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The direct-to-consumer movement: How can CPG brands tap into this spaceAcross the last decade, many of the world’s leading CPG brands have surfed the direct-to-consumer (DTC) wave by acquiring DTC competitors, launching new DTC brands or selling existing brands through DTC channels.
With greater control, higher margins and stronger customer relationships, the direct-to-consumer model is a tempting one. Despite this, it isn’t being leveraged across the CPG space and is underrepresented in the growth agenda of the industry.
In fact, only 16% of CPG brands rate DTC as a key consideration for top-line growth. Despite the fact DTC is growing in size by up to 13% each year in the CPG space.
The growing impact of the movement is clear. Gillette's share of the US razor market fell from about 70% to under 50% in the course of a decade, thanks to DTC competitors like Dollar Shave Club and Harry's. On the flip side, L’Oreal increased its e-commerce sales by 25.7% by expanding its D2C channel across different brands and countries.
As e-commerce continues to grow post-pandemic and the value of first-party data booms, how can CPG brands effectively tap into the DTC space and what should adjacent categories, like grocery, delivery and QSR brands, watch out for?
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