The state of the US ecommerce market

Direct-to-consumer commerce, otherwise known as DTC commerce, is when a brand or manufacturer sells its own products direct to the end customers through channels that enable direct customer communication, such as a brand-owned website, with a lower reliance on third-party retailers or wholesalers.

DTC commerce in the US is set to experience rapid growth across core categories, with DTC ecommerce sales for established brands set to account for over three times more than digitally native brands in 2024, reaching a projected $117.47 billion.  

Core category ecommerce growth in the US

• Fashion and accessories is set to grow by 15% and reach $221b in 2026.
• Retail ecommerce is set to grow by 50% 2023-2027 to reach $1.7 trillion.
• Beauty is predicted to reach $219 billion by 2026.

How are US consumers evolving and how can DTC support?

1. Value-for-money purchasing

Value-seeking will be at the heart of consumer decision making in 2023 due to the economic crisis, with around 70% of Americans ‘trading down’ to cheaper brands and more actively looking into promotions and discounts.

Consumers will look for the maximum value out of each purchase, returning to brands that give the highest value and experience and disregarding those that do not. 

As value for money becomes a greater driver for the global consumer, favorability is shifting towards DTC brands with 23% of consumers believe that products are of higher quality when purchased directly from a brand and 61% claiming it offers the best personalized and engaging digital experience.

This experience can be further enhanced by the acquisition and use of first-party data in consumer-first decision making. Through a DTC approach, brands gain access to first-party data and by leveraging such information strategically can identify shopping behaviors and preferences and so optimize the consumer experience accordingly, from product assortment to pricing to site design.

Whilst consumers are faced with a cost-of-living crisis, brands are looking for ways in which to provide greater value to the purchase experience.

Loyalty programs that reward consumers with points, discounts and exclusive access as well an array of other components like generous ‘refer a friend’ offerings are made more personalized by DTC brands able to pin-point product preferences through unique first-party insight.

In the short term, these initiatives have been shown to have a positive impact on conversion and average order value, and over time on customer loyalty and lifetime value.

2. Seamless customer journeys

Consumers have high expectations when it comes to integrated, multi-channel experiences and shopping opportunities, with almost 90% expecting brands to cater for needs across both online and offline touchpoints to suit consumer preferences.

Offering an elevated omnichannel experience is becoming increasingly important for brands to provide their consumers with a point of difference in order to compete.

DTC commerce equips brands with the tools and technologies to connect more deeply with consumers, using data collated digitally to enhance the physical retail experiences, generating deep customer satisfaction and contributing toward customer loyalty.

Optimizing the in-store experience and integrating with an own-brand DTC site offers a convenient way for consumers to shop such as through click and collect or the ability to check stock levels in store.   

3. Social commerce

Social commerce is on the rise due to its influence on product and brand discovery as well as conversion. Over 96 million American consumers were forecasted to have made purchases through social media in 2022.

The potential of social commerce in driving conversion for brands can be unlocked with a DTC approach. By creating a bridge between social content and a brand-owned site, the consumer journey becomes seamless from social engagement through to checkout.  
 

Challenges with operating a DTC in the US 

Operating a DTC site in the US presents significant opportunities but also operational challenges. Strategic identification of the next channel or market to expand into is a critical first step for brands seeking to successfully grow their DTC offering. Creating and evaluating the strategic vision for your new or evolving DTC approach sets the foundation for future success.

Operational challenges must also be considered and accounted for. Setting up warehousing and logistics in the US to serve every major state is a challenge, and state-by-state product and trade regulation can also pose considerable challenges for brands operating in certain categories like alcoholic beverages. 

Finally, localizing content to suit the various states and cultures in the US is key for brands to ensure resonance with their audiences, having a deep understanding of consumers and specific audiences can mitigate the chances of miscommunication when it comes to localization.

Whether you’re creating your first DTC strategy or seeking to evolve your approach in a new or current market, a well-developed strategy is vital. Our expert teams can help you create and refine your DTC strategy with expertise fueled by 18 years of DTC experience.

Reach out to us today to find out how we can support your DTC growth ambitions.