2021 DTC and cross-border e-commerce growth driven by global Millennial spend, ESW shows

Direct-To-Consumer (DTC) online purchases increased by +17% year-on-year (YOY) as behavioural shifts, formed in response to the Covid-19 pandemic, remained entrenched throughout 2021, the latest data from ESW, the global DTC e-commerce leader reveals.

This increase was powered by a +114% global increase in DTC luxury sales, with smaller sales increases reported across multi-brand retailers (+10% YOY) and single brand and specialist retailers (+10% YOY).

ESW’s Global Voices: 2022 survey of more than 14,000 consumers across fourteen countries revealed Millennials remain the driving force behind increased DTC and cross-border shopping rates.  YOY, the data show that 25 – 40-year-olds reported increased DTC purchasing across all eleven purchasing categories monitored as part of the survey. Domestic ecommerce sales of luxury products (+28%), sporting goods (+19%), cosmetics (19%), fragrance (+13%) and skin care (+10%) saw the highest rises in sales across all age brackets as consumers continue to purchase these traditionally ‘high contact’ items – that would have previously been validated either by trying on or testing in-store – online.

In 2021, over a third (37%) of Millennials made more than 11 online cross-border purchases, an increase of +12% YOY, followed by 30% of Gen Z, 26% of Gen X and 19% of Baby Boomers. Geographically, shoppers in the UAE (53%), China (50%) and India (41%) reported the highest rates of purchase frequency levels at 11 or more.  By country, shoppers in Japan (51%), China (44%), the UAE (21%), South Korea (17%) and Mexico (16%) reported the highest rate of respondents spending more than GBP£1,100 (US$1,500) on cross-border purchases in 2021.

The top reasons respondents cited for buying cross-border include paying less for products than they would domestically (26%) and having a positive past experience buying from a foreign website (26%), highlighting the positive momentum brands and retailers who have improved their DTC and cross-border strategies over the past year have created amongst consumers.

While more than a quarter (26%) of global shoppers bought clothing online outside of their domestic market, making it the most popular shopped cross-border purchase in 2021, overall, the category only rose +4% YOY.  Of the top five most popular cross-border ecommerce categories, luxury and fragrance grew the fastest over the past 12 months, both up +50% compared to the end of 2020, followed by footwear (+33%), and skincare and cosmetics (+31% respectively).

Looking ahead to 2022, consumer confidence remains buoyant with more than half of respondents (53%) expecting their online buying habits to remain roughly the same over the next 12 months.  Nearly a fifth (19%) plan to increase their spend, while slightly more respondents (22%) may decrease their spend.  Consumers in China (45%), India (27%), and Japan (25%) say they are more likely to increase shopping.  By generation, 23% of Millennials and 20% of Gen Z expect to increase shopping, while 26% of Gen Z and 23% of Boomers expect to decrease their online spending. 

Patrick Bousquet-Chavanne, president and CEO, Americas at ESW, commented: “2021 was the year of the Millennial, as this demographic cemented their position as the power shopping cohort driving demand for DTC and cross-border commerce.  The data clearly demonstrate that previous positive DTC and cross-border purchasing experiences are working to create a virtuous cycle of growth in consumer confidence and those outlier brands and retailers, who have worked hard in the past two years to fine-tune their selling strategies in these areas, are reaping very significant rewards.”

Martim Avillez Oliveira, chief commercial officer, EMEA at ESW, added: “The much-vaunted DTC retail revolution is now a reality brands cannot afford to ignore. As consumer confidence continues to grow and global shoppers settle further into their new shopping routines retailers must focus on developing a deep understanding of what drives DTC demand – across all of sales channels and customer touchpoints – so they can capitalise on the appetite consumers have to connect with their favourite brands online and maintain both the loyalty of existing customers while attracting new ones.”

Brands deploying ESW’s Fluency and Symphony DTC solutions can enter both domestic and new international markets in a matter of weeks, many times faster than if they attempted to do so on their own and access a suite of market-leading e-commerce solutions across store, pricing, payments, checkout, fraud and delivery – all through a single integration. ESW’s Velocity consultancy service provides the expertise to execute successful growth initiatives across customer experience, acquisition, and retention, all while engaging directly with customers and retaining ownership of all the data collected during the shopping journey.