Pandemic set to fuel five year D2C sales surge as 97% of UK online brands see direct selling as high priority

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Brands selling online expect a five year surge in D2C revenues after the COVID-19 pandemic led many to invest in their own sales channels, according to new research. 

Multichannel commerce platform ChannelAdvisor and research firm CensusWide surveyed 304 CMOs working at UK brands selling online. 97% of CMOs say that D2C channels have become a higher priority for their brand since the start of the COVID-19 crisis — more than a third (34%) say it has become a significantly high priority. 

When asked roughly what proportion of sales they expect D2C to generate for their brand over the next five years, nearly half (46%) of CMOs said 21-30%. 17% of CMOs said they expect D2C channels to deliver 31-40% of their brands sales over the next five years and 16% expect D2C to be responsible for 41-50% of their brand’s sales. 

Nearly half (47%) of brand CMOs say their brand is selling more products through their own channels, such as their website or online marketplaces, compared to before the COVID-19 crisis. 48% say they are selling more through retailers, while just 6% say they are selling roughly the same portion of products between retailers and their own channels than before the COVID-19 crisis. 

Even as restrictions have lifted and shoppers return to shopping instore, many brands are confident that D2C will deliver even in the short term. 43% of CMOs said they expect D2C channels to generate increased sales over the next 12 months. 

Beyond the revenue opportunities, CMOs are also excited about the other benefits D2C offers their brand. 47% said that over the next 12 months, D2C channels would give them more control in how their brand is generally portrayed online, while 42% said a significant benefit would be the added control over how their brand’s product details are described online. 43% said they are excited about the valuable first-party data that D2C will offer their brand over the next 12 months. 

The Future of Retail Diplomacy

By wielding more power over their own sales, 90% of brand CMOs believe their brand is now in a stronger negotiating position with retailer partners than before the COVID-19 crisis began — 27% say they are in a significantly stronger position. None of those asked said they believed they were now in a weaker position.

Brands have seen how data-driven strategies for both marketing and sales are required to thrive in the new e-commerce dominant landscape, so now expect much more from their retail partners. 57% of CMOs say the data shared by retailers is very useful, while 42% say retail partners share some useful data but they would welcome more. 

Yet even in this new era of retailer relationships, some brands have concerns. More than a third (38%) of brand CMOs said that managing retail relationships would be their biggest challenge over the next 12 months. Many had specific worries around the lack of control in how their products are marketed. 44% said that inaccurate pricing is their main area of concern when listing on retailer websites, while 42% worried that their products will not be easily discoverable by consumers. 

Mike Shapaker, chief marketing officer at ChannelAdvisor, said: “The last 18 months have sparked a D2C revolution and brands selling online now find themselves wielding more power than ever before. Higher than average D2C revenues were to be expected while retail shops were closed, but this research shows that brands believe their own channels will continue to drive significant revenues in the long term. In addition to the revenue opportunities, CMOs are excited to harness valuable data from their own channels that can be used to better understand and serve a new wave of savvy, post-pandemic online shoppers.”