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Sketching the DTC market

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Direct to Consumer (DTC) as a strategy has evolved over the last decade. It started off as a new business model that gave brands more control over the product, marketing, customer acquisition costs and the overall customer experience. The model was so effective that most brands adopted the DTC route in addition to other channels.


The meaning of DTC has expanded. It no longer means only brands that sell through their own direct online channel. Today, small brands sell on Amazon and also have their own Shopify presence. Big retail-first brands like Nike, Pepsi, or Apple – all have their own online DTC presence.


The sheer size of the DTC market has grown as well. During the Covid-19 pandemic, people became more open to experimenting with new brands and niche products, leading to higher sales for DTC brands. In fact, in 2020, US DTC sales grew by 46% (as estimated by eMarketer) while all eCommerce sales grew by about 30%.


Even though the US DTC market is a $100B+ market, the information available on the DTC market is limited. At PipeCandy, we analyze around 21,000 brands to bring you insights into the US DTC market.


State-wise distribution of DTC brands in the US


About 55% of the total DTC market in the US is concentrated in just five states. California has the highest number of DTC firms with 26%, followed by New York with 15%, and Florida with about 6% of DTC firms headquartered in the state. The states of West Virginia, North Dakota, Alaska, and the Virgin Islands are each home to less than 0.10% of the DTC brands.


Product Categories

Fashion and Apparel, Food and Beverages, and Arts and Entertainment have been the leading categories in terms of the number of companies both in the DTC market and the eCommerce market. Other categories each accounted for less than 4% of the DTC market.


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Distribution of DTC Brands by Web Sales


Today, we see that around 75% of the US DTC brands have less than $1M in web sales, and around 0.16% of the US DTC firms have web sales of more than $500M. Web sales is the sales made through the brands' own websites; this does not include the sales they may have through online marketplaces or through physical locations.


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Average visits per visitor


The graph below shows that for firms that have web sales in the range of $1M to $50M, customers visit the sites twice a month. And as you move up the scale, from firms that have web sales in the range of $50M-$100M to firms that have web sales greater than $1B, the visits increase from around four a month to about 10. Brands that have greater awareness among their customers clock in higher sales, and cultivate loyalty among shoppers.

What is striking is that firms with less than $1M in web sales have higher visits per visitor than their counterparts in the higher web sales ranges of $1M to $50M.

It is likely that a brand's presence offline rubs off on the online store, resulting in higher visits per visitor. It is also an indication that brands that earlier focused on retail presence are now sprucing up their digital presence, and the low web sales is a lag effect of traditional brands taking the DTC route slowly. In time, they will migrate to higher web sales bands.

Physical Presence of DTC Brands


Omnichannel, a combination of online and offline presence, is going to be the norm for DTC brands. Most brands have a foot in each, although they choose to focus more on either of the channels.

Firms in product categories such as 'Book Stores', 'Hobbies and Interests', and 'Adult' have a stronger physical presence compared with brands in product categories like 'Gifts and Novelties', 'Health and Fitness', and 'Office Supplies and Stationery' which don't invest much in maintaining a solid physical presence.

When we compare firms with and without physical presence based on their web sales, we find that less than $1M web sales range has the highest proportion (77%) of firms with a physical presence. A higher physical presence in the less than $1M web sales indicates that firms with a strong offline presence have started adopting the DTC channel. The strong physical presence of these brands has been reflected in the higher average visits per visitor within the less than $1M web sales range.