EMarketer has released an inaugural forecast on direct-to-consumer ecommerce sales showing that sales will grow by 24.3 percent to $17.75 billion in 2020, up from $14.28 billion in 2019.
EMarketer defines DTC companies as digitally native brands that began as independent online retailers selling directly to consumers. The estimate excludes travel and event tickets, payments, food and drink services, gambling and other vice good sales.
Despite strong DTC ecommerce sales growth, eMarketer says brands should anticipate hardships in the coming months as a result of the coronavirus pandemic.
“Sales will continue to shift from nice-to-have products to must-have products, with D2C brands falling under the nonessential category. Disruptions in the supply chain are also likely. That will mean slower shipping times, normally a distinguishing factor for D2C products,” eMarketer senior forecasting analyst Oscar Orozco says.
EMarketer’s data suggests that from 2016-2019, DTC ecommerce increased at three to six times the rate of overall ecommerce sales. Due to intensified competition and maturing of the sector, however, the researcher says DTC’s growth in 2020 is less than two times that of total ecommerce—24.3 percent vs. 13.2 percent, respectively. Other reasons why growth rates are starting to moderate include the rise of acquisition costs, tighter funding and more focused profits.
This year DTC ecommerce sales will account for 2.6 percent of the US ecommerce market, indicating most retailers’ struggle to capture significant market share. Led by Amazon at 38.7 percent, the top 10 ecommerce brands will represent nearly 60 percent of ecommerce sales in 2020.
EMarketer estimates 87.3 million people ages 14 and older in the US will buy on a DTC platform this year, up 10.3 percent year over year. Additionally, DTC spend per buyer will grow 12.7 recent to $203. By 2022, the researcher says the number of DTC ecommerce buyers will reach a new milestone, 103.4 million.
A mix of new buyers entering the DTC segment and increases in purchasing per shopper will contribute to DTC brands’ future ecommerce growth.