US direct-to-consumer report 2022

The current economic downturn means challenging times are ahead for many Americans. Encouragingly, though, the growth seen by many online retailers during the pandemic could be set to continue in spite of the cost of living crisis. Even in the face of rising inflation rates, our direct-to-consumer (D2C) shopping survey of 2,000 working-age, nationally representative consumers shows Americans expect their online spending to go up over the next six months. 

Just over 20% of people think the amount they spend will decrease, while 29.8% think it will increase, resulting in a net 9.6% of people who will be spending more online. However, we should temper our optimism; this data probably doesn’t indicate a spending spree. More likely, people think they’ll favor online shopping over in-store as a way to find better deals, or they’re anticipating having to spend more simply because of the rising cost of products.   

Even for the 49.9% of people who say their spending will stay the same, their reduced spending power could lead to them being able to afford fewer purchases. But it’s still interesting to note that the biggest increase in spend will be seen among those aged 35-44 (who happen to be the most frequent online shoppers), and those aged 25-34. A net 13% of 35-44 year olds and 12.9% of 25-34 year olds predict a rise in expenditure in the coming months.  

How much do people spend online currently?

To understand what that increase might look like in monetary terms, let’s look at how much people are spending online at the moment. The single largest percentage of people (23%) spend between $26-50 per month, while 11.6% spend less than this. The remaining 65.4% spend in excess of $50 buying goods online each month, with 30.3% spending more than $100.

Notably, it’s these highest spenders who are most likely to say they’ll be spending more in the next six months; a net 18.6% of people who spend $100+ say they’ll increase what they spend. In comparison, among those who spend between $11-25 per month, a net 0.6% say they will actually reduce spending in the next six months. We can conclude, then, that retailers selling smaller ticket items are likely to feel the impact of the cost of living crisis more than retailers of higher value items.

Currently, Americans are shopping online with high regularity; 47% buy items online at least once a week, while a further 8.1% shop fortnightly. People aged 25-34 are the most frequent online shoppers; 27.4% shop more than once a week, followed by 23.6% of 35-44 year olds.

Which categories are most at risk?

Now the dust is settling on the pandemic, we wanted to know which categories people are most likely to be shopping for online and which they prefer to buy in a store. There are some notable categories that Americans show a strong commitment to buying online; these are gifts (69.4%) and technology (59.6%). 

However, there are a great many things that Americans clearly prefer to buy in store. Among these are groceries (76.6%), furniture & homewares (64.6%), beauty & grooming products (58.1%) and pet products (53.1%). 

Then there are the categories where people are equally likely to shop in both channels: health & fitness, baby & kids, and clothing. Retailers in these “up for grabs” categories will have to work harder to capture customers and should focus on communicating how shopping direct can be cheaper than at bricks-and-mortar stores. As we’re about to find out, value-related messaging will be all-important in the second half of 2022…

What else do shoppers want?

Behind price and quality, ‘delivery cost’ was ranked as the third-most important factor. We’ll delve further into this factor in Chapter 4, but it’s worth noting at this point that retailers face a real challenge on this front. Shoppers are keenly aware of delivery charges and will factor these costs in when making their assessment of what constitutes good value. 

Americans ranked ‘choice’ as the fourth-most important factor when shopping D2C. This might seem like bad news for smaller brands, but you can play to this desire without growing your range. By letting shoppers know that your entire product range is available on your website – as opposed to a limited selection that might be offered by third party retailers – you can give consumers a bigger reason to shop with you directly.  

In fact, you might be surprised to learn that the highest perceived benefit of shopping directly with a brand is being able to access their full range (45.4%). This answer has increased in popularity since November 2020, when it was only the second-rated benefit at 41.1%. 

Discovery of other products was the second-most popular reason people liked using D2C websites, having been the most popular reason two years ago; 40.3% of people say they liked this way of shopping because they end up discovering other products they might like. People aged 18-24 over-index for liking D2C shopping for this very reason (47.9%). But consumers in this age range also believe D2C shopping lets them feel closer to the brand (21.3%) – information that brands should absolutely capitalize on when devising marketing strategy for this age group.

How tech savvy are D2C shoppers?

While social media is only a starting point for online shopping journeys among 6.3% of Americans, this figure rises to 10% among 18-24 year olds and 11.4% in the 25-34 year old category. This shows that brands catering to younger consumers can get significant mileage from advertising on social media and enabling in-platform shopping features. At the other end of the scale, social media is a starting point for just 0.8% in the 55-64 range, so brands targeting older consumers should adjust their ad spend accordingly. 

On the other hand, what we can say with confidence is that brands don’t yet need to worry about investing in voice search as a priority. Only 1.2% of people typically start a shopping journey using a voice assistant. 

Smartphone shopping, however, is massively popular; 65.9% of Americans say they most frequently use their mobile to research or make purchases online, rising to 79.3% in the 25-34 age range. Optimizing your website for mobile and making the shopping experience as frictionless as possible is therefore a must.

While the smartphone is well ahead of other devices as a shopping tool, it’s worth noting that older shoppers over-index for using desktop computers, laptops and tablets for visiting D2C sites. This highlights the need to ensure your website has the necessary accessibility features enabled in order to support shoppers who might find using a smartphone tricky.

What keeps people coming back to D2C?

While starting a shopping mission on a brand’s website isn’t that common, actually buying from D2C retailers is a very frequent occurrence. Some 85.6% of Americans have shopped D2C in the last 6 months, and they’ve made an average of 3.3 purchases.

And yet the memory of a good shopping experience with a brand may not always be enough to drive a repeat purchase. While 17.8% of respondents said the memory of a previous experience drove them to make their last D2C purchase, a larger 27.8% said it was driven by an online search.

Perhaps this means D2C brands are not doing enough to establish loyalty? But, on the plus side, if people head to a search engine when they want to make a purchase, it also means there are more prospective customers for new brands. The important thing is for D2C brands to be visible – especially as word-of-mouth appears to lack its usual power in this sector (just 9.5% of people said their last purchase followed a recommendation from a friend). 

The effectiveness of other tactics also pale in comparison to search; 12.8% were driven to make a purchase by a social media post, 9.5% by a marketing email, 7.3% by seeing the brand featured in the media, and 6.8% by an advert. There were a few differences in drivers between the demographics that are worth pointing out. Shopping trips by those aged 18-24 were especially likely to be prompted by social media posts (22.8%) and media features (9.5%). Meanwhile, recommendations were most important for those aged 25-34 (11.5%).

How long will shoppers wait for delivery?

Delivery time was ranked as only the sixth-most important factor that drives Americans to make a D2C purchase. It seems that the pandemic helped many consumers recognise the need for patience – we all understand the pressure that COVID put on delivery services, while media images of container ships lining up outside ports nationwide are fresh in the memory. 

A significant proportion of consumers – 22% – said they’d be happy with delivery in 6-8 days, while 9.7% are prepared to wait 9 days or more. However, brands should note that the majority (46.8%) of Americans expect to receive their package in 3-5 days, so they shouldn’t be complacent about delivery speeds. And there remain those more demanding consumers who want next day delivery (5.2%) and or delivery within two days (16.4%). 

Delivery time expectations do vary between demographics though; those aged 18-24 will wait the longest (17% said they would wait in excess of nine days), while those aged 35-44 are the most likely to say they won’t wait longer than two days (27.5%).

What are shoppers prepared to pay for delivery?

There’s no denying that free delivery is a major plus for consumers, but is it a deal-breaker if D2C brands don’t offer it? The answer is no; only 17.6% of Americans would be deterred from making a purchase if delivery was not free. 

But the expectation for free shipping does differ depending on your age, and it‘s not necessarily in the way you would expect. It’s people aged 55-64 who are the most likely to say they’re deterred if delivery is not free (22.1%). Meanwhile those aged 18-24 – often thought to be the most demanding – are the least likely to care about free delivery (12.4%).

The good news is that most people are prepared to pay for delivery of their goods – albeit not huge amounts. The average price point where Americans will start to be deterred from ordering is $5.13. A decisive 79% of people would not pay over $8 for delivery. However, very few people expect to pay less than a buck (2%), meaning that levying a reasonable charge for delivery shouldn’t affect your sales. 

In terms of how Americans want to pay for D2C purchases, credit or debit card is still the most popular option with 51.5% of respondents, slightly strengthening from November 2020 when this option was favored by 49.3%. The popularity of PayPal has shrunk to 27.3% from 31.2% two years ago, while – perhaps surprisingly – Apple Pay has grown only very slightly from 5% to 5.6%. Amazon Pay and Google Pay have actually decreased in popularity, so retailers considering updating their websites to support these types of payment may be better off focusing their efforts elsewhere.