New IAB UK report identifies 50 of the UK’s leading Direct to Consumer brands

  • 39% of the online population have purchased from one or more

  • DTC brands super-serve customers to forge genuine relationships

  • DTC consumers value convenience and personalisation over price

Direct to Consumer (DTC) brands have entered the mainstream, according to a new report released today by IAB UK. 97% of the UK online population are aware of at least one of the 50 leading DTC brands in the UK, 39% have purchased a product from one or more and 10% have purchased from five or more.

The report, ‘Born Online’, conducted with research and strategy consultancy MTM, explores the rise of digital-born brands that are reshaping the sector with a data-driven, agile approach to brand building. It identifies 50 of the UK’s leading DTC brands1 – including the likes of Bloom & Wild, Heist, eve, and Gousto – and analyses both their founders and customers in order to understand how they are pioneering a new era of retail.  

The report shows that DTC customers have distinctive traits and values that set them apart from the average UK consumer. They are an affluent group of early adopters that are likely to try new products before their friends (78% among heavy DTC purchasers vs 27% for the UK online population) and often influence others when it comes to purchases (74% vs 29%). 

In terms of what they look for in a brand, DTC consumers are willing to pay extra for personalised products (75% vs 28%), convenience (83% vs 56%) and goods from companies they deem to be ethical (86% vs 43%).

The study also indicates that there is strong potential for future market growth, with 34% of those that don’t currently purchase from DTC brands saying that they would in the future.

Just like their customers, successful DTC brands are challenging the retail norm. While each brand is distinctive, the report shows that they share certain unique characteristics, such as a strong core purpose that feeds into every part of the business. This stems from having been founded to fill a genuine gap in the market based on personal experience and is reflected in brands' use of digital channels to make data-driven decisions and super-serve customers; allowing them to boost relevance, communicate authentically and build loyal audiences. 

As a result of their different approach to brand building, DTC companies are giving rise to a more diverse generation of leaders that are capitalising on digital advertising’s accessibility; 32% of the 50 leading DTC brands have a female founder vs just 5% of FTSE 100 companies that have a female CEO. 

Commenting on the report, IAB UK’s Chief Marketing Officer James Chandler says: “For the first time we can really get a picture of how DTC brands are shaking up the UK’s retail sector and raising the bar. Born and grown online, this new generation of brands are now starting to infiltrate the mainstream, creating a huge opportunity for media agencies and media owners to tap into the burgeoning market and help to propel the next phase of growth.

“As DTC brands evolve, they often expand their marketing strategies to include other channels beyond their core digital activity, increasing the need for external coordination and expertise.”

In order to fully unlock the potential in this area, the report advises media agencies and owners explore how they can best support DTC brands as clients.

Kate Huang, Chief Marketing Officer at DTC femcare brand Callaly, explains: “DTC businesses are agile in response to consumer feedback and utilise analytics to forge authentic relationships with customers. While brand growth is a key goal, protecting these unique characteristics is also a priority. Working with partners that are open to a test and learn approach, support data-driven marketing and help to amplify our customer-centric ethos is crucial.”

This view is echoed by Simon Wilden, Performance Partner at Goodstuff: “DTC customers derive big benefits from their customer relationships, providing a great opportunity for established brands, media owners and agencies to learn from their approach. Not only does this open up a new generation of brands for agencies and media owners to tap into, but it could also help to evolve established practices with existing clients; leading to more authentic, one-to-one interactions.”

The full report, video interviews with DTC founders and CEOs and case studies of DTC brands is available here.

1Based on press mentions, social media following and online engagement.

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