UK direct-to-consumer report 2022

As inflation bites, what’s the outlook for direct-to-consumer shopping in the UK? In this report, we take data from 1,000 working-age Brits to help brands understand how consumer behaviour is changing in response to the cost of living crisis – and what they should do about it.

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The findings at a glance

CHAPTER 1

The crazy growth seen by many online retailers during the pandemic looks set to be cut back down to size by the cost of living crisis. As Brits tighten their belts, our direct-to-consumer (D2C) shopping survey of 1,000 working-age consumers shows they expect their online spending to go down over the next six months. 

Nearly 28% of people think the amount they spend will decrease, while 21.5% think it will increase, resulting in a net 7.9% of people who will be spending less online. It means Brits will be buying fewer things, as well as looking for cheaper alternatives when they do shop. And even for the 50.7% of people who say their spending will stay the same, their reduced spending power could lead to them being able to afford fewer purchases.

The biggest reduction in spend will be seen among those aged 35-44 (who happen to be the most frequent online shoppers), and those aged 55-64. A net 14% of both age groups predict a drop in expenditure in the coming months.  

The only age group to buck this trend are those aged 18-24, a net 11% of whom expect to increase what they’re spending. There are two ways to interpret this data; either people think they’ll favour online shopping over the high street – perhaps as a way to find better deals – or they’re anticipating having to spend more simply because of the rising cost of products. 

How much do people spend online currently?

To understand what that reduction 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 (28.2%) spend between £26-50 per month, while 21.1% spend less than this. The remaining 49% spend in excess of £50 buying goods online each month (although only 17.7% spend more than £100).

Notably, it’s those highest spenders who are least likely to say they’ll be cutting back on spending in the next six months; a net 6.2% 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 21.1% will reduce spending in the next six months. We can conclude that those retailers selling smaller ticket items will take the biggest hit.

Likewise, those selling fast moving consumer goods may also suffer, if consumers start to shop online less frequently. Currently, Brits are shopping with high regularity; 46.4% buy items online at least once a week, while a further 21.4% shop fortnightly. People aged 35-44 are the most frequent online shoppers (22.8% shop more than once a week). But if consumers have less to spend online, it’s likely that they won’t shop with the same high frequency.

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-store. There are several categories that Brits show a strong commitment to buying online; these are gifts (68.5%), technology (68.2%), clothing (61.4%), and health and fitness products (57.7%). 

This preference should go some way to helping these categories stay strong as people cut back on spending. On the other hand, there are things they clearly prefer to buy in-store, and this puts these categories at greater risk. Among these are groceries (67.7%) and pet products (47.2% versus 33.3% who prefer to buy online). 

Then there are the categories where people are equally likely to shop in both channels: beauty and grooming, baby and kids, furniture and homewares. 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 brick and mortar stores. As we’re about to find out, value-related messaging will be all-important in the second half of 2022…

CHAPTER 2

With less money to spend online, it figures that people will be looking for the best possible value. In fact, price will trump all other factors when it comes to winning D2C customers this year. Respondents to our survey ranked price as the most important factor in their purchasing decisions, with quality taking second place. There is a clear distance between price (ranked 2.6) and quality (ranked 3.3), underlining just how price conscious today’s D2C shoppers are.

What is encouraging for D2C brands is the perception that they’re cheaper than their high street counterparts; 31.1% of people believe the prices are more competitive. Building on this perception offers a key way for online retailers to score an advantage as the cost of living crisis worsens.

 
But it’s not just about offering the cheapest prices. In a separate piece of research exploring what ‘value for money’ means to D2C customers, we found that most shoppers are looking for ‘affordable quality’ (32%). A further 20% want to buy something that will last a long time, while 19% want to feel like they’re getting more than they pay for. This suggests messaging should remain nuanced, expressing great value for money over simply rock bottom prices.

What else do shoppers want?

Behind price and quality, Brits ranked ‘choice’ as the third-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 main perceived benefit of shopping directly with a brand is being able to access their full range (44.1%). People aged 55-64 especially like being able to access a brand’s full range when they visit a D2C website (51.9%).

Discovery of other products is also a big plus; 30.8% of people say they like D2C 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 (38.9%). But younger consumers also believe D2C shopping offers a better customer experience (29.2%) and say it lets them feel closer to the brand (27.8%) – information that brands should absolutely capitalise on when devising marketing strategy for this age group.

What factors should take a back seat?

In leaner times, it can also be helpful to know what’s less important to consumers so you can focus your resources where it counts. When we asked people to rank the factors that influence their decision to buy from a brand’s website, they were least likely to say ‘ease/cost of returns’, ranking it 8/8. Returns policy is the type of thing that becomes a positive or negative factor after purchase, so it’s still important for brand reputation, but it doesn’t need to be a lead message for conversion.

Brand image and brand values are also deemed to be less important when weighed up against more practical considerations like price, quality and delivery. Likewise, only 15.6% of people say they like D2C shopping because it lets them support smaller or independent brands. And we know from other recent research that sustainability has also become less of a priority; 60% of Brits say they’re not willing to pay any extra for eco-friendly products right now. 

With this in mind, it’s clear that brands should put the consumer at the centre of their marketing campaigns. How can you help them to save money? How can you help them to care for their nearest and dearest? What extra value can you deliver? These factors become especially important when people have less disposable income.

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CHAPTER 3

To maintain sales in 2022, it’s not just about updating your message to consumers, it’s also about changing where you deliver it to them. There’s been some interesting shifts in where people start their online shopping journeys, with search engines moving into first place. 

Comparing today’s results to those from 2019, we see that the percentage of shoppers who begin a shopping trip on a search engine has risen from 34% to 37.4%. Previously, marketplaces were the top starting point but the power of Amazon appears to have waned (down from 37% to 33.6%). 

This is a good thing for D2C brands, giving shoppers more opportunity to land upon your website. But it does mean that an increasing portion of your marketing budget should be allocated to Google AdWords and SEO. 

The need to invest in search is underlined by a reduction in consumers heading directly to a preferred brand’s website when they want to buy something. Only 20.9% of people say they’re most likely to start a shopping journey in this way, down from 24.5% in 2019.

Where have the D2C shoppers gone?

Search engines might be becoming increasingly dominant but that’s not the whole story. Social media has doubled in popularity as a starting point for online shopping journeys, rising from 3% to 6.1%. It’s still a small number, but it’s bigger when we hone in on the young demographic; 13.5% of those aged 18-25 habitually use social media as a starting point. This suggests it’s a growing trend so it makes sense for brands to enable shopping functions on their social media channels.

On the other hand, what we can say with confidence is that brands don’t need to worry about investing in voice search as a priority. Only 2% of people typically start a shopping journey using a voice assistant. This number has been static since 2019, which indicates all the hype around smart speakers heralding a new era in shopping, was just that. 

Smartphone shopping, however, continues to strengthen; 59.5% of Brits say they most frequently use their mobile to research or make purchases online, which is up from 51% in 2019. All other devices are trending downwards: laptops are down from 24% to 20.2%, tablets are down from 13% to 10.9%, desktop computers are down from 11% to 8%. Optimising your website for mobile and making the shopping experience as frictionless as possible is therefore a must.

What keeps people coming back to D2C?

While starting a shopping mission on a brand’s website has declined a little, actually buying from D2C retailers is more popular than ever. Nearly 88% of Brits have shopped D2C in the last 6 months, and they’ve made an average of 3.9 purchases. People are actually more likely to say they’ve shopped D2C 10 or more times than they are to say they’ve done it only once (11.4% versus 9.3%), showing they clearly enjoy the D2C experience.

And yet the memory of a good shopping experience with a brand may not always be enough to drive a repeat purchase. While 20.8% of respondents said the memory of a previous experience drove them to make their last D2C purchase, a larger 27.1% 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 every time 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 7.7% of people said their last purchase followed a recommendation from a friend). 

The effectiveness of other tactics also pale in comparison to search; 10.4% were driven to make a purchase by a social media post, 8.5% by a marketing email, 7.6% by an advert, and 5.3% by seeing the brand featured in the media. 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 (17.5%) and media features (9.8%). Meanwhile, recommendations were most important for those aged 35-44 (11.2%).

CHAPTER 4

Delivery times and costs are a key battleground for D2C sellers, with everyone competing to do it faster and cheaper. And it is important. Our data shows that although shipping is not in the top three factors that drive Brits’ to purchase, they do rank fourth and fifth, with delivery cost only slightly more important than delivery time.

We also see that poor delivery terms act as a major deterrent to online shoppers. Nearly 45% of people say long delivery times/high delivery costs deter them from buying D2C. In comparison, only 26.9% of people are put off by the inability to try products, and 25.4% by the inconvenience of returning products.

And concerns about data security while shopping online are dwarfed when compared with worries about shipping (just 14.2% of people are deterred by website security concerns). This really puts the importance of good delivery terms into perspective. So what do shoppers expect from D2C brands when it comes to delivery? 

How long will shoppers wait for delivery?

This year’s survey highlights a surprising trend; Brits are now prepared to wait longer for their goods than they were in 2019. The percentage of people who expect to wait no longer than a couple of days for delivery has decreased from 22% to 14.1%. Meanwhile, the number of people prepared to wait in excess of five days has grown from 21% in 2019 to 28.2% today. 

Why might this be? Perhaps the pandemic has taught us to have more patience? We all understand the pressure that COVID put on supply chains and delivery services. And having faced empty shelves and three-week grocery delivery slot wait times, maybe we’ve revised our expectations? Whatever the reason, brands shouldn’t be complacent about delivery; most people still expect their package in 3-5 days (57.7%).

Delivery time expectations do vary between demographics though; those aged 18-24 will wait the longest (36.2% will wait in excess of five days), while those aged 45-54 are the most likely to say they won’t wait longer than two days (18.1%).

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 14.6% of people 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 45-54 who are the most likely to say they’re deterred if delivery is not free (21.5%) – remember they wanted the fastest delivery too? Meanwhile those aged 18-24 – often thought to be the most demanding – are the least likely to care about free delivery (9%).

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 Brits will start to be deterred from ordering is £3.44. A decisive 76.5% of people would not pay over a fiver for delivery. However, very few people expect to pay less than one pound (2.7%), meaning that levying a reasonable charge for delivery shouldn’t affect your sales. 

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