From soaring logistics rates and-gummed up supply chains, and eye watering paid ad costs to fickle customers, DTC brands have a very uncertain 2022 ahead of them.
And yet, there is immense opportunity for savvy operators to leverage inefficiencies and seek out new markets by upping their game.
In this post, we will cover the scope of challenges and opportunities in DTC in 2022 using these 20 interesting stats (all as up-to date as possible).
20 Mind-Blowing DTC Stats For 2022:
- 1. Container shipping costs have increase 4X since 2020
- 2. 20% of all shipping vessels are stuck in ports
- 3. Amazon stock falls by 14%, loses over $200 billion in value in one day
- 4. eCommerce has lost the Covid bounce.
- 5. Shopify stock plunges 73% in 6 months
- 6. The US has just 722,000 B2C companies selling physical goods
- 7. Around 90% of US eCommerce companies record GMV at less than $1mn
- 8. The US eCommerce market is a fraction of the global eCommerce market
- 9. The Chinese live-streaming market grew more than 2X from $171bn in two years
- 10. Most public ‘unicorn’ DTC brands have performed poorly
- 11. Facebook loses a record $232bn in value in a single day
- 12. 50% of Gen Z buying decisions are driven by TikTok
- 13. 41% of customers are fine with shopping in the metaverse
- 14. Online shoppers are 3-4x more likely to return an item than offline shoppers
- 15. A DTC fashion brand’s app is #1 on the US iOS app store
- 16. 10% eCommerce revenue goes into combating payment fraud
- 17. By the end of 2022, there will be about 228mn social commerce shoppers in India
- 18. 50% of US consumers are stressed out over purchase decisions
- 19. 74% Zoomers and 71% millennials bought from international brands
- 20. 82% of consumers look at brand values before buying
1. Container shipping costs have increase 4X since 2020
According to Dewry Shipping Consultant, container shipping costs rise from $2000 just before the lockdown to about $8000 right now, coming down from the peak of more than $10,000 in Sep 2021.
Today's release from Drewry Shipping Consultants Ltd shows container shipping costs continue to fall, now down 24% from the peak in late September 2021. Bodes well for #inflation.
— economistluke (@economistluke) April 21, 2022
However, logistics costs have not come down to acceptable levels, which severely affects the margins of thousands of DTC brands.
2. 20% of all shipping vessels are stuck in ports
The Shanghai port, which is one of the world’s busiest ports, has been under lockdown for more than a month.
And this has had knock-on effects up and down the global supply chain as thousands of ships are waiting to unload and load at ports around the world.
#China's COVID lockdowns have worsened global supply chain woes. One-fifth of the world's container ship fleet is estimated to be stuck in port congestion (not just in China), and the number of ships awaiting berth at Shanghai are up 34% from last month. pic.twitter.com/92Jiha2Xx4
— Karen Braun (@kannbwx) May 5, 2022
According to a Reuters report, it now takes 74 days longer than usual to ship anything from China to the US. And it looks like the congestion in Chinese ports won’t ease soon- right now there are 344 ships waiting to berth at Shanghai, up 34% from last month.
3. Amazon stock falls by 14%, loses over $200 billion in value in one day
Since a large number of DTC brands depend upon Amazon, such a drastic fall in Amazon stock signals trouble in the larger eCommerce ecosystem.
Amazon has long been the bellwether eCommerce brand and its weak Q1 2022 sales data (7% rise compared to 40% for the same time last year) is an indicator of tougher times ahead.
As the Forbes article linked above states, the fall comes on the back of high inflation numbers in Q1 2022, supply chain issues, and the knock-on effects of the Russia- Ukraine war.
These issues are not just relevant to Amazon and will affect the bottom lines of any DTC brand.
4. eCommerce has lost the Covid bounce.
The pandemic didn’t radically alter consumer buying behavior. As lockdowns are lifted across the world, data shows that people are spending more in retail stores and less on online purchases.
According to a US Census Bureau analysis, eCommerce spending as a % of retail sales spiked 4% above the normal trend to 15.7% during Q2 20.
However, that number fell to 12.7% in Q2 21, in sync with normal trendlines.
DTC companies made out like bandits when everyone was in WFH mode. However, now that the world has largely gone back to normal, they will have to work to keep those customers loyal and peel away new customers from brick and mortar.
5. Shopify stock plunges 73% in 6 months
In another sign of toughening business sentiment around DTC and eCommerce, Shopify lost an unprecedented 75% of its value in 5 months and is currently trading at 10% down from its pre-Covid levels.
From a high of $1681.30, Shopify is now trading at $411, and its merchant sales volume is about $3bn lower than previous projections in Q1 2022.
This low volume for DTC brands on Shopify indicates tightening consumer spending, poor unit economics, and overall poor financial health.
6. The US has just 722,000 B2C companies selling physical goods
The eCommerce boom makes it seem like there are millions of eCommerce stores all over the world, and in the US.
So when Pipecandy ran an analysis, the number of DTC companies that came up was under a million, at around 722,000 (click through for the methodology).
However, by other definitions of eCommerce companies(websites with checkout options, for instance), there are 12 million of them in the world, and 4.2mn in Canada and the US.
7. Around 90% of US eCommerce companies record GMV at less than $1mn
The vast majority of US DTC companies have insignificant sales. From Pipecandy data, a total of 687, 113 companies have a gross marketing volume of less than $1mn.
The majority of stores, at more than 500,000, have GMV of less than $100,000.
As you increase the GMV, the number of stores keeps on falling. At GMV of $1bn+, there are only 41 stores, and they make up 56% of the aggregate GMV in the US.
8. The US eCommerce market is a fraction of the global eCommerce market
By 2022, the eCommerce market size in the US at $1009bn is about 20% the size of the global market size at $5525bn.
However, the international market size is growing faster, and according to Pipecandy data will eventually grow to $7,385bn by 2025.
These numbers indicate that where feasible, DTC brands can unlock massive growth potential if they go international.
9. The Chinese live-streaming market grew more than 2X from $171bn in two years
China has the world's largest live streaming market, with a single live streamer often able to move billions in merchandise over the course of a several-hour-long live stream.
This market is in the nascent stages in the US and early-mover DTC brands can gain an unfair advantage.
According to research from McKinsey, the Chinese live streaming market grew to $436bn in 2022, driven by changes in consumer shopping behavior following extended lockdowns.
Interestingly, the Chinese government is seeking to clamp down on this market, imposing tax evasion fines worth millions of dollars on top live streamers.
10. Most public ‘unicorn’ DTC brands have performed poorly
Along with the fall in Shopify and Amazon stock, DTC public companies with market capitalization above $800mn have seen major downgrades in value.
This fire sale in so called WFH stocks is ongoing, as the chart shows.
Warby Parker (63%) and Stitchfix (40%) lead at the top of the stocks with the highest losses.
While inflation and supply chain issues are being blamed on the poor performance of DTC bellwether stocks, the overall stock market as represented by the S&P500 index has fallen by just 11% in the same time period.
This bearish environment is expected to continue for quite some time, as the world economy has been thrown into a tailspin following the Ukraine invasion.
11. Facebook loses a record $232bn in value in a single day
Following Meta (Facebook’s parent company) weaker than expected earnings, Facebook lost a record $232bn in a single day. This number is the biggest one day drop in the history of the stock market
Facebook's plunge can be reasonably attributed to iOS14 updates that kneecapped the platform’s ability to serve highly targeted ads at scale.
While this is definitely good from the privacy point of view for normal users, advertisers like DTC brands that primarily relied on Facebook to acquire customers will have to face testing times.
12. 50% of Gen Z buying decisions are driven by TikTok
TikTok has rapidly become the social media platform of choice for Gen Z, and a study shows that 80% of this cohort are using it for everything, from purchase recommendations, news sources, and even as a search engine.
And 50% Zoomers base all buying decisions on TikTok videos, as evidenced by the virality of the #TikTokMadeMeBuyIt hashtag.
This data point is extremely important for DTC brands to consider, especially in the fashion, food, and CPG niches where it is easy to depict the products visually.
13. 41% of customers are fine with shopping in the metaverse
Roblox, Fortnite, and their likes have become virtual worlds and gained immemse hype and media attention. From behemoths like Nike and Adidas down to smaller DTC brands, many seem to have gotten in on the metaverse bandwagon.
And consumers are responding.
According to a survey by CommerceNext, 41% of consumers would like to shop in the metaverse, even though 48% have never heard of it and only 5% are familiar with it.
Unlike that time in the early 2000s when Second Life fizzled out, the metaverse has now become a part of popular culture- sold-out music concerts in Fortnite being one example- and is here to stay, and overwhelmingly popular with Gen Z.
DTC brands need to have a metaverse strategy sooner rather than later.
14. Online shoppers are 3-4x more likely to return an item than offline shoppers
Returns have been spiking steadily, and National Retail Federation data from 2021 indicates that the return rate for retail has increased by 78% in one year, with $761bn worth of merch returned.
The corresponding figure for 2020 was $428bn.
For brick and mortar, processing returns isn’t as costly as it is for eCommerce companies where return rates are 3x-4x higher.
Interestingly, research has shown that 73% of returns are because of factors within the control of the merchant.
Reducing the return rate has to be as important for DTC brands as acquiring new customers, and can be achieved with clearer product information and more frequent post purchas communication and better service.
15. A DTC fashion brand’s app is #1 on the US iOS app store
Shein, a Chinese DTC fast fashion brand that is extremely popular with young millennials and Gen Z for their cheap, fashionable outfits have hit the top ranking iOS app among all categories in the US.
The Shein app has been climbing in popularity and is the #1 downloaded app in the Shopping category in many countries.
Google Trends data also indicate that it is the most popular website in fashion retail.
Shein is also poised to snatch the top clothing retailer spot from Amazon in the coming days, primarily backed by its strengths in supply chain and coherent branding.
This has lessons for a large number of DTC brands- customer facing marketing in itself will not prove to be enough if the backend processes are not mature or robust.
16. 10% eCommerce revenue goes into combating payment fraud
The eCommerce industry has long struggled with payment fraud, and a Visa supported study titled Global Payments and Fraud Report estimates that merchants spend 10% of their revenue globlly combating payments fraud.
The report states that phishing, card testing, identity theft, and first-party misuse are becoming the most common attack vectors
For most online-only DTC brands, big or small, fraud prevention should be an important item on their operational checklist.
17. By the end of 2022, there will be about 228mn social commerce shoppers in India
Social commerce, driven by the widespread adoption of social media is booming in India.
According to a report by Recogn- which defines social commerce as shopping from brands discovered through Instagram, Whatsapp, Facebook, or Youtube- there were 153mn such customers who made up 53% of India’s total online customers.
This number, from Nov 2021, is expected to rise to 228mn by the end of 2022.
Social commerce, which relies mostly on organic content and influencer marketing can be a sustainable customer acquisition channel for DTC brands that are bleeding from higher-paid ad costs.
18. 50% of US consumers are stressed out over purchase decisions
The highest inflation rate in 40 years has turned shopping from therapy to punishment.
According to a survey by Vericast:
- 50% of customers are stressed out over buying decisions
- 72% of consumers are buying generic or lower-cost items
- Consumers have reduced spending on clothes, accessories, and groceries.
- Coupons would motivate 88% of consumers to buy or try out new brands.
These trends will also affect DTC brands. They will need to test lower pricing tiers, discounts, and explore bundling to give consumers better value per dollar in order to acquire new customers and keep older ones loyal.
19. 74% Zoomers and 71% millennials bought from international brands
DTC brands looking to enter the US market would have a much higher ROI by focusing on younger consumers who drive international purchases.
The Retail Brew/Harris Poll survey also found that
- Only 17% Gen X and 13% Boomers bought from international brands
- 29% of Gen Z and millennials bought from overseas brands at least once every month
- Fast fashion(45%), electronics (41%) and personal care(41$%) were top categories.
- 66%consumers bought online, either from marketplaces or brand websites
20. 82% of consumers look at brand values before buying
A Harris Poll survey has found that a large percentage of consumers will buy from companies whose values align with their own.
- 52% support sustainable brands
- 66% want to buy from eco-friendly businesses
- 55% are willing to pay more
However, 72% of consumers are savvy to greenwashing attempts by brands, while 98% of consumers are willing to buy from alternate brands if the item was not in stock.
Value-based marketing cannot be a cynical marketing ploy, however, because most customers have a very high BS meter and are not easy to fool.
Want to access detailed data on every aspect of DTC and eCommerce operations, including top brands, spending patterns, and advertising trends? Check out Pipecandy for a free trial.