Manufacturers could make £13bn selling DTC

UK manufacturers stand to gain £13 billion over the next five years by using new technologies to sell direct to consumers (DTC), according to a report from Barclays.

An Opinium survey of 500 managers at UK manufacturers found that 72 per cent believe retailing goods DTC and cutting out the middlemen is good for both consumers and manufacturers.

Nearly three quarters (73 per cent) of those asked said they had already adopted this trend as part of their business strategy, which has seen leading retailers, including Nike’s ‘Nike Direct’ service, letting consumers to purchase direct for products such as personalised trainers.

The analysis said that companies have begun to embrace new technology to sell and distribute their own goods via social media and the internet as consumers shift to digital channels.

The figures show that in the last five years, DTC sales have risen 55 per cent, accounting for 16 per cent of all manufacturing sales in the UK.

Of those manufacturers which have invested in a DTC sales strategy, 45 per cent said they had benefited from increased revenue, growth in their customer base (38 per cent) and increased speed to market (32 per cent).

Technology has been a key driver in the adoption of DTC, with nearly all manufacturers (96 per cent) now selling directly through their own websites.

Social media is also of increasing importance to manufacturers, with over three quarters (79 per cent) currently using or planning to sell via Facebook, and 72 per cent currently using or planning to sell via Instagram.

This comes as over half of manufacturers (58 per cent) plan to digitalise their distribution processes in the next five years.

Lee Collinson, head of manufacturing at Barclays, said: “The rise in businesses selling DTC is one of the biggest changes the manufacturing industry has seen in generations.

“As companies go it alone, bypassing wholesalers and retailers, they are increasingly embracing social media and digital channels to advertise and sell their products direct from the factory, and then managing the sales, distribution and after-care themselves,” he continued, adding: “It’s a massive shift and the rewards are potentially huge, with nearly half of companies selling DTC reporting an increase in revenues as a result, along with a bigger customer base and the ability to personalise products.”

However, Collinson added: “DTC comes with its own challenges and requires investment in services, training and IT, so the future is likely to involve a mix of DTC, wholesale and retail and there will still be a role for all three channels.”

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