Direct to Consumer

The internet allows brands to sell to consumers at much cheaper prices than traditional store environments. So why do online sales still only account for c.15% of all sales in the UK? Putting aside for one moment the ‘experiential’ benefits that a day out shopping might deliver, this surely boils down to whether the shopper values the cost saving more than increased inconvenience (can’t see the goods have to wait to be delivered, delivery errors, trust etc). How might this change if the saving were as much as 30%? Unilever, Mars and Reckitt Benckiser have, reports the Telegraph this week, all signed up to a new blockchain enabled shopping service, which allows consumers to buy at wholesale prices (+ a small premium for logistics costs) and elicit this saving. This is a threat, not only to traditional supermarket retailers but also to other intermediaries such as Amazon. Retailers already operate on squeezed margins (typically 2-3%), and grocery sales have the lowest share of online spend. If brands can find an effective way to cut them out of sales, then our (physical and digital) shopping landscape may look very different in the future.