Reports finds manufacturers increasingly sell direct to consumers, avoiding retailers and wholesalers

Manufacturers across Yorkshire are expected to benefit from a £1.675bn boost as they increasingly cut out retailers and wholesalers and sell their products direct to consumers according to a new Barclays Corporate Banking Manufacturing report.

The study – “Going direct: Is direct to consumer selling set to revolutionise the manufacturing sector?” – concludes the traditional model of selling goods via wholesalers and retailers is under pressure like never before, as Yorkshire companies embrace technology to sell and distribute their own goods via social media and the internet.

Nearly two in three companies now sell direct to consumers (64%) in Yorkshire and over the last five years, Yorkshire’s direct to consumer sales have soared by 36%. Direct to Consumers (DTC) now accounts for 16% of all manufacturing sales in the UK, an in-depth industry survey of 500 manufacturing companies found.

UK manufacturers who have invested in a DTC sales strategy said they had benefited from increased revenue (45%), growth in their customer base (38%) and increased speed to market (32%).

The value of goods sold through DTC is forecast to continue to expand rapidly as both well-established global brands and start-ups invest in the potential around selling direct to customers.

Economic modelling commissioned by Barclays, which analysed current growth rates, customer demand and investment in DTC channels, estimates that value of the DTC market will boom to £13bn by 2025. Beyond the manufacturing sector, DTC activity could also provide a much needed boost to the wider UK economy by up to £32.5bn in the next five years.

Lee Collinson, head of manufacturing at Barclays, said: “The rise in businesses selling direct to customers 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.

“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.

“Wholesalers and retailers are aware of the challenge and will need to continue to find ways to adapt and flex their approach. DTC comes with its own challenges and requires investment in services, training and IT. The future is likely to involve a mix of DTC, wholesale and retail and there will still be a role for all three channels.”

The report says technology has been a key driver in the adoption of DTC with nearly all manufacturers (96%) across the country now selling directly through their own websites.

Social media is also of increasing importance to manufacturers with over three-quarters (79%) currently using or planning to sell via Facebook and nearly three-quarters (72%) currently using or planning to sell via Instagram. This comes as nearly half of manufacturers in Yorkshire (44%) plan to digitalise their distribution processes in the next five years.

Manufacturers are increasingly confident about the potential DTC represents with over half (56%) in Yorkshire agreeing that selling direct to consumers cuts out the middleman and is good news for both consumers and manufacturers.

 

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