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Direct-to-consumer boom worth £23bn to manufacturers

Research from Barclays shows that more than half of UK households have received products direct from manufacturers in 2020, a trend that is set to continue growing over the next two years.

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The huge growth opportunity for manufacturers is detailed in Barclays’ new report, A direct approach.

Parcel deliveries have boomed during COVID-19 as consumers turned to online shopping en masse. While online retailers have benefitted as expected, there has also been a notable shift towards buying direct from the manufacturer.

Around 85 million parcels have been delivered direct-to-consumer (D2C) by manufacturers over the course of 2020, with 57 per cent of consumers now ordering at least some of their items through this method. In 2019 the figure was just 39 per cent.

Around 13 per cent of manufactures have capitalised on the shift by setting up a D2C channel during 2020. Products commonly bought this way include clothes, electronics, food and drink, and even large household items such as appliances and furniture.

The research suggests that the trend is set to continue growing even after restrictions have eased. By 2023, Barclays estimates that the volume of D2C parcels will grow by almost 30 per cent, to around 110 million packages a year. This equates to a potential sales increase of £23 billion for manufacturers, which could support an extra 118,000 manufacturing jobs.

The North West is one of the areas expected to benefit most, with a potential £4.3 billion in extra sales on offer for the region’s manufacturers.

Lee Collinson, Head of Manufacturing, Transport and Logistics at Barclays Corporate Banking, said:

“2020 has been a turbulent year for all industries, and the manufacturing sector is no different. However, the increasing demand to procure goods direct from the companies that make them is providing growth opportunities and confidence for manufacturers of all sizes.

“D2C sales will help manufacturing firms increase their earnings and protect and create jobs in the next three years: that’s a welcome shot in the arm not only for the industry, but also for the wider UK economy.”

The report also found that goodwill to UK-based producers is a big motivating factor for customers - 32 per cent of D2C customers see it as a way of backing British manufacturing in tough economic times. Sustainability concerns are also a key factor, with 23 per cent of consumers saying sustainable delivery options have an influence on their purchasing decisions.

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