A boom in manufacturers selling direct-to-consumer (D2C) will provide a £24bn boost to the industry’s coffers by 2023, according to research from Barclays Corporate Banking.

The new report combines polling of manufacturers, logistics firms and consumers with detailed economic modelling to assess the impact of D2C sales, where traditional channels of distribution such as retailers and wholesalers are bypassed.

The results show that a surge in shoppers going direct will mean sales through this channel total £120bn in 2023 – an increase from £96bn this year.

The growth is being driven by consumer choices exacerbated by the pandemic.

Almost three fifths (57 per cent) of the people surveyed said they now frequently go direct to manufacturers because they believe they will get a better price (36 per cent) and better service (23 per cent).

In addition, almost a third (32 oer cent) of consumers are buying direct as a conscious decision to support the UK manufacturing sector. The most frequently purchased through the ‘direct approach’ are clothes (39 per cent), electronics (30 per cent) and food and drink (27 per cent) – as well as larger items such as household appliances (24 per cent) and furniture (22 per cent).

Encouragingly for manufacturers, consumers’ newly-formed habits show no signs of abating even after the pandemic, with more than half (52 per cent) saying they will continue to shop online as much as they do now, and 13 per cent predicting they’ll turn to e-commerce even more often.

Shoppers expect 29 per cent of their home deliveries to come via D2C in 2023, rising from 20 per cent in 2020, the research found.

These trends have seen 13 per cent of manufacturers set-up a D2C channel this year – each investing an average of £288,000 to do so – while 22 per cent have seen an increase in D2C sales.

However, despite the growing prominence of direct sales, the vast majority (98 per cent) of manufacturers also continue to work with wholesalers and retailers.

The move to D2C means that many manufacturing firms are creating jobs: 45 per cent of those introducing direct channels this year have recruited new staff across areas such as customer service.

In fact, there could be as many as 118,000 new job roles supported by D2C sales across the next three years: rising from 500,000 in 2020 to 618,000 in 2023. This is positive news for an industry where, on average, each company has lost 26 per cent of its revenue and 19 per cent of its headcount across 2020.

The logistics sector is also benefiting from the move to D2C.

Barclays estimates that around 85 million parcels and packages will be delivered to UK households this year thanks to D2C sales from manufacturers, and that this will rise by around 30 per cent to 110 million in 2023.

In fact, logistics firms predict that D2C contracts will account for 50 per cent of their annual revenue in three years’ time, compared to 39 per cent this year. To accommodate this growth, 45 per cent are leasing more vehicles, 42 per cent are employing more staff and 28 per cent are taking on more real estate.

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.”

He added: “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.”

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