Jul 08, 2023
This article is a collaborative effort by Dave Fedewa, Nicolas Jabs, Ramji Sundararajan, Kevin Wei Wang, and Stephan Zimmermann, representing views from McKinsey’s E-commerce Global Initiative, NeXT Commerce.
Direct-to-consumer (DTC) sales have been a significant growth driver across various industries. Companies are recognizing the multitude of advantages that come with this approach, such as significantly improved customer loyalty and higher margins. Appliance companies are no exception, and new data show they have a large opportunity to increase their share of DTC sales. Recent analysis reveals that while 32 percent of customers visit manufacturers’ websites during their purchase journey, only 1.6 percent make an e-commerce purchase from them. As a result, it is no surprise that 80 percent of companies in the appliance industry have identified increasing their share of DTC sales as a priority over the next three years.
The DTC channel, specifically e-commerce, has proven to be a vital growth driver across industries. Companies have experienced significant improvements in customer lifetime value and higher margins due to this channel, which also enables new subscription business models and additional services. McKinsey benchmark research indicates that companies across various sectors are seizing this opportunity, with high aspirations for the DTC channel in the future. The appliance industry can follow suit and capitalize on this trend.
Although 32 percent of customers visit manufacturers’ websites during their purchase journey, only 1.6 percent end up buying from them. This glaring disparity signals that companies must develop an improved and seamless DTC e-commerce experience to convert these high-intent visitors into buyers. Today, the top reasons shoppers visit a manufacturer’s website are to obtain product details, reviews, and service information.
For DTC e-commerce to become a significant channel for appliance sales, companies will need to meet consumers’ expectations of pricing benefits and delivery options on par with other retail channels. Services and accessories can also serve as differentiators, attracting customers with unique offerings compared to competitors and potentially fostering brand loyalty.
While DTC sales for appliances have experienced considerable growth, several barriers to further expansion remain, including channel conflict: suboptimal e-commerce capabilities, lack of technology, and limited supply chain capabilities. To overcome these obstacles, it is crucial to invest in modernizing the e-commerce experience and technology, as well as in cultivating stronger relationships with suppliers to ensure an adequate supply of goods. Taking these steps can raise the potential for DTC appliance sales to new heights.
Appliance companies must adopt a strategic and holistic approach to DTC initiatives to optimize their e-commerce success. Four factors have been identified as key to a successful DTC transformation:
Even with the above four key factors for successful DTC transformations, there is a series of critical questions that appliance companies will need to address and align around. These include:
Dave Fedewa is a partner in McKinsey’s Atlanta office; Nicolas Jabs is a partner in the Southern California office; Ramji Sundararajan is a partner in the Bay Area office, where Stephan Zimmermann is a senior partner; and Kevin Wei Wang is a senior partner in the Hong Kong office.
The authors wish to thank Alfredo Muchacho for his contributions to this article.Direct-to-consumer (DTC) salesDave FedewaNicolas JabsRamji SundararajanStephan ZimmermannKevin Wei Wang