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Almost half (48%) of US consumers ages 13 and older buy direct (DTC) brands, according to a survey [download page] by the IAB, with the remainder reporting that they stick exclusively to incumbent brands. So, what differentiates direct brand shoppers from incumbent brand-only shoppers?

First off, it may be helpful to know how the IAB defines a direct brand. “Direct brands create value through low-barrier, capital-flexible leased or rented supply chains with value extraction accomplished primarily through the direct relationships between the company and its end consumer.” Examples given by the research include Blue Apron, Casper and Peloton. By contrast, incumbent brands are those that typically gained market share through above-the-line advertising and distribution through retail outlets in the pre-digital era.

Direct brand shoppers tend to be younger than incumbent brand-only shoppers, with more than two-thirds (68%) being between the ages of 13-44 years old (including 44% being in the 13-34 years old age group). By contrast the majority (60%) of incumbent brand-only shoppers are 45 and older.

The idea that younger shoppers are more likely to purchase direct brands is perhaps backed by prior research by Yotpo which found that direct to consumer brands consider social media to be one of their top customer acquisition channels.

Direct brand shoppers also come from higher-income households. Roughly half (52%) of direct brand consumers have a household income of at least $50K, versus 37% of incumbent-brand only shoppers.

New consumers who mix-in direct brand purchases seem to be driven in large part by self-expression, with more than one-third (36%) saying they explore brands that reflect their style. Nonetheless, there are some surprises. For example, incumbent-only shoppers appear to look more for brands which solve a problem or serve a new purpose (42% vs 37%), which is often part of the differentiation strategy for disruptor brands such as Blue Apron (which looks to make meal prep easier and reduce food waste) or Peloton (which looks to replace traditional gym membership with an aspirational alternative).

Further data from the study can be accessed online here.

About the Data: The IAB report is comprised of results of a survey of 3,000 US shoppers ages 13 years-old and older who have engaged with or have awareness of direct brands.

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