Wake up and Smell the D2C COFFEE MARKET!
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Nearly 150 Million Americans start the day with at least one cup of coffee. And this is a whopping 1 billion across the globe! Like everything else, consumers expect that this ubiquitous drink is available at the click of a button. So if you are a coffee manufacturer trying to get into the online business, you are at the right place.
If you’re part of the coffee industry, D2C sales is an important new avenue to explore. Why? It is the segment that is the fastest growing in the coffee industry. It boasts strong revenues, high growth forecasts - and massive potential for further transformation based on industry trends.
In this blog, we will be looking at
D2C Coffee eCommerce market statistics
Coffee is known as a functional beverage, and younger drinkers love it! Pandemic-driven buying has boosted the coffee eCommerce market, and many consumers are now moving to niche D2C coffee brands that are catering to specific tastes.
Top categories driving D2C Coffee eCommerce sales
Convenience is driving category selection in the D2C Coffee eCommerce space.
There’s currently a lot of buzz around this industry. It’s growing fast in the coming five-year period, and is an exciting space. So why is D2C coffee eCommerce the segment to watch? We identified a few key drivers and challenges.
Key drivers of D2C Coffee eCommerce growth
We identified four major trends positively impacting the D2C coffee industry:
Post-pandemic growth
Since the start of the pandemic, work-from-home culture has driven eCommerce growth in the coffee industry. “App-based ordering saw its greatest increase in the earlier stages of the pandemic, spiking 63% from January 2020 to September 2020.” The eCommerce share of total retail sales is today about one percent higher (translating to USD 81.6 billion in eCommerce sales over the last four quarters) than it would have been without the post-pandemic surge in consumer usage of digital channels.
Other trends, such as sustainability and product innovation, further fuelled the growth of the D2C coffee eCommerce sub-segment.
Sustainability
Customers are increasingly conscious of sustainability in their purchase choices. D2C coffee brands can vouch for their own environmentally responsible farming, procurement, packaging and dispatch techniques, as they are in control of the product for the entire lifecycle from end to end.
Product innovation
There’s a lot of demand for new product offerings in the D2C coffee business. Product or packaging innovation to meet global tastes can serve as a differentiator in the busy D2C coffee sector. In the D2C coffee market, particularly in North America and Western Europe, these innovations include
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Payment innovation is also a growing sector. Since increasingly boutique coffee products are being innovated and purchased, prices are also rising, especially for niche brands and blends. The option of Buy Now, Pay Later (BNPL) is allowing coffee connoisseurs to look beyond their budget for the ideal packet of beans. “65% of US consumers who use or would use BNPL options say they are more likely to shop at stores that offer BNPL, and 21% of consumers are interested in using it to pay for groceries”.
Health-conscious customers
Health-consciousness of customers has enabled the growth of D2C curation subscription models. Such businesses ship coffee directly from niche roasters to consumers around the world. This isn’t just more convenient; it’s also more healthy, as it passes through fewer hands and there is less risk of contamination.
Challenges in Coffee eCommerce
We identified two major challenges to the?continued growth of the D2C coffee industry:
Regulatory compliance
Since it’s a consumable commodity, coffee is subject to food and beverage rules and regulations. When you’re selling online, this is especially tricky as rules could vary from jurisdiction to jurisdiction, and they cover everything from storage to transportation and even brewing! Since it contains caffeine, coffee is subject to an additional slew of regulations. Most of these are likely to require third-party certification, but some may require self-attestation. eCommerce brands selling globally need to track these regulations closely, especially D2C brands as they cannot depend on other organizations such as distributors to be knowledgeable about local regulations.
D2C business structure
What should your business structure be, and how will it impact your D2C coffee business? North America has been seeing a large number of D2C coffee startups burgeon in the past few years. That’s because the flexibility of the startup structure allows the business to launch, experiment and innovate more effectively. At the same time, since there is significant competition in the D2C coffee industry, many market players are looking at inorganic market expansion, including mergers and acquisitions, partnerships and regional expansion. The busy global D2C coffee market is expected to consolidate in the coming five-year period.
What is the future of the D2C Coffee eCommerce segment? The demand for easy-to-prepare, unique and sustainable coffee that’s conveniently available is growing rapidly over the next five years. If you’re a brand in the coffee space, it’s advisable to equip yourself to sell your product direct to your consumers, through your eCommerce website. Thanks to Ziffity's?Enterprise eCommerce focus, we’re well-placed to help you in this mission. Talk to our eCommerce implementation team today.
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