5 Reasons the Future Looks Bright for Direct Marketers
As we celebrate Summer and enter the last half of the year, let’s take a few moments to relish five reasons why the future looks exceedingly bright for direct marketers.
1: The Inevitable Growth of E-Commerce
The National Retail Federation (NRF) projects that U.S. eCommerce will grow 8 to 12 percent this year, representing some $427 to $443 billion in overall sales. More importantly, it’s worth bearing in mind two key facts: 1) all of the recent growth in overall retail sales has occurred online. As a result, thousands of brick and mortar stores are closing their doors (see below); and 2) those eCommerce forecasts only represent about 8 to 9 percent of total U.S. retail sales which Statistica pegs at $5.34 trillion. What does this mean? That with more store vacancies and a clear consumer movement towards e-tailing, online direct marketing has just begun to scratch the surface, and has incredible upside growth potential.
2: Brick and Mortar Retail’s Collapse
Credit Suisse forecasts that in the U.S. 8,640 brick-and-mortar store locations will shut their doors forever this year. In addition to the highly-publicized closures by Kmart, JC Penney, and Radio Shack, Sears just announced a second wave of closures. When you combine this news with the once mighty cataloguers sell-off of its venerable Craftsman brand, the anchor store chain seems all but dead on arrival. These projected closures represent an astonishing 147 million square feet of retail space. Less choice, and half-abandoned shopping centers – a phenomenon known as “dead malls” – are only likely to drive more online shopping, an outcome that will benefit direct marketers and fuel the eCommerce boom.
3: Logistical Efficiency
The speed with which leading e-tailers can deliver products continues to accelerate with next day and even same day delivery rapidly becoming the norm. Amazon’s use of private delivery services, the U.S. Postal Service, lockers, and drones – not to mention their move into brick and mortar retail – are evidence that they will use any and all available means to tackle logistical challenges. Meanwhile, such business services are being made available as part of the Amazon Marketplace, allowing smaller players to avoid managing their own logistics. Amazon’s efforts are setting the bar and the competition will have no choice but to follow suit. As the differential in time and convenience between driving to the local store to buy something and ordering it online and getting it delivered to your doorstep continues to shrink, direct marketing will undoubtedly win the day.
4: Political Turmoil
Donald Trump’s Presidential management is wreaking havoc in Washington D.C. as many key government positions remain unfilled. According to a tracking study mounted jointly by The Washington Post and Partnership for Public Service, out of 564 key positions requiring Senate confirmation, 379 posts lack a nominee as of this writing. What does this bode for the direct marketing industry? That any movement on key industry issues such as net neutrality and an Internet sales tax will likely remain unresolved in the near-term. The daily swirl of controversies and endless tweet-induced brush fires, not to mention the inability of the two sides of the political aisle to find any common ground, isn’t likely to act as a calming tonic for regulatory effectiveness. The result: marketers should be able to conduct business as usual until a semblance of stability is achieved, a situation that seems as likely as Chuck Schumer teeing off at Mar-a-Lago.
5: The Disintegration of Barriers to Entry
In category after category, any public resistance to purchasing product online has disintegrated, and this has fundamentally changed the way that consumers buy everything from automobiles to consumer electronics to vacations to packaged goods. When you think about it, the idea of buying shoes without trying them on makes no sense, right? But with Zappos generous return policies and free shipping both ways, consumers have grown accustomed to trading countless choices for the ability to touch and feel footwear before buying it. This sort of paradigm shift has set the table for other, similar changeovers. One example: according to an article in The New York Times, Amazon is due to eclipse Macy’s as the number one seller of apparel this year.
There are other trends that are a cause for optimism for the DR set including the growth in smartphone penetration and mobile sales, one touch payment automation, and generational predilections among digital natives and younger consumers who have no hang-ups about conducting commerce online. When summed up, they all point to the same thing: the direct channel floodgates are open for business, a notion that should have any direct marketing summer sunbather wiggling their toes in the sand.
Illustration Credit: iStock/emojoez
About the Author
Freelance writer specializing in Direct Marketing. Past chairman of ERA.
Phone: (503) 740-9065