The new growth forecast is based on a 17 per cent increase in online purchases, meaning shoppers will spend an extra £6.8bn on goods and services over the next three years (from 2020).
Although the increase in purchases from D2C retailers was anticipated, it is the speed of change from offline to online that is increasing significantly.
Around 80 per cent of all businesses in the UK are not investing in their online business. At the same time, UK manufacturers are under growing pressure to improve their digital capabilities to remain relevant in an increasingly competitive marketplace.
This rise in the use of D2C means that the number of manufacturers selling products online will rise from 12,100 to 34,300.
The report, produced by Yolt, says that over the next 20 years, there will be 8.4 million jobs associated with the UK’s manufacturing industry.
Manufacturers selling to customers outside of their own country will increase, reaching around 7.9 million people by 2023.
Businesses selling to customers overseas will increase from 1.7 million to 4.3 million people.
The proportion of the UK workforce associated with manufacturers in D2C channels will increase from 29 per cent in 2017 to 38 per cent by 2023.
The number of UK companies selling to international customers using the internet in D2C channels will increase from 778,000 in 2017 to 3.8 million by 2023.
This is expected to lead to a total boost in sales from D2C businesses of £17.6bn by 2023.
UK manufacturers selling internationally, will generate an extra £24bn to their turnover by 2023.
The report states that D2C retailing has the potential to create a large number of new businesses and jobs in the UK, as well as generate significant taxes to the exchequer.
Martin Tetley, CEO of Yolt, said: “The rise of D2C retailing means that manufacturers have the opportunity to gain new customers and help support their growth. Although this industry has seen changes in recent years, there is still plenty of opportunity for manufacturing businesses to grow their own channels and reach new markets.
“With the rapid pace of change in retailing, the government’s decision to double the Business Rates Relief to D2C businesses is a sensible step to provide a boost to businesses that offer good quality goods to consumers from their own stores.”
Manufacturers are taking advantage of the scale of the market and focusing on creating a competitive online retailing channel to grow sales.
Karen Lawrence, Yolt’s director of marketing, said: “The digital platform is enabling manufacturers to make better use of the market they are a part of. Now, manufacturers can use D2C to meet new customers in their homes.
In 2019/2020, about 54 percent of respondents 65 years old or older stated that they never shop online for food items. Among the 18 to 24 year-old respondents 41 percent stated to never shop online for food items. Online shopping for food was most common among respondents between 35 and 44 years of age. Here 71 percent shopped online while 29 percent never shopped online for food items.
“Manufacturers can focus their marketing on improving customer experience and providing more relevant products that sell well. Manufacturers selling through D2C channels are also benefiting from the use of digital technology to provide customer services that are faster and more personal.”
David Parry, procurement officer, South West Industrial Alliance said: “This report highlights how businesses throughout the South West are promoting their products online and in our marketplace to deliver great experiences for their customers. This includes using digital technology to transform the way they provide their services to the market.”
It is predicted that the number of UK manufacturers selling directly to consumers will surge from 1,200 now to 5,000 in 2023, boosting revenues by 41%.
More than 85% of UK businesses (covering more than 125 different types) currently sell via an online platform. More than half of the UK’s 815 manufacturers are expected to do the same by 2023.
Similarly, almost 80% of UK businesses (covering 21 different types of business) are expected to adopt digitalisation in the next five years.
A supply chain for tomorrow
The UK supply chain has evolved rapidly over the last decade with the growth of D2C and online retailing, coupled with stringent government initiatives to improve air quality, leaving UK manufacturers with significant challenges ahead.
Aware of the issues facing the sector, the report outlines a series of proposals to resolve these issues by improving health and safety, facilitating social trading and improving new product development.
Manufacturers need to adapt their supply chain if they want to stay competitive and not be left behind in the fast-changing landscape of retail.
Digitalisation is going to be the key to making this happen. By incorporating digital into their supply chain, manufacturers will be able to increase their business opportunities and product information will be on hand at all times.
This statistic shows the predicted market sizes of online grocery markets in selected European nations, from 2018 to 2023. The UK online grocery market is predicted to experience a large area of growth, expecting to rise from 14.6 billion U.S dollars to a value of 22.1 billion U.S. dollars.
The global manufacturing sector has a turnover of £3.9 trillion, of which the UK’s annual contribution is £315bn.
The UK’s manufacturing sector has transformed significantly over the last 30 years and is increasingly taking on new functions and challenges.
However, UK manufacturers also struggle to match up to the speed of internet growth and the ability to offer a bigger product range through D2C and online retailing.
More than half of UK manufacturers are using the internet for purchasing purposes, with three-quarters using online web services in some form. However, the report stated that these advances in technology have not been matched by the digital capabilities of the UK supply chain.
As leaders in recruitment for the UK FMCG industry, nobody understands the challenges that you face better than Circle Select. We know that your business is only as strong as its people. And we stop at nothing to find you the best talent within our sector. The true elite.
Contact us today
£60,000 – £65,000 Suffolk ACCA, ACA or CIMA accredited Food Manufacturing background Salary: £70,000 – £80,000. Wakfield 5 years minimum management experience in Food Manufacturing £40,000 – £50,000 South London Food manufacturing experience required