Methods

Qualitative phase method

Due to the limited availability of literature, a qualitative phase was first conducted to uncover the potential determinants of consumers' DTC shopping attitudes and intentions. A semi-structured, in-depth interview approach was utilized, as it allows researchers to go beyond a surface understanding of a phenomenon. A total of six participants were recruited at a university in the Midwest U.S., using a purposive sampling method. Four female and two male participants were recruited with an average age of 22.6, and the ethnicity of the participants were White/Caucasian (4), Hispanic (1), and Asian (1). In order to understand what motivates consumers to continuously shop from DTC brands, only the frequent shoppers (e.g., those who have shopped from multiple DTC brands or have made repeat purchases from a DTC brand) were recruited. The participants were frequent shoppers from the following DTC brands: Away, Glossier, Everlane, Allbirds, Reformation, and Warby Parker.

Each interview lasted for about 30 min, and the interview questions included: "What aspects about the brand/product do you particularly like?" "Why did you choose this brand over similar others?" Data collection continued until data saturation was reached, meaning that by the sixth interviewer, no new information was discovered. Recordings of the interviews were transcribed and organized for further analysis following the general procedures of thematic analysis. Three researchers analyzed the data inductively by identifying patterns using open coding. Codes were created as researchers labelled participants' answers that commonly emerged, which were then organized into different themes. Validity of the analysis was established through the peer evaluation process as more than one researcher conducted the analysis and corroborated the results.

Specifically, the theme of co-creation was insinuated by two interviewees (Away and Glossier) with phrases such as "customer making an impact on the business," "frequent communication," "personalization". Cost-effectiveness was alluded by all six interviewees with phrases including "affordable price" and "cheaper than traditional brands". Website attractiveness was identified by the answers of Everlane and Glossier shoppers, "the website looks clean/nice". Sustainability theme was created as the brand's commitment to "environmental sustainability", "transparent business practice," "use of natural ingredients" were echoed by Reformation, Everlane, and Glossier shoppers respectively. All interviewees mentioned the uniqueness of the brand and its products, such as unique "style", "design", and "packaging", which were collapsed into the brand uniqueness theme. The theme of social media engagement was identified after all shoppers cited social media as the main channel of brand's communication and where they were first introduced to the brand. Finally, the innovativeness theme emerged as Warby Parker and Away shoppers described the brands' "cool technology" and "features not available in traditional brands". In addition to the interview, a review of pertinent trade articles and industry reports was conducted to further support the identified determinants.


Determinant identification and hypotheses development

We identified eight determinants of the attitudes toward DTC brands, and of re-purchase intention from the qualitative phase: co-creation, cost-effectiveness, website attractiveness, sustainability, brand uniqueness, social media engagement, and brand innovativeness. Table 1 describes each determinant with examples.

Table 1 DTC Brand characteristics and examples

Characteristics Descriptions Examples
Co-creation Process of building experiences and resolving problems with joint efforts by customers and brands Everlane: Reflecting customers' feedback to change materials and redesign details of items
Glossier: Building the brand based on conversations the founder had with influential female figures on beauty products
Cost-effectiveness Unique business model to offer high quality products at reasonable prices without the presence of middlemen Warby Parker: Selling eyeglasses between $95 and $145 which is lower than the average price of branded eyeglasses ($263)
Gymshark: Selling products between $25 and $60 which is lower than high-end alternative fitness clothing competitor brands
Website attractiveness A website's sole store front role to communicate brand identity and retain customers through thoughtfully designed website interfaces, such as icons, colors, graphics, music, and page lengths Everlane: Website as only store front, which is perceived clean and aesthetic to consumers; highlights the brand's sustainability efforts
M. Gemi: Website entrance with a short clip that shows the brand's association with Italian craftmanship
Sustainability Eco-friendly and social activities embedded into a core of brand concept; providing transparent information about supply chain and pricing policies Reformation: Accentuating the brand's sustainability efforts through proactively sharing environmental impact of products and reporting on sustainability initiatives
Allbirds: Brand identity rooted in sustainability, such as measuring the environmental impact of their products, using natural and recycled materials, and funding external sustainability projects
Brand uniqueness Unique products and brand stories to differentiate from traditional brands; emphasis placed on the brand origin; product function/design specialization in niche categories Bonobos: Offering uniquely designed product (e.g., pants that conform to the natural shape of the waist for comfort)
Away: Minimalistic product designs with unique features like phone charging batteries
Social media engagement Social media often the primary channel for marketing; hyperactive brand-customer interaction through social media; customer's behavioral manifestations in social media beyond purchase as an online community Glossier:
1) Brand's Instagram and YouTube offers information of the brand and products
2) Consumers' sharing experience of products in the online community
Gymshark:
1) Turned fitness influencers into brand ambassadors
2) User generated contents, such as work-out videos, were shared on its YouTube channel to motivate other users.
Innovativeness Innovative business model, products, and brand storytelling in which consumers perceive brands as being able to provide new and useful solutions to their needs; incorporation of cutting-edge technology (e.g., augmented reality, virtual try-on) Warby Parker: Named on the list of innovative companies, highlighting technology of virtual try-ons

The first determinant is co-creation, which is the process of building experiences and resolving problems with joint efforts by customers and brands. Through direct interactions with customers, brands create ample opportunities to jointly create values through customized or co-produced offerings. As DTC brands interact directly with consumers, they can closely monitor customer feedback, and incorporate it into product development, allowing customers to co-create value. For instance, Everlane, a women's and men's apparel brand founded in 2010, to reflect customer feedback, changed the materials used for wool trousers to make them less itchy, and redesigned them by adding details such as belt loops and interior closures, as requested by their customers. For Glossier, a beauty brand founded in 2014, co-creation was embedded into the brand identity from its inception. The brand was built from insights gained from the hundreds of conversations the founder of Glossier had with influential female figures, such as fashion models and businesswomen, to profile their makeup cabinets and share their beauty tips on her blog, ‘Into the Gloss' that the founder started in 2010.

The interviews revealed that Glossier customers perceived the brand as attentive to customer opinions: "they're very into what the consumers say, even on just little things". An interviewee shared how she noticed on several occasions that improvements were made to the products based on customer feedback: "I got a lipstick kind of thing and they would fall out and it was cheap. So I figured a lot of people did that [would have a similar issue] and they changed the packaging for it". Unlike a firm-centric approach, co-creation is customer-centric because customers are treated as active contributors to the development of product and service offerings, as opposed to passive recipients. As a result, the co-creation process highlights the customer's point of view, and reflects their needs and wants, which often yields superior customer experiences. It was shown that co-creation leads to positive brand evaluations. For example, van Dijk et al. showed that customers perceived brands that offer co-creation opportunities as more authentic and sincere. In addition, co-creation was also shown to increase purchase intention, and behavioral loyalty. Thus,

H1:

Perceived co-creation will positively influence (a) the attitude toward DTC brands and (b) the DTC re-purchase intention.

Without middlemen and physical stores, DTC brands enjoy higher margins, and thus are able to offer high quality products at reasonable prices. Thus, cost-effectiveness is one defining competitive advantage of DTC brands. Warby Parker, an eyeglasses retailer founded in 2010, offers eyeglasses priced between $95 and $145, significantly lower than the average price of $263. Gymshark, a fitness clothing brand founded in 2012, is known for leggings with flattering shades, and they are priced between $25 and $60, significantly lower than high-end alternatives, which typically cost over $100.

Cost-effectiveness means that offerings are "good value for the money". That is, DTC brands' offerings have high perceived value or "consumer's overall assessment of the utility of product (or service) based on perceptions of what is received and what is given", relative to alternative offerings. It also means that they are not necessarily the cheapest but better options, as shown by a Glossier customer's comment: "I still prefer Glossier, but it's a little bit higher price point". Another interviewee's comment revealed how the trade-off between price and quality is low for Glossier: "It's really high quality for not super expensive stuff". This view was shared by customers of other DTC brands like Warby Parker: "They're way cheaper than any glasses that you can find" but "I've never seen that they were lower quality than any other glasses I bought". Similarly, an Everlane customer shared that "their materials are really nice just in general, and I said this before, they are really high-quality even for just a basic t-shirt," but "they are not that much more expensive". The same view was echoed by a customer of Away, a luggage brand founded in 2015: "Design was my primary concern when choosing my luggage brand, and with a similar design, then the durability and the material, Away offered the cheapest price". The interviews revealed that cost-effectiveness was one of the most cited reasons for patronizing DTC brands. This finding is consistent with previous empirical findings that showed perceived value's positive influence on brand attitude, customer satisfaction, and willingness to pay. Perceived value was also shown to increase purchase intention and the behavioral intention of loyalty. Hence,

H2:

Perceived cost-effectiveness will positively influence (a) the attitude toward DTC brands and (b) the DTC re-purchase intention.

Since most DTC brands operate purely online, websites are their only storefront. The role of a physical store's aesthetic design on shaping customer expectations and experiences is akin to a website's ability to attract and retain customers through thoughtfully-designed website interfaces, such as icons, colors, graphics, music, and page lengths. Thus, the websites are expected to play a big role in shaping the consumer perception of the brand, as shown by an Everlane customer's comment: "I really like the aesthetics of the brand and just even the way their website is laid out, and it's super clean". Another interviewee who also shopped with Everlane echoed this view: "I really like their website and their interface looks clean". Websites also help DTC brands convey their unique brand identity to consumers. For example, Everlane's website entrance emphasizes its sustainability and transparency efforts. Similarly, M.Gemi, an Italian shoe DTC brand, features a short clip showing its brand story of Italian craftmanship. Previous findings showed that aesthetically pleasing websites leads to more favorable brand attitude. Website attractiveness impacts subsequent consumer behaviors, leading customers to revisit the website, make a purchase, and repeat the purchase. Taken together:

H3:

Perceived website attractiveness will positively influence (a) the attitude toward DTC brands and (b) the DTC re-purchase intention.

Globally, corporate, social, and environmental sustainability have become increasingly an important criterion in consumer purchasing decisions. According to a Nielsen report, 73% of the respondents of a global survey said that they would definitely change their consumption habits to reduce their environmental impact. Cognizant of this demand, quite a few DTC brands embed sustainability into their businesses. Reformation, an apparel brand founded in 2009, tracks the environmental impact of each product in terms of water usage, CO2 emissions, and wastes, and shares this information on their website. In addition, the brand provides detailed information about all their sustainability initiatives, from using energy-efficient lighting and appliances in the offices, to partnerships with non-profit organizations dedicated to protecting the environment. Allbirds, a footwear company founded in 2014, takes a similar approach of measuring the environmental impact of their products, reducing the impact through the usage of natural and recycled materials, and offsetting the impact by funding external sustainability projects. The interviews revealed strong associations between some DTC brands and sustainability. A Reformation customer felt that "most of [DTC brands] have more of a mission connected with them. So if you're going to buy from Reformation, you know that it is sustainable". A similar view was shared by an Everlane customer: "[Everlane's products] are made ethically which I really like. Everlane puts the factories in which the items are produced on all of their things. You can actually look them up and the procedures that they go through". Empirical findings showed that more favorable attitudes toward socially responsible products lead to a higher willingness to pay. It was also found that consumers have a higher purchase intention toward companies with better environmental performance.

Of course, DTC brands are not the only companies that promote sustainability. However, unlike traditional retailers, for DTC brands, sustainability is built into their businesses at their inception and at the core of their marketing and branding, all of which lend more credibility and authenticity to their sustainability claims. DTC brands' credibility and authenticity are expected to negate the increasing consumer skepticism toward corporate sustainability claims. Previous findings showed that if consumers perceive the company's sustainability initiatives to be intrinsically motivated, they evaluate the company more favorably. Similarly, if consumers perceive the company's commitment to sustainability more credibly, they have more favorable attitudes towards the brand, and higher purchase intention. Therefore,

H4:

Perceived sustainability will positively influence (a) the attitude toward DTC brands and (b) the DTC re-purchase intention.

Consumers' perceived brand uniqueness refers to "the degree to which customers feel the brand is different from competing brands - how distinct it is, relative to competitors". With a strong point-of-difference, consumers can easily notice, recognize, and recall a brand over other competing brands. Well-positioned DTC brands compete with other brands by differentiating their product offerings. Bonobos focuses on men's pants with signature curved waistbands that conform to the natural shape of the waist for comfort. Similarly, Allbirds is known for their unique woolen running shoes, made of eco-friendly and machine-washable materials, specifically designed for sockless wear. As such, the DTC brands established their niche positions by offering uniquely designed products, compared to traditional brands. Interview respondents commented on why they purchase DTC products: uniqueness. For Allbirds' product, one said that "I knew I didn't want like normal shoes. I wanted something that was unique. That is why I really like them [Allbirds]". Similarly, for Warby Parker, "They're more stylish and more unique I would say, than most glasses you can find".

In addition to the unique product design, DTC brands differentiate themselves from traditional retailers by highlighting their unique brand stories. For example, several DTC brands offer digital content that creates brands' stories on their websites, such as the origin of brands and sustainability efforts. M.Gemi has incorporated the Italian craftsmanship concept behind its origin and brand story. Glossier shared the owner's entrepreneurial story behind the brand's birth, and the story has given the brand its unique identity. Such sentiment was echoed during the interview. One respondent shared how she was impressed by the Glossier founder, Emily Weiss: "She's a really good role model. I love learning about her. She supports women in business… And I think that's cool. Just hearing her story it's really inspirational… That's kind of what I want to do. The way she persevered against people saying no". Another respondent on the Glossier's packaging that maintains the brands' unique atmosphere: "I really liked the packaging that they have for Glossier. They have positive messages and they always put free makeup bags and stickers and samples and it's in a really cute pink box… [The messages say] have a nice day, be you, just stay beautiful, those kinds of typical things but they're still nice to see". Previous literature found that the brand uniqueness is important for a brand to succeed.

Consumers' desire to differentiate themselves from others can be fulfilled by possessing unique products. Thus, when consumers purchase a unique product, the value of the product increases. As the value of the product increases, consumers' perceived product uniqueness results in higher purchase intention. Similarly, unique brand positioning can lead to a sustainable competitive advantage, and a compelling reason to purchase the brand. More specifically, brands with distinctive stories have higher brand trust, and brand uniqueness is shown to increase re-purchase intention, given greater brand equity. Therefore,

H5:

Perceived brand uniqueness will positively influence (a) the attitude toward DTC brands and (b) the DTC re-purchase intention.

Social media is a critical communication tool for DTC brands to interact with their consumers, conveying both promotional and informational messages, and offering a platform for their customers to communicate. One example is Glossier. Information shared by the brand and its consumers through social media has helped increase the brand and product awareness. One interviewee stated about Glossier: "I followed them on Instagram and I got all the information from Instagram". She continued to say that she learns ideas on how to use Glossier products from social media: "I remember watching these YouTube videos, get ready with me and they were kind of shows [that teach] you how to use their products… And then when they come out with new launches, they have a really good way of marketing it and showing different ways to use them. So it makes me actually really want to buy it". Glossiers' consumers within the online community also guided her to become more interested in Glossier products. The fellow consumers' experiences along with Glossier's own advertisements create synergy: "I saw someone else have a really full lip with gloss and then I was like, oh that looks really nice. So I asked them about it and they said Glossier. And then, after that I saw more advertisements on Instagram and Twitter. Because all of the Instagram pictures and the marketing looked really nice and just natural and glossy". Another example is Gymshark as the brand turned existing fitness influencers into their brand ambassadors. These ambassadors partake in brand storytelling by sharing work-out videos through YouTube channels to motivate other users. These social media engagement behaviors, which are a customer's behavioral manifestations in social media beyond purchase, occur actively among DTC brands' consumers. The online community serves as a virtual space where the community's members can also share friendship, recreation, common interests, and social support, as well as information. Consumers who form a community and receive information, desire to continue these relationships and are likely to commit to the brand more. Direct relationships between social media communications, whether they are firm-created or user-created messages, and brand attitude have been recognized in prior research. Additionally, consumers who participated in an online community have shown greater repurchase intentions for the brand. Thus,

H6:

Perceived social media engagement will positively influence (a) the attitude toward DTC brands and (b) the DTC re-purchase intention.

Brand innovativeness is "the extent to which consumers perceive brands as being able to provide new and useful solutions to their needs". Based on a unique business model of directly reaching consumers, DTC brands provide distinctive features that are not typically offered by traditional brands. The innovation can include business models, products, storytelling, and all the other brand activities. Indeed, Warby Parker and Everlane have been named on the list of Fast Company's "World's Most Innovative Companies". The interviews confirmed that consumers perceive that DTC brands are innovative, especially in terms of technology. For example, a Warby customer highlighted the emerging technology of virtual try-ons, and how this is the best part of the brand: "It's really cool to see all of the features they have on their website. You can take a picture of your face and try them on virtually. I think the best part of the brand is that you can do the trial before you actually commit to buying them".

Earlier studies revealed that greater consumers' perceived brand innovation leads to positive consumers' responses, such as consumer satisfaction, brand loyalty, and brand credibility. It was also found that as perceived brand innovativeness enhances brand credibility, it can subsequently increase desire to purchase. Furthermore, when consumers consider the brand to be innovative, they are likely to form positive attitudes towards the brand. Accordingly,

H7:

Perceived brand innovativeness will positively influence (a) the attitude toward DTC brands and (b) the DTC re-purchase intention.

In the context of online shopping, previous findings showed a positive relationship between attitudes and re-purchase intentions. As such, it is reasoned that consumers with favorable attitudes toward DTC brands are more inclined to buy from DTC brands again. More formally,

H8:

Attitude toward DTC brand will positively influence the DTC re-purchase intention.


Quantitative phase method

The purpose of the quantitative phase was to test the hypothesized relationships that were developed in the qualitative phase. Data was collected from a total of 210 U.S. consumers aged 18 years and older, via a professional online survey company. A stratified sampling method was used to ensure even representation of age and gender groups. A list of 20 popular fashion DTC brands were shown to respondents, and only those who have previously purchased from one or more DTC brands participated in the survey. When answering the survey, respondents were asked to recall their shopping experience with the DTC brands. The respondents' demographic information is provided in Table 2.

Table 2 Sample demographics

Variable N %
Gender
 Male 105 50.0
 Female 105 50.0
Age
 18–25 34 16.2
 26–35 49 23.3
 36–45 51 24.3
 46–55 34 16.2
 > 56 42 20
Education
High school or less 29 13.8
College 139 66.2
Graduate School 42 20.0
Individual income
 < $20,000 22 10.5
 $20,001–$40,000 39 18.6
 $40,001–$60,000 45 21.4
 $60,001–$80,000 32 15.2
 $80,001–$100,000 21 10.0
 > $100,001 51 24.3

The latent variables were measured by using multi-item scales that were adapted from previous studies. The measurement items are summarized in Table 3. All of the items were measured using seven-point Likert-type scales (1 = strongly disagree and 7 = strongly agree). In order to reduce the issue with common method bias, the independent and dependent variables were presented separately in random order, reducing the possibility of detecting patterns and subjectively responding to variables. Since the scope of this research was to mainly measure the significance and relative strength of the determinants on the two endogenous variables, the analysis did not assess the interdependencies between the determinant variables.

Table 3 Measurement items and exploratory factor analysis results

Items Factor loadings AVE Composite reliability Cronbach's alpha
Co-creation   .658 .906 .870
 DTC brands have interactive feedback mechanism between customer and business .793      
 DTC brands offer personalization features .828      
 DTC brands have empathy with customers' problems .810      
 DTC brands are very concerned about my welfare .809      
 DTC brands allow me to provide direct input to the brand .819      
Cost-effectiveness; Lamberton and Rose   .846 .916 .820
 For the given price, I rate the DTC brand's offer as good .920      
 For the given quality of the DTC brand's product, I rate the price as good .920      
Website attractiveness   .718 .939 .921
 I find the DTC brand's website attractive .770      
 I find the DTC brand's website appealing .858      
 I find the DTC brand's website engaging .879 .    
 I find the DTC brand's website gets me excited .839      
 I find the DTC brand's website fun .870      
 I find the DTC brand's website entertaining .865      
Sustainability   .721 .940 .923
 DTC brand adopts environmentally friendly production practices .837      
 DTC brand's clothes are produced with a minimum effect on the environment (e.g., no gases, low carbon footprint) and animals .860      
 DTC brand's clothes are made from sustainable materials such as organic cotton and not be synthetic .867      
 DTC brand's products are made under safe and healthy working conditions, without child labor or sweatshops .842      
 DTC brand pays fair wage for factory workers and raw material suppliers .865      
 DTC brand gives back to the communities in which it does business .829      
Brand uniqueness   .878 .956 .931
 I perceive the DTC brand as highly unique .930      
 The DTC brand is one of a kind .943      
 The DTC brand is really special .938      
Social media engagement (Baldus et al.; Lamberton and Rose   .822 .970 .964
 DTC brand's social media is my critical connection for new and important information about the brand and its products .893      
 DTC brand's social media keeps me on the leading edge of information about the brand .915      
 When I want up-to-date information about this brand, I look to DTC brand's social media .902      
 DTC brand's social media is the best way to stay informed about new developments with this brand .903      
 Engaging in DTC brand's social media allows me to be part of a group of like-minded people .913      
 Engaging in DTC brand's social media allows me to belong to a group of people with similar interests .918      
Innovativeness   .680 .937 .921
 DTC brand is dynamic .812      
 DTC brand is very creative .836      
 DTC brand launches new products and creates market trend all the time .826      
 DTC brand is a pioneer in its category .818      
 DTC brand constantly generates new ideas .859      
 DTC brand has changed the market with its offer .794      
 DTC brand is an advanced-forward looking firm .827      
Attitude   .759 .926 .894
 All things considered, I find shopping from DTC brands to be a wise move .820      
 All things considered, I think purchasing from DTC brands to be a positive thing .893      
 All things considered, I think shopping from DTC brands is a good thing .883      
 Overall, buying products from DTC brands makes sense .888      
Re-purchase Intention (Bhattacherjee)   .840 .955 .936
 All things considered, I expect to continue purchase from DTC brand often in the future .882      
 I can see myself buying from DTC brand more frequently in the future .928      
 I can see myself increasing my purchase from DTC brand if possible .938      
 It is likely that I will frequently buy products from DTC brand in the future .918