Close up on feet wearing white Allbirds shoes and high white socks, Allbirds logo visible on top heel of one shoe.
Source: Facebook | Allbirds

A few years ago, direct-to-consumer (DTC) was the retail model everyone was talking about. It was bringing success not only to brands with fanatically engaged audiences like Nike, but small startups. It provided an unprecedented opportunity to go directly from an advertising interaction to a sale often without investing in a physical storefront.

Fast forward to today and sliding sales indicate that DTC might not be the panacea it appeared to be, although data by segment and timeframe paints a mixed picture.

DTC sales growth has slowed year-over-year, according to analyst Polly Wong, speaking to Forbes. Ms Wong, the president of the DTC agency Belardi Wong, sees customers in some spaces shifting back to stores after years spent shopping online.

DTC does, however, appear to be stronger than it was in 2021. May was DTC’s strongest month in 2023, with an increase in sessions large enough to offset lower conversions. The apparel category showed a 10 percent bump in DTC engagement and home décor was also up. Shoes and accessories remained flat.

Some experts have anticipated a DTC dropoff for a while. Wired reported last year that Apple’s new privacy protections raising digital advertising costs represented a threat to DTC’s effectiveness. Allbirds and Warby Parker’s stock drops were taken as further evidence of DTC slowing down.

DTC may also be impacted by an overall slowdown in e-commerce adoption after an unprecedented boom in online shopping brought on by the novel coronavirus pandemic.

The U.S. Census Bureau, at the end of May, found that while the e-commerce growth rate increased quarter-over-quarter in Q1 2023, to three percent, the overall growth rate was much lower than the 15 percent growth of e-commerce in previous pandemic-era years.

“E-commerce is not destined to naturally overtake in-store retail sales as the dominant sales channel, so it makes sense that its growth may slow down over time now that it’s attained a high level of adoption and sales,” Daniel Keyes, senior analyst of merchant services at Javelin Strategy & Research told Payments Journal, in a report discussing the Census Bureau’s findings.

BrainTrust

“DTC sounded simple and logical. It’s neither. Shopping and buying is based on wants and needs, knowns and unknowns, curiosity and trust.”

Jeff Sward

Founding Partner, Merchandising Metrics


“I think DTC is just like any other retail concept- it works very well for some brands, and for others, it isn’t how consumers want to shop/find the brand.”

Melissa Minkow

Director, Retail Strategy, CI&T


“DTC is definitely a viable business model. The challenge will be around how entrepreneurs innovate enough to provide a differentiated product to the market.”

David Weinand

Chief Customer Officer, Incisiv

Discussion Questions

DISCUSSION QUESTIONS: Is direct-to-consumer a viable business model? What can brands built on a DTC model do to continue thriving? 

Poll

Will we see more DTC businesses in the next five years or fewer?

View Results

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26 responses to “Has DTC’s Heyday Passed?”

  1. Ray Riley Avatar
    Ray Riley

    The temporary rebranding of what most call “retail” to “DTC” is the greatest zero interest-rate phenomenon (ZIRP) for the industry. As many have said when capital was cheap, padding top-line revenue with uncontrolled costs was okay. Now that the party is over, the market has rationalized the need for subscription pet toothbrushes, and a few of the former single-channel mattress companies which can now be found in Costco and elsewhere- just to name a few.

    Each business will have its own distribution model based on the category, average SKU value, size/weight of products (which impacts freight cost), and purchase frequency just to name a few, but the days of massive capital raises merely to fuel top-line growth are hopefully behind us until the next market cycle returns.

  2. Bob Amster Avatar
    Bob Amster

    DTC competes directly with the retailers that carry the same brand. It is hard to figure how the brand itself can do a better job of putting on Web site than retailers and marketplaces that have developed expertise in selling online. Brands can have one flagship location in each major city, such as Ralph Laurent opened in 1986 in New York City to showcase the brand, but not to compete with the retailers on which it relies for the majority of its distribution and sales.

    1. Steve Dennis Avatar
      Steve Dennis

      This is hard to line up with the success most of the iconic luxury brands are having, along with Canada Goose and Nike.

  3. David Weinand Avatar
    David Weinand

    DTC is definitely a viable business model. The challenge will be around how entrepreneurs innovate enough to provide a differentiated product to the market. Many Consumers want the latest, greatest fashion or brand, so there will continually be a market for DTC products. I believe the expectations around growth may have to be tempered as eCommerce is mature and stores are in vogue again but it’s doubtful that will slow the pace of hustlers trying to build a brand.

    1. Steve Dennis Avatar
      Steve Dennis

      DTC and e-commerce aren’t the same. Amazon is not DTC and a Warby Parker, Lulu, or Canada Goose store is DTC.

  4. Katie Thomas Avatar
    Katie Thomas

    Many DTC brands were successful due to an ability to target a niche set of consumers – which was part of the appeal as well (it was quality product that wasn’t everywhere). Apple’s privacy restrictions put a major damper on the ability to do this. On top of it, DTCs simply flooded the market and the options became too overwhelming for consumers. Many will still succeed, but it will likely be through retail partnerships or a very targeted, very loyal consumer.

    1. Doug Garnett Avatar
      Doug Garnett

      Historically, this is the truth about DTC: It can be an effective approach for selling to relatively small markets. Having worked in DTC since the early 1990s, it has never worked for true mass market goods with very large sets of buyers.

      Seems to me the problem here is that founders, investors, and VCs engaged in a group think process and avoiding the considerable DTC history which could have been learned. As a group, they convinced themselves that DTC would supply the vast returns their investments required… Of course, they never could have. Only retail can deliver those levels of sales and revenue.

      Thus, DTC is a solid approach for those willing to stay relatively small — but it’s not a valid approach for growing to massive scale. Why this was forgotten is beyond me. But, founders and VCs do have a tendency to ignore history and, in their haste, doom themselves to failed efforts.

  5. Jeff Sward Avatar
    Jeff Sward

    DTC sounded simple and logical. It’s neither. Shopping and buying is based on wants and needs, knowns and unknowns, curiosity and trust. And trust is established based on performance in real life. When performance and trust don’t materialize, then the returns start to fly. Attach the word “free” to returns and stand back. Customers love convenience but apparently don’t like paying for it. Now add in profitability for the retailer and the experiential aspect for the customer and it turns out that a well balanced offering of physical retail and ecommerce is what serves both the retailer and the customer in an optimal manner.

  6. Paula Rosenblum Avatar
    Paula Rosenblum

    DTC is just another part of the dialectic between brand managers and retailers. Retailers want to sell more private label, brands would love to disintermediate the retailers and keep all the margin.

    At the end of the day, selling DTC will be a part of most brands’ businesses, both through eComm and catalog, but stores will always remain in the mix. Always.

    1. Bob Amster Avatar
      Bob Amster

      Paula, I question if – in the macro – retailers can each be creative enough to market private label that has the same appeal as well-known and trusted brands. There is some room for that in limited places (Kirkland for one). But I believe that retail locations are the better place in which to sell known brands to customers. Brand retail locations (is that also DTC?) can be very good showcases for the brand’s products. Maybe, it is a well-balanced mix of all of above…

  7. Gene Detroyer Avatar
    Gene Detroyer

    As I have often stated when discussing DTC, I am not a big fan. Taking it to an extreme, why should I go to a differnet site or store to purchase what I might want? As a shopper, I am interested in just one place to go that will give me the most choice.

    From a business strategy POV, why should I limit the eyeballs that see my products?

    I admit I use one DTC site, NIKE—the reason why might give a hint to DTC strategy. I can customize my sneakers—red uppers, with a black swish and my initials on the back flap. The customization gave me more than 15 choices, from soles to laces. Cool? And even cooler, I gave a customizing gift certificate to my sneakerhead grandson.

  8. Phil Chang Avatar
    Phil Chang

    I think that DTC as a single, stand alone channel is weak right now. Shipping costs are quite expensive right now, so this impedes DTC from being very compelling. it used to be free shipping if you spend $50, most Ecom websites have upped that number to $90 or $100. This might be fine for higher dollar items, but if you sell smaller dollar ring items, consumers will struggle to build such a large basket at one single DTC outlet.

    DTC brands need to start thinking omnichannel – potential partners that are complimentary where you can sell their items and they can sell yours. Bricks and mortar partnerships to cut down shipping costs and make the product available for pickup are very good options for most brands as a start.

  9. Steve Dennis Avatar
    Steve Dennis

    DTC and e-commerce are not the same. Amazon is not DTC and a store operated by a vertically integrated brand is DTC. Second, ff course DTC is a viable business model. There are many retailers that have been around for a long time (AE, Lululemon, etc, etc.) that are fabulously successful with an exclusively or nearly exclusive direct-to-consumer model. And there are many benefits to pushing toward more direct to consumer, mostly owing to better control of the consumer experience and bypassing wholesale to be able to address and interact with consumers on a one-to-one basis. The challenges in DTC are largely in the DNVB space where many bad assumptions were made on the part of many, first, that you could readily build an online only brand and then second, that wholesale was automatically a bad word. Lastly the narrative on Nike bailing on DTC is very clearly nonsense.

  10. Nikki Baird Avatar
    Nikki Baird

    “DTC” has become shorthand for going to market in digital channels – yes, in direct relationships with consumers, but for quite a while it meant eschewing stores for Instagram. That model worked – maybe – when customer acquisition in those digital channels was cheap and when “The Algorithm” had room for organic reach. And it also existed when VC money was basically free and everyone cared about market share and eyeballs over profitability.

    In that context, DTC is done. Customer acquisition is not cheap, and in fact I have heard rumblings that the store is now a cheaper acquisition channel (but requires capital). Algorithm-driven social media companies have found ways to close off the organic reach and replace it with pay-for-less audience exposure (less thanks to Apple and privacy). And VC money has dried up or comes with a greater emphasis on a product “platform” for category growth and dominance, and EBITDA and profitability over market share. Definitely we will see “one hit wonder” product-based companies that are at the tail end of this boom dry up and return to dust. Definitely we will not see a Glossier or a Bonobos or a Warby Parker of the future – yes, there will be brands that emerge, but the path these companies took to get there is like a tributary in a river delta – here today, gone tomorrow. Will it come back again? I doubt it. The market has matured to incorporate a lot of the learnings of how those companies became successful and arbitraged it out so that the “DTC approach”, such as it was, no longer is differentiating.

  11. Neil Saunders Avatar
    Neil Saunders

    The DTC halo has slipped. More cautious consumers, a fight-back by mainstream retailers, intense competition, higher customer acquisition costs, and greater scrutiny from investors have all piled on pressure. The problem isn’t so much that DTC has become irrelevant. It’s more that many in the space have weak or non-existent margins and tougher questions about the pathway to profitability are now being asked and the cost of subsidizing losses is significantly higher. This has left some scrambling to reduce costs, restructure, and change the way they do business.

  12. Katie Riddle Avatar
    Katie Riddle

    DTC will continue to be a viable channel for small and/or new brands to reach niche audiences without the hassle of heavyweight distribution models. There will reach a point where a brand might need to grow beyond DTC, but it’s a good entry point.

  13. Melissa Minkow Avatar
    Melissa Minkow

    I think DTC is just like any other retail concept- it works very well for some brands, and for others, it isn’t how consumers want to shop/find the brand. The DTC world will constantly be recalibrating as new brands emerge and older ones struggle, but that doesn’t mean it’s not relevant anymore.

  14. Ricardo Belmar Avatar
    Ricardo Belmar

    As with so many things in retail, DTC is not a zero-sum game. It works for some, very well for others, and not so much for yet others. What does this tell us? That DTC is one part of a larger strategy in reaching your customer where and how they want to buy from you. DTC is a viable model for startup brands to find their audience. However, what most of these DNVBs have found dis that you hit a ceiling. Customer acquisition costs are too high now to make this a long-term singular strategy. DNVBs need other channels besides their own e-commerce site. The “easiest” channel for them to pursue – get into other retailers’ stores. In some cases, the answer is open your own stores, but that’s a long-haul strategy that might not work for every DTC brand. The recent “noise” – and it is noise – about Nike pulling back on their DTC strategy is in my opinion just click bait. These reports assume that this was short-term thinking by Nike. It wasn’t. They pushed for a stronger DTC mix, achieved an increase in share that way, and now that they find themselves in possession of excess inventory, they need more retail partners to move that merchandise. It’s a logical business decision. Does that mean Nike doesn’t want a DTC strategy any longer? No, of course not.

  15. David Slavick Avatar
    David Slavick

    DTC is fueled by a business wanting to have a direct relationship with the buyer and improve margin on goods sold. Plus with direct dialogue it can inform future product and services development. There is no reason for it to slow down as a progressive trend. What can cause a limitation is the cost to serve – separate channels, fulfillment, demand to write off shipping cost in order to get the transaction, rewards/discounts for engagement as an incremental expense not traditionally in the business model and so on. CPG or FMCG will always want to go direct to create brand preference vs. having to always compete at the shelf with no direct consumer dialogue.

  16. John Karolefski Avatar
    John Karolefski

    I agree with the post that DTC is an ideal entry point for small and/or new brands, which have difficulty getting into stores. As such, DTC will be with us for a long time.

  17. Kai Clarke Avatar
    Kai Clarke

    We are in a DTC shift. DTC still offers lower costs, lower overhead, and better, more accurate marketing. It only has to overcome the logistical issues and costs to ensure its survival. This will happen as we see better roll-out of autonomous vehicles, common-bound delivery destinations (drop boxes) and bundled freight sharing. Leaders like Amazon and Wal-Mart are pushing the envelope of performance vs. costs and consumers will invariably be the winner.

  18. Kenneth Leung Avatar
    Kenneth Leung

    DTC looks good on paper for manufacturers when they have the cheap capital to invest, not all manufacturers can DTC efficiently and effectively. There is something to be said for shipping bulk to retailers and let them worry about stocking and merchandising. Even companies like Nike who spurned retailers have recently signed deals.

  19. Michael Zakkour Avatar
    Michael Zakkour

    I think DTC will remain an important part of the retail mix. It’s still a fantastic way to get new brands launched on the way to expansion into multi-channel driven growth. I also think DTC will find new life as it becomes part of the evolution of eCommerce into immersive digital commerce.

  20. Rameet Kohli Avatar
    Rameet Kohli

    Most of the strategic reasons that enticed brands to implement a DTC channel are still valid, so it isn’t going anywhere. On the other hand– doing a poor job of executing DTC is going away.

    The pandemic bubble masked a lot of sins and one of them was the idea that any popular brand could just throw up a web page and the money would roll in. They overlooked that dealing directly with consumers means they have to operate and behave like a well-run retailer or they will suffer. And that’s exactly what’s happening.

    Brands who understand they need to play a different role when operating a DTC channel can succeed. But the days of ‘post it and they will come’ have evaporated.

  21. Nicola Kinsella Avatar
    Nicola Kinsella

    DTC is just getting started! And it’s an important part of the mix because it gets brands closer to the customer, gives them more customer data, and more control over the customer experience. Not to mention a boost in margins. But successful brands will use DTC as a strategic part of their distribution strategy, not as an alternative to other distribution channels.

    Another reason I believe DTC will continue to be important in some categories, will be in reaction to the future EU regulations around sustainability. These will require brands doing business in the EU to make their products ‘repairable’ and offer spare parts, rather than the disposable/replacement model that exists in many categories today. It’s likely that many of these parts would be available directly from the brand rather than retailers, particularly in the early days before demand is well understood.

  22. Anil Patel Avatar
    Anil Patel

    I’m intrigued! By Direct-to-customer (DTC), are we talking about retailers who only sell through online platforms? If that’s the case, I reckon the view that DTC should be expanded beyond one-dimensional sales approaches. DTC retail can be followed through any sales channel, such as physical stores, eCommerce, or even social media, as long as the same company is running the show and no middleman is involved.

    In my opinion, the notion that DTC’s peak has passed simply does not ring true. It’s quite evident that customers’ buying behaviors have changed over time, so retailers will just have to adapt their DTC strategy to meet these expectations. Since customers want a consistent shopping experience across all platforms, retailers can reach out to them more efficiently by incorporating “omnichannel” retailing into their business. Within an omnichannel setup, customers can shop or return their purchases from anywhere, whether it’s a store, a website, or a mobile app.

26 Comments
oldest
newest
Ray Riley
Ray Riley
1 month ago

The temporary rebranding of what most call “retail” to “DTC” is the greatest zero interest-rate phenomenon (ZIRP) for the industry. As many have said when capital was cheap, padding top-line revenue with uncontrolled costs was okay. Now that the party is over, the market has rationalized the need for subscription pet toothbrushes, and a few of the former single-channel mattress companies which can now be found in Costco and elsewhere- just to name a few.

Each business will have its own distribution model based on the category, average SKU value, size/weight of products (which impacts freight cost), and purchase frequency just to name a few, but the days of massive capital raises merely to fuel top-line growth are hopefully behind us until the next market cycle returns.

Bob Amster
Bob Amster
1 month ago

DTC competes directly with the retailers that carry the same brand. It is hard to figure how the brand itself can do a better job of putting on Web site than retailers and marketplaces that have developed expertise in selling online. Brands can have one flagship location in each major city, such as Ralph Laurent opened in 1986 in New York City to showcase the brand, but not to compete with the retailers on which it relies for the majority of its distribution and sales.

Steve Dennis
Steve Dennis
  Bob Amster
1 month ago

This is hard to line up with the success most of the iconic luxury brands are having, along with Canada Goose and Nike.

David Weinand
David Weinand
1 month ago

DTC is definitely a viable business model. The challenge will be around how entrepreneurs innovate enough to provide a differentiated product to the market. Many Consumers want the latest, greatest fashion or brand, so there will continually be a market for DTC products. I believe the expectations around growth may have to be tempered as eCommerce is mature and stores are in vogue again but it’s doubtful that will slow the pace of hustlers trying to build a brand.

Steve Dennis
Steve Dennis
  David Weinand
1 month ago

DTC and e-commerce aren’t the same. Amazon is not DTC and a Warby Parker, Lulu, or Canada Goose store is DTC.

Katie Thomas
Katie Thomas
1 month ago

Many DTC brands were successful due to an ability to target a niche set of consumers – which was part of the appeal as well (it was quality product that wasn’t everywhere). Apple’s privacy restrictions put a major damper on the ability to do this. On top of it, DTCs simply flooded the market and the options became too overwhelming for consumers. Many will still succeed, but it will likely be through retail partnerships or a very targeted, very loyal consumer.

Doug Garnett
Doug Garnett
  Katie Thomas
1 month ago

Historically, this is the truth about DTC: It can be an effective approach for selling to relatively small markets. Having worked in DTC since the early 1990s, it has never worked for true mass market goods with very large sets of buyers.

Seems to me the problem here is that founders, investors, and VCs engaged in a group think process and avoiding the considerable DTC history which could have been learned. As a group, they convinced themselves that DTC would supply the vast returns their investments required… Of course, they never could have. Only retail can deliver those levels of sales and revenue.

Thus, DTC is a solid approach for those willing to stay relatively small — but it’s not a valid approach for growing to massive scale. Why this was forgotten is beyond me. But, founders and VCs do have a tendency to ignore history and, in their haste, doom themselves to failed efforts.

Jeff Sward
Jeff Sward
1 month ago

DTC sounded simple and logical. It’s neither. Shopping and buying is based on wants and needs, knowns and unknowns, curiosity and trust. And trust is established based on performance in real life. When performance and trust don’t materialize, then the returns start to fly. Attach the word “free” to returns and stand back. Customers love convenience but apparently don’t like paying for it. Now add in profitability for the retailer and the experiential aspect for the customer and it turns out that a well balanced offering of physical retail and ecommerce is what serves both the retailer and the customer in an optimal manner.

Paula Rosenblum
Paula Rosenblum
1 month ago

DTC is just another part of the dialectic between brand managers and retailers. Retailers want to sell more private label, brands would love to disintermediate the retailers and keep all the margin.

At the end of the day, selling DTC will be a part of most brands’ businesses, both through eComm and catalog, but stores will always remain in the mix. Always.

Bob Amster
Bob Amster
  Paula Rosenblum
1 month ago

Paula, I question if – in the macro – retailers can each be creative enough to market private label that has the same appeal as well-known and trusted brands. There is some room for that in limited places (Kirkland for one). But I believe that retail locations are the better place in which to sell known brands to customers. Brand retail locations (is that also DTC?) can be very good showcases for the brand’s products. Maybe, it is a well-balanced mix of all of above…

Gene Detroyer
Gene Detroyer
1 month ago

As I have often stated when discussing DTC, I am not a big fan. Taking it to an extreme, why should I go to a differnet site or store to purchase what I might want? As a shopper, I am interested in just one place to go that will give me the most choice.

From a business strategy POV, why should I limit the eyeballs that see my products?

I admit I use one DTC site, NIKE—the reason why might give a hint to DTC strategy. I can customize my sneakers—red uppers, with a black swish and my initials on the back flap. The customization gave me more than 15 choices, from soles to laces. Cool? And even cooler, I gave a customizing gift certificate to my sneakerhead grandson.

Phil Chang
Phil Chang
1 month ago

I think that DTC as a single, stand alone channel is weak right now. Shipping costs are quite expensive right now, so this impedes DTC from being very compelling. it used to be free shipping if you spend $50, most Ecom websites have upped that number to $90 or $100. This might be fine for higher dollar items, but if you sell smaller dollar ring items, consumers will struggle to build such a large basket at one single DTC outlet.

DTC brands need to start thinking omnichannel – potential partners that are complimentary where you can sell their items and they can sell yours. Bricks and mortar partnerships to cut down shipping costs and make the product available for pickup are very good options for most brands as a start.

Steve Dennis
Steve Dennis
1 month ago

DTC and e-commerce are not the same. Amazon is not DTC and a store operated by a vertically integrated brand is DTC. Second, ff course DTC is a viable business model. There are many retailers that have been around for a long time (AE, Lululemon, etc, etc.) that are fabulously successful with an exclusively or nearly exclusive direct-to-consumer model. And there are many benefits to pushing toward more direct to consumer, mostly owing to better control of the consumer experience and bypassing wholesale to be able to address and interact with consumers on a one-to-one basis. The challenges in DTC are largely in the DNVB space where many bad assumptions were made on the part of many, first, that you could readily build an online only brand and then second, that wholesale was automatically a bad word. Lastly the narrative on Nike bailing on DTC is very clearly nonsense.

Nikki Baird
Nikki Baird
1 month ago

“DTC” has become shorthand for going to market in digital channels – yes, in direct relationships with consumers, but for quite a while it meant eschewing stores for Instagram. That model worked – maybe – when customer acquisition in those digital channels was cheap and when “The Algorithm” had room for organic reach. And it also existed when VC money was basically free and everyone cared about market share and eyeballs over profitability.

In that context, DTC is done. Customer acquisition is not cheap, and in fact I have heard rumblings that the store is now a cheaper acquisition channel (but requires capital). Algorithm-driven social media companies have found ways to close off the organic reach and replace it with pay-for-less audience exposure (less thanks to Apple and privacy). And VC money has dried up or comes with a greater emphasis on a product “platform” for category growth and dominance, and EBITDA and profitability over market share. Definitely we will see “one hit wonder” product-based companies that are at the tail end of this boom dry up and return to dust. Definitely we will not see a Glossier or a Bonobos or a Warby Parker of the future – yes, there will be brands that emerge, but the path these companies took to get there is like a tributary in a river delta – here today, gone tomorrow. Will it come back again? I doubt it. The market has matured to incorporate a lot of the learnings of how those companies became successful and arbitraged it out so that the “DTC approach”, such as it was, no longer is differentiating.

Neil Saunders
Neil Saunders
1 month ago

The DTC halo has slipped. More cautious consumers, a fight-back by mainstream retailers, intense competition, higher customer acquisition costs, and greater scrutiny from investors have all piled on pressure. The problem isn’t so much that DTC has become irrelevant. It’s more that many in the space have weak or non-existent margins and tougher questions about the pathway to profitability are now being asked and the cost of subsidizing losses is significantly higher. This has left some scrambling to reduce costs, restructure, and change the way they do business.

Katie Riddle
Katie Riddle
1 month ago

DTC will continue to be a viable channel for small and/or new brands to reach niche audiences without the hassle of heavyweight distribution models. There will reach a point where a brand might need to grow beyond DTC, but it’s a good entry point.

Melissa Minkow
Melissa Minkow
1 month ago

I think DTC is just like any other retail concept- it works very well for some brands, and for others, it isn’t how consumers want to shop/find the brand. The DTC world will constantly be recalibrating as new brands emerge and older ones struggle, but that doesn’t mean it’s not relevant anymore.

Ricardo Belmar
Ricardo Belmar
1 month ago

As with so many things in retail, DTC is not a zero-sum game. It works for some, very well for others, and not so much for yet others. What does this tell us? That DTC is one part of a larger strategy in reaching your customer where and how they want to buy from you. DTC is a viable model for startup brands to find their audience. However, what most of these DNVBs have found dis that you hit a ceiling. Customer acquisition costs are too high now to make this a long-term singular strategy. DNVBs need other channels besides their own e-commerce site. The “easiest” channel for them to pursue – get into other retailers’ stores. In some cases, the answer is open your own stores, but that’s a long-haul strategy that might not work for every DTC brand. The recent “noise” – and it is noise – about Nike pulling back on their DTC strategy is in my opinion just click bait. These reports assume that this was short-term thinking by Nike. It wasn’t. They pushed for a stronger DTC mix, achieved an increase in share that way, and now that they find themselves in possession of excess inventory, they need more retail partners to move that merchandise. It’s a logical business decision. Does that mean Nike doesn’t want a DTC strategy any longer? No, of course not.

David Slavick
David Slavick
1 month ago

DTC is fueled by a business wanting to have a direct relationship with the buyer and improve margin on goods sold. Plus with direct dialogue it can inform future product and services development. There is no reason for it to slow down as a progressive trend. What can cause a limitation is the cost to serve – separate channels, fulfillment, demand to write off shipping cost in order to get the transaction, rewards/discounts for engagement as an incremental expense not traditionally in the business model and so on. CPG or FMCG will always want to go direct to create brand preference vs. having to always compete at the shelf with no direct consumer dialogue.

John Karolefski
John Karolefski
1 month ago

I agree with the post that DTC is an ideal entry point for small and/or new brands, which have difficulty getting into stores. As such, DTC will be with us for a long time.

Kai Clarke
Kai Clarke
1 month ago

We are in a DTC shift. DTC still offers lower costs, lower overhead, and better, more accurate marketing. It only has to overcome the logistical issues and costs to ensure its survival. This will happen as we see better roll-out of autonomous vehicles, common-bound delivery destinations (drop boxes) and bundled freight sharing. Leaders like Amazon and Wal-Mart are pushing the envelope of performance vs. costs and consumers will invariably be the winner.

Kenneth Leung
Kenneth Leung
1 month ago

DTC looks good on paper for manufacturers when they have the cheap capital to invest, not all manufacturers can DTC efficiently and effectively. There is something to be said for shipping bulk to retailers and let them worry about stocking and merchandising. Even companies like Nike who spurned retailers have recently signed deals.

Michael Zakkour
Michael Zakkour
1 month ago

I think DTC will remain an important part of the retail mix. It’s still a fantastic way to get new brands launched on the way to expansion into multi-channel driven growth. I also think DTC will find new life as it becomes part of the evolution of eCommerce into immersive digital commerce.

Rameet Kohli
Rameet Kohli
1 month ago

Most of the strategic reasons that enticed brands to implement a DTC channel are still valid, so it isn’t going anywhere. On the other hand– doing a poor job of executing DTC is going away.

The pandemic bubble masked a lot of sins and one of them was the idea that any popular brand could just throw up a web page and the money would roll in. They overlooked that dealing directly with consumers means they have to operate and behave like a well-run retailer or they will suffer. And that’s exactly what’s happening.

Brands who understand they need to play a different role when operating a DTC channel can succeed. But the days of ‘post it and they will come’ have evaporated.

Nicola Kinsella
Nicola Kinsella
1 month ago

DTC is just getting started! And it’s an important part of the mix because it gets brands closer to the customer, gives them more customer data, and more control over the customer experience. Not to mention a boost in margins. But successful brands will use DTC as a strategic part of their distribution strategy, not as an alternative to other distribution channels.

Another reason I believe DTC will continue to be important in some categories, will be in reaction to the future EU regulations around sustainability. These will require brands doing business in the EU to make their products ‘repairable’ and offer spare parts, rather than the disposable/replacement model that exists in many categories today. It’s likely that many of these parts would be available directly from the brand rather than retailers, particularly in the early days before demand is well understood.

Anil Patel
Anil Patel
1 month ago

I’m intrigued! By Direct-to-customer (DTC), are we talking about retailers who only sell through online platforms? If that’s the case, I reckon the view that DTC should be expanded beyond one-dimensional sales approaches. DTC retail can be followed through any sales channel, such as physical stores, eCommerce, or even social media, as long as the same company is running the show and no middleman is involved.

In my opinion, the notion that DTC’s peak has passed simply does not ring true. It’s quite evident that customers’ buying behaviors have changed over time, so retailers will just have to adapt their DTC strategy to meet these expectations. Since customers want a consistent shopping experience across all platforms, retailers can reach out to them more efficiently by incorporating “omnichannel” retailing into their business. Within an omnichannel setup, customers can shop or return their purchases from anywhere, whether it’s a store, a website, or a mobile app.