Guest Post: Jason Greenwood: Is DTC Dead?
Is DTC eCommerce dead?
One could be forgiven for thinking so that's for sure.
According to a CNBC analysis of 22 publicly traded DTC companies:
"...more than half have seen a decline of 50% or more in their stock price since they went public. Notable companies in the space, such as SmileDirectClub, which went public in 2019, and Winc, a wine subscription box, have declared bankruptcy.
Casper, a direct-to-consumer mattress company, announced it was going private in late 2021 after a lackluster year-and-a-half of trading. Most recently meal kit subscription service Blue Apron exited the U.S. stock market after being acquired by Wonder Group."
What the market is saying loud and clear is that DTC is just a channel, NOT a business model.
And the free VC money show is over and customer acquisition at all costs is not a sustainable business model - ESPECIALLY for brands selling durable vs FMCG goods.
For most legacy DTC darlings to survive, they'll likely have to do at least 2 things:
- Establish strategic wholesale/B2B channels ASAP
- Develop physical retail store or co-selling models like the major cosmetics houses have within the major department stores (this is especially true given that 70-80% of all retail sales still happen in physical stores)
A good chunk of my inbound consulting queries are from DTC brands that are looking for ways to expand their business and de-risk their reliance on pure-play DTC eCommerce at the same time.
Strategic wholesale channels are one of the most well proven ways to do this, meaning B2B commerce (EDI, Punch-Out, self-service eCommerce etc).
If you're a DTC brand today and you're facing the same market headwinds as Allbirds and other famous DTC brands, we should talk about how strategic wholesale and B2B eCommerce could be a key source of new, more sustainable revenue for your business.