The Debrief

Making Sense of the Direct-to-Consumer Reckoning


Listen Later

Mounting customer acquisition costs and a pressure to grow fast have made it hard to build a profitable DTC business. BoF deputy editor Brian Baskin and retail correspondent Cathaleen Chen join Lauren Sherman to analyse the past, present and future of the market. 

 

 

Background: 

 

About a decade ago, a number of flashy direct-to-consumer brands peddling premium products and promising to cut out retail’s middlemen emerged on the scene. Quickly, names like Warby Parker, Allbirds and Glossier attracted investor attention with battle cries of disruption, setting off a DTC boom. They managed to raise hundreds of millions of dollars, and garner valuations in the billions of dollars. However, the market as a whole has largely failed to live up to sky-high expectations. How does the model need to change? 

 

“Over the last year or so, investors are looking around and saying ‘wait a minute, you told us you’d get big enough and the profits would come. Where are the profits?’” said BoF deputy editor Brian Baskin. “Consumers have also looked around and said, ‘ok, I got my Allbirds sneakers — what else you got for me?’”

 

Key Insights: 


  • The pandemic exposed a huge flaw in the DTC model: scaling ultra-fast without the support of multi brand retailers is tough — and often requires heavy spending on customer acquisition. . In both private and public markets right now, investors have little patience for brands that aren’t profitable. 
  • Today, DTC brands are embracing other distribution channels in order to scale, or choosing to grow more slowly. 
  • Growing a profitable DTC brand can be done with tight control over spending, scrappiness and smart marketing. AYR — a basics brand that started in 2014 as a Bonobos subsidiary and was later taken over independently by its co-founders — is on track to hit $60 million in sales, having only taken around $6 million in funding.  

 

Additional Resources: 

 

  • Why the DTC Model Can Still Work
  • The Direct-to-Consumer Reckoning


 

Join BoF Professional today with our exclusive podcast listener discount of 25% off an annual membership, follow the link here and enter the coupon code ‘debrief’ at checkout. 

 

Want more from The Business of Fashion? Subscribe to our daily newsletter here.

 

Follow The Debrief wherever you listen to podcasts.


Hosted on Acast. See acast.com/privacy for more information.

...more
View all episodesView all episodes
Download on the App Store

The DebriefBy The Business of Fashion

  • 4.8
  • 4.8
  • 4.8
  • 4.8
  • 4.8

4.8

42 ratings


More shows like The Debrief

View all
The Glossy Podcast by Glossy

The Glossy Podcast

251 Listeners

Naked Beauty by Brooke DeVard

Naked Beauty

1,145 Listeners

The Business of Fashion Podcast by The Business of Fashion

The Business of Fashion Podcast

577 Listeners

Second Life by Second Life

Second Life

2,853 Listeners

The goop Podcast by Goop, Inc. and Audacy

The goop Podcast

6,749 Listeners

Let's Get Dressed by Liv Perez

Let's Get Dressed

279 Listeners

Gloss Angeles by Kirbie Johnson and Sara Tan

Gloss Angeles

686 Listeners

The Run-Through with Vogue by Vogue

The Run-Through with Vogue

700 Listeners

Retail Reborn from The Business of Fashion by The Business of Fashion

Retail Reborn from The Business of Fashion

10 Listeners

Morning Meeting by Air Mail

Morning Meeting

221 Listeners

Every Outfit by Every Outfit

Every Outfit

1,053 Listeners

The Who What Wear Podcast by Who What Wear

The Who What Wear Podcast

94 Listeners

Drive from The Business of Fashion by The Business of Fashion

Drive from The Business of Fashion

0 Listeners

Transforming Luxury from The Business of Fashion by The Business of Fashion

Transforming Luxury from The Business of Fashion

5 Listeners

Fashion People by Audacy | Puck

Fashion People

169 Listeners

Fashion Neurosis with Bella Freud by Bella Freud

Fashion Neurosis with Bella Freud

186 Listeners

The Good Buy by Harper's Bazaar

The Good Buy

70 Listeners

Aspire with Emma Grede by Emma Grede | Audacy

Aspire with Emma Grede

470 Listeners