What happens when D2C brands grow up?

By Image 4, posted on December 12, 2019

 

In the beginning, retail industry disruptors went direct to the consumer in a stunning repudiation of everything that previously existed, and it was the wave of the future. Then those brands went and disrupted their own models by opening their own stores, still forsaking the conventional wholesaling model in order to maintain control of the entire distribution process. Now, the disruptors are part of the disrupted.

Image 4's Insight

Fully digital direct-to-consumer (D2C) merchandising has, apparently, seen its heyday. Although it seems like only a scant few years have passed since D2C brands began to subvert the traditional retail sector, the trend is already reversing. Digitally native brands such as Warby Parker have been opening more stores, and many are partnering with larger brick-and-mortar retailers (see Casper and West Elm). They’re doing this because they’ve grown—and the digital-only D2C business model imposes a growth ceiling, partly because of the high customer acquisition cost (CAC). Brands have no choice: if they want to continue scaling up, they’ll need brick-and-mortar retailing. We’re eager to see how D2C companies will handle the challenge of bringing their digital branding into the physical world.

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