If DTC is broken, is CTC the fix?

Direct-to-consumer (DTC) retail is not getting the positive buzz it did a few years ago — far from it. In fact, downturns among major DTC brands have some industry experts thinking that the model might be on its way out, and that companies that have grown accustomed to doing business as DTC outlets might have to make some changes to thrive.

In a recent Wired article, Shimona Mehta, managing director of EMEA at Shopify, pointed to the stock drops of Allbirds, Warby Parker and Stitch Fix as a sign the model may be broken. While inflationary spending pullbacks were cited as one set of speed bumps, a longer-term hurdle may be shifts in the digital advertising landscape, marked by Apple’s move to block third-party cookies.

To adjust, Ms. Mehta suggests that the DTC model must evolve into a new iteration of itself that she calls “connect-to-consumer (CTC).”

She writes, “This new approach is about taking many pathways to reach customers simultaneously: From social media to Web3, from online shopping to the high-street stores.”

A recent Fast Company article is more bullish about DTC’s future, though it reaches some of the same conclusions about the model’s shakeout and future success strategies. Though it does not call for a whole new acronym, it suggests that DTC brands diversify their marketing strategies instead of relying on one channel, like social media advertising. The article further advises brands to expect the DTC market to continue to grow at pre-pandemic levels into 2025, rather than at the accelerated speed at which it grew during the pandemic-induced bubble. And it anticipates DTC expanding into other business verticals and offering more subscriptions and flexible payment models.

Some DTC standouts that have experienced stock slides have already been moving to a more multi-platform approach. Both Allbirds and Warby Parker now maintain significant physical store footprints.

Post-pandemic shakeout, DTC appears to be picking up in some niche verticals, such as DTC alcohol sales. A recent survey found that 80 percent of craft spirit drinkers want to purchase the libations via DTC ordering, according to a press release.

• Direct-to-Consumer Is Dying. It’s Time for a New Paradigm – Wired
• Has Warby Parker reinvented its business model? – RetailWire
• Is Allbirds doing something wrong or something right? – RetailWire
• DTC state of the union – Fast Company
• 80% of Consumers Want to Purchase Craft Spirits via Direct-to-Consumer Shipping – PR Web
• Are DTC brands still primed for growth? – RetailWire