Transitioning from DTC to Wholesale Saved Our Brand

A singular focus on digital DTC was great early on, but it almost ended up putting us out of business.

Expanding distribution channels allowed us to achieve scale, leverage and profitability, but it was only possible by investing in Brand.

So you can get the buy-in to build the Brand that fuels successful channel expansion, here are:

1) Three things learned about shortcomings of DTC-only, and Brand building's essential role in successful retail expansion,
2) Three ways you can update your thinking on the topic, and
3) Three things you can do about this today

Let's do it

** Three things learned about shortcomings of DTC-only, and Brand building's essential role in successful retail expansion

1. The total market potential for DTC branded e-commerce is inherently limited – on average, about 5 to 7% of your business’s total market potential (e-com is 16% of retail. 66% of e-com is owned by big retailers)

2. Yes, this 5 to 7% is the easiest to access. With a creative product, you can spin up a site, run some ads, and boom you’ve got a business. You can grow quickly and to a decent scale. However, because of the scale limitations and the fact that the digital ecosystem is typically governed by paid direct-response promotion, building a highly profitable business on just this 5-7% is difficult

3. When a category buyer takes a look at their market, they're asking: Will this Brand add to the pie? Will it bring an audience and attract more buyers as opposed to simply displacing competitors by competing at the price and offer level? Is there a real Brand here?


Three ways you can update your thinking on the topic

1. With expanding distribution, the critical questions are: Why would retailers want to carry my product? What’s the unique value proposition of my Brand to a retail buyer? How does carrying my brand get that person promoted?

2. While it's great to 'get that email address' and 'own the transaction', it's less great to have your Meta acquisition cost go up 50, 100, or even 200%. Sure, retailers take their cut, but it doesn't 3x

3. While there are downsides to any channel, the potential scale of contribution dollars retail can generate helps power more product innovation and brand building


Three things you can do about this today **

1. Take a fresh look at your channel strategy. Does it still align with everything you've learned about your biz and the dynamics of digital-only customer acquisition?

2. Exceptional product IS the Brand. And, whether you like it or not, so are your DR ads, promos, manufactured urgency, and discounts. You're building a lasting impression with all of it. Ask yourself, "Is it the impression I want?"

3. Review the investments you're making to drive growth. Are they building the Brand where the answers to the category buyer's questions are a resounding YES?

It wasn’t until we realized this sneaky truth at Chubbies that we really found the path to sustained and systematic profit growth