What's in Store: State of the direct-to-consumer market

Retail Retold

Outline

Challenges in funding direct-to-consumer products due to market changes and investor caution.

• Funding for direct-to-consumer products is challenging, with a 97% decrease in venture capital funding in 2022 compared to 2021.

• Chris Ressa notes that this shift in funding is changing how brands are coming to existence, with DTC brands needing to be more creative in their financing strategies.

• Ressa and Iacono discuss the decline of institutional investment in DTC brands, citing higher costs and a less favorable IPO market.

• They also mention the challenges of scaling DTC brands during a slowdown in discretionary spending, particularly for lifestyle-related products.

Consumer spending habits and the challenges of scaling DTC brands.

• Ressa and Iacono discuss the impact of the pandemic on consumer spending, with a shift towards more essential items and away from discretionary spending.

• They also highlight the success of Stanley, a brand that has managed to penetrate various demographics through effective marketing.

• Iacono and Ressa discuss the challenges of selling products through various channels, including brick-and-mortar, online, and omnichannel.

• They argue that there is no one-size-fits-all approach to selling products, and that the right channel depends on the product and market.

• Ressa argues that eliminating the middleman in retail can be challenging and expensive.

• She suggests that leveraging existing brands like Target and Walmart can be more achievable for DTC brands.

Direct-to-consumer (DTC) retail models, challenges, and potential future changes.

• The speaker believes that physical retail should be the starting point for many businesses, with e-commerce added later for omnichannel presence.

• The speaker agrees that the traditional model of creating a product, building an e-commerce website, and relying on customer acquisition costs may not be the most effective approach.

• Ressa suggests that DTC startups may need to reconsider their approach, following the success of brands that started in physical stores before expanding online.

• Iacono agrees, noting that history repeats itself and that the old concept of starting in physical stores before expanding online may become new again.

• Ressa and Iacono discuss the challenges of launching a successful DTC brand in the retail market.

• They highlight the importance of considering alternative channels, such as wholesale and omni-channel sales, in addition to DTC.