The DTC Party’s Over. What Happens Next?

What was innovative in 2010 is now table stakes. E-commerce paired with Instagram ads and a modern logo is no longer a novel experience. “DTC was an insight 10 years ago,” said Ben Lerer.

Now that a few high profile DTC brands have been punctured on the public market and the economy is crashing, VC-driven DTC business model will likely go into its own recession. Without DTC, there is an opportunity for a variety of smaller, more sustainably funded players who do not seek hypergrowth.

A lot of DTC brands, across categories, adopted “reviving the middle” strategy in the form of good quality items at affordable prices and excellent service. The downside of this model is that it’s costly, and most of these brands emulating it are VC-funded and not yet profitable. Scaling this model is also a challenge, as costs of supply, productio... See more

I think this drives at a more fundamental failing by Brandless in particular, that is likely true broadly: the company’s cost structure was completely unsuited for DTC. My strong suspicion — admittedly biased, given Stratechery’s business model — is that the biggest opportunities in DTC are in niches, and the best way to exploit those niches is by ... See more