The DTC Party’s Over. What Happens Next?

Many early DTC companies that got big quickly contracted out the manufacturing of the physical products they were branding and selling. But that didn’t serve them well in the long run.

For a while, the DTC playbook was golden: Start with a commodity product, something like dish soap or underpants. Give it a modern design and wrap it in minimalist packaging. Include a pastel background in the impeccably staged product photos, which splash across a Shopify-powered e-commerce site flanked by sans-serif fonts, punchy copy and a messa... See more

Brands playing the long game go to great lengths to become vertically integrated. That is, they own and control their production and supply chains. This requires plenty of upfront capital, to be sure, but the move plumps up a company’s margins and allows for quick product development and iteration.

“There’s been a complete shift, from what I’m seeing,” he said. “Acquiring a customer that is not break-even or profitable is almost as stupid as driving your car backwards on a highway. You just don’t do it anymore.”