No. 317: The DTC Playbook Is a Trap

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

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

Highly venture-backed DTCs largely have two pathways to longevity and success. They can sell to an incumbent, much in the same way that Bonobos and Jet.com have sold to Walmart, or they can try their luck and go public. The incumbents are willing to overlook the less than ideal DTC economics because what they’re buying isn’t a business model, it’s ... See more