DTC Brands: Is Wholesale Your New Growth Strategy?

Direct to Consumer (DTC) was originally conceived as a brilliant business model that saved customers money by eliminating the middle seller. With no store overhead, DTC brands could offer lower prices and often faster fulfillment. Today, DTC brands are no longer positioning their business model as their main selling point. Rather, they’re asking: where are our customers and how do we meet them there?  

Answering this question is leading many DTC brands to pursue wholesale opportunities with retailers — and conversely, many retailers are turning to DTC as additional channels.  

Meeting your customers where they are is the new growth strategy.  

And, it makes good revenue sense.  

What’s driving this shift?  

As a third-party logistics (3PL) partner, we have 30 years experience working with retailers, including DTC brands. We’re seeing omniexperience rise as the predominant customer expectation — i.e., customers are no longer differentiating by channels and instead consider it one holistic brand experience. This is fueling the integration of DTC brands into traditional retail channels. Customers want to buy their favorite products where it is most convenient for them — and post-pandemic, that is often instore as well as online.  

The point is that customers don’t care about the channel as long as they can purchase on the channel of their choice, when and where they want to. DTC brands that have a presence in major retailers offer customers the convenience of buying instore. Even if the price point is higher, customers will often pay for immediate fulfillment. It’s a win-win for the brand and the customer.  

Other DTC brands have found that pinning their revenue on a pure DTC play has run its course. The eCommerce era is mature and what made internet-era DTC models shiny and glossy no longer does. (Fun fact: DTC was originally marketed in print catalogs.) The idea of skipping the middleman to buy directly from a brand and having it shipped to your home was once novel, as were the cost-savings; but eCommerce customers have grown up and are more interested in value, convenience, price, and brand reputation.  

They simply don’t care whether a brand is DTC or not; they care about the outcomes they experience. So, DTC brands have more room to break the mold. Once a DTC brand’s reputation is solid, customers recognize it no matter where they find it. Many DTC brands are now at this point, and the concept of going where your customers are is timely and relevant.  

A multi-model strategy scales distribution. Some DTC brands see retail partnerships as valuable marketing, driving further business to their DTC model. Others are taking a dual-approach, splitting DTC and retail 50/50 and reaping profits from both. Others are moving from a pure DTC model to retail partnerships because their customer base is no longer willing to buy higher price point items online and want to experience the product in person, instore, before purchasing. Regardless of the reasons why they are shifting, growth is a driving factor.  

For many DTC brands, it really is grow or die; and expanding into new models is often the only way to add that growth. We also see expansion driven by changes in leadership.  

Many DTC brands are maturing in their leadership strategy, moving from founder-run to non-founder run and bringing on seasoned retail executives. This broadens the brand’s scope of opportunity and brings a perspective that often includes more distribution models. Once a brand reaches a certain stage, it’s often necessary for it to move its leadership beyond founder-only to a non-founder CEO-led model. The skills and vision that birthed the company and brought it to mature development are often not the skills and vision needed to move into enterprise growth. Experienced retail executives bring those skills and a mindset that opens new doors.  

Regardless of how a DTC brand decides to shift to multi-model, the question we hear most is: how does it change order fulfillment operations?  

Most DTC brands work with a third-party logistics (3PL) partner to provide order fulfillment and reverse logistics services. This reduces costs for DTC brands since they do not have to own their own fulfillment infrastructure. The 3PL houses inventory, processes orders, and handles all aspects of fulfillment, shipping, and returns.  

When DTC brands decide to expand to wholesale, they need to find out if their current 3PL can support B2B fulfillment. Radial has the infrastructure, experienced workforce, automation, and tailored solutions to meet DTC brands where they are and help them expand into B2B retail partnerships.   

When brands shift from DTC to shipping wholesale to stores, they need a single source of inventory and a solid inventory management system that can track and facilitate efficient shipping to stores, when and how they need it. Radial’s technology, partnerships, and experts enable our extensive shipping experience to retailers of all sizes. We stay current with retailer routing guides and rules so DTC brands always remain compliant, on-time, and in-full. Our flexible systems help brands navigate the complexities of wholesale fulfillment and support the unique needs of B2B operations. We also provide reporting and analytics with actionable insights to help steer the business towards multi-model growth. 

Working with an experienced DTC and B2B partner will help ensure success, as well as balance great customer experiences with profitability.   

If you’re a DTC brand considering moving into B2B, here are some questions to ask a 3PL:  

Moving from DTC into a multi-model approach can be a strategic plan for success. However, it hinges on having the right fulfillment operations in place to support it.  

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