Direct to consumer
Who is profit
D2C brands are not able to generate profits due to high acquisition costs
Digitally native vertical brands (DNVB) or Digital Direct to customer (D2C) brands are struggling to grow and generate profit. Consumer good brands and retailers have bigger reach and existing relationships. Pioneer DNVB brands Warby Parker and All Birds aren’t profitable after years of operation.
Warby Parker generated $393 million in sales in 2020. It grew by 33% last year. AllBirds reported $219 million in 2020. It grew the most in 2020. It lost $26mn. Target launched 11 brands in the past two years that each sell over $1B annually. Acquisition costs are as high as $29 (INR 1800) per order.
Jason Goldberg wrote in Forbes, “It turns out that owning an existing relationship with customers (in the case of incumbent retailers), or strong customer awareness and distribution (in the case of incumbent brands) are formidable advantages that DNVBs are struggling to overcome.”
Brunt, a D2C apparel brand for trade workers has tapped a niche market and succeeding. It tapped into the existing trend of trade workers building the social media content. It partnered with them, who had a dedicated fan following. Someone wise said, “Context is worth 80 IQ points”.
Worth reading: Brunt is succeeding Link
