As more shoppers make the switch to online retail, brands now have the task of creating exceptional, customer-led online experiences to differentiate themselves in a crowded marketplace. Consumers are seeking out more authentic connections and personalized experiences, and the brands that win are the ones who can turn those connections into loyalty.
The direct-to-consumer model is the best way for brands to deliver these experiences and build lasting, profitable customer relationships. Read on to learn what direct to consumer (DTC) means, how the model works, its pros and cons, and real brand examples—plus you’ll get a checklist to help you launch your own DTC channel successfully.
What is direct to consumer?
Direct to consumer (DTC) is a retail model where brands sell directly to new customers. It skips the wholesale middlemen and eliminates the need to join forces with traditional retail channels and brick-and-mortar stores. Cutting out wholesalers, retailers, and distributors is also known as disintermediation.
DTC brands keep their own products in stock and, when a customer makes a purchase, the brand is in control of sorting, packaging, and shipping the product. They don’t have to rely on a third-party retailer to deliver the goods. This gives them direct access to customers and lets them take charge of the entire fulfillment experience.
The DTC model removes several steps of the buying cycle to speed it up and provide a slicker experience for loyal customers:
- Traditional wholesale/retail model: manufacturer > wholesaler > distributor > retailer > end consumer
- DTC model: manufacturer > advertising/website > end customer
The DTC retail model was created for a digitally savvy consumer base, with top DTC examples like Warby Parker, Dollar Shave Club, Allbirds, and Glossier disrupting the traditional beauty and fashion industries with their unique personalities and customer-first approach. The model helps them build stronger customer relationships and gives them a first-hand understanding of who buys their products and why.
Wholesale brands like Walmart and traditional retailers like JCPenney and Unilever are now up against these smaller, more niche brands that are reaching out directly to customers.
Why direct to consumer is so important
DTC isn’t a particularly new phenomenon. In the 1920s, clothing brands saw an opportunity to cut out the middleman and started to open their own DTC stores. In 2007, Bonobos emerged as one of the first digitally native brands focused on selling just one product.
But the concept has snowballed in recent years because of two major factors:
1. Consumer expectations have changed
Expectations are higher than ever. Retailers must now deliver exceptional customer experiences or lose out to an influx of new competitors. Consumers today crave personalization and human connections, and they want to buy from brands with the same values as them.
This is difficult when you’re selling through large retail stores that stock all sorts of products from a range of different brands.
For example, a consumer might choose to buy a pair of glasses from Warby Parker over Sears. Warby Parker’s mission may resonate with customers more than that of a big-name department store that sells products from many brands with a variety of different values and ethics.
2. Online sales have skyrocketed
Ecommerce sales are showing no signs of slowing down. The International Trade Administration expects global online sales to reach $5.5 trillion by 2027. Retail partnerships are pointless when shoppers no longer venture in-store.
It’s also difficult to stand out in-store when your products are surrounded by hundreds of similar products from different brands. It’s easy to see why DTC retailers have chosen a different path.
Even legacy brands that traditionally have depended on wholesalers for distribution are leaning into the DTC model—take Pepsi, with its Pantry Shop and Snacks.com DTC brands, for example. Legacy brands like Pepsi are moving over to the DTC model due to lower orders from retail clients over time.
How the direct-to-consumer business model works
The model does exactly as it says: sells directly to customers. Shoppers go to your website or another digital channel, make a purchase through your store, and receive the product directly from you—no middlemen in sight.
The whole process is carried out between the brand and the customer, and the brand takes full control over the fulfillment process. Usually, DTC brands are digitally native and favor an omnichannel approach to create unique experiences for each customer. This isn’t to say DTC brands can’t have brick-and-mortar stores, but they ensure that the focus in-store is on customer experience and engagement rather than sales.
Many DTC brands have a very defined target audience and sell a limited range of products—think Dollar Shave Club with razors and Warby Parker with glasses. The model relies on building customer relationships and creating experiences that put the customer first.
This shows a deep understanding of shopper pain points. Many brands use discounts, loyalty programs, reviews, and user-generated content to build communities and retain long-term customers over time.
Omnichannel and social commerce in DTC
Today’s most successful brands blend traditional webshops with social commerce and other digital touchpoints. By owning first-party data across these platforms, brands gain both control and agility.
Owning first-party data and customer relationships
Modern DTC brands win by owning their customer relationships instead of renting them from third-party platforms. Selling across multiple channels, including social commerce, creates powerful discovery and conversion opportunities. The real advantage, however, comes from collecting first-party data.
First-party data is the information a business collects straight from its own customers when they do things such as buy from your website, sign up for your emails, or leave a review. If you own this data, you can reach your customers directly again and again, reducing customer acquisition cost (CAC) and boosting lifetime value (LTV).
At the same time, social commerce is booming. By 2027, it’s projected to drive more than 7.8% of all online sales, making platforms like TikTok, Instagram, and YouTube essential for both product discovery and checkout.
When merchants combine the reach of social platforms with the insights from their own data, they can create flexible, personalized strategies that strengthen loyalty and boost revenue.
DTC vs. B2C vs. B2B: managing channel conflict
Direct to consumer (DTC) means selling directly to your end customer, usually online, without a third party.
Business to consumer (B2B) is the broader category, retailers selling to consumers, whether online or in-store.
Business to business (B2B) covers wholesale or distribution relationships where you sell in bulk to other businesses.
When brands add a DTC channel alongside wholesale or retail partners, tension can arise. Retailers may worry you’re competing on price or undercutting their customer relationships. This is called DTC channel conflict. If it isn’t managed carefully, it may strain valuable partnerships.
How to avoid retailer friction: 5 strategies
- Differentiate product lines: Offer exclusive products or bundles on your DTC channel so you’re not competing directly with wholesale SKUs.
- Set clear pricing strategies: Maintain consistent pricing across channels to avoid undercutting partners, while leaving room for promotions that don’t erode retailer margins.
- Share customer insights: Use your first-party data to help retail partners improve their own merchandising and marketing.
- Align on promotions and launches: Coordinate major campaigns so retailers feel supported rather than sidelined.
- Communicate value: Position your DTC channel as a testing ground for new products and experiences, showing how it benefits partners rather than threatens them.
Handled well, DTC can strengthen your overall channel mix by giving you direct consumer insights that fuel smarter B2C and B2B strategies.
Pros and cons of direct to consumer
Selling direct to consumer gives brands more control over pricing, data, and customer experience, but it’s not without trade-offs.
Before deciding if DTC is right for your business, weigh the benefits against the challenges.
The pros of direct to consumer
- Direct line of communication: You can connect directly with customers to build customer relationships, which positions you on the front line for customer service.
- Better understanding of customer needs: Access to first-hand customer data provides a comprehensive view of customer wants and needs and can help brands make more customer-centric decisions and improve customer retention.
- More control over messaging: No need to rely on middlemen and third-party stores to advertise your products. You own the brand and product strategy.
- Complete control over the fulfillment process: Less reliance on third parties, which means less fulfillment restrictions and the ability to pass any savings along to customers.
- Control over marketing strategy: Easy to promote customer perks, like free shipping, gifts, and a subscription service, without being restricted by wholesale requirements.
- Access to more direct customer feedback: Glean insights directly from customers and foster open communication, and increase brand loyalty.
The cons of direct to consumer
- Everything is on you: It’s up to you to build your own audience via your own platforms and advertising, and you don’t have access to the audiences that big retail stores and sites have already amassed.
- Increased risk: You assume added risks that are usually swallowed up by third parties, like cyber risks and liability risks.
- Potentially complex supply chains: Everything from the manufacturing to distribution to shipping is up to you, which can be both a blessing and a curse.
- Potential increased costs: You might need to invest in tools, software, and product marketing, which can add up and affect your bottom line.
5 examples of inspiring DTC brands
Now that you have a better understanding of DTC, here are some successful DTC ecommerce brands to learn from:
1. Velasca
Velasca is a Milanese startup on a mission to disrupt the footwear industry by connecting consumers online directly to shoemakers.
Co-founders Enrico Casati and Jacopo Sebastio found their DTC model has a competitive advantage over high-end Italian footwear brands because they’re making the same products from the same factories as big-name brands, but can sell them at half the price because they don’t have to give a cut to wholesalers, distributors, and retailers.
“We bet our company on being direct to consumer, which brings about a competitive advantage in terms of pricing,” Enrico says. “You make the same products from the same factories using the same materials as the famous brands. But you’re able to sell them at half the price of comparable products,” says Enrico.
2. Olipop
Olipop is a DTC brand that made big strides in the beverage industry with its innovative product lines. Launched by Ben Goodwin and David Lester in late 2018, Olipop carved out a niche in the soda market by offering flavors like ginger lemon, strawberry vanilla, and cinnamon cola.
The brand overall positions itself as a healthy alternative to traditional soda, offering low sugar and high-fiber beverages for health food enthusiasts.
3. Bombas
Bombas began by selling just socks, a niche product, but a product that everyone needs. It’s since branched out to sell additional products, like t-shirts, underwear, and slippers, but its motto remains the same: Comfort is everything.
One of the brand’s main selling points is its strong values and beliefs. For every item purchased, the brand donates an item to someone affected by homelessness.
4. Gymshark
Gymshark is a leading DTC brand in the fitness industry. Launched in 2012 by high school friends, the brand has grown into a cult favorite, with more than six million followers on Instagram.
Gymshark scaled quickly through influencer-led marketing campaigns. It was one of the early adopters of this approach on Instagram and has since turned every influencer it works with into a brand ambassador.
In August 2020, Gymshark achieved unicorn status when it was given a $1.3 billion valuation, after US private equity firm General Atlantic purchased a 21% stake in the business. The company continues to sell athletic gear online, as well as at its flagship store on London’s Regent Street.
5. Everlane
Clothing brand Everlane is all about sustainable fashion, an ethos that has created close connections with shoppers who are on the hunt for eco-friendly options and don’t buy into the fast-fashion phenomenon. The brand’s ethical approach drives everything it does, from its marketing efforts to its product descriptions, and even its “true cost” calculator.
Checklist to launch and scale a DTC channel
A strong DTC strategy requires more than just setting up a store. Use this checklist to make sure you’re covering the essentials before you launch and as you scale.
Tech stack essentials
- Ecommerce site: Choose a platform that’s fast, mobile-friendly, and easy to manage.
- Personalization tools: Implement apps or features for product recommendations, upsells, and tailored experiences.
- Order and inventory management: Sync stock across channels to prevent overselling and streamline fulfillment.
- Email provider: Use a reliable email platform to send campaigns, automate flows, and collect first-party data that helps nurture customer relationships.
Fulfillment and returns
- 3PLs (third-party logistics): Decide if you’ll handle fulfillment in-house or partner with a 3PL to scale.
- Shipping options: Offer transparent shipping speeds and costs—shoppers expect clarity at checkout.
- Returns process: Build a simple, branded returns process to maintain customer trust and reduce support strain.
Pricing, margins, and customer acquisition costs
- Set pricing strategy: Balance competitive pricing with sustainable profit margins.
- Factor in CAC: Track your customer acquisition costs across paid and organic channels to avoid overspending.
- Review margins regularly: Adjust for rising costs in fulfillment, returns, or marketing to keep DTC profitable.
Store owners take back control with the DTC model
DTC was born out of changing customer expectations and the shift to online shopping. The model gives brands a chance to connect directly with customers and get to know who’s buying them, so they can create a personalized customer journey unique to each shopper.
DTC lets business owners take back control, creating strong relationships with buyers and creating stand-out brands with memorable personalities.
Read more
- How To Write a Return Policy (+ Free Template) (2024)
- The 65 Best Marketing Tools for Online Businesses
- What Is Internet Marketing? Definitions and Examples
- Learn the Difference Between Sales and Marketing
- Marketing Objectives- How to Set Good Marketing Objectives
- 21 Email Marketing Examples to Follow
- 4 Massive Marketing Trends You Should Be Following in 2017
- 7 Free and Simple SEO Tools for Business Owners
- How to Craft an Authentic Social Media Presence That Benefits Your Brand
- Marketing Management- The Role of Marketing Managers
Direct to consumer FAQ
What is the meaning of direct to consumer?
Direct to consumer (DTC) refers to the practice of selling products or services directly to consumers without the use of intermediaries, such as retailers or wholesalers.
This method of selling allows companies to bypass traditional distribution channels and reach a larger audience. DTC companies typically use digital marketing and ecommerce platforms to reach their target consumers.
What is the difference between B2C and DTC?
In B2C (business to consumer), businesses sell directly to consumers, usually through retailers and wholesalers.
A DTC (direct to consumer) model is where the manufacturer or brand sells directly to the consumer through an online platform.
Is direct to consumer profitable and how do margins compare?
Yes, DTC can be highly profitable, because you keep the retail markup that would normally go to wholesalers or distributors. Margins are usually higher than B2B or traditional retail, but you’ll need to factor in added costs like marketing, fulfillment, and customer acquisition. Profitability depends on balancing those expenses against the higher margins.
How do DTC brands handle fulfillment, returns, and customer service?
Most DTC brands use a mix of in-house teams and third-party logistics (3PL) providers to ship orders quickly. They build clear, branded return processes to keep shoppers confident and loyal. Customer service is usually managed directly, through chat, email, or social, to maintain control over the customer relationship and deliver a consistent brand experience.
What channels do DTC brands use to find new customers?
DTC brands typically grow through a mix of paid ads (Google, Meta, TikTok), social commerce, influencer partnerships, SEO and content marketing, email, and referrals. The most successful brands diversify, using social platforms for discovery while relying on owned channels like email and SMS to drive repeat sales.
