Thinking DTC was the most profitable channel was a mistake 5 lessons & 1 Action: Lesson 1: DTC ≠ DTC Early on, we thought DTC was the future. It's DIRECT to consumer, after all I was wrong As Facebook/Meta acquisition costs worsened over time, we learned DTC is a misnomer Beholden to an algo we have no control over, a more fitting acronym is ZTC: Zuckerberg to Consumer Lesson 2: DTC Has Benefits, but The Favorable Economics of the Good Ol' Days Are Gone: CAC was a fraction of today You could actually reach most of your social following Shipping, 3PL labor, Shopify and Klaviyo were cheaper Free shipping/returns weren't standard etc If you're spending the vast majority of your ad dollars on DR measured on 1 day click, solid chance adding wholesale can generate accretive incremental contribution $$, assuming you're willing to invest in brand 🤯 Lesson 3: Under-Appreciated Additional Benefits of Wholesale Predictability in CAC: the margin hit you take from retail partners, while large, does not have the volatility of DR, and certainly hasn't 2, 3 or 4x'd like Meta. Forecasting gets a bit easier Access Massive TAM: Wholesale = 7-10x larger than Shopify Diversification of Cashflow Streams adds resilience, downside protection. Validation of a growth story for investors/acquirers Higher Quality Brand Building: Physical products are touchable billboards. The quality of the impression is 1000x more impactful than an IG ad. Fuels DTC too. You look bigger & more legit when in a great retailer Lesson 4: Avoid Hell on Earth: Get your ops house in order Inventory Mgmt: Make sure that's in a good place. If not, checkout Kyle's @gooddaysoftware Ensure 3PL can do wholesale: Don't learn on the day 10,000 units are going to 3 retailers each w diff't EDI rules Negotiate COGS or terms: Rationale for "why now?" is sound since buys are going to start 📈 Lesson 5: Brand Building Drives It All To experience any of these benefits, you've got to reach more people and get them to feel something Classic product/offer/urgency creative has some impact, but it won't maximize the chance someone chooses you when they walk into the store, & it def won't get the retail buyer to bang down your door to carry you You'll see Brand dollars go further here Action: Every brand is different, so here's an action to consider as you make the right call for you Review DTC cost increases since day 1 Incorporate the "soft" costs on your biz like CAC volatility Forecast continued trends. See when economic model breaks Takes multiple years to ramp wholesale, so work back to when you need to start Make a call Takeaways: Right now, few things are more important than finding incremental accretive contribution $ While all channels have pros & cons, adding wholesale could help Experiencing those benefits requires a shift to consistent investment in broad reach, feeling driven net-new demand generation (Brand building) Thoughts? Hope this helps ✌️❤️🤘