Brooklinen, Our Place are the latest D2C brands to turn to other retailers for growth

The trend: The line between digitally native direct-to-consumer (D2C) and established brands is blurring as more of the former expand their retail partnerships and brick-and-mortar footprints, while more of the latter invest in D2C.

• Brooklinen is bringing its Marlow pillow brand to over 1,000 Walmart stores and as well as the retailer’s website, while fellow digital native Our Place is now selling its distinctive kitchenware via Amazon.
• At the same time, established brands like Levi’s and Nike are pumping more resources into their D2C businesses to take advantage of higher margins and offset weakness in the wholesale segment.

Digital natives look for opportunities: As sales growth slows and customer acquisition costs mount, many digitally native D2C brands are turning to wholesale and marketplace partnerships to boost awareness and sales opportunities.

• Unsurprisingly, Amazon is a popular choice, given that it’s the first—and often only—port of call for many on their digital shopping journeys. Brands ranging from Tupperware to Peloton to ThirdLove have made the leap, while Brooklinen is expanding the assortment of items it sells on the marketplace after revenues grew 29% year-over-year (YoY).
• Underwear startup Parade estimated that selling on Amazon could net it $8 million in revenues by the end of 2025, equivalent to over one-quarter the company’s net revenues in 2022, per The Information.
• While wholesale partnerships are also becoming more prevalent as D2C brands try to shift some of the burden of their marketing and logistics costs, success can take time. Just 3% of Parade’s revenues last year came from retail and wholesale channels, despite tie-ups with Urban Outfitters and Target; the company expects that figure to rise to 10% this year.

Established brands soar: While digitally native D2Cs like Allbirds and Parade are quickly realizing the limits of a D2C-only strategy, established companies are taking advantage of their brand equities and deep pockets to push further into direct sales.

• Levi’s is doubling down on D2C to make up for softness in its wholesale business, as well as develop deeper ties with shoppers and establish itself as a more premium brand. The company noted that direct sales grew in nearly all markets, including North America and China, during Q3, despite a significant slowdown in wholesale demand.
• While Nike recently restored wholesale ties with several retailers, its direct business continues to grow at a faster clip: Sales rose 6% YoY during its fiscal Q1, while wholesale revenues were flat on a reported basis.
• Our forecast expects established brands’ US D2C ecommerce sales to grow by 16.2% this year, compared with just 1.8% growth for digital natives.

The big takeaway: Finding new sales channels will be key for digitally native D2Cs to unlock their next stage of growth, whether that’s expanding their own brick-and-mortar presence, relying on marketplaces like Amazon, or racking up wholesale partnerships.

• At the same time, brands have to stay attuned to the needs of their core consumers, as well as figure out how to appeal to a broader audience that may not be quite as receptive to millennial pink packaging.

Go further: For more on D2C strategies, check out our reports on D2C Brands and D2C for CPG Brands.