The D2C model is evolving as wholesale, physical retail regain prominence

The trend: Brands are rethinking their D2C strategies as momentum shifts from digital natives to established brands and more traditional retail channels, like wholesale and brick-and-mortar stores, become key growth drivers.

Wholesale on the rise: With the heady days of rapid growth behind them, digitally native D2C brands are embracing wholesale as an opportunity to grow sales, boost brand awareness, and quickly enter new markets.

• One-third (33%) of brands are seeing a shift from D2C to wholesale, with the latter taking up a larger share of overall sales, per a report by wholesale management platform Joor.
• Jewelry brand Aurate, skincare company Bubble, and fragrance producer Snif are among the D2C brands establishing wholesale partnerships with prominent retailers like Macy’s and Ulta as they look to reach more consumers and gain a foothold in brick-and-mortar retail.
• Even established brands like Nike, adidas, and, most recently, LL Bean are expanding their wholesale efforts to capitalize on shoppers’ affinity for multibrand shopping experiences and keep competitors from gaining market share.

Looking for growth: Some highly successful D2C brands are finding it difficult to achieve profitability even with wholesale partnerships, raising the possibility of selling on marketplaces like Amazon to achieve greater scale or acquisition by an established player with the requisite expertise and resources.

• Underwear company Parade is reportedly in talks to be acquired by Ariela & Associates International, which manufactures products for Fruit of the Loom and other brands, per The Information. If the deal goes through, Parade would become the latest lingerie startup—joining brands Cuup and Adore Me—to be acquired this year.
• Fellow underwear company ThirdLove is taking a different tack by making its products available on Amazon, a move the company hopes will endear it to customers looking for speed and convenience.

The big takeaway: While there are still opportunities available in D2C ecommerce, as the successful IPO of beauty brand Oddity Tech demonstrates, the lion’s share of growth in the space will come from established players expanding their ecommerce reach.

• To avoid crashing out, digitally native brands will have to embrace wholesale and physical retail, as well as third-party marketplaces (which don’t have to be Amazon).

Go further: Read our latest report on D2C Brands for strategies that established and digitally native brands can use to drive D2C growth.