Is DTC the right channel for your business?

It depends a great deal on your unit economics. Costs of DTC are generally rising - the cost of acquisition, the logistics costs, input cost of goods and services. The implication is if your average order value is less than $40-50, it’s likely going to be a lot harder to make money in the DTC channel.

There are ways to address this - can you bundle your offering to increase AOV, can you move to a subscription revenue model to increase revenue while maintaining cost of acquisition, can you decrease your input costs - shipping, warehousing, materials? Can you get “free” advertising through word of mouth?

Getting into the DTC channel is becoming easier and easier with so many tools and automations; however, easy entry does not mean easy profitability. A little planning up front to figure out the costs you have to cover will help make this a long-term winning channel for you.

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