Direct-to-consumer (DTC) sales has been one of the most signiﬁcant trends in the consumer goods industry in the last few years. This has been fueled by the rise of online commerce as a sales channel and by social media for DTC branding and customer engagement. Many of the most talked-about consumer brands now - Glossier, Warby Parker, Everlane, Bonobos - all started as digital-ﬁrst eCommerce companies selling to consumers without any intermediaries such as wholesalers or retailers.Any eCommerce company that owns its branding, designing and production activities can be classiﬁed as a DTC eCommerce company. However, what we’re seeing as many upstart brands scale their DTC efforts is that DTC is not a segment by itself, rather it is an astute “launch and growth approach” for brands to depend less on retailers’ distribution.By that definition, the DTC brands market is not just the ‘Digitally Native Vertical Brands’ (DNVBs) that have shot to fame and success. Many traditional B2B2C brands such as Nike and branded retail chains such as Gap or Timberland are also aggressively pursuing digital DTC strategies. There are an estimated 1000+ DTC companies that have collectively raised about $4 billion in venture capital since 2012, and about $1 billion of that was raised in 2018 alone!In this blog post, we look at the revenue distribution of DTC companies. For the purpose of this analysis, we analyzed our proprietary database of 20,000+ DTC brands.
The first thing that caught our eye was that unlike generic eCommerce (much of which is multi-brand retail and marketplace sites) where the long-tail dominates (83% of eCommerce is skewed towards long-tail), companies with annual revenue between $1M-$10M dominate among DTC brands. Secondly, more companies are making $10M-$25M in revenue (13.5% of the TAM) compared to the generic eCommerce market size wherein the corresponding revenue segment’s share is a mere 0.9% of TAM. Of the 390+ unicorns mapped by CB Insights, there are at least 20 D2C brands that have made it to the club - Allbirds, Peloton, Casper, Warby Parker, Glossier, Rent the Runway, Stitch Fix, Hims, Away to name a few. Download free eCommerce market research reports like this. We value your feedback, let us know if there are any suggestions/corrections below. For customized eCommerce market research reports reach out to us at firstname.lastname@example.org 🙂
Every week we send out one deeply researched essay that captures the eCommerce industry and its evolution, right to your inbox. 50%+ open rates for a year now.
Trusted by 22,804 DTC & eCommerce industry insiders.