Many DTC brands were still riding high at the beginning of 2022. In 2021, there were a record number of DTC IPOs, while record venture capital funding levels meant some DTC startups were sitting on a very healthy pile of cash at the beginning of the year. E-commerce growth was starting to slow compared to the record online sales activity seen during the pandemic, but many startups continued to see year-over-year revenue increases.
But over the course of 2022, the prospects of many once-bright DTC startups quickly deteriorated. Peloton and Glossier went through multiple rounds of layoffs, the market caps of publicly-traded pioneers like Allbirds and Figs tanked, while other brands quietly closed their doors.
There have been a lot of predictions over the past several years that there would finally be a DTC reckoning on the horizon. But this finally felt like the first year that some of the systemic issues that have long plagued DTC brands — like high customer acquisition costs and unclear paths to profitability — finally came to a head. In the worst case scenario, some brands like Haus shuttered entirely.
In turn, it’s likely that we will see more DTC brands shutter in 2023. At the same time, a more clear understanding of what it takes to make it as a modern e-commerce brand may emerge. This year, founders recognized that the key to building a brand that can last means meant ensuring that their products can be bought by more people in more places, and not just relying on social media and beautiful branding to gain recognition. Here are the major themes that stood out
More brands abandoned the DTC model in categories where it didn’t make sense
It wasn’t all doom and gloom for e-commerce in 2022. But many of the brands that found success in 2022 weren’t pure-play DTC brands. Hero Cosmetics sold to…