The direct-to-consumer revolution, it turns out, has a second act, and it looks a lot like the first act of consumer packaged goods circa 1975.
After nearly a decade of venture-backed brands promising to sell mattresses, razors, vitamins and dog food directly to consumers through Instagram advertisements and skip the middleman entirely, a growing number of those brands have arrived at a familiar conclusion: the middleman has 4,700 stores and a lot of foot traffic.
Hallpass, a low-sugar candy brand backed by Medici Brands (which also owns David Protein), began selling nationwide at Walmart last month. Curie, a personal care company, recently redesigned its packaging specifically for Walmart shoppers. And Little Spoon, which makes food for children, will have 50 products on Target shelves by year's end, more than double the 22 items with which it started last year.
The shift represents something of a philosophical retreat for an industry segment that once treated physical retail as a vestige of a less enlightened commercial era. The original direct-to-consumer proposition — that brands could build loyal audiences online and capture the margin that would otherwise flow to retailers — has run into the stubborn reality that customer acquisition costs on Meta and Google have risen considerably since 2015, while Walmart's parking lots remain full.
(One hesitates to call this a pivot, since a pivot implies surprise, and the people who run Bentonville have been waiting patiently this whole time.)
What has emerged is a new hybrid playbook: build a niche following on the internet first, then present that audience data to a mass retailer as proof of concept and secure shelf space. It is, in effect, using social media as a very expensive focus group.
The irony is not lost on veterans of the packaged-goods business, who spent decades doing precisely this, albeit with different vocabulary and fewer hoodies at board meetings.
Original story published in adweek.com: "Direct-to-Consumer Brands Rebuild Their Playbooks Around Retailers"