Saturday, 01 November 2025 / Published in Enterprise

The Death of Pure-Play DTC: Why Omnichannel Is the Only Path to $100M

The direct-to-consumer (DTC) model is no longer enough to scale brands to $100M. Rising digital advertising costs and market saturation have exposed the limits of online-only strategies. Brands like Allbirds and Casper struggled as customer acquisition costs (CAC) ate into profits, with digital ad spend often consuming 30-40% of revenue. The solution? Omnichannel strategies, blending digital, wholesale, and physical retail, have become the proven path to sustainable growth.

Key Takeaways:

Digital-only is unsustainable: CAC for DTC brands ranges from $45 to $150, making profitability difficult without additional channels.
Omnichannel drives growth: Combining online, retail, and wholesale reduces CAC to $25–$50 and boosts customer retention to 89%.
Success stories: Warby Parker’s stores boosted online sales, Glossier’s retail presence increased local online sales by 70%, and HOKA leveraged wholesale for cost-efficient scaling.
Balanced approach: A 70/20/10 framework – 70% digital, 20% wholesale, 10% physical retail – maximizes profitability and reach.

Brands must diversify early, leveraging wholesale for discovery and retail for customer experience. This strategy reduces dependency on expensive digital ads while creating a seamless customer journey. Failing to adopt omnichannel risks stagnation, while those who embrace it position themselves for long-term success.

The Pure-Play Graveyard: Why Online-Only Models Fail

Some of the most well-known direct-to-consumer (DTC) brands have struggled to maintain growth, revealing the limitations of relying solely on online sales. These examples highlight how fragile the online-only approach can be when scaling up.

High-Profile DTC Failures

Several brands that initially thrived with digital-first strategies faced significant hurdles as they grew. Take Allbirds, for example – it saw its stock value plummet by an astonishing 97% after going public. Casper, another once-promising name, filed for bankruptcy when rising digital advertising costs made it impossible to sustain growth. Other brands like Brandless and Outdoor Voices also hit major roadblocks, as their exclusive focus on online channels left them vulnerable. Without other revenue streams, the increasing cost of acquiring customers outpaced their ability to generate profits.

The Numbers Behind the Struggle

The downfall of these brands often boils down to unsustainable economics. Digital advertising costs – sometimes referred to as a "DTC tax" – can eat up 30-40% of revenue just to keep growth steady. Platforms that once offered affordable visibility now demand higher premiums, turning what was once a growth driver into a financial strain. As these costs rise, margins shrink, making it nearly impossible for brands to scale profitably.

Nike’s Wholesale Misstep

Even a giant like Nike isn’t immune to the risks of narrowing its focus. When Nike cut ties with many of its wholesale partners to prioritize direct sales, it lost a critical, cost-effective way to reach customers. This decision wiped out 30% of its customer base almost overnight. By stepping away from retail partnerships, Nike missed out on opportunities where customers naturally discover and buy products without the brand needing to spend heavily on ads. The resulting drop in wholesale revenue forced Nike to rethink its strategy, and the company eventually worked to rebuild those partnerships. This serves as a clear reminder that even globally recognized brands need a balanced approach across multiple channels.

These examples make one thing clear: brands that rely solely on digital channels are setting themselves up for trouble. A well-rounded omnichannel strategy is key to long-term success.

The Omnichannel Winners: Brands That Scaled Beyond DTC

Expanding on the challenges of relying solely on direct-to-consumer (DTC) models, let’s explore how certain brands achieved sustainable growth by adopting omnichannel strategies. These companies didn’t just diversify for the sake of it – they unlocked new opportunities by blending online, retail, and wholesale channels. Their success offers valuable insights into the economics of omnichannel approaches.

Case Studies: Warby Parker, Glossier, and HOKA

Warby Parker, originally a digital-first eyewear company, faced rising online customer acquisition costs. Their turning point came with the launch of over 200 physical stores across the U.S. These locations not only drove in-store sales but also allowed customers to try on products, addressing a key barrier for online shoppers. This strategic pivot helped Warby Parker transition to profitability.

Glossier embraced permanent retail locations, which resulted in a 70% increase in online sales from nearby markets. Research reveals that retail stores can boost online sales by 2.5 times in surrounding zip codes. Customers often visited stores to experience the brand’s products firsthand and later completed their purchases online, creating a powerful synergy between physical and digital channels.

HOKA seized opportunities left by competitors retreating from wholesale partnerships. By expanding its presence to over 2,000 retail locations, HOKA leveraged wholesale to gain broad distribution without the steep advertising costs that plague digital-only brands. This approach allowed them to reach new audiences while maintaining cost efficiency.

Dollar Shave Club took a similar approach by partnering with Walmart, gaining exposure to millions of potential customers who may not have encountered the brand through online channels alone.

Omnichannel Economics

The numbers speak volumes about why omnichannel strategies outperform standalone DTC models. Brands with robust omnichannel engagement retain 89% of their customers, compared to just 33% for those with weaker efforts. When customers interact with products in person, their trust in the brand grows, leading to stronger loyalty and higher conversion rates.

From a cost perspective, omnichannel approaches are also more efficient. While digital-only brands often face customer acquisition costs (CAC) ranging from $45 to $150, integrating physical channels can bring CAC down to $25–$50. Additionally, physical stores typically achieve payback periods of 12 to 18 months, making them a more sustainable option for long-term growth.

Brands that operate across three or more channels see a 287% increase in purchase rates compared to single-channel businesses. This isn’t just about casting a wider net – it’s about connecting with customers in the most relevant contexts. Wholesale partnerships, in particular, act as powerful discovery tools, exposing brands to new audiences in trusted retail environments.

Wholesale as a Discovery Engine

Wholesale partnerships are a game-changer for DTC brands struggling with online visibility. By placing products in established retailers like Target, Nordstrom, or local boutiques, brands gain instant credibility and reach shoppers who may not actively search for them online.

"DTC is where you build brand awareness, but retail is where you scale." – Brandon Warren, Chief Growth Officer

Being featured in trusted retail stores not only builds consumer confidence but also encourages impulse purchases and ongoing brand discovery – benefits that digital advertising alone often struggles to deliver.

Research shows that omnichannel strategies can improve customer retention by as much as 90%. A shopper might first discover a product in-store, then engage with the brand online for follow-up purchases or additional research. This seamless integration between channels significantly increases customer lifetime value.

The key takeaway? Success doesn’t come from choosing one channel over another. Instead, the most effective brands create a cohesive, multi-channel experience. By combining digital engagement, wholesale reach, and physical retail, they craft a customer journey that’s both engaging and profitable – something pure-play strategies simply can’t replicate.

The 70/20/10 Framework: Balancing Channels for Growth

Scaling a direct-to-consumer (DTC) brand to $100 million in revenue requires a smart allocation strategy that balances control, reach, and risk. The 70/20/10 framework offers a blueprint for sustainable growth, assigning distinct roles to digital, wholesale, and physical retail channels.

This approach creates a powerful synergy. It allows brands to maintain control over their data and margins while addressing the challenges of discovery and scaling that often plague single-channel strategies. At its core lies a strong digital foundation, which sets the stage for the rest of the strategy.

70% Digital: The Control Hub

Digital channels should form the backbone of your business, accounting for about 70% of your revenue and strategic focus. These channels go beyond just having a website – they’re the central hub for customer data, innovation, and profitability.

Direct relationships with your customers are invaluable. Every email address, purchase history, and behavioral insight collected through digital platforms gives you a competitive edge that wholesale partners simply can’t replicate. This data allows you to customize experiences, forecast demand, and nurture long-term customer loyalty.

Profitability is another major advantage of digital channels. While wholesale partnerships often operate with margins around 50%, direct digital channels can achieve gross margins of 70–80%. This extra profitability provides the cash flow needed to invest in growth and weather economic fluctuations.

Digital also enables rapid experimentation. You can test new products, tweak pricing, and respond to market trends in days – something wholesale or physical retail cannot match. Think of your digital presence as both a laboratory and a command center: a place to pilot ideas, refine strategies based on customer behavior, and cultivate a loyal community that supports your brand across all touchpoints.

20% Wholesale: The Discovery Driver

While digital channels power your core operations, wholesale partnerships serve as a discovery engine. Allocating 20% of your focus to wholesale can introduce your brand to new audiences without the steep costs of digital customer acquisition, which often range from $45 to $150 per customer.

Being featured in reputable retailers can immediately boost your brand’s credibility. A shopper who encounters your products in a trusted department store or boutique is more likely to associate your brand with quality and reliability – something that typically takes much longer to establish online.

Wholesale is also a key tool for market expansion. It allows you to reach communities and demographics that digital campaigns might overlook. Whether it’s a local boutique introducing your brand to a neighborhood or a specialty retailer connecting you with niche enthusiasts, wholesale broadens your audience in ways that digital alone cannot.

To maximize the impact of wholesale, focus on quality over quantity. Instead of aiming for hundreds of retail doors, build strategic partnerships with 20–50 retailers that align with your brand’s values and target audience. These carefully chosen relationships often yield better results than a scattershot approach.

10% Physical: The Experience Multiplier

Physical retail, while accounting for just 10% of revenue, plays a vital role in amplifying your brand experience. In-person interactions create emotional connections that digital channels often struggle to replicate, making physical retail a key component of your overall strategy.

Pop-up stores are a great way to test new markets and concepts. These temporary spaces allow you to gauge customer interest, refine your product offerings, and identify operational challenges – all without the commitment of a long-term lease. They’re a cost-effective way to gather insights while building buzz.

Flagship stores, on the other hand, offer a more permanent way to elevate your brand. A well-placed flagship not only drives direct sales but also generates social media attention, attracts influencers, and earns media coverage. Even a single visit can leave a lasting impression that boosts your brand’s visibility.

Physical spaces also provide unique opportunities to learn about your customers. Watching how they interact with your products and staff can reveal valuable insights into product presentation, customer service, and overall experience – insights you can apply across all channels.

The impact of physical retail often extends beyond its four walls. For example, a store that breaks even on direct sales but drives 2.5 times more online sales in its surrounding area demonstrates how physical presence can amplify your entire omnichannel strategy.

Integrating the Channels for Maximum Impact

The real power of the 70/20/10 framework lies in how these channels work together. A customer might first discover your brand through a wholesale partner, explore your products online, and make their first purchase at a pop-up store. Each interaction strengthens the others, creating a seamless and profitable customer journey.

This framework isn’t set in stone. Seasonal trends or shifts in consumer behavior may require adjustments to the balance between digital, wholesale, and physical retail. The key is to maintain a strategic mix that keeps you in control of your customer relationships while expanding your reach and growing your brand’s presence. By doing so, you’ll build a resilient and dynamic omnichannel strategy that drives long-term success.

Implementation Roadmap: Scaling Omnichannel from $1M to $100M

Building a successful omnichannel strategy requires precise timing, strong partnerships, and disciplined execution at every stage of growth. Brands that scale to $100 million know that expanding channels must align with their operational capabilities and market demand.

$1-10M: Testing Wholesale Channels

Before diving into wholesale, your digital foundation needs to be rock solid. This means having a proven product-market fit, reliable fulfillment processes, and enough cash flow to manage wholesale’s longer payment cycles.

Start small by focusing on five strategic wholesale partners. Choose retailers that align with your brand’s identity and appeal to your target audience. For instance, a premium skincare brand might prioritize high-end boutiques and specialty beauty stores, while a fitness apparel company could target independent athletic retailers and yoga studios.

Temporary pop-ups can help you test market demand and fine-tune the in-store experience. Be cautious with inventory, as wholesale often comes with 60-90 day payment terms. Once your foundation is solid and early wholesale tests show promise, you’ll be ready to expand in the next revenue phase.

$10-30M: Expanding Wholesale and Physical Presence

By this stage, you’ve laid the groundwork for broader expansion. With more operational capacity and financial resources, you can now grow across multiple channels more confidently.

Expand your wholesale presence to over 20 locations, but remain selective. Focus on regional growth with retailers that have a strong track record in your category. Department stores like Nordstrom or Target become viable options, offering extensive reach but requiring advanced inventory management and marketing support.

Make your pop-up strategy more systematic. Instead of occasional experiments, plan quarterly pop-ups in 3-5 key markets. This approach builds momentum and strengthens local customer bases, boosting both wholesale and online sales in those regions.

Research shows that having a physical presence can drive online sales in nearby areas by 2.5 times. Leverage this by choosing pop-up locations that enhance your wholesale partnerships rather than competing with them.

Begin scouting permanent retail locations even if you’re not ready to commit. Prime retail spaces often require 6-12 months of lease negotiation, so starting early ensures better options when the time is right.

$30-50M+: Scaling Retail and Wholesale

At this stage, you have the resources and market validation to make big moves in retail. Open your first flagship store in a market where you already have strong online sales and wholesale presence. This ensures an existing customer base to generate initial foot traffic.

Expand wholesale to over 100 locations, focusing on filling gaps in major metropolitan areas and increasing density in regions where you’re already established. Wholesale should account for about 30% of your revenue, providing reach without overshadowing your direct-to-consumer relationships.

Investing in permanent retail becomes more practical at this scale. While initial setup costs range from $150,000 to $500,000 per location, successful stores often achieve payback in 12-18 months. Beyond direct sales, flagship stores offer significant marketing value through social media, press coverage, and enhanced brand reputation.

Territory management is critical to balance your retail and wholesale efforts. Set clear boundaries for store locations relative to wholesale accounts, and consider exclusive product lines for different channels to reduce competition.

Your digital channels should act as the central hub for your entire operation. Use online data to guide wholesale assortment decisions, pinpoint new retail opportunities, and optimize inventory across all channels.

Operational complexity will increase. Dedicated teams for wholesale account management, retail operations, and channel coordination are essential. These added costs, often 15-20% of overall expenses, are necessary to maintain channel harmony and sustain growth.

Success at this stage comes from understanding that each channel plays a unique role while supporting the others. Digital offers control and insights, wholesale drives discovery and credibility, and retail delivers experiences that amplify both online and wholesale performance. Mastering this balance sets the stage for reaching $100 million in revenue.

Resolving Channel Conflicts: Maintaining Harmony Across Channels

The greatest challenge to omnichannel success often isn’t the operational hurdles – it’s channel conflict. When direct-to-consumer (DTC) initiatives start to eat into wholesale sales or disrupt online pricing strategies, the entire approach can falter. To avoid these pitfalls, brands must establish clear guidelines that ensure every channel thrives. With this foundation, practical solutions for resolving conflicts become achievable.

Ensuring Price Consistency

Keeping prices consistent across all channels is non-negotiable. If customers notice significant price differences between your website, third-party marketplaces, or physical stores, it can harm retailer relationships and create pricing pressures. Retail partners may feel forced to lower their prices, which can erode margins and damage your brand’s positioning. To prevent this, brands should enforce strict pricing policies across platforms.

Additionally, co-op advertising can play a key role in supporting retail partners. By funding local promotions and in-store displays, brands can help drive traffic to physical locations without compromising margins.

Exclusive Products and Territory Agreements

To maintain loyalty among retail partners, differentiating your product offerings across channels is critical. For example, offering exclusive colorways or product bundles to select partners can help reduce direct competition between channels.

Territory protection is another essential strategy, especially when expanding your physical presence. Defining clear geographic boundaries – such as a 3–5 mile radius in urban areas or 10–15 miles in suburban areas – ensures wholesale partners in these zones receive unique product assortments or exclusive items. This minimizes overlap and competition within the same market.

It’s worth noting that physical retail remains a dominant force, with over 85% of sales still happening in stores. Even as this share is projected to dip to around 75% by 2027, retail partners remain vital, controlling most customer touchpoints. Their success directly impacts your growth.

To support retail partners while driving omnichannel integration, tools like store locators, local inventory displays, and "buy online, pick up in store" options can redirect online traffic to physical locations. This approach boosts foot traffic without compromising in-store sales.

Another effective tactic is data sharing. By providing insights on trending products and seasonal demand, brands can help retail partners optimize inventory and merchandising. In return, sell-through data from retailers can enhance your own demand forecasting and product development efforts.

Exclusive in-store experiences, like product demos, fittings, or customization services, further strengthen the value of physical retail. These initiatives encourage customers to visit stores while showcasing the unique advantages of the offline shopping experience.

The ultimate goal is to ensure all channels feel valued and protected. When retail and wholesale partners see your DTC efforts as a way to boost brand awareness, educate customers, and expand the market, they’ll view themselves as allies in your growth rather than competitors.

Managing channel relationships requires ongoing effort. Regular check-ins, performance reviews, and clear conflict resolution processes are crucial to maintaining harmony. Brands that succeed in scaling treat channel management with the same level of importance as product development. After all, even the best products can struggle to grow without strong alignment across all channels.

Achieving harmony not only protects margins but also strengthens the omnichannel framework that’s essential for scaling toward $100M and beyond.

Conclusion: The Omnichannel Requirement

Relying solely on direct-to-consumer (DTC) strategies has hit a ceiling. The brands that reached the $100 million milestone didn’t get there by sticking to digital-only methods – they diversified. With customer acquisition costs ranging from $45 to $150 and platform fees eating up 30–40%, scaling through online channels alone is no longer sustainable.

The sharp decline in Allbirds’ stock by 97% and the closure of Brandless sent a clear signal: digital channels alone can’t sustain a $100 million business.

Key Lessons for DTC Founders

For DTC founders aiming to scale, there are critical takeaways to consider.

The most successful brands don’t abandon their DTC roots – they strengthen them by branching out into omnichannel strategies. Retail stores and wholesale partnerships not only complement online sales but also expand market reach and improve profitability. These partnerships help brands tap into local markets while reinforcing their digital presence.

A practical framework to follow is the 70/20/10 model:

70% digital control: Focus on maintaining customer relationships and owning valuable data.
20% wholesale partnerships: Use these to explore new markets and build credibility.
10% physical presence: Leverage retail stores and pop-ups to amplify brand awareness and sales.

This balanced strategy can significantly reduce acquisition costs to $25–$50 and extend customer lifetime value by creating multiple touchpoints.

Timing is just as crucial as the strategy itself. Starting with wholesale partnerships early, scaling through pop-ups and targeted wholesale channels as revenue grows, and eventually establishing permanent retail locations creates a sustainable growth path. When all channels work together seamlessly, they enhance profitability and support long-term success.

Brands that fail to adopt an omnichannel approach risk stagnation or worse. On the other hand, those that embrace this model – while maintaining harmony through consistent pricing, exclusive products, and territory protections – can achieve the $100 million goal while ensuring profitability.

Call to Action

Nike’s misstep cost them $70 billion. Download our case study, "The $70 Billion Innovation Gap," for actionable insights on building a sustainable omnichannel strategy. Discover why integration always outperforms isolation.

FAQs

Why is an omnichannel approach better for scaling a DTC brand than relying solely on digital channels?

An omnichannel strategy proves to be a powerful way to scale a DTC brand by allowing businesses to engage with customers across various platforms, delivering a smooth and unified shopping journey. Today’s consumers move fluidly between online and offline shopping, and brands that link these channels effectively can reach a wider audience and achieve stronger conversion rates.

Shoppers who interact through multiple channels often bring more value – they tend to spend more and exhibit higher lifetime value compared to those who stick to a single channel. Moreover, adding physical retail locations or partnering with wholesalers can reduce customer acquisition costs (CAC) while enhancing brand recognition and credibility. This blended approach strikes a balance between growth, profitability, and long-term stability, making it an essential tactic for overcoming growth barriers.

How can DTC brands use the 70/20/10 framework to drive growth and profitability?

To make the most of the 70/20/10 framework, direct-to-consumer (DTC) brands should thoughtfully allocate their efforts across channels to drive both growth and profitability:

70% Digital: Prioritize online direct-to-consumer platforms. This approach allows brands to maintain control over customer relationships, gather valuable data insights, and safeguard profit margins.
20% Wholesale: Collaborate with established retailers like Target or Nordstrom to expand your audience and enhance brand credibility. Additionally, working with local boutiques can help foster stronger community ties.
10% Physical: Experiment with pop-up shops to explore new markets and use flagship stores to create memorable, immersive experiences that deepen customer loyalty.

This balanced strategy helps reduce customer acquisition costs (CAC) while increasing lifetime value (LTV), enabling brands to grow efficiently without depending entirely on online sales.

What challenges do brands face when shifting from a pure DTC model to an omnichannel strategy, and how can they address them?

Shifting from a direct-to-consumer (DTC) approach to an omnichannel strategy comes with its fair share of hurdles. One of the most pressing challenges is the rising cost of acquiring customers, driven by the ever-increasing prices of digital advertising. On top of that, ensuring a seamless and consistent customer experience across various channels can be tricky, especially when handling logistics like shipping and returns. The fiercely competitive e-commerce landscape also makes it tougher for online-only brands to carve out a distinct space.

To navigate these challenges, brands can explore new sales channels. This might include forging partnerships with brick-and-mortar retailers or tapping into wholesale opportunities. Broadening the range of channels not only eases dependence on costly online ads but also opens doors to fresh audiences. At the same time, prioritizing personalized customer interactions – through targeted marketing and tailored communication – can boost loyalty and enhance customer lifetime value. By striking a balance between digital platforms, wholesale partnerships, and physical retail, brands can establish a growth strategy that’s both sustainable and scalable.

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