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Direct to Consumer: A Trap?

Lots of shakeups with DTC brands over the last few months. Big news I read recently was that the meal delivery service, Freshly, has closed their doors forever, and Blue Apron is knocking on death's door, has been pulled from the NYSE.

No matter how much their revenue grows, these companies are just losing hundreds of millions of dollars every quarter, and something's got to give. Usually they just raise more money from VC firms and keep plugging along, but since interest rates have started to increase in early 2022, it seems like that party is over.

Shipping refrigerated or frozen food across the country is a logistical nightmare and it's expensive. It's hard enough to deliver a hot pizza a few miles down the road, imagine putting chicken on a truck for days at a time and delivering door to door, no wonder they're losing their shirts.

This has me thinking about a lot of other DTC industries like mattresses, Casper and Purple. Casper was once a "unicorn" valued at over $1 Billion but sold about a year ago for about 10% of that. What they, and Purple, have both done to keep sales up and costs down is go Wholesale. You know, like the rest of the mattress brands you see.

The question is not, "Can you sell your products online?" That answer is, most likely, yes. But, "Can you be profitable selling your products online?" That's the new billion dollar question! Watch the video for more.


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