Why lovers struggle straight to user Casper, Allbirds, Peloton
The direct-to-consumer promotion is ending.
A once-busy group of companies, backed by billions in venture capital funding, saw a record year for IPOs in 2021. Now, three years later, most companies are just -to-consumer, or DTC, still struggles with profitability.
“That level of profitability is now what separates the winners in DTC from the losers,” said GlobalData Retail managing director Neil Saunders. “One of the problems with many direct-to-consumer companies is that they are not profitable and quite a few of them don’t really have a sure path to profitability. where capital is expensive.”
Allbirds, Warby Parker, Rent the Runway, ThredUp and others once represented a new era of retail. These digital-first, ultra-modern companies rose to prominence in the 2010s, fueled by the rise of social media advertising and online shopping. With the group came a wave of venture capital funding, fueled by low interest rates.
In just under a decade, venture capital funding exploded, from $60 billion in 2012 to $643 billion in 2021. trade and consumer goods. As the Covid-19 pandemic moved most shopping online, venture capital funds were all in on digital direct-to-consumer companies.
According to a CNBC survey of 22 publicly traded DTC companies, more than half have seen their stock price decline by 50% or more since going public. Well-known companies in the space, such as SmileDirectClub, which went public in 2019, and Winc, a wine subscription box, have announced bankruptcy. Direct-to-consumer mattress company Casper announced it was going private at the end of 2021 after a year and a half of lackluster trading. Meal plan subscription service Blue Apron recently exited the US stock market after its acquisition of Wonder Group.
Now many of the so-called DTC darlings are being forced to re-evaluate their business model to survive in the mobile consumer landscape.
Watch the video above to find out what happened to DTC lovers in the 2010s and how the direct-to-consumer group is faring in the new decade.