The consumer packaged goods (CPG) industry is a behemoth, contributing 10% of the national GDP and supporting one in ten American jobs. Yet as consumer habits evolve quickly and ecommerce continues to gain market share, CPG companies are facing three serious challenges:
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Expenses: They spend nearly a quarter of their revenue on marketing, by far the largest allocation of any industry (Deloitte/WSJ analysis, 2017).
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Insufficient Data: They have little to no first-party customer data because they sell to consumers through retailers and marketplaces, not directly. This gap is accentuated by an increase in privacy regulations, like GDPR and CCPA, and a move toward a cookieless digital world.
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Competitors: They have growing competition from direct-to-consumer (DTC) startups and private labels from established retailers.
CPG brands have reached a critical decision point. They must expand their traditional B2B2C business model and invest in DTC models to remain relevant and competitive in a changing landscape. The pandemic accelerated ecommerce expansion, and that shift has held.
By creating new products for DTC brands, categories, segments, and themes—especially in emerging markets—CPG companies can become more cost-effective, data-driven, and agile. Instead of carrying a marketing budget that heavy, they can allocate some of that budget toward lower spend channels. They can build direct relationships with customers, cultivating trust, collecting first-party data, and personalizing customer experiences across different brand channels.
Some legacy CPG companies—like PepsiCo, Clorox and our client, AB InBev—are already rolling out their own DTC brands. This is a smart, low-risk way to experiment with new products and markets, without having to transform a large company overnight. If DTC efforts are successful, they can coexist with traditional channels and contribute to company-wide goals.
Three Ingredients for a Successful DTC Launch
A DTC launch doesn’t have to be an expensive or laborious undertaking. If your company is considering branching out into DTC sales with your products, you can be ready to go to market in approximately a quarter. Here are the three main elements you need to create an effective DTC technology stack:
1. Ecommerce Platform
Ecommerce platforms like Shopify, Wix, and Squarespace make it simple to promote new products and manage sales and fulfillment without a large upfront investment. Since your company sells directly to customers, you own the relationship you build with them. You can expect your marketing execution to improve with your ability to gather first-party data, as you learn more about your customers’ preferences, behaviors, and buying habits. Most importantly, you have permission to use their customer data across your brand, giving you opportunities to offer one-to-one personalization, research new product ideas, and enhance overall customer experience.
2. Logistics Provider
The logistics of a DTC model are straightforward: your customer orders a product, and you ship it to their doorstep. Reliability, flexibility, and cost-effectiveness are key when selecting a logistics partner. You need to know that you can rely on them to deliver orders on time and provide real-time updates about delays or other problems. Ecommerce platforms integrate with APIs from traditional shipping companies like FedEx and UPS, as well as newcomer delivery services like DoorDash and Uber.
3. Customer Data Platform
Customer data is only useful if you can organize and analyze it strategically. A customer data platform (CDP) is a centralized database that connects information from disparate data sources, such as social media, email marketing, and ad campaigns. When you have a unified view of all your customer data, across multiple channels and brands, you can optimize your marketing strategy and deliver a more personalized customer experience. You also avoid costly or time-consuming mistakes, such as unwittingly violating data protection regulations or targeting duplicate customer profiles.
As consumers spend more of their money and time online, DTC brands are ideally positioned to grow and thrive. CPG companies have the chance to explore new opportunities in the DTC business model—or risk getting left behind. Editor’s note: The above article first appeared on Forbes.com as part of the Forbes Communications Council series, which you can view here.
Why wholesale-only CPG brands hit a growth ceiling
A wholesale-only model caps how well a CPG brand can know and serve its buyers, and the cap tightens as retail shifts online. Four mechanisms do the damage:
- You ship product but never meet the customer. The retailer or marketplace owns the transaction record, so the brand cannot see who bought, what else they bought, or whether they came back. Retention marketing is impossible with a shopper whose name you never learned.
- Demand signals arrive late and pre-aggregated. Retailer point-of-sale and syndicated data report what sold, where, and when—weeks after it sold. By the time a decline is visible in the numbers, shoppers have already formed new habits.
- Trade spend absorbs the marketing budget. Slotting fees, promotional allowances, and retailer media packages are deducted before the brand sees revenue, and they buy visibility on someone else’s shelf rather than an asset the brand keeps.
- Innovation moves at the retailer’s cadence. A new product can wait on the next assortment review, and a slow trial read can end the line before it finds its audience.
The gap is structural, not a marketing problem: it comes from where the transaction happens, so no amount of retail marketing spend closes it. DTC does not replace that system, but it opens a pressure valve. A direct storefront produces full-margin revenue on part of the volume, a live feed of who is buying and why, and a place to test products, claims, and price points without waiting for a planogram decision. Brands that treat DTC as a learning channel, not just a revenue line, carry that evidence back into retail negotiations—with something a syndicated report cannot show.
How to add DTC without fighting your retail partners
The first objection inside a CPG company is rarely technical—it is the fear that a DTC store reads as a declaration of war on the retailers who carry most of the volume. That outcome is avoidable, and the brands that avoid it follow a recognizable pattern:
- Hold price parity on identical products. Undercutting the shelf price of the same SKU turns every retail buyer into an adversary, and retailers notice quickly. The DTC store competes on bundles, subscriptions, and convenience—never on price.
- Differentiate the assortment. Give DTC what retail structurally cannot carry: variety packs, larger formats, refills, limited editions, and early access to new lines. When the DTC catalog extends the retail one, the store looks like brand-building rather than volume poaching.
- Use DTC as demand generation for the shelf. Sampling, new-product launches, and community programs create pull that shows up in the retailer’s own point-of-sale data. A buyer whose category is growing because of a brand’s DTC activity has no grievance to act on.
- Bring retail partners along early. A buyer conversation about the DTC plan, framed around category growth rather than volume shift, costs little and prevents the surprise that poisons the relationship.
Marketplaces deserve their own note. Selling through one puts the brand in front of motivated shoppers, but the platform keeps the customer record, so a marketplace storefront grows revenue while leaving the data gap exactly where it was. If marketplace volume matters, the DTC store is what converts that demand into a relationship—inserts, registration prompts, and refill subscriptions give marketplace buyers a reason to identify themselves.
The classic failure mode runs in the other direction: aggressive DTC discounting, followed by lost shelf space and a smaller business than the brand started with. Price discipline is the difference between adding a channel and starting a conflict.
The DTC economics check: run the numbers before you launch
DTC for CPG fails on math more often than on marketing, because parcel economics are unforgiving compared with a pallet. A case shipped to a distribution center spreads freight across many units; a single jar in a mailer pays the full fixed cost of the trip. That difference decides which products belong in a DTC assortment, and it is why heavy, low-priced items often lose money before marketing even starts. Before committing budget, establish four numbers and the failure mode each one guards against:
| Question to answer | What to establish | Why it matters | Failure mode |
|---|---|---|---|
| Does a single order make money? | Contribution margin per order: average order value minus landed product cost, picking and packing, parcel shipping, payment fees, and returns | Acquisition is only fundable if the first order carries part of its cost | Orders look profitable until shipping and returns are counted, and every incremental sale loses money |
| How much does a customer cost? | Blended acquisition cost across paid social, search, retail media, and affiliate marketing, with the payback point measured across the first repeat cycle | Low order values mean repeat purchases, not the first sale, have to repay acquisition | Discount-heavy launches attract one-time deal hunters, and acquisition cost never repays |
| Will customers reorder? | Repeat purchase rate measured against the category’s natural consumption cycle, plus subscription uptake on replenishable products | Lifetime value in CPG is a reordering question, and only lifecycle marketing can drive it | Treating a consumable like a fashion label—campaign-led, with no reordering logic—leaves the channel dependent on paid traffic |
| Where does the data land? | Whether order, consent, and preference data flows automatically into the brand’s CDP instead of staying locked inside the ecommerce platform | The data advantage is the point of the channel | Data trapped in a storefront tool can never inform lifecycle, retail media, or product decisions |
A brand that cannot answer these questions is not ready to spend on acquisition. The safer sequence is to launch narrow—a few SKUs, fulfillment costs measured honestly, lifecycle flows live on day one—and let the numbers mature before scaling spend.
What first-party DTC data changes in daily operations
Collecting first-party data is the headline benefit of DTC; the benefit only materializes when the data changes what the company does each week. Three loops do most of the work:
- Lifecycle marketing timed to the consumption cycle. Replenishable products have a rhythm: welcome flows, refill reminders set to that rhythm, and winback offers after a missed cycle turn one purchase into a habit. This is also where personalization is heading—agentic personalization applies AI agents to individual journey decisions, which favors brands whose customer data is unified enough for an agent to act on.
- Evidence that strengthens the retail business. Which claims drive repeat purchases, which product pairings lift basket size, which cities over-index—these findings sell in. A category buyer who hears that a variant reorders at a rate syndicated data cannot show has a reason to expand shelf placement, which is how DTC becomes an argument for more retail, not less.
- Reach beyond the storefront. Consented customer lists can seed prospecting on retail media networks, whose inventory is increasingly traded through programmatic infrastructure such as an ad exchange, so the data earns reach even where the brand does not own the shelf.
None of this requires exotic tooling—the third ingredient above, a CDP, exists to make these loops routine. What it requires is ownership: someone in the organization whose weekly job is to read repeat rate, lifecycle performance, and what the data says about the assortment, and to act on it. Data that nobody operates on is just storage.
There is also a second-order reason to own the direct relationship: buying is beginning to shift toward AI-mediated commerce, where assistants research options and complete reorders on a shopper’s behalf. Brands prepared for agentic commerce—structured product data, subscription and reorder capability, consent-based customer records—are legible to that layer of the market. A wholesale-only brand is invisible to it.
FAQ
Does adding DTC mean abandoning retail partners?
No—for an established CPG brand, DTC works best as a complement to retail, not a replacement. Retail still moves the bulk of the volume, and the DTC channel adds full-margin revenue on part of the business, direct customer relationships, and a testing ground for new products. The coexistence rules are simple: keep prices consistent on identical products, give DTC an assortment retail cannot carry, and share the plan with retail buyers early.
Why do most CPG DTC programs stall?
Most DTC programs stall because the first order never repays acquisition and repeat purchases never compound. Packaged goods carry small order values, so a channel that leans on constant paid traffic and discounting loses money on every cycle. The fix is unglamorous: measure contribution margin per order honestly, launch lifecycle and replenishment flows on day one, and design the DTC assortment for reorders—bundles, refills, and subscriptions—so later purchases arrive without another ad.