The miracle promised by direct-to-consumer is dead.
D-E-D.
Dead.
A 2026 research report looked at 50 prominent DTC brand failures between 2022 and 2026.
Celebrated brands like SmileDirectClub and Allbirds were included.
SmileDirectClub went from a $4.1 billion valuation to a $39 million sale in 53 months.
99% down.
Allbirds, once worth billions, and on the feet of so many Silicon Valley tech bros, closed all of its US stores…and rebranded as an AI company.
Because duh!
The model promised to “cut out the middleman” and build direct relationships with customers. Instead, it became a cash incinerator.
High acquisition costs.
Unsustainable growth spending.
Zero loyalty.
The simple story the business press will tell is one of bad unit economics.
It’s an easy story to write. It is also wrong.
The failure of DTC is a story about the death of marketing as a strategic function.
The DTC graveyard is littered with financial failures, but it’s also a story of marketing failure.
The same logic that blew billions in cash on these brands is alive and well in boardrooms across every industry.
What Happened to Marketing?
DTC promised relationships.
Cut out the middleman.
Own the customer.
Know them by name.
Serve them directly.
One-to-one marketing…
This is the business version of the Garden of Eden.
It was always BS.
The plan was doomed from the start. Because the marketer who should have been the customer’s advocate, the voice of the market, had already been sidelined.
Before this DTC miracle even began, marketing had been reduced to the person sending the emails, buying the ads…the coloring-in department.
Fun at happy hour.
Not the person who helps shape the strategy.
God, no.
Definitely not the person who speaks for the customer when the big decisions are being made.
The logic of capital: chasing KPIs. Chasing valuations without profits. Chasing customers because…growth.
It convinced a generation of leaders that the only thing that matters is a “growth story” and acquisition.
Marketing became a support function. Someone who answered to sales.
The 4Ps of classic marketing?
Whittled down to one: promotion.
And, really, this buzzword nonsense of strategic marketing communications.
You don’t even get to decide what you are running…just run the ads.
So, when the CEO wanted to go direct, there was no one in the room to say: “This sounds good and all, but what does the customer think?”
Nobody asked that.
Because no one was there with the understanding that it mattered.
Three Key Moments
In making this DTC decision, there are three moments you need to pay attention to.
Consider them three tests of your strategy.
In the destruction of these businesses, three failures.
Discovery:
Someone should have understood how customer discovery actually works.
Customers don’t find brands because they love them. Most brands take up an infinitesimal spot in the customer’s thinking.
They find them because they show up where customers are.
This business model was built on mental availability. “People know us. They will come right to us. Let’s cut out everything else.”
Yet. Mental availability isn’t the same as physical availability.
Which is being there when someone wants to buy and making the decision simple.
It isn’t one or the other…it is both.
The DTC model collapsed the two into one and assumed that would solve everything.
It didn’t.
The Math:
Someone needed to be in charge of the math. The real math.
What would have to be true for us to achieve success…realistically?
I did this math once when DTC, as baseball teams were considering DTC to deal with the fallout of the regional sports network model.
The numbers necessary were incredible.
To hit the baseline numbers of the old business model, teams would have had to convert the entire population at a rate that far exceeded the best marketing conversion rates anywhere in the world.
That’s not strategy. That’s wishful thinking.
The DTC companies never asked the question.
They were telling themselves that the brand would be enough. They knew the customer would follow them…knew it.
They never asked what would need to be true to hit their goals.
It was easier to believe a fantasy.
The Power:
A strategy is only good when it gives you power.
Power over your customers.
Power over your suppliers.
Power over your competition.
Moving out of wholesale surrendered power over all three.
Gave up customer connection. The brand would be enough.
No. It wasn’t.
Allowed the competition a clear path to greater retail distribution. Might as well roll out the red carpet for the competition.
Sold out partners who were long-term allies. “Thanks. But we will take it from here.”
Sorry. You won’t.
A strategy that gives away power like that is retreat.
Bad idea.
Returning Marketing’s Role in the Business
Those three moments happened because marketing has lost its power in many businesses.
It is a tactical function now.
It can’t be. It’s too important.
The real marketer has disappeared. Replaced by the coloring in department of communications.
We need that marketer to come back.
We need that marketer back as the customer’s advocate.
Because the first thing that an advocate does is shut up and listen.
Not a survey. Not a focus group. Not at first.
The first step is to get back in touch with the customers as individuals.
Listen. Really listen.
And you’ll learn things. Uncomfortable things, often.
Like you aren’t as important to your customers as you are to yourself.
Like the competitors you were facing aren’t the ones you are actually competing with.
That people think about you in a way that is entirely contradictory to the way you want them to.
Here’s the thing. Listening will always reveal something uncomfortable.
The data won’t tell you this. The data is reactive. It’s perfect because it’s in the past.
That’s why it is avoided. Research is a threat.
The advocate knows the truth. You are too close to the situation. You think your business is as important to your market as it is to you…and you are always wrong.
That’s never the case.
The marketer’s job is to close that gap.
Not with a new tagline. Not with more ads. Not with a new promo.
With decisions that bring the customer’s voice into the room so you can serve that customer.
That’s not communications.
That’s strategy.
Want to Avoid the DTC Graveyard? Start Here
Don’t want to make the same mistakes these DTC brands made?
I’ve got four questions for you.
Answer them for your business.
NOW.
One.
Write down one surprising thing you learned from your last round of customer conversations.
If you can’t think of anything, you haven’t been having real conversations.
You’ve been looking for justifications for the data.
Two.
Can you name real people who reflect your market segmentation?
Not personas.
Real people.
If you can’t name them, you don’t really know them.
If you can’t name them, you can’t serve them.
Three.
How wide is the gap between the story you tell the world and what the world actually hears?
If you don’t know, that’s the entire point.
You’ve been assuming something that isn’t true.
The DTC brands assumed.
Now…look at them.
Four.
What decision will you make differently because of what you learned from your customers?
This is my version of Peter Drucker’s “What will you do differently on Monday?” question…dressed in a T-shirt instead of a tie.
Drucker knew the distance between insight and action is where most companies die.
The customer conversation is insight…great. The insight turned into action…even better.
Without the second, the first is a waste of time.
If you answer the questions and the answer comes back as “nothing,” you’ve got your diagnosis.
The DTC brands never asked these questions. They didn’t listen.
They declared. They believed. They failed.
The results are right there for everyone to see.
Don’t add your name to that list.
You’ve scored your business. Maybe you are in the danger zone.
Hit reply. Let’s talk about getting you out of the danger zone.