DTC is a Phase 2 Channel For Most

Before the pandemic increased drop-shipping charges and Apple’s privacy protection kicked in on iOS devices, DTC was a much cheaper channel for founders to get into right away.

You could simply geofence your Shopify “order now” button to appear only locally, where it was relatively inexpensive to ship lightweight packages. 

DTC is still an important channel to get into long-term for the sake of learning more about your fans (who want cases of your product), and it can also be a profitable volume channel. 

But in my view, it is too unprofitable to launch into many CPG categories where trial order volumes are too low (i.e., less than $75). The power of DTC in most CPG categories is less in a trial (where consumers generally want one serving or one multi-serving pack) and more in rewarding fans with cheaper, subscription-based access to a specialty good they love. 

So, enter DTC when your business has entered Phase 2, when your product is lightweight and when you have decent repeat rates. Use DTC to reward fans locally/regionally first with subscriptions. 

Do it when you know you have weekly consumption of 1+ units among your fans. Otherwise, shipping cases to them won’t lead to repeat orders, and you won’t get your return. 

For example, DTC ketchup is definitely not something you want to do from the start.