DTC Brands Struggled with Profitability Prior to COVID-19. Now What?
While the pandemic provided some relief to high customer acquisition costs in the near term, it doesn’t necessarily equal long-term profit.
For certain direct-to-consumer brands, the pandemic invited some of their highest sales as consumers were forced to shop online while physical stores shuttered.
In May, Chewy’s first quarter net sales grew 46% year over year to $1.6 billion, Casper’s rose 26% to $113 million and Wayfair’s direct retail net revenue increased 20% to $2.3 billion.
While revenues are up at these retailers, profits continue to lag. Chewy’s loss in the first quarter grew 62% to $48 million, Casper’s loss grew 98% to $35 million and Wayfair’s loss grew 43% to $286 million. But as consumers became more comfortable with making purchases online during the pandemic, DTC brands may have received the much needed boost they had been waiting for.
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