Why Wholesale Still Matters: Hybrid DTC-Retail Models Power Modern Brand Strategy

Recent data and brand behaviors suggest a more nuanced picture than “wholesale is dead.” While DTC and e-commerce have disrupted many aspects of traditional distribution, wholesale remains both large and (for many brands) highly profitable. Simultaneously, many DTC brands are recalibrating, moving away from pure‐play models toward hybrid strategies combining DTC with wholesale or retail partner channels to manage costs, exposure, and growth.

1. Wholesale’s persistence and profitability
Despite the rise of DTC, wholesale still accounts for around 60% of total sales for most brands in relevant surveys. Its advantages—scale, established retail relationships, broader reach—remain compelling, especially for brands seeking stability and geographic expansion.

2. DTC under economic pressures
Pure DTC models face headwinds: customer acquisition costs rising significantly (often 25-40%), profitability challenges, and diminishing novelty. Brands that once thrived on direct sales alone are recognizing limits in reach, logistics burden, and margin squeeze.

3. Hybrid and omnichannel as the dominant strategy
Brands like Warby Parker, Glossier, Rhode, and legacy giants like Nike / Adidas are pivoting toward or re-emphasizing wholesale/retail partnerships. For many, the strategy is not to abandon DTC, but to combine DTC control over brand, data, and experience with wholesale partnerships that deliver scale, reach, and potentially better margin leverage.

4. Wholesale is evolving, not disappearing
The middleman role is adapting: digitization of B2B platforms, AI for forecasting/pricing, greater demand for sustainability and supply chain traceability, and expectations for efficient fulfillment and transparency are transforming wholesale. Brands that resist these shifts risk obsolescence.

Strategic implications
• Brands should evaluate channel mix more dynamically, balancing DTC margins against wholesale volume and reach.
• Operational capabilities (logistics, fulfillment, inventory management, returns) are becoming core competitive levers—especially in hybrid models.
• Investment in data, digital tools, and sustainability reporting is critical for both wholesale and DTC success.
• Retailer-brand relationships are still powerful: shelf space, retail media, and exclusive offerings are strategic tools for exposure and loyal customer acquisition.

Open questions
• How much can wholesale margins improve without sacrificing brand positioning or customer experience?
• What operational scale is required to make hybrid models (DTC + wholesale) profitable?
• Can wholesale partners deliver the same speed and customer intimacy consumers expect from DTC?
• How will global trade, regulation, and sustainability pressures change the cost structure for wholesale vs direct channels?