What does "direct-to-consumer" actually mean in 2026?
D2C is products sold by brand manufacturers straight to consumers through owned websites, apps, and stores, skipping wholesalers, retailers, and marketplaces entirely [1]. That definition hasn't changed. What has changed is who's doing it and why.
A decade ago, D2C was a differentiator, a signal that a brand was digitally native, venture-backed, and unbothered by legacy retail. That's no longer true. Nike, Lululemon, Gap, and Zara all run substantial direct channels alongside wholesale, and the model no longer sets a brand apart on its own [1]. As one eMarketer analysis put it plainly, D2C "no longer distinguishes a brand. It complements broader distribution" [1].
The growth curve backs that up. US D2C sales are projected to hold at roughly 19% of total US retail e-commerce sales through 2028, a flat line after the sharp gains of the pandemic years [1]. In 2024, the forecast for that plateau sat even lower, near 14.9% for the following year, underscoring how quickly the ceiling arrived [2].
Why is D2C growth slowing down even as more brands adopt it?
Growth is slowing because the conditions that made D2C cheap to scale are gone: paid social got more expensive, competition intensified, venture funding tightened, and many brands never built durable unit economics [1] [2]. The model matured faster than most operators' cost structures did.
“Regardless of whether you're an established or digitally native brand, you need to be realistic about having a balance between wholesale and D2C. No business can be entirely D2C.”
Four structural shifts explain the slowdown:
Physical retail hasn't gone away either. It still made up 83.7% of all US retail sales in 2024, worth $6.234 trillion, a reminder that stores remain too powerful a channel to abandon [2].
- Rising acquisition costs. Apple's App Tracking Transparency, launched in 2021, made the targeted social advertising that let digitally native brands scale cheaply far more expensive [1].
- Intensified competition. Established brands adopted D2C tactics while keeping superior brand recognition, and Amazon and other marketplaces kept absorbing e-commerce share [1].
- VC funding contraction. The era of cheap capital that subsidized growth-at-any-cost D2C brands ended, forcing a reckoning on profitability [1].
- Unresolved unit economics. Many digitally native vertical brands never reached sustainable margins even during their fastest growth [1].
What happens when a D2C brand scales faster than its infrastructure can support?
Two of the category's best-known names show what happens: heavy investment in owned stores and channels without the operational discipline to back it up erodes margins until the brand runs out of options. Casper and Allbirds both lived that arc, on different timelines.
Allbirds has since cut its US store count from 45 to 21 and shrunk the footprint of the ones that remain, while re-entering wholesale relationships it once avoided [3]. Casper's new owner has committed to building "a comprehensive growth and profitability strategy" for the brand, including revisiting which channels it sells through [4].
Neither company treated D2C as a stand-alone business model in hindsight, and both are now leaning on the retail partners they initially bypassed.
| Brand | Signal moment | What went wrong | Outcome |
|---|---|---|---|
| Casper | 2020 IPO | Losses persisted for years; sold Canadian operations for $20.6 million in 2023 to raise cash [4] | Became a subsidiary of foam manufacturer Carpenter Co. in November 2024, after already being taken private by Durational Capital Management in 2022 [4] |
| Allbirds | $297.8 million revenue peak in 2022 | Opened too many, too-large stores; delayed wholesale deals with chains like Nordstrom, betting its own channels were enough [3] | Revenue fell more than a third by 2024; the company lost $419 million over five fiscal years on $1.24 billion in sales, and shares are down over 95% since its 2021 IPO [3] |
Why is D2C becoming a data and intelligence layer rather than just a sales channel?
D2C's real value in 2026 has shifted from sales volume to control: control of the customer experience, the first-party data, and the brand narrative itself [1]. That reframing matters more to commerce leaders than the plateauing growth curve does, because it changes what the channel is for.
Three data points support the shift:
That last figure is reshaping what a D2C site has to be. Structured data, detailed product content, and credible reviews now determine whether a brand surfaces inside an AI-generated answer, not just whether it ranks on a search results page [1]. D2C sites, in other words, are becoming AI-ready storefronts built to serve both human shoppers and the agents researching on their behalf [1].
- More than 55% of US consumers say they feel more connected to brands when shopping on brand-owned websites, and nearly 60% shop direct specifically for exclusive benefits, according to a November 2024 EMARKETER and EWS survey [1].
- Shoppers consistently name brand websites as a leading source of trusted product information, particularly for electronics and apparel, per January 2025 Bazaarvoice data [1].
- Traffic from generative AI sources to brand sites jumped 1,200% between July 2024 and February 2025, based on Adobe Analytics [1].
How is Gen Z changing what D2C needs to deliver?
Gen Z buys direct from brands far more than older cohorts do, but it's a harder relationship to keep than past generations offered. That combination is forcing D2C strategy to prioritize authenticity and community over pure performance marketing.
The numbers illustrate the tension. Some 28% of Gen Z in the US regularly buy D2C, compared with 13% of the total population, according to March 2025 data from KPMG [1]. At the same time, 61% of Gen Z adults have used an AI-powered tool to help with a purchase in the past year, per September 2025 PayPal data, making this the first AI-native shopping generation [1].
This cohort discovers brands through creators and short-form video rather than search or retail browsing, and it is also less loyal and more price-sensitive, willing to switch for better value or stronger alignment with its expectations around authenticity [1].
What should commerce leaders take from D2C's maturing phase?
The takeaway isn't that D2C failed. It's that D2C stopped being a business model on its own and became one channel inside a diversified commerce strategy that has to work with wholesale, marketplaces, retail media, and physical stores together [1].
For 2026, that translates into five concrete priorities for marketers and commerce teams [1]:
Casper and Allbirds are what happens when a brand skips that last point for too long. The brands still growing profitably in 2026 are the ones that never treated D2C as separate from the rest of their commerce operation in the first place.
- Treat D2C as one channel among several, not a stand-alone identity, and integrate it into a genuine omnichannel growth strategy.
- Prioritize brand equity and Gen Z relevance over acquisition tactics alone, since performance marketing drives trial but not retention with this cohort.
- Build first-party data pipelines and incentivize direct relationships through loyalty programs, apps, and exclusive benefits.
- Optimize product content and structured data for AI-mediated discovery, not just traditional search.
- Focus on profitable growth and order-level unit economics instead of top-line revenue alone.
Sources
- [1]EMARKETER, FAQ on direct-to-consumer commerce: How to make D2C profitable in 2026 — emarketer.com
- [2]EMARKETER, 3 reasons why D2C's share of ecommerce sales is plateauing — emarketer.com
- [3]Fortune, Can Allbirds get its groove back? Once the go-to shoe of tech elites, the eco-friendly brand is going back to its roots — fortune.com
- [4]Retail Dive, Casper finds new owners through Carpenter Co. deal — retaildive.com
