On the heels of yet another consumption orgy, I am beginning to see DTC as a bit of a siren song.
Obviously it is where you start when you enter a market like the US as a consumer tech company. That’s elemental logic. And it feels nice, too. On your own site, you have better margins, more control of the UX, and you avoid the complexity of retail.
However, the U.S. market does not reward DTC-first companies for very long.
Our Q1 survey of 1,001 American consumers really drove this home. And our client work this year has only reinforced the notion that you need to move into other channels as fast as you can when you come to America.
What our data said
Here are a few highlights from the research we did with Audience Audit Inc.
- 66.6 percent of U.S. consumers prefer buy consumer-tech products from large e-commerce marketplaces like Amazon. If you aren’t with Bezos, you are massively disadvanted
- Only 29.9 percent like to buy consumer tech from brand websites.
- Even well-known brands cannot pull consumers away from Amazon, Walmart, Best Buy, and other big retail players.
- Survey respondents from all demographics and party affiliation cited Shipping costs, speed, unclear return policies, and lack of trust as major reasons they DTC sites. Yes, you can deal with this but the baked in trust problem is real.
- 38.8 percent of Americans have abandoned a tech purchase because the brand’s own site created friction — slow delivery estimates, unclear returns, lack of reviews, poor product information. Amazon and big retail website work. Which means your DTC site must too. And sometimes, for some companies that is a big problem.
DTC’s chief allure is higher profit. And while the altar of margin is worth praying at, it is not worth dying on.
What this means for DTC-first foreign brands
If you rely solely on DTC as you enter the U.S., or for too long once you are in the country, here’s what happens:
- You greatly limit your addressable market. Our data is solid, and that is its central theme.
- Many people will think you are making the buying experience harder than it needs to be.
- You lose discovery.
- You put yourself in a trust-gap position, limit earned media (and one of its chief benefits these days – AI-search juju.)
Americans still love retail. In the U.S., trust is outsourced to retailers and marketplaces. If you don’t plug into that infrastructure, you lose.
The better model: DTC as a piece of the puzzle
The brands that scale here take a different path. They keep DTC as part of the equation, but they don’t make it the entire engine. They get onto the platforms where Americans actually shop. They make it easy for consumers to buy, wherever they prefer to buy.
When you combine a direct channel with strong retail distribution, a few things happen:
- Volume becomes possible.
- Discovery improves.
- Your reviews multiply (media almost always prefer covering products that are in retail in our experience)
- Your social proof compounds.
- Your CAC drops.
- Your brand becomes “present” in the market rather than hidden behind a single, unfamiliar URL.
The takeaway
If you are a foreign consumer-tech company trying to grow in the U.S., staying pure DTC is a strategic mistake. It may work for a few months, but it will not take you to scale.
The U.S. market rewards brands that meet consumers where they already are. The sooner you adapt to that reality, the faster you grow.