Acquisition stopped being cheap
The founding premise of D2C was that buying customers online was cheaper than paying rent. Ad rates rose steadily and that stopped being reliably true, particularly in crowded categories.
Returns are the hidden cost
In apparel and footwear a fifth of online orders come back, and each return costs shipping twice plus inspection. Customers who try before buying return almost nothing, which changes the margin on the whole order.
Stores as media
A store on a busy high street is also advertising that does not disappear when the budget stops. Several brands now judge a location partly on how many people walk past it rather than how many walk in.
Where it goes wrong
Signing long leases before the format is proven has sunk more than one brand. The ones doing it carefully start with short kiosk or shop-in-shop deals and only commit after a year of real numbers.
