There has been a lot of talk about the 'state of DTC' after a fantastic article from Anna Hensel at Modern Retail earlier this week.
The article claims that 'zombie brands' are 'plaguing' the industry. While there are undeniable headwinds in our industry right now, there actually seems to be a profound tale of 2 cities going on, according to iris data. Let me explain 👇
If your brand is over $15m, things actually may be going pretty well, all things considered. If you are under $15m, its hard and requires a lot of work and attention to right metrics to get profitable.
In 2024 - With regards to revenue - a lot of scaled brands are continuing to grow. On average, a brand on iris with GMV in excess of $15m has grown around 35% or so YoY
Meanwhile, brands sub $15m are shrinking to the tune of double digits %s
With regards to profitability, brands > $15m are seeing an uptrend in cumulative contribution margin dollars since January of 2023.
Brands below $15m in revenue are having a harder time seeing profitability gains, and are on a cumulative contribution margin downtrend since January of 2023, though not by much.
So, what does all of this mean?
A) its hard to be the little guy
B) Nothing can stop product market fit
C) Not all brands under $15m are zombie brands, its just harder
Data disclaimers:
- Iris is still pretty small, and represents ~$2B GMV
- Iris brands have a profitability bias (given we are an FP&A platform)
- The # of brands on iris above/below $15m is almost 50/50
- This data includes amazon
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