How CPG Brands Can Succeed with DTC Strategy?

Last Updated on April 8, 2026

Table of Contents

Key Takeaways

CPG DTC brands help businesses build direct customer relationships, eliminate middlemen, and maintain full control over product making, marketing, and distribution.
Without CPG DTC brands strategy, businesses miss critical first-party consumer data needed to fuel product innovation and personalize the customer experience.
CPG DTC brands enable companies to identify pain points across the customer lifecycle and deliver customized omnichannel experiences that drive loyalty and repeat purchases.
CPG DTC brands face real challenges including retail partner conflicts, rising social media advertising costs, and increasing consumer demand for faster and more convenient delivery.

In our previous blog, we had discussed the framework for choosing the CPG eCommerce route. This blog will discuss the success stories and challenges in choosing the Direct-To-Consumer (DTC) route. Among the available routes for CPG Ecommerce, launching or acquiring DTC Channels contributed to 40% of sales growth in the sector ^[1]. DTC brands manufacture and ship their products directly to consumers without relying on retailers or other middlemen. This might allow the brands to sell their products at lower costs than traditional CPG brands and help them maintain end-to-end control over the making, marketing, and distribution of products.

Why CPG Brands Are Investing in Direct-to-Consumer Strategy

With more than 30000 new products released every year, CPG brands require deeper insights about customer needs to fuel product innovation.
CPG brands that invest in DTC models will build direct relationships with customers and foster loyalty. According to recent research, 21.4% of consumers choose DTC brands over wholesalers because of loyalty programs offered ^[2].
Brands can identify pain points across the customer lifecycle and personalize the omnichannel customer experience. For example, Nestle launched a DTC online shop called the KitKat Chocolatory that allowed customers to design their own premium chocolate bars by picking from four types of chocolate and 14 ingredients.
Around 84% of consumers have shopped online since the start of the pandemic. For almost 150 million of them, it was the first time they’d ever shopped virtually ^[3]. CPG brands should take advantage of this change in consumer behavior.
Boost from Venture Capitalists: Between 2015 and 2019, almost 60% of the money invested ($3.3 Billion) by Venture capital firms was put into DTC brands ^[3].

Key Metrics to Measure DTC Success

To understand if a DTC brand is truly successful, in addition to YoY Revenue Growth, there must be a list of parameters to evaluate the effectiveness of DTC brands.

Control over Social Presence: A measure of how effective the brand is in controlling its reputation and customer perception across social media.
Organic Customer Growth: A measure of how effective the brand is in adding new customers or enhancing sales internally (via Existing Customers – Referrals)
Product-Market Fit: A degree to which a product satisfies strong market demand. Certain factors that influence product-market fit are strong word of mouth and customer retention.
Level of control over Distribution Channels: The brand’s level of control over the channels through which end customers receive the products.
Level of Convenience Offered: A measure of convenience offered to the customers to assist them effectively in their Path-to-Purchase (Customization and Personalization)

Exploring Successful Direct-to-Consumer Brand Examples

Over the past few years, the early adopters of the DTC model have seen tremendous success and gained a significant advantage over the competitors. This is true for both incumbents and new entrants. Certain well-positioned start-ups are successfully competing with the biggest CPG brands.

Digitally Native Brands

Casper took on the mattress industry by eliminating unnecessary choices offered to the consumers and enhancing the customer experience by redefining the path-to-purchase.

Dollar Shave Club took on the razor industry by connecting with their customers on an emotional level and making quality products more affordable for customers through subscription services. This helped them in achieving a stable demand and recurring revenue.

Lola developed a strong bond with its customers by tearing down the stigma surrounding feminine care and sexual health products. Lola offers a convenient, transparent, and customized way for women to get exactly what they need for their period every month.

Legacy Brands

A well-established giant like Coco-Cola started riding the DTC wave a decade back through its ‘Share a Coke’ initiative. Through Cokestore.com, it offers personalized bottles of aerated drinks, apparel, and gifts. Having access to first-hand consumer insights for years, Coco-Cola quickly reacted to changing consumer sentiment on sugar and health.

Similarly, PepsiCo launched its DTC websites Snack.com and Pantryshop.com with a wide variety of products.

Oral Care giant Colgate recently launched its Smart electric toothbrush (with sensors and an app to track progress and provide brushing guidance) and Teeth whitening kits under its DTC channel shop.colgate.com.

Lessons from Failed DTC Brand Strategies

While several brands have succeeded in venturing into the DTC space, a few brands couldn’t capitalize on the DTC wave.

Cocodune wanted to transform the swimsuit shopping experience and hence came up with the “free home try-on platform” approach. Customers can either buy the product if they like it or return it free of cost. This piqued the interest of customers, and the idea went viral initially. But the brand failed to consider high shipping, return, and cleaning costs. This, coupled with the seasonal decline of swimwear demand and an unanticipated currency hit (tied to Brexit), forced the brand out of business.

Raden sold smart suitcases that can charge mobile and transmit their location to an app. Initially, the idea sat well with the customers, but people often don’t replace/misplace their suitcases, making recurring business almost impossible. Soon external factors came into play. Airlines banned smart luggage with non-removable lithium-ion batteries citing fire risks. Though Raden batteries were removable, removing them would wipe out their key features and value proposition.

Brandless offered an extensive range of daily-use lower-end CPG products for just $3 by doing away with the “unnecessary expense” of branding. Brandless continued to experiment with its pricing strategy. It offered a new price point of $9 for slightly superior products and a subscription model with a $36 yearly membership fee (included free shipping). Brandless bet more on the price-conscious customers and severely undermined the concept of ‘Brand Loyalty’. Brandless also relied heavily on “word-of-mouth” marketing for its wide variety of products. Their repeat purchase ratio fell every quarter, and costs started catching up, forcing them out of business.

Overcoming Challenges in the DTC Journey

Let us look at some of the obstacles CPG brands are facing while taking the DTC route

Creating an easily navigable website and app is challenging. Brands need to have a “customer-first” mindset while building an app to enhance the customer experience.
Opening up DTC channels can create conflicts with Traditional retail partners for well-established incumbents. Therefore, brands with both DTC and retail partner options must work to keep the latter happy.
Brands launching their DTC channels should have proper teams in place for creating diverse content. Such content creation should be aimed at capturing Organic search traffic.
Differentiating a DTC product from its competition is increasingly difficult. This requires a unique value proposition from the brand, thereby resulting in brand recognition.
Increasing advertising prices on social media platforms is cutting into profit margins of DTC brands. Therefore, they need to plan their media buying effectively to improve their margins.
Increased demand for convenience, faster turnaround, and intraday delivery has challenged the current DTC brands to stay ahead of foreseeable (and sometimes unforeseeable) challenges.

In summary, CPG brands should navigate the challenges and keep up with the changes in the industry to stay ahead of the competition and excel in the DTC space. Watch this space to know more about the upcoming channels in CPG eCommerce.

Accelerating Your CPG DTC Strategy with LatentView Analytics

At LatentView Analytics, our data science experts seize the opportunity to make sense of big data and turn them into insights for our clients to make data-driven business decisions. Get in touch with us at marketing@latentview.com to know more.

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FAQs

1. What is a direct-to-consumer (DTC) strategy?

A direct-to-consumer approach allows brands to sell products directly to customers without intermediaries. A well-defined CPG DTC strategy helps brands gain control over customer experience, pricing, and data.

2. Why are brands shifting toward DTC models?

Brands are adopting DTC models to build stronger customer relationships, access first-party data, and deliver personalized experiences. A strong CPG DTC strategy enables better engagement and long-term loyalty.

3. What are the key benefits of selling directly to consumers?

Selling directly improves customer insights, strengthens brand control, and enhances personalization. A well-executed CPG DTC strategy also helps drive repeat purchases and higher margins.

4. What challenges do brands face in the DTC journey?

Common challenges include logistics, rising digital marketing costs, seamless experience delivery, and managing retail partnerships. Overcoming these is critical to scaling a CPG DTC strategy effectively.

5. How can brands succeed with a DTC approach?

Success depends on understanding customer needs, offering a clear value proposition, and investing in digital capabilities. Continuous optimization is key to making a CPG DTC strategy sustainable and scalable.

LatentView Analytics

LatentView Analytics has been helping enterprises make data-driven decisions for nearly 20 years. The company brings deep expertise in data engineering, business analytics, GenAI, and predictive modeling to 30+ Fortune 500 clients across tech, retail, financial services, and CPG. A publicly traded company serving the US, India, Canada, Europe, and Singapore, LatentView is recognized in Forrester's Customer Analytics Service Providers Landscape.