In 2018, I wrote about the rise of Direct-to-Consumer (DTC) brands as they disrupted legacy incumbents with better design, pricing, and customer intimacy. Seven years later, some say DTC is dead. But they’re wrong—DTC isn’t dying. It’s evolving. Just last week, Unilever announced the acquisition of Dr. Squatch for $1.5 billion. Dr Squatch created a social-first, male grooming brand with a cult following and a mastery of modern digital growth playbooks which most recently went viral for selling Sydney Sweeney soap with her ‘actual bath water’.
Beyond the product itself, Unilever was drawn to Dr. Squatch’s proven ability to translate viral buzz into measurable revenue, its first-party DTC data, and its social ROI metrics. This acquisition signifies a return to DTC for the CPG giant and underscores the increasing value of direct customer relationships and sophisticated marketing strategies in a privacy-centric world. Dr. Squatch is a masterclass in 2025-era DTC: social-first marketing, owned data, and authentic storytelling that converts attention into revenue.
So what does this “evolution” look like? Let’s unpack the key trends shaping DTC in 2025—and the opportunities for founders building in this space.
State of the DTC Landscape in 2025
First lets start with some of the basic information about the market. Global DTC e-commerce market is projected to reach $595.19 billion by 2033, up from $162.91 billion in 2024, with particularly fast growth in markets like India and the United States. In the U.S., DTC e-commerce sales are expected to hit $212.9 billion in 2025, a 16.6% increase from 2024.
DTC is no longer just a disruptor but a standard go-to-market strategy for both startups and legacy brands. Both established brands (e.g., Nike, Apple) and digitally native startups (e.g., Warby Parker, Glossier) are leveraging DTC strategies, with established brands expected to generate $187 billion in e-commerce sales in 2025.
The DTC landscape in 2025 is marked by a diverse array of categories—apparel, beauty, food, home, electronics, wellness, CPG, and pet products—each leveraging technology, personalisation, and direct engagement to build loyal customer bases and sustainable business models. The biggest change since I last wrote about DTC brands is the shift from rapid growth (some times without attention to margins) to sustainable profitability, omnichannel integration, and deep customer relationships.
It’s clear that 2025 will redefine what it means to be a successful DTC brand. In this post, I cover the key trends and insights shaping the DTC space:
1. The Omnichannel Evolution: Beyond Pure DTC
The era of pure-play DTC is drawing to a close. Successful brands in 2025 won’t just dabble in other channels; they will master a sophisticated mix of sales channels, including retail partnerships and marketplace presence, to build resilient businesses. Why? Because relying solely on one channel leaves you vulnerable to platform changes and shifting consumer behavior.. Today’s winners are omnichannel-native, blending DTC with retail, marketplaces, pop-ups, and more. For example, Glossier created a partnership Sephora and Oura is available in Best Buy—brands are meeting customers where they are, online and offline.
Another good example is Mr Beast’s Feastables, which is now widely available in major retailers like Walmart and Target, truly bridging the online and physical retail gap. Shopify even emphasizes its platform’s ability to help DTC brands sell across various channels, including social commerce and retail.
The goal? Not just growth, but resilience—diversifying away from Facebook ads dependency, owning more of the customer journey, and maximising profitability.
The challenge lies in integration: seamless UX, consistent pricing, real-time inventory, and unified loyalty programs across every channel.
2. AI Moves from Experiment to Essential
AI is rapidly transitioning from a nice-to-have experimental tool to an essential component for DTC brands. Beyond just marketing, AI is transforming how brands measure and optimise performance across the board.
In 2025, basic personalisation is table stakes. Today’s leading brands are using AI to deliver hyper-personalised, predictive experiences based on real-time behaviour, preferences, and intent.
Hyper-Personalisation is a Game-Changer: Rather than showing basic product recommendations. AI and machine learning are enabling hyper-personalisation, delivering highly tailored experiences based on real-time behaviour, preferences, and purchase history. This also includes predictive replenishment and timing nudges, real-time customer segmentation and optimising promotions to the customer.
Analysing customer feedback and competitor marketing: challenger brands are now analysing reviews, service tickets, and social media interactions to gain insights for product development and packaging. It also helps brands understand competitors in real-time by scanning pricing, product launches, and promotional strategies. AI can process industry reports and social media trends, allowing brands to adjust marketing on the fly.
Smarter measurement and optimisation: The real power of AI lies in its ability to process complex multi-touch attribution data and identify patterns for true incremental value across channels. AI agents are now optimising average order value (AOV) and lifetime value (LTV), offering a sophisticated analysis of customer behaviour.
Boosting Operational Efficiency & Creativity: AI is transforming production cycles in creative industries, enhancing human creativity rather than replacing it. We’re even seeing AI-driven content creation leading to faster social media post production. However, there’s a predicted lack of creatives with the necessary skills to fully utilise new AI tools in 2025. AI-supplemented order management will predict demand and improve picking processes, and automating the entire supply chain will lead to inventory efficiency gains.
Every touchpoint is an opportunity to make customers feel seen, understood and ultimately converted.
3. First-Party Data Is Super Valuable
With third-party cookies fading and platforms tightening data access, brands are shifting hard toward owning their customer data. Brands that fail to build this muscle will struggle to scale profitably in the new data era.
When a consumer buys a Unilever soap in the supermarket, the brand is pretty clueless to who they are and what were their reasons for choosing the product. In contrast, when they buy a soap from Mr. Squatch, the challenger brand has a lot of data about the customer, their preferences, habits, etc.
First-party data is becoming one of the most valuable assets for DTC brands in 2025. This data is crucial for deeper personalisation, more relevant campaigns, and building stronger customer relationships. Brands are wisely expanding data collection through interactive touchpoints like loyalty programs, preference centers, quizzes, and post-purchase feedback loops, all while emphasizing transparency and compliance with privacy regulations.
4. Nearshoring is changing supply chain priorities
The pandemic and most recently Trump’s tariffs (especially on goods from China) have undoubtedly increased interest in domestic and regional manufacturing. There’s a significant pivot towards nearshoring, particularly to hubs in Mexico and Central America, leveraging tariff-free trade advantages like the USMCA. While nearshoring might mean higher labor costs, investments in automation can offset these increases and provide better control over production quality and timing.
The focus isn’t just on cutting costs, but on building resilient supply chains that can withstand political and economic uncertainty. Brands are being advised to evaluate nearshoring opportunities, consider automation investments, and strike a balance between cost and resilience.
5. Social Shopping and The Creator Economy
The old playbook of one-off sponsored posts has given way to long-term alignment and shared upside. In 2025, influencers aren’t just promoting brands… they’re building them. There is a wave of “influence-for-equity” partnerships and creator-led DTC launches (for example Kylie Cosmetics, PRIME by Logan Paul & KSI). A major shift is occurring in how brands work with creators, moving away from treating influencer marketing as a separate channel towards deeper integration. I recently touched on this in my VC Cafe post on the state of the creator economy in 2025.
In addition, social media platforms like TikTok Shops or Snap’s native checkout are pushing Social commerce hard. It’s exploding, with over $100 billion in revenue projected from social media product purchases in 2025. Brands absolutely should extend their presence to platforms like TikTok Shop to capitalise on these new sales opportunities. TikTok, in particular, is a significant driver of DTC trends.
Brands are also leveraging micro-influencers for authentic brand advocacy. Dr. Squatch is a fantastic case study here: their success is driven by social-first marketing, humor, niche audience targeting, and collaborations with stars like Nick Cannon and Sydney Sweeney, translating viral buzz into measurable revenue.
6. The Shifting Financial Landscape and Profitability Focus
Let’s talk about the elephant in the room: DTC brands have faced a “reality check” since 2021. Generally speaking, fundraising for consumer startups is no easy task these days.
According to Carta, funding for consumer startups was down 47% in Q1 2025, and if Ycombinator is any indication for the Zeitgeist, only 5 startups are building products for consumers out of 142 in the latest cohort.
Venture capital investments have plummeted a staggering 97% from 2021 to 2023. Rising acquisition costs across platforms and iOS privacy changes have truly disrupted traditional acquisition strategies. Many venture-backed brands “imploded trying to grow at all costs”. The average annual revenue growth rate for DTC stores slowed to just 10% in 2024, the lowest in five years.
In this tough environment, brands that survived the “Ozoic era” (starting 2023) became leaner and are now forced to concentrate on creating better free cash flow and operating income. The median EBITDA margin for eight-figure brands is currently around 7-8%. Companies are struggling to fund growth due to limited cash flow and high inventory carrying costs. To address this, some brands are cleverly pursuing supplier financing to manage cash flow. There’s a silver lining, though: optimism for a rebound in M&A activity in 2025 is building due to declining inflation, lower interest rates, and recovering valuations.
Indeed, venture capital is a bit to blame in this. It funded unprofitable growth for these non-tech companies, which might have been better suited being non-VC businesses with more reasonable growth targets. Now the industry has had a reckoning, it’s harder to secure that funding.
7. Product Evolution & Niche Disruption
DTC brands are increasingly disrupting new categories far beyond traditional ones like mattresses and eyewear. We’re seeing ventures into areas like breast pumps (Haakaa) and non-alcoholic beer (Athletic Brewing). The food and beverage DTC category is also skyrocketing, being the second fastest-growing e-commerce category globally. Brands are finally realising that product evolution, not just advertising iteration, drives future growth. Diversifying product portfolios can help offset seasonal demand fluctuations and reduce risk. Consumers are demanding deeper product detail, including origin, material lists, packaging, care instructions, 3D views, and testimonial videos.
8. Consumer Behaviour Shifts
Demand for Detail & Discovery: Today’s consumers are savvy researchers and quality-conscious. They want extensive background information on products and expect it to be readily available, emphasizing the need for better product and content discovery and improved website chat/search functions.
Experiences over Goods: Younger generations, particularly Gen Z, prioritize experiences over material goods. This is influencing marketing strategies and opening opportunities for brands to integrate products into experiences.
Health Consciousness: There’s a notable shift towards reduced alcohol consumption, leading to a rise in health-conscious and zero-proof beverages. Brands like Liquid Death have successfully leveraged bold, sustainability-focused marketing in this space, even achieving a $1 billion+ valuation for canned water.
Resale Market: The booming resale market is prompting brands like Levi’s, Zara, and Lululemon to launch their own in-house resale channels. This appeals to eco-conscious Gen Z consumers, many of whom are willing to pay more for environmentally sustainable products. This trend also pushes brands to prioritize higher-quality goods.
9. Brand Building and Community
The most successful DTC brands in 2025 are those built on a strong mission, innovative products, compelling backstories, and truly creative marketing. They understand that building strong communities through content and co-creation is paramount. This means encouraging user-generated content, launching ambassador programs, and creating interactive campaigns.
Brand advocates are becoming more important than traditional influencers in building credibility. The ability to craft a compelling brand story that resonates deeply with customers and encourages word-of-mouth spread is crucial for sustainable growth and reducing reliance on costly paid media. Think about brands like MUD\WTR with its caffeine-tackling mission, Marc’s Magic Rub’s family backstory, Liquid Death’s outrageous campaigns, or The Ridge’s sassy social media presence – they all stand out through unique brand building.
What’s Next for DTC Brands?
DTC in 2025 isn’t dead—it’s just grown up.
Overall, success in 2025 will demand DTC brands to be more sophisticated than ever, particularly in how they measure and optimise performance across an increasingly complex landscape. The winners in this next phase will be channel-flexible, data-smart, and deeply customer-obsessed. They’ll prioritise profits over vanity metrics, partnerships over isolation, and technology as a multiplier rather than a crutch.
The playbook has changed. But for those willing to adapt—it’s game on.
At Remagine Ventures, we are one of the few funds that invests in Israeli startups in the consumer space. If you’re a founder building the next generation of consumer tech/products leveraging technology – we’d love to speak with you!
Eze is managing partner of Remagine Ventures, a seed fund investing in ambitious founders at the intersection of tech, entertainment, gaming and commerce with a spotlight on Israel.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
Eze is managing partner of Remagine Ventures, a seed fund investing in ambitious founders at the intersection of tech, entertainment, gaming and commerce with a spotlight on Israel.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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London VCs from JamJar Investments, MMC Ventures and Samaipata Ventures chime in on the challenges and opportunities in European DTC and lessons learned from investing in several European startup in the direct to consumer space.
