What happened to the direct-to-consumer trend that was supposed to upend retail?

Motley Fool Money starts now.

Welcome to Motley Fool Money. I'm Travis Hoyam, joined today by Lou Whiteman and Rachel Warren.

Today we want to dig into what happened to this direct-to-consumer retail trend. This was supposed to be the big thing.

I'm thinking about companies like Allbirds, Casper mattresses, Warby Parker, Peloton. You remember when Peloton was hot guys?

Barely. A little bit. Five to ten years ago, I mean, this was the hottest thing in venture

capital. A lot of these companies went public and they did not work out well for investors.

Some of that was the timing of coming public during 2020 or 2021 during the pandemic when

valuations were really high. But at the end of

the day, their business models did not turn out to be as profitable and as high growth as a lot

of people thought they were going to be. So what is the story here, Rachel, with direct to consumers?

Where did this business fail? And we'll get to, you know, what kind of survived

in just a second. But I want to focus on the failures first, because I think oftentimes that's

the best place to learn for investors. Yeah, there were a few key issues here. And I think it's very

notable that that initial direct to consumer playbook really relied on cheap and effective advertising,

you know, on platforms like Facebook, meta platforms, alphabets, Google,

but that quickly changed. Then there was this dynamic where more and more brands were

adopting the direct-to-consumer model. They were then all competing for that same very finite

digital ad space. And, you know, ad costs went up for everyone. You had updates like apples

that restricted third-party data tracking.

That also actually made it much more difficult for brands to just practically target specific

consumers and measure the effectiveness of their ads. And importantly, that direct-to-consumer

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