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Leaning into festival culture helps Forever 21 connect with Gen Z consumers. Abercrombie & Fitch uses generative AI to speed up the product design process. And Solo Brands embraces the changing definition of the D2C model.

Hard times ahead for D2C healthcare marketers: We unpack Rock Health鈥檚 2022 investment report and what the dropoff in funding means for consumer-focused healthcare brands.

CPG digital ad spending hits $48.79 billion in 2024: Its strength is driven by D2C strategies and increased search advertising.

On today's podcast episode, in our "Retail Me This, Retail Me That" segment, we discuss what established brands have to gain by going D2C, the ways digitally native brands sell in brick-and-mortar stores, and how brands are maintaining a digitally native 鈥渋dentity鈥� for marketing purposes while also going wholesale. Then, for "Pop-Up Rankings," we rank the the digital natives that are primed for success and the ones that need to up their game. Join our analyst Sara Lebow as she hosts vice president of content Suzy Davidkhanian and president of SageBerry Consulting and author of "Remarkable Retail" Steve Dennis.

The trend: We鈥檝e seen more telehealth and D2C health companies tap into markets for hormone replacement therapy for women in perimenopause and menopause and testosterone replacement therapy for men. Vitamin Shoppe and Marius Pharmaceuticals recently rolled out a program that offers the drugmaker鈥檚 prescription testosterone replacement therapy capsules over telehealth.

The bank wanted to introduce credit cards for its retail customers but gave up on the idea after shifting its strategy to weather economic headwinds.

Zooming out: The pharma industry spends billions of dollars annually on D2C advertising. Linear TV is the most prevalent media channel for D2C drug ads as pharma brands look to reach older generations who regularly take medicine. But pharma marketers are also devoting more of their advertising budgets to digital channels such as CTV and search engines.

Hims鈥� core competitor in the D2C healthcare market, Ro, also sells at-home diagnostic kits and has a lab where it processes results. For both companies, the true value is using the test results as a launchpad to get more customers on their treatment plans.

CEO Adam Foroughi and CFO Matt Stump confirmed that ecommerce advertisers, particularly direct-to-consumer (DTC) brands, will play a key role in its strategy. These brands, spanning various verticals such as beauty, household, pets, and accessories, have seen success with paid social advertising on platforms like Meta, TikTok, Snap, and Pinterest.

Brands can also seek to collaborate more closely with retailers on exclusive, lower-priced products and enhance customer engagement through direct-to-consumer (D2C) channels and value-oriented subscription offerings. Innovation is expanding private label鈥檚 share of shopping baskets. Retailers look to cash in on white space opportunities.

Others that are more reliant on D2C brands or cross-border commerce may face increased headwinds. Click here to view our full forecast for US digital ad spending, by tariff scenario.

The years of high double-digit growth for US direct-to-consumer (D2C) ecommerce sales have ended.

First-party retail ecommerce sales will lag the average through 2029, while D2C sales will occupy the middle ground. Amazon will account for nearly 70% of US online marketplace sales. But specialty retailers, including Best Buy, Lowe鈥檚, and Ulta Beauty, are launching their own marketplaces to enhance their value to consumers and brands鈥攁nd potentially challenge Amazon鈥檚 dominance.

Established brands are beating digital natives at their own D2C game. As marketplace and wholesale opportunities obfuscate what it means to sell D2C, brands need to keep up with both their retail and marketing playbooks鈥攐r risk falling behind.

After boosting the D2C model over the last decade, digitally native vertical brands (DNVBs) face a slowing market, with sales growth declining every year through the end of our forecast period in 2028. That means acquiring customers and revenue can鈥檛 solely be done through online channels such as social media, as DNVBs have relied on in the past. Here are three ways DNVBs can continue the momentum of their digital buzz.

Hims & Hers defies digital health market odds: The D2C healthcare company grew revenues and membership鈥攁nd unlike competitors, it鈥檚 increasing its marketing and advertising spend.

Digitally native vertical brands (DNVBs) have a long way to go to catch up to established brands. While established brands will make up $134.55 billion in D2C ecommerce sales in 2023, digitally native brands will make up just $34.84 billion, according to our March 2023 forecast.

Nike鈥檚 close connections to sports and sneaker culture keep it on the top of Gen Z鈥檚 list of favorite brands while its cutting-edge sneaker technology makes the brand a must-have for runners. But Nike must use a mix of D2C and wholesale commerce if it wants to defend its title from the competition.