Mistake #17: Assuming Bigger Retailers = Bigger Profits

When you’re building a brand, it’s natural to dream about landing national retailers. But a huge mistake founders make is assuming that big retailers automatically mean big profits. Many times, the better profit and healthier business actually come from DTC (direct-to-consumer) or smaller specialty channels.

And Here’s the Twist: DTC Isn’t Automatically More Profitable Either

A lot of founders leave retail and think, “Okay, I’ll sell DTC, that’s where the real money is.”

Not always.

DTC comes with its own profit killers:

• paid ads

• rising CAC

• creative costs

• fulfillment fees

• returns

• chargebacks

• shipping

• packaging

• retention costs

In some categories, acquiring one DTC customer can cost more than the profit from their first order—and if they don’t reorder, you’re underwater.

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DTC in 2015 vs DTC Today

Ten years ago, DTC was the gold rush. Ads were cheap, competition was low, and organic reach was strong.Today:

• advertising costs are high

• competition is aggressive

• attention is fragmented

• customer loyalty is weak

• everyone is fighting for the same audience

DTC is no longer “easy money.” You need strong content, strong branding, and a strong story just to get attention.

The Real Profit Comes From Matching Product to Channel

The mistake is thinking a product automatically belongs somewhere.The truth is:

Some products perform better DTCbecause the story, problem, and solution require explanation.

Some products perform better in retailbecause the price point and grab-and-go format make sense.

Some products perform better wholesalebecause the customer prefers to discover in person.

DTC Can Be Profitable IF…

• your AOV is high

• your margin is strong

• you have repeat orders

• you have a niche audience

• you own the email + SMS relationship

• your product solves a clear problem

• your story translates well online

If you sell a $9 product with low reorder rate—DTC might be a trap.

If you sell a $32 specialized problem-solver with strong repeat—DTC might be your goldmine.

Retail Can Be Profitable IF…

• you match price expectations

• margins survive chargebacks

• lead times don’t break you

• you plan cash flow

• packaging performs on shelf

Sometimes retail volume makes sense.Sometimes it crushes you.

The Takeaway

Don’t assume DTC is easy—or retail is better.Don’t assume DTC = high margin—or retail = big money.

Profitability doesn’t come from the channel.It comes from matching the right product, to the right customer, in the right marketplace, with the right economics.

💡 Founder’s Reflection (Mayer):Some of my most profitable SKUs have been DTC because customers re-ordered again and again. But I’ve also had SKUs that worked much better in retail because they were “grab-and-go.” Once I stopped assuming one channel was better, everything became clearer. The channel isn’t the answer—fit is the answer.