What I'm Seeing in the DTC Market Right Now

I talk to a lot of DTC founders. Between my portfolio companies, the brands we work with at Paking Duck, and the deal flow I see as an investor, I probably have conversations with 15-20 consumer brand founders every week. Here's what I'm picking up on right now.

The "premium affordable" segment is winning. The brands growing fastest in my portfolio aren't luxury and they aren't value. They're in this sweet spot where the product feels premium — great packaging, strong brand, quality ingredients or materials — but the price point is accessible. Think $15-35 for beauty, $20-50 for food/beverage, $30-80 for wellness. Customers are trading down from luxury but trading up from generic. This is where Doe Lashes lived, and I'm seeing the same pattern across categories.

Retention is the new growth. Two years ago, every brand conversation was about CAC and top-of-funnel. Now it's all about repeat purchase rate, subscription revenue, and customer lifetime value. The brands that built loyal customer bases are thriving. The ones that were acquisition-dependent are struggling hard. Paid acquisition costs have roughly doubled since 2021 in most DTC categories, and they're not coming back down. If your business model requires cheap Facebook traffic to work, it's time to rethink the model.

Packaging is getting more intentional, not less. You'd think that with margin pressure, brands would cut packaging costs. Some are. But the smart ones are actually investing more in packaging and cutting elsewhere. They've figured out that great packaging drives organic social content, reduces returns, and increases perceived value — all things that improve unit economics even if the per-unit packaging cost goes up slightly. At Paking Duck we're seeing custom packaging orders grow month over month. Brands are coming to us specifically because they want their packaging to do more marketing work so they can spend less on ads.

The macro bet I'm making: the next wave of successful DTC brands will be built on retention, community, and physical brand experience rather than growth hacking and paid acquisition. The founders who understand this are already building differently. The ones who are still chasing the 2020 playbook are going to have a rough year.