Strategy
Wholesale and direct-to-consumer sales require different cash flow planning, inventory allocation, and margin structures. Most brands need both channels eventually, but the right starting point depends on your production capacity, working capital, and whether you can afford to hold inventory for 60 to 90 days while waiting for retailer payments.
Direct-to-consumer sales typically yield higher per-unit margins because you capture the full retail price. Wholesale sales move larger volumes per order but at 40 to 50 percent of retail, and payment arrives weeks after shipment.
Example: a candle that retails for $30 on your Shopify store costs you $8 to produce and $5 to ship to the customer. Your gross margin is $17, or 57 percent. The same candle sold wholesale at $15 (50 percent of retail) with $3 shipping to the retailer gives you $4 per unit, or 27 percent margin. If the retailer orders 48 units, you earn $192 gross profit on one purchase order. To match that profit through DTC, you need 11 individual orders, each requiring its own pick, pack, and ship cycle.
The wholesale order takes less fulfillment labor and predictable shipping cost. The DTC orders give you customer data, email addresses, and the ability to remarket. Neither margin is better in isolation. The question is which one your business can execute reliably right now.
Wholesale payment terms stretch your cash cycle. A retailer places an order today, you ship in one to two weeks, and payment arrives 30 to 60 days after the invoice date. During that window, you have already paid your manufacturer, your shipping carrier, and any packaging suppliers. You are financing the retailer's inventory.
DTC orders settle in two to three business days through your payment processor. You receive cash before you restock, which shortens the time between production cost and revenue. If your working capital is tight or you rely on revenue to fund the next production run, DTC cash flow is easier to manage.
New brands often cannot afford to extend net terms to retailers and fulfill DTC orders at the same time. If you have $10,000 in inventory and a retailer orders $6,000 wholesale, you have tied up 60 percent of your stock for 60 days. Your DTC channel goes out of stock unless you can produce or purchase more inventory immediately. For help structuring payment terms that protect cash flow, see wholesale payment terms for new brands.
Wholesale orders arrive in larger quantities and less frequent intervals. A retailer might order 50 units twice a year. DTC orders arrive daily in ones and twos. Your production and inventory planning must match the order pattern of your primary channel.
If you produce in small batches or work with a co-packer that requires minimum runs, wholesale orders can help you hit production minimums and reduce per-unit cost. If you produce on demand or hold limited stock, DTC is easier to manage because you can pause sales when inventory runs low.
Brands that split inventory between channels need a system to reserve stock for confirmed wholesale orders while leaving enough available for DTC. Without that system, a large DTC week can leave you unable to fulfill a retailer's reorder, which damages the relationship. A wholesale ordering portal with live inventory visibility prevents buyers from ordering stock you cannot ship.
DTC requires ongoing spending on ads, email, content, or influencer partnerships to drive traffic. Wholesale shifts customer acquisition to the retailer. You pay once to acquire the retailer, then they acquire the end customers.
DTC customers who return for a second purchase are more profitable than first-time buyers because you do not pay acquisition cost again. Wholesale customers (the retailers) also reorder, but reorder rates depend on how quickly your product sells through on their shelves. Slow sell-through means no reorder, even if the retailer liked working with you. For tactics that improve retailer reorder rates, see how to get retailers to buy again.
Calculate your blended customer acquisition cost for DTC, then compare it to the cost of landing a wholesale account (samples, outreach time, travel if applicable). If a retailer reorders twice a year for three years, the lifetime value of that account may justify higher upfront acquisition cost than a DTC customer who buys once.
Start with DTC if you have limited working capital, produce in small batches, want to test product-market fit quickly, or need customer feedback to refine your product. DTC gives you control over pricing, messaging, customer data, and cash flow timing. You can launch, learn, and iterate without waiting for a retailer's buying cycle.
Start with wholesale if you have the capital to extend payment terms, produce in larger minimums that lower your unit cost, or sell a product that benefits from in-person discovery (food, beverage, home goods, personal care). Wholesale also makes sense if your DTC acquisition cost is high and your product has strong repeat purchase behavior in a retail setting.
Move to both channels when you have enough inventory to allocate between them, a fulfillment process that handles both small DTC orders and larger wholesale shipments, and the working capital to manage different payment cycles. Brands that run both channels successfully treat them as separate P&Ls with different margin targets and inventory reserves.
Undercutting your retailers by running DTC promotions that drop your price below their retail price damages wholesale relationships. Retailers will not reorder if customers can buy cheaper from your site. Set a minimum advertised price (MAP) and enforce it across all your DTC marketing.
Failing to reserve inventory for confirmed wholesale orders creates fulfillment delays that hurt retailer trust. Use inventory management software or a spreadsheet that tracks allocated stock separately from available stock.
Offering the same net terms to all wholesale accounts without evaluating their creditworthiness or order history leads to cash flow problems and bad debt. New accounts should prepay or pay a deposit until they prove reliable. Established accounts with strong reorder history can earn net 30 or net 60 terms.
Splitting your time evenly between DTC marketing and wholesale outreach when one channel is clearly more profitable or easier to execute. Run the math on margin, cash flow, and time cost, then allocate your effort to the channel with better unit economics for your current situation.
Get Wholesale Orders builds private B2B ordering portals with tiered pricing, minimum order quantities, and net terms, so retailers can place orders without email back-and-forth. The portal shows live inventory, which prevents orders you cannot fulfill. GWO also runs retail buyer outreach (email sequences, LinkedIn, ringless voicemail) and manages your presence on Faire and RangeMe. You get a live dashboard with wholesale orders, a CRM, and reporting. GWO charges 3 percent commission on wholesale orders or a monthly fee, whichever is greater in a given month.
Calculate your gross margin per unit for DTC and wholesale using your actual production cost, shipping cost, and payment processing fees. Then calculate how many DTC orders you need to match the profit from one average wholesale order. If wholesale profit per order is higher and you can manage the cash flow cycle, prioritize finding retail buyers. If DTC gives you better margin and faster cash, focus on growing that channel first and add wholesale when your inventory and working capital support it.
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