DTC’s era of dominance may be in the rearview, a new study indicates.
Joor’s Current State of Wholesale report, conducted during May and June of this year, showed that wholesale has become the dominant sales channel for many global fashion brands.
Seventy-four percent of the hundreds of companies that responded to the digital wholesale management platform’s survey attributed over half of their sales to wholesale. What’s more, 51 percent of those brands—who sell goods like women’s wear, men’s wear, children’s apparel, accessories, footwear and home goods—ranked the development of these retail partnerships as their current top priority for investment, over e-commerce and their own retail stores.
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Joor, which counts more than 14,000 brands as clients, reported that three-quarters of brands’ wholesale sales remained steady, or grew, since last year. One-third of brands (33 percent) said those sales could be directly attributed to a shift away from DTC. The trend is poised to continue over the coming months, with surveyed brands projecting average wholesale growth of 27 percent this year.
A DTC exodus has manifested in Europe and the Asia-Pacific region, with more than 40 percent of brands across both continents saying more business came from wholesale than the previous year. The U.S. saw an even more pronounced shift, with more than two-thirds (67 percent) of survey respondents indicating that their wholesale sales volumes were equal to, or greater than, last year. American brands predicted that wholesale would generate $1.8 trillion during 2023.
Joor CEO Kristin Savilia called wholesale “a critical distribution channel for brands globally, noting that “its importance continues to grow.”
“Fashion brands around the world recognize the benefits of wholesale, not only to increase sales volume, but also to boost brand awareness, acquire new customers and enter new markets,” she said. The trend also represents “a significant shift away from ecommerce and DTC channels—a marked change in the industry.”
While the data paints a picture of “an extremely buoyant global wholesale landscape,” Savilia noted that brands remain realistic about the headwinds currently impacting the retail market. More than half (55 percent) of respondents cited inflation as their biggest hurdle, while 51 percent said they’d been challenged in finding new retail partners. Supply chain disruption still impact 31 percent of brands, more so in Europe than in other regions, while 29 percent said increased competition is eating into sales. One-quarter of brands said their biggest issue is working through excess inventory—a problem disproportionately affecting Asian brands.
Even accounting for the differences in regional market dynamics, analysts said that surveyed brands from across the globe pointed to similar advantages from digital wholesale. Those included time savings compared with non-digital retail (96 percent), increased order accuracy and real-time data access (91 percent) and better inventory visibility (88 percent).
