Why DTC Brands Are Failing and What Amazon-First Brands Do Differently

DTC brands are failing at a rate that should alarm every founder in the e-commerce space. The direct-to-consumer model that venture capital poured billions into over the last decade is cracking, and the brands that built their foundation on Amazon are quietly outperforming them.

This is not a hot take. This is what I see every week working with 300+ brands at Marknology. The data is clear: brands that treat Amazon as their primary channel and then expand outward are building more sustainable businesses than brands that start DTC and try to bolt Amazon on later.

The DTC Problem Nobody Talks About

The DTC playbook used to be straightforward: build a beautiful Shopify store, run Facebook ads, acquire customers at scale, and grow. That playbook broke somewhere around 2022 and it has not recovered.

iOS privacy changes gutted Facebook ad targeting. Google CPCs keep climbing. The cost to acquire a single customer on your own website has doubled or tripled for most brands. And unlike Amazon, where the customer is already on the platform ready to buy, DTC requires you to drag them there.

On Amazon I've got all these fish in a pond waiting to buy. On a website we've got to get them all there. — Andrew Morgans on Startup Hustle

Customer Acquisition Costs Are Crushing DTC

Here is the math that kills DTC brands: if your average order value is $40 and your customer acquisition cost is $35, you are not running a business. You are running a charity for Meta and Google. Even brands with strong retention and subscription models are finding that first-purchase economics just do not work anymore.

Amazon flips this equation. The customer is already there. They already trust the platform. They already have their payment information saved. The friction between "I need this product" and "I just bought it" is nearly zero. That is worth more than any brand website.

The Amazon-First Advantage

The brands I work with that started on Amazon and then expanded to their own website consistently outperform those that went the other direction. Why?

• Immediate access to hundreds of millions of active shoppers
• Built-in trust and two-day delivery that you cannot replicate without massive infrastructure investment
• Advertising that targets buyers, not browsers because almost everyone on Amazon is there to purchase
• Data and feedback loops that help you improve your product before you invest in your own site

I actually have more success with small to medium-sized business than I do with the big brands. The big brands are less willing to maneuver. With the smaller brands, a lot of times I'm talking to the owner directly and they're willing to adjust and pivot. — Andrew Morgans on Startup Hustle

The Hybrid Approach That Actually Works

I am not saying DTC is dead. I am saying DTC-only is dead. The brands winning in 2026 run a hybrid model: Amazon as the primary revenue engine, their own website for brand building and higher-margin repeat purchases, and strategic presence on other marketplaces.

One of our clients at Marknology is on pace to do $18 million across e-commerce this year. We run everything for them: web, social, Amazon. The key is that Amazon is the foundation, and everything else builds on top of it.

The pandemic proved why this matters. Brands that were Amazon-only got hurt when FBA restricted inbound shipments. But brands that had a backup fulfillment strategy, what we call FBM (Fulfillment by Merchant), were able to pivot and keep selling. The lesson: build on Amazon first, but build redundancy.

FBA: The Infrastructure Most DTC Brands Cannot Match

Fulfillment by Amazon is an unfair advantage. For as low as $2.99, Amazon will pick, pack, and ship your product anywhere in the US in two days. They handle customer returns. They guarantee on-time delivery. Try building that infrastructure yourself.

I had a client, Faultless Starch, a Kansas City company, spending $10-13 per shipment through FedEx. When we moved them to FBA, we saved them $10,000-15,000 a month on shipping alone. That is money that went straight to the bottom line.

What DTC Brands Should Do Today

1. Stop treating Amazon as a secondary channel. If it is not your primary revenue source, rethink your strategy.
2. Get on FBA. The economics are too good to ignore.
3. Use your DTC site for brand building, not primary revenue. It is your showroom. Amazon is your cash register.
4. Invest in Amazon advertising. It is more efficient than Google or Facebook for product sales because everyone on Amazon is there to buy.
5. Talk to an agency that understands both. At Marknology, we manage the full ecosystem because we know how the pieces connect.

Andrew Morgans is the founder and CEO of Marknology, a Kansas City-based Amazon marketing agency managing $2B+ in revenue across 300+ brands. Listen to more of Andrew's insights on Startup Hustle and visit our Media Hub for podcasts, videos, and more.