Food wholesalers have one of the lowest gross profit margins at just 15.36% on average. The direct-to-consumer (DTC) landscape, however, represents a critical inflection point. Brands can reclaim 20%–40% margins lost to typical retail trade spend, with the additional advantage of capturing invaluable first-party data typically held by intermediaries.
Success requires mastering the consumer trifecta of emotional connection, convenience, and health-focused offerings, all while navigating the complex operational challenges of cold chain logistics and perishables management that distinguish food commerce from standard retail.
Unsure where to start? This guide explores the state of the DTC food industry and where it’s heading, with examples of brands successfully selling direct to consumers through owned channels.
The food DTC business model bypasses intermediaries—such as distributors or wholesalers—to sell food products directly to the end consumer. These direct sales eliminate the thin profit margins typically found in traditional wholesale to offer full price control, access to customer data, and improved margins.
Gone are the days of solely selling food and beverages in person through retail partners. Analysts estimate the global DTC food market will reach $195.39 billion by 2031, growing at a CAGR of 18.7%.
Driving the shift is the fact that consumers have become wired to expect convenience—and they’re willing to pay a premium to order food online directly from manufacturers and have it delivered to their home:
The traditional food business model—selling to distributors and food retail partners—differs significantly from selling directly to consumers.
Key differences include:
Essentials of a food ecommerce infrastructure include:
“It takes a lot of pushing to change grocery buying behaviour and compel a customer to check out online,” says Stellar Eats’ Emma Kula. “We leverage a free shipping threshold to help push them to convert, and really appreciate that they become aware of it at a critical moment in the buyer’s journey with one-page checkout.”
Consumers are increasingly searching for experiences offered by retailers they buy from—and the food industry is no different. According to one report, up to 64% of restaurant customers say their dining experience is more important than the price of the meal. DTC brands can leverage this trend online.
What constitutes a “premium” experience? Proven strategies for food DTC brands include:
Magic Spoon is the perfect illustration of how these components work together to create a premium DTC experience. On the surface, cereal might not sound like a luxury product, but the brand’s nostalgia-fueled DTC marketing showcases health-conscious versions of cereals its millennial target audience remembers from childhood.
Just over half (56%) of consumers believe the convenience of home delivery justifies the cost. Food shoppers can browse, compare, and purchase from their smartphone in a fraction of the time it’d take to visit a retail store physically.
But simply having an ecommerce website isn’t enough to meet these demands for convenience. You also need:
💡Tip: Activate Shop Pay Installments to allow customers to make interest-free payments and/or monthly installments when they buy food from your DTC website. You get the customer’s total order value upfront, while Shopify handles the collection of payment installments.
People are increasingly seeking products that support better nutrition, fitness, and overall well-being. The food industry is no different:
Prebiotic soda brand Olipop embeds this concept in their entire positioning strategy. “What we’ve executed with the concept is the idea to break one rule and break it hard,” says David Lester, Olipop’s cofounder, in an interview with Shopify Masters.
“The rule that we broke is the ingredients panel. This is fundamentally different from a can of Coke, but everything else is quite familiar to people. It is delicious from the flavor profiles. It looks like a soda, our marketing is fun and vibrant, and that gives you a really rich combination for successful innovation.”
Take a look at Olipop’s product page to see this in action. Product descriptions highlight the fiber-packed recipes, while icons—displaying dietary attributes such as gluten-free, low sugar, and non-GMO—offer nutritional transparency for health-conscious soda drinkers.
Meat might not be the first thing that comes to mind when exploring food subscription services, but DTC brand Good Ranchers proves the business model applies to virtually any food category.
The brand originally sold their American meat at retail events before building an online store to offer subscriptions through BigCommerce. The challenge, however, was troubleshooting recurring billing issues that inconvenienced customers and impacted cash flow.
“We tried to do a homegrown subscription program,” says chief growth officer Jermain Gil. “At one point, we were only processing 50% of our subscriptions because of this system. That was when we realized we don’t need to be a technology company.”
Good Ranchers migrated to Shopify and instantly unlocked a robust ecosystem of apps and partners—including one to manage subscription billing. This, combined with Shopify’s world-class checkout, gave the brand a 10% lift in overall subscription adoption rates and 48% year-over-year growth.
Replicate Good Ranchers’ food subscription success for your own DTC brand by focusing on:
Stories sell—especially when it comes to food. Recipe ideas, behind-the-scenes content, and usage tips help potential customers imagine the product in their daily lives, reducing hesitation to try something new.
Use this content to showcase your brand values. For example, cater to the 73% of Gen Z who are willing to pay more for sustainable products with educational content about ingredients and sustainable sourcing.
DTC beef jerky brand Chomps does this with a sustainability and nutrition blog. It features articles educating consumers on the difference between grass-fed and grass-finished beef—both of which help consumers recognize brands that support sustainable farming practices and animal welfare, while positioning the retailer as an authority on the topic.
At the end of the article, there’s a featured product callout box to enable seamless shopping. Customers who are looking for grass-fed or grass-finished snacks can add the brand’s hero product—a beef jerky snack bar—directly to their shopping cart.
Uncertainty is a major barrier to food buying. If customers aren’t sure if they’ll like the taste, they might hold back on purchasing.
Product samples and trial boxes enable product discovery without commitment. Prospective customers can experiment with new items with less financial skin in the game—then purchase the full-sized version once they know they’ll like it.
Costco has implemented this concept successfully. Known for their free sampling stations that adorn the corners of its warehouse aisles, you can implement the same “try before you buy” program within your subscription box service. Add trial-sized versions of new items inside the box to keep customers excited about their subscription and aid product discovery, then add the option for subscribers to include the full-sized (and full-priced) version to their next delivery.
Hydration electrolyte brand Liquid I.V. faced the same challenge other food DTC brands experience: increasing customer acquisition costs (CAC) on over 20 platforms. They turned to Shop Campaigns to maximize the value of their most valuable asset—customer data—with precise audience segmentation and targeted campaigns inside the Shop app, all at a fixed acquisition cost.
“It was just a couple of clicks and we were live,” says Daley Meistrell, the brand’s senior director of ecommerce. “I just set the cap target and how much we wanted to spend…it was really simple.”
Since launching the Shop Campaigns, Liquid I.V. has reduced overall cost per acquisition by over 40%. They also found that customers acquired through this channel were twice as likely to repurchase, while increasing daily order volume tenfold during the campaign’s duration.
The biggest challenge with food DTC is getting perishable or temperature-sensitive products directly to individual customers rather than shipping pallets to retailer warehouses.
Perishable products like dairy, meat, frozen meals, beverages, or fresh produce need to remain within a safe temperature range from production to final delivery. Failing to do so leads to inventory spoilage—and in worst-case scenarios, delivering food to customers that is no longer safe to consume.
Invest in a cold-chain ecommerce logistics strategy that covers:
Noodle brand Momofuku partnered with Shipbob, a third-party logistics provider, to handle the fulfillment of up to 30,000 DTC orders per month.
“As we continue to grow, Shopify Plus and ShipHero will grow with us,” says the brand’s head of IT Bob Kim. “They are the scaffolding. They’re the lattice upon which this entire thing is built. We can focus on growing the business, focus on new markets, and not have to worry about the operational logistics that they provide for us.”
Rising costs of raw ingredients, labor, and energy mean the average gross profit margin for food-processing retailers is low—hovering around 30%. That’s before accounting for hefty investments required to manufacture and store perishables before they’re sold. Effective inventory management helps protect these narrow margins through waste reduction.
Inventory management systems can store key data about each food SKU, including its:
Automated turnover systems combine this data with turnover rates to adjust ordering, so you only produce or store perishable products that will sell before their expiration date arrives. They also enable stock-rotation systems—such as first in, first out (FIFO)—to maintain freshness and compliance. With FIFO, food made first gets sold first.
Check that your inventory management system integrates with the wider supply chain to support just-in-time delivery. With this model, food only gets made when there’s demand for it. Less capital is tied up in raw ingredients or finished goods, while also enabling you to make quick adjustments to shifts in demand—like viral social media spikes—without being stuck with overstocked SKUs that could spoil before they’re sold.
DTC affords a luxury that traditional retail doesn’t: fast time-to-market. This opens the door to a broad product mix that gives existing customers more attachment to your brand and new customers greater reason to try.
Leverage first-party customer data to identify areas for expansion—information typically gatekept by a retail partner. If your bestselling item is a vanilla cookie, for instance, launch a new line extension—perhaps a “bake at home” cookie kit—to your loyal customer base first. This exclusivity can strengthen brand loyalty while also helping to determine the viability of a new product concept before investing further into development.
“If there’s a way to do a beta test or a pilot or a V1 (first version) of whatever you’re thinking about, go do that, and gather data points that can inform how you plan for the rest of [your business],” says Jen Liao, cofounder of MìLà, in a Shopify Masters interview.
Other food trends to fuel product expansion include:
Food buyers want the convenience of ordering wherever they are, at any time. A unified commerce strategy offers one single operating system that helps you provide these seamless front-end customer experiences while streamlining back-end operations.
Unified commerce is especially important if you’re combining DTC sales with B2B or wholesale. The last thing you need is two entirely separate infrastructures to operate both sales channels, an approach that inflates costs and contributes to technical debt and hampers innovation.
Dutch confectionery brand Tony’s Chocolonely, for example, turned to Shopify to build a password-protected wholesale portal—known as the “ChocoPortal”—on the same site used by DTC customers. This self-serve portal displays custom pricing based on their segment and order size, without the complex infrastructure brands typically build to operate B2B and DTC channels individually.
Because Shopify consolidates data from both sales channels on a single platform, you can maintain brand consistency and reduce platform costs. But don’t just take our word for it—independent research found retailers using Shopify benefit from:
Food DTC brands handle cold chain logistics with temperature-controlled warehouses to store and fulfill perishable products. They ship items via specialized refrigerated carriers or insulated packaging to maintain freshness, often with tracking sensors and temperature alerts. This ensures products arrive safely and on time while minimizing food spoilage.
Traditional food CPG brands can transition to DTC by launching their own ecommerce website or subscription service. Start with a small selection of SKUs or exclusive products to test demand, optimize cold chain logistics, and refine fulfillment before scaling. Lean into personalized experiences that retail typically doesn’t offer—for example, curated bundles, limited-edition flavors, or dietary-specific options.
Food brands can balance DTC and wholesale by differentiating their offerings. For example, sell exclusive flavors, bundles, or subscription packs through your DTC website that aren’t available in retail stores.
