I'm Avi, the founder of Lazrbeam. This question comes up constantly in every CPG community I'm part of. Startup CPG Slack, Reddit, Foodbevy, founder group chats. Everyone has an opinion and most of the advice is based on whoever's talking and what worked for them.
The truth is there's no universal answer. But there is a framework for deciding, and it comes down to three things: your margins, your category, and your cash position. Let me walk through it.
The case for DTC first
Starting with DTC (your own website, Amazon, or both) has real advantages for an early-stage brand.
You keep more of every dollar. In DTC, you sell at full retail price and keep everything after COGS, shipping, and payment processing. No distributor taking 25 to 35%. No retailer taking 35 to 45%. No slotting fees. No trade spend. If your margins are tight, DTC gives you room to breathe while you build the brand.
You own the customer relationship. Every sale gives you a customer's email, their purchase frequency, their preferences. This data is invaluable for understanding your market. In retail, you're selling through someone else's store and you often don't know who your end customer is.
You can iterate faster. Want to test a new flavor? A new pack size? New packaging? In DTC, you can launch it tomorrow and see how it performs. In retail, a packaging change requires reprinting, redistributing, and waiting for the next planogram reset.
You build a proof point. DTC revenue, customer reviews, repeat purchase rates, and social media traction are all data that retail buyers want to see. A brand with $30,000 in monthly DTC revenue and 4.8 stars on 500 reviews has a much stronger retail pitch than a brand with zero sales history.
The case for retail first
Some categories and some brands are better served going into retail early.
Your product doesn't ship well. Frozen, refrigerated, heavy, fragile, or bulky products are expensive to ship DTC. The unit economics might never work online. If your product costs $8 to ship and sells for $12, DTC is a losing proposition. Retail solves the logistics problem because the distributor handles cold chain and the consumer picks it up at the store.
Your category is impulse-driven. Some products sell because someone sees them on a shelf and grabs them. Snacks, beverages, candy, condiments. These categories benefit from physical shelf presence in a way that DTC can't replicate. If your product relies on discovery and impulse purchase, retail gets it in front of more eyeballs faster.
Your customer doesn't shop online for your category. Some product categories just aren't big DTC markets. Most people don't go online to buy hot sauce, granola, or sparkling water. They buy it at the store. If your category is dominated by in-store purchase behavior, meet your customer where they already shop.
You have the margins to support it. If your gross margins are 65%+ at wholesale, you can absorb the retail cost stack and still make money. In that case, retail gives you volume and brand visibility that DTC alone can't match.
The framework for deciding
Here's how I think about it. Answer these four questions.
Question 1: What are your gross margins at wholesale price? If below 50%, start DTC and fix your cost structure before approaching retail. If 50 to 65%, start DTC, build traction, and target natural/specialty retail where price points are higher. If above 65%, you have the margins for retail. Decide based on the other three questions.
Question 2: Does your product ship economically? If shipping costs are more than 15% of your product price, DTC will be margin-negative for most orders. Lean toward retail. If shipping is manageable (lightweight, shelf-stable, small pack size), DTC is viable.
Question 3: Is your category an online purchase or an in-store purchase? Supplements, coffee, specialty health products, and subscription-friendly items do well in DTC. Snacks, beverages, frozen foods, and impulse buys do better at retail. If you're not sure, look at whether your competitors are primarily DTC or retail. Follow the customer behavior.
Question 4: How much cash do you have? Retail requires upfront investment: slotting fees, free fills, trade spend, demos. If you're bootstrapped with $20,000 in the bank, a 100-store retail launch could bankrupt you. Start DTC, build cash flow, and enter retail when you can fund it without risking the business.
The best answer for most brands: both, sequenced
The brands I see winning aren't choosing one or the other. They're sequencing them.
Phase 1: DTC. Launch online. Build a customer base. Collect reviews. Understand your repeat purchase rate. Generate revenue that funds the next phase. This phase might last 3 to 12 months.
Phase 2: Local and independent retail. Start with farmers markets, local specialty stores, and indie retailers in your area. Self-distribute. Learn the retail sales process without the complexity of distributor relationships and national accounts. This phase builds your retail story.
Phase 3: Regional natural retail. Use your DTC data and local retail traction to pitch regional natural chains like Sprouts, Whole Foods (regional), Natural Grocers, or strong regional players. These retailers are emerging-brand friendly and often don't charge slotting fees. This is where Lazrbeam comes in. You search for the specific buyer at these chains and pitch them directly.
Phase 4: Expand. Use your regional retail velocity data to pitch national accounts, conventional grocery, or mass retail. At this point you have the data, the margins, and the operational infrastructure to support a larger rollout.
Each phase funds and de-risks the next. You're never betting the company on a retail launch you can't afford.
The Reddit debate
If you spend time on r/CPG or r/entrepreneur, you'll see passionate arguments on both sides. Some founders swear by DTC-only models. Others say retail is the only path to scale.
The DTC-only crowd often cites control, margins, and customer data. These are real advantages. But DTC customer acquisition costs have been rising for years, and many categories simply don't have the online demand to support a DTC-first model.
The retail-first crowd often cites volume and credibility. Also real. But they sometimes underestimate the cash required and overestimate how quickly retail revenue materializes.
The founders who seem happiest and most successful are the ones who started DTC, proved the product worked, and used that proof to enter retail strategically. They weren't religious about either channel. They went where the customer was and where the economics worked.
How Lazrbeam helps
When you're ready for Phase 3, finding the right retail buyer at the right chain, Lazrbeam makes the transition from DTC to retail straightforward.
You search by retailer, category, and region. You find the buyer who manages your product category. You get their verified email. And you pitch them with the DTC traction data you've been building in Phase 1 and 2.
The pitch almost writes itself at that point. "We're doing X units per month in DTC with a 40% repeat purchase rate. Here's our velocity data from 15 indie stores. We'd love to bring this to your natural snacks set at Sprouts Southwest."
I built Lazrbeam because the transition from DTC to retail shouldn't require a $10,000 trade show or a broker you can't afford yet. You've done the hard work building the product and the proof. Finding the buyer should be the easy part.