Ep. 17 - 10 Keys for Brands to Master Their Retail Direct-to-Consumer Strategy

Traditional go to market channels are underperforming, putting massive pressure on brand incumbents. Many companies wait too long to adapt, finding themselves too far behind the ball to catch up once the gradual shift suddenly accelerates. In this episode, global retail transformation expert Jim Okamura joins the show to unpack a major new framework for direct to consumer success.

We sit down to dissect the reality of retail convergence and why brands must look beyond basic e commerce. Jim breaks down the three distinct levels of direct to consumer ambition, the critical metrics of fact based market sizing, and how to successfully manage channel orchestration. We also dig into the upcoming wave of agentic commerce, explaining why companies must evaluate their data readiness and establish clear AI governance right now.

Direct to consumer channels are not automatically profitable, and many organizations severely underestimate the cost structure of customer acquisition. Transitioning away from a product centric wholesale past requires a brutal cultural shift toward an analytics culture and back of the house operational agility. Viewers will walk away with a practical roadmap for aligning corporate strategy with digital realities before burning capital on top of funnel demand.

Transcript

Welcome And The DTC Reset

SPEAKER_00 0:07

Well, hello everyone, and welcome back to the Digital Front Door. I'm Scott Benedict. You know, today's episode is kind of a special follow-up conversation with a returning guest. Jim Okamura is one of the partners at McMillan Doolittle in Chicago. And he is, in my view, one of the sharpest strategic voices on global retail transformation. And today we're going to unpack a new white paper that Jim, the team at McMillan Doolittle have developed with their colleagues at the Appletoff Group. And it's entitled 10 Keys for Brands to Master Their Retail Direct to Consumer Strategy. So DTC or Direct to Consumer, not new to retailing, but it's interesting the aspects of it that are changing given economic realities and operational complexities and increasing role of AI and uh agent uh or agentic commerce is really shaping how brands in the space develop relationships on a direct basis with consumers. And so we thought there was a lot there to unpack, and we're we're happy to have Jim here uh back to talk uh with us about that. Jim, welcome back to the Digital Front Doors. Great to have you back.

SPEAKER_01 1:26

Yeah, no, it's great to be back. Thank you so much, you know, uh for inviting me back, Scott. Good to see you as always.

SPEAKER_00 1:32

Uh I'm looking forward to this because as I went through uh the report, I was reading it early in the report, you talk about retail uh convergence where manufacturers and digital natives and vertical brands and retailers are all kind of competing in the same ecosystem. I'm kind of curious as as you and the team worked on this from your perspective, what has fundamentally changed that has forced brands to kind of rethink their direct-to-consumer strategy as more than just perhaps an e-commerce strategy, in your view?

SPEAKER_01 2:09

You

Why Brands Must Rethink DTC

SPEAKER_01 2:10

know, it it feels like we're on the cusp of uh say the next generation of DTC strategies. And I think that that's why the timing seemed right for us to to really undertake this study uh from a global perspective, a number of different countries and and companies, you know, were were involved. Uh and it just feels like, you know, those who had ventured down more of a direct-to-consumer uh path, uh, with varying degrees of success, as we'll talk about, uh, you know, um realize that, you know, they're just really started, starting in their whole journey, right? And I think that's where we are starting to see some of these companies who may have a manufacturing or wholesaling uh history, really, I think, you know, realize that uh there's uh you know a lot more runway with uh with the DTC while while others, you know, again, you know, have pulled back a little bit, realizing, well, maybe we're a little bit you know too aggressive in our transformation, which you know we've we've we've clearly seen as well. So it just feels like we're on this, you know, the next generation uh of uh of strategies, right? And I I think you know, we we see a number of uh you know, the report cites, you know, uh a number of factors, you know, such as um uh uh uh companies seeking greater brand control, uh controlling their own customer experience, and clearly, you know, strategic uh goals of uh channel ownership, really, you know, meaning who owns the underlying you know data, all kind of balance with this trade-off of, okay, well, if we if we are a wholesale brand and we have been um uh again distributing our our products you know in in more of a traditional wholesale model, kind of balancing some of those uh reach trade-offs, you know, for to to again recapture some of that brand control and and and channel ownership. But you know, I I think the reality of what we're seeing out there is, you know, I'd I'd love to think that you know, all these companies out there who are somewhere in the midst of this transformation are doing so in this, you know, beautifully rational kind of analysis and all of that. But you and I've been around the block uh, you know, a few times. We know that's not you know the reality. I think the reality of what we're seeing out there today, I think, with a lot of these um work in progress transformations, I think, is uh an underperformance of a lot of existing or traditional go-to-market channels by some of these same companies. And you know, you know as well as I do just how much pressure that puts on the incumbents, right? Okay, we've you know, we're behind our numbers, you know, have been, you know, for a while, the trend line is pretty clear, you know, at this point. And it becomes one of those uh situations where, well, the change was gradual and then it's sudden, right? And and I think, you know, that that uh uh uh I think you know one of the key messages we hope to kind of get across to to anyone uh who may be somewhere in this the midst of their transformation is uh um you know these DTC transformations take time to really again gain you know that that traction. And um, you know, they you know, if they you wait too long, you're so far behind the ball that it really is, you know, hard to kind of you know catch up, along with you know, just added you know, pressure. So I think recognizing some of the signs that you know perhaps you know our traditional business model is waning, you know, is eroding. And I think you know, um, and uh initiating at least some of the investigation of, okay, well, what would a um a more accelerated DTC transformation look like for us, right? I think those are the things that I think, you know, hop hopefully some uh companies kind of uh uh reach some

The Profit Myth And Acquisition Costs

SPEAKER_01 6:20

of that conclusion themselves and and take a good look in the mirror.

SPEAKER_00 6:24

Yeah, uh and I think that's been the interesting thing is that some of the assumptions that a brand had when they chose to go down that path don't always uh work out. In fact, one of the strongest themes that you talk about in the report is that DTC is not automatically more profitable. And I think a lot of brands underestimate the cost structure because one of the things that retailers and retail partnerships bring to the party is customers. And if you don't have that, you have to go get the customers yourself if you're the brand. And I'm curious, is that one of the biggest mistakes that you see DTC brands make right now as they move into direct channels, or is that one of uh a number of perhaps strategic missteps that maybe they make?

SPEAKER_01 7:14

Yeah, I've I've given this a lot of thought, you know, in in recent years, kind of in line with that uh uh uh next generation of strategies that uh mentioned, you know, earlier. And I I don't think there's you know a single answer, you know, to this question. It definitely varies, you know, across the companies who have ventured down this DTC path. Yes, it is sometimes that lack of you know, really deep understanding of retail business models and the cost of customer acquisition and the skill and and effort level that has to, that goes along with it, right? Uh yeah, sometimes it's the capital investment required to invest in whether it's the technology stack, uh the back-end operations of fulfillment and customer care, uh, or operating a brick and mortar, you know, store. Again, though those uh you know, if you don't have kind of a a deep understanding of that, it's easy for those to again just have cost overruns, kind of chewing away all those, you know, retail margin gains that, you know, were were part of the initial. But you know, I still think that you know the biggest mistake we would see, that's a common thread across a number of companies, is kind of underestimating the change required to transition to a DTC model. You know, and the bigger, you know, the ambition and goals, the more change, you know, that that that's required, right? So um, you know, I think especially for branded manufacturers who come from that wholesale past, uh, you know, the the change uh you know required to transition from a more product-centric company to to a customer-obsessed company, you know, that believes in a in a in customer experience management really as the driving force behind some of these strategies. We see we see I I think a lot of people saying those things, right? Are they really embracing that? And do they kind of understand you know the uh the downstream implications, you know, for them and their teams, right? I think that's part of that internal um you know challenge that we'll get into, I'm sure.

SPEAKER_00 9:24

Yeah,

Define Your DTC Ambition Level

SPEAKER_00 9:25

and that that kind of drives me into one of the things that I I saw in the report. Uh, I think you all outlined three levels of what you call direct-to-consumer ambition, and that's DTC as a marketing tool, DTC as an additional sales channel beyond their wholesale relationships. In some cases, it is indeed a strategic priority. Why, in your view, is clarity in what it is you're trying to accomplish, what is your strategy? Why is that so critical? And what happens when brands kind of skip that step in the in the journey, in the thought process, and and just go and launch DTC thinking, well, it's just easier because we control the entire experience ourselves.

SPEAKER_01 10:12

Yeah, you know, the uh clearly we we are big believers in uh clearly defined goals. What are we trying to accomplish before we figure out how we're gonna get there, right? And and and I think, you know, the the the study kind of uh outlines, you know, different uh uh uh penetration goals of DTC, you know, sort of less than 10% or between 10 and 35, uh and uh more than 35% of total revenue kind of coming from you know DTC channels, uh, all of which, again, are just you know lines in the sand, you know, that that that that say, well, what are you know what kind of market sizing analysis you know has been done to really establish, okay, what is our our our company, our brand's you know potential as we move into kind of uh DTC. But uh on top of that kind of uh uh quantitative analysis to to to really kind of uh uh understand what the the size and revenue potential is, it's really assigning strategic roles, you know, for each you know, go-to-market channel, you know, and I think that that's is something that that is is not as clearly defined by by a lot of companies. And by strategic roles, you know, we we mean you know, uh uh roles such as, you know, what are the channel or channels that are going to be our growth drivers, you know, going forward. Um, but where you know, which channels you know may serve more as a clearance channel for end-of-life cycle like uh inventory, uh, which channels, again, you know, may be the best for really uh establishing pricing control. And I think that's one that keeps coming up more and more with the big global brands, you know, we've been we've been dealing with a global pricing architecture, you know, for for example. And so I think you know, when companies don't have these clearly set strategic roles along with the uh uh fact-based market sizing to know what where they're skating to. Um, I I think that's when they kind of get in in uh in trouble and again uh uh end up with more channel conflict than they they they certainly you know want, uh and perhaps more importantly, aren't properly resourcing you know these teams to kind of achieve those goals, right? And I think that that's something that you know we we see this you know with with different brands. I mean, the the there's a number of great you know case studies, you know, within within you know this uh uh global report. I loved reading more of the Solomon uh you know case study, you know, uh uh as an example, the uh sports equipment you know manufacturer that I kind of you know grew up you know uh skiing with. Um but the fact that they as they um were once owned by Adidas and then you know now now uh sold off from them, they they certainly repositioned their brand to be more of a lifestyle brand, which unlocked you know lots of new product category opportunities into soft goods and and again all the lifestyle imagery that kind of goes along with that. So that's certainly, you know, you you see how intentional you know that that was, you know, really taking a look at how is our brand, you know, position and how might we change it, you know, um uh with the DTC efforts, you know, kind of in in in mind. To me, though, those certainly go hand in hand with wanting to kind of you know take back control of your brand and and and the brand uh experience. So again, lots of interesting, you know, cases of companies who again are at various stages of of their DTC kind of in transformation. But they're they're one of the, I'd say, um, ones who have uh uh seen, I think, you know, really good success, you know, with kind of their own channels, right? And I I think that that should, you know, again, you know, be a um, you know, a case study that others, you know, should should point to as they kind of say, is that right

When DTC Fits The Category

SPEAKER_01 14:20

for us, right?

SPEAKER_00 14:21

Right. Right. You know, this this topic of intentionality that that you raised reminds me that a lot of the significant growth we saw in DTC that happened during and the immediate uh aftermath of of the pandemic seemed to have a flavor of, well, we're chasing DTC because everybody else is doing it, and we have to be in the space, particularly if we want to highlight our brand not be one of several brands on a on a retailer's shelf. One of the things I noticed in the report is that it really kind of makes the point that DCC perhaps works best in brands that either have a emotional or an experiential or experience-driven or technically complex category elements uh to them, certainly not commodity type uh type goods. And I'm curious as you advise leaders how to think about their strategy in this space, do you do you kind of ask them or challenge them to think about, hey, evaluate whether your product really is worthy of or deserves that kind of treatment based on what kind of product and what kind of brand that they really are?

SPEAKER_01 15:37

Yeah, you know, the again the report calls out the uh the uh more uh emotional experience driven, you know, categories, technically complex, high consideration you're purchasing and so on. And and absolutely, I think you know, that that that you know has has sort of proven itself over time to to be good characteristics. But I I still bring it back to again, um not only where your brand is at today, but where are you trying to take your your your your brand? And again, lifestyle is is is sort of one of those you know positionings that creates that emotional um connection or certainly seeks to to to to really build you know upon that. Um but I think it's also you know for companies who uh they they can envision you know a customer journey or a customer experience that is you know differentiated from their existing channels, right? So again, don't like how your your brand story is being told through through a you know a retailer partner. Well, here's your chance now to again, you know, really craft that you know your yourself to really you know win with your you know target customers. So I've been thinking about this a lot where they're there there's um uh you know where where clients have had uh um a challenge, let's say, with their existing, you know, distribution. And I do think that brands you know who have you know relied upon uh uh wholesalers and distributors, you know, to to really uh distribute their product through a number of you know different channels. Um, you know, they we we know that they have a tougher time kind of establishing their own channels. So kind of getting your arms around that, we have seen you know a number of brands, uh, especially when we've been talking to them, you know, on on uh on a global standpoint, who have said, you know, we're at the point now where we've done entire uh reviews of all of our distributor partners. And um, for those who have been uh have uh, let's say stronger grow goals, growth goals, you know, in e-commerce, they're really you know, uh assessing those perhaps long-time distributor partners on what do you bring into the digital party, right? What kind of capabilities do you have? Because as we know, again, um distributors, I mean, run the whole gamut themselves, right? In terms of you know, their uh digital and e-commerce, you know, capabilities or their ability to stand up a physical brick and mortar store, too, right? So um some are you know uh have deep, deep experience and tools and assets and so on. Some are really just starting to kind of do their own, you know, transformation. I mean, that's where we've seen you know cases. One of the cases in the in in the report is uh one of our clients at uh Hunter Fan, you know, and Hunter Fan, if you don't know, again, you know, global leader in-sealing fans certainly have a strong uh you know uh uh leader position in that category within the US market. So what they you know, what they've done, and something that we started with them more than a decade ago, was really looking at you know how their um uh really omni-channel you know strategies you know would really help you know their their their uh uh wholesale customers. How can they uh help you know Home Depot sell better on Home Depot.com uh or within Costco's e-commerce channel, et cetera. So where Hunter Fan has really decided to accelerate their own DTC efforts, you know, has been in international markets, where there is less channel conflict with big retail accounts that have decades of history. And so I love that, you know, in certain international markets, like the Mexican market, which has been growing like crazy with e-commerce, right? Uh, you know, there they you know that that has been assigned their growth driver, you know, strategic, you know, role, right? The e-commerce, you know, channel. So just you know, uh uh again, understanding, you know, that current distribution and some of those challenges, I do think, you know, a lot of companies will be would be well served by really having a strong understanding of you know where where do we sit today and how would will we transition from our current distribution kind of footprint, right, to something that is, you know, like a uh uh where DTC channel or channels have a bigger piece of the pie, right? And that that the those are tough things to kind of map out because it's it's really you know, you really gotta have confidence in your crystal ball.

The Cultural Shift To Retail

SPEAKER_00 20:25

Indeed. And in fact, that that reminds me that one of the things that uh I I think I read in the report is that you and the team described DTC as less of a channel change per se and more of a philosophical shift. How do you best serve a customer and are you prepared to do uh what you need to do to serve a customer if you are now responsible for that directly and not sharing that responsibility with your retail partner? When you've seen companies kind of go through this transformation, what does it look like inside the organization? I have to think that there are roles or structures or or things that have to change when you go from being a wholesaler to either a combination wholesale and DTC or or in some cases to go straight into DC DTC. It feels like there's a lot of change that happens organizationally inside the brand in addition to how they they interact with customers.

SPEAKER_01 21:32

Yeah, and I I I do believe that uh some of those internal uh uh change management issues, you know, have been the the the most stubborn, right, to to really uh uh shift, you know, over time. You know, I I certainly agree, you know, in our report, you know, we're we're calling out you know the need to develop more uh cuss uh consumer centric solutions and not just push products at them and and And you know, integrating consumer insights, you know, into refinement loops and and and so on, community building, all you know, good things, you know, and all really, I think, you know, necessary elements for a good DTC, you know, strategy. But I'll always kind of bring it back to what I think it is a um a cultural challenge for a lot of companies, especially those with a wholesaling kind of history. It it's it's really that uh um more holistic shift to a retail mentality driven by uh data and testing and analytic and an analytic culture, right? We know that from again, all you know, you and I from all of our history in in the digital, you know, channels. And and so again, you know, uh just kind of building uh uh a culture within a company that respects and cherishes, you know, data as the new currency to drive, you know, your your DTC, you know, uh business model. Um, that's a big, you know, uh shift, you know, in in itself. But I think it's it's one that is both necessary, but also the output of you know that analytics culture starts to, I think, permeate, you know, like all functional areas, right? It's not just operations, it's not just marketing, right? That's why we've some in in some cases for more advanced, you know, uh um uh uh integrated companies, you know, we've advocated for a centralized analytics function, right? That kind of cuts across functions or departments because you know they're uh we we we believe you know that that's where you know some of the the the magic you know will start to happen, right? So yeah, there is you know a big you know philosophical shift though in these business models. And that's again why you know I I I'm encouraged by I think these next generation strategies as companies, in a sense, have have realized, you know, probably through you know their own missteps, you know, along the way, right? Oops, didn't quite give them enough resources or something.

SPEAKER_00 24:06

Yeah. I I can recall uh a leader in a company I was with saying life is a great teacher if you can afford the tuition. It feels like it applies into this aspect of retail.

Balancing Reach With Control

SPEAKER_00 24:18

And and I think one of the things that I enjoyed about the report is that you talked about developing a DTC strategy isn't always just about eliminating wholesale, it may be about orchestrating both wholesale and direct channels a little bit more strategically. And I think you and I both have the go-to example of Nike's journey of kind of going in a couple different strategic directions in recent years on this on this question, on this topic. As you watch an example like on Nike kind of rebuilding some of the wholesale relationships that perhaps they walked away from, how do you think brands should think about kind of balancing control with reach? In other words, you you gain a lot of control when you're the retailer yourself, but you obviously get much broader reach when you you sell through uh your wholesale partners. How do you see that kind of unfolding for brands who maybe went too far one direction or too far in the other direction?

SPEAKER_01 25:26

Yeah, I I I think we'll see you know more stories like Nike's, you know, where um we on one hand applaud you know their their uh uh shift towards a DTC first, you know, model. And then you know, realizing that they went too far too fast, you know, and and severed some of those wholesale relationships in doing so, you know, have kind of uh you know, work to again rebuild some of those whole wholesale relationships. You know, I to me this is again another example uh of you know have uh why you need clearly defined strategic roles and market sizing based uh uh financial and and other you know kind of hard metric uh goals in in mind. You know, that that you know, and one of the best um, I think, examples of the channel orchestration that we we talk about in in this study, to me that that's always uh best exemplified by the promotional cadence, you know, within um within and across channels, right? And we know that there's some who advocate for um absolutely all channels must be in the same kind of promotion. We've always taken a slightly different position on that, right? And a lot of that is tied to again, what is the strategic role of that channel, right? So which to me says that sometimes it's okay to have you know channel specific uh you know promotions, you know, if the part of that role of that channel is say, you know, trying to uh move, you know, like uh uh aging inventory, right? You know, like or again in pricing control uh you know as a strategic role, if that, you know, um that uh again uh may dictate or at least be a strong influence in terms of you know with the uh uh uh you know where where a channel may or may not be on on that you know same promotion. But it's that kind of give or take that that's a it's hard. We've always described that uh as a higher degree of difficulty for a lot of you know a company. So we you know, we you know we'd often say, sure, it's fine to start off with, you know, all promotions are all and all channels are the same. But I mean, the bet uh uh as you get more advanced, that ability to to again, you know, uh uh refine those, you know, to again the strategic role, I think it can be very, very important. And I think you know, we've now got you know a a number of years under the belts of you know so many of these you know companies who have uh are again somewhere in the midst of their DTC you know journey. And I think you know a lot of them have kind of realized that okay, you know, we we can kind of do these i in a right way if again, you know, we've got our processes you know down pat and we know when and where it's acceptable to kind of go a little you know off or something like that. Or but yeah, it the the promotional cadence is always I think you know one of those keys to to really look at and say how how are we doing this, right? I mean, you know, are we really um you know, achieving what we want to, you know, with us, you know, and and and again, you can't be all you know discounting in that promotional bucket too as well.

SPEAKER_00 28:39

Yeah, and you know, it occurs to me you and I predate uh e-commerce and we always I think fought with, I certainly fought with some of my uh employers about the fact that uh promotions happen without any concern for for channel. And I think we saw maybe an overcorrection to where they all uh you know people thought, well, they had to be all the same. And you make the point that no, think through what role each channel plays and then adapt uh promotions appropriately. I think that also kind of applies to operational uh realities.

Operations Before You Drive Demand

SPEAKER_00 29:18

And I uh I noticed one of the things that you and the team really touch on. One of the strongest messages was the operational transformation that has to take place, whether you go partway into DTC or 100% into direct-to-consumer. Real-time data uh about the business and about the consumer becomes important, fulfillment, different from the fulfillment models and the costs and the effort associated with that, the investment that's associated with that, the IT structure that is different if you're a wholesaler than when you're a retailer uh uh of any type. What do you think are some of the maybe the early warning signs that a brand is trying to bolt DTC into their, into their existing wholesale infrastructure instead of really thinking about it as a transformation in the way that they that they go to market? Are are there recurring themes that you kind of see there?

SPEAKER_01 30:20

Yeah, we we we we definitely have seen over the years companies who have, in our view, done it right. And by doing it right, they they are getting their back-of-the-house, you know, uh uh operations and tech stack, you know, in in order uh before they start driving demand, you know, at the top of the funnel, right? And and so um it those early warning signs, you know, are essentially before we dial up, you know, demand, you know, through through our marketing efforts, you know, are we able to to deliver on our brand promise through our our tech stack, through our fulfillment, you know, our store operations capabilities, and through our customer care. And you know, we we see all of the above, you know, being um difficult transformations, again, as you point out, for companies who were really built for wholesale, right? And so all of a sudden, you know, the this this need, you know, to again uh be able to make uh um decisions uh uh in a timely manner. And and you know, you and I have talked about this forever, and then certainly in the digital space, the need for agility and nimbleness. We talk about that all the time. And I loved, you know, one of the quotes, you know, from one of the executives interviewed who I can't remember who exactly said this, but again, the speed of wholesale cycles, let's say, versus retail versus e-commerce, you know, cycles and just how quickly you do have to b both analyze the data, reach a conclusion, and then you know, a new action, right? And and those again, you know, like are are are difficult. So if your back end isn't in order, that's when the wheels do start to come off, as we've all seen as well.

SPEAKER_00 32:06

Yes, that and that's interesting because for those of us who grew up in retailing, we call that Tuesday. In other words, it's it's something that happens all the time. But if you're new to that space and you're taking on a new part of the value chain, you have to learn those lessons in some cases the hard way. And it's part of what you sign up for when you deal with it with the consumer directly, right? Right, exactly. Yeah.

Agentic Commerce And AI Readiness

SPEAKER_00 32:34

You know, we we can't finish out this show with somehow agenda commerce not finding its way into the converse conversation. I can't recall a recent episode uh that this hasn't come up, and it certainly applies in the context of a of a conversation about uh DTC. And it feels like in in this context, the rise of AI shopping agents and how content relevance uh applies to brand uh uh visibility is perhaps is even more intense than it is in traditional retail because instead of multiple brands uh you're dealing with with yours, how do you think uh agent-driven commerce or agenda commerce changes the the value equation of DTC and what should brands think about beyond what they have to think about with their with their retail partners as a wholesale, but when they're DTC, how does that apply? And what do you think they need to think about uh in the context of being a direct-to-consumer seller?

SPEAKER_01 33:41

Yeah, I know this, you know, as much as I have have, I think, twice now kind of cited uh know your facts, know your revenue potential, get your market sizing. Here's a case, you know, a great case, you know, where so hard to predict what will this look like going forward and what is the slope of that change, right? And I think you know that that that's really where um for one, you you have to recognize, you know, where are we at, you know, today, uh, how much uh uh uh traffic is being again uh uh replaced uh from humans, you know, to the answer engine, you know, crawlers. Um and and I think you know that that that's where when you see you you look at the actual numbers today, you know, uh they're they're small, but you know, the growth is you know tremendous, right? I think what we've we've we've seen throughout the industry, and I I think we all talked about this after the big NRF big show earlier this year. Um, you know, it this just feels like again, a year where um we're we're moving past you know the proof of concepts and kind of pilot test, you know, it investment you know levels to again trying to find you know um uh programs and and initiatives, you know, that that we can really scale. So what we have seen, you know, with a number of you know clients is um are you ready for that, right? And so again, we we've been you know strong advocates uh with with a number of you know clients in in terms of getting uh their um uh their corporate strategy aligned with their AI you know priorities. And usually again, you know, that that's gonna be somewhat what of a mix uh of um uh have you defined AI governance? How does your company again, you know, man get their arms around this and make sure people are singing from the same song sheet, right? Uh and uh what is your data readiness, you know, and what does that you know look like? And what does your organization readiness, you know, look like? Those three things from a bigger picture and longer term are you know, we we see pretty consistently that you know companies uh it we love to see when companies have you know at least one of those buckets already in in nice you know shape, right? But not always the the case. In the short term, I think with that steep slope of you know where agentic you know AI you know really is starting to to uh affect change, um, you know, we are um certainly encouraging a lot of clients to again be testing and learning and adapting to adapting to what does agent optimization really look like, you know, for us, right? And and in a lot of cases, uh in in some of those kind of low-hanging fruit opportunities, I mean, just adding the detail that you know, and and so it, you know, I I expect to see some uh PDPs, some product detail pages, you know, again, that are gonna run forever, because you know, again, that's the kind of information the crawlers are are are picking up on, right? And so again, you just uh knowing that this is now a very imprecise, you know, science, agent optimization. But you know, just as we we did, you know, from you know, search engine optimization decades ago now, right? You know, this is just the next thing we have to to learn and and test our way through and and see again, you know, where we are gonna get some good payback, you know, uh from a a business model, you know, standpoint. But um, yeah, these are all things that you know what we're talking about today. Here we are in the first quarter of you know, like 2026, you know, like let's uh let's see where we're at, you know, by the fourth quarter. And I think we'll all be amazed at like, wow, didn't see that coming, or you know, just the the the pace of change is is is pretty dramatic.

SPEAKER_00 37:32

Yeah, and you know, uh I I had your colleague Bar Divitt on the show uh a while back, and and in the broader context, she said as it related to AI, you know, you can't sit on the sidelines. We don't know how how what optimal looks like uh at the end of this, but sitting on the sidelines and waiting for that to unfold, whether it's the context of retailing broadly or as it relates to DTC, do not sit on the sidelines. And I think it it certainly was appropriate in the context she said it, but it feels like it applies in this context as well, right?

SPEAKER_01 38:06

Absolutely it does. So yeah, it'll be interesting to see as as we we know every company is unique in in both you know what their current state is, but also how much they've kind of gotten their arms around, you know, this very big topic, right? So again, uh uh interesting uh as we have more and more conversations and and and try to gauge, okay, what's right for you.

unknown 38:29

All

Report Link And Final Takeaways

unknown 38:30

right.

SPEAKER_00 38:30

Jim, it's been a fantastic conversation. I really appreciate you kind of breaking down these core elements of this report. And I think I want to make sure that our our listeners know if you want to get into the strategic framework of this report and dive deeper, including the the 10 keys that are a component of the title of the report, the real case studies, and a very honest and objective look at what makes uh DTC business profitable. Uh we'll put a slide up and and show you the link to get there. We'll also put it in the in the show notes uh so that if you want to learn more uh from Jim and the team, uh we'll have the opportunity to do it. Jim, thanks again for sharing this great report, this great information, and certainly your insights on this topic as well. And thank you for joining us.

SPEAKER_01 39:18

Thank you very much for having me. Always great to talk, Scott.

SPEAKER_00 39:22

All right. Well, that's it for now for the Digital Front Door. I'm Scott Benedict. Thanks for listening.