Wholesale vs Direct to Consumer: When to Sell Direct and When to Sell to a Retailer

Direct-to-consumer and wholesale are not two versions of the same store. DTC sells to a person who will use the product. Wholesale sells to a buyer who will resell it and needs a margin. Mixing the language, the pack, and the price is how a brand ends up competing with its own retailers on Amazon.

AEG builds US routes to market for brands and factories. The choice below is the one we make before a line sheet or a Shopify theme.

What each model is actually for

DTC, on your store or on a marketplace where you are the seller, is how the brand learns. You see which scent, size, or color sells, what the returns say, and which words on the page a customer repeats. You also pay to find the customer, or you pay a marketplace referral fee for the introduction. Amazon’s public fee structure — a monthly Professional plan listed at $39.99 or an Individual plan listed at $0.99 per item, plus a category referral fee — is on sell.amazon.com/pricing.

Wholesale is how the brand shows up in a store you do not operate. The buyer’s job is to make a margin after their freight, their staff, and their own promotions. If your consumer price on Amazon is a few dollars above their shelf price, the buyer will notice. If your consumer price is below their shelf price, they will not reorder.

Neither model is morally better. A factory that wants its name known in the United States usually needs a consumer price that is real before a buyer will take the meeting. A brand that already has US doors may not need a large direct store. It still needs a marketplace offer that does not undercut those doors.

One price, then the channel costs

Write the consumer price first. Then back into a wholesale price that leaves the retailer a reason to say yes, and a marketplace price that still works after referral fees, fulfillment, returns, and a modest amount of advertising. If those three numbers cannot coexist, the product is not ready for all three channels. Drop one.

Do not invent a “standard” retailer margin for this essay. Margins differ by category and by the size of the buyer. Use the buyer’s actual terms. Use Amazon’s Revenue Calculator for the marketplace side, and read the 2026 fee letter so you are not pricing off a 2024 screenshot. Amazon says 2026 FBA fees rise by an average of about $0.08 per unit and that no new FBA fee types were added. Your SKU can differ from that average.

Duties belong in the same sheet. Duty-free de minimis treatment is suspended. A small parcel is not a plan. The citations are in the market-entry essay.

What a wholesale buyer needs to see

A buyer is not convinced by a consumer ad. They are convinced by a short set of facts.

• A consumer price that already exists, on a site or a marketplace, and that you intend to keep.
• A case pack and an inner pack that match how the product is warehoused.
• A lead time you have hit before, not a lead time you hope for after the first holiday.
• Compliance for the category. Cosmetics have a specific US registration and listing duty under MoCRA, covered in the sourcing essay. Toys, food, and devices have their own. Do not send a line sheet for a product you cannot legally sell.
• Images and a one-paragraph story that a sales associate can repeat. The longer brand story can live on your store. The buyer needs the short one.

If you cannot answer those, you are not late to wholesale. You are early.

What DTC needs that wholesale does not

A direct store needs a reason to exist beside Amazon. That reason is usually the line in full, a bundle, a refill, or an explanation the marketplace template cuts off. It is rarely a 10 percent coupon.

You also need a way to be found. A store with no list and no marketplace is a brochure. Build the store when you have something to say that the marketplace cannot hold, and when someone on the team will answer the mail. The cross-channel essay is the sequence we use for the first year.

The conflict, and how to avoid it

The conflict is predictable. A retailer buys a case. A unit from that case, or from another distributor, appears on Amazon under a third-party offer at a lower price. Your featured offer either matches it and your margin disappears, or you hold the price and lose the offer. The customer learns the cheaper price. The retailer learns that the brand will not protect the shelf.

The controls that work are dull:

• Fewer wholesale accounts, chosen because they will not divert.
• A written resale policy you enforce, including against a customer you like.
• Marketplace monitoring of the hero SKUs, weekly, as described in the protection essay.
• A pack or a size that is retail-only, so the store is not selling the identical unit that is on Amazon. Use this when the brand can afford two offers. Do not use it to hide a broken price.

None of these is a software setting. They are commercial decisions. AEG’s marketplace work includes them when we are the US brand partner, because a clean advertising account on top of a leaking wholesale policy does not hold.

A factory’s version of the same choice

A factory that has only ever sold to brands is not “doing DTC” by opening a seller account in the factory’s legal name. It is launching a brand: a name, a price, a customer, and a channel. The wholesale business can continue. It should not be the same product, in the same pack, at a price that makes the factory’s own brand customers look foolish. Decide which name is the brand and which name remains the supplier. Then file the trademark in the owner that will enroll it. That filing path is in the Brand Registry essay.

Book a strategy call

If you are deciding whether the US business is a store, a shelf, or both, send a brief or Book a strategy call.