One of the biggest decisions a fashion brand must make is choosing the right business model. Should you sell wholesale to retailers, go direct-to-consumer (DTC) via e-commerce, or combine both strategies?

Each model has its own advantages, challenges, and operational requirements. Understanding how each integrates with PLM (Product Lifecycle Management) and ERP (Enterprise Resource Planning) systems can help you streamline production, manage inventory, and scale efficiently.

This guide breaks down wholesale vs. DTC, their key differences, and how to leverage both models effectively.

Understanding the Two Main Business Models

| Model             | How It Works                                                  | Best For                                        |
|-------------------|---------------------------------------------------------------|-------------------------------------------------|
| Wholesale         | Sell large quantities of products to retailers, department stores, or boutiques at a lower price per unit. | Brands looking for bulk sales and large distribution networks. |
| Direct-to-Consumer (DTC) | Sell products directly to customers via your own website, pop-ups, or flagship stores. | Startups, niche brands, and brands wanting full control over pricing & branding. |
| Hybrid (Both Models) | Combines wholesale and DTC to maximize reach and revenue.   | Established brands ready to scale across multiple channels

✔ How PLM Helps:

• Tracks product assortments and pricing structures for each business model.

✔ How ERP Helps:

• Manages inventory across wholesale & DTC channels to prevent stock issues.

Example: A sustainable streetwear brand started DTC through Shopify, then expanded to wholesale via department store partnerships after building demand.

Wholesale Business Model: Pros & Cons

Advantages of Wholesale

• Bulk Orders & Predictable Revenue – Retailers buy in large quantities, ensuring steady cash flow.

• Brand Exposure – Selling through major retailers boosts visibility and credibility.

• Lower Marketing Costs – Retailers handle marketing, customer service, and logistics.

Challenges of Wholesale

• Lower Profit Margins – Retailers mark up products 2-3x after purchasing at wholesale prices.

• High MOQs & Upfront Production Costs – Factories often require large minimum orders for wholesale.

• Less Control Over Brand Representation – Retailers control pricing, discounts, and in-store presentation.

  
  

✔ How PLM Helps:

• Manages wholesale pricing tiers and SKUs for different retailers.

✔ How ERP Helps:

• Tracks bulk order fulfillment and retail partner payments.

Example: A high-end shoe brand successfully scaled wholesale partnerships with Nordstrom and Saks, using KOBO ERP to manage inventory and order tracking.

Direct-to-Consumer (DTC) Business Model: Pros & Cons

Advantages of DTC

• Higher Profit Margins – No middleman means 100% of revenue stays with your brand.

• Full Control Over Branding & Customer Experience – Direct connection with customers enables stronger brand storytelling.

• Lower Upfront Inventory Risk – Small batch production or pre-orders minimize unsold stock issues.

  
  

Challenges of Wholesale

• Higher Marketing & Customer Acquisition Costs – You must invest in ads, influencer partnerships, and content marketing.

• Order Fulfillment & Logistics – Managing e-commerce orders, returns, and customer service can be complex.

• Slow Initial Sales Growth – Unlike wholesale, where large retailers buy in bulk, DTC sales take time to build traction.

✔ How PLM Helps:

• Syncs product listings with e-commerce platforms like Shopify for seamless updates.

✔ How ERP Helps:

• Manages inventory, shipping, and returns efficiently.

Example: A swimwear brand went DTC-first via Shopify and increased repeat purchases by 30% using personalized email marketing.

Hybrid Business Model: Combining Wholesale & DTC

Many brands start with DTC, then expand into wholesale once they gain brand awareness. Others launch with both models simultaneously, balancing brand control with retailer partnerships.

Advantages of a Hybrid Approach

• Diversified Revenue Streams – Reduces dependency on a single sales channel.

• Stronger Brand Authority – Retail presence adds credibility, while DTC fosters customer loyalty.

• Scalability – Wholesale fuels mass production, while DTC drives profit margins.

Challenges of a Hybrid Model

• Complex Inventory Management – Must balance bulk orders and individual DTC sales.

• Pricing & Discount Conflicts – DTC promotions may undercut retailer pricing agreements.

• Logistics Coordination – Requires multi-channel fulfillment strategies.

  
  

✔ How PLM Helps:

• Syncs wholesale and DTC product catalogs to maintain pricing consistency.

  
  

✔ How ERP Helps:

• Automates inventory allocation between wholesale & DTC sales channels.

  
  

Example: A luxury handbag brand started DTC-only, then expanded into wholesale with Net-a-Porter while maintaining exclusive collections for their online store.

How to Choose the Right Business Model for Your Brand

Ask Yourself These Key Questions:

1. What is my brand’s long-term goal? – DTC builds a community, while wholesale scales faster.

2. Do I have the resources for wholesale production? – High MOQs require strong cash flow.

3. Am I prepared for the logistics of DTC? – Managing e-commerce fulfillment & returns takes effort.

4. Can I handle both models simultaneously? – If yes, a hybrid strategy could work best.

| Business Model | Best For                                         | Challenges                              |
|----------------|--------------------------------------------------|-----------------------------------------|
| Wholesale      | Brands looking for retail distribution           | Requires bulk inventory & lower margins |
| DTC            | Brands wanting full control & higher profit margins | Higher marketing costs                  |
| Hybrid         | Established brands ready to scale across multiple channels | Complex inventory & pricing coordination

Why PLM & ERP Are Essential for Managing Business Models

| Challenge | How PLM Helps | How ERP Helps |
| --- | --- | --- |
| Wholesale Order Management | Tracks retail partner orders & pricing tiers | Manages bulk production & invoices |
| DTC E-Commerce Sync | Integrates with Shopify, WooCommerce, etc. | Manages real-time stock updates |
| Hybrid Inventory Allocation | Prevents overselling in DTC vs. wholesale | Automates order fulfillment per sales channel

Conclusion

Choosing between wholesale, DTC, or a hybrid model depends on your brand’s goals, resources, and growth strategy. While wholesale offers scale and bulk sales, DTC provides higher profits and brand control. Many brands eventually use both models to maximize revenue.

By integrating PLM for product development & pricing and ERP for inventory & order management, brands can manage both wholesale and DTC operations efficiently.

Next Steps:

✔ Book a KOBO PLM demo to streamline wholesale & DTC management.

✔ Download our Fashion Business Model Comparison Guide.

✔ Learn how ERP can help manage multi-channel inventory efficiently.