Latest / The DTC Marketing Podcast with Fexingo: Direct-to-Consumer Brands, Shopify, and E-Commerce Growth / Why DTC Brands Are Building Their Own Logistics Networks
Transcript
- Lucas: Warby Parker announced back in early 2025 that it was opening three regional fulfillment centers — in Pennsylvania, Nevada, and Texas — and projected it would save roughly $200 million over five years by bringing logistics in-house. Luna: That is a massive number. And it's not just about cost, right? It's about control. Lucas: Exactly. Control over the unboxing experience, delivery windows, even how returns get processed. For a DTC brand, the package that shows up at your door is the brand. If it's in a battered box with a generic label, that's a missed touchpoint. Luna: So is this the new normal? Every DTC brand should start thinking about owning logistics? Lucas: Not every brand. But more are looking at it seriously. Let's break down the math. Warby Parker does about $700 million in annual revenue now. They ship millions of frames a year. At that scale, building your own network starts to make sense. Luna: What about a brand doing, say, $20 million a year? Can they even afford a warehouse? Lucas: Probably not on their own. But there's a middle ground. Some brands use hybrid models — partner with a third-party logistics provider like ShipBob for most orders, but keep a small owned facility for high-value or subscription orders where experience really matters. Luna: So the tipping point is somewhere between $50 million and $100 million in revenue, maybe? Lucas: That's a rough range. I've seen brands cross over at $80 million. But it also depends on product type. A furniture brand shipping bulky items has very different warehousing costs than a skincare brand shipping small bottles. Luna: And the capital required — you need to lease space, buy shelving and conveyor systems, hire a warehouse manager. That's not negligible. Lucas: Right. One estimate I saw from a logistics consultant was that setting up a 50,000-square-foot facility runs about $2 to $4 million in upfront costs, plus another $500,000 to $1 million a year in operating expenses before you even ship a single order. Luna: So the savings have to be real. Warby Parker expects $200 million over five years — that's $40 million a year. If their operating costs are, say, $5 million per facility, they're still way ahead. Lucas: Exactly. And they get the intangible benefits too. Faster delivery — Warby Parker now offers next-day in most major metro areas. And a consistent unboxing experience that reinforces their brand. Luna: Let's talk about the unboxing for a second. I've seen DTC brands use custom inserts, branded tissue paper, even a handwritten note. If that's all done by a third-party warehouse, it's harder to control quality. Lucas: And harder to iterate. If you want to test a new insert or change the packaging material, with a third-party you have to go through change orders, renegotiations. When you own the facility, you just do it. Luna: So for a brand that's very experience-driven — like a premium candle or a beauty subscription — owning logistics could be a competitive advantage even at a smaller scale. Lucas: Absolutely. And we're seeing more of that. There's a men's grooming brand called Hawthorne — they do about $30 million a year and they run their own small fulfillment center in Ohio. They say it lets them include free samples and personalized notes without extra cost. Luna: But what about the flip side? When does owning logistics backfire? Lucas: When you overbuild. If you sign a five-year lease on a warehouse and your growth slows, you're stuck with fixed costs. Also, expertise matters — running a warehouse is a different skill set than running a brand. Some brands outsource because they don't want to manage a night shift crew. Luna: So it's not a binary decision. It's a spectrum from fully outsourced to fully owned. Lucas: Right. And the smartest brands think of it as a strategic lever, not just a cost center. They look at their customer lifetime value, their average order value, their return rate, and then model what owning logistics does to those numbers. Luna: I've also noticed that some brands are using their owned warehouses as showrooms or pickup points. That's another layer. Lucas: Yeah, Warby Parker does that with some of their retail stores. They let customers order online and pick up at a store, which reduces shipping costs and brings people in. That kind of omnichannel integration is much harder when a third-party handles everything. Luna: So the takeaway for a DTC marketer listening right now — if you're at $10 million, don't build a warehouse. But maybe start thinking about what your logistics strategy looks like when you hit $50 million. Lucas: Exactly. And start collecting data now. What's your average shipping cost per order? What's your return rate? How often do customers complain about delivery speed? Those numbers will tell you when it's time to make a move. Luna: And if these kinds of strategic conversations have sparked something you've actually used in your own work — even just a framework or a new way of thinking — a couple of dollars a month is genuinely what keeps these shows going. Lucas: Yeah. Buy me a coffee dot com slash fexingo, if you've gotten something out of them. It makes a real difference. Luna: Alright, back to logistics. One more angle I want to touch on — sustainability. Does owning logistics make it easier to reduce carbon footprint? Lucas: It can. When you control the routing, you can optimize for fewer miles. Some brands are using electric delivery vans for last-mile in urban areas. But again, that requires capital. Luna: So the trend is clear — more DTC brands are bringing logistics in-house, but it's a decision that has to be made with eyes wide open. Lucas: Right. And the brands that do it well treat it as a core part of their customer experience, not just a cost line.