After years of selling its products directly to consumers, Bob’s Red Mill is ending its DTC operations, effective Aug. 12. Products will continue to be sold through its wholesale partners.
“For many years, we’ve sold Bob’s Red Mill products over the phone, via mail order and through our website, to make sure they were available to people everywhere,” a company representative told Retail Dive via email. “However, due to our excellent distribution network and the wide availability of Bob’s Red Mill products in stores and online, Bob’s Red Mill will no longer sell our products directly to customers.”
The brand, which produces flours, mixes and cereals, was founded in 1978 and has been selling through other retailers for years. Bob’s Red Mill in 1982 added its products to Fred Meyer, a Northwest grocery chain. The brand, which is now sold in retailers like Target, Walmart, CVS, Giant and Wegmans, said it has made improvements to its online store locator to make it easy to find where its products are sold.
DTC brands are turning to wholesale distribution as the challenges around selling goods online becomes increasingly apparent.
Last year, analysts with BMO Capital Markets questioned whether selling directly to consumers, versus through wholesale channels, was actually more profitable, saying that “although revenue per item grows at DTC, the units lost by abandoning wholesale generally overwhelm the unit price lifts at DTC.”
Wholesale partnerships can oftentimes provide a physical distribution point for digitally native brands that may not have one otherwise and can offer it access to a new set of customers. For the traditional retailer inking the deal, bringing in popular DTC brands can help drive traffic to stores, particularly from younger consumers.
The decision by Bob’s Red Mill to halt DTC sales actually goes counter to the general trend in the food and beverage space where companies such as PepsiCo, Nestlé and Unilever embraced the model during the pandemic to reach consumers isolating at home, and have seen sales only continue to grow.