Scaling from DTC to Retail: The Cash Flow Challenge Every Wellness Brand Faces

The moment everything changes

There's a particular milestone that every successful wellness brand hits: the call from a major retailer. Maybe it's Walgreens, Whole Foods, Boots, or Target. They want to stock your product. You've spent months — probably years — building your brand through direct-to-consumer channels, and now the big leagues are calling.

It feels like a breakthrough. And it is. But it also marks the beginning of a completely different financial reality — one that catches a surprising number of founders off guard.

The shift from DTC to retail isn't just a sales channel change. It's a fundamental restructuring of when and how money moves through your business. And if you don't plan for it, the very success you've been working towards can become the thing that threatens your cash flow.

How DTC cash flow actually works

When you sell direct to consumer — through your own website, Amazon, or marketplaces — the cash cycle is relatively straightforward. A customer orders, they pay immediately (or within a few days via the payment processor), and you ship from existing stock or produce to order.

The gap between spending money and receiving it is short. You might carry some inventory risk, but you're generally receiving revenue within days of a sale. For most DTC wellness brands, this feels manageable. You can see your bank balance and roughly predict what's coming in.

This creates a set of habits and assumptions about how your business works financially. And almost all of them stop being true the moment you enter retail.

What changes when a retailer says yes

When a major retailer agrees to stock your product, several things happen at once — and they all cost money before you see a penny of revenue.

Order volumes jump dramatically. A single retailer might want more inventory for their initial order than you've sold in three months of DTC. If you're going into multiple locations, you could be looking at production runs several times larger than anything you've done before.

Your supplier wants payment upfront. Most contract manufacturers and raw material suppliers require payment before or during production — typically 50% to start and 50% before shipping. They're not going to extend credit to a brand they've only worked with at DTC volumes.

The retailer won't pay for months. Major retailers typically operate on net 30, net 60, or even net 90 payment terms. That means you won't receive payment until 30 to 90 days after delivery. Some retailers are even slower in practice.

The gap compounds. Factor in production lead times and shipping, and you could be looking at 90 to 120+ days between paying your supplier and receiving payment from the retailer. With DTC, this gap might have been a week. Now it's a quarter.

And it happens again. This isn't a one-off. Every reorder follows the same pattern. As you add more retail accounts, the cash locked up in this cycle multiplies.

The hidden costs nobody warns you about

Beyond the basic timing mismatch, there are costs that experienced retail brands know about but DTC founders often don't anticipate.

• Retailer onboarding fees. Some retailers charge slotting fees, promotional allowances, or marketing contributions just to get on the shelf. These can run into thousands before you've sold a single unit.
• Compliance and packaging. Retail-ready packaging is different from DTC packaging. You may need new labelling, barcoding, case packs, and shelf-ready displays. Compliance with retailer-specific requirements can mean reformulating or retesting products.
• Chargebacks and deductions. Retailers routinely deduct amounts from payments for issues like late deliveries, incorrect labelling, or packaging that doesn't meet specifications. These can be surprisingly aggressive, and they come off your payment — which is already arriving late.
• Insurance and liability. Retailers typically require higher levels of product liability insurance than you needed for DTC. This is an ongoing cost that kicks in before you see revenue.
• Returns and unsold stock. Unlike DTC, where returns are relatively predictable, retail agreements may include provisions for returning unsold stock or charging markdown allowances. This creates inventory risk that's hard to model when you're new to retail.

Why this catches smart founders off guard

The irony is that this problem tends to hit the best operators hardest. If you've built a strong DTC brand with loyal customers and growing sales, you're exactly the kind of business retailers want. But DTC success doesn't generate the kind of cash reserves you need to fund a retail expansion.

Most wellness brand founders are product people — they understand formulation, branding, and customer experience deeply. What they don't typically have is a finance background or experience managing the working capital demands of wholesale trade. There's nothing wrong with this; it's just not where their expertise lies.

The result is that many brands enter their first retail partnership underprepared for the financial mechanics. They budget for production costs but not for the timing gap. They celebrate the purchase order but don't model what their bank balance looks like 90 days later.

Some founders learn this the hard way — stretching personal finances, maxing out credit cards, or turning down reorders because they can't fund the next production run. Others scale back their retail ambitions to keep cash flow survivable, effectively putting a ceiling on their own growth.

The scaling trap

Here's the particularly painful part: it gets worse before it gets better.

If your first retail partner goes well and you win a second, your cash requirement doesn't just double — it accelerates. You're funding production for both accounts simultaneously while still waiting for payment on the first. Add a third retailer and the working capital requirement balloons further.

This pattern isn't unique to any single brand or product category. CBD brands experienced it at scale between 2019 and 2021 as hundreds of new companies tried to ride the wave into national retail. The same thing is happening now with adaptogens, functional mushrooms, and nootropics. Each new category creates a fresh cohort of founder-led businesses hitting the same working capital wall.

What the smart brands do differently

The brands that navigate the DTC-to-retail transition successfully tend to share a few common traits.

• They model the cash gap before they commit

  Before accepting a retail order, they map out exactly when money goes out and when it comes in. They know what their peak cash requirement will be and when it will hit. No surprises.

• They secure financing before they need it

  The worst time to arrange working capital is when you're already in a cash crunch. The best time is before you've accepted the purchase order. Having a financing facility in place means you can say yes to opportunities with confidence.

• They negotiate payment terms proactively

  Not every element of the financial relationship with a retailer is fixed. Some brands negotiate shorter payment terms for initial orders, or structure milestone payments that reduce the gap. It's always worth asking.

• They use trade finance to bridge the gap

  Purpose-built trade finance solutions — designed for the specific timing mismatch between paying suppliers and collecting from retailers — are increasingly available and well-suited to growing wellness brands. These are fundamentally different from bank loans or credit cards, and they're structured around how wholesale trade actually works.

Planning your transition

If you're a DTC wellness brand considering retail, here's a practical framework for thinking about the financial side.

1. 1 Map the timeline. For each retail partner, lay out the full cash cycle: when you pay your supplier, when you deliver to the retailer, when you get paid. Be realistic — add buffer for production delays and slow-paying retailers.
2. 2 Calculate peak exposure. What's the maximum amount of cash you'll have tied up at any point? This is your working capital requirement. If you can't cover it from existing cash reserves, you need a financing plan.
3. 3 Talk to your supplier early. Your manufacturer or raw material supplier may be willing to adjust payment terms if they understand the opportunity. Some suppliers will share the financing cost if it means larger, more predictable orders.
4. 4 Explore financing options. Traditional bank lending, invoice factoring, credit cards, and trade finance all have different strengths and limitations. Understand which ones fit the specific pattern of retail cash flow — where you're paying out before you have anything to factor or borrow against.
5. 5 Build relationships, not just transactions. The best retail partnerships are built on mutual investment in growth. A retailer who sees your brand performing well will be more flexible on terms over time. A supplier who benefits from your growing volumes has an incentive to help you bridge the gap.

The bigger picture

Moving from DTC to retail is one of the most significant transitions a wellness brand can make. It's where many of the industry's most successful companies were built — and where many promising brands stalled because the financial mechanics weren't in place.

The good news is that this is a well-understood problem with increasingly good solutions. You don't have to figure it out alone, and you don't have to choose between growth and financial stability.

Alethium helps wellness brands bridge the cash flow gap between paying suppliers and collecting from retailers. If you're planning a move into retail and want to make sure the finances are as strong as the product, book a demo and let's talk it through.