Slowest Growth Since 2022, Shattered Confidence, and the $200M Scaling Trap

Your Weekly DTC Industry Roundup

Another week, another round of headlines screaming doom and gloom about holiday shopping.

E-commerce stocks are tanking. Consumer confidence keeps sliding. Analysts are pulling out words like "impossible to forecast" with alarming frequency.

But here's what actually matters when you strip away the noise:

• E-commerce growth just hit its slowest pace since 2022 as tariffs and job fears squeeze consumer spending
• Shoppers are hunting for value above everything else, quality and discounts now drive 90% of purchase decisions
• Consumer sentiment is still trailing last year's levels, sitting at 16% vs 18% in 2024
• DTC founders scaling past $200M are struggling with a brutal reality: the bigger you get, the harder sustainable growth becomes

Time to separate signal from noise …

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Consumer Behavior

E-Commerce Growth Stalls Out at Worst Level in Three Years

U.S. e-commerce sales grew just 5.3% year-over-year in Q2, marking the slowest expansion since late 2022.

That's not a typo.

After years of companies conditioning customers to expect November 1st deals, consumers finally wised up. They're waiting for the real discounts, not the warm-up offers brands keep pushing earlier and earlier.

The problem isn't just timing. Job cuts are up 175% compared to last year, with over 153,000 positions eliminated in October alone. Government shutdown fears rattled 12% of the workforce. And those student loan payments everyone forgot about? Yeah, those restarted in Q1.

E-commerce stocks are feeling it hard. eBay's down nearly 20% over three months. Etsy's off 12%. Even payment processors like PayPal dropped 12% despite posting solid revenue growth.

The underlying issue is simpler than most analysts want to admit. When consumer confidence drops and spending tightens, the first thing that goes is discretionary purchases. And most DTC products fall squarely in that category.

The market's essentially pricing in a reality that founders already feel in their dashboards every morning.

See more details here

Market Performance

Shoppers Make It Simple: Value or Nothing

Value for money just became the single most important factor driving holiday purchases, according to new data from Mastercard surveying over 4,000 consumers.

Not brand loyalty. Not convenience. Value.

Product quality came in second, followed immediately by discounts. Translation: people want good stuff, but only if the price makes sense. About 73% of shoppers are now waiting for wish list items to go on sale before buying, while 71% respond to personalized discount codes.

Here's the part that should make you rethink your promotional calendar.

Consumers have been trained to wait. Years of brands pushing "early Black Friday" offers backfired spectacularly because shoppers learned those deals always get better. So they sit on their hands until the real event.

Despite economic pressure, 90% of consumers still plan to shop physical stores this holiday season. Gen Z leads that trend at 91%, which flies in the face of the "digital native" narrative everyone loves. Turns out, younger shoppers actually want to see products in person and get inspiration from displays.

The data also shows 42% of consumers are already using AI to help with gift buying, jumping to nearly 50% among Gen Z and millennials. Whether that's a threat or opportunity depends entirely on how discoverable your products are to AI recommendation engines.

The bottom line: if your pricing strategy doesn't scream value right now, you're fighting an uphill battle.

See full details

Market Sentiment

Consumer Confidence Still Lagging Despite Recovery Signals

Present purchase sentiment is sitting at 16% compared to 18% last year, according to recent DTCCI tracking data.

Consumers are still holding back.

That 2-point gap might not sound massive, but it represents a meaningful difference in purchasing intent across millions of transactions. When you're trying to forecast Q4 performance and build inventory plans, that hesitation shows up everywhere.

The broader context makes this even messier. The University of Michigan's Consumer Sentiment Index hit 50.3 in November, down nearly 30% from the same period last year. That's the lowest reading since the early days of the pandemic when nobody knew what the hell was happening.

What's driving the hesitation isn't mysterious. Job security concerns are up. Inflation on consumer goods remains persistently high despite rate adjustments. And Trump's tariff strategy, even with recent trade deals, is still projected to cost global businesses over $1.2 trillion in 2025.

About a third of those costs will get passed directly to consumers.

The challenge for DTC brands operating in this environment is that you can't just discount your way out of low confidence. You need customers who actually believe they'll have money next month, next quarter, next year. Without that baseline security, promotional tactics only go so far.

We're not in a demand problem. We're in a confidence problem. And those take longer to fix.

See what others are saying

Taylor Reacts

TaylorReacts to Operators Forecasting Conversation

In this Taylor Reacts, I’m listening to the latest Operators episode and pausing to unpack the real story behind all the “worst consumer in a decade” and “hardest year since COVID” talk.

We get into why Black Friday isn’t actually the main job of a CEO right now.

How to think about 2026 forecasting with Board/Budget/Bonus scenarios.

The difference between “sexy” trend growth and durable, compounding growth.

And why category, LTV, and resilience matter more than heroic one-year spikes.

If you’ve ever stared at a 2026 model wondering what numbers are actually reasonable, this one’s for you.

Watch now

Podcast

AppLovin’s Incrementality Is INSANE

AppLovin’s incrementality is way bigger than anyone expected, and in this episode of the DTC Hotline, we break down exactly why.

With Black Friday/Cyber Monday right around the corner, brands are scrambling to understand whether AppLovin is a true “next-Meta” opportunity… or just hype. After running multiple incrementality tests across CTC’s client portfolio, the results are clear: this channel is creating more business value than the platform reports.

In this episode, Richard, Tony, and Luke explain:

Why AppLovin is showing insane incremental lift

How scale compares to Meta, Snap, and Pinterest

The exact setup (pixel, feed, creative) you need right now

Why BFCM performance will look inflated — and what to do after

How to think about becoming an AppLovin advertiser in 2025

The mindset shift brands need to win new channels

If you’re considering AppLovin for BFCM or planning your 2025 media mix, this episode is your blueprint.

Watch now

Final Thoughts

What This Means for Founders

The thread connecting all of this is pretty clear once you step back from the individual headlines.

Consumer behavior is shifting toward value-driven purchases while confidence remains depressed compared to last year. E-commerce growth is slowing to levels we haven't seen in three years, and stocks are pricing in the reality that most founders already feel in their P&Ls.

For brands still scaling aggressively, there's a reckoning happening around what "good growth" actually looks like at different stages. The 100% year-over-year gains that defined 2020-2021 created unrealistic expectations that are now crushing morale and making capital allocation decisions nearly impossible.

The smartest operators are building multiple scenarios into their planning. Not just one rosy forecast, but a range of outcomes that account for different levels of consumer demand, promotional intensity, and operational capacity. That's not pessimism -- it's preparedness.

If you're planning 2026 right now, the temptation is probably to build aggressive targets that justify your existence to a board or investor base. Resist that urge. Build a forecast you actually believe you can hit, then layer in upside scenarios that show what's possible if conditions improve.

The worst position you can be in is over-inventoried with stretched cash flow heading into a soft demand environment. We've watched good businesses get distressed that way. The second-worst position is under-resourced when demand shows up, but that's fixable with time and usually leaves your margins intact while you scale up.

Nobody really knows if consumer confidence will recover in Q1 or if this softness persists through spring. What you can control is building a business model that works regardless of which way the market breaks.

The companies that survive this period won't be the ones with the best growth story. They'll be the ones with the most resilient operations and the clearest understanding of what actually drives their numbers.

Plan accordingly.