Rising Acquisition Costs Squeeze D2C Margins
Customer acquisition has become an increasingly expensive hurdle for D2C brands. Between 2015 and 2020, average customer acquisition cost (CAC) spiked by about 60%, and this upward trajectory continues into 2024. In fact, Facebook and Google ad costs have surged ~89% in the past two years alone, eroding the ROI of digital marketing. With CAC at all-time highs, many D2C companies are seeing their margins under pressure. This “CAC crunch” is forcing brands to rethink their cost structure and efficiency in other areas of the business.
Rather than rely solely on expensive ad spend, savvy brands are doubling down on retention and operational efficiency to offset acquisition costs. One major lever is global talent arbitrage – building offshore teams to handle support and operations at lower cost. What was once a fringe tactic has become common practice: in a recent survey, 78% of companies said the economic climate is impacting their decision to outsource, and 63% increased their outsourcing budgets in the last year. By using offshore talent strategically, D2C players can reinvest savings into growth while maintaining a quality customer experience.
From Lean Teams to Global Pods – Real Examples in 2024
An emerging theme is U.S.-based D2C brands building “global capability center” style teams offshore to support their growth. Unlike one-off outsourcing of call volume, these are dedicated pods embedded in the company’s workflows, often handling everything from customer support to marketing ops and back-office reconciliation. Recent examples abound:
- True Classic (Apparel): This fast-growing D2C apparel brand reached $400M in revenue with a lean U.S. team of under 60 people, by leveraging a dedicated offshore team across marketing, ads, data, invoicing, and more. The offshore staff functions as an extension of True Classic’s in-house team, enabling massive scale without a bloated HQ headcount.
- Quip (Oral Care): Quip, the oral care startup known for its electric toothbrushes, found that outsourcing certain tasks to agencies was inefficient and costly. During a pandemic-fueled growth spurt, Quip pivoted to a more hands-on offshore solution. They embedded two full-time remote team members (via a specialist provider) into their growth team to own daily marketing operations. One managed email campaigns and process improvements, while another focused on data-driven outreach to influencers. This embedded offshore pod helped Quip streamline operations and keep their in-house “strategic talent” focused on big-picture growth, all at a fraction of the cost of agencies
- Legacybox (Media Services): Legacybox, a D2C service for digitizing home videos and photos, turned to an offshore team to scale up customer support when their inbound requests tripled. They had struggled with long backlogs (customers waiting months for help), but after bringing in dedicated overseas support, customer wait times shrank from months to mere weeks. The offshore support reps handled service tickets, live chats, and even updated help center articles – becoming an “essential part” of Legacybox’s team and drastically improving response times and customer satisfaction.
- Unbloat (Wellness): In an extreme “scrappy to scalable” story, one D2C supplement brand scaled from launch to over $2M in annual revenue within 12 months with only one in-house employee – the CEO – by adding two offshore hires. Those offshore team members now run core operations: one manages customer experience, email marketing flows, and influencer programs, while the other produces constant creative content for ads. This tiny U.S. team augmented with skilled offshore talent managed to 3× the brand’s ARR in a year, an impossible feat without cost-effective manpower.
- OpenStore (E-Commerce Aggregator): Even aggregators that acquire D2C brands are embracing the model. OpenStore (valued ~$970M) operates 40+ micro-brands and has an “army” of 17 offshore team members doing the heavy lifting. These remote team members handle migrating each acquired brand’s systems, updating product listings, inventory checks, outreach and more – OpenStore even embedded an offshore team lead to coordinate the pod. This lets a relatively small central team manage a huge portfolio of online stores efficiently.
From fledgling startups to unicorn-bound brands, the pattern is clear: dedicated offshore teams are helping D2C companies punch above their weight. Functions commonly offshored include customer support and CX, back-office processes like returns and accounting reconciliation, and growth marketing operations (ad management, content, reporting). The key difference from old-school outsourcing is that these teams act as a seamless extension of the brand, often working exclusively for one client with deep product training.
Dedicated Pods vs. Traditional BPO Service
Unlike generic BPO call centers where agents might juggle multiple clients, the GCC-style model gives D2C brands a focused, embedded team. This dedicated approach yields notable benefits in customer experience and efficiency:
- Brand Familiarity: A dedicated team is trained only on your brand, products, and policies. They develop tribal knowledge and can resolve issues faster. As one CX provider noted, “With a dedicated team, response times are quicker because agents are familiar with common customer issues… customers no longer have to be transferred around” Familiarity leads to higher first-contact resolution – dedicated support teams can often solve problems on the first call or chat, whereas generalist agents might require multiple touchpoints.
- Consistency & Quality: Dedicated offshore reps can deliver a consistent, on-brand service experience. They become true brand ambassadors, versus a shared pool where quality may vary call-to-call. This consistency drives up customer satisfaction. (In fact, one company saw its CSAT scores jump from 72% to 91% within six months of integrating a dedicated remote support team, while also cutting support costs by 35%))
- Extended Coverage: Many D2C brands use offshore teams to provide 24/7 support or at least cover after-hours shifts economically. The result is faster response and resolution times around the clock. Studies find that outsourcing enables companies to offer “faster resolution times, faster response, lower queue times, and improved first-contact resolution rates” thanks to this always-on capability. Issues get resolved overnight instead of waiting until the next U.S. business day, boosting customer happiness.
- Scalability & Flexibility: Offshore partner teams can be ramped up for peak seasons or new product launches much more flexibly. Brands can start with a small pod and expand it as the business grows or as needs arise. This scalability was evident with OpenStore’s model – they started by offloading a few rote tasks and gradually expanded to dozens of offshore roles as their scope grew. The cost structure is often variable, so D2Cs pay for productive hours rather than carrying fixed full-time salaries year-round.
To be fair, a shared-agent model (where agents handle multiple brands) can be cheaper for very small startups with low ticket volumes. But most scaling D2C players find the extra investment in dedicated teams pays off through better CX metrics and customer loyalty. As a Magellan Solutions report put it, a focused support team spends more time understanding your customers and products, leading to “quicker problem-solving and an overall improved experience” that boosts loyalty. In the current environment, where every customer interaction matters, that quality difference is huge.
Measurable Impact on CX and Operations
The move to offshore teams isn’t just about cost-cutting – it’s translating into tangible performance gains for D2C brands:
- Faster Response & Resolution: Dedicated offshore CX squads have dramatically shortened ticket backlogs and resolution times. Legacybox’s case is telling – by onboarding trained offshore reps, they eliminated months-long wait queues and brought response times down to within weeks or even days. Generally, outsourced teams focused 100% on support can respond faster than small in-house teams juggling other duties. Many brands report significantly improved first response times and quicker case resolution after outsourcing, which in turn lifts customer satisfaction.
- Higher CSAT/NPS: Improved service quality directly boosts customer satisfaction (CSAT) and Net Promoter Scores. Quicker answers, 24/7 availability, and knowledgeable agents reduce frustration. Some brands also note that having support available in more time zones/languages (via offshore) earns them higher global CSAT and new customer segments.
- Chargeback and Dispute Reduction: Proactive customer support and efficient issue resolution help head off chargebacks and payment disputes before they happen. This is critical as e-commerce chargeback rates have soared 222% between Q1 2023 and Q1 2024 amid rising friendly fraud. By quickly resolving order problems or refund requests via offshore support, D2C brands can prevent many disputes from escalating to bank chargebacks. (Industry data shows 72% of merchants saw friendly fraud increase in 2024, so preventing disputes is a high priority.) Moreover, some brands employ offshore “risk analysts” to review transactions and respond to chargeback filings promptly, improving win rates on disputes. While specific reduction stats are hard to come by publicly, the logic is simple: satisfied customers who get timely help are far less likely to resort to filing chargebacks.
- Faster Reconciliation & Back-Office Cycles: Offshoring isn’t only for customer-facing roles. Many D2C firms use offshore pods for finance ops and reconciliation – e.g., processing returns and refunds, reconciling marketplace payouts, and updating inventory records. Having a trained team focused on these nitty-gritty tasks often speeds up the cycle. For instance, a U.S. fintech reported a 70% faster report turnaround time after building an offshore analyst team to handle reconciliations and data prep. In the retail D2C context, faster return reconciliation means customers get refunds sooner and inventory gets back in circulation faster, improving cash flow.
All these gains come while achieving significant cost savings. Labor arbitrage remains a core benefit – brands can save anywhere from 50% to 70% on talent costs by using offshore team members. One provider that embeds offshore marketing staff charges around $2,500–$3,000 per month per full-time assistant, which is a fraction of a domestic salary for a similar role. These savings can be reinvested into growth (offsetting those high CACs) or passed on in the form of better service. Crucially, by offloading routine work to capable offshore teams, U.S. staff can focus on high-impact initiatives like product development, retail partnerships, and creative strategy. This dual approach drives a better balance of quality and cost.
Outsourcing and CX Trends Going Into 2025
Outsourcing in general is seeing strong momentum as we head into 2025. What used to be viewed cautiously has become a best practice for scaling. A recent industry report found that 63% of companies are open to switching outsourcing partners to get better value – they care most about a mix of service quality and cost savings. In other words, brands are actively seeking providers that can deliver skilled, dedicated teams, not just the lowest-cost call centers. The global customer experience (CX) outsourcing market is projected to grow to ~$82 billion in 2024, with specialized “boutique” providers emerging to serve D2C and e-commerce clients with white-glove service.
Notably, tech-forward D2C brands are leading the charge. In the SaaS/tech sector, 65% of companies report using multiple outsourcing partners for critical processes – a sign that even core functions are now handled by external experts embedded in the organization. D2C e-commerce is following suit, especially in areas like omnichannel customer support, content moderation, and supply chain coordination, where in-house expertise might be limited. The ability to scale up teams on demand is incredibly valuable in the volatile D2C market. As one outsourcing CEO observed, what used to be a “nice to have” (an offshore team) has become essential for staying agile and competitive.
In terms of customer experience, brands are striking a balance between automation and human touch. Simple inquiries are often handled by AI chatbots, but more complex or high-value interactions get routed to those dedicated human agents offshore. This frees up human agents to focus where they add the most value – empathy, upselling, and creative problem-solving – while bots handle FAQs. The result is often a smoother overall CX, blending efficiency with personalization. Many outsourcing partners now offer integrated solutions combining AI and trained agents as a package.
Bottom line: Direct-to-consumer brands that once prided themselves on doing everything in-house are increasingly comfortable “growing up” with global help. By building offshore pods – whether through a partner or their own satellite office – they gain cost leverage and round-the-clock capability, without sacrificing brand quality. In a landscape where CAC is high and customer expectations even higher, this model is proving to be a lifeline. As D2C brands plan for 2025, those that invest in robust, well-managed offshore teams (for customer support, operations, and growth) are finding they can scale sustainably from scrappy to scalable, delivering premium experiences to customers worldwide, at a sustainable cost structure. The playbook for D2C success now often reads: hire global, think global, and let your best people – wherever they are – turbocharge your brand’s journey.