“DTC” has become much more than just a buzzword in the retail industry.

The model has become increasingly attractive not just for startups, but for traditional retailers as well, with Under Armour, Adidas, Nike and Levi’s leading the charge.

Eighty-five percent of business leaders have already switched to a DTC model and one in 10 business leaders are planning to switch to a DTC model in 2023, according to a recent study from Circuit. The study also found that 66% of DTC companies experienced growth this past year and 45% said they acquired new customers.

But these companies face their own challenges. Forma Brands, the parent company of beauty brand Morphe, filed for bankruptcy earlier this year, and it likely won’t be the last filing among digitally native retailers this year. Several other DTC companies have turned to layoffs to cut costs as they’re faced with changing consumer behavior and increasingly scarce capital.

Competition is also making it increasingly difficult to acquire, and retain, customers.

As the year progresses, these are just a few of the things we’re keeping an eye on in 2023.