📉 Funnels Are Failing — Here’s What’s Next

Old playbooks are being torn up in real time.

New tariffs are scrambling supply chains. AI is changing how (and where) people buy. And media platforms are prioritizing algorithmic efficiency over marketer control.

Some brands are going to stall. Some are going to disappear. And a few will chart an entirely new path.

This week, we break down how the best operators are navigating the volatility:

• Macro: How Shopify is beating the panic (for now) + Trumps tariff talks

• Trends: Why AI could become the new storefront

• Tactics: How to find, frame, prove & scale your media buying

Let’s get into it ⬇️

MACRO

Strength in Uncertainty?

📈 Shopify Defies the Panic

While much of the DTC world is bracing for impact, Shopify’s Q1 earnings dropped like a hammer of optimism:

• Revenue up 23% YoY

• Merchant Solutions up 25%

• Operating income of $86M (vs. a loss last year)

President Harley Finkelstein didn’t hold back:

While brands are watching margins collapse and ad costs rise, Shopify itself is stacking wins, and its platform data suggests its merchants are still moving product.

But don’t pop the champagne yet.

2 quiet signals hint Shopify is bracing for headwinds:

• They sunset the $1M/year app revenue exemption, now taking 15% after a lifetime $1M — squeezing their partner ecosystem.

• Tariffs didn’t hit Q1. This means that Q2–Q4 will show the real impact.

In short, Shopify’s performance may be more about lagging indicators than long-term immunity.

🇺🇬 Trump’s UK Trade Deal: Symbolic, Not Strategic

Trump’s administration just signed a new trade agreement with the UK. Key headlines:

• U.S. drops steel and aluminum tariffs

• The UK reduces tariffs on U.S. beef and ethanol

• A carve-out for 100,000 British cars to avoid the new 27.5% auto tariffs

That all sounds nice, but don’t mistake it for meaningful DTC relief. The base 10% tariff on most goods remains, even with one of America’s friendliest trading partners.

This deal signals Trump is open to talks, but also doubling down on the 10% baseline.

🐉 The Real Battle: U.S.–China Talks Begin

The U.S. and China are meeting in Geneva for the first high-level talks since Trump’s January tariff barrage.

Current status:

• U.S. tariffs on Chinese imports: 145%

• Chinese duties on U.S. exports: 125%

• Both economies are hurting, but playing chicken on who blinks first

Don’t expect a breakthrough. This is more “phase one vibes” than real resolution. But for DTC brands reliant on Chinese sourcing, this is the one to watch.

Even a “mini-deal” could unlock cost relief — or at least clarity.

🔍 Takeaway

Trends 

Commerce Is Leaving the Website 👋

🧠 AI Isn’t Just Helping Brands — It Is the New Storefront

Forget “AI tools for merchants.” The real shift is happening in how (and where) consumers discover and buy products.

Shopify President Harley Finkelstein put it bluntly:

This isn’t theoretical. Shopify already powers commerce integrations across Spotify (for artists like Beyoncé) and YouTube (for creators like MrBeast).

The implication: AI interfaces like ChatGPT, Perplexity, and Claude are next.

Not just as search or recommendation tools, but full-blown commerce platforms with embedded checkout.

🌍 The Era of Distributed Commerce

The old playbook:

1. Spend to acquire traffic.

2. Send everyone to your dot-com.

3. Squeeze conversions through CRO and funnel hacks.

The new playbook:

• Meet buyers where they are, not where you wish they’d go.

• Discovery and checkout happen inside third-party environments — AI chat interfaces, streaming platforms, or creator profiles.

• Your store becomes an API, not a destination.

This is more than multichannel or marketplace strategy. It’s a fragmentation of the point of sale, and brands need to start thinking like platform-native entities, not website-dependent ones.

⚠️ What This Means for DTC Brands

• SEO and Meta ads aren’t enough: Product discovery is shifting toward AI-first interfaces that won’t rely on traditional search or scroll-based feeds.

• Checkout needs to be portable: Embedded commerce, powered by Shopify or others, will need to function in non-web environments.

• Brand visibility becomes interoperability: You’ll need to plug your catalog into wherever the attention lives — from Perplexity answers to Claude summaries.

This isn’t a future trend. It’s already quietly underway.

🔍 Takeaway

Tactics

Find, Frame, Prove, Scale

In 2025, growth isn’t just a funnel. It’s a system where targeting, messaging, and experimentation all talk to each other.

Here’s how the best brands are building that system.

👀 Step 1: Find Your Customers — by Budget, Not by Interest

Old-school media buying asked: Who are we targeting?

Modern media buying asks: What are we willing to pay — for each type of customer?

As Jess from FireTeam Agency explains, Meta’s cost-controlled environment flipped the targeting paradigm. When you set a CPA or ROAS goal, you're telling the algorithm:

“Only go get the people I can acquire at this price.”

Here’s the nuance:

• Retargeting audiences might cost $20 per acquisition

• High-intent cold shoppers = $60

• Problem-aware users = $80+

• New demos = $100+

But if you set a flat $75 CPA, Meta maxes out your cheap audiences… and then stops scaling.

🧐 Smart media buyers now tier CPA by audience type — turning budgeting into targeting and opening new, scalable pools without tanking efficiency.

🧠 Step 2: Frame the Offer — So It Matches the Customer’s Worldview

Once you’ve found your audience, the next challenge is making the product make sense to them.

Sarah Levinger lays out the real issue in emerging categories like grounding sheets: people aren’t rejecting the product — they’re rejecting the premise.

That’s why she recommends the TEEP framework:

1. Trigger curiosity (not skepticism)

2. Explore safely through relatable content

3. Evaluate using identity + rational proof

4. Purchase via micro-commitments, not pressure

🧠 In this model, creative isn’t persuasion. It’s calibration. You’re helping the customer make of the product before they ever click “Buy.”

🔗 Be sure to read the whole thread.

📊 Step 3: Prove What Works. Then Layer Your Learnings

Most brands run experiments to report outcomes. But the best run experiments to create outcomes.

Olivia Kory breaks this down through a YouTube playbook that quadrupled iROAS:

• Started with an iROAS baseline of 1 (via holdout test)

• Then tested creative: brand story beat product-focused

• Next, tested targeting: contextual outperformed other methods by 10–51%

• Finally, tested bidding: algorithmic beat manual

Each insight stacked on the last. The result? A compounding system of improvement, not just a one-off win.

🧠 It’s not just what you test. It’s how you sequence insights so each one sharpens the next.

Takeaway 🔀 Pulling It All Together

Too many brands still treat performance like a patchwork of tactics:

• Media buying over here

• Creative over there

• Testing buried in someone’s Notion doc

• Report cards rather than insights

But in 2025, the edge goes to brands that build an integrated growth system:

• Use CPAs to shape targeting

• Use creative to shift mental models

• Use structured testing to evolve both

Quick Hits

• Is the age of the 10-person, $100M brand here thanks to AI?

• AppLovin reports major gains in growth and revenue in Q1

• A breakdown of Hims Q1 earnings and their 111% YoY growth

• Plant-based meat companies continue to collapse

• 🚨 Don’t forget to sign up for the free event, Shaping The Future of DTC