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1/ This article from @hilarymilnes deserves more attention.
The key question for DTC brands is the trade off between:
+Fulfillment & shipping cost savings
+(Arguably) shoppers down the purchasing funnel vs. FB
-almost complete loss of your brand experience at Amazon
-14+% rake
The key question for DTC brands is the trade off between:
+Fulfillment & shipping cost savings
+(Arguably) shoppers down the purchasing funnel vs. FB
-almost complete loss of your brand experience at Amazon
-14+% rake
2/ My take: don’t take it! (though personally, I might be better off financially if you did 😁)
@melanietravis puts it perfectly in the article “I think of Amazon as one side of retail and the Shopify-and-Facebook brand as the other. I think they can coexist.”
@melanietravis puts it perfectly in the article “I think of Amazon as one side of retail and the Shopify-and-Facebook brand as the other. I think they can coexist.”
3/ Amazon is likely threatened by DTC brands. The sales from the $xB DTC explosion of the last few years - Allbirds ($100M?), Harry’s ($250M?), DSC, Warby, etc. have bypassed the Amazon platform (although still small compared the the $xxxB through Amazon).
4/ Melanie is right. DTC brands have done a fantastic job on the front end - i.e. getting customers to their brands via FB+Shopify. But they need to figure out their backend strategy. They need a @Shopify+FB for fulfillment and shipping.
5/ Amazon has the cheapest fulfillment & shipping rates on the planet. To get to this stage was painful - patient investors, thick skinned CEO, lot of (ahem, crying & peeing?) employees, investing several billions every year in automation and physical buildings across the world.
6.a/ DTC brands cannot compete with Amazon on fulfillment & shipping costs. Amazon’s scale alone provides lower costs. That’s why most DTC companies offer poor shipping options (at least compared to Amazon). AndieSwim offers 2-day shipping for $15, and 1-day shipping is $40!! 😲
6.b/ To be sure, yes, 3-5 day shipping is free but my hunch is it’s more 5-day than 3-day. Would love to see more data here.
7/ These costs are exactly why this is an opportunity for a central player to consolidate fulfillment & shipping demand from all DTC players, and offer lower costs to each individual player from scale and automation. It’ll take patience but it can be done.
8/ Amazon already offers a not-so-well advertised multi-channel fulfillment option. This hasn’t received much internal attention in the past.
Most DTC brands don’t use this. And rightly so, because the costs are too steep, at least when I last checked.
services.amazon.com/fulfillment-by…
Most DTC brands don’t use this. And rightly so, because the costs are too steep, at least when I last checked.
services.amazon.com/fulfillment-by…
9/ IMHO, two reasons for the lack of attention and high costs: (i) products in MCF don’t spin the Prime flywheel, and (ii) offering lower costs might cannibalize FBA. Perhaps, even the market wasn’t ready, DTC hadn’t taken off yet.
10/ And so, the key question is: will someone be able to consolidate the DTC backend before Amazon decides it will become that DTC backend for fulfillment & shipping?
Because, DTC brands may not bite the frontend freebies, but they sure will bite the backend ones.
Because, DTC brands may not bite the frontend freebies, but they sure will bite the backend ones.
