A practice that every DTC Brand should copy:

CSX White Belt Training

Back in the day, Bonobos called their CSX team “The Ninjas” both internally and customer facing…

🥷 In the weeks and months leading up to BFCM, all team members across the org were expected to spend a day training with the Ninjas to earn their “White Belt”

For those unfamiliar with Karate, the White Belt symbolizes the beginning of your learning journey

This is a really hard question to answer because like so many topics in DTC, the best response is usually 'It Depends'

However, I'll take a shot at what - in my experience - is the best Ops organizational structure for *most* small/mid-sized Brands

1/13

https://twitter.com/soundslikecanoe/status/1514657037736726530

Key Assumptions:

1/ Digitally Native Brand
2/ 10-20 SKUs
3/ $10M-$25M in Annual Revenue
4/ Multichannel (let's assumed eCom is dominant, followed by wholesale/marketplace and then retail)
5/ Products are unique to the brand, meaning they are designed and developed in-house

2/13

I just had an OUT-OF-BODY unboxing experience

And it came from DTC furniture brand @fyrn_sf (pronounced Fjyurrn)

Let’s dig in 👇🏻 I ordered a Mariposa Chair from Fyrn and received it 8 short days later despite custom wood and hardware finishes

Fyrn products are handmade in California (SF)

The outer box is slight, but with strong visual branding (tape) and a stamp to denote the domestic manufacturing

Let’s talk Loyalty on V-Day 💞

What makes Starbucks the best of the best ☕️? First, 1 in 4 Starbucks customers are Rewards members, and 40% of Starbucks revenue is generated from those 25% of customers

Quick math tells us that this is Starbucks most valuable customer cohort

Source: HBS

While Amazon, Walmart and others try to figure out how to make money selling food online in a post-COVID world, others are delivering big profits selling gourmet foods and delicacies Direct to Consumer

A thread

🥩🦞🦪🐖 In August, I wrote this thread arguing that we are in the midst of the largest transfer of wealth in history, and that this shift would create dramatic opportunity for Luxury businesses across all sectors

https://twitter.com/digitallynativ/status/1290318195899994114

A thread about a love triangle 💞

Between a holding company of Legacy Brands 👗

The largest mall operator in the US 🏬

And the worlds largest asset manager 💰 2/ This story starts in 2010

Jamie Salter is the outgoing CEO of Hilco Brands (Linens & Things, Polaroid, Le Tigre, etc). He pours $250M into his new venture: Authentic Brands Group

Early acquisitions for ABG were modest, and include small apparel brands and celebrity licenses

This pretty much sums up the state of things

From @packyM and Not Boring This is one of the more important takes time I have seen, period

It should be read and understood by everyone in the DTC ecosystem

Read the whole post here

notboring.substack.com/p/shopify-and-…

If I'm founding a DTC brand today there's only one choice for market positioning:

Luxury

We are undergoing the largest wealth consolidation event in our nation's history, and a continuation of what the digital era had already catalyzed 2/ The pandemic and remote work financially favors those with discrete income/wealth and those who sit behind screens for a living

This divide has been deepening since 1989, coinciding with the digitalization of commerce, a force which has now exploded in velocity

NASDAQ 📈

A thread about LEGO

On overcoming adversity 🧯

On product principles 🧒

And on building a distribution channel, brick by brick 🧱 2/ It's 1916 in the sleepy village of Billund, Denmark

A young carpenter named Ole Kirk Christianson leverages his love for woodworking and opens a carpentry business

He finds modest success, producing ladders & stools

But in 1924 an accidental fire burns his shop down

A thread about White Claw 🐾

And entrepreneurship...

🍷 2/ In the early 1970s, a Canadian born recent college grad named Anthony von Mandl landed a wine selling apprenticeship

He quickly parlayed that experience into starting his own wine importation business out of the back of his car at the age of 22

One of the DTC Brands I'm most excited about is @eastforkpottery

You may have heard of East Fork previously as the purveyor of #themug which drops every Tuesday at noon and promptly sells out

I recently ordered from East Fork. Here is why they may be the future of DTC 👇 2/ East Fork is located in Asheville, NC

Their founding team is comprised of true craftswomen/men and they produce their products on-site, using local materials

Analyzing Lululemon's Q1 2020 earnings presents the roadmap for DTC success

1/ High Gross Margins
2/ Owned Sales Channel Distribution
3/ Sales Channel Agnostic

👇 1a/ High Gross Margins

Lululemon logged a 51.3% Gross Profit Margin in Q1 2020 versus 53.9% in 2019

On the surface, this looks worrisome, but they unpacked the deltas:

Rent/Depreciation: -330bp (unavoidable)
eCom Shift: -110bp
Currency: -20bp

Product Margin: +180bp

There has been quite a bit of conversation lately regarding inventory velocity and matching demand with supply for DTC companies

Having been focused on solving this challenge for more than a decade, I'll offer up my perspective on the best approach

👇 The first and most important thing to get out of the way...

There are no one-size-fits-all solutions, and there are very few one-size-fits-many solutions

This is because no two companies architect their supply chain and demand engine the same way

Yesterday I posted about the profitability headwinds facing eCom, resulting from a shift of consumer purchasing behavior away from transacting offline (due to COVID-19 restrictions) to online retailers and brands.

Feedback was mixed, so I will unpack my point a bit more 👇🏼 The framework of my point, which I believe was also widely misunderstood, is that when I reference future profitability, I’m focusing on the [aggregate] of eCom sales, and the [mix] of products being sold within that aggregate

Not any single brand/category, or outliers

Stitch Fix reported Q2 earnings and issued weaker guidance yesterday, prompting public market investors to hammer the stock (-42% at one point) which lowered $SFIX Market Cap to $1.6B

The drop in value would appear to be outsized as SFIX remains profitable and growing

But...👇🏼 2/ On the earnings call, CEO Katrina Lake cited promotionality and reliance on FB as headwinds for future expansion

To combat those forces, Lake noted a forthcoming shift in creative and brand marketing spend, as well as product offerings at lower price points to broaden appeal

1/ It is fairly obvious that profitability at the unit (per transaction) level is critical to becoming profitable as a business

What's not obvious is that the majority of unprofitable DTC brands have positive unit economics as they grow 2/ The reasons brands like these haven't become profitable is that they're building for the next tier of growth, not the one they're on

In order to get there, investments are required: Talent, infrastructure, technology, etc

These investments add Fixed Costs to the business

I've had the opportunity as a new father (for the second time) to experience one of the most exciting DTC Brands/Products over the last 8 weeks...

The SNOO Sleeper by @happiestbaby

Their business is a powerful case study on how DTC brands can be successful

my thoughts.. 👇 2/ Founding Story:

Dr. Harvey Karp was a notable pediatrician in LA for over 25 years (~1980-2005), during which time he developed his perspective on early childhood dev, and in particular, sleep

in 2001 he and his wife Nina incorporated their business: Happiest Baby Inc

(1/6) For DNVB > $10M in annual revenue:

Begin segmenting revenue across products and customers by Price Type: Full Price / Promotional / Markdown

Build strategies to grow Full Price (flywheel) while limiting Promotions and Markdowns (2/6) The fundamental challenge is that repeatable growth becomes more difficult and marketing performance is positively sensitive to price as an influence on Demand (elasticity). Price becomes the lever that is most easily pulled instead of developing flywheel focused strategy

(1/9) On the #DNVB value proposition: I suffered a broken zipper pull on my beloved @away luggage during a recent flight. I brought it to the Away B&M location at The Domain in ATX and was greeted instantly by a polite and empathetic sales associate (2/9) She pulled up my account in a matter of seconds (the original purchase was made at their Soho location in NYC) and noted that my purchase was under warranty so I would be able to replace the item at no cost. Moments later she emerged from the back room with a brand new bag