Does D2C Make Sense for your Brand?

The TL;DR:

• Let’s Chat D2C: Why having a D2C ecommerce channel doesn’t make sense for every vertical.

• What I’m Thinking about this Week: Integrating Teams after an Acquisition.

• The D2Z Podcast: Retention processes for SAAS business, product bundling, and more with Wesley Magness, R&D Lead at Recharge.

• App Highlight: No app highlight this week. Reply to this email with your tech company and why it should be featured next week! If you’re a brand, let me know some of the cool apps you’re using!

• Upcoming Events: I’m presenting my “10 Steps to Building a Retention Program” at ChargeX in D.C. from 4/26-4/28 and have discounted brand tickets if anyone wants them. Submit your questions ahead of time for my AMA with this form!

Random tip: Organize your Slack channels in folders. I have over 100 Slack channels I’m in, and it would be impossible to manage without organization.

Let's Chat D2C: Why Having a D2C Ecommerce Channel Doesn’t Make Sense for Every Vertical

The COVID Effect

When March 2020 hit, there was a mad dash for every business to get up and running online. If you were an ecommerce brand, you doubled down on advertising. If you were a brick-and-mortar business or retail distributed brand, you spun up a Shopify storefront 

The reality is that D2C doesn’t make sense for every vertical. The margins don’t work.

An Example

Let’s use kombucha as an example. Numerous issues with this product category make it cost-prohibitive for D2C:

• Low Price Per Unit: Retails for around $4-5 per bottle.

• Weight: Kombucha is a heavy product. Even if bought in bulk by a customer, shipping costs are astronomical.

• Cold Chain: Kombucha must be kept refrigerated, increasing logistics complexity and shipping costs. 

An Alternative Approach

What we’re doing with our Electriq clients in verticals where the D2C margins just don’t work is focusing on creating a unique online storefront experience that is primarily content-driven and drives retail sales. Some brands can also make Amazon work because FBA costs and the scale they get there help with margins.

 For example, if you’re a kombucha brand, you could sell merch on your ecommerce store and have exclusive perks available to your customers who mention you on social via a platform like Gatsby.ai

What It Means for Your Business

Rethink the assumptions you’re currently operating with. Two years ago, the assumption was D2C ecommerce was the right move for their business. But as we’ve seen in the past year, margins are extremely tight for certain product categories. Take a strong look at your sales channels and double down on the ones that make the most sense.

What I’m Thinking About This Week: Integrating Teams After an Acquisition

Now that some time has passed since the acquisition, I’ve dug into some of the takeaways and lessons learned from these first 12 months of integration.

Team Member Orientation on Company Vision

For starters, it has become increasingly clear that there are gaps in understanding among new team members about the larger organization and the opportunities that come with it. While the acquisition was an excellent opportunity for both companies, it's essential to ensure everyone on the team is on the same page about the organization's goals and mission.

The lack of understanding is particularly acute among new team members who were not there during the acquisition process. They often don’t fully understand why Electriq was acquired (or that it ever was its own entity) or the parent company's goals and ambitions.

To address this issue, we're continually developing onboarding programs that get new team members up to speed on the entire organization, including its history, goals, and opportunities. We're integrating new team members fully into the business, regardless of the team they're joining. This approach ensures everyone is on the same page, increasing the likelihood of success across the organization.

Quicker Team Integration

Another key learning is that we could have been quicker in integrating our two teams. Integrating instead of operating as separate entities would have been more beneficial. There was a fair amount of overlap, and we could have leveraged each other's expertise in certain areas. We’re now doing that effectively but could’ve done it even quicker.

 Now, we're at a point where people are willing to hop in and help out, even if it doesn't necessarily fit within their job title or description. Team members are eager to assist in other areas where they can add value, regardless of whether they are part of the DRINKS or Electriq team.

Despite having different business units, we emphasize that we are all one team. It's essential to be cross-collaborative and share where possible to improve efficiencies and make everyone's lives easier. If we were to do it again, we would integrate the teams more quickly to mesh the culture and get everyone on the same page ASAP. This approach would also free up bandwidth and resources.

The most remarkable thing was seeing us close a MASSIVE client this year that would’ve been impossible for either of us to win as separate entities. Our combined forces and expertise gave us the credibility and ability to win the deal.

And More with the Book!

There’s a whole lot more I want to dive into regarding this topic and others, so I’ve been working on a book for the last year that I’ll be sharing more details on in the coming weeks!

This Week’s The D2Z Podcast

#56 – The Power of Automation and Navigating for Long-Term Success

🎧Listen Now 🎧

In this week’s episode, I sat down with Wesley Magness, R&D Lead at Recharge. Specifically, we explored the following:

💰 We talked about automating retention processes for ecomm brands, how to handle bundling and managing different apps with overlap, and how many Shopify apps are too many.

📲 Wesley also shared insights on technology's tendency to complicate things and the importance of keeping data in one place for seamless, frictionless distribution.

😎 We discussed his entrepreneurial journey with ElectricSMS, the concept of minessence, and how it describes Recharge Flows, his main focus for the past nine months. Wesley also shared his thoughts on strategic acquisition processes and philosophical alignment and how founder-led companies can be successful.

🚀We dove into the importance of retention and ease-of-use and how they relate to bundling and consolidation. Wesley also shared his insights on the impact of macroeconomic headwinds.

App Highlight - N/A

No app highlight this week, reply to this email with your tech company and why it should be featured next week! If you’re a brand, let me know some of the cool apps you’re using! 

Upcoming Events

I’m presenting my “10 Steps to Building a Retention Program” at ChargeX in D.C. from 4/26-4/28 and have discounted brand tickets if anyone wants them.

I'll also be hosting my monthly AMA LIVE from ChargeX! Tune in on 4/26 at 1130AM PST/230PM EST on Linkedin.

Submit your questions ahead of time with this form!

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