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The DTC Pilgrim's Progress

Ashwin Ramasamy
Ashwin Ramasamy
May 29, 2022
4
Min Read
The road to profitable growth is not easy. The cost is high, and the resilient brand must be willing to pay the cost no matter what. We are awash with the sins of a bull run, but this does not keep us from attaining glory.

It's funny how the classic Christian fiction has a message for a DTC founder and the message is both prescient and ominous.

Every brand knows the phrase 'Default Alive' but enacting it is hard. Sell on Amazon; put that 'Buy with Prime' button; embrace retail; cut back on brand marketing – there is plenty of advice. Many brands have embraced these principles already. But there are many that have not and for them, there isn't a knight in shining armor.

  1. On average, based on our sampling of 100,000 DTC brands, 37% have a retail store presence.
  2. 20% of the brands have wholesale operations, indicating that they are omnichannel and have retail partnerships.
  3. There are at least 160,000 brands with DTC operations that have their listings on Amazon, in the US.
  4. But there are at least another 100,000 brands that are not on Amazon but have a meaningful DTC presence.
  5. 80% of the DTC brands don't have a wholesale presence.

As Benjamin Graham says, Mr.Market is manic-depressive. The market has been rewarding growth at all costs and he has changed his tune over the last month. It's too short a time for unprepared brands to react. It's bigger than them.

It's bigger than what even the large retailers can handle.

A case in point: In times of financial austerity, shoppers go to familiar places to shop. Walmart, Sam's Club, and Target are where the action is going to be. But they all have been stock-piling more than they had to. There is a whip-lash effect felt. A lot of unsold inventory coupled with weak consumer sentiment means that, eventually, the shoe will drop. Even the best retailers could not time their inventories well in an uncertain environment. They reacted to the data they had.

Retailers have huge inventory and that is dragging down profitability. Softening consumer demand will only exacerbate things for them. If a brand isn't already on the aisle, it is going to be hard for a retailer to prioritize a new brand over moving what they have on their inventory.

There is an exception though, to the lackluster appetite of retailers for new brands – the inventories that are piling up are based on the pandemic-curated buying behaviors and are not the ones that shoppers want now. Less loungewear and more officewear, please! This means that brands that can plug the blindspots of demand by the swift movement of inventory will be a retailer's favorite, but the agency is with the retailer.

Brands know that

  1. Local or diverse supply chain can react faster
  2. Just in time' is fragile
  3. Retail buyers take a year to bring new brands to their aisles
  4. Affiliate channels and Amazon are ways to get around the dependence on digital advertising

But small and mid-sized brands have a size tax. They simply don't have the ability to fight all the fires during normal times. They have moved from survival mode to euphoria to supply shocks to attribution problems every quarter for the last two years. In the next two years, the market will reallocate resources to entities that can produce and sell efficiently.

We will learn the lesson once more – that several businesses are just products of the market they were in.
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eCommerce-specfic lead qualification criteria
Freedom from non-Commerce databases.
Predictable demand generation. Very precise segmentation & messaging.
Free Trial
Be a Segmentation Superpower
eCommerce-specfic lead qualification criteria
Freedom from non-Commerce databases.
Predictable demand generation. Very precise segmentation & messaging.
Free Trial
Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
hm.com
HQ Location: Beaverton, Oregon, United States Of America, 97005
hm.com, operated by H & M Hennes & Mauritz AB, is an internationally-focused online store that generates eCommerce net sales primarily in Germany as well as in the United States and the United Kingdom. With regards to the product range, hm.com achieves the greatest part of its eCommerce net sales in the “Fashion” category.
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Order Volume
Commercepedia Maturity Score
Record Coverage
High
Category
Arts and Entertainment, Business and Consumer Services, Business and Industrial, Consumer Electronics, Health and Fitness
Sub Category
Arts and Entertainment, Business and Industrial, Office Supplies and Stationery, Technology and Computing
hm.com funding details
Total venture and debt funding raised by hm.com from accredited investors.
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The most accurate online retailers dataset curated by algorithms & analysts
Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
Slips poor jokes & gets away with a poker face. Carries a no BS attitude at getting things done. First to arrive at the office, Ashwin’s energy does not ebb through the day. Ashwin is one of the co-founders and he sets the tone for marketing, sales, design & culture.
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How do D2C brands think about growth? A perspective from early days of DTC.
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