Considering every step of my product's journey is a full-time job, on top of my job. As my 10-year-old company, Repurpose, sits at the precipice of making our most major push into the direct-to-consumer (DTC) space, I can't help but think, "Did we do this thing backward?"
Think about it. Ever since companies like Blue Apron and Dollar Shave Club won over our hearts, minds, and dollars, DTC brands have become the norm. Ever since the DTC boom coincided with Amazon's total dominance, convenience has emerged as king.
As a consumer and a mother of two small children, I am right there with the masses ordering next-day delivery. As a founder, I've remained mostly focused on our wholesale business thus far. For Repurpose, our core product line has historically been convenience purchases-- items that people realize they need last minute. It's rarely a premeditated move to order a bunch of compostable paper plates and cups in bulk for far into the future and buying everyday goods online just wasn't yet mainstream consumer behavior when we founded.
So, we put our products where we knew our customers would find them-- in grocery stores. But as delivery services improved, DTC brands became more commonplace, and as COVID-19 amplified demand, it became clear that we needed to pull double duty and equally invest in more DTC operations. I know we're not the only ones shuffling around. It seems like everyone is trying to go omnichannel these days and with good reason. We're just one of the few who decided to go against the current by starting wholesale and moving to DTC.
So, for all you DTC brands looking to leap into the retail space, I want to share some important wisdom I've learned going the other way around.
Growth Will Look Different
One of the most appealing parts of a DTC business is the opportunity for quick growth. This is because when you are selling directly to your customer, you're able to collect revenue immediately and growth becomes self-sustaining. With wholesale, it's important to remember that this is definitely not the case.
Overall, the sales cycle is going to look different. The bigger the retailer, the bigger the growth opportunity-- even if it takes longer than you're used to. With DTC, you can push and pull sales and promotional levers at any point, but retailers are on a specific annualized schedule. With wholesale, you'll have to stick to their old school calendars, and understand their sales cycles and resets. Because you get paid differently, growth will also look different and it's better to be prepared for that challenge.
You Need to Hire Differently
With this learning curve with new partners in mind, it's also important to consider your own people. Examine your team and determine if you have the talent to handle managing retailers.
From my experience, the people who know how to run wholesale are different from DTC experts and it's not likely that you can take your existing DTC team and expect them to know how to do it. You might need to invest in new experienced team members who understand the players and how the sales cycle works in order to have the most successful retail partnerships.
Map Out Your Channel Strategy
The decision to go into retail can be an unexpected brand exercise. There are so many categories of retailers from which to choose. It's important to do your homework to fully understand the various wholesale channels, to have a good idea of where you want to be and when you want to be there. Should you build your business in the natural channel, grow your customer base, and expand from there? Or is mainstream mass retail an ideal place to start? What most fits your brand? What is a realistic goal to achieve?
For Repurpose, we were in Safeway/Albertsons Nationally before we were national in Whole Foods. For us, we had a unique opportunity to go straight to the mainstream first. Like I said, the bigger the retailer, the bigger the growth opportunity. The order in which you choose retail partners will be dependent on how much capital you can front-- and that's different if you have investors or you're bootstrapping it. Map your plan but you can also be rewarded by being flexible and open to opportunities that may change your strategy.
Expect Unforeseen Costs
Running a business, you're probably already used to unforeseen costs popping up. But, when it comes to retailers, it's important to be aware of them because they can be pretty costly.
In general, wholesale is like real estate, and as a brand, you're expected to pay the rent. This means you have to sell enough to pay your rent and, if you're new, they will likely take a security deposit, a.k.a a 'slotting' fee, to take a chance on you as a new brand. And, before your product even makes it to said shelf, be aware of how much distributors cost.
The whole point of DTC is to cut out the cost of the middle man, so if you're making the move to retail you'll need to factor in the middle man you were cutting out before. Not the end of the world, but definitely a big adjustment in sticker shock when coming from the DTC world and a financial cost that needs to be considered.
Release Control Over Customer Experience
This one might be the hardest. While the other tips I've covered can be challenging from a logistical and financial perspective, this one can cut you emotionally as a founder.
Your brand is your baby, and if you're coming from DTC, you're used to controlling the entire customer experience. With retail, you're letting your baby go off on their own a bit. You can expect to generally have less control over the way the product is displayed, the way you can track promotions, customer feedback, and overall brand experience.
Welcome The Perks
Ok, you've made it this far and I haven't scared you away. Let me tell you, it's not all pain points and financial bloodshed. There are some really awesome perks when it comes to going retail.
For one thing, you don't need to deal with customer service. Let the retailer do that for you. And, with less control comes more awareness. You can consider the move to retail an investment in marketing, and a major brand awareness play. Consider how many eyeballs your product can get in one day of sitting on the shelf versus digital advertising spend.
Plus, something you definitely won't get with digital is real credibility. The nice thing about your retailers is that they'll partner with you on promotions and really put heavy-hitting resources behind promoting your brand.
Moving from DTC to retail is challenging, but if you've made it this far running your own business, there's probably not much that will scare you out of making a move. It's hard, but for today's consumers, omnichannel is really the future if you want to stay competitive. I should know; I'm doing the same thing-- just in reverse.
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November 04, 2021 at 01:55PM
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How to Take Your Product From Direct-to-Consumer to Wholesale (From Someone Who Did It Backwards) - Inc.
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