There’s no denying that making it today can be an uphill climb. The good news is that we’ve learned a lot from the current (though volatile) D2C market. For the latest brands looking to make a splash, here’s our best advice:
Rethink Series A. When Series A funding is coming in, the prospect of a billion dollar valuation can feel enticing, and very possible. In reality though, impressive funding at the onset is increasingly being met with crippling investor expectations, which can then only be met through additional funding and efforts to further increase top-line revenue, which continues until unicorn status is achieved (or in most cases, not achieved).
That’s why it’s important to reframe how brands think about Series A funding. Yes, some will be lucky enough to reach the golden pinnacle, but many will find success by building their brand in a more traditional way that values sustainable growth over fast-tracked success. While this growth happens at a smaller scale, it also possesses staying power for longer periods of time — which helps brands develop incremental traction when first entering the market.
Build categorical diversity from the start. Even early entrants to the D2C marketplace that experienced initial success found themselves leveling off because they lost their allure. Casper’s limited product offering with mattresses is a solid example of this. Casper is now trying to reposition itself as a sleep solutions company as opposed to solely a mattress company.
With this in mind, new D2C brands can do themselves a favor by offering a wider range of products and categories from the start instead of adding on layers as they grow. The brands that are taking a holding company approach –– creating a portfolio of products and leveraging owned audiences and shared resources across their portfolios –– will find that this strategy can yield a greater likelihood of success.
Zero in on the “X” factor. With today’s D2C landscape offering a relatively level playing field and limited barrier to entry, more brands are trying their hand at success. At the same time, figuring out what makes your brand unique could be the deciding factor.
This doesn’t mean the answer is walking down the aisles of your local retailers and building a business around revolutionizing a pre-established category. Rather, the key is in making sure your brand offering is valid and differentiated, and that you believe in your value proposition.
It’s easy to follow the trends and become a “startup hobbyist,” but it’s much harder to build something that truly stands out from the pack.
Launching a new D2C brand comes with its own set of challenges –– everything from funding to scalability to growth. While every brand may have visions of becoming the next unicorn, chances are that only a select few will reach that goal. It’s how each brand works through their obstacles that can truly separate the winners from the losers.