Retail Vs. DTC. Do’s, Don’ts, and Considerations

Hello there, and welcome back for another Sunday bite to Chew On.

This week, we’re talking about something that can either be the best growth lever in your company…

… or

An absolute waste of time and money

Some DTC founders love it, while others hate it.

We’re talking about retail.

We’ve been in +700 retailers for a little over a year now and are looking to launch at Walmart with more than 4000 stores.

If you had asked us about getting into retail a little over a year ago, we would’ve said, “Yeahyeah, you just do this and that, and it’ll be fine.”

But if you ask us today, we’ll tell you that going into retail can be a pain in the A’s if you’re not properly prepared for it.

So in this newsletter, we’ll break down our hard-learned lessons from being in retail as well as what you should do and don’t do.

Having team members who’ve been down the path of retail before is KEY

Transparently, one of the biggest mistakes we’ve made in retail is thinking that we’re Superman. We thought we could tackle this beast with the competencies we had in-house and transfer a lot of our marketing, supply chain, packaging, and design knowledge from DTC to retail.

Our experience is: You can’t

Retail is very different from DTC from a lot of perspectives. The packaging that works well enough for your online sales may be terrible for driving offline retail sales. The marketing strategies that get people to buy online may never get a single foot into a retail store. And the hardest part about retail: Inventory and cash flow management. It can be costly and time-consuming to figure this out on your own.

Therefore, if you’re thinking about getting into retail, our advice to you is to Partner with people who’ve been down the path of retail before. It’s not the same as DTC, and you need to acknowledge that you’re not Superman, and your current team may not be Superman, either.

You need to think long and hard about your retail placements.

When we launched at +700 Vitamin Shoppe stores, we just took whatever placement they gave us, which naturally is among all the other collagen products.

What we didn’t notice at the time is there are a few problems with that.

First of all, some of our products are more than just standard collagen. They are more what you can call functional collagen. For example, we have a collagenic fat burner product, which is a mix of a fat burner and a collagen product.

The reason why people buy this product is because they want to lose fat, which is typically not the same reason why people buy collagen.

Hence, by placing our collagenic fat burner together with all the other collagen products, we don’t get seen by the people looking for this product but rather by people looking for a more “standard” collagen.

Secondly, if you have a product that’s very different from your competitors both in functionality, taste, or package design - then getting placed at the same shelf as everybody else can actually be a bad idea.

To give you context, we sell flavoured collagen - whereas most of our competitors sell unflavoured collagen. Besides that, we have a very bright package design, whereas our competitors are “less bright”, you could say.

Hence, when we’re on the same shelf - our product looks like the weird kid in the class. The unflavored, boring collagen products look like the norm, and ours looks weird in that crowd - and as a result, people hesitate to spend their money on it.

Why? Simply because humans are risk-averse about trying something that is new and different.

The two types of buyers in retail

In retail, there are two types of buyers. There are the ones who know what they want and head straight down the aisle, grab their preferred brand, and leave.

And then there are the ones who like to look around, check out the different products, and then choose the one that’s most appealing to them.

One of the things we learned the hard way is that most retail buyers fall in the second category.

Hence, your packaging design needs to be so on-point that it should persuade a person giving you and five of your competitors 2 seconds each to pitch yourselves.

… and chances are, if you’ve built your packaging design for DTC - then it won’t be able to persuade anyone in 2 seconds or less.

So the learning from here is: Once you get into retail, make sure your packaging caters to the second category of buyers. Unless your normal packaging design is already super persuasive, eye-catching, and to the point - then don’t assume that your DTC packaging will work in retail

Steal our retail launch strategy.

Advertising and marketing for offline sales is not as easy as you might think. These days it’s not really easy to get people to buy from a local retailer when they could just order your products online instead.

But, at the same time, you still need to do it in order to drive more offline sales through your retail channel and stay on the shelf.

One the strategies we’ve used with great success, is allowing people to get 3x more reward/loyalty points for their purchase if they buy through a retailer.

This incentivizes people to shop from the retailer first and then come back to use their loyalty points on our app.

The feedback we got from our retail buyer for this strategy is: “I don’t know what you guys just did, but this is the greatest movement in inventory we’ve seen for a new brand launch.”

So if you’re launching your brand on retail shelves soon - feel free to steal this strategy.

Thank you!

If you’ve read this far, we just want to say thank you very much! We appreciate you, and look forward to serving you next week.

All the best,
Ron & Ash