Here’s what I learned this week

This was the original DTC play.

They never included the cost of acquiring a customer.

The logic was sound, what if we could cut out the middleman retailer and their markup?

Everlane started back in 2013 via Kickstarter right when everyone was launching on Kickstarter.

It’s also when a cost per click on Facebook was less than $0.10 and you could get email subscribers for about that.

That’s why you don’t see that cost included below, it was negligible.

This isn’t the same today.

You should read Fan Bi’s full post here:

Here was my response and my thoughts on the current state of DTC:

The model dies out, gets replaced by direct from manufacturer who has an additional 10-15% to play with margin wise, and marketplaces that cater to them take over.

The smart ones like Amazon control the advertising market of the marketplace and steer consumers to the products they make the best cut off of.

Facebook/Meta ad tax of 20% is absorbed by the manufacturers who can absorb it and directs that traffic to the marketplaces where things are sold.

So the manufacturer pays a 5-10% tax instead of the 20% tax and boxes out the DTC company.

Vertical manufacturing makes a comeback, brands move to less mass produced and more limited drops that are made on demand to lower their footprint.

We return to a quality over quantity consumerism?

Ok so that last bit is a fantasy, in truth, this ends one way, much the same way we're seeing all retailers stocks go along with DTC brands who haven't figured out distribution and how to lower that 20% tax.

In truth, it's a trillion dollar question to crack, but at the end of the day buy Facebook Stock.

As long as people think they can win, they are happy to gamble and Facebook is the casino, they always win.

I really believe in that last bit, Facebook is a casino with the way that most brands use it. What brands need to be looking for are card counters, people that understand the game and know how to tilt the odds in their favor.

I’m not talking about media buyers and ad creators mind you, I’m talking about those people that actually understand how to leverage the platform to your advantage in ways that others don’t see.

I personally haven’t come across many that can effectively do this.

I do have some experiments though that are pending around how to leverage these existing platforms in different ways…

Is there a secondary market for your goods?

To me this is the definition of whether or not you have a product or a brand.

To do this though, you need to limit production of your goods and have scheduled drops through controlled mediums.

Supreme

Nike

Louis Vuitton

and other brands limit the amount of goods they produce and have separate athlete only pro models of their goods.

When something is rare or limited it becomes a collectible.

I can’t tell you how many past items no longer produced from brands I would love to purchase again, I’m kicking myself for not getting duplicate pairs of shoes.

These were/are my favorites.

In fact, I have three different colorways but it was near impossible to find this colorway.

Nike doesn’t sell all their colorways on their website, some of them only go through select retail accounts.

This is what most brands miss these days, they aren’t building anything worth collecting.

They are all trying to mass produce goods.

There’s a lesson in limited drops, I think there will always be room in the market for them from select brands that really know their customers.

A Personal Dilemma

I don’t like what ecommerce has become.

I don’t like…

• the obsession with attribution

• the celebration of hacks

• the commoditization of nearly every product

• the broken unit economics

• the amount of people that don’t know what they are doing

• the amount of lies in the ecosystem

• the lack of data driven approaches

• the amount of money that people gladly spend on Facebook

• the terrible website experiences

I love ecommerce.

I love…

• that the bar is so low

• that brand arbitrage is possible

• that you can scale a brand ridiculously fast with the right process

• that most people haven’t been in the game for more than 5 years

• that there’s still a ton of things that need to be optimized

• that products can actually change lives

What I want to see in ecommerce:

Brand Transparency

• Don’t make me leave the website to find 3rd party reviews

• Build for my journey no matter the stage

• Show me comparative pricing

• Help me justify the cost of purchasing your product

• Make my experience fun and informational

I’m actually rethinking the way we have our product pages laid out entirely in preparation for somethings were working on.

I’ve developed a rather love hate relationship with ecommerce as an industry, it’s how I do 99% of my shopping, but often I find myself having to go to tons of different places to get the information I need to make a decision.

This is a big gap.

Data will help me solve this gap.

Selecting Projects

There’s a framework I’m working on that has potential to benefit every ecommerce company, but it’s requiring me to rethink my entire approach yet again.

You see over the course of the years, while participating in the building of a brand on the side, I’ve noticed the gaps that appear at different points of the journey.

I’m not talking about things like apps for cross selling and upselling etc. I’m talking about the fundamental things that are needed in the modern ecommerce customer journey that are lacking.

I’m working behind the scenes on some approaches that will hopefully help me break through the noise of how a lot of brands are approaching things.

I want super powers.

I want to be able to leverage strategy to give any business a fighting chance.

My goal still remains, be able to start a business or help a business grow in a way that builds 10x leverage into their existing ad budget.

Data collection will always play a role in this.

The Takeaway

We’re headed towards the time of prove your worth, brands and business are becoming more critical of spend, the basics aren’t going to cut it for much longer.

Have a great week!

-Jon

Catch up on past posts: https://ecomwithjon.beehiiv.com/

You can learn from me: jonivanco.com