Ride the D2C Wave

“If you’re feeling whiplash, it might be the ten years forward we just jumped in 90 days’ time.”

In light of COVID-19 induced lockdowns, consumers are now spending more than ever online. A recent analysis by McKinsey showed that e-commerce in the USA has made 10 years of progress in just 3 months. With this rapid growth in the channel, we decided to find out more about what it takes to grow a stellar online business.

We spoke to some of our portfolio brands from 3 different categories, to give you some insight into their D2C experience. Griddle’s Co-Founder, Sophie McGregor spoke to us about recently starting to sell D2C during the lockdown. Griddle sell chilled wholegrain pancakes, and have more recently launched pancake mixes. Theo Garcia, Co-Founder of Solo Coffee, were predominantly selling through a wholesaler but pushed more emphasis into their D2C channels as a result of lockdown. Unlike Griddle, Solo is not a chilled product. Their cold brew coffee might be best served… cold, but fortunately for them they don’t have to worry about this behind the D2C scenes. Dean Dempsey, Co-Founder of Naturelly, has been doing D2C the longest of the 3 brands we spoke to. These naturelly juicy jelly products, similarly to Solo are served chilled but sold online as ambient.

To learn from their stories, keep reading…

How did you get started selling D2C?

Dean always planned to do D2C and right from the start they built an e-commerce website to allow Naturelly to sell online directly to consumers. Naturelly built up their network of customers initially through collecting email addresses at trade shows. “We organised follow-up emails sent to buy from us online with a discount code”. This was a great way to get the ball rolling for them.

Although Solo has had an online store for a while, most of their sales were through a wholesaler for foodservice customers. Then the pandemic hit, and their wholesale orders disappeared. They had to adapt to survive, and this meant pushing D2C. To refine Solo’s D2C offer the Founders had to act like customers themselves. “We ordered boxes to our houses and for the first time, reviewed the customer experience — Focussed on the pros of our service, and the cons. Then we started tapping into the customer’s pain points and created press pieces around it.” You might’ve read Solo’s feature in Vogue “How to make a café-style coffee at home”, or the Evening Standard “Top coffee deliveries in London”. Even though they’re more familiar with selling D2C now, they’re still continuing the constant reviewing of their service and ironing out any creases that appear.

Griddle started selling D2C when they noticed that the climate wasn’t going to shift away from online sales any time soon, especially during the lockdown. “It was either get onboard or miss the opportunity”. Unlike Naturelly and Solo, Griddle sell a chilled product, adding complexity to selling D2C. Sophie said “I did a lot of research into what other chilled brands were doing. I got several quotes from Warehouse and packaging suppliers. I then did research into thermal properties for packaging and what would work for us”. Their friends over at Oppo were really helpful in this research stage as they sell frozen products. Not exactly the same as Griddle but they realised that they’d encountered a lot of the same issues that Griddle had.

What is your advice to anyone looking for a fulfilment partner?

1. Compare all costs, from pallet storage to picking and packing along with postage for different multiples of cases that you may sell to the customer.
2. Make sure your margins when selling D2C include all costs from the fulfilment partner.
3. Look for a fulfillment centre that understands how important customer service is to you.
4. Trust and communication are key. “Our previous centre hated speaking to us and rolled their eyes whenever we had a problem. Our new fulfillment partner regularly checks in with us on WhatsApp!”
5. Get some advice from someone doing it already. There are a lot of pitfalls and to have someone there to steer you at the beginning is invaluable”.
6. If you can’t buy them a drink, send them a bottle — it’s worth your time.

What are your top tips for selling from your own website?

When it comes to selling online, our brands’ advice couldn’t be simpler. Your website should look good, your product should look good, your website should be discoverable, and get on top of your data. Sophie recommends that if you have the budget, you should definitely consider a photographer, and someone to help you on your SEO and customer tracking. Although “you can do most of it yourself with a bit of research”.

What are your top tips for working with Amazon?

Selling through Amazon is a bit trickier than it appears. Theo describes it as “a beast of its own (one that we have far from mastered)”. That said, they are very excited about Amazon Fresh, Amazon’s newer faster grocery delivery service, and will be looking at working with them. Other than that, they recommend that it’s best to ask an Amazon specialist, of which it seems there are many in the market.

Dean mirrors this and adds that if you do get a specialist in, to make sure to employ them on a commission-only basis after the initial set up costs. “We tried to do it ourselves without realising the full potential of the platform which you only find out when working with specialist experts”.

What has been the most productive thing you’ve done to increase order size or repeat purchase?

“Listen to customer feedback — Good or bad, customers will happily give feedback” says Theo. “After the lockdown started, we sent out an email telling our customers that we had made improvements XYZ directly as a result of feedback. Our return rate (even from those that gave negative feedback) was much higher than expected”. Theo explains that customers like to feel like they have made a difference and been involved with supporting a start-up. He recommends using the 80:20 rule: speak to the 20% that are responsible for 80% of sales. “Our DTC marketing efforts will be mostly spent on brand loyalty — we have lots of exciting projects coming up that focus on adding value to existing customers!”

Naturelly’s trick was to offer 25% off of their subscription package on a mixed case of 12. Dean said that this worked really well at the beginning. Since then, promotions on O2 Priority and Virgin Red offering 40% off attracted a lot of new customers in one hit. Once they’d attracted these new customers, they were able to re-target them via email marketing with new offers to encourage repeat purchase.

Sophie said “Mostly due to the platform we use we can’t list single products with a minimum basket size. So we had to create the bundles which automatically dictates the order size”. She also highlights that promoting free delivery over a particular basket threshold can help to increase order volume.

What has surprised you most about selling direct?

“Not really a surprise as you expect it to” from Sophie’s perspective, “but having an immediate call to action on our posts has really helped our engagement on social platforms.”

Sophie has also enjoyed receiving direct feedback from Griddle customers. This is a benefit for selling D2C as “you can’t really get that through retailer sales”.

Dean agrees with this. He said that they’ve found their customer base are really helpful when they need to ask questions or get feedback for research purposes.

The biggest surprise for Dean was the sheer bulk volume that customers buy in one hit. “We have regular super-shoppers who will buy 36 pouches of jelly a month from our website.

Theo was most surprised to find even more satisfaction as a brand Founder once Solo focused more on D2C. They also had the opportunity to really grasp the size of the potential market, something that was really motivating.

“As a consumer brand, we were rarely speaking directly to our consumers, which we’re now realising, is totally backwards! As a food and drink brand, it’s easy to get caught up in winning huge accounts and selling pallets of stock. This means the product and business becomes focussed on satisfying other businesses, which normally care solely about margins and demand over the end consumer. The surge in our DTC has not only become deeply satisfying (with our efforts being directly rewarded and celebrated) but also has now become a significant revenue stream. And this will only increase. 95 million cups of coffee are drunk every day in the UK alone, 65% of these are drunk at home. Needless to say, there is a huge audience for us to focus on. We are now concentrating on laying one brick at a time as perfectly as we can, with the snowball in full motion, we see the potential to create a wall the size only Donald Trump could dream of!”

So there you have it! I hope that you can take something from our portfolio Entrepreneurs. Be sure to let us know if you plan on implementing any of these top tips.

- Alice Hannah, Operations Executive at Mission Ventures.

With special thanks to Sophie McGregor, Theo Garcia, and Dean Dempsey.