The rise of the first direct-to-consumer (DTC) brands in the late ‘00s and early ‘10s held a specific promise for consumers: best-in-class products at a lower price point than brands available in retail channels. Brands like Dollar Shave Club, Warby Parker, and Casper, didn’t always have innovative products when they first launched, but they went to market with innovative ways to get their products in the hands of consumers.
In hindsight, their growth playbooks were straightforward: paid advertising on Google and Facebook to drive initial traffic, attractive first-time customer discounts for short-term conversion, and targeted remarketing and email marketing to nurture and convert customers down the line. The rest is history.
Photo by Andrea Piacquadio from Pexels
The ecommerce growth landscape looks very different in 2023, and the strategies used by these DTC powerhouses aren’t as effective as they once were. Facebook and Google ads have jumped in cost, and retargeting will be increasingly complex with Google phasing out third-party cookies next year. These are just some of the reasons DTC and ecommerce brands like Billie and Bloomscape are going omnichannel and are partnering with retailers to fuel their growth.
In this article, we’ll break down why you should consider going B2B by partnering with a retailer on their marketplace or dropship program and how you can start selling on a retail marketplace in a matter of days.
The Standard DTC growth playbook is outdated
If you’re looking to grow your DTC brand or launch a new one this year, you can’t use the same playbook that worked for Casper or MeUndies. Here are a couple of reasons why:
The cost of Facebook and Google ads is up over 50% year over year
The data is in: Facebook and Google ads are much more expensive than they used to be.
Data shared by ad automation platform Revealbot, shows that the average Facebook CPM jumped from $9.89 in January 2020 to $15.38 in December 2021. Common Thread Collective also shared similar data — they estimated average weekly Facebook CPMs at $9.04 in 2020 vs. $13.92 in 2021.
With respect to Google ads, MediaPost shared data around paid search marketing costs in August 2021, stating that “the average cost-per-click for paid search ads rose…34% year-over-year.”
Instagram ads have also gotten much more expensive. Revealbot’s data shows that the average Instagram CPM increased from $6.48 in January 2020 to $12.84 in December 2021.
Younger social media platforms like Snapchat and Tiktok have cheaper ad costs, but they don’t have the targeting and optimization that Google and Facebook have. This often means that lower costs lead to lower conversion rates.
While digital advertising used to be the primary growth channel for DTC brands, these increased costs mean that traditional DTC brands need to shift toward a channel optimization strategy, treating digital advertising as one of multiple channels they should leverage for growth.
With third-party cookies going away, retargeting will suffer
In January 2020, Google announced that they were making third-party cookies obsolete. Since then, their plan has changed in the face of regulatory backlash.
Regardless of the outcome, third-party cookies are going away. Browsers like Mozilla and Safari have already blocked them. It’s only a matter of time before Google follows suit.
Without third-party cookies, brands will have fewer opportunities to retarget their ads to customers, which means that they will have to find new ways to get in front of customers outside of their own marketing channels.
The new DTC playbook: partnering with retailers faster with marketplaces and dropship programs
Caraway is one of the hottest DTC brands launched in the last five years. After its launch in November 2019, the brand grew by 2000% in 2020. It also received favorable reviews from publications like Town & Country, Food & Wine, and Forbes.
Even with such explosive traction, Caraway hit a growth ceiling in late 2020. In February 2021, the brand announced an exclusive wholesale partnership with Crate and Barrel.
Caraway isn’t an exception. Bloomscape announced its partnership with West Elm in January 2020 and Billie announced its partnership with Walmart in January 2022.
Wholesale isn’t the only way to get a retail partnership started. Retailers have started to see the value in testing new partnerships on their online marketplaces and dropship programs.
In both models, retailers don’t have to carry inventory risk upfront. They get to expand their assortment and keep customers satisfied. They also get to test a brand’s product with their customers, which can be useful in gauging whether it makes sense to go wholesale.
For brands, they can fulfill orders from their existing inventory and they don’t have to wait for payment on net 30 or net 60 terms from retailers as dropship and marketplace models usually compensate the brand at the point of purchase. They also get to test whether their brand is the right fit for their retail partner.
TMPL Athletics, a brand that we work with at Convictional, found incredible value in partnering with retailer Harry Rosen a year after its launch. They partnered together on Harry Rosen’s dropship program.
Basil Farano, TMPL’s President, told us in a phone interview, “People assume that when you’re doing ecommerce, you’re eliminating the hard part, which is going store to store and selling your goods wholesale.
The reality of it is it’s a vast ocean that you need to attract consumers to. So I think for a brand like ours and the size that we are, the additional exposure that we get…it just brings a level of legitimacy.”
Caraway and TMPL’s growth stories make it clear that while retail partnerships weren’t a short term priority for the first wave of DTC brands, they’re necessary for newer DTC brands that want to grow quickly. With marketplaces and dropship programs, DTC brands have a faster path to omnichannel growth.
How To Start Selling on a Retail Marketplace or Dropship Program
Historically, selling with a retailer through their marketplace or their dropship program could be challenging. Many retailers use electronic data interchange (EDI) to onboard their sellers, but it’s slow and difficult to use. Onboarding with EDI usually takes 1-3 months.
At Convictional, we remove the EDI bottleneck by enabling brands to connect with retailers through integrations that are convenient for them to use. We’ve worked with thousands of brands to get them live with retailers — sellers through Convictional typically see the process from initial contact to their first sale on a marketplace in less than 30 days. Here’s how you can do the same:
Identify Your Target Retail Marketplaces
Not every marketplace is right for your brand, and that’s okay. Profitable partnerships happen when you partner with a retailer that shares your brand’s ethos, values, and positioning.
Make a list of retail marketplaces that can showcase your brand. You can identify them by looking at the values and themes they emphasize on their website — do they align with yours and those of your customers? Which other brands do they carry on their platform — could you see your products sitting alongside them? Follow them on social media and sign up for their email newsletters to see how they promote their brand partners.
Pitch Your Brand and Establish a Relationship
After you’ve made your list of target retail partners, it’s time to start pitching your brand to them.
A few ways you can pitch are:
-
Apply through their website
Marketplaces like The Fascination and The Verticale offer brands an opportunity to pitch themselves through their websites. -
DM them on social media
Reach out to ecommerce executives at retailers on Linkedin and start a conversation. You can also reach out to marketplaces through their Instagram accounts. For example, Scandiborn initiates many of their brand partnerships by reaching out to them on Instagram. -
Cold email outreach
Use an email prospecting tool like Clearbit, Apollo.io, or Hunter.io to source emails for the executives who work at your target retail marketplaces and email them your pitch. -
Join a supplier enablement platform like Convictional
At Convictional, we make it easy for retailers and suppliers to trade with each other. Once you’ve joined our platform, our sourcing team will find the right marketplaces and dropship programs for you. We offer several ways to connect your store to our platform, including direct integrations with Shopify, WooCommerce, and BigCommerce.
After you’ve heard back from your target retailers, establish a relationship with them. This includes setting margin expectations, selecting assortment, signing a contract with agreed-upon terms and conditions, shipping SLAs, return policies, damaged goods policies, and any negotiated marketing placement.
Complete Your Onboarding Program
Every retailer’s onboarding program is different. It consists of connecting your inventory and product information with your retail partner so that they can list your brand on their marketplace.
We offer an easy way for both retailers and brands to transact with each other directly from their ecommerce platforms in real time. After you’ve integrated your data with Convictional, we guide you through a step-by-step process to sync your products, update your product information, and share price lists with your retail partners.
TMPL Athletics took less than two days to get set up for their partnership with Harry Rosen. According to Basil, “The process was extremely easy and it didn’t take much time at all.”
Coordinate Your Go Live Strategy
Retailers with marketplaces have a go live process that they execute with their partner brands. It could be an exclusive launch discount, a timed giveaway, or crossposting on each other’s social media channels. Coordinate your go live strategies to get the most attention from your respective audiences.
Make Your First Sale
You’ve gone live on your partner’s marketplace. The only thing left to do is to get your first sale.
Depending on your partnership agreement, you may get paid by your partner on a net 15 or a net 30 basis. You could also get paid after each sale if you’re on Convictional. Our auto payouts feature remits payments to brands within 24 hours after they’ve made a sale on their partner’s marketplace. This feature is only available if a brand connects their Stripe account with Convictional.
Start Growing Through a Marketplace or Dropship Program
It’s easier than ever for DTC brands to partner with a retailer and diversify their growth channels. Landing a retail partnership early in your brand’s growth can connect you with captive customers who might end up becoming your most loyal advocates.
If you’re looking for guidance with your first retail partnership, Convictional can help. Get started today by contacting our team.
This is a guest post written by Nikhil Venkatesa at Convictional. Convictional is the Supplier Enablement Platform helping enterprise retailers, marketplaces and distributors launch and scale their marketplaces by offering a modern way to connect and transact with every third-party vendor, including dropship, marketplace, and wholesale. Powerful API-based infrastructure allows buyers and sellers of products to automate trade no matter their integration preference, including API, EDI, and native platform apps.
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