Hey friends, I hope that you’re having a great Labor Day weekend!
Now, look… I know you’ve probably got tomorrow off, so I’m not going to give you a 6-page tactical email for you to go through. Today will be no more than a 4 minute read. So I hope you’re sitting back, relaxed, feet up, and have a beverage in your left hand (unless you’re a lefty… then your right hand).
Before we get into today’s newsletter, a couple of notes:
The last landing page roast was so much fun. I accidentally messed up the setup, and we could only allow 100 people in (sorry!). The next one is September 8th (this coming Friday) at 12pm EST. Sign up here to get the invite: nik.co/roast
A few of you have asked me for a copy of the Black Friday newsletter (7-pages of BFCM tactics) and also a link to the BFCM deck. Now, you can get them both here: nik.co/bfcm. Starting next week, I’m going to work on getting all my past newsletters up on a site for you.
Lastly, check out this awesome site for DSTLRY, launched from Sharma Brands this week. We worked with Chip and David, two forward-thinking founders. David’s last company, Comixology, to Amazon. Now he’s back with another company to innovate in his industry (with an amazing website). The Sharma Brands team can quite literally develop anything and everything… it’s so good.
Okay, let’s get into the newsletter. So this past week Moiz and I recorded a Limited Supply podcast episode that was 100% driven by our Slack community (which now has over 3K members). We posted that we were going to do an AMA. We received 57 questions and wanted to get through as many as we could. We are planning to do another so if you want to throw a question in, join!
Overall, your thoughtful questions allowed us to record one of my favorite episodes yet where Moiz and I covered everything from our POV on the 2023 and 2024 DTC landscape, the changes happening to venture backed brands, the future of AI tools for DTC, what metrics Moiz and I track on a daily basis for our businesses, Pinterest ads as an underrated marketing channel, who we’d hire if we were just starting out, our strategies for pre and post purchase upsells and so much more.
I think we covered 20-30 good nuggets in this episode but here were some of my favorites.
On Moiz and I’s 2023 and 2024 DTC Outlook
1. Products will become cheaper
Across verticals, freight shipping costs are actually going DOWN because supply chains are getting back to normal after the extreme COVID crunch. China had some of the strictest lockdowns, causing the cost of overall product innovation, development, sampling and manufacturing to go through the roof, including shipping costs.
This means products should become cheaper to make and ship to the US overall. That's a great thing for brands, and to be able to pass that along to customers, or invest into higher quality products.
2. Venture funding will dry up for unproven and unprofitable brands
We’ve already started to see brands that once chased high valuations and venture-style growth at all costs falling out of the sky like dead birds. A few like Parade have been covered in the press, but think of all the ones that didn’t get coverage. Do not raise money unless you absolutely need it!
Moiz and I both think that venture funding will reduce dramatically for unproven and unprofitable brands in the years ahead. The days of raising $50M at a $500M dollar valuation or even $5M on a $50M valuation without a product, customers, or substantial revenue are gone for DTC and CPG brands. Sure, maybe smart sounding AI tools will get these valuations but venture money for unproven and unprofitable brands will mostly disappear especially in the category of DTC and CPG.
Here’s why I think that’s good for the industry… venture capital for CPG brands is great when you have something that works like an equation. When you know that for every dollar invested in marketing, you have a return that is profitable, then you should only seek venture funding if you need it to scale. Most brands don’t need venture capital, they should be able to grow sustainably. We aren’t building tech companies where we can go acquire users… we are building brand equity, earning trust from consumers, and selling physical products. You can’t just pump CPG the way you can a social media platform with VC dollars, and expect the same outcome. Founders, do not fall for it!
To get something off the ground, you shouldn’t need more than what you could raise in a friends and family round, a loan, or from your own savings. The founders who I know built their business off of savings are the most grateful now that they did that. They own 100% of the company, and have full control of how they want to build it. Once you get your thing started, be financially savvy. Take financing loans when applicable (use this calculator), ask for longer payment terms from vendors, agencies, software, manufacturers, hire overseas talent when you can, etc. There are ways to be smart and stretch every single dollar.
3. As a result, pricing will get more competitive.
Venture backed companies that raised 10s of millions or hundreds of millions but aren’t profitable or aren’t meeting their sales targets and revenue goals are going to start lowering prices. Expect discounts on major SaaS products, and high-end CPG brands.
Expect lower tier options and more friendly intro and retention (when you tell them you’ll leave) pricing terms across both your DTC tech stack and subscriptions to CPG products.
Another obvious point is competition. There is more competition now than ever before for both brands and SaaS providers. That’s a good thing because it means the ecommerce industry is maturing, and those PE rollups that were once popular will likely come back.
It used to be that tools like Okendo didn’t have much competition. Now, they do with companies like Sendlane that are competing on price and I think it will impact how much top vendors can charge across the board. The same could be said for SMS providers or ESPs. The general idea is that more competition drives prices down for brands and I think we will see more of that next year. For vendors, agencies, software companies, and consulstants, ensuring that you really are the absolute best at what you do, should be your number one priority.
Pro tip: Even though a vendor is offering better pricing (or free pricing), remember that you wouldn’t go to a Flu doctor if you need brain surgery. Same reason you shouldn’t use an ESP for SMS, or product reviews. That is their upsell to keep you there… but 95% of their engineers aren’t focused on innovating that function.
4. AI will be less useful than we think in 2024.
It seems like just 6 months ago, you couldn’t escape a conversation without hearing about how ChatGPT and AI were going to disrupt everything. That could be true but both Moiz and I think it will have less of an impact in 2024 (i.e in the near term) and probably more of an impact later down the line.
Right now, ChaptGPT is really good for research and helps me a ton when I need to find evidence that supports a claim. Klaviyo has some great features around AI when it comes to subject line recommendations and I think it will help with some general copywriting, and there are cool tools like MidJourney and DALL-E that help with static image creation. That said, AI certainly hasn’t replaced top agencies or marketing departments yet. IMO, it’s only improved them! I think AI tools won't be as hyped in 2024 but will probably be even more impactful 2-3 years from now as the technology gets even better, but we’ll see.
There are some companies like Pixis that work with large advertisers, and claim to make creative using AI, write the copy, put the campaigns live, and optimize. If that scales like it says, then everyone’s ads will be thumb-stopping, gorgeous, and everyone should be able to build an eCommerce brand, right? That’s not usually how it happens, but we will see.
For now, I find AI to be most useful with heatmap identification, subject line writing, sourcing medical studies to back up claims, and coming up with hook ideas.
Shopify just launched Shopify Magic, which would do a similar thing — make the barrier to entry lower for everyone. So how will you differentiate?
5. What metrics do Moiz and I look at on a daily basis?
Another interesting question that was asked was “what metrics do Moiz and I look at on a daily basis to judge the health of our businesses?”
I have 2 answers. There’s a set of metrics I look at for Sharma Brands, HOOX, and 1180 and there’s a set of metrics that I look at for my clients.
For my companies, I look at revenue, pipeline, churn, etc.
For my clients, we’ve done something pretty unique and built custom dashboards for each client to use. It displays:
- Daily revenue
- Daily orders
- Daily items sold (which is not the same as orders)
- AOV
- CVRs by landing page
- Funnel metrics that show total sessions > to add to cart > to checkout metrics
- The top 5 most visited URLs
- Revenue per session
- Page views
- Profitable RoAS
- Percentage of new sessions
- Individual channel ad spend vs individual channel revenue
- Top SKUs sold
- Current shipping costs
- Daily top ad creatives (+ their spend, CPA, and RoAS)
Here’s what Moiz looks at:
- Total daily revenue
- Revenue by new customers vs returning customers
- Revenue by email and SMS
- Open rates and click through rates for email and SMS
- Facebook ads
- Pinterest ads
- Google ads
If you’re looking at the in-platform view, here’s what we recommend:
- CPM
- CTR
- CPC
- Content Views
- Cost Per Content View
- Add to Carts
- Cost Per Add to Cart
- Checkouts Initiated
- Cost Per Initiated Checkout
- Purchases
- Cost Per Purchase
- Subscriptions (if applicable)
- Cost Per Subscription (if applicable)
- Email Captures (if applicable)
- Cost Per Email Capture (if applicable)
6. Pinterest ads are underrated
I was surprised but according to Moiz, Pinterest ads are apparently under-rated. Moiz shares his full take on the ep from 12:00-15:35 if you want to listen in.
I haven’t run Pinterest ads since Sharma Brands worked with 21 SEEDS (which sold to Diageo) a few years ago. But with our Pinterest traffic, we saw about a 5 minute time on site, and quite cheap CPCs, compared to Meta. The scale was less, but you can absolutely get some efficient traffic.
The key is to make sure you have contextually relevant creative to the Pinterest platform. You can’t just repurpose your FB ads on Pinterest, you need something that fits the nature of the platform, which is heavily search based, and DIY based. Make someone feel like you helped them discover something new.
7. Who would we hire if we were just starting out again or building solo
Another question that came up was, if we were just starting out, or if we were building solo, who is the first person we’d hire?
Moiz said customer service and my pick would either be growth or ops. It really depends on what your strengths are as a founder but if you are good at content, marketing, branding, copywriting, etc, you probably need someone on the growth side who can help run ads, A/B test campaigns, A/B test landing pages, understand how to use various MarTech tools and softwares like Microsoft Clarity to study heat maps and watch user recordings.
The second person would be an ops hire who can help you handle all of the logistics and also help you take a more holistic view of your business. The best ops people I’ve met constantly look at things like how to save on shipping costs, how to save on your 3PLs, how to optimize your POs and more. They handle the nitty gritty details of the business so you can keep steering the ship.
I personally think that if you’re on a budget, you should learn how to do multiple things on your own (managing incoming shipments, running your ads, posting to social media, putting product in shippers, etc). When you immediately start to outsource things, you lose the intimate touch that lets you learn the process yourself. So when you hire a consultant, an agency, or even just a 3PL, you have no idea if what they’re doing is right, or wrong. You just have to trust them. Sometimes that works… but there are a lot of predatory agencies, 3PLs, and consultants who you’ll waste money with.
Instead, if you run the ads to acquire the first 1,000 customers yourself, you’ll understand the benefits and messaging that actually drives customers. When you ship the first 1,000 orders, you’ll understand the most optimal way to pack, and what combination of products gives you the lowest shipping costs. When you respond to the first 1,000 customer service issues, you understand how to improve on the product or how to make response times the most efficient.
Once you learn how to do something, then hire someone to take the process you’ve built, and make it 10x better with their experience and expertise. I did this myself with Sharma Brands. It was just me, and now we’re a team of 30 people. Everyone on the team is better, smarter, more experienced than me in what their role is — but I can still call the BS when I see it. That’s how you need to be with your own business.
If you want to get more insights, I highly recommend that you listen to the full episode, here!
Okay, now onto some fun stuff…
Vendor of the Week:
Bynder — The CMO-loved, efficient, and easy-to-use digital asset management platform for brands
Alright, I’ve got a plug here and an amazing SOU (state of the union) report for you on content.
Let me first tell you about Bynder. We use Bynder with some of our clients who have a robust content management system, and have digital assets from retail stores, eCommerce, earned media, etc. In 2023/2024, 75% of CMOs have made a point to find a Digital Asset Management (DAM) solution that works for them… I’m here to tell you that Bynder is the one you should be looking into.
Whether you use Dropbox, Figma, Slack, Monday, Canva, or Adobe… Bynder seamlessly integrates and allows its DAM platform to be the single source of truth for your assets. You can easily import assets, capture metadata to enrich assets, and track the distribution of them.
Now the SOU Report… Bynder put together an amazing State of Content Report for 2023. Read (and download for later) the full report here!
There are two things every CMO wants:
- Reduce costs
- Get more eyeballs with content
That IS the currency brands care about. Setting up the infrastructure to best execute those needs is where this report comes in.
Click here to read the full State of Content Report for 2023!
LP of the Week:
Today’s landing page of the week is an exciting one. A few months ago I found the worlds perfect crunch in a tortilla chip by a holding company called Ancient Crunch. They launched a brand called MASA Chips, and they are out of this world. We took their original website (click here to see it) and had to turn it into a conversion machine.
The reason I’m so excited about this page is because we started with pretty much a blank canvas, other than our copywriters and account manager getting the opportunity to try the product themselves. Once they had the product in hand, the page practically created itself.
If you haven’t had these chips, I highly recommend getting yourself a bag!
Why haven’t you gone through with a HOOX landing page yet? I’ll tell you what… just book a call on this page, and let us show you our highest converting landing page examples. We convert around 6% to 9% with our LPs. How? Well… we spend about 5-6 hours on brand/product/competitive research, angle development, positioning, another 4-5 hours on copywriting (we write from scratch), and then a combined 8-10 hours of design. We don’t just build you something based off your site… we reimagine what you currently have.
Click here to book a call with us and see our best examples. Or, if you’re ready to get started, take advantage of our Black Friday offer and buy a landing page on this link.
That's all for this week
I’m sending today’s newsletter out while I’m watching the US Open. If you’ve been to the Sharma Brands HQ in NYC, you’ll see that the only thing on my TV is tennis, so I am currently living my dream.
I hope you have an amazing day tomorrow, whether you’re working or taking an easy day. Get yourself 9 hours of sleep (you will feel invincible), stay hydrated (squeeze half a lemon in a glass of water), and get a sweat in!
I’ll see you next Sunday for another 7-page tactical deep dive… maybe we’ll dive into how brands spending $500k/month or more are managing their paid social stack, the channels, tactics, creative strategies, and more. Well, I guess this turned into a 7 page newsletter too, but it was a more fun read, right?
Have an amazing week!