David Manela

At 6 figures, vanity metrics are a distraction. At 7 figures, they're your downfall. After working with dozens of high-growth DTC brands, I've noticed a pattern: The ones scaling fastest focus relentlessly on actionable metrics. But first, let's address what many brands get wrong: ❌ Vanity Metrics (I call them the 'Growth Illusion') The total website traffic, social media follower count, and email list size might look impressive in the reports. But they're dangerous distractions. These metrics don't correlate with revenue or profitability. They often mask underlying issues in your business. Worse, they encourage short-term thinking over sustainable growth. It's gonna result in high marketing costs and low ROI. I've seen beauty brands with millions of Instagram followers struggle with tiny conversion rates. Fashion startups with massive email lists but negligible repeat purchases. These vanity metrics created an illusion of success while the businesses stagnated. Now, let's focus on what truly matters. ✅ Actionable Metrics Here are the 8 metrics that truly matter for ecommerce growth: → Conversion Rate → Average Order Value (AOV) → Customer Lifetime Value (CLV) → Cart Abandonment Rate → Revenue Per Visitor (RPV) → Add to Cart Rate → Gross Margin → Net Promoter Score (NPS) Unlike vanity metrics, these metrics give you a clear picture of your store's health. They reveal your true growth potential and areas for improvement. -- Stop chasing vanity metrics that look good on paper but don't drive growth. Remember, what gets measured gets managed. Follow me for more content on scaling ecom brands 🚀

7

1 Comment

What if you could get 400 regular buyers to weigh in on best practices for direct-to-consumer (DTC) subscription? Subscription products are the holy grail for consumer and DTC brands, but what do we actually do and want as buyers? As someone who runs and works with consumer brands, I wanted to get some real insights here, so I ran a survey with SurveyMonkey. Here’s what I found from 400+ responses: Finding 1: 80% of respondents subscribe to less than 3 products. Insight for brands: It’s unlikely your new brand is going to find a ton of subscription traction, so don’t build the model and assumptions around that. Finding 2: Pet food has the highest likelihood for subscription, while beauty, skincare, health and wellness supplements aren’t as high as you would think. Finding 3: Two major concerns people have when subscribing is not knowing how long a product will last them, as well as the cancellation process and terms. Insight for brands: at the point of subscription, give insight around product usage, typical duration, as well as crystal clear information on ease of cancellation. We as buyers have all experienced subscription experiences that are impossible to cancel, and that’s a hesitation we bring when evaluating any new subscription. Finding 4: 82% of buyers have subscribed, knowing full well they’ll cancel, just to get the discount. Insight for brands: heavily discounting to incentivize subscriptions may be hurting you. This data not only helps me as I build my own brands but working with teams, we now don’t have to debate how to structure these kinds of user experiences — sometimes all you have to do is ask! Success isn’t just about finding answers; it’s about being caring enough, and daring enough, to ask the right questions #DareToAsk. A ton more insights here. Check out the full survey, and let me know in the comments what questions you want to see data and findings on: https://lnkd.in/egGvRJse  #surveymonkey #ad #daretoask

22

1 Comment

I sat down with Cherene Aubert and asked her to share her complete playbook for offer testing in DTC brands. Here are 5 game-changing tactics most DTC brands completely miss: 1. You think your marketing is driving demand In reality, your offer could be the biggest driver. At Bobbie (infant formula brand), Cherene discovered: ↳ Turning off ads didn't slow demand ↳ Removing the welcome offer cut demand by more than half "The advertising wasn't driving the demand... It was the offer." 2. You force subscriptions on new customers Instead, focus on low-barrier introductory offers. Bobbie's approach: ↳ Offered a small "starter bundle" for first-time customers ↳ Didn't force subscriptions despite being subscription-focused "Every business has a different offer or introductory offer that is unique to them." 3. You prioritize business goals over customer needs Align your offers with how customers actually make purchases. Cherene's advice: ↳ Conduct customer research (surveys, focus groups) ↳ Think about your own buying behavior "You have to think about what the customer ACTUALLY wants." 4. You rely solely on discounts Consider alternative offers that don't cut into margins. Examples: ↳ Free merchandise ↳ Product samples ↳ Slow-moving inventory "Having a big discount can cut into your margins a lot more than having, say, a piece of merch." 5. You expect instant results Offer testing is a long-term strategy that requires commitment. At Bobbie: ↳ Spent 6 months on offer testing ↳ Had weekly cross-functional team meetings ↳ Tested new offers every 2-4 weeks "We made it a priority. We said we're going to make testing a priority for the business." - - - TL;DR 1. Effective offer testing can dramatically improve customer acquisition and reduce CAC. 2. Focus on customer-centric, low-barrier introductory offers. 3. Prioritize testing, involve cross-functional teams, and be patient. 4. Finding the right offer takes time. 5. Start by creating a prioritized list of offer ideas and systematically test them using the ICE framework (Impact, Confidence, Ease). Watch the full episode here:  https://lnkd.in/eXjpsYfX

67

I recently saw this metric from Carta’s 1Q24 VC Fund Report, which is very concerning. DPI... is nowhere to be found in earlier vintages that probably should start showing DPI. Funding early-stage projects is great, but ultimately, these venture dollars need to exit their investments and pay back their limited partners. That’s where the metric Distributed to Paid-In Capital (DPI) comes in. While managing a fund, we get interim measures during the life of the fund (e.g. IRR, MOIC), but ultimately, “you can’t eat IRR.” If you want to build a lasting venture capital organization, you need to start showing DPI for your fund. Keep in mind that this is traditional VC data from Carta, and is not strictly crypto venture. Crypto venture tends to get liquidity earlier (tokens) and things tend to go parabolic sooner (faster, more unicorns) - but I’d wager that the data here is somewhat similar for Crypto VCs… Not as much DPI as there should be from these earlier vintages. Read the full article, as well as a recap of all the crypto fundraising rounds for August, here: https://lnkd.in/g3eVJ-iF

18

2 Comments

How We Helped Kiehl's Since 1851 Boost Revenue by $1.6M Through CRO. Kiehl's faced a common ecommerce challenge: increasing conversions while minimizing acquisition costs. Our "Conversion Blueprint" process uncovered 100s of optimizations. ✅ Reduced abandonment ✅ Increased purchases ✅ $1.6M in additional revenue 👉 Check out the full case study below.

12

1 Comment

DTC brands: want to absolutely crush Black Friday & Cyber Monday sales this year?  2024 is all about PRICE.  Nothing has yo-yoed more this year than consumer spending.  Inflated prices on necessities like groceries and housing have plummeted discretionary shopping. We’re likely to see spending go back up during the holiday season. But consumers may spend less overall.  They may also hesitate to buy from brands they don’t already know.  To win their dollars, you need to make your products accessible.  Here’s where the pricing opportunity exists.  Traditionally, offers like “Buy X get Y% off” are strong plays.  Product bundling also works well in categories where bundling makes sense.  But do you have products you want to move fast?  Discount those items more steeply.  Or, go one step further.  If you’re selling 4oz of a best-selling product, try selling a 3oz version.  In short: supplement tried-and-true tactics with lower-priced entry products.  The goal, now more than ever, is to lower the bar to entry while delivering as much value as possible.  Manage to do that and you're going to win sales during the holidays and beyond. Not every first-time buyer comes back for a repeat purchase.  But if you capture price-conscious consumers with affordability, you will get returning customers.  And the discretionary dollars they do spend will have a better chance of being spent with you.  P.S. Price is just one part of success this holiday shopping season. Want to increase your sales even more?  DM me for more BFCM advice!  #ecommerce #dtc

12

How to increase a DTC brand's bottom-line profit with a lower MER (All savvy DTC brand founders and marketers understand this, but most don't)... Absolute contribution margin dollars are far more important to profitability than MER. MER is merely a relationship between revenue and ad spend, whereas absolute contribution margin is the actual dollars that contribute to and increase bottom line profitability. Many brand founders find this counter-intuitive, but the reality is that if taking a lower MER allows you to scale ad spend and top line revenue enough to offset the margin decrease caused by the lower MER, the result can actually be an increase in absolute contribution margin dollars and thus an increase in bottom line profitability. Check out the example below. If the ad buyer for this brand feels confident they can spend more than $380,292 at a 2.5 MER, then dropping MER from 2.75 to 2.5 actually drives more contribution margin dollars and more bottom line profit. Find this confusing? It's okay - you're not alone. Consider sending me a DM to learn how my team of DTC-focused Fractional CFO's at Free to Grow CFO can help.

16

7 Comments

*Shopify BEATS on Q1 earnings* - I listened to Harley Finkelstein at 2x speed so you don't have to.. Highlights below 👇 In Q1, Shopify beat on both revenue and earnings with increased payment adoption and rapid growth as well as continued wins in the enterprise segment. Notable wins included BARKBOX, INC. PrettyLitter, Overstock, WYN BEAUTY by Serena Williams. A quick rundown of the #'s Gross Merchandise Value: $60.9B ( ⬆ 23%) - same growth rate as Q4. impressive to see that growth rate sustained at increasing scale. Revenue: $1.9B (⬆ 23%) - up 29% when adjusting for the sale of Shopify Fulfillment Network to Flexport. Gross Payments Volume: $36.2B (⬆ 32%) - most importantly GPV grew to 60% of GMV up from 56% in 2023 which means they're capturing more share of payments via Shopify Payments which means more revenue. Looking closely, their take rate also is increasing as Shop Pay increases penetration Subscription Solutions Revenue: $511M (⬆ 34%) - mainly driven by price increases and increased merchant adoption. MRR: $151M (⬆ 32%) - interesting 🚩 this is only up $2M from Q4 2023, so QoQ MRR growth is actually a tepid < 2% Shopify Plus accounts for 32% of MRR, a decline in share from Q3 last year. This is one of those hard-to-reconcile counter-narratives to everything the team says on these earnings calls about enterprise and moving up market. Gross Profit: $957M with GM at 51.4%. It's interesting to watch this GM oscillate on revenue mix for the quarter. Q4 is payments heavy which is traditionally lower margin whereas more of the revenue in Q1 comes from SaaS and subscriptions and pushes margin up. GP is what pays the bills so great to see it growing so quickly Free Cashflow: $232M (12% FCF margin and doubling YoY) - Shopify continues to become a cash-generating machine that will allow it to reinvest in its platform and growth to up the pressure on incumbents like Salesforce and Adobe. THE MAGIC METRIC - Shopify talks about increasing the Attach Rate, but I don't think they spend enough time on it. Ultimately, it's the number that drives this business and the long-term shareholder value of the company. Attach rate is defined as (merchant revenue/merchant GMV). Effectively, it's how much of their customers' revenue they capture as revenue to the platform. However, it's the ultimate balancing act - if too high competitors can steal share, too low, the business doesn't grow. The way to continue to justify increasing this take rate is to build valuable net new features where merchants have no problem paying incremental dollars to Shopify because they're either adding more value to the business or replacing other costs in the PnL. This is why Shopify Editions is such a big thing! Currently, Attach Rate is at 2.99% and growing QoQ The Look Ahead to Q1 2024 Looking forward, Q2 is forecasted to be in line with expectations set at the end of last year, so no surprises there. Good quarter Shopify!! #shopify

82

11 Comments

AdAttributionKit: Unpacking Apple’s new ad attribution framework AAK unifies Apple’s various advertising attribution frameworks under a single umbrella product name and extends SKAdNetwork in meaningful ways, including with support for re-engagement and alternative app marketplaces. These are substantive improvements. But impediments to adoption remain: IP-based attribution is still widely viewed as a suitable alternative to Apple’s native iOS attribution framework, meaning that platform tools like Conversion APIs will take adoption priority.

101

5 Comments

When we asked CPG founders who they wanted at Founderland... Their answer was clear: People who can help them grow their business & achieve their goals. Specifically: - The top retailers - The most founder-friendly investors, and - Other founders they can learn from and share with This conversation that I'm hosting at Founderland is a perfect representation of this group, plus one BIG bonus. We're also including Joel Toledano and ChargeUp.ai which is one of my favorite tech companies that is supporting consumer brands today. They automate the retail deduction and chargeback process for brands, saving them an insane amount of time and money. Such a cool co. Excited to teach, share and connect...and get some deals done, while of course having lots of fun. Joel Toledano Jen Zeszut Kim Coffin Deb Conklin

90

41 Comments

DTC-first companies have a major conviction problem lately   The beauty of Ecomm is the speed of the feedback loop   When things are going well, you know right away and the magnitude of success can surpass our previous mental models   It’s not unusual for a brand to grow >2.5x year after year, compounding at a pace that would be absurd to a traditional wholesale brand   Not only do results like that feel great, they are SO rich with data — you know so much about your consumer and how they behave. You can (and should) cut your retention data dozens of ways to inform why things are going so well and how you can keep the party alive   This positively rigorous, data-driven behavior can be a seductive and eventually addictive, giving yourself the perception that your business is a rocket ship and you sit in a comfy chair at Mission Control, with endless dials at your fingertips   Problem is what happens when the tide shifts direction and you’re swimming against the current, as has been happening in the past few months or years (depending on the brand)   The speed of the feedback loop means that concerning stats start popping up at Mission Control faster than countermeasures can show impact   The same channel dynamic that unlocked unheard of momentum can start to feel like an insurmountable challenge, especially if the culture of the company was to obsess over the data this can wreak absolute havoc on team morale and make you question your belief in the product/brand   The only answer to this challenge of reversing momentum is deep, long-term conviction in your solution to the consumer problem that made you start this business in the first place   That conviction is so important because of how long it will take for the new strategies to work: • Double down on great products • Shout your story from the rooftops • Maniacal execution in retail and ecomm   There are no easy solutions that show impact quickly… the only way out of this stage is through

67

3 Comments

Yesterday PitchBook dropped some new data showing Q2 activity up, and Modern Retail and Anna Hensel published a great article on Zombie brands. Sean Frank summarized it well. So what is the actual state of affairs? Do things suck? Or do things not suck? My take: We live in too much of a black and white world. Nuance and grey area are important. Take the Non-Alcoholic category for example. Twitter takes are hot that either Alcohol is DEAD, or Non-alcoholic is FOR SURE a fad. For me, the answer is in between. I don't need NA to take over the whole store, or even half the store. I need it to grow its shelf space from 1 to 1.5, or 2. Incremental changes, across a wide number of stores. That grows the market. It's not all or nothing. The current investment cycle is messy. There are large amounts of zombies. There are also large amounts of good companies successfully raising capital, quickly, that may trade at revenue multiples in the future. Both can be true, at the same time. Discerning investors and operators will continue to focus on fundamentals.

17

3 Comments

Is optimizing to increase AOV even worth it for DTC brands? How high should it rank in the priority order of a never ending task list that brand operators tend to have? This graphic puts it into perspective: On the face of it a 10% increase in AOV doesn't seem like much, so it went from $100 to $110, what's the big deal in that? What impact will it have on a DTC biz doing >$1M/year? But if you analyze it one layer deeper, you'll notice that the additional cost you paid for this $10 increase is only COGS. No additional $$ were invested in marketing + fixed costs (team etc) to drive this. This is higher quality revenue at a much better margin profile and every incremental dollar here subsequently has a higher impact on overall profit margins Depending upon your cost structures, a 10% bump in AOV can result in anywhere from 15-35% increase in final profit margins. Credits to Harry Molyneux and DTC Pages for the graphic and giving me consent to use it.

8

This article really resonated with me, especially the section below about founders knowing their numbers. What skill set should a founder starting a brand today have?  Drew F.: "Now, more than ever, you have to know your numbers. You have to be able to describe your unit economics, not only certainly to any prospective investor, but also to yourself because the odds that you’re going to get any capital are near zero. If you don’t know your unit economics and cash flow, you won’t have a business. The founder that knows their numbers and how to scale the business in a healthy and efficient way is the founder that will prevail." Scaling a beauty brand has never been easy, but it has gotten increasingly more difficult over the past few years. Capital efficiency and a focus on margins and profitability have also become more important for investors seeking to deploy in the category. True Beauty Ventures Cristina Nuñez Rachel Brown Beauty Independent #beautyinvesting https://lnkd.in/egBiFhPC

33

6 Comments

I think new subcategories are one of the most effective ways to differentiate. You're not creating something entirely new (category creation), but establishing a sub-branch of an existing category - by introducing new must-have capabilities. It's what we're doing at Wynter. Yes it still involves more risk and making bets than the traditional way of competing, but with a much bigger upside. To find an opportunity to develop a new subcategory, you need to create a new set of "must-haves". These are characteristics early fans truly care about. Requirements to win the positioning game by building a new subcategory: - new or improved *must-haves* that provide a different/significantly better outcome or user experience - there's a visible brand driving this - early adopters jumping on this (word of mouth) The pre-requisite to subcategories is feature parity with the traditional categories. Tesla needed to argue that their battery range was adequate before people would seriously consider the new electric car subcategory it created. And then Tesla added new "must-haves" like crazy acceleration, big screens and self-driving capabilities to outcompete. Offerings without new "must-haves" won't be relevant, visible nor credible. Winning is no longer based on "my brand is better than your brand", but rather on being the ONLY (or at least the most relevant) brand for this subcategory. In case of Wynter, we deliver insights from B2B decision makers (detailed targeting options), on-demand, typically in 24 hrs, through a self-serve platform. Other players in the market research / qual insights space can't do any of that. Competitors lose because they lack the new "must-haves" this subcategory brings. The ultimate goal is to have your brand be the only one that is visible and credible with respect to delivering these new “must-haves", so choosing you over others becomes an obvious choice.

76

18 Comments

I'm a big fan of "value retail". Time and again, a new platform with value based positioning has been able to carve out space in a competitive market with very large incumbents. Their offering has been simple - significantly (30-40% at least) lower prices than incumbents. They have squirmed their way to a large outcome. This has happened across categories, without a doubt.    Meesho came eight years after Flipkart/ Amazon with their average order value being <INR 350 vs INR 1k+ for market. They're at $5B GMV RR.   Zudio rose from <INR 150 cr in 2017 to INR 6000 cr+ currently with ASP of <INR 500.   Lab grown diamonds are 60%+ cheaper than mined diamonds while being physically/ optically/ chemically the same. From 2016 to 2023, they expanded market share from <5% to 50%+ (by volume).   Janaushadi stores (Govt operated pharmacies selling "generics") rose < INR 150 cr revenue in 2017 to INR 2400+ revenue RR in 2024. They sell 50-70% lower priced medicines.   Physicswallah rose to $200m+ revenue in 4 years with ~20% of incumbent's pricing.   Globally, late entrant Temu rose to $40B GMV RR within 2 years on the back of low pricing. Imagine threatening Amazon's territory   But low pricing as a strategy is an outcome. It looks simple but behind it lies extremely complex inputs that make it possible. It involves opening up exclusive low priced supply and creating the most optimized and lean operations to squeeze out every penny. - Temu/ Shein had access to China's low cost manufacturing capabilities, longtail China suppliers who weren't able to monetize well in China's competitive domestic market, regulation of De minimis in US where they don't pay import duty taxes via air drop shipping - Zudio did end to end manufacturing in-house at low TAT at reasonably low MOQ that enabled entire inventory refresh in < 2 months, leading to limited inventory losses. They made a strong call of spending zero on marketing/ branding - Physicswallah spent 8 years to conquer YT led distribution (45m+ subscribers) leading to limited CACs vs incumbents who spend 30-40% of their revenue on sales / marketing (via feet of street) - Meesho opened up "direct from manufacturers" supply with their low (zero) commission model - LGD/ Janaushadi are both product innovations (same quality at exceptionally low prices)   Because of this, it's nearly impossible for incumbents to replicate the low pricing strategy almost instantly. As they are not just mimicking the prices but also tightly run operations, new supplier partnerships, marketing advantage.   If you want to disrupt pricing for a market, an ideal question to ponder on is how will your supply chain enable that..

438

21 Comments

Learn a bit more about our DNA and how we operate at Acurio Ventures from Kate Cornell

23

1 Comment

I got asked on the Ecom North finance panel yesterday: "What advice would you have for someone starting a DTC business today?" 2 major things: 1. Margins - I would not launch a DTC business today unless I had at least 70% margins Acquisition costs are way too high these days to make DTC work if you were starting from scratch. Lower margins will lead to longer payback periods and stretching payback periods from day 1 is not a good sign for longevity. 2. Cash Conversion Cycle - How quickly can you turn your cash out into cash in the bank? If you're paying for inventory before your items ship or even worse months before, you are running into a cash flow straining situation. The longer your cash is tied up the less you can invest it in other parts of your business. Obviously, there's a lot more to this, but cash flow management is a major consideration when starting out.

72

12 Comments