Retail 2020: Looking Back On D2C Brands
Direct-to-consumer (D2C) brands came in two flavors during 2020. The first were the Pepsis, Heinzes and Krafts that either didn’t like their retail distribution or saw a pandemic-driven opportunity to get new products in new configurations to the consumer. The second flavor were the brands that had seen traction before the pandemic and flourished during it with innovative marketing, fresh business models and cool packaging. That group is more exciting. Here are three we were most impressed by during the year.
Green Goo: Funny name with a serious mission. Formed in 2008, Green Goo is a women-owned, family-operated company that started out making skin products and first aid salves for friends and family. When those markets sparked a fan base and reorders, the company was born. Green Goo was right on the edge of a breakout when we spoke to them in April. Its eCommerce business has jumped 35 percent each year since 2016. Last year, it began selling at Walmart. Johns Hopkins distributes its products via its scleroderma lab. After the lab was redirected toward the COVID-19 crisis, the staff made sure to give each of its patients the link to the company’s site so they could buy their own products.
After receiving a round of funding from an angel investor, Green Goo has hired regional sales executives and a marketing team. That team will launch publicity, SEO, social and influencer campaigns. The early track record says influencer campaigns will be critical.
“I love hearing from people who tell me they’ve had poison ivy for six months, and then they use our product and two days later it’s gone,” CEO Jen Scott told PYMNTS. “And for me, the fun part is the non-believers. A daughter calls and tells us that her dad’s a pharmacist who doesn’t believe in natural cures, and he had some rash that he couldn’t get rid of, and she gave him Green Goo and it was gone. It’s fun from a customer acquisition standpoint when you get the folks who are less inclined to explore natural products. They’re really just looking for something that works, and they hear from someone else that it works and then they’re sold, which is really cool.”
Spiceology: At Spiceology, they want spices to have variety. The seven-year-old D2C hybrid brand has received $4.7 million in funding this year and is on a mission to get chefs and consumers to experiment with flavor, as home cooking is in vogue and restaurants are starting to come back from the pandemic. To provide perspective on how difficult it is to scale a spice supply company, Spiceology employees (all based in the U.S. to guarantee freshness) were set to pack about 500,000 packages during the month of October. Some of the money raised by Overstreet and his team will be used to automate that process. The problem for Spiceology has been simply too much demand — and the funding will help it scale without losing any of the quality of the spices.
What also makes Spiceology unique are the blends. Because of the founder’s expertise and innovative spirit, the company’s products are all different, from the packaging right down to the names. Instead of a generic three-ounce cylinder that’s found in the local spice aisle, Spiceology comes in two versions. The first is a play on the periodic table concept. For example, Smoky Honey Habanero comes in a glass jar with the chemical-like symbol Hb. The Cherry Chipotle Ale Rub comes in a black beer can with red letters marked Cc.
One of the missions under its mission of “experiment with flavor” is to educate the consumer about how spices are farmed, harvested and blended. “We’ve all been that person who, when asked to go pick up some cumin or chili powder or something simple, goes to the supermarket spice aisle and feels like they’re never getting out alive,” CEO Chip Overstreet told PYMNTS at the end of October. “There’s either too many spices to choose from, or not enough of a selection to really experiment. Spiceology aims to fix both problems.”
Misfits Market: To hear Abhi Ramesh tell it, he’s in two businesses. First, he’s trying to fight against the excesses of the U.S. food system, which is one that wastes more than 40 percent of all produce either due to excess production or cosmetic imperfections. Second, he’s “rescuing” that excess produce to bring a unique subscription box business model to the masses at an affordable price. But regardless of how the business works, don’t call the products of Misfits Market ugly.
“There’s the excess and then there’s the rest of the produce that doesn’t make the cut,” Ramesh, Misfits Market’s founder and CEO, told PYMNTS CEO Karen Webster. “Ugly is sort of this broad term that has been almost used as a marketing factor in this industry, but it’s not even ugly. It’s anything that is nonstandard. Maybe it’s apples that have not even bruises, but … a grocery store wants all their apples to be perfectly red. So we see things that are too small or too large. It’s just sort of like nonstandard versions of food that traditional retailers either are not able to buy or refuse to buy.”
Such “misfits” have helped the Philadelphia-based startup turn “rescued” produce into a fast-growing online grocery platform in just two years. Its growth has been so successful before and during the pandemic that it has attracted new funding that will allow it to expand its unique subscription box business model. The $85 million round was led by actor Ashton Kutcher’s Sound Ventures and Valor Equity Partners.
“There’s definitely a level of sort of, kind of some curiosity around what is it actually going to look like when I get it?” Ramesh said. “And I’d say nine times out of 10 our customers are positively surprised that the stuff that they are getting isn’t as weird or ugly or misfit as they would have anticipated. In reality, the imperfections are kind of minor. And, especially when you tap into the surplus and excess bucket, sometimes there aren’t any noticeable imperfections. It’s just the imperfection was the inefficiency of the food system.”