We fail fast, probably not fast enough in fact, but fast compared to most.
FMCG is all about a hypothesis, testing an idea and learning when to give up.
We have had a lot of failures and I am as proud of the failures as the successes. Here is why, you learn from them, and you don’t make the same mistakes again (you make new ones!)
Since we started in e-commerce in 2008 (11 years ago!) we have launched the following brands:
Diet Chef Diet Now Fine Coffee Club Brewhive Prana Protein Bean to Door Parsley Box
That is quite a lot – certainly around one a year since 2015. The jury is still out on a lot of them, but most have failed to meet their potential. Some have failed altogether, but who cares! I only care about the successes. My view is a success is born every 10 years, incubating some of these ideas might improve the odds, but we will have to wait to prove this, check back soon (well in 10 years!)
I meet a lot of D2C brands, especially in the FMCG space. I love chatting to them and trying to understand their marketing channels, technology stack, unique proposition etc.
But I always come back to a core issue that a lot of the D2C brand’s havent thought about – consumption. Most retail brands think about this a lot, to get a brand listed in a retailer is incredibly hard, but what is even harder is getting regular purchase.
Regular purchase is really simply down to consumption, the product you bought in the retailer, needs to be consumed and replaced.
If it isn’t consumed, then you have a problem (you will get kicked out of the retailer) or online you will die! Your CAC:LTV won’t support your growth aspirations and you will literally die as a brand!
So I love to focus on this in any conversation. It is so obvious that most D2C brands don’t think about it, generally, they are so focused on getting the first sale, consumption or repeat purchase is an afterthought.
It shouldn’t be. Delve deeply into the consumers thought process and try to work out where you are going to go once you have a trial from a customer. Why will they consume more, and how often do they use your product.
This is why certain categories of D2C brands are really attractive. The obvious one is shaving (Dollar Shave Club ad break 26m views!) – most men do it every day, so you have regular consumption of razors, causing higher LTV. It wasn’t the quirky ad alone that made the brand successful.
Pet Nutrition is another area of extreme consumption, that’s why we love this sector and Bella and Duke.
So you run a D2C brand – think obsessively about consumption – it will take you far!
Over the last 10 years we have grappled with logistics software and had many failed attempts at implementing ERP systems!
So we thought why not use our own internal system and make this available to third parties who are struggling with similiar problems.
So we are launching Warehouse Buddy, a SaaS product for SME logistics needs. No expensive consultancy, all you require is a simple internet connection and you can start improving efficiency and reducing errors.
We are currently looking for beta testers so let us know if you would be interested in participating.
I am 50 this month, I have been in high technology and emerging technology for 30 years.
I am an early adopter – I buy all the new services I can, explore new ways to shop and pave the way for the mass market to follow.
I have seen this in technology first hand – usually by being around a decade too early!
In Grocery as with all retail – things are changing. Asked years ago consumers would say they were perfectly happy with shopping in supermarkets rather than fiddling around with their computers to buy online.
But online is taking a grip of grocery quicker than many can appreciate.
CB Insight have produced some great information on the changes in the grocery market. Take a look here.
As anyone that has ever met us knows we love Amazon (and obsess about how to compete with them!)
What we love most about it is the clear strategy that delivers long-term shareholder value, it uses the cash flow from its businesses to invest in the future rather than returning this cash to shareholders.
It is by far one of the most misunderstood companies that we have come across
Luckily we bought Amazon in July 2014 at $316.65 per share. The share price this week passed $1,900, but I think its just the beginning so we are not sellers!
Like Mr Bezos we believe in the long term.
You can look at what we most admire about Amazon here
We are excited to have closed our a significant seed investment in Bella and Duke (www.bellaandduke.com) one of the UK’s leading raw pet nutrition businesses.
We have tracked pet nutrition as an interesting area for a number of years, but believe that Bella and Duke have some very interesting defensible qualities and fit with our focus areas of nutrition and food tech.
Bella and Duke (www.bellaandduke.com) founded by friend Mark Scott and Tony Ottley, who were frustrated at the lack of quality meals for their own pets.
We hope to help the team manage the growth by investing in logistics, web and customer recruitment.
We are also very excited to be supporting a business that has come through the Scottish EDGE program.
When we bought back Diet Chef from Piper Private Equity (who are a great investor!) in 2015 we did this to leverage the massive investment we had made in systems and infrastructure (see Andrew’s post on this).
It took us a little longer to move Diet Chef into a couple of adjacent categories and optimise our marketing but we are very pleased with the 2017 financial results which have exceeded our expectations and generated around £1m of EBITDA.
Our growth strategy wasn’t simply focused on generating cash from Diet Chef but more to invest this cash flow in adjacent categories that our infrastructure can serve.
In 2017 we invested and launched Parsley Box (www.parsleybox.com) a reimagined elderly nutrition brand that is growing very strongly against a stagnant revenue comparison of our two larger competitors.
We have achieved this by letting the management team focus almost 100% of their time on customer recruitment and building the team. Move Fresh has provided the logistics and supply chain to allow the scaling of the marketing at a rate most startups would fail to keep operational efficiency at.
So as we get into 2018 we plan to invest in other adjacent areas and to reach the consumer in different channels, one of the reasons we appointed Henrik Pade to our board of directors.
We will both look at doing this organically and through acquisitions if we can find the right ones. Let us know if you think you can help us on this journey, either as an experienced startup founder or if your company would be interested in joining our journey – its going to be fun!