What if there was a different way to scale a natural product brand effectively? What if you didn’t have to raise vast amounts of money only to give much of it away in the form of trade spend? What if you didn’t need to build a large organization and risk all those bad hires?
The good news is there is a way to scale that avoids these and many of the other pitfalls most early-stage natural product brands confront. However, it won’t work in every case. It requires some intentional design of the product, packaging, and COGS. For most, with some adjustments, it can be done and, in many cases, should be done.
The ingredients of this different path include:
A relentless pursuit of capital efficiency
A short cash conversion cycle
Construction of a lean and agile organization
A laser focus on unit and channel economics
Harnessing the growing power of e-commerce
Leveraging digital to build a tribe
A curated and disciplined approach to retail
Driving discovery through alternative channels
Let’s examine each briefly.
1. A relentless pursuit of capital efficiency
Capital efficiency has been a topic of many of my articles. The reason is pretty apparent. The more efficient you are with the use of capital, the less of it you need. That means less dilution, fewer cooks in the kitchen, and more time spent growing the brand rather than funding that growth.
2. A short cash conversion cycle
Keep reading, and you will soon realize, if you haven’t already, these eight ingredients are very intertwined. Limiting the gap between producing inventory and getting paid for it should be fundamental to your channel strategy. Those channels offering a quick cash conversion cycle should be prioritized. The quicker you turn your cash, the less of it you’ll need, making you capital efficient.
3. Construction of a lean and agile team
Even the best team puts pressure on a business. It becomes a big mouth that must be fed, and it is hungry, whether you have an abundance of food or not. As you evaluate your go-to-market strategy, think through what each channel might require in terms of human resources. Those that need less or allow for the use of fractional or outsourced help that can be flexed in or out should be considered first.
4. A laser focus on channel economics
Every channel has its own set of economics. Each one has its margin requirements, route-to-market costs, and investment needs to drive discovery and trial. Specific channels require the use of middle-people such as distributors, brokers, and more. Others are based on transactional costs like fulfillment, shipping, and commissions. Knowing those costs and their implications is a must.
5. Harnessing the growing power of e-commerce
According to some recent studies, 10% or more of American consumers regularly shop online, and sales doubled from 2016 to 2018. These numbers are likely to continue to grow, and e-commerce shoppers are typically early-adopters.
6. Leveraging digital to build a tribe
Branding is the act of aligning what you want consumers to believe with what they actually believe. There is no better place to have that conversation than online. Good content that supports engagement is critical to building a tribe of evangelical followers.
7. A curated and disciplined approach to retail
Retail still has its place in this new path to market. The difference is that instead of it being the lead strategy, it is the support mechanism. Selecting retailers that have your ideal consumers in their stores is vital. Additionally, choosing only those that will merchandise your product in a way that supports discovery is a must. Being disciplined, getting into only those stores that offer the best chance of succeeding, is part of a smart strategy.
8. Driving discovery through alternative channels
The ability to place your product where the problem you are solving is most pronounced or the need you’re filling is most acute is why alternative channels offer such a great opportunity. Airports, corporate campuses, colleges and universities, micro-markets, and more are substantial discovery platforms that should be part of most go-to-market strategies.
It is possible to build and scale a brand in a different way. The above may not be your exact roadmap, but I hope it causes you to think differently and to challenge the current norm of overspending and underperforming.