1、0 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS Direct Brands 2018 Founders Insights NEW YORK OCTOBER 31, 2018 The Direct Brand Initiative Strategic Partners: 2 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS Direct Brand Economy, 2010 - Direct Brands create value through low-barrier, capital- flexible, leased or r

2、ented supply chains, with value extraction accomplished primarily through the direct relationships between the company and its end consumers. Indirect Brand Economy, 1879 - 2010 “Indirect Brands” are characterized by value-creation based on dominating O&O, high-barrier, capital-intensive supply chai

3、ns with value extraction accomplished through a series of third-party handoffs (brand to publisher to retailer). 3 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS 50 CXOs 1:1 interviews Founder survey CXO Roundtable What are Direct Brands? How do they behave? How do they sell? 4 DIRECT BRANDS 2018 | FOUNDERS

4、 INSIGHTS the survey remains open & we are sharing back results 5 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS What are Direct Brands? PART I: 6 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS 97% of respondents list “category disruption” as their goal direct brands are born to disrupt 7 DIRECT BRANDS 2018 | FOUND

5、ERS INSIGHTS 10% are using value pricing alone as a differentiator More than half say theyre positioning their products as premium brands 40% are straddling both direct brands = value + premium 8 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS direct brands are in every aisle More than one-third of responden

6、ts are in health, wellness, & beauty 25%+ are in apparel, fashion, jewelry 20%+ are in food & beverage Nearly 40% of respondents selling across multiple product categories 9 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS Almost two-thirds of respondents identify “revenue growth” as a top 3 KPI Average gross

7、 margins are 50% and EBITDA margins are 10% 25% were profitable in 2017 and 90%+ of respondents expect to be profitable by 2019 direct brands are profitable 10 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS direct brands are not tech-led, theyre marketing-led 20% of founders worked in tech before founding t

8、heir brand Almost 40% of founders say “innovation” is main success driver Founders say marketing is their most critical business function Valuations for respondents are 4-5x revenue in-line with fast-growth CPG companies 11 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS PART II: How do Direct Brands behave?

9、 12 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS fast is the new fashion in every category Average time to launch first product was 7 months Today they can launch a product in 4 months One-third of founders say their biggest mistake is moving too slowly to iterate the core product or change the portfolio”

10、 13 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS servicing customers is in their DNA 92% of respondents consider customer service a top 3 business- critical capability Every role is a customer service role “Listening” to the customer re-defines the brands identify 14 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS

11、 50% of direct brands say they hired the wrong people finding talent is a challenge 15 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS PART III: How do Direct Brands sell? 16 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS selling products not always subscriptions Approximately two-thirds of direct brands follow a “C

12、PG” sales model Only one-third of respondents are seeking subscribers 17 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS Half or more use content marketing, editorial, PR, organic social to market 78% of respondents use email marketing for their products But only 22% deploy SEO this isnt DR its branDR 18 DIR

13、ECT BRANDS 2018 | FOUNDERS INSIGHTS disruptor brands are DIY or use disruptor agencies Almost 60% say they do not use agencies, but rather do all their marketing themselves Only 11% say all their marketing goes through agencies 19 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS 50% of marketing spend goes to

14、 Facebook 40%+ have customer acquisition cost management as a top 3 KPI Respondents are testing 3 other marketing channels we love Facebook but its complicated 20 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS 100% of respondents say their owned web channel is core to their retail strategy Over 50% of direc

15、t brands are either selling goods in owned retail or plan to within 12 months e-commerce is dead long live omnichannel 21 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS Fewer than 20% of respondents consider Amazon a threat 31% are not selling on Amazon 39% are selling on Amazon or plan to within the year 5

16、8% say CPG companies are main competitors Amazons not a frenemy its just another channel 22 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS Direct Brands Consumer Study (2019) Direct Brands Market Study (2019) Partners Direct Brands Days (2019) Direct Brands Cannes (2019) IAB 250 2.0 ALM 2019 23 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS we are keeping the survey open & sharing back results 24 DIRECT BRANDS 2018 | FOUNDERS INSIGHTS Thank You