In the current business landscape, building an eCommerce brand from scratch is not the challenge it once was. There are so many platforms to take advantage of – that is, if you know where to look and you’re smart about how you move. Leon Lewis is the Founder of Daybreak Growth Partners. Joining Elliot Begoun, Leon talks about the foundations of building an eCommerce brand. No more punching around in the dark. With Leon’s advice, you can build a precise path to eCommerce success!

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Building An eCommerce Brand From Scratch With Leon Lewis

Thanks for joining me for this episode of TIG Talk. I’m looking forward to it and I got a lot to cover. Something that is top of mind for a ton of people is eCom in general but a lot around refrigerated and frozen eCom, there’s some complexity and some belief that that’s not viable for brands. Leon Lewis is joining me to dispel that myth, as well as talk about some basic best practices around building a brand and selling a brand in eCommerce. I’ll let Leon tell his story. It’s fascinating. He’s been doing this since ‘97 since he was twelve, which means two things. One, he’s been doing it a long time and two, he’s a hell of a lot younger than I am. Without any further ado, Leon, I want you to tell your story of how you got into this space.

Thanks for having me, Elliot. It’s great to have an opportunity to chat about all of this stuff. My journey in eCommerce is weird and long. When I was twelve in 1997, I designed a board game and started a little company online to sell it. At that time, I could hardly find a company to process a credit card payment on the internet and my mom was like, “Who’s going to come to the house? You can’t do stuff on the internet.” I did that for a long time. I’ve been a musician my entire life. I’m surrounded by instruments and albums that I put out and stuff. I started a record label online, I started out punk rock, and eventually, we started distributing books, zines, and art and we put out over 100 albums. We distributed about 3,000 different products.

I started that business when I was sixteen and branded into my twenties. We were selling CDs when I first started through the mail, which probably seems like an insane thing at this point. I did that for a long time. I got out of that business for a variety of reasons and joined the Hohner Company. Matthias Hohner invented the harmonica in 1856. It was this old German company and I came on board. It was a legacy team and I was the only person that understood eCommerce. I started there in sales loving music and eventually, I started to play around with Amazon and some of our eCommerce accounts, which was largely eBay at that point. I helped launch the musical instruments category on Amazon, which was awesome.

I came to be promoted to run their ukulele business, Lanikai Ukuleles, which was the number one brand in the world at the time. I headed that up and spent a lot of time in Hawaii out there running the business, building the brand in Asia and in Hawaii but we started headquarters back in Richmond, Virginia. We focused on D2C there, being the number one brand on Amazon and being huge on some industry players like Musician’s Friend, etc. After the Hohner Company sold for the first time in 150-year history, I joined a company called Health Warrior. Here in Richmond, Virginia, there’s not a ton of natural food brands, so there’s this weird standout honestly. I came on board there. Amazon and D2C were practically just getting started putting the foundation together.

We built that business over the course of three years when PepsiCo acquired the company in 2018. Amazon was the number one customer. We had this boring D2C business. It’s great to cut our teeth in a competitive category and learn a lot as things got as big as they were. That was 2018 and so much has changed since then. I joined REBBL after that, which started there in 2019. We built this cold ship business, not just being able to ship products across the country, but we are also proud to share, especially as Earth Day coming up to feel like it’s maybe in the shadows.

We have a 100% recyclable pack out, so we’re not shipping in styrofoam, which is a lot of natural brands and we end up still using some toxic ice pack styrofoam to ship. The business has exploded and we’ve been able to scale that up. On Amazon, we’re existing alone amongst our competitors for direct shipping as well as D2C where we have a growing subscription business, etc. While the retail landscape is difficult, I feel like we were well-positioned to tackle this shift that’s happened. We haven’t missed a beat. It’s been exciting.

Going back a few times just as an FYI to the audience. You have a couple of burgeoning young stars in your little music production, right?

I met some guys when I was sixteen years old, playing in a buddy of mine’s living room. They had a band called Art Lord & the Self-Portraits and later renamed themselves Future Islands. They became absolutely huge. They’ve sold out shows in most of the world at the stage. Kesha, before she was Kesha, played on an album that I put out. She was in a band when she was a teenager as well. NO BS! Brass band, which is a huge brass band and they tour all over the world. They’re buddies of mine from here in Richmond that have been working hard for a long time. Girl Talk as well, who blew up a number of years ago, was also a guy that started out playing in living rooms. I worked with him early on, so it’s been amazing to see all those careers take off after working with them so early.

What’s the biggest myth around eCom when it comes to refrigerated and frozen?

A lot of folks have looked at it like it’s impossible that the demand isn’t there. According to Helium 10, there were 80,000 people that searched for oatmeal on Amazon and similar numbers for terms like cashew milk, dairy-free milk, as well as yogurt, frozen pizza, and things like that. There are brands that are taking advantage of it but a lot of big players in these spaces have still looked at it as just an insurmountable challenge.

What mistake are many of the brands that do enter into it? A lot of them I know do it because they feel like they need a presence but it’s an ancillary activity at best marginalized in terms of their priorities and also looked at as something that isn’t scalable. Not only a part of their growth engine but part of their brand discovery engine. What are you seeing that many brands are doing that is wrong or at least setting the bar or the headwinds against them?

A lot of it is the foundation that you build. There’s a lot of experts on Amazon and D2C. There’s a lot of people that understand operations and logistics, but there’s a big gap in building the relationship between the two. You can have a foundation for a perishable frozen business that makes sense for the company and customer as well. Unless you have a small product with a high ring price that’s perishable, you are not going to be able to ship out of Los Angeles, if you have customers in New York. It’s not going to work out for you. If you pass those shipping costs on to a customer, which are going to be for two-day air freight burning jet fuel, no one’s going to buy it. It creates this impossible scenario.

There’s a lot of brands that have gone forth and built these businesses. It’s a glass kombucha and you can buy a case online. It’s going to cost you $50 to $60 for the case and the company’s going to spend $65 between warehouse fees, shipping, and packing materials to ship it to you. With the amount of pressure that some brands are under to explore those channels, they have gone down these paths that are not sustainable and not scalable. D2C and Amazon are expensive to advertise on, build retention, and a good customer base but then if you pile on an inefficient operational build, you’re dead in the water honestly.

You make the price point expoundable for consumers. I asked you what you felt in your opinion they were doing wrong. If you’re to design or suggest the design of an optimal solution, I’ll throw out two. One is the potential of geofencing and being regional your eCom efforts and then attacking it from a national perspective. How would you approach both and what do you think of both options?

The regional approach is interesting if you’re trying to build-out like, “Is this going to work? Is anyone interested in this?” A lot of companies that make single-serve beverages, etc. feel like it’d be weird for someone to want to buy a dozen of them at a time because that’s different from consumer behavior and a grab-and-go beverage spot. It’s like grab 1 or 2 and go. Not grab twelve and go. A few people do that. Brands feel like it’s not going to happen. If you have a single fulfillment partner, you’re not going to be able to go on Amazon regionally. You have to go to D2C, so it’s great for a testing phase.

The interesting thing with a lot of this is that regional juice brands and national cold-pressed juice brands have been doing this for a long time. It’s when you get outside of that cold-pressed area that it seems like this weird, untouchable thing. People have been selling 7-day or 14-day cleanses, $200 orders for many years successfully. There’s a lot of regional players in that. If you can build that out and you only have one source, then it’s right to go in. Maybe your costs aren’t as efficient or you’re paying your 3PL to source all the materials for you, etc. and that’s fine. Try to understand, build a waterfall. Someone buys a 12-pack of this beverage or 6-pack of cottage cheese or yogurt. What happens? What does every cost that’s triggered there?

That’s ugly, to begin with, but where could you get it? If you were able to cut your shipping cost in half or if you were going to open up to national, you have to understand where you could go, start to optimize, and build from there. Nationally, you have to look for a partner that is going to have multiple fulfillment centers. That could be out of the Midwest, which could hit most of the East Coast and the Midwest, and then Nevada or Los Angeles to service the West but you’re going to need to go back to start. Even if you have to track some products further than you normally would, you’re ultimately going to save a ton on shipping.

On top of that, as you scale, it’s great to start out and say, “What do you think is the recommended pack out for this?” Pay attention to what that is. What brand are they using? What sizes are these? Go and source them yourself. If you have a long term 3PL partner, they should have no problem with you like, “We’re going to ship in our boxes. We’re going to ship in liners and ice. You pull from that.” You’re going to find that your costs are probably going to go down 50% for those because the markups are 100% plus. That’s a revenue generator for 3PLs. You have to find a partner that there’s an opportunity to build that longer-term relationship with. You need to be paying the actual freight if someone’s adding on 15%, 20%, 30%.

Short term, if you’re just trying to figure this business out and understand if there’s a real opportunity here, great but in the long term, you’re going to have to figure out a workaround. Build your business around pack sizes and around the size that makes sense for you. If you can’t make any money, if someone only buys three bottles of kombucha, then you have to sell 9, 12, 15 or whatever, and build that value for the consumer, and then grow your business from there. You have to start from a realistic place.

Here are some of my beliefs. One of the realities that are going to come out of our post-COVID time is the fact that there’s going to be more SKU rationalization both in distributors and potentially in retailers. Consumers are still going to want variety and products that solve a problem for them or meet an unmet need. Two things are going to happen. More of that early discovery and more of those early purchases will be online D2C. For those more nuanced or novel items that retailers do carry or alternative channels, colleges, universities, corporate campuses, and so forth, will be B2B eCommerce. My question is for a young brand, fairly new, just starting out, how realistic is it to build an early good solid business with good fundamentals online if you’re refrigerated or frozen?

I don’t think it’s impossible. You have to find a great partner. There’s a handful out there. One message I would have is that there’s broadly a shortage of refrigerated and frozen warehouse space in North America back and ship in eCommerce. For brands that are thinking about this, it’s time to pursue it because more partners are at capacity. Second, it’s early on and see what happens. A lot of brands starting out early on, there are many things to consider because eCommerce talks about so much. Overall, you can control your cost upfront. You can get a viable product live with a 3PL. Your costs aren’t going to be optimized, but it’s going to be a great base of learning for you, including on the D2C side where you’re not on Amazon, but you’re going to own those customers. You can survey them, come back, and get them to keep purchasing from you, have subscriptions, etc. You can learn a lot.

There are a few questions that we’ve got from the audience and we’ll go through them. I want to turn after that more broadly to eCom and general D2C and B2B. This one’s from Todd. “We currently use the 3PL solution that has two warehouses, West and East Coast, and provides two days shipping to most states. This solution is using eco-friendly packaging and has a robust portal for placing sample orders, tracking shipments, and inventory for traceability. They are also integrated with Shopify and soon to be with Amazon as well. Unfortunately, they’re not set up with QVC. However, the cost of packaging and shipping is almost $9 per pizza, which drives up our eCom SRP. I would enjoy knowing from you what other options that you have that have similar types of capabilities or know of.”

I would zoom out on that question a little bit. If you are buying eco-friendly packaging or if they’re providing it for you, I would take a look at those costs. I would go and speak to those distributors or manufacturers yourself. Understand what their minimum order is and if you can hit it, and then I would also attempt to renegotiate with the partner that you have that’s going to be based on what your actual order size is.

If you are paying a $6 base fee and then $2 per item, but your average order size is going to be six items, that’s a crazy cost. On one side, there is an opportunity to put some pressure on your provider, especially as your business grows and have that conversation with them like, “We’re a small customer of yours. We’re just going to stay a small customer because you guys are making way more money off of this than we are and this is not scalable. This is a short term relationship if you can’t work with us.”

Back to my other comment about there’s not much warehouse space here, as I’ve explored this, and I’m not going to get into names, I’ve been frankly appalled at the rates that some of these partners are charging for these orders. I’ve looked at others that are a fraction of those costs and then on top of that, I’ve come to understand what things would cost if you just went direct. What is the shipping of these costs? There is room to negotiate. There’s room to source those directly. Understand, like that $9, what is every component that’s going into that, and what does that realistically cost?

Another question from the audience. This one is from Lauren. “How do you feel that online price where the consumer may have to buy more than they might buy it by retail should be compared to the retail price, especially when trying to build in the option for free shipping?”

Free shipping is 100% essential. You definitely called it Lauren. I’ve built large D2C brands where we charged a notable premium to the retail price. As the business shifts more online, brands have accepted weak eCom margins for a long time. We’re going to start to see that change. We’re going to start to see all of those costs that go into eCommerce get passed on to the consumer a little bit more. It is 10% or 15% higher than it is at retail but at the same time, this is recycling packaging material. I live in a city with two Whole Foods and both of them take me 35 to 40 minutes to get to, so I don’t go there a lot.

If I love the brand and I want a bunch of it, I might just order it online. Thinking about that price, building in discounts for things like subscriptions. What is that customer going to be worth to you if they buy from you five times versus just getting that one order? Optimizing around whatever that order size has to be so that you make money and learn to build your business there. Don’t learn to build your business with 40% off your first order and we pay $20 through a Facebook Ad to get you. That’s not going to get you anywhere except broke over time.

You also have to determine where your discovery platform is. If eCom is also going to be your discovery platform and that’s where you’re going to drive a trial then you may have to invest some in trial driving sizes that are upside down. Hopefully, not terribly upside down, or you find other ways to drive trial, which is retail but it could be alternative channels and elsewhere. You have to determine because the first barrier is that first order, that’s the biggest risk. Once they know they like a product, that’s not scary to buy more of it if it’s something they’re going to consume regularly and they know. It’s just that, that first-time trial is hard, in my opinion and in my experience.

Health Warrior is a great example. In Health Warrior, we had a six-pack of chia bars, free shipping, $9.99, choose your own flavors. That would move all day long, 100 a day, and came in a nice branded box. It was super cheap to ship. We sold many of them. We had a negotiated rate with our warehouse, but there was no ice in that. A big challenge as a perishable brand is that hot price point and hot trial offer. Especially if you’re small, it’s hard to hit. You have to choose your path wisely there. If you get good and you’re able to test and learn a lot with your paid social, then you can learn how the first quarter can be $50, instead of that $9.99 at hot price point. There’s not a ton of options out there. There are insulated mailers, but if it’s the stuff that needs to go in a box or it’s a beverage in a plastic bottle, that’s not going to work. It’s an interesting dynamic.

Are you seeing a fair amount of them offering a satisfaction guarantee or something on that first order to try to do it?

It’s great to offer that upfront if you’re comfortable with it. Ultimately, guarantees like that, even if people don’t like the product. Most people don’t come back and say, “I demand a refund for this.” It ends up bringing a lot of benefits upfront to your conversion and it’s not going to be a headache in the back end in mind.

Another audience question. This one is from Alan. “If you’re launching a new brand, being regional D2C, how do you start to drive sales and interest to your brand? What would be a realistic acquisition cost or percentage?”

That’s an interesting thing, Elliot. As you and I have been talking about with D2C specifically, Facebook and Instacart advertising are expensive. There are referral programs, which can help to drive friends and family and those lower costs over time but generally, for a single order acquisition cost, if you’re doing better than $20, you’re doing a good job. If you’re doing below $10, you’re doing an awesome job. You would want your blended COA, cost of acquisition, to be in that $5 to $10 range generally so that you can balance your organic and then paid acquisition. Some of your organic customers are going to see an ad and open up Safari and Google your brand to buy it.

Looking at it blended and then managing that when you’re looking at your P&L is important. It’s interesting when you look at D2C because when you get that sale and whatever happens, happens. It is interesting versus investing in Amazon, especially if your brand is competing in a big category, where if you’re a protein beverage, each sale that you get from advertising against keywords in protein beverage is going to improve your ranking over time. You have a longer-term benefit to that investment versus D2C, which can be one and done.

One point that I would make as well is that it’s difficult and a mistake to look at it transaction by transaction because you don’t look at that when you go to retail. You’re investing in advance of the return of that with free fills, TPRs, demos, and all of those things. What you want to do is you want to look at that lifetime value. You want to look at what’s your repeat purchases that you want to see that you’re building. It’s like an annuity. If you do it well and your brand is sticky, then as you bring people into the franchise, you keep them there and you work hard to keep them there. In my mind, that’s one of the benefits or the differences between Amazon and D2C.

D2C is you’re getting permission to market to them directly. You need to be the ones building a brand relationship with them because it’s an emotional connection. Branding is emotional, it’s not logical. We don’t buy branded things out of logic. We buy them for motive reasons. It’s how you connect with them, and that’s a benefit of D2C that you don’t get as much so with Amazon. Can you address in a more detailed why or how the pressed-juice category has been able to make this work both regionally and nationally, execution, category dynamics, etc.? What’s worked?

I’m no expert in that category. That’s just been a casual observation throughout all of this. Looking at categories like yogurt, plant-based dairy, or a lot of refrigerated stuff where it’s like, “No one is selling online,” and then looking at a lot of juice brands and going, “This is well established online.” It speaks to a couple of things. Not everyone has access to a juice bar. If you don’t live in a city, I would be surprised if there’s a quality juice bar near you. A lot of folks look at that and they also do cleanses. If you’re going to do a 3, 5, or 7-day cleanse, the dynamic of the category to speak to that is like, “This is all you’re going to have. You’re going to spend $20 to $25 a day, breakfast, lunch and dinner, on cold-pressed juices and you’re going to need it for seven days.” That’s a big card size and that’s something that’s going to be manageable from the cold ship perspective because you’re going to be able to pack all of that into one large box and be able to make those numbers work.

This question comes from Phil. I hope it finds you well. “Can you use Shopify to sell to wholesale customers and different pricing for qualified customers?” There’s a lot of interest in brands being able to have a direct relationship with their outlets and Shopify definitely has the capability of doing that. There’s Shopify Plus and so forth. You can give a little bit more detail on that, Leon.

Shopify Plus is inaccessible for price point-wise for many brands. There’s a great app called Wholesale Club, which allows you to offer discounts on-site for customers that are tagged with certain things. It’s like, “Here’s our wholesale program. Log into your account and you’ll see wholesale pricing.” It’s incredibly important. When we look at how people are discovering beverages or when they discover anything at the grocery store, it’s going to be happening more online because people are going to be spending less time at the retail store. That was already happening. It’s been accelerated.

It opens up the need to reach them at other places. It’s like, “This is the perfect protein bar for recovery after yoga.” You want to have that B2B program so that the studio owner has tried your brand, but it’s not sold in their area but they love it and they want to sell it. You want to open up that path and that opportunity for them and be able to meet your customer at the point of need. That’s both an opportunity for small places like the yoga studio in a small town that people wouldn’t discover your product otherwise because there are no Whole Foods anywhere nearby.

Retail brands are expanding into some experiential stuff where they want to have those wellness options. Lululemon is one. They’re selling beverages and some snack brands at a handful of their locations and looking to develop those smaller relationships with those brands. They can try it out and you have to be able to facilitate that. Wholesale Club and Shopify is one way to do it. I’m a big proponent of seeking out a way.

You made an important point that I want to emphasize and that is, we talk a lot about retail and eCommerce but places like the yoga studio where the yoga instructor is an influencer over his or her community of attendees of yogis, the gym, the naturopathic physician’s office, or places like that. That could well be marketing that pays for itself. That is a form of physical influencer marketing and a great opportunity that you missed out on if you do not have the ability to have a wholesale B2B site for your brand. It’s a huge potential for any brand regardless of whether you’re refrigerated, frozen, ambient, or what.

If you can get closer to where the problem that you’re solving is more pronounced or the need that you’re feeling more acute, and you can get around people that can be purchasing your product and influenced by that herd or community mentality, it’s a massive opportunity. You are cutting off your marketing and your discovery opportunities at the knees if you do not have that as part of your arsenal. I would encourage anyone reading here to figure out how to do that because it is a palpable and important weapon to have.

There are a lot of brands that will invest in giving away products at a gym and few learn how to sell products into that gym. It’s interesting.

If you do it well, by the way, it can be a lot more than marketing that pays for itself. It could be a good revenue and profit stream if done well. This one is from Sarah Berg. “Do you have suggestions for how one builds a relationship with Amazon purchasers or how to?”

I might not have a popular opinion on this one but I’ve been selling to Amazon. I helped launch the musical instrument category. I had a close relationship with my buyer. I’m strategic looking at what promos are going to work? What are other people doing? When I look at that relationship, it’s not there anymore. First off, if your business is smaller than $10 million on Amazon, they are likely not going to be interested in having a direct relationship with you. A lot of the benefits that they’re going to offer to you as a smaller vendor are going to be expensive and are going to be the secondary to robust investment in Amazon advertising, Amazon promotions, and all of the things that you would have access to through Seller Central. That game has changed. I don’t view it as necessary to have a hugely successful brand on Amazon. There is a lot of pressure. I’m ex-Amazon. I know how it works. I don’t feel that that’s valid or required at this stage.

I feel slightly differently. Not necessarily in disagreement, but my belief is you have to look at Amazon as a powerful retailer. They’re not a third party retailer unless you’re Vendor Central, but they are still a retailer. They’re a platform. Your ability to drive the relationship with them is no different from your end-user or end consumer. It’s no different than if you are trying to drive a one-to-one relationship with the end consumer at Whole Foods or a Kroger or elsewhere. It’s their relationship. Amazon owns that relationship with the consumer, but what they do for you is they bring a large number of consumers to their site. To not be there could be a huge miss.

However, D2C is the place where you can cultivate a relationship. You’re not going to see the number of people that you see on Amazon. The conversion rates are going to be lower and you’re never going to have the household penetration that Amazon does with Prime. I’m off the belief, and Leon you are completely allowed to disagree or call bullcrap on this, that the ultimate, like you are in retail and like you are elsewhere, is to be agnostic about the platform. What you want to do with any brand is you want to be where your consumers are. You want to be where they live, work, shop, play, and share things.

They’re going to be consumers that will buy on Amazon and would only buy your product on Amazon. There’ll be others that will either start on Amazon, want to learn more, and come to your site. There’ll be others that will just buy on your site. Your job is to decide where is your best opportunity, what is the trade-off between having that direct relationship versus the spend of trying to drive them to your site or just leaning into Amazon and all of the economics. To maximize the potential sales of your product you need to be agnostic and you need to be where consumers are.

With apologies to Sarah because I interpreted that to mean vendor managers on Amazon versus those your end consumers on Amazon, so sorry.

No worries. A question from Jeff about margins. “Being that shipping is a significant cost in a beverage brand, how do we strike a balance between price and margin? What’s a good margin structure strategy?” He says that some of his competition who include shipping in their pricing doesn’t make sense or they’re sucking it up in the margin game. Any thoughts around the best practices there?

For example, if it’s a beverage, let’s say you have a 12x12x12. How much is that box going to cost? How much is the liner or the ice if it’s perishable going to cost? How many units can you fit in? You have to build your common order size. If it’s a custom box, it has to be twelve for you to hit that margin that you want to hit and build it up from there. Look at those costs and what retail dollars do I need to get this to a decent point?

When you look at that in comparison to your retail margins, I would consider that with eCommerce, you have an interesting advantage, which is that you can visualize all of your costs and if you need to, do not always look at it on that transaction level. As you’re building your model and looking at the viability of the business, you can visualize that net margin, which is a lot different than like, “I sell to a distributor and I make 40 points.” There’s going to be a lot of other costs that might come later like brokers and off-shelf promos that you might assign to that later on. With eCom, it’s a little bit easier to visualize that net.

To answer the second question about competitors, I would order something from them and see how they’re packing it. Where does it come from? What are the materials that are inside of it? Have they found a cost structure here that is fundamentally different than yours? Try to understand what might be changing those dynamics. Some brands, especially in beverage eCommerce, lose money on every sale. It’s hard and it’s strange that that carries on overtime. On the flip side, you might find an opportunity to improve your cost by buying it and seeing what you get.

It’s amazing sometimes when we don’t think about the simple, straightforward tactical solution. Buy and see what they’re doing. Here’s an interesting question from Ryan. “How important is it establishing a product review system for your product early on? Can you share some best practices on doing that, some of the best places to gather those, and how to promote those across different platforms?”

For Amazon, as soon as you’re launching, you should be sending custom HTML emails through a platform. FeedbackFive is one that I like to use, which is simple. You can send consumers a series of emails, asking them to leave a review, giving them recipes, and if the product can be used in recipes. You see a lot more engagement from customers and they realize that they’re buying directly from a brand, not just a distributor or anonymous Amazon with no relationship to the actual brand. That helps. If you’re doing Seller Fulfilled, FBM through Seller Central, some brands will include a card that says, “Leave us a review. Thank you.” That’s a little bit of a gray area for Amazon but major brands are doing it.

On the D2C side, it is a great way to not just get reviews but drive repurchases by saying, “You’ll get $10 off your next order when you leave us a review.” I’ve seen brands go as high as, “We’re going to give you a $40 credit if you leave a video review that’s at least a minute long of your experience with this product.” More on the supplement category like, “How are you using this? What have you seen?” I would get into it. If you’re using Shopify, Yotpo, and similar platforms are robust and allow you to build out that behavior, enable social sharing, and enable easy referral programs for consumers, so they can share their review. They can get $10 off of their next order if a friend uses their $10 coupon they gave them. I would explore those options and build the ecosystem around it.

Ryan has a follow-up and that is, “How important it is to engage with some of your more passionate fans and consumers? What are some good ways you can drive longer lifetime value with them via sales, special gifts, etc.?”

It’s not easy to figure out that first upfront deal that’s going to get people to convert and try, but getting people to come back and to build that relationship is what seems to come later on. A lot of brands will launch and go, “We’ve seen a lot of purchasers. How can we get them to come back?” You should build that as part of your ecosystem upfront. If you’re using a robust email platform like Klaviyo, you can build those behavioral mechanisms. It’s like, “When someone’s ordered from us 3 or 4 times, let’s send them this special email and a special code.”

There are some apps like Free Gifts that can be built out to add things to orders for consumers that are placing their fifth order or if they’re buying a large amount so that then flows through to your warehouse. It doesn’t have to be a one-off thing. It is great when a CEO or someone like that writes some notes, etc. Elliot goes to our buddy Shane and gives him 500 cards. “Shane, can you design these and I’d come back?” He’s like, “My hands are tired.” You can build the behavioral ecosystem around it. Explore those options. If you have that technology, don’t just set it up for the upfront purchase. Set it up for the fifth purchase.

For refrigerated brands focused on retail so far, how do they pivot to eCommerce? On a scale of 1 to 10, how difficult or easy would it be to pull it off with a pivot to an online channel? What were your thought processes and what questions do we ask ourselves?

It’s challenging because as we’ve discovered, not everyone is looking at the full structure that you have to build here. Some of those questions are going to be, “Where do we have the product now? I only have one warehouse and it’s in Los Angeles. How are we going to get it to a fulfillment warehouse that’s in Chicago? Who’s that fulfillment warehouse going to be? What are our costs going to be? How are we going to ship this when I look at my price versus my pack size?” “I have inexpensive cashew milk and I sell it in a gallon-size for $599 or $699 but it’s perishable.” That’s going to be a challenging business model versus, “We sell ginger and turmeric shots. They come in a little three-ounce thing and they’re $5 apiece.”

It depends on the product and depends on the price of it. You’re going to have to take a look at that. Go and look at prices for the components you know that you’re going to need if it’s perishable. To get it as a box, liner, ice, and dunnage like wax, craft paper, and stuff. Go and price some of that stuff out, and see what it would look like if someone bought a twelve-pack from you. Start to do that math and you can start to arrive at a framework and build it out from there. Start with a number and with a model that is giving you a number that makes sense to you.

Let me switch gears here. “In your experience, what’s the more effective and efficient use of funds to acquire new customers, especially if you’re on Amazon? Would that be leveraging more of it on Amazon ad spend or increase social spending?” That’s a question from Jeff.

If you’re in a category where there’s a lot of searches, you believe in your product. Let’s say, I’ve been playing around with keto baking. There’s keto cake mixes, keto mug muffins, and all sorts of baked keto items. A ton of the searches are happening in a limited set of keywords, so it makes sense to have your organic keyword strategy, paid keyword strategy, and language you’re using on your listing to have a synergy there. Focus on those key terms, invest in those to drive your organic relevance, and get sales where it matters the most. A lot of people talk about longer-term keywords, etc. Focusing on some key terms is super important.

For D2C, social spending is great. If you have a community, you have to remember that if you are investing a lot in your organic social content stream that only a fraction of your audience. If you have 10,000 followers, 1,000 to 2,000 of them tops or seeing most of your posts, so make sure to balance that investment. If you’re putting out great content, you are building a community and investing in boosting and some basic retargeting to engage with those folks, and you can expand it from there.

Here’s a more tactical question. It concerns using dry ice in transporting, what fillings you have or what feedback you’ve gotten on that?

I haven’t played around with dry ice a ton, just on one brand at this point. Whoever’s packing that order out for you, you need to have some insert to cover yourself legally. Not everyone understands how dry ice works. That comes in the box. If they’re putting it in a coolant bag, which is more common for dry ice pack-outs because you need it to be in there tight and you don’t want the ice to be falling all around, then a sticker on top says Dry Ice Caution is going to be necessary. Take the necessary precautions. It’s important to have an insert that if you’re using recyclable materials, make sure your consumer knows that because that’s a cool thing. A lot of people feel guilty when they order a box of drinks and it’s like, “Look at all this stuff that I put out into the world.” If it’s recyclable, make sure they know that. Have a fun insert, make it cool, and educate people so they feel okay about it and they can buy from you again.

A couple of more questions from the audience. This one is from Laura. “Thoughts about regional pricing based on shipping zones? Is that negative to consumers? Is it better to eliminate regions that are more expensive and not make that available? What’s your thought there?”

It depends on what you’re seeing. If you are shipping out of Los Angeles, you have customers in New York, and you have an expensive large, heavy box that you’re shipping, you might have a longer-term problem that you have to solve there because those shipping costs aren’t always going to go away. I would also look at where’s your business based? I have to charge customers in Massachusetts a huge shipping rate because I’m coming out of Los Angeles, but that’s 1% of my customers so you can equalize things.

All of my friends and family in Hawaii would hate for me to say this. Most often, in the perishable world, it’s not realistic to ship there. That is one that frankly for any business that’s you’re shipping large, heavy boxes that were forced to turn off. It’s interesting because some consumers do push back and it’s like, “It’s going to cost us $150 to ship this box. We’ll split it with you if you would like.” Few people end up taking us up on that.

For cold single-serve premium beverages, can you comment on other existing online platforms for launch?

FreshDirect, Good Eggs, and Thrive is starting to play with perishable and frozen, but I don’t think that that’s a large launch yet. It’s great to start out there if you can begin that relationship. I would take a look at the size of the category. A couple of those sites there’s a freebie. If you open up their category pages, the products are in sales rank, so you can see where you stand any day. If you are doing $20,000 of business there a year, I would have a conversation with your buyer trying to understand how big that category is. A lot of times, when brands are in that growth mode and they’re like, “We’re going 50% up year over year,” some of those regional players, you hit that ceiling faster than a chain of stores that you would because their customer base have been smaller. That’s changing, so maybe that’s sage advice.

Here’s one more question from one of the audience members. “Do you need much expertise to put together a Shopify website that’s effective? It’s user friendly, but wondering how much additional skill work is required.”

Shopify is a straightforward platform to get started with. You don’t have to be a massive technical expert. PageFly is one app that’s drag and drop. “I’m going to build my pages. Here’s the color I want. Use the eyedropper.” It ends up being simple to get it up and going. Spend a lot of time testing it. Be your consumer like, “Does this work? Am I giving people the experience that I want them to?” It doesn’t have to be flashy. It just has to be getting your message across. It has to function. There’s a lot of developers out there that can do a little bit of work if it’s like, “I need to fix this one thing,” and you can keep that cost in the hundreds instead of the thousands.

If this is an important business initiative, reach out and get help for something like Leon. I always encourage founders that it’s easy to spend money on many things but you always have to be asking yourself, “What’s my highest value activity? Where do I drive the most impact on my business? Where you don’t and where you need that help to invest in it?” It is a great segue to giving you the opportunity to tell a little bit more about what you do, Leon and how people can reach you, etc.

Elliot, as you and I have gotten to work together, it’s been great with what you do with TIG brands, if everyone is already familiar. I feel the same way about eCommerce for smaller natural foods brands. When you’re first starting out, these are all common and super valid questions. A lot of the advice out there is geared towards brands that have bigger budgets, have been doing it for a while, or they are ready to scale. Their advice is costly and you’re not there yet, so you’re not going to reap a benefit. One thing that I’ve been focusing on is helping brands that are either doing their first $10,000, $100,000, or their first $1 million online.

Helping them either get online, pivot from being mismanaged by either an agency or a platform, transitioning to some new reality that they’re dealing with, or even exploring feasibility. There’s a ton of noise and a ton of advice out there, and it doesn’t apply to every brand. It’s hard to say like, “How does this work for me?” Feel free to reach out. I’m on LinkedIn, Leon Lewis. I also have a small consultancy that I’m working on. It’s called Daybreak Growth Partners that is focused on brands that might need a little bit of help or getting online or just need some more visibility into their management. I’m providing that service for them. That’s [email protected] if you want to reach out.

First of all, this was awesome. You have such great knowledge around this space. I’ve been in it for as long as you have and you’ve seen all the changes. If you could point to one brand that you think is doing it right that anyone on this should go look and see what they’re doing, who would that be?

This one is going to be off the wall. I have a friend in Auckland, New Zealand named Valentin Ozich. Since he was eighteen, he started a clothing brand called I Love Ugly. They’re the largest menswear brand in New Zealand. I’ve watched them go from this broken website, bouncing all over the place in social media, how they talk about it, and their approach. I’ve seen them dial it in above and beyond in almost any brand as they have turned their vision to be a longer-term especially because this is in the fashion world, they say, “What is our long game here?” If you go and check them out, look at how they talk to their customers and look at the messages that they put out. I feel like brands that build value and build a relationship with their consumer over time are the winners.

I Love Ugly is what I mean. Look at their website, it’s Killer Shopify. Heroldson is one of the best build Shopify sites in New Zealand, Australia. They do talks about them, their approach, social media strategy, and the way that they communicate with their consumers. If you want a brand, it’s interesting in the world of food because I didn’t start here. I’m here now and I love it. We live and breathe these things every day but to other people, it might just be a snack. We have to develop that relationship with them that meets them where they are, whether that’s digital, the follow-up email after an order, how you sell the products, and what you expect from them. You have to build value to them within the context of what your brand is going to give to them.

When you look at longer older brands, Patagonia is one that I’m always still impressed by, just see how those conversations change over time and how they bring people into that dialogue. It’s great you have to keep the product upfront but for people that have been with you for a while, that’s going to mean the world in a number of years as they recommend more customers to you. It’s how you can cultivate and build that relationship, whether it’s, digitally, technically, through how they buy, and what they get in the box, etc.

Leon, thanks for joining. Everyone, thanks for coming on. We’ll share the link to this recording on our YouTube channel and we are going to be converting these into podcasts soon. We’ll be back with more on that. Thanks, everyone. Take care.

Important Links

• Leon Lewis – LinkedIn

• Hohner

• Health Warrior

• REBBL

• FeedbackFive

• PageFly

• [email protected]

• I Love Ugly

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