Previously, direct-to-consumer business models became popular when online brands like Warby Parker and Bonobos received hundreds of millions of dollars in funding. As a result, the DTC model continued to be applied to more and more product categories that didn’t always make sense, such as low-margin foods and hard-to-ship beverages. Now, founders are increasingly wondering if it makes sense to launch their products as a DTC-only brand.
One such company is plant care brand Arber, which launched in the spring of 2021 and now sells its products through big-box retailers like Target and Walmart as well as garden centers. Arber has raised $3.5 million to date, with plans to raise more to support upcoming retail rollouts and an Amazon launch in February. This strategy, according to Arber founder and CEO Vanessa Dawson, led to Arber’s current revenue split of 90% from wholesale and 10% from its DTC website. As it expands its footprint, Dawson said Arber still expects the bulk of its revenue to come from wholesale, while its DTC site will be used for exclusive items and customer education.
Arber currently sells liquid concentrates of chemical-free plant food, insecticides, fungicides and bioprotectants – with plans to add soil food in the coming months. Dawson told me she made the decision to secure retail partnerships before launching DTC. This was during the height of the pandemic, when many direct-to-consumer brands were struggling to grow in the face of myriad challenges such as supply chain issues and rising advertising costs.
But Arber also decided to prioritize wholesale because the majority of garden and lawn products are still purchased from physical stores. Another driving factor is one that the majority of e-commerce brands are facing today: rising customer acquisition costs through expensive digital advertisements.
“We decided to go into retail right from the start and have seen 100% year-over-year growth,” Dawson said.
But scaling up to support big-box retailers takes time. Arber launched his DTC website in the spring of 2021 and secured distribution deals with Grove Collaborative and The Sill that summer. Around the same time, Dawson also requested and hosted a formal product review meeting with Walmart’s garden center shoppers to convince shoppers to haul Walmart a year ahead. After extensive ingredient and packaging reviews, the brand was able to launch at Walmart in the summer of 2022.
In order to compete effectively With decades-old legacy brands like Scotts and Bonide hitting retail shelves, packaging has been a big priority. “It’s a struggle for a DTC brand solely in this noise-breaking category,” Dawson said. “You have about 12 seconds to grab someone’s attention on a shelf, so we have to make sure the message is there via packaging and messaging.”
Arber’s bright, minimalist packaging touts that its all-natural ingredients are safe to use, even by children and pregnant women. Arber’s packaging also highlights its formula, which uses microbes that activate plants’ natural immune systems to prevent disease and stimulate plant growth.
The brand is currently available in more than 2,900 Walmart stores, with more doors added weekly. “[Walmart cares] to innovate in this category,” said Dawson. This month, Arber has been rolled out to more than 1,700 Target stores and on Target.com. Dawson said Arber was wanted by Target’s new garden center buyer, who wanted to know more about Arber’s formulation. With that, a formal review of the product followed to ensure that Arber met Target’s merchant packaging and formulation standards.
“From a brand perspective, Target feels really aligned with us,” Dawson said, noting that the retailer’s customers differ a bit from Walmart’s mass-market shopper. “It’s also an opportunity to talk to indoor gardeners and see what resonates with them.”
Despite the limited resources of a CPG startup, Dawson said Arber’s biggest shelf advantage is the ability to stand out on a shelf through innovation and design. “Buyers appreciate the uniqueness of our effective formulations and active compounds,” she said.
But with each new entry into a retail chain comes new demands and new challenges, Dawson said. “Range reviews take place a year before launch, so we’re already in talks with which retailers we’re launching in 2024,” she said. “For Target, we’ve created a new bottle size that’s different from Walmart, so there are hurdles around the production and supply chain.”
Despite the major investments required for retailers to enter the plant care category, Dawson said being digital native is still a strong differentiator for shoppers. “It’s important to maintain a DTC presence to communicate aesthetics, product education and messaging,” she said, adding that the website also offers exclusive products, such as priced bundles. reduced and thematic kits, as well as content. Arber’s website has a blog of resources and tips on how to care for all things greenery, from small houseplants to backyard greens. “We will work to get DTC, including Amazon, up to 20% of our business,” Dawson said.
This year, about 70% of Arber’s ad budget will go to in-store marketing, while 30% will be allocated to digital marketing spend like influencer marketing and collaborating with creators on content. “We’ve also hired a new vice president of marketing with extensive retail marketing experience,” Dawson said.
Arber’s approach to DTC shows how more and more brand founders are realizing that they cannot realistically count on all sales coming from their DTC channel. That’s why some CPG brands, like beverage makers Liquid Death and Juneshine, have stopped using their websites solely as sales vehicles, and more so as hubs for marketing tools like branded content and products. On the other hand, this approach also brings new challenges, including the need to juggle a number of large wholesale accounts in order to maintain growth.
Bryan Gildenberg, retail consultant and CEO of Confluencer Commerce, said Arber’s first-year model is similar to early retail brands that emphasized aesthetic and organic ingredients. “We’ve seen it with brands like Method and Mrs Meyers bringing fresher design to an outdated category,” Gildenberg said.
Historically, he said, Target has been one of the major retailers most interested in developing these types of starter brands. “Target is always on the lookout for brands that can make their shelf look different than everyone else’s, so they’re always on the lookout for emerging brands.”
Another big advantage of a digital native brand when tying its initial growth to large retailers is positive margins. “These innovators tend to take market share from their commodified counterparts,” Gildenberg said.
But the trick is to maintain the momentum of the category while reaching more stores – and that often involves continued investment in new products or exclusives.
Arber is currently developing 12 additional products that will be announced for the 2024 season. Dawson said a few more deals with retailers are expected to be unveiled over the coming year. “We’re also looking to double our rounds with Walmart and hit aggressive targets with Target this year,” she said.
what i read
- The rise of so-called “shoppy stores” is the latest trend among digital-native food and drink brands trying to gain exposure offline. These kitsch stores, like Grubstreet pointed outoffer Instagram-friendly brands like Omsom sauces and Graza olive oil.
- canned seafood brand fishmonger entered into its first national retail agreement. Adage spoke to CEO Becca Millstein about the launch and growth trajectory of the Whole Foods brand.
- Less than two months after filing for bankruptcy, direct-to-consumer wine club winc was acquired by a spirits startup amass. As the information reported, Amass will use Winc’s data-driven approach to sell alcohol.
What we’ve covered
- In the face of a Federal Trade Commission crackdown, online brands are becoming more cautious about designing subscription plans. Modern retail has spoken to the executives of Broad outlines and NutraClick why they make it easier for customers to change or cancel subscriptions.
- The deployment of Meta’s Advantage+ shopping campaigns is being welcomed by a number of advertisers and e-commerce brands. Agencies and brands like the menswear startup True classic is broken down how they apply the automated advertising product to their advertising campaigns.
- Online brands continue to struggle with excess inventory. Some, like the Great Bear and carleenresort to revealing the secret to their customers via significant discounts on overproduced SKUs.