These days, brands can no longer lean on direct-to-consumer as an identity…
With most brands now selling online, direct-to-consumer has become one of many channels that brands can leverage.
My guest Ashly Knox is here to break down this shift and how brands can thrive using DTC as a channel.
The COO and CMO of Henson Shaving, a DTC razor manufacturer based in Canada, Ashly has over 20 years of experience in sales and marketing, working for both global brands and startups alike.
In this episode, he’ll cover the challenges of DTC and the levers brands can pull for customer retention.
Mentioned in this episode:
Transcript
Voiceover: This is Performance Delivered, Insider Secrets for Digital Marketing Success with Steffen Horst and Dave Antil.Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success podcast, where we talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I'm your host, Steffen Horst. The topic for today's episode is why d2c should be viewed as a channel versus an identity. Here to speak with me is Ashly Knox, who is the COO and CMO of Henson Shaving, a DTC razor manufacturer based in Canada. Ashly has over 20 years of experience in sales and marketing, working for both global brands and startups alike. Ashly, welcome to the show.Ashly Knox: Thanks for having me.Steffen: Ashly, before we start talking about today's topic, tell our listeners a little bit more about yourself. How did you get started in your career? And what led you to being a COO and CMO at Henson Shaving?Ashly: Yeah, I mean, I think it's probably like a lot of people where, you never sort of follow the plan you thought you were going to. I actually went to university and took physics, which must help me at some point. But it's definitely didn't, wasn't necessary for the career I ended up pursuing. But I think near the end of that I had done some, some Co Op work terms and things like that, and just had that moment of, this was also back in the late 90s, early 2000s, when that first.com bubble burst. And so a lot of the companies that I had done some internships with basically went out of business. And so I had that moment of time to say, you sure you want to work in a lab the rest of your life or not. I thought maybe I would try something else. Ended up getting a sort of a junior level marketing gig with Microsoft, which set me on the path of doing sort of sales and marketing, but always with tech companies, you know. Including Blackberry, which is, we're based here in Waterloo, Ontario, that's the headquarters of Blackberry. So I worked there as well. And so that path just kind of gave me like right out of the gate really strong, sort of like global brand marketing, because you know, we had just launched Xbox at Microsoft going up against PlayStation. Obviously, when I was at Blackberry, we're going up against iPhone and later Android. So I got like a front row seat to a lot of really neat brand challenges, which I think are beneficial for me now sort of working with a startup. Because that can keep those larger, sort of brand lessons in mind as you're starting to build a brand from scratch.Steffen: Interesting. Now, today's topic is why DTC should be viewed as a channel versus an identity. What do you mean by DTC as an identity?Ashly: Well, I mean, I think if you look like I don't know, maybe a decade ago, maybe it's longer now. And you sort of just think of some of those, just the fact that a brand maybe chose DTC that in itself was its differentiator, right? If you think about Casper or Warby Parker, those are like some obvious examples where the innovation was the channel. Nobody was ordering mattresses or, or eyewear online at that time. So it felt just really innovative and fresh. And I'd almost argue that I think at the time, consumers almost sort of self imagine that the products were maybe even more innovative than they were just by that association, right? It's like, oh, wow, just you know, you can just order your mattress online and get it shipped to you in one of those neat boxes. The whole idea was so fresh, right? And even in our category of shaving, right Dollar Shave Club came out, got great traction, more or less by changing the distribution model, right? The razor itself was very familiar to the other options that were available at the time. Get a subscription, it was pretty cheap, you get it sent to you every month. So back then sort of DTC was the differentiator, right? The method, the distribution method itself was really unique. Now, if you fast forward to now all three of those brands are in brick and mortar as well. And honestly, I think that's a pretty natural evolution. So now that DTC is sort of matured, I just think we should call out that natural evolution for what it is. Which means we should start to realize that a brand that starts DTC is doing that, right, they're starting there. So if a brand that adds wholesale or retail to the mix, I don't think that's an identity crisis. I think that's just growth. A lot of times it's almost like external parties that like identify a brand as DTC when maybe it's just a channel, but I think there are a lot of DTC founders and operators that may be over-rotated on that distribution being their identity. Again, 10, 12, 13 years ago, maybe you could. But even those trailblazers have had to evolve. Nowadays, I would say if you're starting a business, DTC in 2023, that just means you've chosen that as your first channel. But that's not the identity of your company in my opinion.Steffen: I see. And kind of it makes sense, right? I mean, if you want to start a business and you want to communicate directly with the target customers and generate revenue and grow your company that keeps you in full control, while when you have to find distribution partners, or even get into brick and mortar, that gets more expensive, and it's probably a much more difficult play.Ashly: I mean, I think that's right. I think DTC is actually the perfect starting place. Because it's relatively, again, anyone who's done DTC knows it's, it can be complex, but it's relatively simple, right? You get an online store up with Shopify or whoever. It's very easy to get on the ad platforms, it's very easy to find even early on to find a 3PL or someone to help, you know, ship product. Now, obviously, you need a product, you need to be able to talk about the value proposition. But assuming you have those things, I mean, assuming you wouldn't start a business, if you didn't have those things, DTC is very, very easy to get going. Doesn't mean it'll be profitable or something. But it's easy to get your product in front of hundreds or 1000s, or millions of eyeballs. Starting, you know, starting your business pitching to retail. I mean, I couldn't even imagine starting that way anymore. It almost feels archaic, right, even though that's how the world worked for hundreds of years. So yeah, I don't think DTC is a bad distribution channel. In fact, I think it's the perfect starting channel. We've just always viewed it in that lens. We're gonna start intentionally this way to hit you know, checkpoint A, B, C, D. And then eventually, you know, if our company grows and does well, I would fully expect us to be in the traditional retail. I don't think that means we're no longer disruptive. I think it means we made it. I think ending up in retail should almost be like a sign of accomplishment, you know. Not a oh, they're relenting, they're giving in, they've decided that they don't want to win. No, no, no, you got successful enough to the point that Target called you or, you know, insert retailer here.Steffen: Yeah, yeah, I kind of agree. Obviously, during the pandemic, a lot of companies that came from brick and mortar needed to go online, because their customers couldn't go into their stores anymore. That was kind of the other way around, right? They existed in brick and mortar, but the necessity pushed them into another channel, basically into another situation. And, you know, once you have a brand that that works really well from a DTC perspective, I would say it's probably much, much easier to have these conversations with the Targets and Walmarts of the world and say, hey, you know what, you really should pick up our product in your store, because there's a demand here already and we can prove it.Ashly: Yeah. And it lowers the risk for them, right? Because if you can say, look at our sales volume here doing it ourselves, you know, then it becomes a lot easier for them to make the jump.Steffen: Yeah, yeah, of course. Now, what are some drawbacks from around identifying as a DTC brand.Ashly: So there don't need to be any. I think if that delivery channel, like if going direct, is actually unique, differentiating for your product category, then making that identification can be good reinforcement. I just, I just don't know if that's the case anymore. You can buy everything. You can buy everything online now. So if your identity is hinged on that premise, then that feels a bit shaky to me, and it could limit some of your approaches. You know, I think some of the drawbacks, beyond that, there's a couple sort of easy examples. I'd say, you know, you're just mentioning, let's say a wholesale opportunity comes up or a retail opportunity. But you say no, because, you know, in your head, you're a quote unquote DTC brand. Or maybe you want to focus on the perceived higher margins that DTC has to offer. Well, one, do the math to make sure your CPE is low enough for that statement to be true. That's not always the case. And secondly, I think wholesale can have, can often have like less operational burden. You know, again, that direct consumer comes with a lot of upsides. The downsides are you're doing everything yourself. So shipping a bulk order to a retailer where they distribute, they do reverse logistics, they handle you know, they merchandise it. All that stuff, that's depending again, on your product and your category. That can actually be a more streamlined path. As crazy as that sounds. You always think as DTC is easier. And again, starting it is. But over time, you know, right now we actually have both. We do DTC and we have wholesale and all of our wholesale orders still ended up through our Shopify platform. And you can just see these big spikes, right. Oh, someone just came and made a big bulk order. It's one shipment. And it's done. It's actually kind of nice. I think another example would be, you know, the desire to stay in control of your brand. There, you know, there's this perception that if you sell to, again, a Target or someone else, that that either waters down your brand, or they're gonna want to position you in a way that's not aligned with what you want to do. And I think generally speaking, it's good to have your guard up for that kind of stuff. But I think that's sort of one half of the equation. I think there's a lot of DTC brands that I think are starting to realize for the last couple of years that a good retail presence actually works back up the other way. Like, it actually helps your online business. I really, I hate the word synergy, because it sounds like a buzzword. But there really is that nice synergy between the channels and I've talked to some DTC founders who've done their own retail, like their own brick and mortar stores. And they've actually found that, you know, if they have a store in pick a city, Austin, Texas, the fact that they have that retail, physical brick and mortar presence in the market, means that their online business actually converts better. Their acquisition costs go down. So I think that's something that if you view it, you know, as the sort of the broader picture of, hey, we're just trying to sell product A to customer B, then you don't have to look at them necessarily as competing functions, they both serve the same end result. And I think more and more brands are coming to that conclusion, but I still talk to a lot of brand owners who their first gut reaction is no, no, no, we need to do that ourselves.Steffen: Now, what's the ideal or optimal role of direct to consumer strategy in your view?Ashly: I mean, the first one is what we talked on. I think there's no better way to get a business off the ground in 2023. It's easier than ever to be able to tell people about a product to actually transact, you know, take the money, ship it, all those things. You know, from the start, we treated DTC as the starting point, but within months we had, this might be specific to us. But we had shaving retailers reach out to us to resell. Within the first two years, we had distributors from all over the world reaching out. Why? Because they saw an ad, they heard about us through a sponsorship or something. So all our DTC efforts recruited them, essentially. So it got us off the ground. And it got us our first couple dozen of wholesale partners. And those, again, early on with all the uncertainty and things, those hedges in your business are just so incredibly valuable. So the DTC has a like a little slump, and you know, you've got wholesale orders or vice versa. I think the other optimal role of DTC is I think, certainly around customer retention. You just have more levers you can pull. Again, I'll keep going with the Target example. If Target buys your product, the transaction is more or less done there. So you have to hope that either within the packaging or through social, some other track, maybe you can bring them back into your world. Whereas if you're transacting yourself online DTC, there's just a greater chance that they're going to sort of auto enroll into that ecosystem. Now, that's not as relevant for us. We basically sell you one product, and you and that's it. The average online brand has, you know, upsells, or subscriptions or, you know, multiple skews to be able to bring people back for that lifetime value. So I think that's a really strong role that DTC can play. Again, it doesn't mean you shouldn't do retail, it just means DTC should focus on retention.Steffen: How does brand identity or brand identity strategy differ from what you just talked about?Ashly: Well, I think your brand idea sort of transcends your distribution channels, right? It's your beliefs, it's your core offer, your purpose. I don't think that means it needs to be grandiose, you don't need to be saving the world necessarily. But I would, you know, I'd argue that most companies' purpose isn't, you know, to sell direct to customers, you know, that's just a way that they transact the purpose, but the purpose is typically something much, much broader than that. And even then, I would say, like, you know, in the lifecycle of a new company, you're probably going to transact with, unless the company is born out of a purpose, which does happen for sure. Oftentimes, though, it's born out a product idea, right. And so typically, you would, you would go to market with the product idea, even before you had fully identified what that purpose or identity is. So step one, often nowadays is product idea. See if there's a product market fit, then elevate the product idea into a brand identity. So again, because in my mind, if that's your order of operations, then necessarily selling to customers direct isn't your brand identity, you've already been doing it. And you were doing it around the product idea. So I think you can actually operate for one to three to four years without even having that brand identity fully baked yet. Again, unless you're born of purpose, like, hey, our goal is to whatever.Steffen: Yeah. Actually, that doesn't necessarily mean you don't want to build a brand. It's just the identity might change, adjust over time.Ashly: Yeah. I think early on, it's great to, it's okay to have this like notion of experimenting, right? Because really, what you want to do is you want to, if you don't have product market fit, then you don't really have anything? And testing that, obviously you want to make sure the product is viable. But you know, I think testing that is really like your company's main objective early on. We have this product, can we sell it to someone? And once you say, yes, then who's buying it? Once you know those two things, then you're off.Steffen: And I would say that even established brands sometimes have to adjust their identity based on how the market changes and certain other things. That doesn't mean you have to throw it completely overboard, or that they do throw it completely overboard, but certain attributes, or certain things that they want to be seen for or known for, you know, might have to be massaged a little bit.Ashly: Absolutely. Like I alluded to off the top, I gotta, unfortunately for me a negative version of this. But it's still a useful lesson to learn early in my career. A front row seat of that, when I was at Blackberry. Blackberry sort of had this idea about what it was. Which I think it knew what it was, for the most part, I don't think it cared about what its customer wanted as much. And it just turned so fast. Now, that's a very unique example, where one you're competing against Apple. Good luck. Two, in a sort of this emerging, you know, highly visible category. You know, if you're selling cookware, you can maybe afford to struggle a bit and turn it around. We sort of had all eyes on us. And so those mistakes, we paid an order of magnitude more than maybe the typical company might. But it's because it wasn't able to evolve that sort of brand strategy quickly enough. Because the brand strategy, if you've got it, sort of that identity, if you've got that baked in informs everything you do. It's not just your marketing, it's your product strategy. It's how you deal with your employees. It's how you deal with your customer. It's everything. So it matters. But there's, you know, there's like everything in ecommerce and especially like in setting up new brands, there is that growth timeline, and building a perfect brand beginning on day one, that's not where that belongs. You got to sort of, you need more data, I think.Steffen: Yeah. If we use Henson Shaving as kind of as an example. I mean, there are a lot of shaving brands out there already. What was it where you guys said, you know, we're Henson Shaving said you know what, we want to found another one. How are we going to set ourselves apart from the rest of those out there already?Ashly: Yeah, I mean, it's a totally fair question. And actually, I'll get back to that. Because exactly what you're saying is actually informed our own brand identity. Because there are a lot of brands out there, right. So for us, the genesis was really more around our CEO, his brothers own an aerospace machine shop, here in Ontario, Canada. And when COVID hit, they had some of their big, you know, aerospace satellite projects canceled, because no one was going outside for a while there. And so they made this decision to like, you know, they'd always made parts for other companies. They thought, well, what if we could make something ourselves. Maybe we could sort of control our own destiny, right? Not be at the whims of these other projects. And just out of circumstance they started looking at razors. And this sort of ties into the brand identity thing because they're these machinists, who make very, very complicated parts at very high tolerance. And so they were looking at building a razor, only through that lens. Hey, if we just wanted to make a razor, well, knowing what we know, how would we make it right? Versus a lot of folks sometimes it's more of like, you know, to be a business input to that.So it's typically in the shaving case, or we'll make sure that the blades are proprietary so we can sell more. Or make sure that the razor doesn't cost that much. We want to sell it as cheap as we can, because we know we're going to sell them creams or lotions or something later. And those are all fine business models. There's nothing wrong with that. Just wasn't the mindset of a couple of aerospace machinists. It was nowhere in their mind to think about that. So they sort of looked just, you know, at the mechanics of it. Then what we've done from a marketing perspective has been like, well, you know, there's a ton of shaving companies out here. And there's been actually, it's sort of strange to hear that, you know, while razors have been around for hundreds of years, if you look at just the last decade or so, you've got Harry's, you've got Manscaped, you've got Dollar Shave Club, that have all become really big, really successful. So even though it's an old category, there's sort of been a lot of new players in it. So we're also wary of that. Like, oh great. These guys have all come to the scene and now we're another one like, great, like, isn't there some fatigue here? So we just try to, now the flipside of that, I don't want to say anything negative, but in those companies, but they weren't, they sort of weren't necessarily to solve product problems, they were more looking at sort of brand alternatives to the incumbents, right. And I think they all did really well with that strategy. So they've done very well. Our approach has been to sort of like just kind of restore confidence in the industry, in the actual product. So we've been trying to just be very matter of fact, and try to like, explain shaving as dull as a proposition as that sounds, in the name of, you know, being able to differentiate ourselves. Because at the end of the day a razor is, maybe a razor for the average person. Our approach has just been to like, talk about the mechanics of it. Very matter of fact. No gimmicks, no humor, no anything. Just go very down the middle and that's how we've been able to carve out this nice little niche.Steffen: Yeah. Interesting. Now, DTC in general seems to have had its ups and downs in the last few years. What are some of the challenges, we might have talked about some already, previously or before, that you see?Ashly: I mean, I think not to get too macro here. But I do think there's, I would expect a trend towards first order profitability. I think interest rates climbing, there's been some pretty high profile investment and you know, banks collapsing, there's sort of a lot of nervousness out in the market right now. So I think the idea of a brand not being profitable, but being able to continually raise funds in order to scale, I just think that's going to start to shift. Or at the very least, I'd caution folks from playing that game for the next little while. I think, you know, when I say first order profitability, if someone buys on that first order, you should be making money. The way that a lot of ecommerce works, or has worked the last decade is I'll break even or lose money on the first one, but I'll get profit over time by either selling them more of that thing or selling them other things. I think if I was starting a business in 2023 online, I would say, you need to make money on the initial order, that's going to be the way to do it. Just because of all those sort of macro economic factors now. So if you need like, yeah, if you need multiple purchases, or multiple months to make a new customer profitable, then I would, I would scale with extreme caution. Because I just think the lending costs are gonna go really high. The other thing, actually, with DTC, and this is a boring answer. But my goodness, the accounting portion of running an online business still feels super archaic. Everything, like 3PLs, you know, Facebook, there's all these like Shopify, there's all these really cool platforms that let you go from zero to hero so fast. And then you get to doing the books, it's still like, pulling teeth. So I don't know what enterprising accountant out there wants to start a online accounting startup, but it feels like a pain point that everyone has. I think beyond that, you know, I think a lot of the iOS privacy stuff that hurt things, I think we're mostly past that. Doesn't seem to be top of mind as much as it was a year ago. I think so I'm not too, I'm not as worried about those challenges. I think there's plenty of opportunities and like AI, not to shift into a whole other conversation, but certainly AI and some of these emerging technologies, I would suggest they sort of need to be, I don't know that if you're an ecommerce owner today or a founder, you need to be taking direct action, but you need to be looking at it. I think you just, it'd be almost irresponsible not to at least be paying attention at this point.Steffen: That makes sense. How about the cookie topic?Ashly: Yeah, like I said, it's not, for us other than a small blip last year, it hasn't really impacted us. Most of the other founders I've talked to, they say that it's, they've come out the other end of it now. It sort of depends what your goal is. If for customer acquisition, I think you're okay. Because money in money out, you should still be able to track things relatively effectively. Where it comes to pose a problem is with those retention plays and with the things like that. For the most part, I also think that type of cookie tracking isn't something a small company needs to even worry about early on. Like you need to hit a certain level of scale, like in the eight figures to be really worried about that. I think it's been one of those things that because it's so high profile, brands feel compelled to do all this really deep level attribution. And I would argue that you don't need to do that until you've reached a bigger level of scale. It's not the droid you're looking for.Steffen: Well, I mean, you might be limited in how you target people. If you have to live on your first party information, you know, that might not allow you to be as detailed in your mid upper funnel activities, as you're able to do at the moment. Thank you so much for joining me on the Performance Delivered podcast and sharing your thoughts on why DTC should be viewed as a channel rather than identity. Now, if people want to find out more about you, about Henson Shaving, how can they get in touch?Ashly: Yeah, I mean, I'm actually at hensonshaving.com. You can check us out on our website, I'm on LinkedIn. We're pretty easy to get a hold off. We're still a small team. And it's been a lot of fun to grow it in a tumultuous time over the last couple of years with the pandemic, but it's been a lot of fun. And thanks so much for having me.Steffen: Of course. Well, thanks everyone for listening. If you like the Performance Delivered podcast, please subscribe to us and leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital, you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ. Thanks again and see you next time.Voiceover: Performance Delivered is sponsored by Symphonic Digital. Discover audience-focused and data-driven digital marketing solutions for small and medium businesses at symphonicdigital.com.
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