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Factors impacting the DTC landscape
When we set out to create Honeycomb a year and a half ago, we were struck by a few factors impacting the DTC landscape. The first was the tremendous growth of Shopify and its incredible set of APIs. Here for the first time in online retail was an ecommerce platform that could accommodate a wide range of brands and was providing the endpoints that would allow commerce to flow from one online store to another. We thought, “What would happen if you were able to connect the backends of any two stores that wanted to partner together?”
Around the same time, several headwinds started to impact the growth of DTC brands, starting with the cost of customer acquisition. The two main marketing channels for DTC growth, Facebook and Podcasts, saw demand far outpace supply, as well-funded startups drove up the price of media to levels where the math behind customer acquisition models could no longer be justified at scale.
The next factor impacting growth was the sheer number of new DTC entrants. With the costs of entry lowered, new brands sprung up to address white spaces in verticals by creating hero products that tapped into unmet consumer wants and needs. Incumbent brands with visions of owning an entire lifestyle were now competing with upstart brands that had already filled gaps they were hoping to eventually address. Increasingly, it began to look like there would no longer be “lifestyle brands”, but rather brands that fit like jigsaw pieces into a lifestyle.
The final factor we began to witness was the demand of authenticity from the consumer. Presented with a sea of new brands, each advertising to them individually, consumers began to grow increasingly numb to advertising. Which of these new brands could they trust with their hard earned dollars? To help with these decisions, consumers are now turning to trusted sources to help them wade through an overwhelming number of products and brands to choose from.
In this environment, we began to see real value around the idea of product partnerships between brands. The benefits for partnering brands are clear. For the brands that are introducing their customers to an exciting complementary brand, they are gaining further trust and authenticity by easing the burden of choice heaped upon the consumer. These introductions will earn them increased brand affinity and loyalty from their customer base and a new revenue stream to profit from. For brands that are selling products through these partnerships, they are able acquire new customers at fixed costs that enable responsible, scalable growth. Finally, when brands form reciprocal partnerships and decide to sell each other’s products, they can avoid trying to acquire the same customer independently and lower their dependence on paid advertising.
This idea has gained significant traction and was most recently validated by Brooklinen, the popular bedding brand, when it announced the launch of Spaces, their new online marketplace of complementary brands. From the ModernRetail article announcing the launch:
Brooklinen’s Fulop sees this as a part of a larger and necessary trend for DTC brands as they grow up. “It’s impossible for us all to succeed,” he said. “There will be consolidation with like-minded brands doing partnerships like this.”
- Rich Fulop, Co-Founder of Brooklinen
Why we built Honeycomb
This is the exact reason why we built Honeycomb. We believe the next great sales channel for DTC brands is actually the brands themselves. To nurture this new sales channel, we have built a two-sided network that allows like-mined brands to exchange product catalogs and online storefront space with complete ease. With a few button clicks, you can decide to launch your own product marketplace, sell your products on another brand’s marketplace or do both. Finally, we know you are incredibly busy. Our promise to you is to make managing this new sales channel as easy and seamless as possible.
We’re excited to embark on this journey together and have aligned our success entirely with yours. If you aren’t generating revenue from these partnerships, then we aren’t generating fees. So let’s get to work and let’s build the next great sales channel together!
