Lessons from Brandless: 5 Pitfalls to Avoid in Launching a D2C Brand

The news of Brandless going out of business has generated a lot of buzz on LinkedIn. A few people are taking the opportunity to knock the overall concept (a company without a brand), the investor group, or the unit economics. Personally, I appreciated some of what Brandless did along the way and greatly admired their brand that wasn't a brand (that really was a brand).

Using Brandless as a case study, I've outlined five pitfalls to avoid when launching a D2C brand. Although I have no direct experience with Brandless, I did some research to connect the dots on a few learnings from the agency-side roles I've played in launching and growing hundreds of eCommerce brands over the last ten years.

Lessons from Brandless: Pitfalls to Avoid in Launching a D2C Brand 

Macro Pitfalls

• Pitfall 1: Brandless Took a Lot of Money Early. Over $50M before they launched. You don't need a lot of money to launch a brand.
• Pitfall 2: Brandless Didn't Pay Enough Attention to Unit Economics. The beauty of retail is that the unit economics reveal themselves very quickly. If you launched a physical retail store, you'd work on refining the concept until it was profitable before launching the next 10 stores. The same should be true of online retail. Get profitable before you scale. A great question to ask. Are we using investment $ to cover lopsided unit economics?

Digital Platform Pitfalls

• Pitfall 3: Brandless Built Their Own eCommerce Platform. In addition to the increased investment and speed to market, a bigger problem with this approach is that it makes improving and pivoting the business as data starts to come in much more difficult. It also isolates you from the biggest talent and experience pool in the eCommerce industry, services providers, who often exist within a platform community. And although some of the worlds best brands are starting to look like technology companies, a brand should never start that way.
• Pitfall 4: Brandless Implemented Sophisticated Technology Ahead of Their Maturity Stage. At launch, the average brand integrates between 20-30 vendors to orchestrate their end to end digital experience. It's a lot of decisions to make! Activation brands should prioritize working with third party technologies that are easy to install, do a lot of the heavy lifting for you, iterate quickly and perhaps most importantly, work really well together. However, it's usually the enterprise technologies that have the most compelling sales teams, and paint the most sophisticated vision for the future. What they don't always tell you is the amount of data, people and process all working together to achieve the use case. It's something that even the most mature brands have a hard time making work. When I looked at the Brandless Tech Stack, it looks like they implemented a lot of very sophisticated technologies. Unfortunately, Activation brands are not ready to use technologies such as Sailtru, Contentful, Algolia, and Segment. Don't get me wrong, we LOVE these technologies, but only for mature brands.
• Pitfall 5: Brandless Built Their Own Data Science Team. At activation, a brand's customer data initiatives should be focused on marketing channels and software automated moments across the digital experience. Eventually, for mature brands in that $100m+ online space, with years of customer data, a personalization strategy starts to exist across a complex ecosystem of people, processes and tools. In this environment, a data scientist practice can become useful. I can count the number of D2C brands (not retailers or marketplaces) on two hands who should even consider incorporating data scientists into their teams. This talent, although extremely important to the ecosystem, just doesn't make sense brand side.

At the end of the day, the critical success drivers in launching a D2C brand relate to the products, brand story, marketing, value proposition and unit economics. The greatest thing modern eCommerce and marketing technology have done for brands, is to automate core commerce and marketing functions at a very high level of quality and sophistication, to free up the brand stakeholders to focus on these critical success drivers.

I'm super interested in everyone's thoughts, so please comment and share! Also, if you're interested in hearing more about Tomorrow's approach to Digital Commerce Activation, Growth or Innovation, read below or shoot an email to [email protected]

If you're interested in further context on the digital platform pitfalls, I'm excited to share Tomorrow's philosophy on Digital Commerce Maturity and Activation below.

The Digital Commerce Maturity Model

We spend a lot of time thinking about the maturity journey that a D2C brand goes on to become a market leader (see picture above). In fact, we've mapped our entire service offering and partner ecosystem to each step of that journey.

Without this contextual lens, it makes it hard for brands to make maturity-right decisions. One small example of this are the traditional eCommerce analysts, such as Gartner or Forrester. Their business model exists through partnerships with large enterprises, and as a result, they provide almost no content for brands in the activation or growth phase.

The Activation of a Digital Commerce Brand

When we start working with a company to launch a new D2C brand, we use 3-4 visuals that explain the philosophy behind our Activation approach. The first, captured above, highlights where we want to focus (y)our budget. The reality is that no start-up brand can outperform the best practice options that leading vendors already provide below the line. Spending time below the line also takes focus away from the areas above the line which are all critical success driving factors for the brand. To make matters worse, once you start custom building functionality below the line, the impediment gets bigger and bigger as your brand grows. Soon, you start encountering significant technology blockers across your growth initiatives.