Q&A: How This Digitally-Native Brand Grew from Zero to Nine Figures

Simple Modern has sold $400MM+ in drinkware, lunch boxes and more since its inception.?It’s one of the top sellers in its category on Amazon and it also has a rapidly growing DTC business.?Bryan Porter is the Chief eCommerce Officer at the company and talks about the pros and cons of different distribution in this interview and how the company started as a digitally native brand that is now also sold in some of the world’s largest chains.??

Follow him on Twitter where he posts excellent insights on digital commerce and his learnings over the years: https://twitter.com/jbryanporter

Describe your company.

BP: Our brand is Simple Modern. We sell primarily drinkware. Vacuum-insulated drinkware is where we started. We have the top bottle and tumbler listings on Amazon. We're top sellers in Target. And we're moving into Walmart as well. We also have kids' bottles in a lot of different licensing properties like Star Wars, Marvel and Disney. And we have a fan shop business where we sell the major pro sports leagues. We’re suited well to serve families. I, along with Mike Beckham and Micah Ames, started Simple Modern. We all worked together at our previous company and in e-commerce for about seven years. We wanted to create a culture and a company that fit our world view and would be a company where we could really become the best versions of ourselves. And hopefully help other people to grow as well.

Let’s talk about direct to consumer. When did Simple Modern first start selling its own products?

BP: We launched our website in the same year that we started selling on Amazon. Our strategy now is for our website to be the place for our biggest fans to come and get things that you can't get anywhere else. We bring in website exclusives. We have personalization with laser engraving. We have bundling options where the more that you put in your cart, the more you can save. Roughly [DTC is] tracking around 10% of our Amazon revenue. Our website revenue has been growing faster than Amazon revenue, which is great. That's exactly what we want. Our website, even though it's not our biggest channel, we view it as the most strategic. Amazon is about 60% of our company's revenue to put DTC in the context of the whole company.

(Here is a thread from Bryan about the evolution of the company's DTC approach.)

What is the advantage of DTC for a brand?

BP: ?I think it's really just access to our customers. We can run advertising more seasonally, like back-to-school is the big time of year, since we have a lot of kids. We've found that we can advertise pretty well during back-to-school, same thing during Q4. We have really great, giftable products that are priced around $20-25. We can email [consumers]. We can use SMS. We can use social to talk with our customers. One thing we do a lot is we survey our customers who bought on the website. I would hope that the website would grow to be 30-40% of our company’s revenue.

Are DTC margins any better than margins in other channels?

BP: Yes, they are. Obviously not having a middleman or a third party selling your product [improves the] level of profit. One thing with DTC, if you can get cart sizes to be bigger, the economics get really good, really fast, because you can ship things in one box and there's a ton of saving to be had with bundling.

You'd mentioned Amazon.

BP: We started off in the Amazon marketplace. We listed our own products on the marketplace and sold them directly to the customer. Now we're in a relationship with Amazon where we sell our product to Amazon and they ship products to the customer. ?Amazon 1P is really a great option for sellers that become a large percentage of the market share in a category, especially if you have physical retail distribution. There are a lot of benefits to being 1P in that Amazon sends you POs weekly. They take the inventory in their warehouse. They do all the support, all the fulfillment. We just sell product to them at a wholesale price. And there's just more, a higher level, of partnership with 1P. We have a vendor manager who we talk with weekly about ways to grow the business. In 3P you have more flexibility with price and how you list the products.

How have you managed to stave off competition and avoid counterfeiters or knock-off products?

BP: We have really leaned all the way into our brand being our biggest moat. We will not sell products that we don't think are the highest quality. Our goal is to not only get a first purchase from customers, but to get repeat purchases. And we've realized that branding is really what prevents imitators and competition from coming in and just copying your products.

Has being on a marketplace like Amazon helped the rest of the business?

?BP: We were able to get into Target a few years ago. And over time we've been able to build out the most shelf space in Target. We're the the best performing drinkware brand in Target. A lot of that is because we've developed products on Amazon. We've read reviews, iterated on products, made lids better over time through reading one-star reviews, and we've also been able to test ornamentation. We've tried hundreds of colors on our Amazon listings, and we've been able to find that customers voting with their wallets, buying whatever they think is best, is the best way to find customer preferences.

There are all these Amazon marketplace aggregators out there. They've raised a ton of money to buy up brands. What is your impression of this aggregator space, like the Thrasios and the Berlin Brands of the world?

BP: ?We have definitely been approached by many companies wanting to buy ours but we really have no interest in selling. I think one problem aggregators have had in the past is the valuations for these Amazon brands that have been bought have been pretty high. So getting the value out of the prices that they buy them for has been tough.?A lot of Amazon brands spend 20%, maybe even 30% of their revenue, on Amazon advertising. They're not necessarily producing profit, though they're producing a bunch of revenue. But not much of that flows to the bottom line.

You raised an interesting observation in a recent Twitter thread about advertising on Amazon in particular.

BP: ?Our focus is on organic placement and creating listings that convert higher than any other listing. And if you can do that, Amazon is incentivized to show you at the top of search. We've been able to effectively do that in most of our categories. So whenever we run advertising, the idea is that we do it in areas where we need more impressions momentarily to create a spark in our listings. A lot of our ad campaigns look great, but in reality, we would have gotten most of those sales anyway. And if you strip those sales out of our ad metrics, then, all of a sudden, the ad performance does not look nearly as good as it did. So it's hard for us to want to pay for any traffic if we can just get that anyway.?Our take on digital advertising has been that it's something that is nice to have, but to have a company built on that is as much of a weakness or a threat as a strength.

This interview was edited for clarity and brevity.??