No. 281: “V” is For Vertical

Warby Parker’s factory.

If you read any post on digitally vertical native brands, you’ll be hard pressed to find one single paragraph on manufacturing. In Andy Dunn’s now famous essay on the rise of vertical brands, he doesn’t mention the process of production one time. In CB Insights much-loved analysis of the nine biggest DTC success stories, you won’t find one mention of the production process.  This, despite the entire industry being driven by a global manufacturing resurgence.

Screen Shot 2018-08-06 at 1.45.48 PM
eCommerce as a % of total manufacturing shipments.

You listen hard. Stick to the basics, stick to the basics, stick to the basics, so says the antagonist from one of my favorite films of my youth. But while crusty old Coach Kilmer was a villain in the movie, he made a great point. And it’s a point that many in the DNVB space are overlooking. As the battle to rise above the noise has reached a fever pitch, brands are overlooking the most important part of the value proposition: a great product.

Face it, not everyone has a factory. This means that manufacturing partnerships must be priority number one for product-founders. A partner has to serve your best interest; they are there for the long haul. They make concessions and provide you with help during the product discovery and refinement phases.

Founder Collective on Twitter

Yes! The first Casper Mattress that sold was the 50,001st sold by founder Philip Krim, who spent a decade dropshipping beds previously. The best D2C founders are more focused on industry dynamics and acquisition channels than twee launch videos and clever branding. Follow suit!

A DNVB is a manufacturer first, marketer second. Either you’re building the product within your own walls or you’re spending countless hours overseeing the process with a trusted partner. But for every ShinolaRogue Fitness, Warby Parker, Harry’s or East Fork that own their factories, there are countless DNVB’s (see: Fashion Nova) that excel by optimizing partnerships with manufacturers. The operative word is “partnership.” If you’re the owner of a vertical brand, you’ll need more than a vendor to navigate the obstacles of today. A manufacturing vendor sends you a spreadsheet with pricing, a manufacturing partner tests ideas and sends you samples. They are an extension of you. They are as invested in you as you are in them.

American Giant Partners with Eagle Sportswear

Early on in my DNVB journey, I met a savvy product-driven entrepreneur named Adam Blitzer at Manhattan’s Javits Center during the very early days of Mizzen + Main. Those were the years that we spent (a) not paying ourselves and (b) being brushed off at trade shows. Blitzer’s situation was a little different than ours. His booth was always directly across and nearly always bustling. As one of the few young companies who closely-managed their own production, we built a kinship for each others brands. His product offering was refined and constantly evolving. In short, he simplified a very difficult aspect of the business.

Setting aside trade agreements, tariffs, and other political issues, things are booming. More goods, coming from more sources, going to more places.

One other thing that’s increasing: pressure. Every year there is greater pressure on producers to show regulators and customers that their goods are sourced ethically and sustainably. It’s as if the whole world is now from Missouri, saying, “Show me” when it comes to the integrity of products they purchase. Ingredients now matter as much as, if not more, than the end product. To many modern consumers, ingredients are the end product, whether it’s the wheat going into your cereal, or the cotton going into your jeans.

Trends in Global Supply Chain Management

Before becoming the CEO of his latest company, he was the founder of a successful duffel bag direct-to-consumer brand called Blue Claw Co. There, he maneuvered through the arduous obstacles faced by brands that manage the push and pull of global politics on their young companies. It was through this experience that inspired him to build Softline Brand Partners as the solution for vertical brands who are focused on insulating themselves from the industry and market fluctuations (from materials to production to shipments). Softline has become the go-to for DNVBs seeking the type of partnerships that scale from zero to one. A network of domestic and foreign manufacturing plants, the company heralds its partnerships: from startups like Bespoke Post and Leesa Mattress to retail titans like Timex, Woolrich, and Allen Edmonds.

In a recent discussion with Blitzer, here’s what he had to say about the industry:

We’ve grown accustomed to operations like Gin Lane and Red Antler successfully building product brands from sample to market. We’re the company that works with you before you complete the brand development phase. For us, the ultimate partnership would be inline with those legendary marketing agencies. Let us build a better product pipeline and make their jobs easier.

DNVB founders are in a tough position. Not only are the tech (online retail) and acquisition (paid advertising and social) vital components to achieve growth; managing the supply chain may be the most important of the three core competencies. As global trade increases in volatility, brands that are not managing their own product manufacturing (in house or through partnership) will be at a distinct disadvantage.  A brand is not truly vertical unless the founders have a stake in production. The end consumer can observe the difference. There are brands who are thriving thanks to successful partnerships.

From Member Brief No. 27

Fashion Nova is not a traditional DNVB. The fashion brand began as a very small group of retail stores in Los Angeles’ B-level malls. The brand relaunched in 2013 as a digitally native brand and achieved rare air. Instagram, influencers, and consumers-turned-evangelists amassed one of the most effective top funnel efforts in brand-side eCommerce. Needless to say, they’ve built a blueprint for legacy businesses that are looking to reinvent themselves for the digital commerce age. 

Fashion Nova’s manufacturing turn-around is reportedly best-in-industry. CEO Richard Saghian can move from idea to sample to production in under 72 hours by working with close to 1,000 factories. As a result, the five-year-old website releases new designs faster than most fast fashion houses. This means that typical consumers can look like their celebrity and social media icons within a few days of their red carpet appearances. 

The founders who possess the sophistication to navigate trade and supply chain superiority will become the leaders of their product categories. While technical prowess and customer acquisition successes receive the majority of the press buzz, it’s supply chain excellence that empowers brands to maintain the agility and growth potential that characterized DNVBs from the start.

Read more of the issue here.

By Web Smith | Edited by Meghan Terwilliger |About 2PM

Editor’s note: If you would like an introduction to Softline Brand Partners, feel free to reach out. 

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