When & How to Sell Across Multiple Channels: The Tension is Real

For the first 5 years at Chubbies we built an explosive, fast-growing, direct-to-consumer e-commerce business.

And we almost ran out of money.

For the next 5 years, we slowed down and built a scalable, profitable, and systematically growing consumer Brand.

Our story speaks to one of the largest points of tension in digital brand building today.

It’s the tension between the simplicity and speed of building an ecomm store and going direct-to-consumer, and the scale, leverage, and profitability that comes from expanding your channels of distribution.

When we look at the total market potential for e-commerce as a percent of total retail, figures have it ranging from 15% to 20%, depending on the source. Then when you look at the top 15 online retailers, they dominate about 66% of the total US e-commerce market. This means that the total market potential for direct-to-consumer, branded e-commerce, is inherently limited – on average about 5 to 7% of your business’s total market potential (with some variation depending on the category).

Now, the interesting bit is that this 5 to 7% is the easiest to access. With a creative product, you can spin up a Shopify store, start running Facebook and Google ads, and - boom - you’ve got yourself a business. Depending on your market, you can grow extremely quickly and to a decent scale.

But the tough part is that, because of the scale limitations and the fact that the digital ecosystem is typically governed so heavily by paid direct-response promotion on Facebook and Google, building a highly profitable business on just this 5-7% is extremely difficult.

This is where distribution comes in. And here, the critical question is how? Why would retailers want to carry my product?

Or, in other words, what’s the value proposition of my brand to a buyer from a big retailer? How does carrying my brand get that person promoted?

This is where the power of Brand comes in.

Through your customer interactions, your packaging, your products, your marketing, your fulfillment, etc. - whether you like it or not, you are building a brand. You are building a lasting impression (or maybe not so lasting) of your business, your community, and your product offering with your potential customer base.

When a category buyer takes a look at their market, that’s exactly what they’re looking for: businesses that will add to the pie, that will bring an audience, that will attract more buyers as opposed to simply displacing other category competitors by competing at the price and offer level.

And the great news about investing to build Brand is that it doesn’t just help you to grow in that 5 to 7% DTC e-commerce slice, but it spurs growth in the full 100% of your category’s market.

It wasn’t until we realized this sneaky truth at Chubbies that we really found the path to sustained and systematic profit growth.
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