Mehtab | Karta Ventures@MehtabKarta
Here are 5 super fast ways to juice profitability very fast at a DTC co. We've done this at a dozen cos.
1. Cut shipping costs. Reshop shipping carriers with one big cheat code. You NEED to turn your existing carrier off or they won't take you seriously. We use a grey hat (no problems for us in 4+ years) service to keep shipping under their accounts at reduced rates while we negotiate with Fedex/UPS.
2. Rehaul packaging. Examine packaging for your core product lines. At one company, we had a lot of product that was a long rectangle. Then we had one product that was packaged as a square but the square package was in ~37% of orders. This meant our boxes had to be way bigger than they should have been which drove up shipping costs. So we redid packaging to make everything ship in a rectangular box. You can also do things like find optimal edge crush strength required for your boxes and reduce the box thickness to save on cardboard. This was ~0.5% of rev at one co! You can take this to the next level with something like a packsize machine, which prints optimized boxes per package. Only really makes sense if you are high variance per package.
3. AdWords overspend. Export AdWords reporting to see what keywords you are actually spending on. Dollars to donuts there is some OBVIOUS brand stuff in there that shouldn't be, and platform is over attributing. Even with MTA solutions, they are usually wrong b/c of cross device patterns. Cross device is a HUGE problem if you have a lot of avg items per order. Test trimming budgets by 50% and hold that based on your avg consideration period to see if its incremental rev for you.
4. Merchandising & collection sort logic. What is the logic for showing specific products you show on collections, your menu, your homepage, etc? Usually there is a massive AOV/CR unlock here that is very easy to implement. There's an article on my blog that shows you how to do this fast & cheap.
5. Reevaluate staff/offshore. Use the "GWC" tool from EOS to evaluate all staff and have you teams use it to evaluate their team. That tool is beautiful because it's simple & incredibly powerful. It really slaps you in the face if you're murky about someone.
If you aren't offshoring, do so. There's no real reason for most roles to be in the US, especially once you factor in payroll taxes, liabilities tied to US employees, etc. I like to use a cheap ATS like Jazz HR to post on indeed/linkedin aggressively, no need for some marked up 3p firm (noob move).
6. Get on a plane. Other cultures outside of the US value facetime 10x more. This means you need to show up in person to get juicy terms/pricing. Visit your vendors and attend trade shows. I've never lost money doing this, ever! Fly economy, stay at cheap hotels and show up. No need for a booth at most trade shows to make it a profitable trip.
BTW when negotiating with suppliers in other countries, there is a real "big man" thing most of the time. Instead of trying to beat them up on pricing, suggest alternatives like "how can we engineer this to be X instead of Y?". You'll usually find there's a lot of things your manufacturer is doing that adds zero value to you and your customer, but drives up cost. The fastest way to resolve this is by meeting them in person and seeing how the product is made.