Startups
Auto Added by WPeMatico
How to use Amazon and advertising to build a D2C startup
Matt Altman & Tyler Elliston
Contributor
Contributor
Matt Altman runs the Amazon practice area for VMG Ignite, an eCommerce consultancy that helps early to mid stage CPG companies achieve growth. Tyler Elliston is the founder of VMG Ignite. Clients include Sun Bum, Perfect Snacks, Aloha, Pill Club, Solid Gold, and many more.
Entrepreneurship in consumer packaged goods (CPG) is being democratized. Every step of the value channel has been compressed and made more affordable (and thereby accessible).
At VMG Ignite, we have worked with dozens of direct-to-consumer startups trying to both find product-market fit and achieve scale through Amazon and online advertising.
This article focuses on customer acquisition, particularly Amazon and online advertising, for the direct-to-consumer (D2C) CPG venture. Selling on Amazon, specifically third-party (3P), has become an increasingly important component of the D2C playbook. About 46% of product searches start on Amazon, which makes it a compelling source of sales even for early-stage ventures.
Table of contents
- How to find product-market fit
- How to get started with Amazon
- Maximizing sales on Amazon
- Getting started with Facebook ads
- Growing sales after you have product-market fit
- What tools and technology to use for your D2C business
How to find product-market fit
People say that ideas are a dime a dozen. They aren’t valuable. But finding product-market fit? Now, that’s hard. The gap between an unexecuted idea and proven product-market fit can seem vast. Yet it’s a critical first step because, ultimately, marketing amplifies your product and value proposition.
If they aren’t compelling, marketing will fail. If they’re compelling, even mediocre marketing can often be successful. So start with a great product that people love.
How do you create a great product, you ask? A/B test your product configuration like you A/B test your landing page, copy, and design. Your product is a variable, not a constant. Build, ship, get feedback. Build, ship, get feedback. Turn detractors into your customer panel for testing.
Early-stage D2C companies typically get their first customers through three channels:
- Begging your friends and family to buy and promote your product.
- List it on Amazon as a 3P seller. Figure out the platform and start selling!
- Advertise on Facebook. Start with a daily budget of 10x your price point to get started and start tinkering with creative, audiences, and settings to minimize cost per order.
The companies that succeed are often the ones that iterate the fastest. In his book Creative Confidence, IDEO founder David Kelley and his co-author (and brother) Tom relay a story of a pottery class that was split into two groups.
The first group was told they would each be graded on the single best piece of pottery they each produced. The second group was told they would each be graded based on the sheer volume of pottery they produced.
Naturally, the first group labored to craft the perfect piece while the second group churned through pottery with reckless abandon. Perhaps not so intuitive, at the end of the class, all the best pottery came from the second group! Iteration was a more effective driver of quality than intentionality.
Don’t know how to manage Amazon or Facebook? Here are some best practices:
How to get started with Amazon
Powered by WPeMatico
India’s 9-month-old CRED raises $120M to help people improve their financial behavior
Many Silicon Valley companies and fintech startups in India today share a common mission: They all want to bring their financial services to the next billion users. Dozens of fintech startups that we have spoken to in recent months have told us that they all want to address much of India, one of the last great growth markets globally, in the next few years.
So you can imagine our excitement when we learned there is at least one startup that is going after just a few million users in the immediate future. We’re talking about CRED, a nine-month-old, Bangalore-based startup that is building solutions to incentivize credit card users in India to become more responsible with money and thereby improve their credit score.
CRED has raised $120 million in a Series B financing round, Kunal Shah, founder and CEO of the startup, told TechCrunch on Monday. He declined to share more information. The startup, which has raised about $145 million to date, is now valued between $430 million to $450 million, a person familiar with the matter told TechCrunch.
According to a regulatory filing, existing investors Sequoia Capital, Ribbit Capital and DST Global’s Gemini Investments led the round, with participation from Tiger Global, Hillhouse Capital, General Catalyst, Greenoaks Capital and Dragoneer.
Hundreds of millions of Indians today don’t have a credit score because they have never taken a loan from a recognized entity nor owned a credit card. According to the government’s official figures, fewer than 50 million credit cards are in circulation in India currently, with industry reports suggesting that the actual number of unique credit card holders is about half of that.
“Nobody taught us about how to use money,” Shah told TechCrunch in a recent interview. “This has created a huge trust gap in India. If you look at developed markets, systematic trust is very high between all the entities. Members don’t have to rely on third-parties. In India, even if you wanted to rent a flat, you look for brokers, for instance.”
You can build that trust when you know how someone handles their money, and how they have handled it in recent history. “Our aim is to create a big membership community with high credit worthiness, therefore open up more opportunities for them,” Shah explained.
Shah is not going after the masses. He wants to focus on just the credit card users for now, and if he could win the trust of just half of those plastic card holders in India, he would consider it a success.
“Instead of chasing the mythological mass customers who are currently useful only on paper if you wanted to boast about your daily active user or monthly active user metric, our goal is to serve the existing users,” he said.
On CRED, users are offered a range of features, including the ability to better track their spending, get reminders and check their credit score, but more importantly, access to a range of lofty offers such as membership to a gym at a discounted price, access to good restaurants at low prices and subscription to various services at little to no charge. Users can access these features by earning points, which they can secure every time they pay their credit card bills on time.
Varun Krishnan, editor of technology news site FoneArena, told TechCrunch that he has found CRED useful in getting reminders to pay his bills and likes that he can pay them through a range of payment options, including UPI apps and debit cards. “I have several cards and it is hard to track amounts and due dates of payment for each one. They send all these alerts on WhatsApp, which is a blessing,” he said.
These are the reasons that attracted many people like Krishnan to join CRED. That, and some incentive to pay his bills — though he hopes that CRED expands the range of offers it currently provides to customers.
That wish may soon come true. In the coming months, CRED will enable these highly sought-after customers to access some financial services from banks in a single-click. Additionally, it is also exploring expansion to some international markets, the aforementioned source said.
CRED does not charge users any money for joining its platform, nor for availing any of the features it offers. But it is generating revenue from some of the partners that are supplying offers on the app.
It’s not a surprise that Shah, an industry veteran known for speaking the uncomfortable truths at conferences, has won the trust of so many investors already. He built one of the biggest payment apps in India, Freecharge, and sold it to e-commerce giant Snapdeal for a whopping $400 million in one of the increasingly rare exits that India’s fintech market has seen to date.
Powered by WPeMatico
Daily Crunch: A big funding round for Boll & Branch
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.
1. Bedding startup Boll & Branch raises $100M
The company sells sustainably sourced sheets, pillows, mattresses and towels. Until now, it had only raised $12 million in outside capital.
This new funding comes from L Catterton. CEO Scott Tannen compared Boll & Branch to the firm’s previous investments The Honest Company and Peloton — companies that “have become the winner in the startup competition” and are ready to “really become household names.”
2. Nvidia and VMware team up to make GPU virtualization easier
Nvidia today announced that it has been working with VMware to bring its virtual GPU technology to VMware’s vSphere and VMware Cloud on AWS.
Founded by three Tsinghua University graduates in 2011, Megvii is among China’s leading AI startups, with its peers (and rivals) including SenseTime and Yitu. Its clients include Alibaba, Ant Financial, Lenovo, China Mobile and Chinese government entities.
4. Watch the first look at ‘Star Wars: The Rise of Skywalker’ from Disney’s big fan event
This video goes really heavy on the nostalgia.
5. Experimental US Air Force space plane breaks previous record for orbital spaceflight
The Boeing-built X-37B space plane commissioned and operated by the U.S. Air Force has now broken its own record for time spent in space. Its latest mission has lasted 719 days as of today.
6. Is Knotel poised to turn WeWork from a Unicorn into an Icarus?
Knotel has reversed the WeWork “co-working” model. Instead of “WeWork” branding everywhere, Knotel simply leases buildings, takes a small office for its staff and then kits out the space in a way where a company can just move straight in and call it their own. (Extra Crunch membership required.)
7. This week’s TechCrunch podcasts
John Vrionis of Unusual Ventures joins Equity to talk about why he thinks “stage-agnostic” investing doesn’t make any sense. And on Original Content, we review the Netflix movie “The Red Sea Diving Resort.”
Powered by WPeMatico
Satellite internet startup Astranis books first commercial launch on SpaceX Falcon 9
Y Combinator-backed startup Astranis is now set to launch its first commercial telecommunication satellite aboard a Falcon 9 rocket, with a launch time frame currently set for sometime starting in the fourth quarter of next year. Astranis aims to address the market of people who don’t currently have broadband internet access, which is still a huge number globally, and they hope to do so using low-cost satellites that massively undercut the price of existing global telecommunications hardware, which can be built and launched much faster than existing spacecraft, too.
Astranis satellites are much more cost-efficient because they’re smaller and easier to make, which changes the economics of deployment for potential carrier and connectivity provider partners. Its approach has already attracted the partnership of Microcom subsidiary Pacific Dataport, an Anchorage company that was formed to expand satellite broadband access in Alaska. This will be the goal of the company’s first launch with SpaceX, to deliver a single satellite to geostationary orbit that will add more than 7.5 Gbps of capacity to the internet provider’s network in Alaska, tripling capacity and potentially reducing costs by “up to three times,” according to Astranis.
This isn’t the first-ever satellite that Astranis has sent up to space — it launched a demonstration satellite in 2018 to show that its tech could work as advertised. Astranis’ approach is distinct from others attempting to offer satellite-based connectivity, including SpaceX’s own Starlink project, because it focuses on building satellites that remain in a fixed orbital position relative to the area on the ground where they’re providing service, as opposed to using a large constellation of low Earth orbit satellites that offer coverage because one or more are bound to be over the coverage area at any given time as they orbit the Earth, handing off connections from one to the next.
Powered by WPeMatico
The Void’s Curtis Hickman on scaling, creative IP and the future of VR experiences
What can you do with virtual reality when you have complete control of the physical space around the player? How “real” can virtual reality become?
That’s the core concept behind The Void. They take over retail spaces in places like Downtown Disney and shopping malls around the country and turn them into virtual reality playgrounds, They’ve got VR experiences based on properties like Star Wars, Ghostbusters, and Wreck-It Ralph; while these big names tend to be the main attractions, they’re dabbling with creating their own original properties, too.
By building both the game environment and the real-world rooms in which players wander, The Void can make the physical and virtual align. If you see a bench in your VR headset, there’s a bench there in the real world for you to sit on; if you see a lever on the wall in front of you, you can reach out and physically pull it. Land on a lava planet and heat lamps warm your skin; screw up a puzzle, and you’ll feel a puff of mist letting you know to try something else.
At $30-$35 per person for what works out to be a roughly thirty-minute experience (about ten of which is watching a scene-setting video and getting your group into VR suits), it’s pretty pricey. But it’s also some of the most mind-bending VR I’ve ever seen.
The Void reportedly raised about $20 million earlier this year and is in the middle of a massive expansion. It’s more than doubling its number of locations, opening 25 new spots in a partnership with the Unibail-Rodamco-Westfield chain of malls.
I sat down to chat with The Void’s co-founder and Chief Creative Officer, Curtis Hickman, to hear how they got started, how his background (in stage magic!) comes into play here, how they came to work with massive properties like Ghostbusters and Star Wars, and where he thinks VR is going from here.
Greg Kumparak: Tell me a bit about yourself. How’d you get your start? How’d you get into making VR experiences?
Powered by WPeMatico
Udacity names former LendingTree executive to CEO post
Online education startup Udacity has hired former LendingTree executive Gabriel Dalporto as its new CEO, an appointment that follows months of layoffs and a restructuring directed by the company’s co-founder and executive chairman Sebastian Thrun.
Dalporto comes to Udacity after seven years at LendingTree, where he served in numerous positions, including chief marketing officer and chief financial officer. Dalporto stepped down as CFO in 2017 to join the company’s board and become executive advisor to the CEO. Dalporto left the executive advisor job in 2018, but remains on the board.
Thrun stepped in as executive chairman and took over operations at Udacity after Vishal Makhijani left the top post in October 2018. The CEO position has remained vacant since Makhijani left. Thrun will remain as executive chairman now that the CEO spot has been filled.
“He’s extremely strategic and pragmatic,” Thrun said in a recent interview, describing Dalporto.
Dalporto is known for his turnaround skills. But the new CEO says his focus at Udacity won’t be slashing costs and other activities often associated with that skill set.
“I was hired as a growth executive; I was not hired to be a turnaround executive,” Dalporto told TechCrunch.
Dalporto isn’t ready to provide details of his plans as CEO. Monday is his first day at the startup. But he will likely focus on growth areas such as the startup’s enterprise and government programs, as well as retaining and recapturing students into the Udacity ecosystem. Udacity’s enterprise clients include AT&T, Airbus, Audi, BMW, Capital One, Cisco and the Royal Bank of Scotland. It also has government relationships with Australia, the MENA region and New Zealand.
Dalporto is coming into a startup that is leaner and more productive, in terms of launching new nanodegrees, than it was a year ago. It’s also cash-flow positive, according to Thrun, who has spent 2019 revamping the company.
When Thrun took over as executive chairman and assumed operations and a search for a CEO, he found a company that had grown too quickly and was burdened by its own bureaucracy. Udacity, which specializes in “nanodegrees” on a range of technical subjects that include AI, deep learning, digital marketing, VR and computer vision, was struggling because of runaway costs and other inefficiencies. Its nanodegree programs, which had grown in 2017, became sluggish in 2018.
Staff reductions soon followed as Thrun sought to get a handle on costs. About 130 people were laid off and other open positions were left vacant. Thrun then cut further in April. About 20% of the staff was laid off and operations were restructured in an effort to bring costs in line with revenue without curbing growth. The company streamlined its marketing efforts and downsized and consolidated office space. As of April, the startup employs 300 full-time equivalent employees and about 60 contractors.
Other changes included the launch of a global technical mentoring program, switching its direct-to-student business from fixed to monthly subscription pricing to incentivize individuals to move through courses faster. Lalit Singh, who joined Udacity in February as chief operating officer, has been critical to the turnaround, according to Thrun.
Its productivity has also improved. In first six months of 2019, Udacity launched 12 new nanodegree programs compared to just 8 in all of 2018.
“In the three months since we’ve initiated these changes, the consumer business has grown by more than 60%,” Thrun wrote in a blog post Monday announcing the changes.
Udacity’s enterprise and government programs have also grown, with bookings increasing by more than 100% year over year.
Clarification: Thrun was never officially the CEO. He was at the helm of all activities at Udacity, but under the role of executive chairman, a position he is keeping.
Powered by WPeMatico
Bedding startup Boll & Branch raises $100M
Boll & Branch, which sells sustainably sourced sheets, pillows, mattresses and towels, is announcing that it has raised $100 million in a strategic investment from L Catterton’s Flagship Buyout Fund.
This looks like a big change from the company’s previous approach to funding. It was self-funded for its first two years (resulting in what CEO Scott Tannen described as “a lot of maxed out credit cards and five mortgages on my house”), and even when it started looking at venture capital, it only raised a total of $12 million from a single institutional backer, Silas Capital.
In fact, when Recode wrote about Boll & Branch’s Series B last year, it described the startup as one “that wants to raise as little venture capital as possible.”
Tannen said that when he founded the company with his wife Missy, they wanted to “build a sustainable business from the ground up,” and that wasn’t just about the products — they didn’t want to build a company that was “ultimately designed from day one to be sold.”
As a result, he said, Boll & Branch has been profitable for the past four years and is now bringing in “nine-figure revenue.” He compared it to other L Catterton investments like The Honest Company and Peloton, companies that “have become the winner in the startup competition” and are ready to “really become household names.”
In a statement, L Catterton’s Nik Thukral described Boll & Branch as “one of the most beloved bedding brands” and said it “capitalizes on several compelling trends including the emergence of authentic, pure, and chemical free products that can be traced back to their origin, as well as consumers’ heightened focus on healthy living.”
The company’s next steps include expanding internationally — Tannen said that while the company doesn’t currently sell outside the United States, “It’s hard to imagine a country or market in the world that doesn’t make sense for Boll & Branch.”
It will also continue expanding the product lineup. Tannen hinted at “really interesting product introductions” coming in the next few months. They might not be the most obvious additions to the lineup, but he said these decisions come from asking, “What does the home goods brand of the future look like?”
He added, “That’s what we’re trying to be, versus trying to look in the shopping mall and just creating a new version of something [that already exists].”
Powered by WPeMatico
Style recommendation startup Stylitics raises $15M
Stylitics, a startup powering outfit-based shopping recommendations for online retailers, is announcing that it has raised $15 million in Series B funding.
The company was initially known for ClosetSpace, a mobile app that provided consumers with outfit recommendations and inspiration.
While the app is still live, Stylitics’ focus has shifted to its retailer tools — for example, when you look at this blouse on the LOFT website or this shirt on the Banana Republic site, Stylitics is powering the “Ways to Wear It” and “Wear It With” widgets recommending other products that you could purchase to complete the outfit.
The company said it’s drawing on brand merchandising guidelines, engagement and purchase data from the retailer, broader trend data and stylists’ expertise to create these recommendations, which are updated as products sell out.
In an email, founder and CEO Rohan Deuskar (pictured above) added that Stylitics is able to provide useful recommendations from the start, without requiring time to train with a retailer’s data.
“We have billions of data points from powering outfitting on dozens of sites for more than four years, so we have a very good idea on Day One what an excellent and high performing outfit should look like for each product for a new customer,” Deuskar said.
Stylitics says it has driven $300 million for its retail partners — a group grown in the past year to include Ann Taylor, Calvin Klein, Chico’s, Gap, Kohl’s, Macy’s, Under Armour and White House Black Market.
The startup has now raised a total of $21 million. The new round was led by PeakSpan Capital, with participation from Trestle LP. PeakSpan co-founder Phil Dur is joining the Stylitics board.
“With the rapid growth of digital commerce, retailers are scrambling to keep pace with the consumer demand for more visually exciting and compelling shopping experiences,” Dur said in a statement.
The startup said it will use the money to grow its sales and marketing team while developing new types of shoppable content and in-store experiences.
Powered by WPeMatico
India’s FreshToHome raises $20M to grow its fish, meat, vegetable and milk e-commerce platform
FreshToHome, a Bangalore-based e-commerce startup that sells fresh vegetable, fish, chicken and other kinds of meat, has raised $20 million in a new financing round as it looks to expand its footprint in the nation.
The Series B round for the startup was led by Iron Pillar, with Joe Hirao, the founder of Japan’s ZIGExn, also participating. The startup, which closed its $11 million Series A financing round three months ago, has raised $33 million to date.
FreshToHome sells “100 percent” pure and fresh vegetables and meat in Bangalore, Mumbai and Pune — the latter two of which it recently entered. It says it does not add any preservatives or other chemicals to prolong the life of the produce. (Typical meat sold by a retail store is riddled with chemicals and could be months old.)
Unlike most other marketplaces, FreshToHome has built its own supply chain network, which gives it better control over quality and delivery of the food items. It uses trains and planes to move inventory, and has become one of the biggest clients of several local airlines.
The startup sources vegetables and fish directly from 1,500 fishermen and farmers across the nation. It uses an app to negotiate with farmers and fishermen.
It continues to expand its control over all aspects of its business. “Today a large part of our poultry comes from institutional farmers. Now we are going a step ahead and processing the chicken at the slaughtering level ourselves,” Shan Kadavil, CEO of FreshToHome, told TechCrunch in an interview.
FreshToHome is able to deliver the perishables on the same day and as soon as up to two hours, Kadavil said.
The startup also began operations in UAE recently and has opened physical stores in Bangalore and Chennai.
FreshToHome has amassed 650,000 customers — up from 400,000 in late May — in 10 cities in India, and recently started to sell milk in Bangalore, another market segment that remains largely unstructured in the nation. Every day it receives 14,000 orders, and processes 20 tons of fresh food.
It recently crossed $30 million in annualized direct to consumer sales, which makes it the largest e-commerce platform serving this category. It is seeing 30% month-to-month growth, said Kadavil, who has previously managed tech support for Support, and India operations for gaming firm Zynga.
And that growth has helped the startup attract some attention. Several major players in the nation, including Amazon India that recently expanded to include perishable category and Flipkart, have held talks with FreshToHome to acquire some stake in the startup, a person familiar with the matter told TechCrunch.
And there is a big opportunity in the space. The cold-chain market of India is estimated to grow to $37 billion in next five years.
In addition to directly procuring its supplies from farmers and fishermen, FreshToHome also serves as a micro-VC, giving them access to some money upfront and resources to produce more from their farms. It also gives them an assurance that it will buy back their produce.
Kadavil founded FreshToHome with Mathew Joseph, a veteran in the industry who has dealt with fish export for more than 30 years. Joseph started India’s first e-commerce venture in fish and meat, called SeaToHome, in 2012.
FreshToHome will use the fresh capital to expand its network of contract farmers, and add 200 to 300 tons of additional produce each month.
In a prepared statement, Anand Prasanna, managing partner of Iron Pillar, for which it is the first investment in food-tech space, said, “FreshToHome’s brand proposition has been to provide 100% fresh food with 0% chemicals — not an easy thing to achieve in India at a large scale. By smartly using big data and machine learning, they have created a sustainable supply chain, which offers a fair price to consumers, fishermen and farmers, for their premium produce… We love companies that solve such hard issues in large market segments in India through unique tech enabled moats!”
Powered by WPeMatico
India’s BharatPe raises $50M to help merchants accept digital payments and secure working capital
BharatPe, a New Delhi-based firm that is enabling hundreds of thousands of merchants to start accepting digital payments for the first time, and is also giving them access to working capital, has raised $50 million as it looks to scale its business in the nation.
The Series B round for the one-year-old startup was led by San Francisco-headquartered VC firm Ribbit Capital and London-based Steadview Capital, both of which have previously invested in a number of financial services in India.
Existing investors Sequoia Capital, Beenext Capital and Insight Partners also participated in the round, pushing BharatPe’s all-time raise to $65 million. The new round valued the startup at $225 million, Ashneer Grover, co-founder and CEO of BharatPe, told TechCrunch in an interview.
Google and Amazon, both of which offer payment services in India, were also in advanced stages of talks to fund BharatPe’s Series B financing round, but the startup’s founding team was not keen on diluting their stakes, especially in the wake of BharatPe’s recent growth, a person familiar with the matter told TechCrunch.
BharatPe operates an eponymous service to help offline merchants accept digital payments. Even as India has already emerged as the second largest internet market, with more than 500 million users, much of the country remains offline. Among those outside of the reach of the internet are merchants running small businesses, such as roadside tea stalls.
To make these merchants comfortable in accepting digital payments, BharatPe relies on QR codes built as part of government-backed UPI payments infrastructure. “We get them to put up a QR code in their shops, and any customer that uses a UPI-powered payments app — which is now supported by nearly every payments app in India — can pay these shop owners digitally,” said Grover.
Through BharatPe, these merchants also get access to a simplified dashboard on their phones to track the customers who owe them money and get periodic reminders.
BharatPe has amassed more than 1.5 million merchants on its platform. It processes more than 21 million transactions a month, worth more than $83 million, Grover said.
BharatPe also allows merchants to secure short-term loans. New merchants can secure about $500 for a period of three months from BharatPe. As merchants spend more time on BharatPe, the firm increases the amount to about $2,000.
The lending business is crucial to BharatPe. Payment apps make little to no money through making transactions on their platforms. Those processing UPI payments can not even charge a small commission to merchants. “There is no money to be made in doing payments in India,” Grover said. So you charge small interest on loans.
Access to working capital is a major challenge in developed markets such as India. According to a World Bank report, more than 2 billion people globally do not have access to working capital.
Grover said BharatPe aims to use the fund to add about 3.5 million merchants in the next 12 months. The firm has more than 2,000 sales people who are adding 400,000 new merchants to BharatPe each month, he said.
The rest of the money will go into financing the loans on the platform and building new solutions. Later today, BharatPe will launch a new service to connect suppliers and merchants through BharatPe so that their accounts are in sync.
Powered by WPeMatico