The Future of Consumer Products

“What’s the difference between all of these direct-to-consumer cookware brands???”

That is the title of a recent article by the popular brand discovery site Thing Testing. It is a valid question, the cookware space now has numerous players. If you are in the market for cookware or just happened to type any related keywords in a browser you’re likely to have been inundated with endless ads of highly instagrammable pots n pans. You may have doom-scrolled past one of the popular products from Sardel, Our Place, Kana, Caraway, Potluck, Made In, Great Jones, Crane Cookware, Equal Parts, or Abbio etc. etc. etc. the list goes on, seemingly forever.

How is a consumer to tell which one is for them? 

The thing is, it isn’t just cookware that is seeing a proliferation of brands, it's everything. Any of the early success stories in DTC such as Away, Casper Mattress, or All Birds now have dozens of competitors. 

A common thought is that this is due to Covid-19 accelerating an eCommerce trend that was already moving up and to the right. It is true that Covid has helped digital commerce, but the brand proliferation is largely due to Shopify & others democratizing the tools needed to launch a business. It is easier than ever to start selling products online. What this means for a brand that finds the admiration of consumers is that it won’t be long until there are many look-alikes to compete with.  

This results in consumers left needing help finding their perfect match and brands struggling for ways to differentiate. Sites like Thing Testing, CPGD, Happy Patron are helpful (and fun) for consumers but not a viable growth strategy for brands. What’s worse for brands is that Facebook ads, the tool that spurred DTC ecomm success in early to mid-2010’s, are getting more expensive. The number of monthly active advertisers on Facebook/IG have risen from 3M in Q1 16’ to more than 9M+ today.

Number of monthly active FB advertisers in millions

With the number of advertisers increasing it is no surprise that CPM costs are getting driven up. Ad costs are rising and in many cases products largely look the same. Take an Away suitcase for example, let’s play a game, can you picture in your head what they look like?

Which one is theirs?

Shopify themselves have quietly recognized there may be a growing issue. They’ve succeeded so well at their goal of democratizing entrepreneurship that they’ve almost been too good. The number of stores on Shopify has grown exponentially. However, for Shopify to retain as many active customers as possible those brands need to successfully sell products! With the brand counts in every product category continuing to grow it is becoming harder for brands to differentiate and achieve sustained success. Wisely, Shopify has been getting ahead of it and continues to invest in an ecosystem of resources for brands.

So where does that leave us? My guess is that the proliferation of brands continues but that we’ll see a growing shift to products targeted towards hyper niche segments of consumers. Product market fit will become more narrow and market segment sizes will decrease. However, the brands that win will have the opportunity to retain their prize customers at a higher rate and for a longer period of time. 

Is this happening already? The answer is Yes. 

A great example is Eight Sleep. Casper Mattress revolutionized the mattress industry by making a historically all brick & mortar retail product available online and easily deliverable. Since then, dozens of competitors have popped up. The world can choose from companies like Purple, Nector, Layla Sleep, Dream Cloud, Plushbeds, Amerisleep, Idle Sleep….you get it.

Enter Eight Sleep. Like many successful products before them, they found opportunity on the margins by targeting a niche customer segment - BioHackers. They created a “Smart Mattress” with patented sleep fitness technology. You literally plug in 🔌 your mattress. For data driven fitness optimizers that track their biometrics, this is right up their alley.

Think of it as the rise of sub-categories. Eight Sleep created a Smart Mattress sub-category within the broad Mattress category and they are being rewarded for it. When you design a product for a niche consumer and deliver on product market fit you end up with reviews like this:

I’d guess Eight Sleep’s retention proves to be incredibly high and many of their customers will have a monogamous mattress partner for life.

Going forward consumers are in for more products catered exactly to their lifestyles. On the brand side, the game of evolving go-to-market strategy for DTC is going to be fun to watch. Even though there are lots of players, it certainly remains a game worth winning.

BTW did you guess right on Away? It is the middle row all the way to the right.