Unilever’s recent $1 billion purchase of Dollar Shave Club showed the world what those in-the-know have realized for at least half a decade: all facets of retail will eventually be disrupted by e-commerce.
Further, the brands that will do the lion’s share of this disruption will stem from a new breed of company.
Andy Dunn of Bonobos fame calls this exciting new breed “V-commerce” — short for Vertical Commerce brands. These vertically integrated, direct-to-consumer brands are hyper-focused on customer experience and intimacy. They use the web as their primary mean of engaging and interacting with their consumers, and, in nearly all cases, are born digitally.
Starting to sense a pattern?
The ability to reach consumers directly will define the future of retail.
Truth be told, consumer packaged goods is one of the last bastions remaining to be disrupted by digitally-native offerings. Despite the fact that selling bulky, low-cost items online is hard, CPG disruption will happen, and it will likely happen very quickly.
Why will it happen quickly? Venture capitalists are attracted to huge markets — the nearly $1 trillion CPG market is ripe, and VC’s have already started making bets:
To name a few, Jessica Alba’s Honest Company has raised $222 million, and Tristan Walker’s Walker and Company Brands raised $33.3 from IVP and Andreessen Horowitz. Both have been highly successful.
We’ve only seen the tip of the iceberg. Venture investors follow success like lemmings — so you can bet more and larger bets will follow.
Most of these will be wrong. But a few will be right. And that’s all it takes to disrupt an entire industry.
I speak from experience. I raised over $100 million of venture capital as the Founder and CEO of Acumen Brands. In that role, I architected the growth of Country Outfitter, an online retailer of Cowboy Boots, from zero to a $100 million annual run rate in 18 months.
32 straight weeks of 12% revenue growth compounded weekly turned my business that did $2.0 million ANNUALLY into a business that did $4.0 million WEEKLY.
In less than two years, we completely disrupted the cowboy boot industry ruled by 130-year-old incumbent companies.
We accomplished this disruption the same way as Dollar Shave Club — by establishing a direct relationship with consumers. Specifically, we became masters of social media, email, and content marketing. By building 7 million Facebook fans and 11 million email subscribers, we built a personal relationship with our consumers and made it easy for them to do business with us.
CPG will be disrupted by companies establishing similar direct, personal relationships and lines of communication.
Hilton was disrupted by AirBnB. Yellow Taxi by Uber. Walmart by Amazon. Cox Cable by Netflix.
P&G, Nestle, Unilever — you are next.