This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →
Sichuan-inspired Asian sauce brand Fly by Jing let its Instagram followers in on a hot piece of gossip earlier this month.
The company announced that it was discontinuing its line of dumplings, which it had launched in late 2021. Fly By Jing positioned the news like it was announcing a celebrity breakup, writing in one Instagram post that the company was undergoing an ‘conscious uncoupling’ with its dumplings. It was a creative way to announce a decision many DTC brands have to make every day: when is the right time to discontinue a product.
On its face, launching new products seems like a straightforward way for a brand to grow revenue. But if it goes wrong, it can be a costly endeavor. During its third-quarter earnings, Allbirds said it was taking a $12.7 million write-down as it sought to exit some apparel categories. Founders who spoke with Modern Retail said that deciding whether or not to discontinue a product often comes down to a calculus of how much demand there is for that product versus their core line, and how much money they have to spend on inventory overall.
“As a startup, you have a limited amount of resources, time and money,” as Sarah Moret, founder of deodorant brand Curie put it.
Fly by Jing founder Jing Gao told Modern Retail that her company made the decision to discontinue the dumplings late last year. “When we looked at how quickly our sauce business was growing, it made more sense to focus on our core rather than spread our resources too thin across two completely different businesses,” she wrote in an email.
Sean Riley, the co-founder of Dude Wipes, said that by their nature, startup founders often want to be creative and do a bunch of new things. But, sometimes he said, “you can try and do too much.”
In Dude Wipes’ case, he said that the company made a mistake by expanding into body wash and deodorant around 2019.
“We knew people loved the Dude brand, and they loved Dude Wipes,” Riley said. So we thought, ‘well why can’t we make other products for guys in other men’s grooming categories?”
The problem was that in 2020, demand for the company’s flushable wipes started to explode as toilet paper was harder to come by.
“Everyone was buying all of the Dude Wipes from us — more than we could produce,” Riley said. In turn, Dude Wipes decided to discontinue its body wash and deodorant to focus more on its wipes, a process that took more than 12 months.
Riley said that he thinks that too many DTC brands as a whole expand into new categories too early. As he puts it, he views Dude Wipes as fitting into the toilet paper category — a category that he claims is worth about $13 billion. Right now, Dude Wipes takes up less than 1% of that market — the company did just over $100 million in retail sales in 2022.
So, he said he thinks it makes more sense for Dude Wipes to focus on making its next goal taking up say, 2% of toilet paper sales – rather than trying to grow new categories. Now, when Dude Wipes launches new products, Riley said it is more closely focused to the company’s hero products. For example, the company recently launched a bathroom holder for its flushable wipes.
Not every company discontinues a product because it is a dud, but rather, because it no longer fills a need for their core customers.
Curie’s Moret, for example, said that when her company launched hand sanitizer in 2020 — a product that had been in the works before the coronavirus pandemic — it was a top seller. But fast forward to 2022, and demand for hand sanitizer had fallen, to the point where it was only making up about 5% of the company’s sales.
That made it a relatively easy decision for Curie to discontinue its hand sanitizer last year – although Moret said she still gets emails from customers every week asking the company to bring it back. But by discontinuing hand sanitizer, Curie instead could invest more money in creating new scents of its signature deodorant.
In other cases, some startups also find that a new item surpasses the popularity of its hero product.
Ruby, which describes itself as a line of organic, functional sparkling sodas, announced earlier this month that it was discontinuing its original product, a still Hibiscus drink, to instead focus on carbonated beverages.
Founder Noah Wunsch said that he launched Ruby in 2021 after experimenting with various low-sugar drinks that he concocted in his kitchen. He settled on hibiscus-infused drinks as a white space.
Last year, Ruby decided to launch a few varieties of hibiscus-infused sparkling drinks. The sales of its sparkling drinks ‘very, very quickly’ exceeded sales of its still beverages, which Wunsch said was the primary reason for discontinuing the line.
But, he said that Ruby’s decision was further cemented by customer feedback.
“A lot of the things that came up when we were demoing and sampling the still [in stores] was – this is really good, but it would be even better with bubbles,” Wunsch said.
Once a brand decides to discontinue a product, it can still take months to officially get the item out of market. Even after its wholesale partners have been notified, a company still has to sell through its existing product, update its website copy and stop promoting the old products on social media and, finally, break the news to customers.
Gao said that Fly By Jing decided to promote the discontinuation of dumplings in a cheeky way on Instagram “to celebrate the success of our dumplings, not mourn its departure.”
Overall, Gao said the lesson Fly By Jing took away from its dumplings launch was that, “it’s much harder to stay disciplined and say no to shiny opportunities sometimes, but that focus is the most effective way to grow,” she said.
What I’m reading
- Blueland CEO Sarah Paji Yoo told Retail Dive that her company finally reached profitability in 2022. Now, this year the company is focused on expanding its wholesale presence, thanks to new deals with retailers like Target and Costco.
- As Nike focuses more on its own DTC sales, Foot Locker is dedicating more shelf space to hot brands like Hoka and On.
- Allbirds says it has created the world’s first net-zero carbon shoe, a product that the company hopes will help it regain its footing after sales declined during the fourth quarter.
What we’ve covered
- The Verticale, which launched as a marketplace in 2021, is pivoting and is instead adopting more of a social commerce model, complete with video and influencer recommendations.
- Over-the-counter medicine is increasingly getting the DTC treatment, thanks to startups like Wonderbelly and Cabinet Health.
- Why startups like Thrive Market and Bobbie are launching their own podcasts.
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