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Discover the Secrets of Eco-Friendly Branding with Wear Pact | EP. #87

May 31, 2023 | Author: Andrew Maff
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The world of apparel is increasingly becoming more competitive with brands competing for the attention of consumers. And with brands capitalizing on the green trend, eco-friendly branding has become an important part of the game for many companies.

On this 87th episode of The E-Comm Show, our host and BlueTuskr CEO, Andrew Maff is with Drew Cook of Wear Pact to discuss the secrets of eco-friendly branding and how to pivot and stand out amidst a recessive economy.

If you enjoyed the show, please rate, review, and SUBSCRIBE!


Have an e-commerce marketing question you'd like Andrew to cover in an upcoming episode? Email: hello@theecommshow.com

 

 


Discover the Secrets of Eco-Friendly Branding with Wear Pact

SPEAKER

 

 

 

 

Andrew Maff and Drew Cook

 

 

CONNECT WITH OUR HOST: AndrewMaff.com  |  Twitter: @AndrewMaff | LinkedIn: @AndrewMaff 

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Drew Cook

 

Drew Cook is the CFO and Head of Operations at Pact, the country's largest sustainable D2C apparel and home goods business, where he leads the Finance, Accounting, HR, Legal, Compliance, Operations, and Wholesale functions.

 

Drew began his career in investment banking at BofA Merrill Lynch. He also spent time at Evergreen Copyrights and worked on the Strategy and Development team at the Chicago Cubs.

 

Drew holds a BS in Business Administration from the University of North Carolina and an MBA from the Kellogg School of Management.

Transcript: 

00:03

Repeat revenue is so critical when acquisition becomes expensive for two reasons. One is it just provides more profitability. And the second is it helps you justify higher acquisition costs on the front end if you can count on those customers to drive meaningful LTV.

 

00:20

Hey Everyone, this is Nezaar Akeel of Max Pro, Hi I'm Linda and I'm Paul, and we're Love and Pebbles.

 

00:25

Hi, this is Lopa Van Der Merch from RASA and

 

00:27

you're listening to and you're listening and you are

 

00:29

listening to The E-Comm Show. Welcome to The E-Comm Show, presented by BlueTuskr, the number one place to hear the inside scoop from other e-commerce experts, where they share their secrets on how they scaled their businesses and are now living the dream. Now, here's your host, Andrew Maff.

 

00:56

Hello, everyone, and welcome to another episode of The E-Comm Show. I'm your host, Andrew Maff. And today I am joined by the amazing Drew Cook, who is the CFO and head of operations over at Wear Pact. Drew, how are you doing right for a good show?. Good.

 

01:10

Andrew, excited to be here. I appreciate you having me. Yes.

 

01:13

Super excited to have you on the show love diving into everything that you've got going on, obviously touching and sustainability. We'll get into that stuff too. But I like to do the usual and give you an opportunity to give everyone a little bit more information about your background, where you've been where you're at now, and a little bit more about perfect.

 

01:31

Perfect. So I've been a patch for about nine years. Before that, I have what I would consider a pretty typical kind of finance training background. So I did investment banking in New York for a few years and then worked for the Chicago Cubs, which was an interesting spin on finance, but did that for a couple of years. And then I went to business school in Chicago. And between my two years, I interned with a small venture fund called revelry brands, which at the time was the majority owner of Packed so got exposed to the packing business at that point. Loved it and was kind of inspired by the mission and the team and joined full-time after I graduated from business school. So I've been here for nine years, as I mentioned, my kind of role covers all the that I would consider supporting functions. So we're 90% direct consumers, but a small wholesale business. And I view kind of my job my team's job as making life easier for our marketers and our product team to put great products on our website and hopefully sell them so packed has been around for a little bit longer than I've been here for so 12 or 13 years. We are, as I mentioned that you were sent direct consumers about 85% Women's products is what we sell. And our key point of differentiation in the market is sustainability. So everything that we make is certified organic. And almost everything we make comes out of a Fairtrade-certified factory. So apparel is a pretty crowded marketplace, but we've got a few points of difference that help us to know but

 

03:05

yeah, so on the sustainability side, you know, obviously, everything's kind of labeled, as you know, organic and, you know, obviously says all the different sustainability, things that everyone likes to claim. And that's also a crowded market now as well. Because everyone's kind of going in that direction. So what are what's your team doing to kind of stand out from all the other sustainable brands that are out there now?

 

03:30

Yeah, I think the big piece is that you know it for us, it's not a capsule, it's not one season, that we're testing it out, it's comprehensive. And so when you come to our website, you can be confident that everything that you're going to buy there is to see there is made with the same values. And so you know, a lot of brands, big brands, small brands, will kind of test out sustainability to see how their consumers feel about it by doing a capsule. So they'll try, you know, a collection of T-shirts that are organic. But we believe to make a kind of long-lasting change in the industry, you have to commit to it a little bit more wholeheartedly. And so we've made a very strong bet that consumers care about where products come from and how they're made. And so it runs through every single product we make.

 

04:16

One thing I know I wanted to touch on because it's super interesting. You're the CFO and the head of operations, which is usually two different roles, not usually two different things. So obviously, if you've got a massive background on the financial side, I know I believe you were at Merrill Lynch for a while I've just been you mentioned you were at the Cubs, the operational side. So are you also overseeing the filament inventory, all that fun stuff?

 

04:44

Yeah. And, you know, I think specifically on the inventory piece. As an earlier stage business, working capital kind of inventory management is so critical to cash management overall and cash management is so critical to kind of early stage businesses. That I think there's a very direct line there with how that works. But the more kind of tactical operational piece fulfillment, I hope I've worked when it was I had a product on procurement and kind of working directly with our factories, in mountain freight outbound freight, that piece has been something that I've learned. But what my kind of view on it having done it for four or five years now is that an analytical mindset is well suited to handle those responsibilities. And I think the training I got in finance and kind of, in my experience, being the CFO made me a little bit better suited to kind of pick, pick up the operations piece, even though I didn't have more specific ops background or training.

 

05:44

That makes a lot of sense. And that is a very good point. But now at this point, I knew your company I know is clipped far clearer eight figures, so you're much bigger now. So handling all of that, it's gotta be super fun. Are you on? Like, how many different channels are you on? Are you solely focused on the DTC site? Or are you also available on other marketplaces or other websites?

 

06:06

So we, we, our online presence is almost exclusively limited. Our website, which is where facts.com, we have a very small Amazon presence. And Zappos puts some of the products we sell to them on Amazon. But then we also have the remaining most of the 10%. It's not VR, the website comes from Whole Foods Market. So we have distribution in about 450 Different Whole Foods across the country. They have what I described as a relatively curated assortment of our products. A lot of people don't even know that whole food sells apparel, but we've got a pretty sizable business there that we actually think is bigger than anything we could ever build with any individual department store. So it's a great place for us to meet our consumers. They're very good partners for us. And, you know, the consumer walking through the door of the whole food is is one that immediately has at least some base alignment with our values.

 

07:07

Yeah, that seems like the two brands would be aligned pretty well. The Amazon sides are very interesting. I'm always excited to hear when someone is limiting how much they're doing on Amazon. What is the thought process behind why you have a limited selection of inventory on Amazon? And then why did you select that product line as well?

 

07:30

Yeah, so it's impossible to I think it's impossible to ignore Amazon overall, they are within kind of any kind of E-commerce, they are not only a huge checkout location, but it's also a research platform and a search engine. And so I think, to not be on there, risk, the chance to kind of miss exposing your brand to certain consumers. And there are a million risks with Amazon, if you get over-leveraged to them, they can always go do the same thing via their private label, you don't own the customer interaction or the customer relationship. And so, you know, we very clearly acknowledge kind of the risks, and the biggest one for us is probably being directly competitive with our own website. And so we try to limit the assortment, the way we do it is, if you're on Amazon, you're also not typically shopping for fashion items, I don't think it is the best kind of fashion buying experience. And so we put our kind of core basics on their replenishable items that you can think of buying on Amazon. So our biggest product category right now is our women's shelf rock camera saw it as a basic layer and piece, it accounts for like 75% of our sales on Amazon. So we just have a great scale there. And, you know, a long history of built and built-up reviews. And so we try to make sure that what we're putting on there is very tight that it's not going to detract from, you know, what we think of as the higher value consumer relationships that will come from a direct relationship.

 

09:05

Yeah, that makes a ton of sense. Are you and for Zappos? So obviously, you're selling Zappos, they're doing someone there. They just, that's you don't have any control over that correct? It's just, Zappos just has it available.

 

09:19

Yes, that was also a very small assortment that we sell to them. And, Zappos and Amazon are part of the same company, which is Amazon is a parent company. And so Zappos chooses to put a fair amount of its products onto the Amazon platform. And so some of our products that you'll see on Amazon, don't know if they're actually sold by Zappos.

 

09:42

That's interesting. So are they overlapping with you at all? Or is there something in there?

 

09:47

There's some overlap. You're not available? Yeah, no, there's some overlap with the products we sell there. And on our website, we do try to keep it to most of our basics as well. And so we're actually thinking a lot about that. sale right now and what the best way to kind of to serve as both Zappos and Amazon are. But I think our continued belief is that you want core basics typically in different pack sizes that are selling on our website as well so that you're differentiating them that way. But where people are looking for organic, if they're searching for organic underwear, or they're searching for organic leggings, they can find our assortment there, because we think we do it better than anybody else. And, you know, we haven't spent a ton of money on brand awareness. And so being on that platform can ultimately help bring people into the brand. Yeah.

 

10:37

You mentioned you have been with the company for nine years there, you said they're about 1213 years old. So you were pretty much right at the beginning there. So obviously, you've seen the company grow substantially since then. And you also got to go through the fun. That was the whole COVID period. How did you deal with that, specifically with supply chain issues? And then what I would imagine was probably a pretty significant increase in sales traffic coming to the site? And is that still something that you're battling with? Or have you kind of cleared through that?

 

11:08

Yeah, so COVID, as I think you've kind of nailed it, it was a double-edged sword, where, at the beginning and COVID, when we had already, you know, bought products, and we weren't waiting for them to come in, it felt amazing from a business standpoint because you've got all this demand people are at home, they're buying online, and for us, they're buying comfort and comfort is kind of is really what we focus on. And so our brain was very well suited to take advantage of that. The other kind of interesting aspect is that grocery stores were always deemed essential. And so our retail, the whole foods never really shut down. So we were, you know, people weren't going to Nordstroms, but people are still going to Whole Foods or another grocery store. So that kind of helped insulate some of our wholesale business as well. And so super beneficial at the start, and then you start to see the impact on the supply chain, specifically what was happening overseas, so our factories shut down from anywhere between 30 to 60 days, at the same time, we're facing, you know, a massive increase in demand. And so, you know, the, the follow-on effect of that is that at some point, you start running low on inventory. And, then compounding that was the port issues in LA. And so there were vessels that would sit outside the Port of LA for 20 or 25 days. So we would be, we would think we're kind of on the verge of having new products, and then they'd be stuck kind of just miles offshore. And so that was very challenging, you know, our warehouse manages things pretty well through COVID. So we didn't have huge issues there. But now it feels like things are normalizing a little bit, but you know, as the supply chain normalizes, then you start to see the software consumer with some of the macro things that are happening right now in the economy. So it's always, you know, our business has been pretty good, but it's hard. It feels like you never see, you know, supply working perfectly smoothly and demand taking off at the same time. Seems to be one or the other. Yeah.

 

13:13

Where, where do you think this is going to end up going now? So obviously, like, you know, we've kind of gotten out of the supply chain issues, but now we're having this issue where a lot of sellers and correct me if I'm wrong, if it's on your end as well, but a lot of sellers are seeing that sales are some saying they're slumping, others are saying like, Yeah, well, that's because the past two or three years was kind of like gangbusters. So it's, it's a little bit is it? Is it actually slumping or is it correcting? But then obviously, now we're, you know, in this discussion of, are we in a recession? Are we not? Are things gonna get worse? Are they going to get better? How are you kind of mitigating that and being able to deal with what may or may not happen?

 

13:52

Yeah, I mean, we, first of all, I'm not an economist, I'm not that smart on this stuff. So I read and I try to understand how it's gonna impact our business. And, you know, my gut is that if you tell the public and customers and consumers over and over and over that, there's a recession happening, that they're going to start to believe and act accordingly. Even when employment holding up, okay, you know, people aren't losing their jobs at a massive rate as they haven't past recessions. And so, you know, for us, like, I also think it's hard for us to pinpoint what's going on, is it just a normalization from COVID peaks of demand that you were talking about? We're also just at a much higher scale. And so I think maintaining the same levels of growth we've seen the past few years isn't necessarily sustainable, but we're still going to grow 25-30 % this year. And so, you know, that's, I think we're beneficial to be where we're fortunate to be in that situation that you know, our business still has some tailwinds to it. But, you know, my hope is that is, you know, we can kind of navigate through as inflation eases consumers probably get a little bit more comfortable buying and that we have somewhat of a soft landing here and that we don't see some of the same recession impacts that we've seen historically. And I think one of the other hard things to, put together is that the last recession that arise thinking about was the second biggest, in the country's history. And so I think it's possible for us to be in a recession that's not quite as negative. And that, you know, people are waiting for the bottom to fall out. But we might have a little bit more of a muted recession where we can bounce back a little bit quicker.

 

15:33

Yeah, yeah, I agree with that. Are you doing anything now to potentially, you know, just kind of reduce any, I guess any risks that you may have? I know, some people are really ramping up marketing, because they want to just kind of fight through it. Others are going in the opposite direction, where they're more focused on, you know, efficiencies of fulfillment and inventory, and just making sure they have what they need to kind of ride out whatever is going to happen, like, what's your approach to that?

 

16:00

Yeah, I think part of it is trying to be cautious about the macro environment right now. But the other is understanding what's happened to, you know, growth stage businesses over the past two years. And, you know, there was a time where, you know, if you were growing 40, or 50%, it didn't matter what your bottom line looked like. And that has very much changed, I think in the market. And, and whether it's public investors or private equity investors. And so I think the incentives for a brand, to pursue growth at all costs have gone away. And so for us, I think that's probably the bigger driver for us versus macro conditions is that you know, we build sustainable products, we also need to have a financially sustainable business model. And we are, we're profitable, we're not relying on external capital right now to fund our operations. And so for us, I think that's been the biggest piece is that we're slowing the growth a little bit proactively because that means we can grow more profitably and not necessarily risk that we're going to grow so fast that we need to fund operating losses to do so. And so I would say it's more of the kind of market conditions in some way that has dictated us slowing down growth a little bit and being a little bit more cautious about how we're spending pace of new customer acquisition and things like that. Yeah.

 

17:23

So as you kind of look into that, you know, adjustment, you obviously focusing on the bottom line, what is the investment then go into? Are you looking to expand into new channels the thought to expand inventory? And from a marketing side, which is obviously a little bit more of my forte, like, there's really only so much you can do from a digital perspective without just spending an arm and a leg for customer acquisition costs. There are only so many ad channels what is that approach look like to continue to scale it?

 

17:51

Yes, it's a good question. It's really hard. So there, as you kind of continue investing in new customer acquisition, there are diminishing returns at some point. And so and we're very big on measurement and data. And so if we're not seeing if we can't see what $1 is getting us in spend, it's hard for us to place that dollar. So we've retrenched a little bit in a very core marketing channel where we feel like we have strong attribution, the ability to kind of pull leverage as we need to manage overall performance. And so as we think about investing in growth, you know, we're looking at a number of things, one is continuing to try to ensure that we're providing existing customers with options to come back. And so repeat revenue is so critical when acquisition becomes expensive, for two reasons. One is it just provides more profitability. And the second is it helps you justify higher acquisition costs on the front end, if you can count on those customers to drive meaningful LTV. And so focused a lot on providing great service and great products to our existing customers. We're also looking at new channels. And so you know, DTC was the hot thing for a while, but now everybody's looking more at the Omni channel. And so where are the places that we can go efficiently to meet consumers? Where again, we always believe that there's more value in having a direct relationship with the consumer. But can you go meet consumers in channels where they're already shopping, where there's high intent? And can you convert them into direct consumers long term? And so with Rajat rising digital costs and CACs, it starts to help make wholesale looks more appealing in terms of going and finding consumers.

 

19:33

Yeah. You know, you mentioned the LTV side and it's one of those things that I'm always kind of shocked when I speak to people about you know, the business they're running mostly obviously, e-commerce sellers have like it never seems to be as much of a focus as I believe that it should be. Obviously, it sounds like you guys are doing that. And I don't want to get into specifics on financials or anything, but how are you measuring basically what your customer acquisition costs is versus what your LTV is because LTV can be a bit of a loaded question. If you're factoring in like, you know, 1213 years of business, you really only want to limit that LTV to like a couple of years or so. So how are you measuring that?

 

20:12

Yeah, so we look at LTV to CAC, and we look at it over shorter periods of time. So two years, two to three years, but a max. You know, I didn't mention this at the front, but our business actually started mostly as a wholesale business. And so we've kind of pivoted, since then. So I would say our E-commerce business is really only five or six years old. And so we look at more recent cohorts. Because again, I think you don't want to count on having customers be with you for four or five, or six years, it's hard to know what things are gonna look like down the road. And also, I think, you know, the most recent cohorts are probably the best at predicting what's going to happen in the near term future. So we look very closely at LTV to CAC to make sure we're driving meaningful profitability. We focus on first versus profitability, too, though, because then it makes everything else gravy. And so trying to get to a first purchase profitable, dynamic, where you feel like you can kind of invest up till that point, and we know exactly what our role as needs to be for a first purchase to be profitable. And so let's grow up until we get to that point, but not go beyond that. Yeah. And then the retention piece becomes, you know, just icing on the cake.

 

21:22

Yeah, exactly. You mentioned that, you know, you've kind of focused on those main marketing channels that are obviously the ones that you have stronger attribution on that you have a little bit more control over to pull those levers, which what are those channels that you're mainly focused on.

 

21:38

So for new customers, we still spend a lot of our money within the meta platform, so Facebook and Instagram, and then Google was our third, we also do a lot of affiliates, because the affiliate is just paid for performance, which is great if you're getting give some type of content producer 10 12%, to help you sell your products, that's much cheaper than paying Facebook, 50 or 60 bucks to hire a customer for you. So those are the channels that we focus on. And then again, I kind of circling back to the retention piece, and LTV will do 65% of our revenue this year from existing customers. And so I think we don't talk about that from a channel standpoint as much, but SMS and email are critical for us.

 

22:23

That makes sense. Drew, really appreciate you having me on the show. I don't want to take up too much more of your time. Obviously, really appreciate it. I'd love to give you an opportunity here to let everyone know a little bit more about where they can find out more about you and more about that.

 

22:36

Awesome. Yeah. To find more about packed at wherepack.com We will be biased and say we make amazing clothes. And you can also feel good about what you're purchasing from an environmental social standpoint. So check us out there and then I'm on LinkedIn, Drew Cook. And yeah, Andrew, I really appreciate the time for the conversation.

 

22:57

Yeah, thank you so much for being on the show. Drew everyone else you tuned in obviously thank you as well please do the usual rate review, subscribe, and all that fun stuff on whichever channel you want or head over to ecommshow.com to check out all of our other episodes but as usual, we appreciate y'all joining us and we will see you all next time.

 

23:15

Thank you for tuning in to The E-Comm Show head over to ecommshow.com to subscribe on your favorite podcast platform or on the BlueTuskr YouTube channel. The E-Comm Show is brought to you by BlueTuskr, full-service digital marketing company specifically for e-commerce sellers looking to accelerate their growth. Go to bluetuskr.com Now for more information. Make sure to tune in next week for another amazing episode of The E-Comm Show.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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