← DTC Podcast
DTC Podcast
Ep 545: How Lovevery Built a 9-Figure Subscription Engine—Then Rebuilt It to Unlock Even More Growth
00:39:45
Loading summary
Transcript54 lines
- [00:00]
A
We're uniquely about serving not just the child, but also the parent. We started the business with the idea in mind that we would make products that were the quality we would want and that customers would be willing to pay a price premium. Any business that is acquiring people to subscribe doesn't work unless you can have churn be very, very low. By really paying attention to our customers with every single product that we made, we were able to have the kind of high loyalty we wanted. Our strategy in this business around growth is focused on three levers to grow lifetime. So expand the years that we serve to grow our spend with our customer launching more SKUs within the lifetime that we're already serving. And then the last is to grow our footprint expanding internationally. You're going to continue to see all three from us.
- [00:53]
B
Rod, welcome to the DTC podcast. Super excited to have you here as a parent. I've been following lovevery for a while. I was wondering maybe if you could just kind of walk us through the hero's journey with this product.
- [01:05]
A
Okay. Gosh, I mean, it's been a while now. We launched eight years ago, give or take, with a single product, and we've grown to a little over 150 products. Today, our audience has swelled to 5 million-plus across 34 markets. We shipped more than 40 million playthings. But if we go to the very beginning, it was when I was still working in tech and I got a call from my wife's best friend, Jessica. And I've known Jessica for more than 20 years at this point, but she was telling me about this new business idea that she had. She previously started a baby food company. I'd always worked in tech, but we shared business ideas. And she was telling me about this notion she had of taking all the science that she'd become aware of when she had her first child and turning it into an early learning program for children based off of a recurring model of a subscription. I instantly got it. I had just been going through kind of like all the, I think, most exciting, but also maybe most challenging in some ways, years of parenting with my two kids. I have twins, boy and a girl. And it just totally resonated for me what she had in mind. And so instantly I was like, hey, let's do this together and be 5050 partners and work on it. And that was a couple years before we launched. I was thrilled that she also thought that we would bring something complimentary to the table and could maybe build a big business together. And so we started working on it first, sort of testing these ideas that we had. And it started with testing out this whole subscription concept and what should go in what would end up being called a play kit, but also testing some other ideas. Like our first product that we launched with was actually the Play Gym. So we were testing that alongside the ideas for the play kits. And then we were finding manufacturing, finding design, working on the brand naming, all of that. And then we launched. And at first nobody was buying, nobody was buying the products. But quickly people became familiar with the products and we got smarter about how to market it. And it grew from there to the point that I described before, which is pretty expansive brand across a lot of markets.
- [03:20]
B
When I was in those early days of parenthood, I remember looking at my daughter Sophie. Sophie the giraffe.
- [03:26]
A
The giraffe.
- [03:27]
B
And I looked around at all my other friends and family that had kids in the same age and they all had a Sophie the giraffe, you know, binky or whatever. It's like when you can get into that market, when you can become a fixture for parents, like, how did you, how did you crack it? I think is my, is my one question. How did you, what was your first really glimmer of hope that, okay, we can, we can really crack this market.
- [03:48]
A
So for us, you know, I mean, like, like any entrepreneurs, capital is like a big constraint, right? I mean, you only have so much money that you can spend and people are only willing to invest so much early on when it's just an idea. So while we had this vision from the very beginning of having the subscription with all these years of play kits, and we even thought we would have a mobile app for parents, we knew that probably we wouldn't be able to afford to do everything at once. We needed to start with one product. And so the first product that we launched was our baby Play Gem, which covered a year's worth of play. It was the most play gems at the time were the, I think they still are the most registered for developmental item on baby registries in the US and so we said, okay, well, let's see if we can create in this one product an encapsulation of everything we're trying to do. Because there were some unique things we were doing there. We were incorporating a lot of elements from early learning, early childhood science around high contrast images, around how children develop by stages and how that happens physically, how that happens with the eyes. We incorporated a play guide. So we incorporated content to a degree nobody else did. We were incorporating both wood and fabric in a way nobody else was at the time, we had a different look. That different look cost a lot more than the other products on the market. People would question us and say, I don't know, you're competing against products that cost 50% what your product costs, 30% what your product costs. Do you really think people will buy this and buy your brand? Are you really sure? And we believed in it because of the feedback we've gotten from customers. We believed in the research behind what we were doing. And so we raised enough to be able to launch that Play Gym and also continue to develop our play kits for launch about six, seven months after we launched the Play Gym. And we found pretty quickly that people did like the product, that they were willing to accept the price premium. And in fact, in less than a year on Amazon, the product became the number one revenue generator in that category. And we launched on Amazon and Direct to Consumer about the same time with that product. So we quickly were getting feedback from the market that this idea that started off as this concept Jessica had and then which we turned into a brand, turned into like some, some beautifully designed product that it had legs off the back of that success, we were able to raise more money, launch the subscription, and then continue going.
- [06:17]
B
And when you say with your initial go to market strategy, was that often you mentioned Amazon, but was that also through Meta ads specifically to generate that demand?
- [06:25]
A
Yeah, absolutely. I mean, you know, we advertised all the places you would expect. But I think what was more important than that was that there was genuine enthusiasm for the product on the part of experts, on the part of early consumers, influencers. And we did an excellent job, I think, just getting the product in the hands of influential people early on, whether it was press or other influencers. And so we got really good feedback back from that, which we could then turn into ads on Meta. In the early days, our most successful ads would be ones that would actually reference an article that talked about how different somebody's experience was with our product, and then that would just sell itself. So I think when we started, I think I was making ads on my phone with an app because we couldn't afford to pay anybody to make ads, and we weren't selling quickly enough. A month or two rolled by and then suddenly we started seeing more and more sales happening, and it was happening off of ads that were specifically referencing this credibility that we'd gotten in the market. And so we built off that. I think even now you'll find that most of our ads are based off of somebody's real experience with the products. And how they solve a pain point.
- [07:39]
B
Can you talk a little bit about we evaluated Montessori when we were looking at schools for my daughter. And can you just talk a little bit about maybe the mission of the company, how it ties to a similar mission that they might have at Montessori and how you built that in the company?
- [07:53]
A
I mean, our mission is really focused on supporting families, and we try to evolve the company to continue to support families in a way that's going to be helpful as circumstances change. And that means when I say families, I'm saying that intentionally because we're uniquely about serving not just the child, but also the parent. And so to your question, I think Montessori is attractive to many people because it is a philosophy that kind of gives you a structured approach that is rooted in research, that's rooted in things that work, where both the parent and the child are plugged into a system that kind of works across multiple phases of early learning. Now, with that said, we were inspired by Montessori. We were also inspired by other schools of early education and also just sort of research from scientists around how neural development happened. My kids went to a Reggio Emilia preschool, and there are ideas from Reggio. There are ideas from Waldorf that are in our product curriculum. There are ideas that our team have come up with just brand new play products that never existed before, that are rooted in child development science and what was missing before and then proven out through play studies. So, yes, Montessori is important. It's a great framework for a lot of people. For us to give you an example, like one area where we depart. Montessori doesn't encourage pretend play as much. Right. It's all about family work, and everything is real. Whereas some other schools around early childhood embrace pretend play. And so we do kind of utilize pretend play and elements of our program as an example. But, yeah, Montessori was absolutely an inspiration.
- [09:42]
B
You've made it work on the Play gym. Talk to me about building out the subscription program and maybe your biggest learnings of building that.
- [09:50]
A
That was really a labor of love that we spent years on. Today we offer our standard PlayKit subscription, which goes through the first five years of life. And then we have new offerings like our early Reader Club, where you can subscribe to books. We also offer skill sets. Currently, we have a whole learn to read set that comes later. And there's other ones that we're working on. But if we go back to the core PlayKit subscription, we didn't know if it was going to work or not. Like we had great results in our tests with folks, but we didn't really know it was going to work until that first week when we launched and then we saw instantly that people were adopting it, people were going for it. But even then there was a question of well, what's the retention going to be like? Are people going to stick with this? Because as you know, right, Any business that is acquiring people to subscribe doesn't work unless you can have churn be very, very low. Unless you're just shipping low quality product and you've just got incredible profit margin. And so you're like economically you're not upside down after even like one sale. That wasn't the kind of business we were building. We were building high, high quality product. So we needed people to stay. What's been amazing for us and what we learned is that by being mission driven, by really paying attention to our customers, with every single product that we made and every single Play kit, we were able to have the kind of high loyalty we wanted. So for instance, if we look at PlayKit subscribers today, 96% of them last through they stay beyond the first kit that they subscribe to. If you look at Net Promoter score and we look at that across 34 markets globally, our net promoter score is 74. That compares favorably to companies like Netflix, Nike, Starbucks. It's in the same sort of area as Apple, depending on the Apple product better than or same as Apple products. So very, very well loved. And we guard that with everything that we've got. Jessica is constantly combing through customer feedback on products, thinking about how do we improve a product or do we need to sub out a product to make sure this is a better experience and we pay attention to the content that we put out there as well. So another big learning with our subscription was after we launched our mobile app for subscribers. And what we learned was that, you know, the more accessible we make our early learning content, the better the experience is going to be for our customers and the more retentive they're going to be. So we see a double digit advantage in retention and in contribution profit at 12 months for a subscriber who's on the app versus one who isn't. So it's incredibly valuable and it's interesting.
- [12:32]
B
Because you set a life cycle kind of at the beginning of the expectation with the subscription where it's like it's for five years. And so I bet that has a positive effect in that it's like people are knowing that this is the defined term that they're kind of in for how like are you able to say what your average retention is like within that five year window?
- [12:52]
A
I won't say what the exact average retention is. I'll tell you. It varies depending upon like what kit they enter on for all kinds of reasons. It's obviously better for us to get somebody as early on in the life cycle as possible, but we want to make sure that we're compelling as a company, no matter what age somebody enters at. I think it's mainly because if you look at behavioral science like there are these pivot points when somebody is ready to substantially change their behavior. Like when they move into a new house, for example, right? You move into a new house, you go to Home Depot, you start buying new stuff, maybe you rethink like how you're living your life. The biggest or one of the biggest is when you have a child, right? And right when you have them, you're ready to make changes. And so if we have your attention then and we can make you aware of our offerings and you find them compelling for making your life easier, we're going to do a better job like hanging on to you for a really long time because we just become ingrained in that behavior change. Right. When you have a child versus if we get you later now, you could still have a great experience with us later. And we have lots of very happy customers who join us later. But it's always best for us to get you as early as we can.
- [13:58]
B
You mentioned wooden fabric and it made me think of my first years there with my partner who was very anti plastic, very sort of like, I think there's like a plastic backlash, right? Especially when you have a kid, you're constantly being deluged with cheap plastic stuff. And so we just like, just because it was gonna be around our lives all the time, we decided, okay, let's buy higher quality things, let's make a lot of wood and fabric and things like that. Is that sort of a trend that you really notice and have capitalized on as people kind of reacting away from cheap trinkets?
- [14:27]
A
I mean, I would say that we started the business with the idea in mind that we would make products that were the quality we would want and that customers would be willing to pay a price premium. That meant more fabric, more wood, using organic fabrics or oecotex fabrics where we could, using sustainably forested wood where we could. But we also do use plastics and we use bio based plastics where we can. It's tricky. So I would say we're not, I would say we were maybe like reflective of a trend, but we weren't actively saying, well, let's use wood because people want more wood. It was more, let's make a high quality product that's going to last. Which if we talk about, you know, secondhand market for our products, our products are extremely durable and hold a lot of value in the secondhand market. So I think it's because they're built to last, whether it's the wood or the fabric or the plastic. Sometimes plastic makes more sense for a product set. Right. Like we just launched our bath set, you know, and I think like a wood bath set would probably not be a good look. So we try to use really high quality plastic that you know, is as safe as possible and put that in the customer's hands.
- [15:34]
B
And so when you're really focused on the subscription program, was it still. Was meta still the main, the main growth tool when it comes to driving the growth for the subscription program, or was it sort of an omnichannel approach?
- [15:44]
A
It was omnichannel. I mean if we're talking direct to consumer specifically, you know, you would see equal parts Meta, you know, Google, YouTube, things like, you know, streaming TV, which at different points in time would take up to a third of our spend. Another thing that's been important to us is working with creators. We've had a program where we've seeded product with creators in the business for over five years. It's been an essential part of our business too. I mean, all that being said, if you look at our post transaction survey, our Heidi how basically 2/3 tell us they found us organically. 40% tell us they heard about us from a friend. There's this customer love powered element of all of it that filters into the paid ads, that filters into getting creators. It's hard to disaggregate it. But yeah, I mean meta's super important. It's a big component, but it's not the only component.
- [16:36]
B
And then recently you've kind of unbundled your subscription offering a little bit to make it more maybe accessible. Talk to me about the decision to do that because it's like once brands have that scaling subscription program, I think a lot are loathe to kind of move away from it. So talk to me about that decision, what sort of metrics you were seeing that made you want to unbundle.
- [16:53]
A
So I think the thing that was most compelling to us when we thought about making purchase of an individual kit an option was when we compared the number of people who loved the brand followed. The brand subscribed to our emails versus the number of people who actually became subscribers. We said, hey, there's a huge gap. There's a huge gap here between people who love the brand and people who are willing to subscribe. Now, we love our subscribers, and we do everything we can to put as much value into that subscription. Like, a few months back, we made all of our digital courses available for free to our subscribers. That's like a $500 value we gave to our subscribers. We really care deeply about making that subscription valuable, and it's where we can have the most impact on a family because we're with you every step of the way. We wanted to have as much impact as possible and also make the company as successful as possible. So we wanted to close that gap between kind of like people who are willing to subscribe and people who love the brand but they weren't quite willing to subscribe. Maybe they would be willing to subscribe if they tried some product, though. And so all of that motivated us to start testing, offering the ability to purchase in a subscribe and save kind of a format where, yes, you can have an individual play kit, but you'd have to spend a little bit more than what you spend if you just subscribe. And what we found is that it basically expanded our audience that was transacting with us. So we didn't cannibalize our subscriptions to kind of a terrible degree, but we acquired a lot more customers who were now engaged with the brand and transacting with us. So overall, if you look at, like, cost per transaction, if we're looking at, like, ad spend and things like that, we saw an improvement in our cost per transaction. We saw an improvement in the conversion rate on our site. When we did that.
- [18:45]
B
Talk to me a little bit about the growth trajectory of the company, because I imagine over Covid, you guys experienced a huge, like, I. As a parent who was trying to teach a child over that period or facilitate their classes during that time. Talk to me about the growth maybe during that time and then how you guys have sustained it over time over the past few years.
- [19:04]
A
Like a lot of companies, for us, Covid was an accelerant in that people had more money to spend. And there was just sort of, like, for a brief period, CPAs were low. For those of you who don't, like, spend money on ads, customer acquisition cost was lower than it ever was going to be. And so there was a short period where we were able to, like, really spend aggressively on ads and get payback on those ads extremely quickly because people had budget. We weren't competing with that many other brands for the ad space. So the ads were cheap. So we saw a tremendous growth off of that in 2021. I would say that sort of like opportunity around ad rates went away relatively quickly because people figured out like, oh wait, it's not the end of the world. Actually, if you're an E commerce or direct to consumer, you can do really well. So those ad rates came back up and that opportunity went away. People continue to have a lot of willingness to spend. So we saw a strong growth in subscription. We knew, however, that that was not going to be something that was going to go forever. And we needed to build a sustainable business and we needed to offer other ways for people to participate with the brand. So even before we launched subscribe and Save, which we were talking about with you, we were already thinking of other things that we could do. So we were doing omnichannel expansion, right? So we were starting to sell individual products into Target. And then since then, other, other places. We also knew that like, we wanted to maintain a deeper relationship. So we started doing digital products like our digital courses, which I mentioned in our app. We knew that not every parent was all in on like early childhood playthings, that there were some who were into that, but were also more focused on things like learning skills for school. And so we moved into reading and we're moving into more skills. So I think we always knew that it was going to be about evolving our business, making it more sustainable also, like having more ways to participate with the brand and finally like making the brand, the business more profitable. And so as we shifted out of that phase, what you saw was a company that was operating in more different kind of channels, different kinds of offerings, and also doing so at an increasing level of profitability. So we flipped to a profitable company at the end of 2024 and have been since then.
- [21:26]
B
What were the key changes you made during that profitability flip? I'm sure there was a ton, but are there any that you really point to that allows you to drill in.
- [21:33]
A
Everything other than sacrificing quality of customer experience? So, you know, there's a lot that you can do, especially like if you've started a business and you're just sort of like learning as you go, you make a lot of mistakes in terms of like setting things up for profitability. Right. So when we started, we had a small warehouse in Idaho. I'm in our Boise, Idaho headquarters. And so it was down the street, most mature businesses, like, they've got warehouses, you know, on the coast. They maybe have a warehouse in Canada where you are. Maybe they've got a warehouse in the center of the US Maybe more. If they're a really big, big business, they certainly aren't putting their warehouses in Idaho. Right. As an example. So simplifying supply chain fulfillment would be an example. Or just getting smarter about how we're handling shipping of our products to us or manufacturing our products in ways where we're not putting money into packaging that's not going to be valued by the customer and instead putting money into the product. All kinds of stuff like that. I mean, beyond that, I would say kind of our thinking around advertising is just continue to get more sophisticated. We're not spending money if we don't see good payback on the advertising.
- [22:41]
B
You mentioned Canada, but you said, I think it was 40 different countries. 30. 40 different.
- [22:44]
A
34 markets.
- [22:45]
B
Yeah, 34 markets. That's amazing. Talk to me about how you tackled international expansion, where you probably focus on maybe Canada or other English markets first. But talk about your expansion strategy there.
- [22:55]
A
Like everything else with this business, it started with our customers or prospective customers. So, I mean, pretty much right from launch, we were hearing from Canadians who were so close by and maybe had friends and family in the US that they wanted our products. And so we quickly moved to address that. And for folks in direct to consumer, they know that there are relatively straightforward ways you can tap into the Canadian market. We did that in the typical ways to begin with. Beyond that, the area where we were just seeing the most interest just inbound to us was Western Europe and the uk and so we also had tremendous interest coming in from Asia, but we thought, okay, well, Europe and the UK especially like English language. We know we can do. A talented person who had kind of like been very interested in our products for her own children was based in Amsterdam. She asked if she could help us look at doing that market. And so she did. And we worked with her to initially launch UK and Europe and initially build out an office in Amsterdam with a team there so that we could really be focused on that market. And then we've added to that team over time. It's evolved. And then when we saw success there, we then moved to Australia, New Zealand and Singapore, out of Australia as well. We're now through different kinds of arrangements, looking at ways of getting into retail and other markets around the world as well. Currently we're selling product in several different languages and continue to add languages. It's something that we treat very seriously. We think there's a bigger opportunity for us if we take a market very seriously and we operate in it directly as opposed to just shipping product out of some warehouse in the U.S. it's just American product and we just sort of ship it all over the world. We'd rather not do that because we don't think we're creating a meaningful business and a meaningful relationship with the customer the way that we can. If we go more embedded, that makes perfect sense.
- [24:47]
B
The connection to the parents is, and that, you know, really making the parents feel happy that this thing is in their lives is so, so important. And if you're not supporting with the right language or the right local customs or any of that. And then you recently moved into Walmart, I know you've talked a little bit about your retail expansion. Was there anything you had to do, price wise or product wise to facilitate that big move?
- [25:09]
A
Walmart has been an amazing partner so far. They had reached out to us once or twice expressing interest in working with lovevery. And I think at first we were nervous because we were like, oh, they're so big. Can we even handle that? We're like just getting good at working with Target, working with Amazon, working with Babylist. We met with the team and they were so collaborative. They really helped us understand what kind of price point they wanted us to get to which our SKUs are under $40 and what their strategic goals were around including Lovevery into what they were offering. We involved our own product team directly in conversations with Walmart and got real understanding very quickly around what kind of products they wanted. And then we said to ourselves, okay, well can we make products that hit our quality bar and Walmart's pricing bar that serve our mission, that are intentional around early childhood development and the science behind it, and do all of that within a tight timeline and without cannibalizing against like our existing products, especially our direct to consumer subscription. That's a pretty, pretty serious ask. Fortunately, we have really talented product designers, product engineers who just dug in. They were motivated by the opportunity and we were able to make some great products that so far seem to have been pretty successful in that launch with.
- [26:28]
B
Walmart, you're doing things all the time that may not be the most intuitive for the bottom line, but they're intuitive for your customer relationship. And I think about your circularity marketplace, which I think as a parent you're constantly thinking about the amount of like waste, you know, that you have in your child's life. And so this Idea that you could recycle things because kids are going through toys is pretty fast and furious to other people is something again, that's like great for the customer, not necessarily great for you guys because you probably don't take a cut or take as much from the marketplace. Can you talk a little bit about your reasoning to build out the circularity marketplace?
- [27:04]
A
This is a thing that we launched it a couple months ago, but it's a thing that we'd been thinking about doing for years. The reason why was we knew that there was an active secondhand marketplace taking place in lots of typical places, whether it's Faith, Facebook, Mercari, Poshmark, ebay for our products because they were so much more durable than typical and folks were embracing that. I think the other thing that we saw that was happening was just a general embrace of secondhand goods, pre owned goods just in general population was taking on more millennials were doing it, some Gen Z, even more so, and it was just showing up everywhere. I think the thing that ultimately convinced us that we needed to do it was a research trip that Jessica and I went on with some of our research team. We went to a couple of cities. We were in New York, Brooklyn and Long Island City, parts around New York, and then we were also in Houston and visiting families who we knew were brand aware but had not subscribed, had not bought products directly from us. And we were spending time with them, seeing all this used lovevery product in people's homes and how they felt this connection to the brand. But they had no kind of commercial connection with us. And they weren't even aware in many cases of our mobile app, for example. They didn't actually know all the ways that they could play with the different products. So they had stuff, they weren't necessarily using it to its fullest potential. And we looked at the data, we had this experience and we just said, look, this is happening. We can either have a direct relationship with these people or they could continue to have an experience with our brand that we've got nothing to do with. We also had the belief that if we could support that direct relationship and support pre owned purchases, sales and kind of make it a more standardized experience, that would actually improve conversion of our new product as well. You see this with premium products of all different shapes and sizes, where if you have a premium product with an active resale market underneath it, more people are willing to buy that premium product because the carrying cost for them is lower. And so that was another part of our belief. So we launched It I think what we've seen is tremendous uptake in our offering. We do, you know, take a small charge for people to list and sell on that marketplace, but we think we make it a much better experience for the seller and the buyer. And we are getting a lot of signups to emails and direct relationships with us on the parts of sellers and buyers. I think it's still early days, so we'll wait and see how effective we are at building on that relationship with folks. But they are transacting buying new products from us as well and doing other things with the brand and those are relationships that we didn't have before. So I'd call it a success, but one where there's still upside.
- [29:51]
B
You mentioned the app improving LTV and kind of stickiness. What has gone into making that app a success? And also just where in their purchase cycle are they downloading that after? Is it on the packaging to get into the app? How are you bringing people into the app and. Yeah, how's that working?
- [30:07]
A
Yeah, so we're encouraging people to sign up for the app right after they purchase and then we try to promote the app in lots of different places, like on product and packaging, in our email series and everywhere else that we can. I think the evolution of the mobile app for us has been like everything else, very customer driven. Where we found, for example, what kind of like activities with product are helpful or we've seen people don't know what a product is. So we added visual search so you can just take a photo of a product and then it'll tell you what the product is and ways to play depending on your child's age or we've had experts answering questions. We found that we weren't getting as many questions as we wanted and we thought it was because we weren't answering questions quickly enough. And so we took all our expert knowledge and we integrated it with AI and added sort of an AI answering service based on all our expertise, with very curated answers specific to whoever's asking the question. And then we saw a massive uptick in Q and A happening on the app. So we've continued to evolve it. I think we're going to make more E commerce available on the app over time as well, because people are asking for that. And we know from other examples out there in the market that this is another thing that makes a subscription more retentive, is when you give people more ability to manage their account from an app. So we'll probably do that as well. It's going to continue to Evolve. We launched it on Android a few months ago as well. So now we're in both platforms and we're starting to roll it out to international markets more and more. Right now, about 50% of our subscribers are on the mobile app.
- [31:39]
B
How big is livevery now in terms of employees?
- [31:42]
A
We don't really share sort of like revenue and employee figures that regularly. I would say it's been around the same size, kind of employee and business wise over the last few years and we've tried to get more efficient. We did reduce headcount as one of the things that we had to do following the institution of tariffs. There were a couple things we had to do to just sort of make the business a little bit more sustainable. But I think fortunately for us, a lot of that coincided with the advent of all these new AI tools becoming available. So while it's really unfortunate to have to rationalize your business so that you can stay profitable in a situation where new costs are being imposed on your business, it is fortunate people are out there creating new tools that we can use with AI that help us do more with a slightly smaller team.
- [32:32]
B
So tariffs, that was going to be one of my questions. They have been a big impact. Is the impact known fully at this point or are you still kind of assessing what it's going to be like in the new world?
- [32:43]
A
It's known to the extent that the numbers, the percentages are dependable and that they're not changing, which it seems like there's more and more certainty around for whatever given country you might be importing from, what that rate is going to be. So to the extent that there's clarity around that, we're able to pretty much size up what the cost is to the business and then know what we need to do to deal with that. And then we're also able to, because we have loyal customers, because we have customers who we talk to all the time, we're able to think about how do we approach managing this. Because part of how you manage it is on the cost side, right? So we talked about reducing headcount in some places in order to reduce our operating expense. Part of it is around raising price in one place or another. And so, for example, when it came to thinking about a price increase of some kind in our direct to consumer customers, we talked to them about like a few different options, different ways that we could do that. And it turned out that a shipping charge and not basically providing everybody with free shipping the way that we used to was the least objectionable thing that we could do. So we stopped providing free shipping, started charging for shipping. And then in retail, there were some price actions that had to happen in retail. So those are things that also had to happen. With all that being said, the business is continuing to move forward. We're seeing nice growth along a number of our product lines, nice growth in retail. And we're doing this all in a more financially sustainable way because we're just managing everything so tightly. So that's good. But for sure it's a challenge to us, just like it is for anybody else who imports products into the US as part of their business.
- [34:24]
B
What are your goals kind of going forward over the next couple years? Do you plan to kind of get deeper with your current audience of sort of one to five, or are you looking to expand into the older space?
- [34:35]
A
Our strategy in this business around growth is typically focused on three levers. One is to grow lifetime, so expand the years that we serve. One is to grow our spend with our customer. So that means launching more SKUs, like within the lifetime that we're already serving. And then the last is to grow our footprint. So expanding internationally, you're going to continue to see all three from us. So if we look at expanding lifetime, a big move for us was launching our reading skill set. At first and testing showed that we had a tremendous impact on early readers. And we could see kids learning to read. They didn't even think that they were learning to read. They were just playing games. And there was great efficacy for this product. People loved it. I think you'll see us move into more skills over time and continue to serve later years in that way. If we look at the next category around, like creating more SKUs to serve the existing lifespan of customers that we serve. I think like there's a number of new products that you see us developing, both larger products and there's some really amazing ones that are in the works. But like one that was really fantastic that we launched last holiday was our Play Kitchen that has working water. It's really innovative. You got to check this out if you're in the market for a Play Kitchen, but we have some other bigger products like that, then we have smaller products, lower price point products with retailers like Walmart. We have like another expansion of product happening with Target that's happening later on this year. You're going to continue to see really exciting products coming out from lovevery and then expanding footprint. We're in conversations in a lot of different international markets. And then we're also looking to expand within the existing international Markets that we serve. I would say we're starting to mature in terms of retailer relationships here in the US but we still have a ways to go. So in Canada where you are, we have a ways to go on retail and we're excited about conversations there. I think in Europe, in the uk, in Australia and other markets, we can also do a lot more there. So you're going to see more expansion internationally as we grow footprint as well.
- [36:39]
B
You mentioned this early on how streaming ads are a big part of your sort of growing the brand awareness. I think more and more brands are just thinking about like how do I get net new eyeballs on my brand? And I guess you're doing that like you say with your three different ways of thinking about that. But what are any specific top of funnel tactics or approaches strategies that you found really effective over the years? I guess streaming is one of them. Do you have because you have such a broad market, like you could be a Super bowl advertiser because every person watching that, almost every person's a parent in a way. Right. So you can kind of go anywhere with it.
- [37:12]
A
Be a big check. Yeah, lots of eyeballs, that one. I don't know if I could, I could make that stretch. But I guess like what I would say is the more authentic, you know, the, the ads are, the more tied in they are to the customer's pain point, the better they're going to do. And it's really not about how polished a particular ad is, although we take a lot of pride in what our in house team is able to develop. It's really more about does the person looking at that ad believe that it's reflecting a pain point that they're experiencing and being done in an authentic way? For us, it all goes back to the product. It goes back to our relationship with customers and then doing as much as we can to capture that in the ads and then having that show up, whether it's on streaming or on a Meta AD or TikTok post or wherever. It's about capturing that more than anything else, more than any kind of polish. We don't use agencies a lot for this reason. We kind of do as much in house as we can with a really talented team in house and we just try to stay true to the mission.
- [38:16]
B
Is most of your team in Boise?
- [38:18]
A
They are the latest numbers? I'm not sure I'd say the majority is not in Boise, but some substantial portion is like there are more employees, more lovevery employees in Boise than anywhere else. We also have offices in Amsterdam and Hong Kong. But we also have a lot of remote employees in almost every single state in the U.S. just like our customers, so they're all over the place. We try to have people come together in Boise when we can, but it's not the easiest city to get to. Actually, it's not like a convention center.
- [38:50]
B
I heard it's America's best kept secret, though. I've heard it's a great place.
- [38:53]
A
It's pretty nice, especially if you like being outdoors. I mean, my kids grew up here and they probably ended up doing a lot more outdoor activities than they would have if we'd stayed on the east coast where we lived before.
- [39:03]
B
Totally. Well, get out there and play. If you're in the audience and you've got a child in that one to five range, you've got to go to lovevery and check it out to follow Rod's entrepreneurial journey. Maybe LinkedIn. Do you suggest they follow you on.
- [39:16]
A
Yeah, sure. Go for it. Nice.
- [39:17]
B
Well, thanks so much for coming on the podcast today. It's very cool to hear this story.
- [39:20]
A
Yeah, thanks for your questions. This is great.
- [39:29]
B
Thanks so much for listening to today's episode. If you're not a subscriber to our newsletter, you can do that right now at directtoconsumeralloneword.
- [39:37]
A
Co.
- [39:38]
B
I'm Eric Dick and this has been the DTC podcast. We'll see you next time.