The e-commerce industry has undergone significant changes in the past decade. Physical retailers have been forced to establish an online presence or risk being one of the casualties of a widespread retail shutdown that has seen over 50% of US retail square footage go vacant. For the ones that do go online, they are faced with a highly competitive market where Amazon controls over 50% of the US e-commerce market.
As this shift has progressed, niche direct to consumer (D2C) eCommerce businesses have thrived, largely due to social media and building online communities that act as brand ambassadors and die-hard supporters. As convenient as Amazon is, data has found that consumers are more responsive to original branded products that hold personal sentiment. This is why 90% of people are more likely to trust a product recommended by a friend than a paid advertisement.
To highlight just how prevalent these shifts are, this article will be a deep dive into the fascinating world of D2C e-commerce by an entrepreneur that has scaled his online business to over $10 million in annual sales.
How Social Media Is Leveraged to Drive Revenue
Frankie Quiroz is the 27-year old co-founder of the automotive apparel brand Tuned in Tokyo. Founded in 2015, the Riverside, California based company has steadily amassed millions of followers on social media, leading to a consistent sales growth that is on track to reach over $10 million in sales in 2020. With a standard e-commerce valuation multiple applied, Tuned in Tokyo is valued in the neighborhood of $30-40 million and growing.
In preparation for this article, Frankie Quiroz and the team at Tuned in Tokyo shared sales data with me and were very transparent with their figures. One fascinating thing to note is that there has been no major slowdown in sales during the coronavirus epidemic, despite people being out of work and logistics being complicated.
When asking Frankie Quiroz why that is, he responded with some interesting insights that help explain how to think about D2C brands in an age where options seem endless.
Quiroz explains, “As opposed to retailers on Amazon, we own our customer database. This allows us to communicate directly with our customers, provide exceptional customer service, and create offers that are mutually beneficial during tough times. This is something you can only do when having full control over the last part of your sales funnel.¨
To go one step further, I inquired about the importance of Instagram and how it plays into this funnel, especially given Instagram has not provided many robust sales tools (such as hyperlinks) until recently.
“Instagram has been very important but one thing you will notice on our page is the lack of any hard sales. We provide entertaining content that is niche and correlated to the products that we sell at Tuned in Tokyo`s website,” explained Quiroz.
When taking a closer look at the Tuned in Tokyo Instagram page, Quiroz was correct as the last six posts were videos of high-performance cars with an educational and entertaining edge. The only signs of product sales were in the saved stories toolbar, something that is not invasive yet still prevalent.
“We have always been a customer-centric brand. All of this is carefully planned with the customer in mind. You will notice our t-shirts retail for just $11.99 at the moment, down from $24.00. This is an extremely affordable price point for all of our fans and it helps bring customer loyalty, especially given the quality of our products on Tuned in Tokyo.”
Scaling a D2C Ecommerce Business in 2020
Scaling a brand in 2020 depends on many factors including the industry, niche, and outlets being used. Certain “hot” industries, such as CBD, are not allowed to capitalize off of paid ads online due to restrictions. Other brands have a wide range of options including Instagram influencers, Facebook ads, PR, SEO strategies, and even events.
Tuned in Tokyo leverages multiple channels to acquire customers. It is important to note that Frankie Quiroz has now built Tuned in Tokyo`s total fan base into over 30 million people across various channels. As sales increased, Quiroz and his co-founder realized that they would need to bring on more people and expand operational reach.
Tuned in Tokyo now has over 30 employees that work out of a massive 7,000 sq ft warehouse in Riverside. The company traditionally has focused on just two product lines, t-shirts and hoodies, but has expanded to other smaller accessories as well as mystery packs.
“You can never underestimate the importance of having a good team around you and the group knowledge built around knowing your product, industry, and customer. We keep it simple, with high-quality products and designs that are in demand by our customers,” said Quiroz.
For other entrepreneurs reading this, this advice can be applied to any industry and even service-based businesses. With Tuned in Tokyo scaling and in a good place, Quiroz has set out to build another apparel business focused on customized shoes.
“Once you get the entrepreneurial itch, it is hard to stop. My advice for aspiring entrepreneurs out there is to build self-awareness around what you love to do and what you are good at and go for it. It won’t be easy, but you never know unless you try.”