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Howdy Readers ๐ฅฐย

In this newsletter, youโll find
๐จ Harsh Truth: Why Most DTC Brands Struggle with Poor Unit Economics
๐บ๐ธ TikTokโs Future in the U.S.: New Algorithm Under Consideration
๐ Improving Review Transparency: Initiatives by Trustpilot and Google
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UNIT ECONOMICSS
๐จ Harsh Truth: Why Most DTC Brands Struggle with Poor Unit Economics
If your Average Order Value (AOV) is less than $20 with a 30% margin, scaling your business is an uphill battle.
But donโt lose hope. Here are steps you can take to turn things around:
1. Create Product Bundles
Increase your AOV by offering product bundles, encouraging customers to spend more in a single purchase.
2. Focus on High-Margin Products
Select products with higher margins and better AOV to ensure youโre making a worthwhile profit on each sale.
3. Negotiate Better Rates with Logistics Providers
Engage in discussions with your third-party logistics (3PL) provider and warehouse to negotiate lower rates. Many brand owners find they are overpaying and can save significantly with better terms.
4. Enhance Customer Retention
Implement strategies to retain customers and increase their Lifetime Value (LTV). Repeat customers contribute more revenue over time.
Why This Matters:
Large brands dominate because they have better unit economics. They can invest more in customer acquisition, which gives them a competitive advantage. In the long run, this economic leverage allows them to outpace smaller competitors.