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Transforming DTC via supply chain innovations with Boll & Branch CEO Scott Tannen | E1809

This Week in Startups

Thu Sep 14 2023



Supply chain innovations:

  • Boll & Branch CEO Scott Tannen discusses taking control of the supply chain and building a trusted brand through transparency.
  • They have a lot of control over their supply chain, allowing them to pass along savings to customers while delivering more value.
  • They create their own products instead of ordering finished goods from manufacturers, giving them full custody over the supply chain.
  • By buying cotton directly from farmers at the seed stage, they are able to refinance the cotton and ensure sustainable farming practices.
  • They prioritize traceability in their supply chain, providing customers with information about where each product came from.

Brand building:

  • Boll & Branch focuses on quality and good value for money as key aspects of their brand.
  • They aim to be the first trusted brand in the bedding category by prioritizing transparency and customer satisfaction.
  • The reputation of the brand is important, as customers trust that Boll & Branch provides high-quality products that last.
  • Word-of-mouth marketing and repeat customers play a significant role in building the brand's reputation.
  • Their commitment to sustainability also contributes to building trust with customers.

Engagement vs. boycotting:

  • Engaging with suppliers and promoting positive change can have a greater impact than boycotting regions or countries.
  • Boll & Branch engages with fair trade organizations to ensure fair wages and ethical practices throughout their supply chain.
  • Through engagement, they empower workers and encourage factories to meet higher standards.
  • This approach allows them to contribute positively to communities while still maintaining profitability.

Global wages:

  • Wage levels vary across different trades within the same region or country.
  • Boll & Branch has seen an increase in wages for workers in factories they work with but acknowledges that global wage comparisons are not yet feasible.

Inflation:

  • Shipping costs experienced a spike during COVID but have since subsided for Boll & Branch.
  • Raw material prices increased temporarily due to supply chain disruptions but have stabilized.
  • Boll & Branch held off on raising prices immediately and only had one price increase post-COVID.
  • The cost of marketing has remained high, with CPMs (cost per thousand impressions) remaining at elevated levels.

Marketing channels:

  • Paid social media and paid search are popular channels for advertising.
  • Companies rely heavily on smart targeting through platforms like Facebook and Google.
  • Word-of-mouth marketing becomes crucial when customer acquisition costs rise.
  • Building a strong brand that generates positive word-of-mouth is essential for long-term success.

Future of materials:

  • Synthetic fibers like rayon marketed as sustainable alternatives to cotton don't hold up as well in terms of durability
  • Advancements in material science include dyes made from vegetables and fruit, coffee grounds blended with cotton, and other tech materials
  • Boll & Branch is investing in leading the category by exploring more sustainable options like silk and different fibers/materials that provide added benefits to customers

Quality of cotton:

  • Boll & Branch uses super high-grade cotton for its sheets, which lasts longer compared to low-grade cotton used by most DTC companies
  • Cotton gets better as it breaks down, taking a long time to deteriorate even after 100 washes or more
  • The way threads are spun impacts strength and softness, while fabric softeners and chemicals like formaldehyde can break down the natural properties of cotton

Retail stores:

  • Boll & Branch operates small retail stores (1,500 to 2,500 square feet) that serve as micro stores for onboarding customers
  • Retail stores contribute to about 60-65% of in-store purchases in the category
  • Stores offer personalized customer service, including delivering products to customers' homes and helping create an entire look for their bedrooms