Bear

If you were to say there was a seminal article in the history of DTC, you’d probably pick Andy Dunn’s “E-Commerce is a Bear.”

It’s 12 years old now, and while some predictions haven’t aged too well, Dunn (the co-founder and CEO of Bonobos) did nail some core concepts. In it, he said there were four ways you could compete against Amazon in ecommerce¹:

• Proprietary pricing

• Proprietary selection

• Proprietary experience

• Proprietary merchandise

DTC ended up being built around the merchandise: goods you can’t get anywhere else (though, of course, that has ultimately changed as brands matured).

Business models, as we’ve previously discussed, were mostly built on top of that by favoring cost-plus pricing strategies. For brands that started with the product, the price came next.

But what if you started with price point and worked backwards?

A couple weeks ago, our head of marketing, Alex, interviewed one of our customers, Michael Ting of Jaxxon, about price testing. And while there was a lot of good stuff in there, the piece that stuck out the most was Michael talking about how the brand uses price to position itself in market. (This clip is great, if you don’t have time to listen to the whole interview.)

Jaxxon saw a market opportunity in men’s jewelry where the market was anchored by low-priced/high-volume businesses and high-priced/low-volume businesses, but very little competition in the middle. The brand has lived in that space, and been successful doing so. 

This feels like a story worth being pretty loud about, given how rarely you hear one similar to it and how much more I think you will hear this type of story in the future.

So, here goes: 

Starting with price creates multiple advantages. Clear positioning makes a lot of other components to executing a brand easier: like what your creative looks like, where you aim to get retail distribution, and how you expand your product catalog.

Product quality actually becomes a creative constraint, too.

Depending on where you’re positioned (say upper end of a category), you can probably get away with making a “great” product for a “great” price, but imagine what happens if you can make a “great” product for a “good” or even “OK” price. 

That value doesn’t need to be fully extractive of the customer, either. You can invest that extra margin into marketing and product expansion that reinforces your position in the market and, therefore, builds more price inelasticity.

This, I think, will be the next wave of how to compete (which I recognize is counter to some prevailing beliefs around Agentic Commerce): Finding price positioning alpha in a category based on consumer demand and value trends will create more opportunities for brand growth and product expansion, because brands will follow market trends and consumer spending habits more closely. 

And, if that happens, everything else Dunn mentioned—the selection, the experience, the merchandise—will all flow from that.

1   It’s worth noting that the article is so old that the hyphen in “e-commerce” didn’t look as weird then as it does now.