Everything worth writing about in DTC

DTC is in disarray this week and it's got Sean Frank of Ridge.com wondering if we’ve been hexed. 

No voodoo Sean, just DTC things. 

Let’s address his comment and start with Amazon. 

New Amazon Fees

Amazon recently introduced new fees for seller inventory management in its warehouses. 

Sean’s take:

So, what’s actually going on?

Breakdown

We summarize the new fees below but you can get them in detail here.

The good

→ Referral fees down

→ FBA fulfillment fees more granular, many drop.

The bad

→ Some fulfillment fees are up.

→ Inbound placement fees exist now. They can be worked around though.

→ Low inventory level fees exist now, too. 

→ Removal, liquidation and disposal fees are up. 

→ Returns and processing fees are up for high return-rate products (except shoes and apparel)

What does this mean in practice? It gets complicated. Inbound placement fees charge you for sending all of your inventory to one warehouse. Split your package between 4+ warehouses and the fee goes away. But now you’re paying more for shipping. 

Molson Hart says the new fees are costing him $0.83 per unit. For 400,000 units, that’s $300,000 his business needs to absorb this year. Which it can’t. He has to crunch the numbers and find out which of 30 shipping options will work best for his company. 

DTC Operators will note that switching to Amazon Warehouse Distribution (AWD) makes storage much cheaper. AWD hasn’t attracted as many as Amazon hoped, and these new fees could be a move to incentivize the transition (credit: eCommerceJack for the idea).

If you do switch, however, be wary. Amazon has a history of undercutting competitor shipping costs, only to gradually increase prices over time and end up far more expensive. They are following the same pattern with AWD. 

Takeaway: Amazon seems to enjoy making life more difficult and more expensive for its sellers.  There will be a breaking point past which it becomes more interesting to switch to DTC and other platforms. 

The Meta Outage

Meta-owned Facebook and Instagram (and Threads 😵) went down for two hours on March 5th, at 10:00 am. 

Those two hours cost them about $30M. Peanuts.

Of course, life went on. 

Kids went outside. 

No. Wait. They were on TikTok. 

Quadragenarians and up went outside. 

Except those in DTC. 

Why? Because shortly after the outage, Meta ads began to go haywire. 

Breakdown

Users across the platform began complaining about significant overspend on ads. Dave Rekuc “had 1 ad set go from $400 spend in an hour to over $6k spend at an inflated CPM”.

It seems that duplicating or rebuilding the same ad and relaunching fixed the issue. Many users, like Deborah Stone, were locked out of their ads account after the outage. Meta did not show any signs of response. 

Meta spokesman Andy Stone’s statement is all we got. The statement? We’re down, sorry. 

He communicated it through Twitter/X, the irony of which was not lost on the Twitter community. 

David Hermann expressed mental fatigue. His most trustworthy ads have not been performing, and his troubleshooting may have been a waste of energy since the error could be Meta’s.

Many echo his feelings, citing poor ad performance through much of Q1 and wondering if Meta is at fault. This includes Sean Frank of Ridge.com.

Beyond the 14/02’s and the last few days’ overspend, Andrew Faris sees no evidence supporting this. 

Takeaway: Meta isn't into open communication. It’s on you to keep an eye out for anything unusual in your meta ads. Duplicate and rebuild them if in doubt. 

Klaviyo’s Professional Services

As you may (or may not) have heard, Klaviyo, one of the biggest marketing automation platforms, released a set of professional service packages.

What packages specifically? 

This screenshot of their pricing has been going around on Twitter/X. 

Breakdown

Their offering is suspiciously similar to what Klaviyo’s agency partners offer, says Chase Dimond. He reminds us that Klaviyo wouldn’t be where it is today without its partner agencies. Quite the backstab.

His feelings were echoed around Twitter/X.

Scott Segel, Director of Agency Partnerships at Klaviyo, responded directly to Tyler Sickmeyer’s post above, claiming his LinkedIn post should address his concerns. The post’s TL;DR: According to Scott, Klaviyo customers sometimes want help getting started (repeat, getting started), from Klaviyo specifically. Not its agency partners.

Agencies responded positively to Scott’s post, while most of Twitter expressed strong disapproval. This includes many hints at switching over to competitors such as Sendlane.

Bonafide non-sheep Steven Petteruti went against the grain. His theory? Klaviyo could be trying to capture segments of the market where this offering is required to secure certain accounts. If true, he continues, this would actually benefit the partner ecosystem by attracting more customers. 

Daniel Pearson, founder of growwithbamboo, also weighed in with some actual thoughts. If it's better for Klaviyo customers, he loves the move. According to Scott, Klaviyo is meeting customer demand. Daniel says: “Client value first. Always.” Klaviyo agencies should stop complaining and look for opportunity. This is happening. Figure out what Klaviyo is planning and see how you can work with them. This is just the beginning. AI is blurring the line between service and tech solutions. Agencies will implement workflow automation, and SaaS will add services until they “converge into solutions that just… work.”

Ben Sharf, co-founder of @getplatter, says combining SaaS and professional services is what they’ve been doing from the get-go.

And now for our final and favorite take, Chris Orzechowski is neither for or against Klaviyo’s decision. He straight up DOES NOT CARE.

“For as far back as I can remember, I've been the guy that brand owners have been "sneaking through the back door" to UN-FUCK their agency's strategy & copy. [...] As far as I'm concerned, it's just 'another agency' out there, who threw themselves into the mix. If there were 1,000 email agencies... now theres 1,001. Doesn't change much, from where I'm sitting. Good. Bring it on.”

Takeaway: Time will tell whether Klaviyo are actually turning against their partners, or if they are really plugging a gap in the customer journeys. Either way, expect to see more companies merging services and SaaS.

Quick Hits

• The DTCCI (Direct To Consumer Confidence Index) is back on the rise after a long fall. Provided by Common Thread Collective and KnoCommerce, it is derived from 5 data driven questions asked to 5000 eCommerce shoppers daily. 

• A report from RivalIQ found that the engagement rate for branded content on TikTok dropped from 5.69% to 2.63% YoY (Inside.com). Cause? Unknown. Possibilities? Many. 

• Meta is ending its Authorized Sales Partner program in July. It enabled third parties to provide local services in Meta’s stead around the world, much like Salesforce does.