As Digital Brands Realize They Need Stores, Fifth Wall Ventures Sees An Opportunity
“Retail is not dead. DTC is not dead. What is dead is thinking that any smart MBA could ‘growth hack’ their way to a real business through cheap digital customer acquisition,” says Matt Higgins, cofounder and CEO of RSE Ventures. “Ten years ago, that might have worked, but now, every mature company is chasing those same Instagram eyeballs, driving up CAC [customer acquisition cost] faster than a VC could shovel money back into a startup.”
Higgins, a recurring shark on ABC’s Shark Tank who co-teaches a “Moving Beyond DTC” course at Harvard Business School, says direct-to-consumer companies can develop intimate conversations with customers “at warp speed.” However, he adds, “that conversation has to be taken offline very quickly to build a lasting business.
“DTCs that have any form of physical touch point enable customers to form a deeper bond with their brand, which translates to lower [product] returns, higher average order size and more purchases over the long run,” Higgins says. “Non-traditional retail opportunities inside places like Showfields and Nordstrom are popping up to help DTCs dip their toes into retail before they make expensive, high-stakes real estate commitments.”