A little digging unearthed a few realizations. For starters, many of these brands carry no inventory — they are designed with tightly constructed and managed supply chains that can manufacture and ship product in small batches on demand, often in coordination with a partner in China. I heard about a few of these brands that launched and sold merchandise essentially as a design test, and then informed customers that shipping may take a couple months as the first round of inventory was made. In such a world, a new company that makes socks or bathrobes could could conceivably launch three brands at once and then only develop the brand that performs the best. These brands can be spun up and wound down quickly, and they are managed with an eye on cost of customer acquisition and the achievable spread on Instagram.
I think this mass of micro brands with massively efficient marketing are, in aggregate, having a much bigger impact than anyone thinks. Using hyper-targeted marketing, just-in-time manufacturing, and social media, these brands find and engage their audience wherever they may be. Of course, small brands are nothing new, but they typically remained small companies. Now I’m hearing about more and more of these brands with tiny teams generating over $10M in sales, with higher-than-normal-retail profit margins. What is driving this new wave of commerce, and what are the implications?