The last two years have seen some radical changes to the way people live and shop and that has meant new challenges and opportunities for young growing companies like the clients of Stage 1 Financial. For many of these high-growth companies, it can be challenging to know when to get the assistance of a CFO. We won’t go too in-depth on the subject of how and when to get a CFO but this set of data does tell a very compelling story of why you should get CFO assistance.
For this Data Insights Article we have analyzed a grouping of our clients that sell in the following three ways; Direct to Consumer, Wholesale, and through Amazon. The intention is to compare how each sales channel has performed and what the implications have on these businesses. The following are the key findings:
- Since the beginning of 2021, Wholesale & Amazon Revenue Growth has significantly outpaced Direct to Consumer (DTC) Revenue Growth
- In both Food/Beverage & Beauty, the average growth for Wholesale and Amazon has been 345% and 169% respectively
- For the same customer segments, DTC average growth has lagged at 19.8% from January 2021 thru July 2022
- The same trend has continued into 2022: Wholesale (+139%) & Amazon (+175%) Revenue Growth has outpaced DTC Revenue Growth (Flat)
- Outside of Q1 of 2021, there has been a high correlation between Quarter over Quarter growth for both WS & Amazon
- For DTC to support the small growth in revenue since Jan 2021, marketing spend has increased +137% and has increased 20% to keep revenue flat YTD
As we internalize these findings and circle back to why a young, fast, growing business should get CFO services there is a clear takeaway, they will help your business adjust and take advantage of situations like this to keep growing and not keep investing in a failing strategy. From a Stage 1 CFO perspective, it’s important to review profitability by channel and continue to invest in Wholesale & Amazon. As for DTC, its important to keep a close eye on the unit economics so as to not get into a negative position or increase your current cash burn.