As consumers increasingly turn to eCommerce and as consumer packaged goods (CPG) brands look to make more direct connections with their customers, many have turned to direct-to-consumer (D2C) channels to cultivate trust and gain better insight into who buys their products.
However, Sebastian Rymarz, co-founder and CEO of marketplace brand accelerator Heyday, told PYMNTS that CPG companies such as Procter & Gamble, which was founded in 1837, were built for retail, not eCommerce, and are burdened by legacy brands that make it harder to pivot.
“We’re kind of rebuilding that platform that CPGs have built over the last 200 years, rebuilding it for eCommerce,” he said. “In fact, we have an advantage over them, because we get to start with a blank canvas.”
Heyday was founded in August 2020 and has so far raised $245 million, indicative of the strong enthusiasm investors have for marketplace aggregators. According to Crunchbase, nine Amazon-focused aggregators have raised over $2.3 billion in funding, with Massachusetts-based Thrasio taking the lion’s share at $1.6 billion.
“The Bring it to Me Economy” report, done in collaboration between PYMNTS and Carat from Fiserv, found that 91 percent of consumers have made at least one purchase on Amazon in the past year, and 70 percent have shopped on another digitally recognized marketplace.
Rymarz said, though, that looking at marketplaces as a digital economy, “you realize that it’s an economy that hasn’t been institutionalized from the standpoint of capital formation, from the standpoint of talent, from the standpoint of scale players — and that’s what got me super excited. This is like the Wild West.”
What was holding back institutionalization, Rymarz said, was a stigma that great digitally native brands — such as Dollar Shave Club, Allbirds and Glossier — don’t sell on Amazon or other digital marketplaces. “For a lot of products, Amazon will compete with you, they’ll steal your data, they won’t share data, and the list goes on,” he said. “That’s sort of the stigma.”
But the reality is that consumers are increasingly turning to marketplaces as convenient places to shop for a wide selection of items. “The way we see the future evolving at Heyday is all about location, location, location,” Rymarz said. “People say that in a physical context, and it’s true in digital. And we think that location is digital marketplaces.”
Finding the Right Fit
Rymarz said Heyday is exclusively focused on three consumer goods categories — functional home, lifestyle and personal care — and only invests in brands that have durable value and the opportunity for Heyday to add value. “If we see a brand that has a ton of products, has basically exhausted the market and is in a ton of channels, that may be a great brand and a great business, but it’s going to be harder for us to drive value to that business,” he explained.
Heyday is distinct from brand aggregators such as Perch and Thrasio in that it’s not focused on acquisitions. The company typically buys about two brands per month, “and for the next few years, that’s what we plan to buy,” Rymarz said. Rather, Heyday’s strategy centers on brand creation and incubation with a marketplace-first mindset. “If you’re building an eCommerce business, digital marketplace is obviously going to be your biggest channel,” he said. “It’s not going to be direct-to-consumer.”
U.S. D2C eCommerce sales reached over $111 billion last year and are expected to hit $129 billion by the end of 2021, according to eMarketer; by 2023, D2C eCommerce sales could reach nearly $175 billion. And Heyday’s portfolio does include D2C operations — Rymarz noted that “digital is omnichannel,” which means being wherever the consumer is shopping.
But Rymarz is also steadfast in his belief that “the Warby Parker of the next decade is going to be built marketplace-first,” pointing to the fact that many brands are already recognizing this and shifting to be listed on Amazon and other marketplaces. “They cannot ignore that location, or the volume there.”
“We’re building tech, operations, ad campaign execution … we’re building all those things to be great at marketplace. You cannot be great at marketplace if you don’t take that approach,” Rymarz noted. “And if you want to be great at eCommerce, you have to be great at marketplace.”