Bean Box CEO: D2C Better Than Amazon for Small Brands

Bean Box CEO: D2C Better Than Amazon for Small Brands

As consumer packaged goods (CPG) companies look to build loyalty and maintain consistent sales, subscription offerings can go a long way, but Amazon’s popular Subscribe & Save program may not be the best fit for smaller brands, as Bean Box has observed.

In an interview with PYMNTS, Matthew Berk, CEO and co-founder of the direct-to-consumer (D2C) coffee brand, explained that, after the brand’s early success with Amazon Subscribe & Save, the tide turned.

“On the one hand, Amazon creates a broad, a relatively democratized marketplace, where any brand can compete for a buyer,” Berk said, “and on the other hand, for smaller brands like ours, which are more special in nature and have more targeted product sets, it is very, very hard to compete, largely because we ended up being outspent by the larger brands.”

He noted that Bean Box was one of the early brands to participate in Amazon’s Subscribe & Save program, building on the company’s existing success on the eCommerce giant’s marketplace, and that its subscription “did pretty well” for the first 12 to 18 months, after which point there was a “dramatic decrease” in its subscriber count.

Overall, the Subscribe & Save audience is massive. Research from the study “The Subscription Commerce Conversion Index: Subscribers Seek Affordability and Convenience,” a PYMNTS and collaboration, found that 42% of consumers with product subscriptions participate in the program. Yet not all brands enrolled in the program have the same shot at reaching these consumers.

“While Amazon is a great place to get more brand exposure, you also are competing in a marketplace where literally the largest brands in the world are competing, and where Amazon’s own products are competing as well,” Berk said.

Bean Box, for its part, shifted to D2C Subscribe & Save offerings. The company already had subscription offerings, but after trying out Amazon Subscribe & Save and realizing that there was an audience for single-product subscriptions, wherein consumers get discounts for recurring purchases, the brand integrated this offering into its D2C site — a higher-margin channel than selling via Amazon.

However, Amazon remains an appealing acquisition channel, with “roughly 7%” of those who had bought Bean Box products via the third-party marketplace later buying direct from the coffee brand, Berk said.

To hold onto subscribers, frictionless purchasing experiences are key. Research from “At the Checkout: Deal-Chasers Versus Loyal Customers,” a PYMNTS and collaboration, revealed that 76% of loyal customers said satisfying checkout experiences influence their decisions on whether to purchase again from a given merchant.

“What we’ve learned is that when it comes to meeting the consumer, … part of the equation is giving them a frictionless experience to buy,” Berk said. “That can be the website. They can purchase in an SMS message. They could purchase using our app. We try and make it really, really simple. … Those are the ways to really engage your customers and to continue building their lifetime value.”