During the early months of the pandemic, direct to consumer (D2C) businesses saw sales skyrocket, as consumers stuck at home turned toward remote channels for their shopping needs. Meanwhile, companies that relied on the congestion of urban business districts struggled to maintain their customary flow of revenues.
Noting this shift, Shaunak Amin co-founded SnackMagic, an eCommerce snack box shop that specializes in corporate gifting, although individual consumers also make up a portion of the shop’s clientele. Previously, Amin had co-founded and led Stadium, a food delivery service focused on corporate lunches, though after the pandemic hit he pivoted to the more remote-friendly business.
“We grew from nothing, no business, to 20 million annual run rate in close to eight months, and it keeps growing quite fast,” Amin told PYMNTS in an interview. “Even if things open up, I think, overall, people want to feel connected … even though many people might be working remotely.”
In the spring, the company announced a $15 million Series A fundraise to grow its platform, which generates revenue both from businesses and from consumers who, having been gifted a snack box, return to the service to make their own gifting purchases. He noted that the company’s revenue currently comes about 85% from corporate gifting and 15% from D2C purchases. He predicts, however, that the split will shift to 60/40 over time.
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Amin noted that the company uses data both to personalize the experience for the consumer and to make smarter decisions about the brands on the platform.
“We’re working on a project where if you log in, you’ll see a menu that is personalized to you, and if I log in, I see a menu that’s personalized to me,” he said.
Additionally, he noted that the company uses the insights it gathers from the online shop to reevaluate its inventory every quarter, combing through the lowest performing quartile and deciding whether to replace the brands. Amin explained, “Our relationship with each brand is very transparent, where they see what’s moving and we’ll give them guidance and feedback on what people are saying about their product.”
Moving toward the future, the company wants to “become the one-stop shop for all things CPG online,” providing comprehensive data about product performance as well as feedback and focus group insights.
What Consumers Are Saying
Data from PYMNTS 2020 study D2C And The New Brand Loyalty Opportunity, a collaboration with sticky.io, which surveyed more than 2,100 U.S. consumers who had reported purchasing consumer packaged goods (CPG) products at least once in the previous year, found that 58% of D2C users reported purchasing from new food and beverage product brands since the start of the pandemic. However, the D2C food and beverage category has been slower to take off than other categories — only 16% of consumers reported using D2C for food purchases.
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