Getting mass distribution on the shelves of huge retailers may not be the best way forward for new consumer-goods brands, according to the co-founder of a new venture capital (VC) business The Craftory.
executive, founded the company in May 2018, and its website describes it as "counter-corporate and anti-traditional VC," with a focus on cause-driven consumer goods.
It invests in "challenger" companies that have at least $10 million in sales, aiming to grow them to $100 million-plus, but Leoni Sceti advises against doing deals with large retailers, for fear of compromising their standards, being pushed to reduce their selling prices, or being squashed by brands owned by the large consumer-goods companies.shelf , very often is the beginning of the end.
If a smaller brand that uses ingredients that are in limited supply gets a listing at a large store, for example, it may have to cut back or replace that ingredient to be able to compete on price, he said. Writing on The Craftory's website,: "It's hard to be the champion of healthy nutrition when you're one bottle facing against 75 Coca-Colas on the shelf, whereas you can stand free and bold, noteworthy all because of yourself, online.
Smaller, new brands are "cool because I know about it and you don't," Leoni Sceti said. "Then you spend money , you grow it, and then it loses his cool. So, it's a vicious cycle," he said."Amazon is the big massive elephant in the room because it's both a channel that you can stay in control of but it's also a channel that is incredibly risky.
But when a smaller brand starts being recognised by consumers more broadly, competitors can bid on its brand name so their products appear on Amazon's search results page, for example.
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