Forget complexity.

Let’s get simple without getting simplistic.

Three ecommerce rules … ripe with raw honesty about what happens when you break them.

📊 Sean Frank reveals the “formulas” of being a merchant

🤑 Connor Rolain with a referral strategy that actually works

🗞️ Five biggest headlines from this week in consumer news

Plus two invitations …

Mike Beckham

Simple Modern, CEO

Operators Assemble! Your Invitation

On June 17th, we’re excited to be hosting our first online event … by operators, for operators.

20+ speakers
4 keynotes
Mystery headerliner
10 lightning panels
Live AMA podcast

And best of all, three breakout tracks for (1) leaders, (2) marketers, and (3) finance.

It’s a half day. All of the Operators will be there. I’ll be hosting the leadership track — you don’t want to miss this.

Grab Your Spot Today

Sean Frank

Ridge, CEO

The Math of Ecom, 3 Rules (FORMULAS) & When It Breaks

What we do isn’t special, hard, or unique.

The second oldest profession on earth is merchant. Instead of traversing the landscapes of Eurasia, bringing spices and silks to foreign lands …

Ridge sells mid-price, accessible luxury goods to the masses via Meta and Shopify.

I love what I do because I love cool new things. I am a driving force for new products at Ridge because it’s what I like.

So, while what we do isn’t unique or hard — I find it fulfilling.

It’s an old, simple tradition.

But what happens when people try to outsmart the industry? What is the math of being a merchant?

MSRP > COGS = Profit
Offer + Attention = Sales
Consumption = Frequency

RULE 1: MSRP > COGS = Profit

Rule one is so obvious it hurts.

Sell things for more than they cost to make.

Why is it even a rule?

Because there was an era when it was ignored.

Casper had negative gross margins; Blue Apron had negative gross margins. They were literally selling dollars for 90 cents — with more steps.

Ten years ago, both those brands were DARLINGS. They took VC dollars and lit them on fire to chase market share.

But there are NEGATIVE NETWORK EFFECTS in consumer.

Google and Uber can get to 80-90% market share because they end up being utilities.

Consumer seems to top out at 20%.

Coca-Cola has 20% market share for soft drinks in the US. Add in all its sub-brands (Sprite, Diet Coke, etc.), maybe 35%

The greatest consumer brand of all time doesn’t have a monopoly.

VC brands tried to break a rule.

And they paid for it.

RULE 2: Offer + Attention = Sales

Rule two is how marketing works.

You need some sort of offer, and you need some way to get attention to make sales.

Facebook is just an attention machine.

You trade dollars for impressions — the first widespread, low-buy-in, easy-to-use ad platform.

No spend commitments, no account reps or onboarding.

Permissionless attention.

The merchants of Babylon needed the marketplace, the town square, the booth. The brands of the post-WW2 era needed TV and radio and department stores.

We just need a credit card.

But Facebook or a tradeshow booth does the same thing …

Get attention on an offer.

“My thing does X and Y for you. It does it better than Z! Here’s how much it costs.”

Ads aren’t anything without offers.

But an offer isn’t just a discount. It is the problem your product solves. And it is why that solution is more valuable than the money in someone’s wallet.

Problem, solution, offer, ads … attention.

In that order.

RULE 3: Consumption = Frequency

You cannot change human habits.

Why are beverage companies so valuable?

Because you drink them.

Every human drinks a half gallon of SOMETHING per day.

If you can be a regular part of that daily habit, your purchase frequency shoots up.

And if someone buys from you more frequently, you are more likely to spend more to reach them.

The cycle continues!

You spend more and more to acquire customers that are theoretically more valuable to you over time …

Oh wait, we have heard this one before: ECOM 101.

Every brand is different.

If you sell wallets, your frequency is low, once every 5–10 years.

If you sell subscription medicated soap that helps with dry skin, your frequency is probably high.

Everything has a consumption timeline. If you know a thing or two about accounting, that’s called depreciation.

A Ridge wallet depreciates after five years.

That bottle of soap? 30 days.

Strip out the pretty colors, the landing pages, and the influencer endorsements — what do you get?

TAM = size of opportunity
Higher AOV = lower conversion rate
Lower conversion rate = more expensive attention

More expensive attention means higher CACs. Which in turn means you need a higher LTV to offset.

Furniture is a great example. High AOV, low LTV, but big TAM. Lots of competition.

Home saunas? High AOV, low LTV, but smaller TAM. Less competition.

Human consumption is a mostly solved market.

It’s why TRENDS are a good thing.

Candy is medium TAM, low AOV, high LTV. Candy is a 100% solved market — until trends offset that balance.

Freeze dried is a trend that is growing fast. Healthy candy is a trend that is growing fast.

Catching a trend breaks the math and makes things work in your favor until the trend passes …

Reflections on Ridge and Trends

Why did Ridge work? Medium AOV, low LTV, big TAM. On the surface, I would give Ridge’s thesis a 5/10.

Good, not great, and not worth trying.

But what worked in our favor?

The trend of digital advertising.

Building Ridge today would not work because attention costs 10x what it did a decade ago.

The business model of medium AOV + low LTV doesn’t work when you break rule two.

200 million people came on the internet, shifting all their watch time from TV to social media, and we were an early advertiser.

It’s a switch that happens maybe once every 50 years. We got super lucky to be there.

Plus, we were in an ignored category.

Fashion houses took men’s accessory sales for granted.

They were husband gifts, sold through the wife as an upsell. Ignored category, cheap attention, big enough TAM. That’s what made me a winner.

That wouldn’t work today.

The modern version of Ridge would be …

High AOV: Jewelry or watches
Big TAM: Women’s first, men don’t care enough
Sold on subscription: Shrinks TAM massively but makes LTV actually work

For credibility, we’d build with designers directly or stylists.

I’d sell something like a themed box for $100 that changes every month (frequency) with pieces of jewelry worth $300-$500 (offer) … but costs $20 to make (profit).

Otherwise, you will just lose money in the auction.

Ad costs have 10x’d in 10 years.

Has your AOV 10x’d?

Connor Rolain

HexClad, Head of Growth

Building a Referral Engine That Generated $450k in 90 Days

The usual “give X, get X” referral schemes have been played out across DTC.

At HexClad, we designed a program with Rivo that increased AOV 17% from referred customers and generated nearly half a million dollars in the first 90 days.

Three things make it work …

Tiered Gifts: We gamify referrals by using specific products for each level instead of discounts
Minimum AOVs: Referred customers must spend over $400 on their first order to qualify
Inescapable CTAs: Not just post-purchase, we include dynamic blocks in every email campaign

We couldn’t have done it without a partner like Rivo that lets us collaborate on their product roadmap to fit our goals.

You can check out Hex’s full case study with them, or …

Get a Demo for Yourself

THE FEED

Sean’s Back in the Green + Market Insights, Future Commerce Tech & Dynamic Budgeting

Go-To-Market Strategy: How 9-Figure Brands Plan, Execute & Post-Mortem Product Launches

Outsource Your Sales Tax Nightmares + FIGS, Building Your Own Factory & More

The Trends

Curated by the editor of CPG Wire, this week’s biggest consumer-news headlines.

1. PepsiCo Completes Poppi Acquisition: PR Newswire

PepsiCo completed its acquisition of modern soda brand Poppi for $1.95B. The deal also includes a performance-based earnout. Since Oct., PepsiCo has shelled out more than $3B to acquire Poppi, Siete Foods, and Sabra Hummus as the company refocuses on better-for-you snacks and beverages.

2. AG1 Goes Beyond Greens: Twitter (X)

After spending over a decade perfecting its flagship product, AG1 is expanding into the sleep category with AGZ.

AGZ is formulated with herbs, minerals, and clinically studied adaptogens to support restorative sleep. This is a smart play for AG1. While it might be tempting for the company to launch trendier products (like creatine or colostrum), sleep is such an enormous market for AG1 to enter.

3. ECP Growth Grabs $100M For Fund IV: PR Newswire

Emil Capital Partners rebranded as ECP Growth and raised $100M for its fourth fund. Established in close partnership with Tengelmann Group in 2011, the firm has backed a number of brands like Aloha, Base Culture, Bare Snacks, NextFoods, TCHO, and numerous others.

4. Final Boss Sour Secures More Funding: FinSMEs

Viral sour snack maker Final Boss Sour raised another $4M in seed funding. Science Inc., which developed Final Boss Sour in-house, led the round. A number of other institutional investors like Melitas Ventures, GFR Fund, Uncommon Denominator, and Simple Food Ventures also participated in the round.

Science Inc. is best known for incubating Dollar Shave Club and Liquid Death, so Final Boss Sour is in good company.

5. Creatine Sales Continue to Skyrocket: Fitt Insider

Thanks to brands like Create Wellness and influential podcasters like Joe Rogan, creatine sales are absolutely skyrocketing.

Once considered a fringe supplement for bodybuilders, the compound is having its mainstream moment. As a category, it’s expected to be worth $4.2 billion by 2030. On Amazon alone, creatine sales are up 65% year-over-year.

About the other “invitation”

First off, we’d love to have you join us for our Operators Assemble online event.

Be sure to reserve your seat!

Second, we have two spots left for our lightning panelists: