Win Brands Group has been around since 2017, but this is the year the DTC roll-up strategy is really beginning to gain steam.
The company owns a slew of online businesses, including the candle company Homesick and the weighted blanket brand Gravity. According to founder Kyle Widrick, things have been building nicely since inception, but thanks to big pandemic-related changes Win is now set up for more growth.
“We’ve built up our holding company and our structure and our process in such a way that we plan to do a third vertical and a fourth and a fifth,” he said on the Modern Retail Podcast. “And this will continue for a decade-plus to come.”
Most recently, this week, Win announced that it raised $40 million and acquired a new company to its portfolio: a hat brand called Love Your Melon. On the program, Widrick spoke about his ambitions for LYM, as well as the crossroads many founders of growing online brands face.
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“It was clear they were going to have to hire a tremendous amount of more people to get to success on Amazon and at retail,” said Widrick. “So the question becomes: Do you want to build that yourself and hire those folks yourself? Or do you want to partner with someone like Win?”
Another big topic in the e-commerce space is the rise of roll-up companies. Though Win has been around for a while, other firms — many of which like Thrasio and Perch are focusing on marketplaces like Amazon — are continuing to grow and amass large amounts of venture capital funding. According to Widrick, his company and the others are different for a variety of reasons. One of the big ones being branding: Win Brands Group looks to acquire companies with a notable brand, while many other roll-ups are looking for fast-selling SKUs.
Ultimately, said Widrick, that leads to the ultimate ambition he has for his company. “We’re partnering with great founders and making bets on great brands that we plan to be around for the next 20 years-plus,” he said. “These are not flash in the pan — in and out — these are long-state businesses that we’re betting on for the long term.”
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Here are a few highlights from the conversation, which have been lightly edited for clarity.
Win’s initial rubric for acquiring a brand
“I really fell in love with the Homesick brand — I knew it was a home run concept. The question was: Did we have the capability to scale it? [It] was primarily an e-commerce direct Shopify business when we bought it, they had not launched on Amazon yet. Oe of the first challenges and questions that we asked ourselves was: Could we make this a successful brand on Amazon? So we pushed on that, and then we took it to retail. We launched at Target, we launched at Bloomingdale’s. What we look for in these brands is [number one] a category leader: that we feel like, within whatever category — niche or not — that they can be the leader in that space. Two, some sort of founding team and ethos that we can get behind. And then three, and maybe most importantly, how much value can we add? If [we come] in and [partner] with this brand, can we really improve in a dramatic way the scale of this business?”
On Win’s latest acquisition: Love Your Melon
“[Love Your Melon] is an outerwear business, mainly hats. Their core product has been a winter hat with pompoms. They have a lot of licensing with Disney and other companies. They’ve done a great job building a niche leader in that space. And when we met the two founders, it was an open discussion about how far they’ve come and where they want to take the business. And it was clear they were going to have to hire a tremendous amount of more people to get to success on Amazon and at retail. So the question becomes: Do you want to build that yourself and hire those folks yourself? Or do you want to partner with someone like Win — who has the resources set up to allow you to plug into — and then really just keep doing what you’re doing and focus on best product?”
Why Amazon roll-ups differ from Win
“You see a tremendous amount of [fundraising] happening on the Amazon side. The Amazon roll-up is a very efficient roll-up for a whole host of reasons. However, they’re not focused on branded businesses. So it’s a completely different animal. I think, for us in the branded world, we faced headwinds last year with Facebook, iOS — that has been one challenge. There are other challenges. There will be more challenges this year. So I think the game is really aggregating as much great talent as you can to figure out those problems, and being able to scale [with] an omnichannel approach. Omnichannel is key. When we hit Covid, we had websites that thrived and retail that dried up; we had retail that thrived [and] websites that dried up. So having that consistent, three-pronged revenue strategy is very, very important to us.”
‘We’ve really had to diversify’
“Facebook, iOS, that’s something that is never easy to manage. But [they’re] easier to manage with scale, when you have multiple brands to look at what’s happening, and sharing those resources and those positive learnings across. I’m sure we’re going to see more challenges this year, from a customer acquisition perspective. We’ve had to really diversify where we’re looking for those initial customers. A lot of the brands we end up partnering with had early success on Facebook and Instagram, and that has scaled to a tremendous level. But that’s not a channel that’s scaling organically easily between brackets anymore. So you have to be creative, you have to look you know, different niche audiences.”