2025, eTail Boston. Keynote Fireside Chat - Keynote Fireside Chat: We’re in D2C 3.0. What Does That Mean?

Michael Wieder, Co-Founder, President & CEO, LALO: Nice

Moderator: Anna Hensel, Executive Editor, Modern Retail: to see you. So I think we first got connected back when X was still called Twitter. Yep. And the term D two C was still all the rage. So first of all, how do you feel about the term D two C?

Michael Wieder, Co-Founder, President & CEO, LALO: I'm cool with it. I don't get too wound up on terms, I think. Okay. If you go to X there might be different opinions and people's stronger opinions.

People wanna use it. Go for it.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. So the title of this keynote is we're in D two C3 0.0 and we'll talk more at all these terms. There's no kind of one right definition for it. Yeah. But what do, how do you feel like, how people think about D two C? Like, how has that shifted? And actually we should back up a little bit.

Anna Hensel, Executive Editor, Modern Retail: For those who don't know Lolo tell us a little bit more about the brand.

Michael Wieder, Co-Founder, President & CEO, LALO: Sure. So we make baby and toddler product. We've been around for six and a half years. Omnichannel brand at this point launched D two C. Yeah. And really grew our business originally that way, but quickly, it, it relatively quickly, expanded out into other channels that were necessary for us to scale.

But to answer your first question of D two C and kind of the history of where D two C even started was D two C really started 1.0. Was a business model.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah.

Michael Wieder, Co-Founder, President & CEO, LALO: It was the idea of arbitraging Google, like was talked about in the old way, in the last chat or Facebook and arbitraging the ad marketplaces to be able to scale in e-commerce, and you saw brands explode overnight, the Warby Parkers and those OGs of D two C. They found a way to make that their business model then probably D two C 2.0. What it became was. Okay, is this a go-to market strategy? And I think that's the world in which we were founded. It really became a go-to market strategy. And now as we go into D two, C3 0.0, D two C is really becoming a sales channel, and it needs to be treated as such.

And the profitability and the p and l of it needs to be examined on the level of every other sales channel. And oftentimes it still becomes a go-to-market strategy. Like we're still hanging onto that because it is the sales channel with the lowest barrier to entry.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah.

Michael Wieder, Co-Founder, President & CEO, LALO: It allows brands to get out there quicker, start a business, startups can really thrive and find footing.

But what we're seeing now in D two C3 0.0 is a rapid expansion into omnichannel, rapid expansion into retail. I think, if we look at, and this is especially in CPG and food like Graza is a great example, right? Yeah. They launched D two C, but it was like on Whole Foods shelves, like the next day.

And they've exploded since then. Yeah. Or buns or, something like that.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. And so when you launched D two C first, but did you consider yourself a D two C business when you launched?

Michael Wieder, Co-Founder, President & CEO, LALO: I think we did, honestly. And the reason was in our category, we were one of the last categories to really move online.

Yeah. Baby, like historically has really lagged everything. And that's the white space we saw. It was lagging in everything. Like no one shopped for anything the way you shop for baby. And part of that is because the literal consumer behavior within the space, right? Pa, you have a consumer has no idea what they're buying, how much should cost, how does it work, and they're entering the scariest fucking moments of their life.

It's I could say this as someone with two people, like you have a ton of anxiety and that anxiety is now in your shopping experience. And that's a if you're shopping for pots and pans you, you know yeah, I don't want it to stick. I like, stainless or I like ceramic or whatever.

No,

Moderator: Anna Hensel, Executive Editor, Modern Retail: I'll never forget when I went shopping with my sister to get a stroller. When she had her first kid. We were in there for an hour and a half. She was really stressed, figuring out like, oh, I like this. But So you did consider yourself a D two C brand when you launched, and so I'm curious now.

Anna Hensel, Executive Editor, Modern Retail: Looking back as you've moved into omnichannel, which we'll talk about, I don't know, is there anything you feel like maybe you did too late or you wish you would've invested in sooner because you thought we're a D two C brand, this is the path we need to follow?

Michael Wieder, Co-Founder, President & CEO, LALO: I think it's like very tactical. And I, I think packaging is the piece that you know is completely different. When you're a D two C brand. You need to get something. From point A to point B using different carriers, right? It needs to pass certain drop tests. It needs to make sure that it's, if it's thrown by a UPS delivery person on a front porch, it's not gonna get damaged.

It's not gonna, like the product is gonna get there safely. When you get into retail, there's a whole different piece of the puzzle. Your product, your on shelf, that packaging is your PDP. Yeah, so we grew up in the digital world and our. Our PDP was so important. What content is there?

How do we tell a story? Now your packaging needs to do all that for the people that are discovering you in the aisles. So that's a very different change. But then it goes all the way down operationally to, okay, we used to pack. Master cartons with 250 units of a small item in one box. And now we have to change that to be, have inner cartons and master cartons.

And there's real cost implications as well as inventory planning implications. So it on one end, there's the sexy side of it. We need to make this patching look really cool and stand out next to competitors. And then there's like the real operational side of it that impacts the p and l and the way you actually run your business.

That. You don't know until you're in it.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. Yeah. I think when I talk to brands that launch in mass retail for the first time, that's the number one I hear thing I hear about what they need to change is packaging. And then you're on shelves for a year and you learn more about okay, what actually catches customers.

Anna Hensel, Executive Editor, Modern Retail: Yeah. When

Michael Wieder, Co-Founder, President & CEO, LALO: we launched in Target this year it came together really fast and furious. 'cause Target reached out to us. In the middle of their line reviews, they said, we've been denying you we have this premium strategy. We want to, we're thinking about a brand. We want that brand of you guys led to quick meetings.

Ultimately they came up, we came up with this thing together of how we were gonna show up with two end caps adjacent to one another. Big brand statement. And then when they awarded that to us, in, in early July, they were like, we need to know how it's gonna fit on the shelf. And we were like. Oh we need to figure that out and we need to redo all of our packaging.

Yeah. So we had two and a half weeks to create 43 new pieces of packaging.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Wow. That's crazy. Yeah. Yeah. Yeah. You recently, as we talked about, you launched in Target. And also it's been a weird year economically as we've talked about. How is the launch in Target going so far?

Anna Hensel, Executive Editor, Modern Retail: What have you learned?

Michael Wieder, Co-Founder, President & CEO, LALO: Yeah, it's been really great. Interesting. And full of a lot of learning. There's products that are absolutely crushing it and we continue to pour fuel on the fire. We can't keep it in stock. There are products that move less well, and you have to learn where your winners are.

We also have a big out of aisle statement, and as we move to 26, we're learning, oh, it's gonna be different to be in aisle. So our second year in target. It's gonna be very different than our first year. Yeah. And there's still more pivots and learning and also learning about merchandising and like how things show up and you expect it to be this way, and it's not that way.

We visited almost 30 stores like ourselves. My co-founder and I have gone to the stores. Watch how people shop, right? Talk to people and you like that is the best. Like we would like literally hide behind clothing racks and watch people on our displays and where their eye goes and where they stop.

And we're learning about, oh, we would've done that differently or changed that differently. And right now we're actually going through talking about packaging. We're like refreshing all of our packaging because we're going from living in this big branded statement to living next to all of our competitors in the aisle.

And we're like, oh, we need to stand out even more.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. 'cause we

Michael Wieder, Co-Founder, President & CEO, LALO: don't have this big, beautiful display.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. So what are some of the most interesting, what's like the most interesting shopping behavior maybe you've observed? And then what's like the most interesting thing you've heard from a customer?

Michael Wieder, Co-Founder, President & CEO, LALO: I think that one thing that we learn, shopping behavior is like sometimes too much product is not a good thing. Like you want to create the space and, it's like clutter isn't a good thing. Yeah. So we probably over merchandise one of our end caps because we got one dimension from Target, but it was really another dimension.

And so you learn about the systems that may be not there. I think watching people. Interact, how they actually look at the packaging or if you have a display of a product, how can really get people to stop. And then I think the other piece is, I packaging should be the title of this.

Yeah. Talk. But we have a little multipurpose caddy, so it's a, it can be a diaper caddy or an art caddy. It grows with you in our classic law form and. Our like D two C packaging box was used as the inner carton, and so it had our logo on it, had the product, it had the product name, but it didn't tell you anything.

It was just a brown corrugate with white print. And we found out that stores were not opening that box to put on the shelf. It had a beautiful perfectly wrapped it, explained the product and they just put this brown box on the shelf. And so we had to put out a full blast to all target stores.

Be like no. Open this. And then on the flip side, we had to tell our part, use a shittier box. Like this box should look like it's gonna fall apart. Should not be confused with retail pack.

Moderator: Anna Hensel, Executive Editor, Modern Retail: I imagine. It's been a learning experience, I'm sure as a founder, I imagine you're so used to control and then going into a big box retailer and seeing how people do things differently than what you would've imagined.

Anna Hensel, Executive Editor, Modern Retail: But let's go over, so you're in I wanna go over your different sales channel. Sure. So you have your D two C site, you're in Target. Where else are you selling?

Michael Wieder, Co-Founder, President & CEO, LALO: Yeah, in 20, we launched in 2019. In 2021, we launched with Babylist, which is the fastest growing online baby registry. And that was really important for us to go where our customers really were and be like more available on registry.

And then from there we expanded into Amazon in 2023. And also with some other dropship partners, Bloomingdale's, Creighton Kids, pottery Barn kids in our space, a lot of, there isn't a lot of brick and mortar presence anymore. There used to be a lot more. Yeah. Bye bye. Baby's gone. Babies are us is gone.

Specialty stores are dying every day. And a lot of the business like Crate, PBK really rely on their digital business more than their brick and mortar. Crate doesn't even have, physical space for baby.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. So what do you view as the purpose then, of all these different channels?

Anna Hensel, Executive Editor, Modern Retail: Is there a certain type of customer you think is more likely to go to one than the other?

Michael Wieder, Co-Founder, President & CEO, LALO: Yeah, I think that there's certainly I, there's Babylist is on its own. I think the blanket on all of them is every single retailer we're on has a presence on baby registry. Yeah. They're putting effort into it and building their registry presence, and our customers going there, our gift givers are going there, and so we, we really need to be there.

That's number one. Number two, there's definitely brand alignment in some of them, so you look like a crate or a PBK or a Bloomingdale's. Their premium, specialty and department, right? That is important for brand alignment and they're making up a good portion of the market and we've been surprised by where they can pull and we rely on their audiences.

Every day, D two C, Amazon, target really, and baby will still dominate, Bloomingdale's runs a friends and family sale. They're putting all their marketing dollars to bring their traffic. Yeah. And we can, we can really we have a friend flying up. Yeah. We can lean into that and take advantage of their audience.

And for us for Target, we're seeing like, the place it's truly incremental is in store.

Our brand awareness we have solid brand awareness in our category. There's still so many people that have never seen or heard our brand for whatever reason. But that discovery in store, we're really seeing it's leading to, we're seeing the halo into D two C.

We track that and how many people are finding us out of a in target, and we've only been in target now for five months.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah.

Michael Wieder, Co-Founder, President & CEO, LALO: Target in our post purchase survey is two x the Amazon discovery. So people actually discover brands in target where people convert on Amazon. So I, there's not so much discovery happening on Amazon.

Yeah,

Moderator: Anna Hensel, Executive Editor, Modern Retail: that's interesting. We talked about, we're in this era where, okay, at first maybe DG DTC was looked at as a business model. The reality is it's a sales channel. But I'm curious like, 'cause I feel like there was so much talk when I first started covering D two C startups about it's great you can get like so much customer data through your D two C channel.

Anna Hensel, Executive Editor, Modern Retail: Definitely having. Emails is helpful, but are there any insights or things you feel like you can glean through your D two C channel that are maybe harder than others?

Michael Wieder, Co-Founder, President & CEO, LALO: I think that's the biggest excuse that happens in DC. Yeah. Like first party data is the excuse for bad product.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah.

Michael Wieder, Co-Founder, President & CEO, LALO: So like the best thing you can do for retaining people in your brand and getting them to come back and have a great NPS score and have referral firing on it, at all cylinders is have a great product.

Deliver on the brand promise. And so what we had in this this world of D two C, it was easy to get a product from China. You could put it on the internet really quickly and you can sell, and you can arbitrage marketing, right? So if you remove, like you have tariffs now Freight went up in, during COVID.

Yeah. The ad marketplaces are more expensive. You've you've made it hard. We've made it harder. And so you have to get smarter, you have to do different things. You actually have to deliver on a great product. And that is to me. The best way to get people coming back. So then it doesn't matter what sales channel it's happening on, yeah, you're putting more marketing out there.

You see a lot more what would be traditional D two C brands talking about the importance of brand marketing now, or marketing channels at scale like TV or out of home because they're seeing like, oh, there really are ways to hit people in mass. Versus serving ad one at a time to one person, right?

That one-to-one gets expensive. One to many can be super efficient if you do it well. And so I think that's, this is part of what people are learning in this new stage of building a D two C or a digitally native brand or non internal brand.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. Yeah, very true. So internally, what has been, has it been like adding.

Anna Hensel, Executive Editor, Modern Retail: All of these channels, like how do you balance all of them? How do you feel like they're getting the resources that they need that maybe someone who works on, more of your Amazon business isn't too territorial?

Michael Wieder, Co-Founder, President & CEO, LALO: Yeah. I think we've done always done a lot with a little, we have a very like lean and mean team as we've scaled.

We're. We are less people now than when we were doing, than we were when we were doing, or we were about the same as what we were doing, half the revenue. Okay. We've figured it out and that's by finding great people that wanna work together and know how to communicate. We're fully distributed around the country and we've, we have a team of parents primarily, so they're like really invested in what we're building and we continue to take a lot of ownership as founders.

I personally am. On a texting basis with every single one of our buyers.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah.

Michael Wieder, Co-Founder, President & CEO, LALO: Because they want, I want them to know we care about them, we care about the channel, and we want this to be a true relationship. It's not a transactional thing. And then everything else, like we have good leaders that have adapted and wanna learn, and it's just the commitment to learning.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. I do have one question about tariffs. Sorry, we're not gonna get away without talking about it. But I think because you're a startup, you have more direct relationships with your customers. Like how have you been trying to communicate with customers about tariffs and because as we've talked about, baby is a category that's been heavily impacted.

Michael Wieder, Co-Founder, President & CEO, LALO: Yeah, so I was actually in China on election day. I was in China, two weeks, two and a half weeks before Liberation Day. Our target line review was the day before Liberation Day. Or actually, I'm sorry, the day after Liberation day. Yeah.

Moderator: Anna Hensel, Executive Editor, Modern Retail: It's hard to keep track of all these and,

Michael Wieder, Co-Founder, President & CEO, LALO: And so it was that there was like all the, oh, is there a pause?

Is there not a pause? And, but it was very clear parents are gonna be adversely affected by this. We don't want safety to be a concern because when you have to move supply chain, when you. If you talk about moving to a country with less tariffs, number one is the engineering talent there to build stuff.

We work in a regulated industry. You have to start everything from scratch. Your production line, your supply chain gets better. Every production run you make, it gets quality gets better and better. So you're starting from zero. So I got really concerned as an industry are we gonna see more recalls?

Are we gonna see more children getting hurt? Are we gonna see parents trading out on decisions of do I need to actually use a car seat? Or can I figure something out? So we didn't want to, we didn't want that. Literally the next day I flew from our target line review back home. AM was on squawk Box, like talking about we need to protect parents.

And then from there we were like, okay, we're gonna commit to transparency. 'cause we knew, that's always been our thing. The reason we launched D two C was to be closer to the customer. So we still like to maintain those roots of being close and communicative and transparent. We started something and very purposefully branded it and acknowledged the ridiculousness of branding.

Something about tariffs called Tariff Tuesday, where I sent an email, a plain text email explaining, here's what's going on. Here's what we're doing to fight it. Here's what you can expect on prices from us. Prices in the industry and our customers really appreciated. We ultimately did. A open a MA, so a zoom where people could come and ask me any question about tariffs.

And the questions were unbelievable and very vulnerable. And at the end, and I opened up for the last questions, people said, how can we help wallow? Which was baffling. Yeah. But it just shows the more you put in, sometimes the more you get out. And ultimately we did have to raise prices and we worked very closely with our retail partners to make sure we can mitigate that as much as possible.

We worked with our factories. As well. And we passed on, so like some of our retailers, we said, we can't give you that margin anymore. And they said, okay. We'll take the hit here and you take the hit here. And we worked it out.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah. It's a weird time for sure. My last question for you is just as someone who, I cover startups a lot and I feel like, I don't know, it can be very overwhelming sometimes it's like navigating trends.

Anna Hensel, Executive Editor, Modern Retail: It's you need to be a D two C business, and then it's like, you need to go omnichannel as soon as possible. What advice would you give to someone? Starting a business today about like how to think through where to take their business. I'm sure it changes as the business grows, but what would your advice be?

Michael Wieder, Co-Founder, President & CEO, LALO: You need to run a good business.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Yeah,

Michael Wieder, Co-Founder, President & CEO, LALO: It doesn't matter how you do it, but you need to be super focused on your p and l. For us, as we become omnichannel, we look at everything down to on a contribution margin basis. We're not looking at, gross margin or top line. We're looking at, okay, how is this channel performing in comparison to everything else?

How does marketing contribute to the mix of where we sell? And ultimately you need to build a financially sound and strong business and you need to build a brand that is full of integrity. If you do those two things, like the consumer will feel it, right? People act on their feelings. More than anything they do.

Like most of the time they are not acting just so logically. I think people expect people to act pure on like data and think very logically and nine times outta 10, they're thinking very emotionally. And so you have to get into the psyche of the consumer to build that strong brand trust and validation that persists over time and creates a brand and a business persists.

And if you have the financial backbone to support that you'll be in business for a long time. Yeah.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Ongoing challenge, always getting into the psyche of the consumer, but yeah. Very important. Michael, thank you. Thank you. This has been great. Thank

Michael Wieder, Co-Founder, President & CEO, LALO: you. Yeah,

thank you both.

Moderator: Anna Hensel, Executive Editor, Modern Retail: Great conversation.