- A startup called Mavely thinks it can help DTC brands address rising customer acquisition costs (CAC) on channels like Facebook while helping them grow by word-of-mouth.
- Mavely’s pitch is that people can shop and earn commissions by sharing products with their communities on its app, while DTC brands can reach new customers.
- Mavely also claims it’s improving on the multilevel marketing company model, which has come under criticism.
- But its community is tiny compared to Facebook, and has to compete for DTC brands’ attention with established platforms like Snapchat, Pinterest, TV, and others like Wildlink and Verishop.
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As the direct-to-consumer economy matures, the very social channels that DTC brands used to grow are getting saturated and expensive.
One startup thinks it can help DTC brands address rising customer acquisition costs (CAC) while helping them expand their communities through word-of-mouth. Mavely is a shopping app where DTC brands can sell their products and people can shop and earn commissions by sharing products they like with their friends and families.
“There’s only a couple of channels to acquire customers right now, and the competition on those channels is accelerating, which is a big problem for DTC brands because the costs keep rising while the lifetime value of user stays the same,” said Evan Wray, cofounder of Mavely.
Mavely says it helps DTC brands recruit new customers in a community-focused environment
The startup, which launches today, has raised $1 million in funding from Tim Connors’ VC firm PivotNorth Capital, and has more than 100 DTC brands including Allbirds, BarkBox, Brooklinen and M.Gemi on board. Wray and his cofounder Sean O’Brien previously built and sold emoji platform Swyft Media, and Wray is also a partner at VC firm Trail Mix Ventures.
The idea is to give DTC brands a way to target new audiences, specifically suburban women aged 35-50. Users earn 5% back when they shop for themselves and up to 10% on friends and families’ purchases, Wray said.
Mavely is trying to put a new spin on the multilevel marketing model, where companies recruit people to sell for them but which has gotten a bad rap for leading a lot of people to actually lose money. Wray said Mavely has no cost to join, no inventory requirements that consumers must maintain, and no minimum follower count that users need to recommend products.
The app is already profitable on a per-user basis, said Wray. He said Mavely gets an undisclosed commission through an affiliate fee from brands whenever a purchase is initiated on its platform, a portion of which goes to the users. In this way, the cost of getting customers is a fraction of what it costs through Instagram or Facebook, claimed Wray, and brands control the checkout experience.
“It costs about half or a third of the cost of a Facebook or Instagram ad,” said Wray. “We are already seeing up to a 12% buy conversion rate on products, which obliterates the industry average. The mobile average is less than 2%.”
DTC brands are seeking new channels — but Mavely has plenty of competition
Ad prices on YouTube and Instagram have steadily increased, according to a recent UBS survey of 40 advertising executives who spend more than $90 billion on advertising. But as DTC brands look for alternatives, Mavely is hardly the only option available to them.
They are exploring everything from Snapchat, Pinterest, and TV to physical retail, hoping to get better bang for their buck. They also have platforms like Wildlink, a platform that rewards consumers for referrals across social and digital channels; and Verishop, a DTC shopping platform that’s trying to take on Amazon.
Read More: Direct-to-consumer brands that built their businesses without traditional advertising are now embracing it in key ways to fuel growth
Still, Mavely is a draw for some DTC brands. Brooklinen began beta-testing the platform in March as Instagram and Facebook got more expensive, said Katherine O’Keefe, the brand’s director of partnerships, PR and social. Its customer acquisition cost on Mavely has been less than half that of other channels, she said.
“Mavely isn’t prone to the constant price fluctuations the way other digital marketing channels are, and also allows our consumers to connect more directly with each other,” she said. “Having consumers who advocate for your brand is one of the most valuable things you can ask for as a marketer.”
M.Gemi has been using the app to encourage users to expand its community by hosting in-person meet-ups.
“It’s the localization of social if you will,” said Heather Kaminetsky, chief brand officer at M.Gemi. “It creates more of a flywheel effect. It’s like social on steroids.”
A question is how quickly Mavely will be able to scale, said Brooklinen’s O’Keefe. The app counts about 10,000 users and aims to reach 30,000 by the end of the year, said Wray, but that’s still a drop compared to Facebook and YouTube’s billions of users each.
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