Why bedding brand Buffy isn’t playing by the direct-to-consumer rules

But the DTC model was mostly a launch strategy. Buffy hasn’t raised venture capital funding, which has allowed it optimize to profitability early in its life instead of chasing growth and scale to justify a valuation. It started selling third-party on Amazon in addition to its own site (something other digital brands have sworn against doing) and its co-founder and vp of brand, Paul Shaked, has realistic ideas about how quickly the company can actually grow. Buffy opened its first pop-up store in New York in December and plans to launch its second product this year.

“There’s this trope of cutting out the middleman and therefore delivering more value and more affordable products to the customer, but it’s fluff for a lot of folks,” said Shaked. “Brands aren’t passing on savings in a big way when you consider how much they’re spending on growth. But for us we do it to try to make our products as affordable as possible. We don’t consider that our innovation, we consider that table stakes.”

Buffy is part of a growing cohort of digitally native brands that are prioritizing longevity over fast growth out of the gates. It’s a sign that the category’s maturing: In the past, brands saddled with millions in VC-funding could quash competition by outspending them on flashy marketing campaigns and brand awareness. With customer acquisition becoming prohibitively expensive, young brands like Hims and Rothy’s, in addition to Buffy, are turning their attention to loyalty plays and long-term growth plans.

“There’s an idea that you can ‘blitz scale’ in retail right now — scale something so quickly and make it so available with technology to power it. That’s a fallacy,” said Richie Siegel, the founder of retail advisory company Loose Threads. “The scaling of consumer companies is a much more linear path. It’s not exponential.”

That mindset led Buffy’s team to decide to sell on Amazon, a decision that Shaked said he’s still “wrapping his head around.” But, with the goal of making sustainable bedding more readily available and affordable, he said Amazon is fitting, with the goal to get more product into more people’s homes.

“What Amazon represents is a way to get the word out and get product into people’s hands. If you look at it just from a business standpoint, Amazon is the world’s marketplace and they do so much so well, and they represent a door into everyone’s home in a way,” said Shaked. “For us, I think recognizing those opportunities as non-threatening to our brand is important. It’s not something that gets in the way of people going to our site, so I don’t see it as a problem. It’s a way to leverage technology.”

Since Buffy’s site still makes up the majority of the company’s sales, Shaked sees Amazon as as much of a marketing play as Instagram. It drives awareness alongside sales. But, the company doesn’t have direct access to the customers that buy through Amazon. As a third-party seller, Buffy has more insight into the demographics of its Amazon customers, but those sellers are prohibited from interacting with their customers directly, a detriment for any DTC company built on an open flow of communication between brand and customer. According to Shaked, the lack of transparency for customer information on Amazon is a trade-off for volume.

Buffy’s first physical store, a temporary pop-up in Soho, is where Shaked sees customer interaction taking place. But while brands like Casper and Parachute eye big store network expansions to fuel offline growth, Shaked said every decision the brand makes prioritizes profit.

“It’s hard to say we’ll open a bunch of stores anytime soon. That’s a really big feat, and we’re trying not to grow too fast as well. That’s not what success looks like — we’re not just going to go out and raise $10 million tomorrow and open 20 stores and hope it works,” said Shaked. “If we ever do raise money it will be on the premise of retaining profitability. Especially when we’re selling a product that’s supposed to be universally affordable, we can only get there through volume. It makes no sense for us to be preaching that while hemorrhaging money.”