Matthew Kelly breaks down the margin targets consumer brands need to survive retail. Aim for 80%+ gross margin on your product, then 60%+ after shipping and transaction costs. Start direct-to-consumer first, because retail partners will squeeze you.
Ideally 80% or higher.
Ideally 60% or higher.
About 50%.
How do you make retail margins work when they take a big cut and charge big promo fees? Why do you make any margins work? You do the math, right? I think it helps to have I think the potential success in any consumer business starts with the gross margin. That's where it all starts. Without those numbers being high and ideally like CM1 being, I would say 80% plus CM2 net of shipping, final mile transaction being ideally 60% plus, you can get away with 50. But ideally 60% plus retailers will squeeze you. But I think being a D2C first business helps that because you generally have margins built for D2C that actually can work quite well. Well, in retail when you move the cac, we learn a lot about retail. But yeah, it starts with your product margin. And if your product margin is not great, it's going to be hard.
