Sonoma Brands is an investment firm with a focus on growth-stage consumer brands that excel across DTC and retail channels. They partner with fast-growing, omnichannel CPG brands, and having a strong understanding of the tech stack that powers those brands’ digital success is key to their investment strategy.
As these brands grow, they often leverage Sonoma’s network to expand distribution into retail, and reducing friction for the customer between physical and digital experiences becomes critical for growth.
We sat down with Brian Nicholson, Managing Director at Sonoma, who offered advice across several verticals:
Approaching retail expansion strategically
Why it’s important to connect online and offline channels
How he sees brands using and experimenting with QR codes
“When we invest in a brand, we validate the market, quality of the product, and team. Above all, that team needs a clear edge in their go-to-market strategy.”
The Business of Retail – Do’s and Don'ts
When launching your products into a new retailer or big box distributor, Brian advises his brands to be sure to overachieve in their first several months there.
He advises setting up product demos and IRL activations using QR codes and leveraging events (coworking, festivals, gyms) to create new opportunities for customer activation.
Brands can create an elegant process for consumers who encounter their brand at an event to say, for example, "I love this great new low sugar salsa — let me use this really simple checkout process to buy my first 12-pack, or even gift it to a friend."
Creating a strategy for retail can look different for every brand. However, for many brands, it’s important to design a retail strategy that can prove velocity within a core demographic – and then leverage that momentum to open doors in demo-adjacent retailers.
In reality, using that velocity data can open up bigger doors that often require a leap of faith.
A lot of brands are enticed when a big retailer approaches them and says, "We're going to roll out the red carpet and provide you with a ton of distribution,” but Brian cautions that you have to follow a very specific roadmap when designing a scalable distribution plan in retail.
Brian recommends that founders remain strategic and disciplined in the design and roll-out of their retail plan. Part of that discipline means ensuring you have a way to drive users back to your site or DTC channel for easy replenishment or a subscription.
“There’s no better place to drive trial than physical retail or experiential settings. Doing all you can to leverage that exposure is what brand builders should be focused on as they step into retail.”
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How to Connect Online and Offline Channels
As the pandemic has changed shopping behaviors, brands have refocused on their digital experiences and started to think more critically about how to remove friction from their online channels. Brian sees a rising number of brands in the Sonoma portfolio – as well as those in his broader CPG network – seeking out tools to connect online and offline customer channels.
He shares three specific areas of focus that brands should optimize:
Build mobile-first e-commerce flows
Create an incentive structure to drive customers to reorder your products
Define what keeps buyers coming back, and double down on those value props
Designing a compelling mobile experience is crucial if you want to engage customers from a physical environment or a point of purchase, especially as more and more brands invest in mobile optimization.
And while brands pick digital tools to improve conversion, they also care equally about building a brand and telling a story.
“Brands are actively looking to a new set of optimization tools to build mobile experiences that both remove friction from checkout and pull them into your brand story.”
How Brands Are Using and Experimenting with QR Codes
QR codes have taken off during the pandemic, and have continued to rise in usage.
Leaning into this consumer behavior is starting to work for forward-looking brands that get creative about where they deploy QR codes, where they lead, and how they remove friction from all stages of their acquisition and conversion funnel.
Brands don't want to be forced to rely on their consumers having to remember to search for them on Amazon when they run out. Instead, they are realizing they can deploy QR codes on packaging and other brand assets to send customers directly towards checkout.
Beyond replenishment use cases, Brian expects more marketing dollars to be poured into events and experiences that leverage QR codes, especially coming out of COVID as more people are willing to gather in person. Offering free trials and giving away free samples can be a great way to capture new customers and then market to them down the road.
“Tools that empower brands to make the most of IRL marketing events and allow for some level of attribution are the key to unlocking engagement and revenue.”