Happy Sunday!

If you’re reading this, I hope you’re feeling hydrated, rested, and you spent the weekend vibe-coding something epic. Me? I spun up a new publisher with 180 SEO-optimized articles, designed a brand book for a new project, and just put the finishing touches on an app that allows you to input your brand guidelines (or use AI to extract it from your domain) and create static ads for Meta. I’ve been falling asleep with my laptop open almost every night building things… it feels like a real-life video game. Anyways, not to derail us too much from today’s topic: the eComFuel trends report (ps, if you’re not a part of the community, it’s the only membership I have in this industry and it rocks. If you mention “Limited Supply” they’ll hook you up!).

But, before we dissect what $3.5B in DTC revenue have to say about the current state of DTC…

Genstore — your unified dashboard for marketing, ops, CX, and more.

Here's something I've been noticing with founders doing $1M to $10M. They're not struggling with strategy. They know what to do. The problem is they're running their brand across seven different platforms, and every day turns into a game of tab-switching between their store builder, email tool, analytics dashboard, ad manager, support desk... you get it. You lose hours just context-switching between tools that don't talk to each other.

Genstore built the thing a lot of us have been duct-taping together for years. One platform that handles store infrastructure, marketing, operations, customer support, and analytics. All of it. What caught my attention is their AI Agent Team... not chatbots that spit out suggestions, but specialized agents that actually execute. Campaign strategy, product ops, customer support 24/7, analytics, even the technical buildout. You can go from zero to live store in under 10 minutes.

The brands that win aren't always the ones with the best product or the biggest budget. They're the ones with the best execution. If you're spending more time operating tools than operating your business, check out Genstore.

It's Sunday afternoon. Someone's on their couch, locked in on The Masters. 10-20 million people just like them, canceling plans, ignoring their kids, watching every shot.

And right there, in the middle of all that attention, your brand shows up.

Y’all, this is not a hypothetical. This is what CTV advertising on premium content looks like. Come hang with me on April 29th for a session on how to make it happen with a 4-figure budget.

Grab your spot →

This week’s Limited Supply episode was a fun one. I touched on ad funnels, AI, the grit to start pumping things out with AI, and everything in between. Thanks to Jared from Activate Talent for joining me in moderating this episode!

If you’ve got 30 minutes while you’re biking to work, driving to school drop-off, or lifting at the gym, give it a listen on Apple, Spotify, or YouTube.

Every year, eComFuel puts out a trends report. If you're not familiar, eComFuel is a private community of 7- and 8-figure eCommerce store owners. It's run by a longtime friend of mine, Andrew Youderian, who has been doing this for over a decade, and it's one of the few communities where the people talking actually have skin in the game. 

This year, 300 store owners representing $3.5 billion in combined revenue opened their books. No sponsors. No agenda. Just real data from real operators. I spent an entire flight reading the report and adding my own commentary and thoughts (specifically around ads, AI, and Amazon) around a few findings I want to break down... not just the data, but what it actually means if you're building or running a brand right now.

The report is amazing. It’s over 50 pages long and tracks some amazing things (for example, did you know people who are 55+ years old were MORE likely to be playing with Claude Code vs 40-55? IMO you ALL should be playing with Claude Code, but I’ll save that for next week’s newsletter, where I plan to dive into 2-3 tools I’ve made FOR DTC brands with Claude Code, OpenClaw, and other AI tools. If I start that rant now, we’re going to be here for too long and not get to the report. Alright, this is going to be a fun newsletter. Let's get into it.

The share of store owners manufacturing their own products jumped nearly 50% in the last few years. Meanwhile, almost every other model... reselling, drop shipping, private label slapping... shrank.

Foreign competition has made it brutal to sell me-too products. And this lines up perfectly with something I've been saying for a while: if you don't have something genuinely new to sell, or a genuinely new way to market and sell it, don't even try to compete. You're going up against a factory that's willing to sell the same thing for less and doesn't care about your brand story.

The flip side of this is actually encouraging. More brands than ever are investing in real manufacturing, building non-garbage products, and competing on innovation. That's a sign of a healthier market. It also means the era of dumb VC money propping up mediocre brands with nice packaging is getting washed out. Finally (I could go on a VC in CPG rant too, but I’ll save that).

The takeaway here is simple. Innovation isn't optional. And it has to be real innovation that delivers on its promise... not just a different color label on the same formula everyone else is selling.

60% of brands in the U.S. and 65% internationally were impacted by tariffs. Everyone talks about not having all their eggs in one basket with Meta ads. But tariffs clearly woke people up to the reality that maybe they need supply chains set up and ready to go in three different countries, not just over-reliance on one. Shockingly, this entire effort has only led to 4% of surveyed brands deciding to move their supply chain to America. I can't blame the other 96% either... it's not cheap.

Here's what happened with pricing. 60% of brands raised prices by 5% or more. 24% raised 15% or more. Just under 6% raised by 25% or more. But the report makes a point I want to echo: if you were severely impacted and you haven't raised prices... you should.

Having worked with brands during this time, the ones who raised prices and conveyed why didn't see a negative impact. Customers understand. They read the news. They know what's happening. You're not fooling anyone by eating the margin hit and slowly bleeding out. Be transparent, adjust your pricing, and move forward.

Gross margins hit 49.5%, the highest ever recorded in this survey. Net margins fell to 10.6%, the lowest ever. Basically, everyone's making higher-margin products. Nobody's keeping the money. And I can tell you exactly how this happens because I see it constantly.

Picture this… You get to the $20M mark. You're scaling fast. You're hitting guaranteed million-dollar months. You start thinking, NOW is when you scale the team. And this is where it falls apart.

When I consult with brands at this stage, it's always the same story. A bloated team with too many people who don't have enough experience. Too many agencies, with nobody leading the charge and asking "Do we even need what we're getting from this vendor?" or "Have we thought about building this muscle internally?" or "Can AI do this for us now?"

It happens like clockwork. You get comfortable seeing a nice balance in the checking account. You start hiring creative directors, designers, coordinators, a social media manager, a content lead, and an assistant to the assistant. Turns out 80% of the team's effort is focused on things that don't matter or don't drive meaningful revenue, and you're stuck paying $150K per head for it.

The most profitable stores in the survey spent 38% less on COGS and 30% less on overhead than their peers. If profitability is your issue, the answer isn't in your ad account. It's in your org chart.

Here's my rule of thumb for a healthy DTC team: maybe 5 people (or less) focused on DTC, eComm, Amazon, growth, and agency management. Maybe 5 (or less) on creative. And the rest should be contractors, offshore talent, or AI. That's it.

Stores with owned warehouses grew revenue at 3.9%. Stores that lease? 33%. Stores that outsource fulfillment entirely? 30%. I couldn't agree more with this.

If you have some real strategic advantage to owning a warehouse, like you plan to monetize it by handling fulfillment for other brands, then maybe it makes sense. But for how fast Amazon, TikTok, and 3PLs move, you're better off using a partner like Tondo Fulfillment versus trying to do everything yourself.

Focus on owning the customer. That's where the money is. It's not in having a good line for pick, pack, and ship. And here's the thing nobody talks about: whoever buys your brand someday probably doesn't want to deal with that headache either.

Remote teams in the survey grew profits 80% faster at the same revenue size. Warehouse owners reported the lowest optimism about the future. There's a message in that data if you're willing to hear it.

I'm not surprised by the Amazon news. They've been slowly stacking on fees (they literally just announced another 3.5% in fees for fuel cost increases), and for most brands, Amazon is now a must-have channel to catch the people who don't click directly to your site or buy on a marketplace like TikTok Shop.

Amazon's share of revenue has dropped from 28.2% pre-COVID to about 20% today. More sellers are on Amazon than ever (63%), but the share keeps shrinking. DTC operators are growing revenue 65% faster with better gross margins (52.7% vs 41.9%). And the sentiment gap is wild: 91% of DTC sellers like selling DTC. Only 17% feel that way about Amazon.

But let me be clear... Amazon isn't going anywhere, and just because it's not growing rapidly anymore doesn't mean it's not a good place to be.

When I talk to brands, they want to be on Amazon for two reasons. First, reviews. Amazon reviews are still some of the best social proof in existence. Everyone knows (shoutout to Amazon's strong brand) that they don't let shady or unverified reviews slide. As a result, people want those Amazon reviews as an asset. Second, to capture spillover shoppers from TikTok Shop, Meta ads, or any other channel. Nobody wishes all their customers come from Amazon. But if your customer has a Prime membership and wants that 6 PM same-day delivery... fine. Buy it wherever you see fit.

Here's the nuance nobody talks about though. If you're a brand that already has tailwinds, Amazon needs to be executed at a very high level. Great imagery. Emotion-evoking copywriting. Page design and SKU organization that looks like you have a full Amazon team behind it. All of that is the price of entry. Can't do that? Don't get on.

On the other hand, if you don't have tailwinds and you're just trying to drive sales on Amazon, it's like walking into Canton Fair and screaming "Who wants to buy this?" There's too much going on, too many products flying around... nobody cares. Come back with tailwinds.

97% of stores use paid traffic. It's basically universal. And yet people still talk about growing without ads as if that makes them smarter or more disciplined. Truth is... if you're not aggressively using the most effective feedback loop in existence for a CPG brand, you're just not being aggressive enough.

The stores spending the most on paid are growing 3-4x faster, and their net margins are comparable to the conservative spenders. The difference isn't ROAS. It's business model. The winners are running about 64% gross margins and about 15% overhead. They built a P&L that can absorb aggressive ad spend and still print money.

If your margins can't support paid, the fix isn't a better media buyer. It's a structural one.

72% of stores have adopted AI. Revenue growth for adopters versus non-adopters? Virtually identical. Net margins? A coin flip. Non-adopters are actually growing profits slightly faster.

The report frames this as "AI isn't paying its tab yet." I'd frame it differently. Most people are being taught to use AI in really boring, flat ways.

Helping eliminate a customer service agent. Building a slightly better brief. A reporting dashboard for Meta ads. Cool, I guess. But that's not where the real opportunity is.

Nobody is building apps that are truly custom for their business. And that's where we need to get to as an industry. Every business is about to be a software company, just like they're already expected to be a media company. The best brands over the next decade will be those who understand how to create and modify software to accelerate their own growth.

Your ops person shouldn't be looking at zone-shipping reports in Excel. Build a viewer custom to your brand. Your FP&A person (if you have one) should be using Manus or Claude Code to build self-updating dashboards that recommend how much inventory to buy, and why. Your growth marketer shouldn't just plug AI into Meta to flag ads below a certain ROAS (the lamest possible use of AI). Instead, they should be building publisher sites within hours with 100+ articles where they can host their own content and drive organic traffic.

Luckily, the report shows that AI is everyone's number one priority going into the rest of the year, followed by marketing. Here's my personal take on that: if you don't have AI and marketing chops as the leader of your organization, you are completely cooked. You know how they say good culture starts at the top? If marketing and AI aren't baked into your brand's DNA... you. are. cooked.

Let me be specific. If you and your team aren't aware of Claude Code, Manus, RapidAPI, Higgsfield, Kive, and others like them, you need to get on that now. And if you are on all those tools... have you taken it to the next level? Have you set up your own OpenClaw Mac Mini? Built your own internal apps? The definition of vertically integrated now includes software.

Get with the program. 80% of these store owners are optimistic about the future. The ones who'll still be optimistic next year are the ones building, not just buying subscriptions.

Hopefully today’s newsletter inspired a thought, a nugget, or an idea you’re going to implement this coming week. I promise I’m not becoming an AI newsletter, but do not be intimidated by the amount of AI talk that’s about to intertwine in the future sends because of how integrated it SHOULD be! Do whatever you need to do to get up to speed. If I hosted a live Zoom office-hours style session where I went over what I’m seeing actually work at the intersection of AI and CPG, would you join? Let me know on this form.

It’s Sunday night, so I hope you plan to get 9 hours of sleep going into the new week. Stay hydrated. Make sure to sweat. Get a great sleep. I’ll see you next Sunday, same time, same place!

If you've spent money on Google Ads, you might be owed some of it back.

This one's a little different from my usual mentions, it’s not a sponsorship. I just think you should know about it.

There's an active arbitration process right now against Google due to multiple U.S. courts and regulators having determined that Google engaged in anticompetitive practices in its advertising business. If your brand has spent on Google Ads (and let's be honest, most of you have), you could be eligible to recover a portion of that spend.

Keller Postman LLP (with Sentinel Law PLLC as co-counsel), a leading class action and mass arbitration law firm, has assembled a large portfolio of these arbitration claims against Google. The law firm handles the entire process end-to-end, from claim preparation to resolution. 

Here's why I'm sharing this: most brands I work with have spent hundreds of thousands (if not millions) on Google Ads over the years. Even recovering a fraction of that is real money you can reinvest back into growth. The filing process through Keller Postman takes minutes, not months. And there's no upfront cost to you... they only get paid if the claim is successful.

If you've run Google Ads, check if you're eligible. nik.co/refund 

Attorney Advertising. This email is a commercial message about potential legal claims involving Google Ads. The sender is not a law firm and does not provide legal advice. If you submit information through links or forms in this email, it may be shared with an independent law firm, for a free evaluation. You do not become a client of any law firm unless you sign a written engagement agreement. Any estimated recovery amount shown estimates the maximum possible recovery based on the ad spend you submit. It is not a guarantee. A case can settle for a much lower percentage or result in no recovery. Past results for other clients do not predict outcomes in your matter. The sender is not affiliated with Google LLC or its subsidiaries. This email was sent by [Your name or your company’s name], [your address or your company’s address] To stop receiving these emails, please click the unsubscribe link in this message.

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