DTC Toy Company Looks to Better Days

The reality of post-pandemic ecommerce has been tough for many direct-to-consumer merchants. Take Molson Hart. His company, Viahart, makes innovative educational toys and sells them on Amazon, Walmart, and other marketplaces.

The last two years have been challenging for Viahart. What worked before and during Covid doesn’t apply now, Hart says. Certainly that’s the case with Beardbrand, my company.

Hart first appeared on the podcast in 2022. In this episode, he and I address the struggles of our businesses and how we persist for a better day.

Our entire audio conversation is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: Tell us about your business.

Molson Hart: In 2010, I launched Viahart, a direct-to-consumer maker of educational toys. In 2017, I started with my brother Edison Litigation Financing, an intellectual property trademark enforcement firm. My brother is now Edison’s full-time CEO, and I’m no longer involved.

Viahart has struggled over the last couple of years. I tell my team monthly what our sales are compared to a year ago. Our June 2024 sales were down 14% across all platforms — our DTC website, Amazon, all channels. June 2023 sales were down 7% from 2022. So it’s two years of pain and suffering.

Bandholz: Beardbrand has also struggled. What is your strategy for getting back on track?

Hart: Our products are highly discretionary. When the cost of food goes up by 30%, consumers cut things.

We’ve tinkered with different channels and products, but our success there has not compensated for our losses on Amazon, Walmart, and eBay. We started selling on TikTok Shop, generating $7,000 in revenue in June. In May, we did zero. The $7,000 in June for educational toys will likely translate to $30,000 to $50,000 in each of November and December.

That helps, but the problem is Amazon, Walmart, and eBay sales are down. We’ve been doing a lot of wholesale, and that’s been growing, but not enough to compensate for the marketplace declines.

Bandholz: We’ve tried many things at Beardbrand, from changing our packaging and manufacturing to tweaking marketing channels. We doubled down on organic YouTube marketing, unsuccessfully. We tried ads again, but they’re not working at the scale we need.

Hart: It seems many discretionary brands are experiencing weakness. So don’t be down on yourself. Neither of us is purely an ecommerce company. To me, an ecommerce business is like Amazon or even TikTok Shop. Each of our companies is a brand.

I like Viahart’s products and their value to customers. In the short term, we may experience pain. But so long as we remain profitable, we will keep investing, innovating, and delivering value.

Bandholz: It’s a bloodbath on Amazon. Even if you have an excellent brand name and a utility patent, it doesn’t protect you from the margin compression that’s happening. It doesn’t matter if people search for your brand if Amazon won’t show the results without advertising. Nike and Apple are perhaps exceptions. However, all of us below Nike and Apple must pay increasing fees on Amazon, which are just eating into profitability. So it’s difficult.

Hart: There was a time when you could make money selling anything on Amazon. You just threw up a listing — cups, pillows, you name it — and made money. Viahart once sold 50 product types on Amazon. No more. Every time competition came in, we would cut the losers.

What worries me about the business is the declining U.S. consumer purchasing power. It’s just hard to internationalize any business. Plus, looking at birth statistics is troubling because we sell educational toys. It doesn’t matter how amazing our products are if fewer children are born.

Bandholz: Why are so many DTC ecommerce companies suffering?

Hart: I made a list of what I thought was causing DTC ecommerce companies to be in bad shape. For one, consumer debt is peaking. There was minimal consumer debt in 2020 and 2021 because of stimulus checks. Now consumer debt is near an all-time high. Food costs are up, but not wages.

TikTok is the only bright spot that applies to American DTC ecommerce in the past year.

I was young and stupid when I started this business. It wasn’t successful, even after several years. I eventually figured it out and generated profits. You and I have to try new things and adapt. No one cares about our feelings.

We need to keep hacking away with an open mind. That’s how we buy a yacht someday.

Bandholz: Where can people follow you and buy your products?

Hart: Our products are available on TikTok, eBay, Walmart, and Amazon. Follow me on X and LinkedIn.