DTC cereal brand Magic Spoon was among the Tauruses throwing a virtual birthday party this April. Cofounder Gabi Lewis might not have imagined it that way—but as Lewis tells it, Magic Spoon’s first year of business otherwise went according to plan.
In today’s edition of Talking Shop, I spoke with Lewis about Magic Spoon’s influencer marketing strategy and where he sees online grocery brands heading next. Spoiler: He’s confident his direct to cereal bowl brand isn’t going away anytime soon. Keep reading below for the full story.
This interview has been edited for length and clarity.
It’s obvious to most readers that cereal is a crowded product category, and not one that’s common to selling online. How has Magic Spoon approached customer education in its first year, with regards to cereal competitors and the DTC shopping experience?
Cereal incumbents have done a phenomenal job at marketing, forever. Cereal advertising is some of the most iconic advertising we have in this country or even the world as far as consumer products go. So in terms of consumer education, we had a bit of a leg up from the larger players here because they’d created such love for the category, and love that’s pretty deep for an unhealthy food.
When we entered the cereal market, with a brand that was leveraging that nostalgia and love for a category, but with a product that actually speaks to what the consumer really wants, we found that the education that was required was actually very minimal. People have such love for the category, but in many cases they stopped eating cereal a while ago because it’s so terrible for them. In offering something that could let them eat cereal again after they’d missed it for so long was such an obvious yes for so many customers.
As far as the buying experience goes, cereal wasn’t being purchased online by most people. But again, we’re in this lineage where people have done the education for us—but if it’s not the cereal companies, it’s all the DTC companies. In category after category over the past several years, consumers have been educated to purchase something online which in many cases would, in theory, be a lot harder to do not in person than cereal. If you can buy a mattress online without trying it out or glasses online without knowing how they look on your face, a box of cereal is a fairly easy thing to click and order.
One year in, you’re still 100% DTC. What’s behind your decision to not explore physical retail or third-party marketplaces online yet?
Maybe this is too blunt of a way of putting it, but every company, if they could, would sell a very simple, single product and operate a very small number of owned channels. For us, I think because there’s such product market fit, and such deep love for the category of cereal, we’ve been able to grow really quickly and have an amazing launch direct to consumer. Also, we’ve been able to leverage all of the benefits offered for all of the DTCs like having a close relationship with your customers.
Three years from now, we’re certainly not going to be only DTC. Eventually, we want to be everywhere and anywhere that cereal is purchased by consumers. So that’s going to start to mean we need to be in traditional brick and mortar. For now, we’re very focused on DTC and we’re planning on releasing a lot of new flavors this year and just growing that way, but certainly in the future we’ll diversify our channels. And I think that’s probably true of most DTC companies.
There’s a lot of debate concerning the best and most cost-efficient channels for acquiring new customers. Which channels have worked best for Magic Spoon?
Most of them are fairly similar to other direct to consumer companies. Increasingly podcasts have been an amazing acquisition channel for us. That includes some small podcasts but also some bigger ones like Pod Save America and Joe Rogan.
We do a bit of influencer marketing as well. That’s one channel where our approach is a little bit different from most brands. We typically don’t pay influencers, at least not up front. Instead, we send boxes of cereal out to influencers of various sizes and it’s a product with so much appeal we get a uniquely high response rate with that strategy. From most other companies I’ve talked to, they’ll ask an influencer if they want to be sent a product, and depending on the size of the influencer they may be a little bit iffy or they’re not sure. For us, whenever we ask someone if we can send them some tasty cereal, nobody says no.
We also have a lot of influencers who are investors in the business. The first round of financing we did, pre-launch, about half of that round was through health and wellness influencers all writing small checks for the business. They were people who loved the idea, loved the brand, loved the initial product samples, and wanted to get behind it in a really meaningful, authentic way. Then when we launched, we had a bunch of influencers of various sizes who spoke about the launch of Magic Spoon with amazing captions about how it was the first time they’d had cereal in a decade and they feel so good about it. That really propelled us to a different level.
You’re celebrating your brand’s first birthday in a strange time, to put it lightly. What changes have you noticed in your customers’ behavior due to COVID-19?
We’ve seen a pretty sustained increase in demand over the past couple of weeks, and that’s been from either new customers that are finding us for the first time, or perhaps known of us for a long time but hadn’t yet pulled the trigger. But we’re also seeing an increase in demand from existing customers who are buying more of our product for a number of reasons.
It’s been amazing to see, but of course we want to be cautious around the fact that so many businesses are having a really hard time right now. For us, seeing people write in constantly about how much of an impact Magic Spoon has on their day during this difficult time is really amazing for all of us to see.
It must help that you’re selling an essential product online during a time when online grocery demand overall is growing. Do you expect customers to stick with online grocery services following the pandemic’s end—and do you think more single product grocery brands like Magic Spoon will emerge?
I think everything for online grocery to take off was already in place. Certainly not all customers are going to continue to purchase food in the future the way they are now, but I think a large part of [ordering online] will stick.
At this time, I don’t think it’s necessarily true that there will emerge more single product brands that are selling online, at least in the very near term. That’s just given how long it takes to develop products and launch a company. Especially right now, you can’t really do the food science and testing required to create a new product with social distancing and not being able to access a lab and test kitchens and various other places. Looking further into the future, I could see there being more brands eventually, in this category at least.