Try This D2C Business Model On For Size

Italic wants to bring the membership model that makes Costco famous to the D2C space.


July 27, 2020

Photo via: Italic

By Trung Phan (@TrungTPhan)

***

If there’s one thing that gets our team fired up, it’s innovative business models.

Enter Italic.

This ecommerce brand spent 3 years partnering with manufacturers of the world’s top brands on a product line that sells at cost.

Translation: The company offers 1k+ items, from kitchenware to clothing, but it makes zero profit on each sale. To get the deals, consumers pay an annual membership of $100.

Sound familiar?

The $143B retail giant Costco is famous for charging membership fees and selling products at ultra-low markups. But the membership model isn’t as common among D2C brands.

Italic’s CEO, Jeremy Cai, thinks of his company as “a premium consumer brand running a marketplace that connects consumers directly with manufacturers.”

Cai is inspired by 2 other businesses that have mastered subscriptions: 

  • Netflix capitalizes on its large audience by investing in original content that attracts and retains subscribers. 
  • Spotify disrupted incumbents that relied on a lucrative but outdated model (digital and physical sales).

Italic is seeing bold demand

Italic has a waitlist for new members in the thousands (you can sign up here). With 93% of members breaking even on the first order, it’s probably worth the wait.

We asked Cai if he had any requests for startups that might interest The Hustle’s community.

Here are 2:

  • A company combining land acquisition with prefabricated homes
  • Financing for creators akin to what’s available for ecommerce companies (think Clearbanc)

If you’re working on either of these, reach out to Cai here.

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