Online, retail, wholesale? Baked by Melissa's best sales channel

Key Concepts

• Sales Channels: Online (Direct-to-Consumer/DTC), Wholesale, Retail.
• Entrepreneurial Journey: Starting a business, overcoming setbacks, building a brand.
• Brand Building: Authenticity, customer connection, social media leverage.
• Business Operations: Balancing craft with business functions (finance, P&L, hiring).
• Partnerships: Strategic collaborations, authenticity, mutual goals.
• Personal Growth: Self-belief, overcoming imposter syndrome, resilience.
• Customer-Centricity: Listening to customer feedback, adapting products.
• Hustle Culture: Dedication, productivity, work-life balance.

Decision Making: Where to Sell First (Online, Wholesale, or Retail)

The central question addressed in this episode is how a small business owner, particularly in the food and beverage sector (using cupcakes as an example), should decide on their initial sales channel: online (Direct-to-Consumer/DTC), wholesale, or retail.

Melissa Benesai's Journey and Insights

Melissa Benesai, founder and CEO of Bake by Melissa, shares her experience and provides insights into this decision-making process. Her entrepreneurial journey began unexpectedly after being fired from her job.

• Origin Story: Melissa was fired on a Wednesday morning and, feeling unfulfilled in her previous work, decided to bake cupcakes, a passion she had been pursuing for friends and acquaintances. This led to her first business opportunity through a caterer connected to a PR agency.
• Initial Revenue Channel: Her first revenue stream was through events with the caterer.
• First Retail Channel: A tasting at Cafe Barry in Soho led to an opportunity to sell cupcakes at a holiday market in Union Square, establishing her first retail channel.
• E-commerce Development: E-commerce was integrated early on, with her brother and a childhood friend building the Bake by Melissa website. Even in the early days, they utilized platforms like PayPal, though the process was more manual than today.
• Expansion Strategy: Melissa emphasizes that expansion should be driven by customer appetite and engagement. Key considerations include listening to customers, observing how they interact with the product, and analyzing profit margins.

Key Arguments and Perspectives

• Customer-Centricity is Paramount: Melissa repeatedly stresses the importance of understanding and listening to the customer. "Our customers inform our business strategy." This feedback loop is crucial for product development and market expansion.
• Margin Analysis: While not explicitly detailed with figures, the importance of understanding profit margins for each channel is highlighted as a critical factor in decision-making.
• Direct-to-Consumer (DTC) Margins: Melissa suggests that direct-to-consumer channels generally offer the best margins, especially for vertically integrated businesses that control manufacturing and distribution. Bake by Melissa's model of baking and shipping their own products exemplifies this.
• Adaptability and Opportunity: The decision of where to sell should be flexible and adapt to emerging opportunities and customer demand.

Building and Scaling a Brand: Authenticity and Community

A significant portion of the discussion revolves around how Bake by Melissa has grown into a nationwide brand while maintaining authenticity and fostering a strong community.

Maintaining Authenticity

• Core Values: Melissa attributes the brand's authenticity to "love is the short answer and grit and resilience." She connects her personal happiness to working hard towards something she loves, which translates into business success.
• Team and Purpose: She finds fulfillment in working with like-minded, passionate people towards shared goals and selling a product that allows customers to express love.
• Product Quality: In the perishable goods space, maintaining product quality and continuous improvement is seen as a key differentiator.

Leveraging Social Media for Brand Growth

• Visual Appeal: Bake by Melissa's visually appealing product lends itself well to platforms like Instagram, where they initially shared product photos and behind-the-scenes content.
• Proactive Adoption of New Platforms: Melissa's commitment to being at the forefront of emerging social media channels is evident in her approach to TikTok.
• TikTok Viral Success: A pivotal moment was when a salad recipe video posted from the Bake by Melissa TikTok account unexpectedly went viral, garnering 20 million views overnight. This demonstrated the power of social media for community building and inspiration.
• Content Strategy: Following the viral success, Melissa committed to posting a recipe a day for five years, which has exponentially grown their social media following, led to cookbook deals, and created a new revenue stream through brand partnerships.
• Community Engagement: The social media community is seen as a source of inspiration, learning, and connection, breathing new life into Melissa and the business.

Business Operations and Leadership

The conversation delves into the challenges of balancing a founder's craft with the operational demands of running a business, and Melissa's personal journey in leadership.

Balancing Craft and Business Functions

• Delegation is Key: Melissa's advice for new business owners is to "get people to do everything that you don't need to do." The focus should be on areas where the owner can uniquely add value.
• Building a Strong Team: Having a team that excels in areas where the founder may not is crucial for success.

Melissa's Leadership Evolution

• Initial Hesitation: Melissa was not the initial CEO of Bake by Melissa. Her older brother served as CEO in the early days, and she learned by observing him. She later learned from another CEO before stepping into the role herself.
• Self-Doubt: She admits to not believing she was capable of being CEO of a company bearing her name, a sentiment she attributes to a lack of self-belief, which she finds is a common issue for women.
• Board's Belief: Her board of directors believed in her when she didn't believe in herself, which was instrumental in her taking on the CEO role in 2019.
• Earning Confidence: Melissa describes her journey as having to "earn her confidence," which she believes is the opposite of many entrepreneurs.
• Embracing Imperfection: She values being wrong, as it signifies that others are right, leading to further opportunities. She also highlights the importance of knowing what you don't know.

Brand Partnerships

Melissa discusses her approach to brand partnerships, emphasizing authenticity and strategic alignment.

• Early Partnerships: Bake by Melissa has engaged in brand partnerships since its inception, including collaborations for album launches and TV shows.
• Content as a Product: She views content creation as an additional product for Bake by Melissa, leveraging their reach for brand partnerships.
• Selective Collaboration: Melissa only works with brands she genuinely loves and believes in, ensuring authenticity for her community.
• Goal Alignment: Successful partnerships are based on aligning the brand's goals with the partner's objectives.
• Uniqueness of Each Partnership: Each partnership is approached uniquely, without a standardized mold or strategy.

Personal Reflections and "Dirty Unicorns"

The episode touches upon personal challenges and lessons learned, including the concept of "dirty unicorns" – significant business mistakes.

• The "Dirty Unicorn": Not Believing in Herself: Melissa identifies her biggest mistake as not believing in herself.
• Gender Differences in Self-Perception: She observes that women tend to underestimate their capabilities, while men may overestimate theirs. She advocates for women to pursue opportunities with the same confidence as men.
• Women's Strengths: Melissa believes women's cautious approach to problem-solving, which involves seeking information before acting, makes them powerful.

The "All Hustle" Mentality

Melissa discusses her intense work ethic and the concept of "hustle."

• Constant Productivity: She admits to working extensively and finding it difficult to "do nothing." Her therapist has described her as "addicted to productivity."
• Entrepreneurial DNA: This drive is deeply ingrained in her family, with an entrepreneurial father and brother.
• Blurred Lines: For her, work and life are intertwined, with no clear separation.

Customer Feedback and Product Development

The importance of customer feedback in shaping product offerings is a recurring theme.

• Responding to Customer Needs: Bake by Melissa developed gluten-free and vegan options in response to mothers who couldn't purchase cupcakes for their children's birthdays.
• Kosher Certification: They also obtained kosher certification based on customer requests.
• Developing Thick Skin: Melissa advises entrepreneurs to develop resilience and be open to feedback, even when emotionally attached to their product.

The Final Decision: Making the Leap

Melissa offers advice on the crucial decision of choosing an initial sales channel when resources are limited.

• Customer Location: The primary consideration should be where the customer is looking for the product and where the greatest opportunity lies.
• No "Right Time": For women founders, she suggests that there might not be a perfect moment to start; rather, it's about taking action when busy and having a passion.
• The "Jump": She likens the decision to skydiving, where thorough preparation is followed by the necessary leap.
• Simultaneous Pursuits: In her own journey, she simultaneously pursued job opportunities while building her cupcake business, keeping options open.
• Orders Dictate Full-Time Commitment: The business became a full-time endeavor when the volume of orders and tastings necessitated it, even while she was still exploring other employment.

Conclusion and Takeaways

The episode highlights that building a successful business, especially in the competitive food and beverage industry, requires a blend of passion, resilience, strategic decision-making, and a deep understanding of the customer. Melissa Benesai's story is a testament to overcoming adversity, embracing authenticity, and leveraging opportunities, particularly through social media, to build a thriving brand. The key takeaway for aspiring entrepreneurs is to focus on customer needs, analyze margins, be adaptable, and most importantly, believe in oneself to take the necessary leap.