 model, added more wholesale distribution, and now are working towards a strategic path forward.){kind=link}
With a change in CEO and other leaders at Solo Brands, the parent company of Solo Stove, it’s a rebuilding year. Their growth rocketed as the category leader in fire pits, until they struggled to find growth with their direct-to-consumer (DTC) model, added more wholesale distribution, and now are working towards a strategic path forward.
They have some strengths that they’re re-launching from, as they identified through the strategic plan that they’ve been developing.
The results of this in-depth strategic analysis confirm my conviction that our brands have significant opportunities to continue to gain market share within their respective categories and that we have a long runway of growth ahead of us.
We have clearly identified several strengths of the company, highlighted by, one, we have incredibly strong brands with a passionate, loyal, and high-value customer base. Two, our brands are leaders in the premium segments of their markets, with a long-term opportunity to grow into additional categories and expand our TAM [total addressable market].
And three, we are building the infrastructure to create a highly scalable model that will drive long-term margins and returns on capital.
Chris Metz, CEO of Solo Brands
Solo Stove based their strategic plan on consumer insights that they conducted of over 2,000 consumers. They consider it to be a double-blind survey because they talked to a broad array of demographics and everyone from existing customers to consumers that aren’t even interested in the category.
Within Stove, Solo Stove’s net Promoter Score was incredibly high, putting us in the top 1 percentile in the outdoor goods market and leads in unaided brand awareness compared to our direct competitors.
Walking in, I believed that the Solo Stove brand was strong. But frankly, I was pleasantly surprised to see just how strong it truly is. We have a premium customer base as the average household income of our customers is near $200,000, which is 2 times the outdoor goods market.
This consumer insight work will inform our strategic approach to pricing as well as how to leverage our strong brand characteristics to expand our TAM by entering into near-term adjacent categories.
Chris Metz, CEO of Solo Brands
No indication was given about what adjacent categories they plan to enter. Directionally, Solo Stove started with camp stoves and fire pits. Since then they have expanded into outdoor cooking with pizza ovens, and into outdoor lifestyle products.
To support their expansion into other categories they’ve also grown inorganically. They’ve acquired indoor fire pit and lifestyle brand TerraFlame, followed by outdoor cooling company IcyBreeze.
Innovation Pipeline
Solo Stove has had a robust innovation pipeline over the past few years that’s built around their line of smokeless fire pits. It sounds like 2024 is a year of rebuilding that pipeline.
They guided down their earnings for the year, and said that they’ll have new products beginning in 2025. What’s concerning about that is fire pit season is still ahead of us in 2024.
We will have multiple exciting new products in Solo Stove to launch beginning in 2025. In fact, some of these new product introductions will begin to expand our TAM as we innovate into near adjacent categories outside of our core fire pit and pizza oven categories within Solo Stove.
We believe that the investments we are making in people and infrastructure will position us to return to revenue growth, expand our margins and begin to introduce multiple new product innovations starting in 2025.
Chris Metz, CEO of Solo Brands
Marketing and Promotions
Solo Stove has found success by bundling products to increase average ticket price and through promotional activity. While other outdoor companies have seen softness in higher priced goods, the bundling strategy has allowed Solo Stove to avoid that trend.
what we’re seeing every day is that our average order value, or AOV, continues to be strong and it’s not reducing, which is somewhat counterintuitive given what we’re seeing in the economy and given your comments about the consumer being pinched.
And the reason for that is because we’re offering value in the bundles. So, it creates a win-win. We create some value for our consumers, but we’re also able to drive a higher average order value that you don’t see compress our margins as much as, say, a discounting or promotional environment.
Chris Metz, CEO of Solo Brands
They have traditionally almost always had a sale running on their website. Their promotional strategy will be changing in the future.
But we’ve historically been pretty promotional. And I think part of the opportunity for us is to create an environment where we’re, frankly, less promotional and not everyday low, low discounting.
Chris Metz, CEO of Solo Brands
To help on both fronts they feel that their website needs a refresh. A positive online shopping experience is especially important for Solo Stove since they are so heavy into DTC.
Now, one of the key changes, and I mentioned it before, is our consumer shopping experience online is not where it needs to be, particularly with our website. We said when I first walked in that we’ve made a choice to change platforms to salesforce.com, and we’re working very, very hard to bring that online next year in the first — hopefully, in the first to second quarter, it will be fully online and will create a much, much easier, much more exciting shopping experience for our consumers.