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The past few days have felt like nothing short of a whirlwind for all of us. Changes and updates on the tariff situation seem to be coming in on what feels like an hourly basis.
We see a lot of commentary and opinions in the consumer space about what tariffs mean for the economy, markets, and global trade as we've known it.
But consumer brands don't need more commentary. They need tactical insights on how they can run their business better and still grow through these unprecedented times.
If you're a DTC founder or operator, here are 10 tactical things you should be doing in your business right now to navigate these new waters.
Revisit your next 6 months forecasts and check against your days inventory for each category and SKU. If your inventory position was already tight, discounting heavily and moving units at a lower margin may not be the best decisions ahead of PO uncertainty.
Identify what volume and discounting rate you're able to operate within to sustain your minimum contribution margin target, then work backwards from there to plot out inventory requirements.
The best time to start price testing was when you first started selling; the second best time to start is now.
If you're not already price testing on a regular basis, now is the best opportunity to get clarity on price sensitivity and where you can win back incremental points of margin.
Discounting is an integral part of most brand's strategies, especially on the new customer acquisition side. However, if you can afford to still move units at a slightly higher margin without hurting your acquisition efficiency, you may be incentivized to do so.
Big disclaimer here: Testing new offers is risky, and it may not be wise to move away from a tried and true strategy—especially if revenue is already under pressure. However, just like with price testing, testing alternative discounting strategies that include a higher minimum order value or quantity threshold, discounts with bundles, subscription offers (where applicable), starter packs, BOGOs, or "up to X" offers can provide more margin protection around your hero products.
This process doesn't happen overnight, but now may be worth revisiting your product catalogue.
Either manually or in your BI tool, run a report that shows you your total quantity sold, revenue, and contribution margin by product; analyze which products drive 80% of the outcomes and you will usually find it's from the top 20% of your product catalogue.
In a world of increased tariff complexity, it may be worth asking yourself: do I really need to re-order inventory for 80% of these other SKUs, or can my business grow without them? That's not to say don't test new products, it's saying cut what's not working already and move on.
First rule of forecasting: All forecasts are wrong, but some are useful.
The only thing worse than operating without any forecast is operating based on a single forecast. Build a base case, worst case, and best case forecast to understand the sensitivity of your revenue, contribution margin, and cashflow in different situations. Once you've established some top-line expectations based on your new and returning customer revenue models, model the various scenarios by changes in spend, price-point, COGS, and other variables to understand the breakpoints within your financial model.
With new information coming in every day, you need clarity on what financial levers you have available within your business to sustain growth under pressure.
We can't always control revenue, and we certainly can't control what happens next with tariffs. However, we can always control our fixed expenses.
If you have projects that are not vital to the business, consider pausing them and preserving cash; if you have functions within your organization that are not contributing to the viability of your business, carefully assess how they fit into your current cost structure and the economic realities of your business.
Ask yourself: Can I consolidate my software vendors? Can I hold off on this channel expansion? What daily tasks are not actually adding value to the bottom line?
Tariffs or not, your landed cost should always be under a microscope. But with tariffs adding potential volatility to your cost structure, it's even more important to understand exactly what contributes to your cost of goods sold—and where there's room for improvement. This could mean renegotiating with suppliers, finding efficiencies in packaging, or exploring alternative fulfillment options.
Get granular: break out COGS into component parts (product cost, packaging, freight, duties, tariffs, etc.) and map where optimizations are possible. Saving $0.25 per unit might feel small, but if you’re moving thousands of units per month, that’s a meaningful cash flow unlock that compounds over time.
It’s easy to keep planning for growth as though everything will go according to plan. But what if it doesn’t? Instead of assuming the same ROAS metrics or unit economics, revisit your growth expectations in light of potentially thinner margins and shifting consumer sentiment.
Growth for growth’s sake isn’t the goal; sustainable and profitable growth is. If the path to growth under a tariff-heavy model means lower profit, longer payback periods, or increased risk, it’s worth having a clear-eyed conversation with your team or key stakeholders about what success really looks like over the next few quarters.
If you're heavily reliant on one geography for manufacturing, now is the time to start exploring other options. Even if moving production isn't feasible in the short term, starting the diligence process on near-shore or dual-source partners is the right risk-adjusted decisions for most merchants.
These supply chains are extremely closely tied and re-shoring is not a simple process—it may not even be possible depending on your current sourcing. However, having backup suppliers or blending your sourcing strategy will create new levels of redundancy, protection, and potential operating leverage for the future viability of your business.
Nobody and no business is totally isolated from tariffs. Whether there's direct or indirect impact, the playing field has been effectively levelled for all. However, some brands stand to win more than others under the circumstances.
If you have the ability to lean into "Made in America" messaging, have already built out a significant domestic production footprint, or have the ability to temporarily absorb the cost to continue growing and taking market share, now is the time to double-down on what is working inside of your brand.
As always, protect your cashflow, proceed with caution, and keep building for tomorrow.
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Until next time!
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