Mastering Revenue Balance: How Brands Can Safely Diversify Beyond Amazon

Paul Sonneveld
I'm your host, Paul Sonneveld, and today we're diving into a topic that nearly doesn't get enough attention in the Amazon world, namely how to balance your revenues. Specifically, how do smart brands distribute revenue between Amazon and other channels like DTC? And what happens when that balance gets out of control? Now, to help me unpack this today, I am joined by Daniel Pierce, the Founder of Spry Tribe. 

Daniel has a long track record in commerce, sports nutrition, and digital growth strategy, and he's worked hands-on with brands navigating exactly this challenge. His experience spans Amazon seller and vendor models, large-scale DTC programs, TikTok shop, and more. Plus, he brings a deep technical background in AI and innovation. So today we're going to explore what a healthy Amazon to DTC ratio looks like, how to correct an unhealthy one, and what practical steps leaders can take to reduce risk while still driving growth. And as always, we'll leave plenty of time for your questions. So stick around and join the conversation. Daniel, it's a pleasure to have you on the show. Welcome. 

Daniel Pierce
Thanks, Paul. It's good to be here. I appreciate the invite and an opportunity to talk to the audience here. 

Paul Sonneveld
As I mentioned in my intro, I think this topic is often overlooked where, you know, and I'm guilty of that. Most of these episodes are really focused on Amazon, how to get more out of Amazon and how to really probably shift that the real revenue balance one way, but let's just help the audience understand here. When you talk about revenue balance, right? What is your definition? How do you define it? And why does it matter? 

Daniel Pierce
Yeah, the revenue balance, this is classic risk mitigation, where you don't want any channel to be over twenty percent of your net revenue. And sometimes it's very easy to grow on Amazon. And that can get way, way out of balance. And having worked with a lot of brands pre-pandemic, I saw clients that were overexposed in that manner really hit a wall, right? And so when the pandemic happened, and then we had, let's say, a forty to fifty percent revenue drop off almost immediately, on some Amazon seller and vendor accounts. 

It really woke up at least in sports nutrition the need to have a strong DTC platform and some just channel diversity and and not rely as much on Amazon. I think what's also necessitated that obviously, in sports nutrition specificall,y is that there's a lot of regulatory updates ingredient updates that happen. So you can you can have a very hot product and you know all of a sudden you're you're subject to a lot of testing and then meeting those testing requirements. So that i think that's what necessitated this very hard look and channel diversification strategy. 

Paul Sonneveld
So if you are thinking about balance, what is a good, I mean, I think in the past we've spoken about kind of it's quite common to see ratios of like ten to one, eight to one. And it's not just DTC, by the way. I see these ratios say, you know, Amazon versus Walmart and the like as well. What is a ratio that you sort of steer your clients towards? And it's not aspirational, because it's not always easy, but what does healthy look like in your mind? 

Daniel Pierce
Healthy looks like it depends on the stage of the brand. We always have brands that, you know, they accelerate on a channel first. Right. I use an example of old school labs, a former client. You know, they were a hundred percent Amazon-reliant. And one of those brands that I referred to during the pandemic that saw a very sharp decline. All right. Due to just basically not be able to get inbound inventory in. And what we did is we set up a model where we were trying to get them to at least a one to one ratio within six months, believe it or not, of their DTC versus Amazon. When that happened, we were actually able to exceed that. But that was essentially the goal from a net revenue perspective. And it worked. 

Now, getting there took a lot of engineering, so to speak, a lot of a lot of pivots, a lot of advertising pivots, you know, some merchandising pivots, some innovation pivots and what we were introducing. But I would say that would be an ideal now a realistic. OK, because it's you know, as we've seen, it is a lot easier to grow on Amazon versus a direct to consumer as a startup or let's say a brand sub twenty five million because you don't necessarily have the operational infrastructure to support rapid growth versus Amazon does. 

When we started to start to get into that mode and we come we come into brands that are more established. Usually, we like to see no more than a four to one ratio. That would be ideal. When you start to exceed that, as I said, Amazon sort of, it can take over your brand. And you create a lot of brand gravity from just search, from off-Amazon search presence. And it, as I said, the money mechanics, operational mechanics behind it too, you're not building the right type of infrastructure on your own. 

Paul Sonneveld
So when it comes to creating that balance, I guess from a first principles point of view, I see two levers, right? One is slowing down Amazon growth and the other one is accelerating DTC growth. Let's talk about like the slowing sort of Amazon growth. I mean, what are the technical levers Well, first of all, do you purposely slow down Amazon growth? And if so, what are some of those technical levers that brands have to intentionally do that without hurting profitability? 

Daniel Pierce
Yeah. I mean, look, one of the first strategies that I like to put into place and to establish is what we call what Amazon can't do strategy and setting up a framework of necessarily brand features that Amazon can't compete with. Okay. Specifically around loyalty systems. I think that's probably the biggest one that helps you set up a good WACD framework. So that's first and foremost. We know that Amazon has its flywheel, its purchasing flywheel. You can't compete with that, right? But now when you start really getting into the loyalty aspect of it, we know that Amazon has preferred rate credit cards, other things of that nature. You get kickbacks. And you can earn a certain percentage towards future purchases using your credit card of choice, so on and so forth. 

When you park that, then we can sort of say, okay, well, this is what the brand can now start doing on a direct-to-consumer vantage point that really gives an advantage versus Amazon loyalty features. That's the first thing that I like to establish, and the cost impact of that because when you start mapping, let's say, customer lifecycle or customer journey right through your purchasing cycle on your DTC website, you can do some amazing things. There's some amazing software systems out there that can help along that journey. You know, they're obviously Shopify partners. And they allow you to build that out in really great blistering detail in a manner you would never be able to do with Amazon. I think that's probably first and foremost is understanding, again, how do we build our loyalty system in a manner that can actually exceed what Amazon does and its ease of purchase and features and everything. 

Paul Sonneveld
Yeah, we're starting to sort of get into the territory of customer lifetime value and how do you balance that profitability, right, that you see on a customer? I mean, in my mind, sorry, go ahead. 

Daniel Pierce
I was going to say, Amazon has an amazing acquisition cost for a new customer. We see that. It can be half of a direct-to-consumer or even sixty percent less. But with that said, the actual LTV seems shorter as well. And there's great software systems like MerchantSpring where we can actually track that, but you really can't track through the platform itself on Amazon. But then when you actually start doing the comparisons of Amazon LTV versus direct-to-consumer LTV, you know, direct-to-consumer LTV is generally a lot higher, right? So, you know, when you start factoring all that, okay, like, yeah, you start to see drastic contrasts. 

Paul Sonneveld
So, can I go to the other equation of this conversation, 

Daniel Pierce
Yes.

Paul Sonneveld
Which is how do you really drive your DTC? So you spoke about, okay, what are the things that Amazon can't do? W-A-C-D. 

Daniel Pierce
W-A-C-D. 

Paul Sonneveld
Yeah. What about, let's say you're able to slow down your Amazon business a little bit, drive more profitability. But I guess a lot of times, like what you're saying, getting to a one-to-one parity, I mean, that's pretty aggressive. But even getting to like a four-to-one, it's going to require some acceleration on your DTC business most likely. I mean, what are the levers that you look to in order to do that? 

Daniel Pierce
I mean, innovation pipeline and the ability to do test and learn, right? So, having sat in the innovation seat or sitting in innovation seat with a lot of brands, your innovation pipeline, understand that how you manage that and how you deploy that, you may not always scale to Amazon first, right? You may do that test and learn with your best customer cohorts on your direct-to-consumer channel and start to really build out the loyalty that way, again, with VIP access, other things. There's a lot of things you can do, but I would say pipeline management innovation management is first and foremost. 

Also, getting your retention standards up. Okay. Which again, life cycle management with direct-to-consumer is a lot easier to do. Okay. Just through your communication systems, SMS systems, email systems, everything you, you can build those out in an amazing, well-mapped manner, and you can completely control your acquisition through lifecycle and then even reacquisition. So, again, it's just about building out those systems in a very detailed manner and meticulous manner. But I will say it actually comes to portfolio management. So a prime example is if, you know, classic sports nutrition example, right? We may only have our six flavours up on Amazon, but we may do a lot of our test and learn flavours and seasonal flavours off Amazon. Right. So for our best customers, maybe new customers, they are, you know, we're creating more what I would say advertising and new product offering gravity on our direct-to-consumer platform. 

Now, what's changing that a bit is obviously TikTok shop, because as we know, it's becoming a much better brand discovery engine, and its halo effect on Amazon revenue and direct-to-consumer channel is massive. Right. So that's changing the game a little bit. And I'm sure we'll get to that, and how to diversify from Amazon a bit. But I would say innovation management is first and foremost. And then truthfully, journey mapping, really understanding your first order to second order drop off your second order, third order drop off and just your retention and churn and really managing that. That is that's put it this way. Amazon does not necessarily give you that data, right? You can figure it out, but it is you can't do it to a one to one basis with customers at all. 

Paul Sonneveld
No, I think we forget what was it like in the days we could talk to customers directly and send them offers, promotions, all of those things. So based on what you said, there was one question that sort of popped in my head, which is, it's a bit of a leading question here. Does Amazon still have a role as a customer acquisition engine, as opposed to just, hey, customers know my brand, they like to shop on Amazon, so I have to be there, right? What's your perspective on that? Does Amazon still have a role as a customer acquisition engine and get people into the brand? 

Daniel Pierce
Yes and no. Okay, we obviously have brands that have proven that they don't need it. Okay. And you know, a brand like first form, for instance, a very large direct-to-consumer supplement brand has proven they don't need it. An American-made made clothing brand origin USA, they've proven they don't need it. And they're a massive brand. Okay. Now, with that said, there is a customer that pretty much shops on Amazon. It's specific persona types, right? But there is an ease to Amazon and Amazon has done an amazing job with their fulfillment and coming down to same day fulfillment, almost same hour fulfillment in some cases. And now they're able to compete with the Instacart and DoorDashes of the world too, right? So they can control their entire value chain down the last mile now. 

So I will say this, if I was a strategist for Amazon, I would take a very close look at what's happening on TikTok with creators and product discovery, okay? Because TikTok is viewed as a platform that is a young person's platform. But when you really get down into the stats, about a third of TikTok users, I believe, are over the age of forty, right? And so from a brand discovery vantage point generationally, a lot of things are shifting there, okay, for a lot of reasons. And so i would be worried. 

I think also we can't forget the role that answer engines and large language models are starting to have a influence on our purchasing patterns and brand discovery patterns and how we're asking questions and being curious you know I believe it's speculated that Google traffic will be down by fifty percent by 2028 due to the advent of ChatGPT, claude.ai, DeepSeek, etc. And the fact that Amazon has actually blocked ChatGPT from crawling its site. It's actually cloaked from these engines now. So I think Amazon does have a role, but I really think it needs to, you know, and who am I, but needs to sort of check the ego and strategy a bit in terms of brand discovery engine, because it's not going to be as powerful as it used to if it can't get people to its platform.

Once it has you on your platform, yes, something like Rufus is absolutely amazing, and they're going to be doing amazing things, right? You know, they do have a partnership with ChatGPT on the AWS side.But again, from an end consumer perspective, what are they doing right? My sons right who are, they are fourteen and fifteen, right? How they're discovering products now they're not going to Amazon, right? They're finding out via chat, sorry SnapChat, ChatGPT, TikTok, and they're transacting right away on TikTok shop right? And the barrier to entry is a lot easier, I guess, with these other platforms, especially when you start getting into alternative payment methods. 

So I do think, you know, and look, just candidly, we saw this with Prime Day, Summer Prime Day, right? I mean, for the first time, we saw a TikTok to a hard TikTok shop to a hard pivot. That week, they launched their own subscription systems, their own very aggressive deals. And we saw a major softening in performance in the summer prime. I didn't see you get a lot of attention. So, yeah, I do think things are changing. Amazon will always have a role, but the tide is shifting fast. 

Paul Sonneveld
So with that in mind, I'd love to go back to the start of this conversation around revenue balance and the metrics, because I think we just spoke about Amazon versus DTC. But let's maybe make that a little bit wider in terms of, because there might be other things in there, right? TikTok shop being the prime example. So TikTok shop, DTC, Amazon, maybe there are some others in there as well, depending on, but obviously, your background is in sports nutrition space. 

What's your view in terms of, because I think it will, obviously, if we're talking furniture, it might be a completely different perspective here, but from a sports nutrition point of view, what do you view as the optimal balance? Or, you know, maybe let's project towards the end of this year, right? What do you consider to be a good balance between Amazon, TikTok shop, DTC? And maybe, you know, if you think there should be other channels in there, I'd love to hear that. 

Daniel Pierce
Right. So it's interesting, right? Because you come into brands at various stages of their life, right? You know, I have a major, major client that their Amazon to DTC ratio is way out of whack. So like their prime initiative for 2026 is to rein that in. And try to, let's say, go from an eight-to-one to a six-to-one ratio. And then by, let's say, 2027, maybe equalise that a little bit more. Right. 

But if we're talking like a pure startup, so we do work in the beverage space as well, food and beverage. So I'll use an example of a startup, Brew Shockalaka, right? This is a nootropic zero sugar coffee RTD. So when we set up the channel strategy for them, okay, we're actually looking at Amazon as an early growth engine. Okay. But we're also looking at TikTok and TikTok shop as a break-even brand discovery engine and funnelling all this hopefully back to DTC at some point in time. Right. So from like a net revenue like perspective, we would like to be one-to-one with Amazon, with TikTok shop at a break-even. And that's at a startup. 

Okay, now, as retail channels and other channels, because beverage obviously cannot exist only on e-commerce, right? It must go DSD, C-level stores, specialty, gyms, everything, right? There's obviously a lot of diversification that has to happen there, but we're actually, again, one-to-one ratio from a net revenue perspective, year one, that would be ideal with TikTok shop. And this is the whole thing with TikTok, right? We're not looking at it as a profit engine. We're looking at it as the marketing and brand discovery engine. 

Paul Sonneveld
Which is just a side question on that, actually, are you thinking about TikTok as just from purely from an advertising point of view, like where are you directing the purchase? Are you directing into TikTok shop or you're directing the purchase to you know, to Shopify or other? 

Daniel Pierce
So we are directing the purchase on a TikTok shop, but we also know that algorithmically and from an oppression perspective, we are influencing sales elsewhere, and we do see that, right? So as I put GMV Max ads into place and start to accelerate those, I see acceleration on Amazon. I see acceleration on direct to consumer, you know, but to, you know, I will say this, TikTok is a, it requires a massive amount of creators and sampling to really optimise the algorithm for visibility over there. But once you understand those benchmarks, which we do very well, you see lift in all channels. 

So and and I think this is where for the classic Amazon marketers, we are parking a lot very large percentage of our former Amazon budget or budget perspective for startups or even late-stage brands into TikTok. Now, for that reason is just because it is a, even though that you're seeding creators, right? The authenticity of their reviews and the creativity behind their reviews is unmatched, right? So when you start to take that from ten to twenty to a hundred and now a couple thousand shoppable videos with maybe one to two thousand creators under your belt, Amazon can't compete with that with their with their creator system. If you want to even call it that, right. 

And the amount of advertising user-generated content that you get from you know stirring up that engine, it can actually feed your meta and YouTube advertising engines as well. So TikTok has made it easy well I should say they make they made it easy because it's not easy there. but They've made scaling a creator system a lot easier and a lot more cost-effective using agencies than, let's say, classic influencer systems. 

Paul Sonneveld
Yeah, yeah, yeah. Gotcha. What are the mistakes people typically make? And we talk about kind of diversifying. I think everyone likes the concept, right? I think many Amazon brands would love to get to a one-to-one ratio. It's hard. It's hard work. As you say, it takes time. It certainly doesn't happen overnight. But there's the right way of doing it. And then, you know, there's probably making a lot of mistakes along the way. I mean, you're probably going to make some, but what are the biggest mistakes that you've seen that brands really should look to avoid? 

Daniel Pierce
I want to understand your data in your ecosystem you're competing in. I mean, I'm talking about this coffee brand, Brew Shockalaka right now, right? So if I'm going to go on Amazon and do a PPC strategy for them, I'm now competing with Starbucks and Monster Java, right? So, whereas they're not really doing anything on TikTok. So I think it's really understanding your competitive landscape. And using all available data that you can, whether it's SPIN, Cercana, FastMOS, CaloData, really understand it, right? Really understand where your acquisition cost is going to be and really where to put that cash. That's more of a startup phase, right? 

On a, like what I would say, a more established brand, right, is paying attention to the market shifts and understand where the impression gravity and attention gravity is coming from or going with what you're doing, right? Because all of a sudden, we use an example of the creatine category, right? Creatine is exploding right now, right? It is exploding on Amazon, right? It's doing extremely well. But then also we see this crazy acceleration on TikTok, right? And a lot of that acceleration is housed by a couple of brands. So you start to see Bloom just go through the roof, right? And what this has created now is this category shifting, okay, that they may not be aware of, right? 

So, again, it comes down to understanding data, right? And sometimes I will say legacy brands probably rely a little bit too much on, let's say, Spins and Circana, great data. But also understand there's this other platform out there that is crushing it, right? So when you start to look at creatine stats, you start to see, okay, creatine is starting to slow on Amazon, right? But wow, it's almost logarithmically taking off on TikTok right now, right? I think that's the big one and is just paying attention to data. 

Also under like I will say it understand that our country has really diversified in the last few years, and we have a very large Latino customer base that's growing a very powerful purchasing engine. And it's hard to speak to them in their native language on Amazon versus TikTok like, you know, forty nine percent of purchasers or purchasing audience over there is Latino. So right. So it's also paying attention to those things. I think it's, again, it's, it's always data driven, but just, just look, I think stereotypically is, you know, like we're, I'm assuming you're in your forties, right? We're in our forties, right? 

Paul Sonneveld
Yes, maybe.

Daniel Pierce
And we're in these other platforms like we're just generationally not aware of or right well i am right. I think a lot of execs aren't aware of really the impact they hear about it right. But they're not really aware of the impact. So we now have brands that have no direct-to-consumer right that are doing extremely well in, let's say traditional retail like Walmart and grocery chain. But they've noticed Amazon slowing. They're like, Dan, what do we do? Then I said, Well, explain to me your brand discovery. And they're like, Well, we just, you know, people used to find out about us on Amazon, and we would invest more in PPC. And I'm like, yeah, but guys like brand discovery is not necessarily happening on there the way it used to. And like, well, where is it happening? And I'm like, Well, like YouTube, TikTok, you know, social media. 

So, it's just as I said, I think there's some generational biases that exec teams have to be acutely aware of with just how buying habits are changing across just all generations right now. Specifically when it comes to brand discovery. So, again, I think Amazon is really onto something with Rufus. Look, I'm an Amazon customer. I love Rufus. But at the end of the day, I'll say this. They've cloaked themselves from the largest brand discovery engines out there. So, which, you know, it's one, TikTok. Two, it's turning into the answer engines like, you know, ChatGPT, so on and so forth. So, you know, times are changing. So you definitely need to have a much clearer perspective of just really the customer journey and where brand discovery is happening. A really, really sober look at that. 

Paul Sonneveld
Yeah, that makes sense. So as we close out, maybe just one final question. I'm sort of picking up on the thing that you mentioned before. Yes, I'm in my late forties. Absolutely biased towards Amazon. I think there's a lot of particularly, probably males like me, don't want to sort of stereotype here, but really don't know much about TikTok shop, right? Or TikTok specifically. I mean, we've just started a new year. Like what advice would you have for people like me to say, right, this is how you start to familiarise yourself with TikTok shop, both in terms of as a user, but also as some of the data, right? How do I get my hands on some of that data? How do I wrap my head around the opportunity that TikTok shop presents for my brand? Like, what practical things could I do over the next few weeks? Just to sort of get in there. 

Daniel Pierce
Well, one, if you have kids, ask them. They're the best teacher, okay? If you don't, right, join the platform yourself. And just, it will algorithmically start to adjust to you very fast, right? And you'll start to understand some of this journey and discovery that's happening over there. There are great tools such as Kayla data and FastMoss, which will give you category data, sales data, so on and so forth. But also, you know, TikTok does an amazing job of educating and, um, there's just so much open source information about it that, you know, um, you know, as an agency, they're very inviting, right? As a creator, I'm also a creator on TikTok. So I'm a monetised creator, right? They're very inviting. So there's a lot of avenues in. But I think, you know, just here's some here's some crazy stats. You know, understand that. Twenty one percent of TikTok users are on YouTube. OK. Forty one percent aren't on Instagram or have it loaded on their phone phones anymore. And sixty two percent are don't have Facebook anymore. Right. Generate, you know, and that's across all generations. 

So when you start to understand those stats, if you're not doing something over there, right. And you're relying on those social media engines for brand discovery, people just aren't going to see you period. And that's a, those are some very sobering stats that I know cold because they are part of my agency pitches truthfully. And, but they are, it's very, it's very real. Right. So, you know, the, I will say this, I think just kind of closing the Amazon PPC engine has stalled a bit. I believe their DSP engine has stalled a bit. I'm grateful that they've opened up ability to do some OTT with them and but the reality is is a lot of dollars are best spent elsewhere now when it actually comes to generating authentic user-generated content and having actually people create for your brand and build videos and commercials better than you ever could right? And TikTok has really allowed that. 

Paul Sonneveld
Yeah, that's really interesting. I mean some of those that you quoted there are, trying to find the right word. Challenging. Challenging. It really makes me want to go, okay, let's go. 

Daniel Pierce
Sobering. 

Paul Sonneveld
Sobering, yeah. And they're not static either. I suspect they're dynamic, and they're only moving one way. 

Daniel Pierce
They're moving, yeah. And when you actually know the benchmarks to start to move the needle on TikTok shop and the ins and outs, it does start to, from a startup even to a late stage brand that maybe has really good financial resources, it really does start to set up a an advertising and brand discovery model that is, you can actually work against very, you know, tight benchmarks. Understand that when you start crossing your, you know, again, your five hundred shoppable video, you do see threshold thousand video, two thousand video. 

Like, what can you actually expect versus doing cold start, you know, launches on Amazon is very hard unless you get into some of the accelerator programs. But even then, it's still very hard. Right. So but I will say this. Right. I do believe that there is a core three platforms that any startup or late stage brand should be working on direct to consumer Amazon and now TikTok shop. And I would put TikTok shop up there in the same echelon with Amazon in terms of pure brand discovery right,  for sure. Even exceeding it. 

Paul Sonneveld
Well, that's a that's a great wrap, and it brings us to the end of uh today's Marketplace Masters session. A huge thanks to you, Daniel, for sharing such practical insights on managing the Amazon DTC and TikTok shop revenue balance, this is really an area that many brands struggle with and rarely discuss openly. So I think your experience working with high-growth brands and startup brands in the sports nutrition space and the beverage space really brought some clarity to this conversation. So I really appreciate you for your expertise and your time and sharing that with us today. 

Daniel Pierce
Anytime, Paul. Happy to be on here. 

Paul Sonneveld
All right. Take care. All right. That's the end of today's episode. Thank you for everyone who joined us live. If you registered for today's session, you'll receive a recording in your inbox. So keep an eye out for that. And if this topic sparked any ideas or you'd like to explore related themes in future episodes, please reach out, send me a DM on LinkedIn, or, you know, hit me up. Always appreciate your input. Have a great rest of your day, and we'll see you at the next episode of Marketplace Masters. Take care.