Why Walmart Is A Critical Step For Dirty Lemon's Evolution

When Dirty Lemon launched back in 2015, it not only made waves for its functional beverage and price but also its distribution model. Rather than seek out retail distribution, they invested heavily in cutting-edge technology such as order by SMS, staff-less stores, and a direct-to-consumer sales model that delivers cases of Dirty Lemon to most of the US in one business day.

So news that Dirty Lemon would get stocked on Walmart shelves may come as a bit of a shock, but one brought about by a change in the online marketplace and a continued upward growth trajectory limited by a lack of retail presence.

“The difference online between 2015 and now is pretty dramatic,” says Zak Normandin, founder and CEO of Iris Nova, the parent company of Dirty Lemon. “There’s a lot of brands that use social media, Instagram, and Facebook for advertising. That marketplace is very cluttered and very expensive. Consumers have changed the way they react to advertising online as well. The things that used to work to acquire customers online don’t work anymore, or the things that do are expensive, and we’ve reacted accordingly.”

“Coinciding with our departure from online customer acquisition, we started using retail as a way to acquire customers profitably,” he adds. “Our thesis is that customers fall in love with or find new beverages inside of stores, and then once you find a beverage you love, you typically want to buy just that beverage in bulk and have it stocked in your home or office. Basically, all the places you spend your time.”

Normandin says that online marketplaces are broken as the model of acquiring customers one-by-one and, in his opinion, a poor way to spend capital.

“A case of Dirty Lemon has an average selling price of $65. You have a skincare product with an average price of $20, then you have a car company like Audi, for example, with an average selling price of $45,000. Then you have realtors trying to sell houses for hundreds of thousands of dollars, and they’re all trying to acquire the same customer. Naturally, the price is going to be the average of all of these different groups,” Zak says, further explaining that, while a realtor can spend thousands to acquire a single customer, that isn’t a profitable strategy for someone with a sub $100 price point like Dirty Lemon.

Based on this new hybrid model of introducing and acquiring a consumer in-store, then servicing that consumer directly, Iris Nova had to find the right retail partner. As it so happens, Walmart is currently adapting to a shift in consumer preferences for premium and healthy products, especially among millennials.

“We were really impressed by their focus on the millennial customer and presenting consumers with better-for-you options that they wouldn’t have expected at Walmart,” Zak says, adding, “The data is really interesting, Walmart is the largest supplier of organic food products in the United States, the scale is substantial, and they’re incorporating more premium products nationally. They are someone really good to partner with.”

Normandin wants to ultimately challenge Amazon in the e-commerce beverage space; allying with a retailer of similar size at this stage is necessary for Iris Nova’s future aspirations. “Finding a partner of similar size to Amazon but is complementary to what we offer as a service provider to the portfolio of brands is important,” Zak says.

“There hasn’t been a brand that has scaled globally without expanding their reach into new channels,” he adds, citing brands like Harry’s and other beauty and care products that started and continue to distribute direct-to-consumer but have also established retail presences in stores like Target and Sephora.

Zak doesn’t see the original concept of building out an e-commerce platform and eschewing retail as a mistake, but that it allowed Dirty Lemon to build the foundation of their brand. He recommends new brands focus on a specific customer, double down on the relationship with that customer, and then make sure they have a memorable experience.

“One of the things we learned in the past year since the investment from Coca-Cola is that we can be a compliment to the way things got done in the past and the legacy infrastructure that exists," he says.

“Just because we think differently doesn’t mean we don’t fit into that infrastructure,” he says.