The DTC Brand That Wins Isn’t Smarter — It’s More Flexible

How to build a brand that slays black swans (and eats them)

You’re not running a SaaS company with sticky enterprise clients and three-year contracts.

You’re selling to Becky in Ohio who isn’t buying today because her rent went up, her credit card APR just spiked, and gas is at all time highs.

Consumers is fickle and hard to predict. Meantime, you’re stuffing your consumer business full of risk by trying to forecast perfectly.

Here’s an example…

You’re launching a new product. You think it’ll fly. So you buy inventory aggressively — 10,000 units at $20 landed cost. That’s $200,000 locked up.

You don’t have the cash on-hand, so you use debt to fund the inventory purchase.

But you miss forecast. Now you’ve got 3,000 units collecting dust.

You discount to drive revenue. You make back $35K on $60K of product. Congrats! You just lit $25,000 on fire.

And that’s just the beginning.

Now you’ve lost…

• The cash you needed for the next PO

• The warehouse space you needed for new bestsellers

• The contribution dollars you needed to meet your goals

• And the focus your team needed to actually grow

Then it flips: suddenly, a product does better than expected. You’re going to sell out…

Oops, time to rush a reorder. You text your suppliers on WeChat…

Lead time of 40 days.

Freight? 25 days.

Then customs decides to inspect your container. Bolt on another 4 days and get slapped with tons of fees.

Quality issues? Luckily none of those…this time.

By the time product lands, you are out of the seasonally strong period in your business, oops.

The solution?

Building your business in a way that allows you to aggressively acquire customers when times are good, and can survive poor macro conditions long enough to crack new products or channels.

Everyone talks about fixed vs variable costs. It’s a helpful lens, but not enough.

Instead, think every cost as being on a spectrum. Inventory is technically variable. But it’s not fast variable. You can tweak ad spend in 10 minutes. You can’t tweak inventory in 10 minutes.

Shift your business toward levers that move fast when you need them to.

Using Pricing & Customer Acquisition Costs to Obliterate Inventory Risk

To keep things simple, let’s assume you run a business where an increase in price yields a commensurate increase in customer acquisition costs.

Raising prices as much as possible until this relationship breaks is a massive win for your business because it obliterates inventory risk.

Raising prices + higher CAC = same profit, but...

COGS as % of revenue drops → lower inventory requirement per $ of revenue.

That means you can afford to be less precise with forecasting, because the penalty for being wrong (overstocking or understocking) is reduced.

Ad spend is extremely flexible, inventory is not — so any shift in the business model that favors “more variable” levers like ad spend gives you more agility.

As a fun aside, inverting this is why it's very tough to make a price decrease work. They can work yes, but they make the business harder to run!

Use Forgiving & Friendly Sources of Capital

It’s better to use more expensive capital that’s a lot more flexible. Find the most survivable money. You’re not building a brand to win on interest rate arbitrage.

Vendor debt is always great because it’s usually unsecured. For example, Meta offers net 30 terms. Assuming you spend $1m a year, that’s an additional $83,000 of cash sitting in your business every month. And unlike most lenders, Meta doesn’t ask for a lien on your business. They aren’t calling you up mid-month to restructure terms if CAC goes up.

If you can get Net 30 or Net 60 from your factory, your 3PL, or your freight broker, that’s another layer of working capital you didn’t have to raise or borrow. Stack enough of those together, and you’ve bought yourself 60–90 days of flexibility.

You can negotiate things like early pay discounts if you don’t need the flexibility. Almost all retailers use this concept to adjust as needed when their forecast is off. They’ll usually pay you on time or even early, but they want the ability to toggle into paying you later at a minimum.

I wrote a blog post on structuring credit correctly that’s on this substack that is likely helpful.

Postponement, Modular SKUs, and Shifting From Raw Materials to Labor

If you’re manufacturing in-house, shift cost away from raw materials & finished goods into labor. If you’ve spent too much time with supply chain nerds, then you know this concept is called postponement.

A real-life example from a brand we invested in that sells affordable artificial wedding florals; we started focusing on designs that use less raw materials but more labor for our floral arrangements.

The result?

Same perceived value to the customer, better margins for us, and way less cash locked up in raw goods.

Since it’s easy to scale labor up or down for us, that shift took pressure off forecasting. When demand slows, we scale labor down. When it spikes, we ramp up.

Tangentially related is structuring your products such that the inventory itself is as multi-use as possible. We started applying seasonal ornamentation in-house instead of asking the factory to do it. A plain wood vase becomes a Christmas item with a red bow. Add a pumpkin sticker and it’s Halloween. Same base SKU, extended selling window, lower inventory risk.

Again, same idea; shift cost from inventory to something more variable - labor. The key mental model here is optionality: maintain optionality in your inventory as long as possible, only locking in decisions when you have to.

Not every product can be late-staged. But many can. And even in rigid categories, packaging, bundling, or accessory configuration can introduce flexibility. The idea is to delay the point of no return as long as you can whether that’s in manufacturing, labeling, kitting, or fulfillment.

This Doesn’t Mean You Shouldn’t Forecast…

Forecasting isn’t the problem. Relying on a forecast being perfect is.

You’ll never predict every spike or slump but you can build a model that bends without breaking. That’s the difference between getting caught in a death spiral of over-ordering and discounting…versus turning mistakes into momentum.

This isn’t theoretical. We’ve done it. We’ve helped brands move cash out of rigid systems and into flexible ones. We've turned dead inventory into living margin. We've helped founders stop bleeding and start growing profitability without losing control.

If you’re trying to build a more profitable, resilient consumer business, we’d love to help. We invest capital, roll up our sleeves, and go deep. Whether you’re solving for short-term cash flow or long-term scale, we can unlock value and reduce risk.

Worst case, you get a second opinion from people who’ve been in the trenches! Drop us an email via our contact form: www.kartaventures.com

I promise, we don’t bite.

PS - if you liked this, let me know via twitter, comment here, wherever you want!