Tabs Chocolate Playbook

Date: 7/20/2023

This analysis focuses on the Tabs Sex Chocolate playbook for success in the DTC space and summarizes an interview with its TOP G founder, Oliver Brocato. He explains how he took revenue from 0 to $10M+ per year in 18 months. According to Semrush’s data, Tabs first received web traffic in February 2022. Brocato said that it took him about a year to finalize the product formula, source ingredients, secure a co-manufacturer, and find a packaging provider to bring the chocolate to market.

My goal is to summarize the key takeaways and action steps for my own business and share them with others for feedback.

Important Takeaways

• More important to know your distribution than your product, as it's about the potential to market it.
• Oliver invested in custom polycarbonate virgin molds for the chocolate to have tabs “t” on them, allowing the chocolate to easily break apart and be shared with a partner.

• They needed to get the polymailers for shipping out the packaging.
• Beyond the product there are more moving parts like
• Photography
• Website
• Design + Development
• Marketing
• Customer Support

• The gensis of the idea started when his business partner saw a popular titktok video for Sex Chocolate that had 8M views and 2M likes
• The brand for that chocolate had no social media and not even a website
• So there was an incredible amount of potential and with his knowledge, skill set and background he knew he could execute on it.
• From idea to first sellable product was 11 months for him - so that’s R&D for supply chain, formulation, recipe, coman.
• Launch date was December 20th, 2021 - in first 3 weeks of business they sold out of their entire inventory
• Working with influencers did not scale well. For every 1000 people he reached out to only 10 wanted to collab and they wanted to charge exhorbitant rates. So he decide to do the content creation / andrew tate strategy
• Instead of influencer collabs he worked with 1 content creator, Ke, on a retainer basis and paid him a flat fee to make 1 tiktok a day for 30 days and he generated anywhere from $60,000 to $80,000 in revenue in the first 30 days.
• How to scale it - 2 options.
• Instead of bringing on a bunch of creators he created new accounts and assigned each creator their own account then hired talented creators to run and manage the accounts.
• TikTok democratized the ability to go viral so it wasn’t about how many followers you could get it was about your ability to create good content that hit the 4 you page.
• You no longer had to pay someone a crazy amount of money to reach their audience and tap into their distribution network.
• He sold out of all his inventory in first 3.5 weeks so then if he sold $80,000 in first month and sold out it means he had invested in $80,000 / 19.95 (which was the original price before he increased it to $29.99 because it had a higher CVR there) = 4000 units of inventory. Assuming it cost $5 for chocolate and box COGL then that would be $20,000 of cash invested. He claimed to have started the business with $30,000 (his bet on the business) so that was $10k left over and I believe he paid Ke $2-3k to promote his product for the first 30 days
• So from that first month he would have made back his $20k plus $56,800 in profit increasing his cash position to $76,800

• On January 15th, 2022 an influencer by the name of @maciawolf posted a tiktok about them and it got 6.6M views and 2M likes and in 1 day that video drove over $50,000 in revenue. He didn’t pay her to post the video she just did it organically. For their 2nd month of business they did $280,000 in revenue and a lot of that was in pre-orders.
• They decided to ship the inventory for packaging by sea container instead of by air because it was significantly cheaper but that was a huge mistake as the container got incredibly delayed and they were out of stock for like 3 months. And in that time they lost all of their momentum and fire and sales slowly declined.
• In April they finally had inventory again but it wasn’t so easy to gain momentum again - he says it’s a game of momentum
• Then November came and his revenue dropped by 40%. TikTok banned him. All his accounts got banned and then his co-founder dropped out to go back to school. Then he moved back home after having moved to Miami to live in a penthouse and focus on scaling the business.

• This even pushed him back 10 steps and had to pull himself out with the help of the first content creator Ke and his uncle and he started exercising again to get back in shape.
• Then he focused on building the best fucking team
• Email & SMS
• Conversion Rate Optimization
• Ad Creatives
• All of these coupled with moving into Q4 with holiday season, black friday, cyber monday things started to explode again
• He took a trip to Europe for 2 weeks in November 2022 to enjoy life and get back to a good mental state.
• Your mindset, life and general well being is so connected to your business.
• Most importantly is he crafted a team of ASSASSINS

• He started spending $100,000 on Instagram and twitter meme pages to promote his top performing videos for 24hrs and working with bigger influencers, more influencers, revamping the operations side. Doing new photoshoots, redesigning the entire website, bringing on a conversion rate optimization team and then they started taking off like a rocket ship.

Market Analysis

Amazon performance

https://www.amazon.com/dp/B0BT28F6WH

Using the Amazon Product Opportunity Explorer

• 78,453/3 = 26,151 clicks per month - all the traffic is likely branded searches

Semrush data shows steady strong growth

Organic terms are mostly branded

No direct competitors yet

Focused on defending branded terms

Sample Ads

Future Plans

• Get into international marketplaces - more than 40% of all of his traffic comes internationally and they currently only sell in the USA
• Diversify away from the D2C website - Move to Amazon, Etsy, Wholesale and retail shops, smoke shops, sex stores, convenience stores, gas stations
• Lastly he wants to break into paid advertising
• He wants to build out new products and extension lines since currently they are only a one product shop
• Looking at his performance on Amazon he is doing about 4000 units a month which is we assume is all the lower priced $29.99 price he’s making $120k/month on Amazon currently as of 8/5/2023. He listed his product there on May 6th, 2023. https://www.amazon.com/dp/B0BT28F6WH

• It is interesting to compare his branded queries vs Mr. Beasts Chocolate

• Took most popular and natural supplements for sex and put them into a great tasting chocolate that was a luxury experience. According to Amazon ingredients are “60% cocoa, Epimedium, Maca Root & DHEA”
• They invested heavily into building an amazing package - the packaging needs to look attractive in order to help them acquire a customer. The packaging & branding was inspired by Truff (super expensive high end hot sauce brand). Tabs box is very similar to theirs

• Worked with a food scientist and chocolatier to come up a chocolate that was impactful and also tasted good.
• He targeted Generation Z with "sex chocolate," which contained natural supplements sold in pill form and packaged in a unique way. By making these supplements luxurious and destigmatizing their use, he disrupted the pharmaceutical industry's traditional approach.
• TikTok democratizes the ability to go viral. He got up to 30-40 TikTok creators on retainer putting out 1-3 TikToks per day so they were pumping out a massive amount of content - eventually he switched everyone over to fully affiliate commission based model which lowered the downside of non-performers and rewarded top performers more. Only some of his creators have a small monthly retainer with commission.
• He doesn’t know what video will go viral but he does know that if they put out 50 videos a day then one of those will hit the algorithm. Instead of trying to find the needle in the haystack you just grab the whole haystack
• Controversial product with luxury feel engineered to go viral on TikTok
• Can you describe the essence of the product in 3 seconds? If so that will contribute greatly to your success.
• They’re not selling chocolate. They’re selling an experience and a mood and therefore the whole entire vibe needs to be spot on. Otherwise how do you justify selling 3 tiny 20grams of chocolate for $29.99.
• Called hundreds of chocolate Co-manufacturers before finding the right one with a low MOQ
• Supply Chain
• Started getting traffic on website Feb 2022. Doing over $10M in revenue for 2023. 40-45% net profit margin with over 1 billion organic views on TikTok
• Product Development
• Chocolate
• Only stuff made in China is the box and the chrome poly mailers which create an embryotic effect which traps the heat from coming into the chocolate because chocolate melts. Melting wasn’t something he thought about until the summer months came and customers were complaining left and right about the chocolate melting - this also negatively impacted his Amazon listing review rating.
• Then there’s the special plastic that wraps the chocolate that is a particular manufacturer