Aaron Luo launched the DTC bag brand Caraa in 2015 alongside CFDA Award-winning designer Carmen Chen Wu. Now, eight years into the brand’s life, Luo has another brand under his belt — Mercado — and a new perspective on how DTC brands can grow and be successful in the modern retail landscape.
“Back in the day, there were these people who came from a business background and came into DTC thinking, ‘Hey, there’s a waste of space here. We think we can do things better and cheaper and acquire customers quickly,’” Luo said. “I don’t want to say they never paid attention to the product, because many did. But marketing was much more important to them.”
But that era of DTC brands being able to grow by forcing customer acquisition and dumping money into Meta is over, he said.
Additional highlights from the conversation, below, have been lightly edited for clarity.
Launching a new category
“The new baby line is a perfect example of how the brand has evolved with our customers. When we first started the brand, it was very much designed to cater to and target the millennials. The reality is that since we started giving our customer the kind of products that she wanted to complement her busy lifestyle, she started to have children. The first baby bag we designed was inspired by requests from our customers saying, ‘Hey, I’m really struggling to find the right baby bag for the market.’ We wanted to provide something better than the, for lack of a better word, Amazon-type baby bags out there. Something functional and durable. So we worked with 500-plus moms and dads, and ended up discovering that dads carry the bag around just as much — so we ended up with something unisex. Our first baby bag is still one of our top-selling products in the baby collection. The genesis was just our existing customers asking us to go here. Because we listen to our customers and because we want to evolve the brand with our customers as they go through different stages of their life, we produce products that service her and make her life better.”
Prioritizing product over marketing
“Facebook and Instagram were very effective platforms to acquire new customers. But we decided, ‘What if we flip the cards a little bit and let the product take center stage?’ What that meant was that we invested in R&D, invested in design and invested in hiring the right people to actually support that function, versus just hiring the best digital marketing agency or the digital marketing strategist. That’s not to say we didn’t do a healthy amount of that. The focus behind the brand was always to let the designer really dictate the DNA of the company, let that be the North Star. That paid off and, regardless of what happened in digital marketing or the iOS 14 updates, and so on and so forth, we stayed true to our product. We let the product be the center stage of the brand and allowed our customers to come to us because of the product, versus any kind of fancy marketing.”
Bringing content creation in-house
“Our office is in Chelsea in Manhattan. The team grew a lot over the pandemic. We were fortunate enough to grow and thrive through the pandemic and we felt it was time to create a space where we can create our own content. So through the pandemic, we took a lot of the content creation investments in-house. We felt that it allowed us to be a lot more flexible with our content creation and made economic sense. We have a significant size studio in Chelsea where people can work and we can shoot stuff. Every week, some member of our team is using the studio.”