How Dixxon made $20 million a year with limited-edition drops
Jun 22, 2022
Dixxon's success story started with flannel shirts and evolved into a multi-million dollar business using key strategies. They create scarcity with limited editions, primarily using social media to build hype. Most traffic comes directly to their website, thanks to an engaged audience. They offer complementary products, increasing customer lifetime value. By releasing smaller, more frequent product drops, they encourage customer engagement and repeat purchases.
It all began with flannel shirts. In 2013, Danny Dreyer started selling quality flannels while he was working 60h a week as a mechanic for Harley Davidson motorbikes. It was only intended to be a side project at first, during a time when he and his wife already had their hands full caring for a baby and toddler. That was long before they moved into their 48,000 square foot warehouse in Tempe, Arizona. Later, Dreyer would describe the story of his company’s beginnings as “$180 and a dream” - the name of his podcast. In 2020, the business was making over US$20m in annual revenue.
Dixxon has cultivated a large following on social media, with nearly 390k followers on Instagram and 180k on Facebook. However, their financial success can be attributed to their strategy of limited edition releases. Let’s take a look at some of the ways they have managed to capitalize on their social audience base to increase their profitability.
Restrict production quantities to create scarcity and exclusivity
You won’t find Dixxon’s products on Amazon; they produce limited quantities of each design (1000 to 7000 pieces). Their limited edition releases are a huge part of their strategy, as it encourages customers to act quickly. Dixxon relies heavily on social media to hype their products and announce releases, catching people in the moment as they scroll their social feeds.
Though socials make up their main strategy, it’s interesting to note that most of their traffic does not come through social channels - rather, they are mostly coming directly to the website (61.9%). (Source: Similarweb)
How is that so? Dixxon’s social media posts don’t even mention links to their landing pages. They simply inform their followers of the latest drop.
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Followers are already expecting the drop, and are familiar with the brand, so the moment they see the news on their social feeds, they go directly to Dixxon’s homepage. Below is a screenshot of the top organic keywords leading to Dixxon’s website in the month of April. All of the keywords are of the brand’s name, indicating that most visitors were already searching for the brand. (Source: Similarweb)
Between hyping their product drops in advance and only releasing limited quantities per model, their products often get sold out, putting at least $50k in the bank every release. The company does several releases per month.
Offer multiple complementary products to increase customer lifetime value
One way in which the company prolongs their visitors’ time spent on the website is by offering multiple different types of products. On top of flannel shirts, Dixxon has also diversified into producing jackets, caps, shorts, sandals, and other items. The products are often marketed together as a matching set, encouraging customers to purchase more items.
It works - people are spending more money on the website than before. “Lifetime value has gone up as more customers are trying more products. The average order value is actually going down, about 20%, because people are ordering more - they’re ordering less per order, but they’re placing more orders per month on average, because we’re having more releases,” shares Senior Brand Manager Chris Vallely in a 2020 podcast.
"Lifetime value has gone up... [customers are] placing more orders per month on average, because we're having more releases." - Chris Vallely, Senior Brand Manager for Dixxon
Below is a screenshot of Dixxon’s traffic and engagement over the month of April. While the total visits have dropped significantly from previous months, the average visit duration (3m48s) and pages per visit (5.03) reflect an engaged visitor base. (Source: Similarweb)
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The two charts below show Dixxon’s efforts in bringing high intent customers to their website through a mix of organic and paid efforts paying off. Though there is less traffic to the site in April (539.7k), the duration of visits and pages per visit are both higher than in February when traffic was nearly double (814.2k). The chart also shows an overall upward trend in visit duration as well as pages per visit, showing an overall increase in visitor engagement on the website.
Encourage smaller and more frequent spending, instead of larger and less frequent hauls
According to Chris, the company used to release 10-12 flannels at a time like other companies. However, they found that customers were not likely to spend more than $100-200 in a transaction, even if they wanted all the designs they released. When the company switched to multiple and smaller releases, they saw their AOV dip only 4-5%, but those customers would also purchase the next release two weeks later.
Their adjustment in release strategy reflects the company's understanding of their customers' behaviour and limitations. Rather than increasing their marketing budget to try and acquire higher spenders, they found a way to increase profitability by working with their existing customers' spending preferences.
In addition, the company is able to see success in repeat customers because of their active communication on social media. They keep their audience engaged through frequent posting - they post 3 times a day - and by delivering high quality images and engaging videos. These posts are of course fueled by intense product development; as an example, in March the brand did no less than 6 collaborations, 6 collections, and several individual releases.
Dixxon found its core audience of people looking for high quality flannels, and through rapid product development is now able to create more and more offerings to increase their customer lifetime value. By entrenching their products firmly into people’s daily lives, and also making their social media postings a part of people’s daily habits, Dixxon has successfully carved out a solid customer base for a long and sustainable business.
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