AOV Over $150 for Growth
Sean Frank, CEO of Ridge, on the state of ecommerce post-COVID
This is really a claim about ad math, not product taste. When paid acquisition gets expensive, a brand needs enough dollars in each order to cover product cost, shipping, payment fees, and still leave room to buy the next customer. That is why higher AOV matters so much now. Ridge pairs a premium price point with sub 20% product cost targets, while older D2C playbooks like selling a $300 item that costs $150 to make leave too little contribution margin once ads get expensive.
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Ridge frames the key metric as contribution margin, meaning how much of each order is left to spend on marketing after the direct costs of making and delivering the product. In that framework, raising AOV is the fastest fix because every extra dollar on the order creates more room to buy traffic.
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The comparison point is luxury. Hermès reported gross margin of about 71% in the first half of 2024, and Ridge points to that kind of structure as the benchmark for physical goods brands that still want to grow through paid channels. The product does not need to be luxury priced, but the unit economics need to look closer to luxury than old school D2C.
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This also explains Ridge's category expansion. Moving from wallets into rings, bags, belts, and luggage is not just about revenue growth. It creates more chances to bundle items together and lift order size, which helps offset rising Meta and Google acquisition costs that still dominate spend for most brands.
The next phase of ecommerce favors brands that can manufacture cheaply, sell at a premium, and stack more items into each cart. As paid channels mature, growth will keep shifting toward brands with accessory style economics, repeatable bundling, and enough margin to keep feeding the ad machine without breaking profitability.