You Don't Have a Product Line. You Have a Storage Problem.

A brand in my portfolio hit $4M in revenue last year. Solid growth, strong repeat rate, good margins on paper. When I dug into their P&L, they were barely breaking even. The culprit wasn't ad spend or shipping costs. It was 47 SKUs.

They'd launched with three products. Clean, focused, easy to manage. Each one had strong demand. Then they started listening to customers. "Can you make this in lavender?" "What about a travel size?" "Do you have a bundle for couples?" Each request felt reasonable. Each new SKU felt like growth. So they kept adding.

By the time I looked under the hood, 11 of those 47 SKUs accounted for 82% of revenue. The other 36 were sitting in a 3PL warehouse in New Jersey, racking up storage fees, tying up cash in inventory, and creating a supply chain complexity that was eating their ops team alive.

This is the SKU trap, and almost every DTC brand falls into it between $2M and $8M in revenue.

Here's what happens mechanically. Each new SKU needs its own inventory forecast. That forecast is usually wrong because you don't have enough sales history on a new product to predict demand accurately. So you either over-order and sit on dead stock, or under-order and go out of stock, which tanks your conversion rate on that product and messes up your ad performance.

Each new SKU also needs its own packaging. At Paking Duck, I see this constantly — a brand that started with one box design now needs twelve variations for different sizes, scents, and bundles. That's twelve different print runs, twelve different MOQs to hit, twelve different items for your warehouse team to pick and pack correctly. The error rate on fulfillment goes up with every SKU you add. Wrong item in the wrong box. Wrong insert. Wrong size. Each mistake is a support ticket, a return, and a customer who's less likely to reorder.

Then there's the marketing problem. Every SKU needs its own product page, its own photos, its own ad creative. Your marketing team — which at this stage is probably two people — is now spread across 47 products instead of focused on the three that actually drive the business.

The best operators I know in DTC run lean SKU counts and print money. One supplement brand I'm invested in does $12M a year with four products. Four. They know exactly how much of each one to order, their packaging is dialed, their fulfillment error rate is near zero, and their marketing team can go deep on creative testing for each product instead of spreading thin across dozens.

The fix isn't complicated but it takes discipline. Pull your SKU-level P&L. Not just revenue — full contribution margin including storage, packaging, marketing, and the ops overhead of managing that SKU. I guarantee you'll find products that are revenue-positive but margin-negative once you account for the hidden costs.

Then ask yourself a brutal question for each underperformer: if this product didn't exist today, would you launch it? If the answer is no, sunset it. Not next quarter. Now. Sell through the remaining inventory at a discount, remove the listing, and free up the cash and attention for the products that actually drive your business.

I know this feels like shrinking. It's not. It's focusing. The brands that win long-term aren't the ones with the biggest catalogs. They're the ones with the tightest operations and the deepest understanding of what their customers actually buy.