Inside Shopify’s efforts to become the operational Amazon of DTC
Shopify is taking a page out of Amazon’s playbook as it looks to become the all-encompassing platform engineering the growth of direct-to-consumer retail.
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Shopify is taking a page out of Amazon’s playbook as it looks to become the all-encompassing platform engineering the growth of direct-to-consumer retail.
Kroger's digital sales are increasing as the company invests more in services like delivery and in-store pickup, but they continue to eat into the company's profits. During its first quarter earnings on Thursday, Kroger reported that digital sales were up 42% compared to the same period last year, but same-store sales excluding fuel were up just 1.5%. But, operating profit declined to $957 million, compared to $1 billion a year ago. Kroger is in the middle of its Restock Kroger initiative, introduced in 2017, a restructuring strategy put in place to create an Amazon-style flywheel to protect its business.
Physical retail strategies have become integral to the growth of direct-to-consumer brands, as they seek out customers they can't reach online. Members of the first generation of DTC, like Warby Parker and Casper now have aggressive store expansion plans. Home goods brand Parachute is one such brand that's undergoing a rapid physical expansion. After launching in 2014, last year Parachute raised $30 million in venture capital to open 20 stores by 2020. Right now, the company now has seven stores in Los Angeles, San Francisco, Portland, New York, Chicago and Dallas.
In the last 18 months, Rocksbox's private-label products, made up of eight different brands, have grown from 25% of its total inventory to 85%, and private-label products are driving about 85% of sales for the company.
As a retailer targeting teens, Forever 21 faces stiff competition as bankruptcy has rattled the category. But Forever 21's specialty -- fast, disposable fashion released on a seemingly never-ending cadence -- has helped to protect it. Middle-of-the-road retail has been susceptible to being squeezed out as customers skew to the high and low ends of fashion's totem pole.
There are no one or two go-to-retailers whose stores fitness startups can start selling their products in before opening their own physical retail space, to learn how their products do in stores. Retailers need to be willing to dedicate floor space for product demos, and to assist with delivery and installation of the bulky equipment. So, startups have been experimenting with pop-ups that allow them to leverage existing retail space to get a better sense of what customers want.
Resident is the latest brands group to form around a collection of retail startups, and it’s betting that a power-in-numbers approach will work in its favor in the crowded DTC mattress category. Resident is now the parent company of mattress brands Nectar Sleep, DreamCloud, Awara and Level Sleep, rug brand Wovenly and Bundle, a furniture line that launched in May.
Underpinning Rothy’s store strategy is an emphasis on profitability: According to Rothy’s president Kerry Cooper, the first store is profitable and became so four months in. As more digitally native brands move offline and into their own physical retail stores, these locations have served dual purposes as both marketing plays and sales channels, particularly in the form of pop-ups that ship inventory displayed in stores to customers’ homes.
Plus-size and extended-size fashion brands are launching by the droves, no thanks to wholesale partners. Rather than retailers' buy-in, the direct-to-consumer model's proven success is giving brand founders the go-ahead. More brands are launching to cater to women above a size 14, and are relying on the direct-to-consumer business model rather than wholesale to reach their customer.
Location data is no longer limited to geo-fencing, which typically triggers a text or app notification when a person enters a street or store.
Pinterest said in its S-1 filing, released in March, that it was starting to build more product and measurement tools to better serve digitally native vertical brands, and had a dedicated sales team to serve these emerging brands. In the months since then, Pinterest has released a new campaign type called conversion optimization out of beta that it said it says has proven popular among DTC brands especially.
Supermaker, which launches today, is a new media site founded by Schmidt and Cantino focused on telling the stories of entrepreneurs, particularly women and people of color who are launching consumer brands with a “conscious agenda” according to Cantino, as well as sharing career and business advice around topics like raising investment funding and commanding successful social campaigns. The site currently features spotlights on brands like Bippy, a sustainable toilet paper company, and Anna Robertson, the founder of Ghana-based apparel brand Yevu.
With Delivery Unlimited, Walmart is adding another option to its suite of delivery services that get orders to customers on a same-day basis, upping competition against Amazon and Target, as well as cross-retailer services like Instacart. It’s the latest in a string of additions to Walmart delivery options.
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