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.

Daily Briefing Jun 20

Kroger’s digital investments are driving sales growth but eating profits

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.

Q&A

How Parachute CEO Ariel Kaye plots her brand's expansions

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.

'A tough category': Online jewelry brands are looking to personalized product and service to drive sales

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.

Other news to know

  • The Wall Street Journal posted an in-depth report on DTC ad spend this week, highlighting just how much money is flowing to ad channels from the category. They’re branching into traditional categories: The top 13 DTC brands’ national TV spending grew 42% in 2018 to $137 million, according to Magna.
  • Mondelez, which owns Oreo, Ritz and Nabisco among other CPG brands, is acquiring a majority stake in Perfect Bar-parent Perfect Snacks, per CNBC. Last year, the company did $70 million in sales and is seeing double-digit year-over-year growth.
$378 million
DTC ad spend from the top 13 brands in 2018, according to Magna
Latest Stories
Forever 21's problems indicate a bigger crunch for traditional fast-fashion retailers

Forever 21's problems indicate a bigger crunch for traditional fast-fashion retailers

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.

How fitness equipment startups are plotting the push into physical retail

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.

A new DTC holding company is targeting the home goods category

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.

How Rothy’s is building out its physical store strategy

How Rothy’s is building out its physical store strategy

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.

'Traditional retailers won't carry our assortment': Why plus-size brands are favoring the DTC model

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.

Propelling consumers towards conversion: Three ways location data transforms media spend
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Propelling consumers towards conversion: Three ways location data transforms media spend

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.

How Pinterest is trying to win over DTC brands

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.

The founder of Unilever-owned Schmidt's Naturals is launching an editorial site for entrepreneurs

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.

Walmart is testing a delivery subscription as it ramps up its grocery e-commerce business

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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