As the number of purchases made online grows, so has the number of startups selling businesses on their checkout experience like Bolt and Fast. Meanwhile, established companies like Shopify and Apple are trying to push greater adoption of their own digital wallet. All are trying to convince direct-to-consumer startups and other e-commerce brands that if they use their incrementally better checkout system, it will result in huge increases in conversion rates and average order values -- but the reality is that only a few will become the go-to checkout options for most consumers.
There's a fierce competition brewing amongst the major social media companies to win over the advertising budgets of e-commerce companies. Facebook, Google, TikTok, Pinterest and Snapchat are always testing out new advertising formats, but within the past couple of years, these companies have increasingly focused on testing out new ad formats and features designed with e-commerce companies in mind. Modern Retail has laid out all the different ways that these companies are trying to win over more e-commerce brands.
As the pandemic continues to upend the ways people shop, direct-to-consumer startups are continuously looking for creative ways to reward customers through the launch of new loyalty programs. Handbag brand Dagne Dover launched its first-ever loyalty program last week, through which customers can earn points not only for buying product, but also for writing a review, or following the company on social media. Hair care startup Prose also launched its first ever membership program over the summer, incorporating perks like access to one-on-one virtual consultations and a wellness podcast. It's a trend that started before the pandemic, but now it's more important than ever that companies find ways to reward their loyal customers, even if they're not able to buy product right now.
Rothy's had just launched a new category, handbags, when the coronavirus pandemic hit in March. The brand, which got its start in 2016 selling ballet flats, acted fast to retool its product lines. For one, the company quickly started churning out masks in its wholly-owned factory in Dongguan, China. Then, it shifted its focus to ramping up prints and colors in products like sneakers that Rothy's figured would be more in demand as people started to spend more time at home. Rothy's didn't emerge from 2020 fully unscathed, but it did manage to end the year profitable.
Within the past month, a number of new SPACs focused on the consumer sector have emerged. Some consumer investors are looking at SPACs as a way for them to get more involved with later-stage companies, and if their SPAC does well, it could give them a competitive advantage over other venture firms. But as more SPACs launch, they'll be more competition to win over the best candidates poised to go public.
Social media complaints have been piling up on social media for direct-to-consumer furniture brand Joybird. Some customers Modern Retail spoke with said that not only are deliveries being delayed -- a common occurrence amongst all retail companies during the pandemic -- but that they are receiving incomplete orders, like only part of a sectional or a table with no legs. And, that when they've reached out to Joybird's customer service teams, they've struggled to get an explanation.
It's a good time to be a startup that sells products for cats and dogs, as the pet care sector is currently booming. Earlier this month Wild One, which launched in 2018 by selling accessories like leashes, announced that it would start selling some of its products in Target. In October, another dog food startup, Jinx, announced that it would start selling its products on Petco's website. These pet care startups have a few trends working in their favor, namely that a number of pet shelters reported record adoptions in 2020.
An Apple iPhone update is about to upend the advertising strategies of e-commerce companies. The update has the greatest implications for app developers, but it also will significantly impact e-commerce companies who spend most of their advertising money on Facebook and other mobile ads. Here's what every e-commerce company needs to know about the iOS14 update, and how to prepare for it.
Last year, many direct-to-consumer startups saw record sales -- but they also struggled to produce and ship enough product to keep up with customer demand. If the first few weeks of 2021 are any indication, those issues are likely to continue well into the new year. Since the beginning of the pandemic, startups have been scrambling to find ways to speed up production, mostly by adding more suppliers and placing orders for products further in advance. A year later, and the problems persist.
Retailers are trying to get their employees vaccinated -- and fast. There's a clear incentive for retailers to encourage their employees to get vaccinated as quickly as possible: as more of their employees get vaccinated, it decreases the likelihood that one of them will contract the coronavirus at work. However, mandating that employees get the vaccine presents its own set of challenges.
As retailers increasingly open more stores in strip malls or open-air shopping centers, they're also rethinking what these locations should look like. Locations of Macy's new off-mall chain, for example run only 20,000 square feet, tens of thousands of feet smaller than the typical department store. As other retailers like Sephora and Foot Locker are looking at opening more off-mall locations, they're following similar playbook.
Walmart is starting off 2021 by losing one of its key e-commerce executives. Marc Lore, who has led Walmart's e-commerce strategy since the big-box retailer acquired his startup Jet.com for $3.3 billion, announced he was leaving Walmart after nearly five years. It leaves Walmart without the person who has previously been deemed the architect of its e-commerce strategy. All this during a year in which e-commerce is likely to once again experience tremendous growth — and as the coronavirus pandemic drags on.
The direct-to-consumer startup boom has also fueled the rise of a number of secondary industries — for example, buy now pay later services. Affirm just went public this week and if its Wall Street debut is any indication, it’s got some staying power. Affirm disclosed in its S-1 that it generates nearly 30% of its revenue from just one company: Peloton, one of the darlings in the DTC space. But the relationship between buy now pay later services and DTC startups runs deeper than that.
Outdoor furniture company Outer pays its customers to turn their backyards into "showrooms," which prospective new customers can check out as they're deciding whether or not to buy a sofa or a rug from Outer. It's something that the startup has done since launching in mid-2019. But 2020 was the year in which Outer started to prove that its model has traction. The company did more than $12 million in sales in 2020, up from $1.1 million in 2019. Now, the company plans to lean on its customers more to help fuel its growth, as it seeks to expand the showroom model.
For the past several years, more and more people have started abstaining from or cutting back on alcohol during the month of January, as part of a campaign known as Dry January. For startups that sell alcohol-free versions of beer, wine and cocktails, that means this is their month to shine. Modern Retail spoke with founders of startups like Curious Elixirs, Ghia and Ritual Proof Zero about how they are trying to attract new customers this month.
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