Direct-to-consumer startups are, unsurprisingly, turning to one another to navigate their business' through the coronavirus pandemic. Partnerships between direct-to-consumer startups were already becoming more popular before the coronavirus pandemic. But more startups have been turning to partnerships in recent months in order to reach new customers while other marketing tactics like physical pop-ups remain out of the question. It's also a way for startups to test out new product categories, while resources remain tight.
All big-box retailers are now trying to become tech companies. That's the takeaway from the news that Walmart is teaming up with Microsoft to submit a bid to acquire TikTok. Acquiring TikTok could help Walmart grow its advertising business astronomically -- and that could be a boon for e-commerce startups looking for somewhere else to spend their money besides the Facebook-Google duopoly.
As the coronavirus continues to shift more retail spending online, more retailers are looking to remodel stores to double as fulfillment centers for online orders. Best Buy said on its earnings call yesterday that it would be piloting a new ship-from-store model next month, where 250 of its stores would be remodeled as "hubs" in order to ship out more online orders. Other retailers are likely to follow suit, as demand for online shopping will only pick up as the holidays get closer.
TikTok's future in the U.S is unclear, after TikTok announced it plans to sue the Trump Administration over an executive order from early August that had ordered Byte Dance to sell TikTok within 45 days, or the app would be banned in the U.S. But that hasn't stopped direct-to-consumer startups, who are hungry to find alternatives to Facebook, from trying to acquire new customers through the platform.
Lingerie startup Adore Me is encouraging more of its customers to become influencers. In February, the company launched its own self-serve platform called Creators, where social media influencers can sign up to promote product. Adore Me's self-serve approach is indicative of how direct-to-consumer startups' approach to influencer marketing has shifted over the past couple of years. Rather than trying to find the influencers with the most followers to promote their product, they're instead focusing on trying to find smaller creators who are more genuine fans of the company.
The coronavirus has forced retailers to rethink how they approach key events this year. and the holiday season will be no exception. Kohl's CEO Michelle Gass said that the company is anticipating "early holiday demand beginning in October." Target CEO Brian Cornell also said this week that the company will be "spreading our best price holiday offers over a longer timeframe," in order to cater to customers who start holiday shopping in October. As retailers prepare for holiday shopping to begin earlier, they will have to think about how to build out their fulfillment and buying process to handle the unusual shopping patterns.
Despite their affinity for shirking traditional retail practices, there's one that direct-to-consumer brands can't shake off entirely: the belief that the customer is always right. Or, more commonly, DTC startups like to follow in the footsteps of Amazon, and declare themselves customer-obsessed. But when customers behave badly, it's often retail workers that pay the price. In order for DTC startups to truly champion diversity and inclusion, they have to train their store staff on how to handle racist or belligerent customers.
During the pandemic, Walmart benefitted from being one of the only games in town. Now, as most non-essential retailers have been able to reopen the majority of their stores in the U.S. and delivery times have started to stabilize, the question now becomes how well Walmart is able to retain its customers throughout the rest of the year. During its second quarter earnings on Tuesday, Walmart reported that its e-commerce sales during the period grew 97% year-over-year. It will be tough to match that growth the rest of the year, but Walmart can maintain a strong growth rate if it encourages its e-commerce customers to cross-shop as much as possible.
As more shopping moves online, some property owners are looking for new uses for dying malls or former department stores. Last week, the Wall Street Journal reported that Amazon was in talks with Simon Property Partners to turn some former stores previously occupied by JCPenney and Sears into fulfillment centers for the e-commerce giant. But converting stores into warehouses comes with its own set of challenges.
During the coronavirus pandemic in the U.S., e-commerce has become a lifeline for businesses to stay afloat when many non-essential stores were ordered closed in April and May. Now, changes being made to one of the backbones of the e-commerce landscape -- the United States Postal Service -- threatens to create a huge headache for retail and consumer startups .In mid-July, many businesses started reporting packages were taking longer to get to customers, which coincided with new cost-cutting measures that the USPS could implement. Every e-commerce business, from mom-and-pop shops all the way up to Amazon rely on the USPS in some way, and any changes in service or prices could wreck havoc on small e-commerce businesses.
Over the past several years, Kroger has been building out its own Amazon-style flywheel to protect its revenue growth as more grocery shopping moves online. So on Tuesday, it didn't come as much of a surprise when Kroger said it would be launching its own third-party marketplace. The grocer will likely find it challenging to match Amazon's reach online -- but retail analysts still say the marketplace could prove to be a boon if it helps Kroger subsequently grow its marketing business.
Even before the pandemic, malls were struggling to figure out how to diversify their tenant mix as fewer shoppers visit department stores. Now, the pandemic has exacerbated those challenges, as existing tenants stopped paying rent during March and April store shutdowns, and other types of businesses are concerned about signing new leases before the pandemic is over. Simon Property Group and Macerich's earnings from this week show that there is still a long ways for mall owners to go on the road to recovery.
Public Goods, an online-only consumer packaged goods company, is making its first foray into physical retail. The startup announced on Tuesday that some of its products like shampoo, toothbrushes and facial cleanser, will now be available for purchase in select CVS stores.But Public Goods' strategy differs from that of other CPG startups in that shoppers have to buy a $59 per year membership in order to buy products from its website. So when Public Goods starts selling in CVS this week, it will be the first time that its products are available for purchase without a membership. It will be an important test for the young startup as to how receptive customers are to buying one-off products from Public Goods at a traditional retail store.
DTC Twitter is obsessed with Tweet threads. Or, at the very least, they are frequently cited as recommended reads in industry newsletters like 2pm Inc. and Lean Luxe, and often serve as inspiration for further discussions in Clubhouse, Slack, or virtual events. Heavy Twitter usage is not unique to the DTC startup scene, but these Tweet storms are a good a mirror to expose the strengths and weaknesses of DTC startups.
After posting record-high sales during its second quarter, Amazon is struggling to maintain enough space in its warehouses for inventory. That's creating headaches for sellers who rely primarily on Amazon's fulfillment service (FBA) to get the majority of their products to customers.
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