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Since launching last year, seed-stage VC fund Vice has invested almost exclusively in these categories, which is currently proving to be a success. Vice-backed startups include CBD seller Plant People, which saw a rough 30% increase in mid-March without the use of marketing spend. Similarly, CBD beverage Recess also doubled its e-commerce sales over the past two weeks. Meanwhile Lucy, the nicotine harm reduction platform in Vice’s portfolio, experienced a 50% increase in sales in recent weeks. Those figures are attributed to news of young smokers’ coronavirus mortality rate being higher than non-smokers, thus driving traffic to the site.
DTC alcohol has been slower to take off than other products, but this surge in pandemic can help it change customer habits for good. Winc president Brian Smith tells us how they're going about accelerating it.
Running a new direct to consumer brand is challenging enough, but doing it during pandemic-related economic uncertainty comes with a new set of obstacles. Shapermint, the brand that sells shapewear, generated $150 million in revenue since its 2018 launch with an operation of an international, remote team. The company initially saw some drop in sales, but has pivoted content and marketing quickly to try make the most of the current situation. Modern Retail talked to co-founder and CMO Massimiliano Tirocchi about pivoting to be about "at-home" shapewear, taking advantage of cheaper ad rates, and managing employee burnout.
Despite China seemingly back in action with funding, venture capitalists don't expect a quick restart for U.S. startups. “I really don't see many deals starting and completing during the quarantine."
DTC brands and platforms are passing on revenue from e-commerce as losses from physical sales losses mount. Examples include luxury watch platform Hodinkee, sustainable container brand Corkcicle and clothing rental service Wardrobe, which are using their existing e-commerce backends to help the store locations they sell their products in. This month watch-focused platform Hodinkee opened up its e-commerce platform to allow physical retailers it normally promotes, but are currently shut down for business, as well as watch brands it carries.
I’m not working today. I have bad anxiety, and have increasingly become more terrified of killing someone’s grandma. I’m not as worried about getting sick myself, so grocery shopping for me has become awful. Even before the strike, I’d been cutting back on work. Thankfully my rent is paid through April, but I’m terrified of falling behind on bills.
Unlike multi-million square foot warehouses, micro centers are typically located in much-smaller spaces within cities, averaging about 10,000 square feet. Examples include platforms like Fabric, which builds automated micro-fulfillment centers for retail clients, with a focus on grocery chains.
People don’t think of co-working spaces as operations for physical products, but all our fulfillment is done out of our office, where we have expensive equipment for custom label printing. Our teammate from California was feeling uncomfortable being in New York and went back home, and I wanted to support him on that. The timing also coincided with our other teammate leaving to have surgery, so now it’s just me, our full time head of engineering and a few part time employees.
With physical fitness facilities deemed non-essential and workout equipment selling out fast, virtual fitness startups are having a moment. Strength-training system Tonal, which launched in 2018 and retails for $2,995, is seeing a surge in sales this month. The wall-mounted weight simulation product is getting a second look from customers searching for exercise activities in confined spaces.
As the medical gear and staffing shortage increases, retail’s efforts toward coronaviruses relief are expanding beyond monetary donations. Since the virus’ outbreak in the U.S., multiple brands have announced plans to quickly offer important aid to those on the front lines of the public health crisis. Companies include direct to consumer players like Allbirds, Clove and Judy, as well as corporations like Apple, Walmart and Gap, among others. Medical gear is depleting fast, which has manufacturers like Honeywell putting factory schedules into overdrive to produce N95 masks. In the meantime, those with existing reservoirs are stepping in to replenish protective equipment and other needs for the healthcare providers who need it most.
DTC brands are going back to their roots by shifting their focus back to e-commerce.
"With everyone staying home, it’s actually been good for the puzzle business."
Radish, Everlywell and Nurx announced their own respective versions of at-home coronavirus tests.
"Landlords have been sympathetic to the retailer brands’ situation during these shutdowns."
"There is always going to be room for companies that understand a customer’s needs and deliver products with value."
In 2008, Melissa Mash, now the co-founder and CEO of handbag brand Dagne Dover, was managing Coach's wholesale e-commerce business, which consisted of selling through the websites of department stores like Macy's and Nordstrom. As the recession worsened, she got a crash course in what not to do during hard economic times. Mash said the biggest takeaways for her were, one, the dangers of offering deep discounting, and second, relying on wholesale retail partners to drive all of your sales, especially when they are hurting for revenue themselves.
Read MoreExclusively for Modern Retail+ members: Hear from Colin Darretta, CEO and Founder of Wellpath, on the future of direct to consumer business.
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