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At Modern Retail's first Plus Talks, WellPath CEO Colin Darretta talked about how he's retooled his DTC wellness brand. He provided tips and insights about how to prepare a supply chain during a global downturn, as well as the business trends he's looking toward.
For retailers, running heavy promotions during store shutdowns is proving to be tricky. Due to the coronavirus outbreak, large retailers like Macy’s and Nordstrom, along with chains like the Gap, are aggressively pushing seasonal sales to make room for spring merchandise. With virtually all brick and mortar sales down, anywhere from up to 80% to 100% of expected revenue effectively disappearing for large brands, offering discounts is one of the most effective ways to stay afloat right now, said senior retail analyst at Fit Small Business Meaghan Brophy.
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.
Just weeks after Allbirds and Warby Parker filed to go public, online wine club Winc followed suite. The company, founded in 2011, is betting on an IPO to help it scale its DTC and wholesale operations as it attempts to gain market share.
Read MoreAt the Modern Retail Summit, retail marketers will discuss everything from the Amazon effect to new infrastructure to the shift in the direct-to-consumer world.
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