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Buy now, pay later has become one of the biggest shopping trends of the pandemic. Thanks to a struggling economy and unpredictable holiday season, millions of consumers and hundreds of retailers are embracing installment payment services like Klarna, Afterpay and Affirm. And they're advertising them prominently during holiday promotions.
As Facebook is seeking to become more of a commerce platform, it's also increasingly interested in acquiring services to assist the e-commerce and retail companies it is trying to court. That's evidenced by Facebook's latest acquisition, announced on Monday. The social media giant announced its intent to acquire Kustomer, a customer service platform that counts Birkenstock and Glossier among its customers.
After surviving the Black Friday rush, direct-to-consumer brands have a new challenge at hand: how to ensure their holiday sales aren't hampered by long shipping delays and going out of stock on certain items. Founders say that they are trying to incentivize customers as much as possible to order early, as well as giving as many details as possible about warehouse and supply chain challenges, in the hopes that shoppers will be as patient as they were in the spring.
As shoppers become more dependent on e-commerce, a growing number are beginning to look online even for Christmas trees. A small handful of DTC-style brands, like Walddie, have cropped up to offer delivery-focused tree sales. Even big players like Walmart, Home Depot and Lowe’s are stepping into the market, selling Christmas trees not just in their physical stores but also online. Digital Christmas tree are on the rise -- but ultimately, the Christmas tree business might show the limits of online ordering despite this banner year for e-commerce.
Since launching earlier this year, DTC furniture brand Sabai Designs has been on a mission to incorporate its Instagram followers' feedback into the design process. This process of releasing color and design combinations that early followers voted on has resulted in high conversion rates. However, Sabai also found there are advantages and drawbacks to crowdsourcing design ideas from social media.
The "middle mile" -- the part of the supply chain in which goods are shipped from a supplier's warehouse to a retail store -- might not have the buzz or high profile of last-mile delivery, but a growing number of retailers see middle-mile logistics as a quick path toward slashing delivery costs. For retailers, that would keep them competitive as the online delivery space grows more crowded.
More than nine months into the coronavirus pandemic, people are still shopping online more than they did last year. This has created an opportunity for companies focused on creating the tools that these e-commerce providers need to run their businesses. Those are the types of businesses that Mike Duboe, general partner at venture capital firm Greylock, told Modern Retail he is most interested in investing in.
One year ago, Clorox launched a direct-to-consumer supplement label called Objective Wellness. Now, Objective is taking another page out of the DTC playbook by partnering with Gravity Products, the maker of the weighted Gravity Blanket. The two are selling 'beauty sleep kits' on each of their respective websites. The move shows that even big CPGs are taking cues from the DTC playbook.
In the five days following Thanksgiving, there's usually a wave of retailers offering anywhere from 20% to 50% off of their products. But this year, the wave of brands offering deals between Black Friday and Cyber Monday will feel more like a never-ending tsunami as brick-and-mortar retailers try to make up from revenue lost during the spring. Still, eight direct-to-consumer startups Modern Retail spoke with said that they plan to swim against the current, and don't plan to offer any steeper discounts during Black Friday than they did last year.
In August of 2019, the Atlanta-based pet supplement company Goodboy launched with a series of products to help dog-related health problems. The site was clean, featuring green and orange colors, and asking shoppers to take a quiz to get a personalized assessment of what products they should buy. Then, the founders began noticing other sites doing similar things. "It was hard to pawn it off as just inspiration," said co-founder Kari Sapp. But this is anything but a unique problem.
Eight years ago, startups turned to Shopify primarily to sell products online. Now, a startup might turn to Shopify to help fulfill orders, get some cash for their business, or use its point of sale system when it opens a physical store. As the startups that launched on Shopify, like Allbirds and Glossier, have grown up, Shopify's influence over the e-commerce ecosystem has ballooned. Now, the company is at an inflection point. The bigger that Shopify gets, the more calls the company faces for it to launch services that solve the biggest pain points of its merchants -- but it could risk diluting Shopify's focus.
Skincare startup Topicals, which launched earlier this year, has said that it wants to market itself to the idiosyncrasies of Gen Z. With that, much of its content is posted on Twitter or TikTok, rather than Instagram. And its aesthetic and voice has been much more unvarnished rather than the preened tone many people expect from certain brands. On the most recent Modern Retail Talk, Topicals co-founders Olamide Olowe and Claudia Teng spoke about how the company has positioned itself and why it has attempted to rethink its overall brand messaging.
Online Black Friday sales are proving to be more difficult to administer than usual. With the lack of physical store openings and the fierce e-commerce competition among DTC brands and traditional retailers, brands like Deciem are looking to creative approaches to draw in shoppers this season.
As a behind-the-scenes restaurant vendor, dinnerware brand Jono Pandolfi has relied on wholesale sales for nearly a decade. However, when hospitality and fine dining all but shut down this year, the ceramics company found revenue opportunity in a new segment of customers. Since focusing on growing its DTC revenue, online sales have tripled year-over-year, with overall profits up by nearly 400%.
For many direct-to-consumer brands looking to sell and ship their products through someone's website besides their own, there's still only one dominant choice for them in the U.S., and that's Amazon. Despite the emergence of dozens of direct-to-consumer startups in every category from cookware to mattresses to pet food, no marketplaces have emerged to focus solely on these direct-to-consumer brands. That, in theory, leaves an opening for a new marketplace to create an alternative to Amazon for these direct-to-consumer brands.
With in-person sales largely out of the picture this holiday season, brands must adapt to deliver the frictionless experiences that online consumers expect and demand.
At the same time as retailers are racing to perform ever-faster shipping times, they also appear to be upping the incentives for slow delivery. Retailers, including Amazon, Target and Macy's are all offering shoppers discounts in exchange for longer shipping times. And that split might signal a changing mindset for some retailers -- rather than focusing on speed at all costs, some are taking a more nuanced approach to logistics.
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