Buy now, pay later services had a record year in customer acquisition during the pandemic. Now, companies like Afterpay and Affirm are turning to physical stores to market their installment payment options for customers. What began as an e-commerce checkout tool is becoming the latest tool to get shoppers back into stores.
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.
Caraway, a predominantly direct-to-consumer cookware startup, is kicking off its first physical retail partnership. The startup announced on Tuesday that it's launching a new cookware set that will be sold exclusively in 81 Crate and Barrel stores, and through Crate and Barrel's website. Caraway just launched in November 2019, but CEO and founder Jordan Nathan told Modern Retail that he thought it was important for Caraway to start selling its products through other retailers' websites early on, because "we want to be where customers are buying for big stages of their life."
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.
For decades, dry ice has been the standard packing solution for frozen and perishable foods. But with much of the depleting supply going toward keeping Covid-19 vaccines cold, brands that rely on dry ice to ship products to consumers are looking for alternatives.
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.
The pandemic helped push secondhand resale sites, including Poshmark and The RealReal, into the spotlight. One platform that's been quietly building a following is Tradesy, which is mainly geared toward fashion and luxury shoppers. In an interview with Modern Retail, Tradesy founder Tracy DiNunzio discussed the importance of building a robust authentication program early in order to scale a resale site.
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.
For the DTC brands still betting on physical retail, expansion is on hold right now. But those in booming categories, such as homeware, are finding opportunities to expand into brick and mortar through wholesale partnerships. One example is Parachute, which launches at 65 Crate & Barrel stores this week.
When it comes to art buying, brick and mortar galleries have historically dominated the space, making for an intimidating experience for most everyday shoppers. However, while the art world is struggling without in-person auctions, marketplaces like Artsy are finding that the pandemic is helping expand the market to include young customers.
ClassPass, which began as fitness boutique-booking app back in 2013, has been rapidly expanding into other areas such as wellness and beauty treatments. In the past year, the platform has added 6,500 non-workout venues to help diversify its marketplace offerings and potential revenue. And the company plans to double down on this area.
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.
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.
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