Like other delivery-related trends, text-to-order may finally see mainstream adoption. "Every brand will have a website to feature products and phone numbers for customer service and transactions,” Iris Nova's Zak Normandin said.
Unlike most grocery retailers, the membership wall makes it harder for Thrive Market to tap into the current demand for Thrive Market. "Those coming in aren’t just looking for a short term delivery solution," said CEO Nick Green.
Personal protective equipment like masks, gloves and face shields are in high demand. Many retail companies today see an opportunity in both donating PPE to medical groups who are running low on critical supplies, and sellng it to customers in need. At the beginning of April, direct-to-consumer footwear brand Rothy's announced that it was launching a group called the Open Innovation Coalition to help companies work together to solve the challenges they are facing in trying to manufacture this equipment.
In some ways, it's starting to feel like the early days of the direct-to-consumer boom all over again. A startup's website is once again its most important sales channel, as stores remain closed. Startups are having to operate with as small of a team as possible. And Facebook is once again a cheap place to advertise. Over the past couple of years, the constant refrain has been that DTC startups need to rely less on acquiring customers through Facebook. As more companies started advertising on the platform, Facebook advertising costs started to rise. Now, as more companies are dramatically slashing their advertising budgets in the wake of the coronavirus, Facebook is becoming less crowded.
"Focus on storytelling right now," said Higgins. “DTC is predicated on having a one-to-one interaction," with the customer that can't be emulated if there is a middleman.
Some online brands are seeing sales spike, others are plummeting. They are all dealing with myriad other issues putting pressure on the overall business. Some startups are trying out new digital campaigns to try and account for the vast behavior shifts -- all while staying cognizant of the bizarre times we're all in. It's a difficult tightrope to walk, but showcases brand new marketing terrain.
As more people are considering trying telehealth for the first time, Ro is moving forward with marketing and product expansion plans to introduce its women's focused-brand, Rory to new customers. Last week, Rory ran its first-ever TV ad, and this week launched a new product offering, a customized prescription skincare treatment. Rob Schutz, chief growth officer at Ro, said that the company has been "shipping more product than ever before" over the last month. While he declined to share overall growth numbers for Ro, he said that Google search traffic across its three brands -- Roman, Rory and Zero -- was up 30% between March and April.
Right now, direct-to-consumer startups have to hope for the best but prepare for the worst, and nowhere is that more evident than within their brick-and-mortar divisions. Most of the executives I spoke with this week said that they don't anticipate being able to re-open their stores until the summer. "I think people are preparing models [in which stores] will open as early as July and as late as October," said Logan Langberg, principal at Imaginary Ventures, which has invested in Camp and Everlane. But it's absolutely critical that when stores re-open, DTC brands are ready.
It's impossible to predict the future, but Vuori senior director of retail Catherine Pike thinks "huge advancements in brick and mortar retail" are coming now that brands are out of their comfort zone.
This quarantine period could prove to be a winning factor in the virtual fitness category. Startups in the space, including Mirror, Tonal among others, are doubling down on the timely trend by introducing new digital products.
For DTC brands, this was the year to reach profitability and expand beyond online. Now, no one can go outside and most sales have plummeted. This changes the strategy, especially for companies that pinned growth on new retail opportunities. How to proceed, however, is unclear.
With retail budget cuts and furloughs, PR spending has naturally been put aside for many brands. This shift in organic marketing is seeing a new era when it comes to agency retainers and dedicated in-house public relations.
Many reports say VC cash is drying up due to the drastic change in the economy. But some investors are still looking for new opportunities. Modern Retail talked with Coefficient Capital, run by two VCs who navigated the 2009 financial crisis. The founder partners shared their insights into the rough terrain ahead.
A month ago, I was talking to the founder of a one-year-old direct-to-consumer startup who was out fundraising. The founder told me it was a weird time to be fundraising. The coronavirus outbreak was just starting in the U.S, and some investors were already starting to get hesitant about deploying capital. Additionally, many of the investors the founder was meeting with were looking for companies that could display a surefire path to profitability, but without sacrificing high growth rates. In the month since then, things have only gotten weirder. Months ago, steps that were being billed as smart and necessary in order for an e-commerce company to become profitable, like expanding wholesale partnerships and opening their retail stores, have now turned into logistical nightmares as most stores remain closed.
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.
One thing is true for nearly all conversions on Amazon: They’re captured by products on page one of the search results. And a significant share of purchases go to just the top few results.
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