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For the past few years, Warby Parker has been cited as an example of the rare direct-to-consumer startup capable of turning a profit -- the company first noted in 2017 that it achieved profitability on an EBITDA basis. But when the company filed its S-1 last week, it revealed that the path to profitability remains bumpy -- and it served as a good proxy for the biggest challenges DTC brands face in 2021 in turning a profit.
In the past, Cupshe focused on selling low priced swimwear on Amazon and its own DTC site, driving $150 million in revenue this year. Last week, following a $15.5 million funding round in March, the brand is expanding to athleisure and diversifying its marketing streams.
In its S-1 filing with the SEC, DTC footwear brand Allbirds unveiled its goal for a sustainable public equity offering,” or an “SPO." The document also unveiled major operating losses and a lack of profitability for the well-funded company.
Warby Parker is the latest direct-to-consumer company planning to go public. The eyewear brand, which was founded in 2010 and currently has 145 stores, is preparing for a direct listing on the NYSE. The debut will come after years of major revenue growth coupled with operating losses.
After years of scooting by on beautiful aesthetics, some startups are feeling the ripple effects of DTC disillusionment. That is, customers (and high-profile writers) are increasingly expressing remorse after spending a premium to buy beautiful cookware or bedding from a startup that they think is more ethical than traditional retailers.
Despite the fact that shoppers are likely to receive a dozen-plus emails from retailers each day, direct-to-consumer startups are constantly trying to wedge their way into people’s promotions tabs. And email marketing is only likely to become more crucial -- and more complicated -- for any burgeoning DTC startups, thanks to privacy-focused changes in the digital marketing landscape.
With holiday planning well underway, DTC startups are planning for the 2021 holiday season to be just as chaotic as last year's. While they hope that carriers like UPS and FedEx will be better equipped to deal with the surge in e-commerce orders, port delays are shipping container shortages are in some cases worse than last year.
Rarely, if ever, does a startup’s first year in business go according to plan -- but DTC founders who launched their businesses in 2020 had to deal with an unprecedented amount of chaos. Now, going into their second year of business, these startups are ramping up marketing investments, and resuming some of the brand-building tactics they previously had to put on hold.
Within the past several years there has been an explosion of new specialty marketplaces through which e-commerce brands can also sell their products. As a result, e-commerce brands have more options than ever before when considering where to sell their products online -- and many of them are expressing more interest in moving beyond DTC distribution earlier on.
Even before the pandemic, DTC brands saw major potential in catering to healthcare workers. With the recent IPO of scrubs brand Figs and the growing interest in medical careers, more startups are betting on a market for products beyond scrubs.
Getting products manufactured overseas, transporting them over to the United States and shipping them out to customers globally is still nearly as difficult as it was in 2020 -- and in some cases more difficult. As a result, nearly every decision that a burgeoning e-commerce startup has to make these days has to account for shipping or production delays on every little item.
Weighted blanket brand Bearaby's hyper-localized digital advertising helped the brand increase revenue by 600% in 2020. Going forward, Bearaby will maintain the strategy, while adapting advertising narratives towards trends like travel and working around IOS 14 app privacy tracking by keeping users' purchasing path in a single creative-to-cart, new ad type.
Last summer, brands took a muted approach to marketing. Now, the mood is much more celebratory as some brands are rushing to host their first in-person events in nearly eighteen months. Many of these events are being planned on the fly, as some brands were hesitant to plan any indoor events until a month or two ago.
Over the years, many health and beauty direct-to-consumer brands have chosen to expand their physical retail via standalone stores or marketplaces. However, there is also a growing trend of partnering with traditional department stores or big box retailers, such as Nordstrom and Target. Urban Outfitters, once known as a hip millennial clothing retailer, is quietly building its own hub of digitally-native skincare and wellness brands.
Health care apparel brand Figs, which recently went public, has an army of nurses and doctors online. These brand ambassadors have helped give the company a name -- as well as lowered its customer acquisition costs.
The Nation Retail Federation predicts record Halloween sales of $10.14 billion this year with candy and costumes, in particular, growing 20% and 28%. Still, while in person shopping opens up alongside an in-person holiday, Halloween e-commerce continues to thrive in 2021. And retailers are preparing accordingly.
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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