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.
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.
Podcast advertising is booming -- particularly in light of the news Spotify recently announced that it is acquiring podcast advertising and publishing platform Megaphone. And direct-to-consumer startups are helping fuel that boom, considering the long-running joke that Blue Apron, MeUndies and Casper are essentially underwriting the shows they advertise on. The Spotify-Megaphone deal could have significant implications for what types of DTC brands are able to advertise on podcasts.
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.
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.
One of the dominant moods of 2020 has been paralyzing uncertainty, and it's been particularly prevalent this week as Americans wait for the results of the presidential election. The election isn't the only thing on direct-to-consumer startup executives' minds -- after all, once the election is over, Black Friday is right around the corner. But Election Day also can't be business as usual.
For years, direct to consumer brands had been pouring their marketing budgets into physical flagship stores in hopes of real-world discovery. Now that storefronts are going through a transformation, brands and curators like Naked Retail and Showfields are rethinking the role of popups and stores. Here's what the new DTC showrooms are looking like in the coronavirus world.
There's a new most-talked about acronym in the DTC world these days: SPAC, which stands for special purpose acquisition company. SPACs give startups an alternative way to go public, without going through the traditional IPO. In a SPAC, a group of individuals raise money in order to acquire a company with the purpose of taking it public. At least one direct-to-consumer startup, Hims has already opted to go the SPAC route. But investors caution that SPACs won't entirely replace the traditional IPO process.
Quip's latest retail partnership shows that direct to consumer brands know they need to get into the hands of mainstream consumers to scale globally. It can also help drive subscriptions. As Quip CEO Simon Enever told Modern Retail, establishing brand ubiquity at national retailers “has always been a part of the plan."
In the direct to consumer space, a foray into retail usually requires getting noticed by big players like Walmart and Target. However, for a select group of home decor-centric brands, Williams-Sonoma-owned West Elm has become a resource for entering brick and mortar. From Leesa and Bearaby, to new cookware brands like Caraway, West Elm's portfolio of brands is looking increasingly like a DNVB hub.
Many direct-to-consumer brands have long held off on selling through Amazon. But they can't completely ignore its orbit, as Amazon still sets the conversation in e-commerce. There's a laundry list of DTC brands that have still held off on selling through Amazon -- Glossier, Warby Parker, Allbirds and Away to name a few. But, a few trends emerge among the digitally-native brands that have taken the leap to selling through Amazon.
Pattern, formerly known as Gin Lane, arguably helped create the ubiquitous minimalist DTC aesthetic. But after helping brands like Sweetgreen, Harry’s and Everlane achieve their branding goals, chief creative officer Emmett Shine explains why he's taking a step back and rethinking the model's tropes. "At the end of the day, you have to sell products," he told Modern Retail.
In conversations with a handful of direct-to-consumer startup executives about their holiday marketing plans, the biggest concern cited was figuring out when was the right time to run holiday ads. Both to ensure that customers order far enough in advance so that they get their products by Christmas, and to ensure that they are spending their holiday marketing dollars most efficiently. The executives Modern Retail spoke with said that for the most part, they weren't that concerned about rising digital advertising costs, either because they've been able to further diversify their ad spend away from digital this year, or customer acquisition costs are still lower than they are last year.
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