Edgewell has decided to pursue a "standalone" playbook after the Federal Trade Commission's move to block the Harry’s acquisition last Monday, said Rod Little, Edgewell president and CEO. The company also said that Harry’s plans to sue its prospective partner, a case that Edgewell said has "no merit." A spokesperson for Harry's said the company has nothing to share on potential litigation at this time.
Casper is finally a public company. The road here was bumpy. It involved the mattress brand slashing its valuation by more than half and hoping Wall Street would take the bait. Conversely, Peloton, which IPO'd earlier this year, went another route -- going all in and hoping its buzz would lead to fortune. Both are having difficulty on the public markets. And they show the evolving blueprint growing DTC brands have to make when looking for an exit.
Many onlookers believe a DTC cooling is on the horizon. With a bunch of less-than-stellar exits from the likes of Casper, Peloton and Harry's, the VC-funding model of branding building seems to be crumbling. This leaves both investors and founders left with the question: Is it worth it to raise money from venture firms? It's becoming a more complicated topic, and one that will have a big impact on a company's choices down the line.
There are a bunch of DTC brands that look very very similar. Meanwhile, there are others that solve problems way outside the scope of digital commerce. What's happening is both a mad dash to cash in on the DTC craze, as well as a realization that new brands need to find some sort of competitive advantage -- even if their products look similar to others'.
Amazon has been wooing direct to consumer brands for years by offering them an array of services including financial backing and inventory management via the Fulfilled By Amazon program. For many founders, being on the platform was something to be avoided. But even some that were lured by Amazon’s benefits early on have been gradually making the move off the marketplace.
When CPG conglomerate Edgewell announced in May that it was acquiring razor brand Harry's for $1.37 billion, the news was viewed as a win for direct-to-consumer startups. Now, what was once viewed as a surefire deal might no longer happen. On Monday, the Federal Trade Commission announced that it was suing to block Edgewell's proposed acquisition of Harry's.
Casper isn't the first DTC mattress brand to go public -- despite the large amounts of noise around it. Purple, which launched as an online-only mattress brand via a Kickstarter campaign in 2015, sold to shell company Global Partner Acquisition Corp. in 2017 for $1.1 billion, which subsequently took Purple public.
"We were kind of an accidental DTC company," Lo & Sons co-founder Derek Lo said on the Modern Retail Podcast. "We started before the term even existed."
Last August, creative agency Gin Lane announced it was rebranding to Pattern, a holding company for multiple brands that would sell products direct-to-consumer, with an overarching focus on helping its customers deal with burnout. With the launch of its second product line, a brand focused on home organization called Open Spaces, Pattern's strategy of how it plans to cross-promote products to different customers is coming into focus.
A few years ago there were only a few DTC cookware brands. Now there are dozens, and they all are trying to tell a similar but unique story. As a result, more of these companies are honing their brand story and trying to figure out product differentiation.
DTC startups didn't invent the practice of bombarding customers multiple times a week with emails. But DTC brands do face a unique challenge compared to other retailers: how to get customers to keep opening their emails when they only have a few products to promote.
In its early days, being direct-to-consumer meant lower prices. Because there was no middleman, so the theory went, companies were offering better quality goods at more competitive prices. But as the industry matures, there has been a shift away from branding DTC products as the most affordable alternative to traditional retail shopping for personal products. The strategy to offer “no markups” was integral for the success of Warby Parker and Everlane, among others when they launched a decade ago. However, that’s no longer the case, as evident from a new crop of luxury DTC brands that are looking to duplicate the model’s biggest success stories, in diamonds, luxury fashion and more.
All eyes are on Casper and its plans to go public. The company has long been considered a leader in the DTC space, but now that things don't look great for its public market debut, the question remains how its performance will impact other digitally native brands.
Customer service workers at direct-to-consumer startups are increasingly speaking out about being overworked and feeling undervalued. Here an employee who does customer service work at a startup candidly describes what her workday is like.
In a new guide for brand and agency marketers, learn the most cutting-edge measurement and attribution techniques preferred by advertisers that have successfully scaled their TV budgets.
Exclusively for Modern Retail+ members: Hear from Colin Darretta, CEO and Founder of Wellpath, on the future of direct to consumer business.Subscribe