Stay in Touch
New alcohol brands are using online content and marketing strategies to appeal to younger demographics and apply a DTC sensibility to booze, one category that – unlike mattresses, razors, athletic wear, beauty and household products – has only recently seen the rise of direct-to-consumer contenders.
As direct-to-consumer brands have started to branch out from their bread-and-butter digital marketing channels like Facebook and Google and explore channels like TV, out-of-home and direct mail, pressure is building to figure out which of these channels are most effective at driving sales.
Lalo is approaching its expansion with a steady drip of product launches that establishes category expertise, decluttering a confusing shopping experience for baby products, but without relying on the hero product approach that can box new brands into a specific one-product niche early on.
Most, if not all, DTC companies don't launch with a loyalty program. Given that these brands are often first built around a single "hero product," that doesn't leave them with much room to offer customers additional add-ons once they spend a certain amount. But, six-year-old lingerie brand ThirdLove decided to launch a loyalty program, called Hooked, in November in conjunction with a revamp of its promotional offerings.
To Harbinger Ventures founder Megan Bent, there are three forces at play in CPG that makes it a ripe category for new investment: Customers are seeking out brands that fit a new set of expectations around ingredients and positioning; big corporations, meanwhile, aren’t innovating and bringing new brands to market as fast as startups; and retailers need differentiated selection to bring customers into stores.
Nike's direct-to-consumer sales continue to grow consistently, but investments in digital capabilities and real estate continue to eat into the athleticwear company's profit margins. The athletic apparel company reported during its fourth quarter earnings on Thursday that sales from Nike Direct totaled $11.8 billion during its fiscal year 2019, up 13% from last year. To grow DTC sales, Nike has focused on directing customers to sign up for its free NikePlus app.
Late last year, DTC footwear brand Allbirds surpassed a $1 billion valuation, making it one of the largest DTC success stories of the last decade. But while an eventual IPO from either Allbirds or one of the other comparable DTC juggernauts like Warby Parker seems inevitable, it won't necessarily open the floodgates for others in the space.
Haus, which launches online today, is a new aperitif brand selling directly to customers online. Co-founder Helena Price Hambrecht, which has a background at Silicon Valley startups like Skillshare and Uber, worked with her husband Woody Hambrecht, a winemaker, to plot out a modern spirits brand using the sourcing, processing and bottling systems they already owned. The resulting aperitif is wine-based, and contains 15% alcohol.
Iris Nova, the DTC beverage company that launched in 2015 with Dirty Lemon, plans to invest a total of $100 million into startup consumer brands by 2021. The goal is to build out a modern portfolio company for brands in the CPG space to compete with legacy companies like Coca-Cola and Pepsi.
The round was led by VCs and angel investors including Randa Digital, Amity Supply, Cherry Tree VC, Brian Spaly and Scott Belsky.
For 10 Grove, a bedding brand competing in a category already crowded by other players like Brooklinen, Snowe and Parachute, its vertically integrated supply chain is the cornerstone of how it plans to build a “genuine” direct-to-consumer business, according to founder Rana Argenio.
There are no one or two go-to-retailers whose stores fitness startups can start selling their products in before opening their own physical retail space, to learn how their products do in stores. Retailers need to be willing to dedicate floor space for product demos, and to assist with delivery and installation of the bulky equipment. So, startups have been experimenting with pop-ups that allow them to leverage existing retail space to get a better sense of what customers want.
Resident is the latest brands group to form around a collection of retail startups, and it’s betting that a power-in-numbers approach will work in its favor in the crowded DTC mattress category. Resident is now the parent company of mattress brands Nectar Sleep, DreamCloud, Awara and Level Sleep, rug brand Wovenly and Bundle, a furniture line that launched in May.
Underpinning Rothy’s store strategy is an emphasis on profitability: According to Rothy’s president Kerry Cooper, the first store is profitable and became so four months in. As more digitally native brands move offline and into their own physical retail stores, these locations have served dual purposes as both marketing plays and sales channels, particularly in the form of pop-ups that ship inventory displayed in stores to customers’ homes.
Plus-size and extended-size fashion brands are launching by the droves, no thanks to wholesale partners. Rather than retailers' buy-in, the direct-to-consumer model's proven success is giving brand founders the go-ahead. More brands are launching to cater to women above a size 14, and are relying on the direct-to-consumer business model rather than wholesale to reach their customer.
Retail media is rich with data that the right team of analysts and strategists can help you unpack to better understand how your investment at retail is driving bottom lines. One metric doesn’t fit all; in fact, a combination of KPIs might be necessary to fully grasp sales success.
Target reported better-than-expected earnings results, and its stock has been soaring. Much of its recent success was thanks to its growing private label program, which gave the retailer better margins. The question remains whether the company can sustain this momentum as it scales more lines.
Read MoreJoin us at Amazon Strategies, where we’ll hear from brands successfully selling on Amazon, as well as leaders from agencies and consultancies that work with these retailers.
Register Now
