Rothy's had just launched a new category, handbags, when the coronavirus pandemic hit in March. The brand, which got its start in 2016 selling ballet flats, acted fast to retool its product lines. For one, the company quickly started churning out masks in its wholly-owned factory in Dongguan, China. Then, it shifted its focus to ramping up prints and colors in products like sneakers that Rothy's figured would be more in demand as people started to spend more time at home. Rothy's didn't emerge from 2020 fully unscathed, but it did manage to end the year profitable.
Within the past month, a number of new SPACs focused on the consumer sector have emerged. Some consumer investors are looking at SPACs as a way for them to get more involved with later-stage companies, and if their SPAC does well, it could give them a competitive advantage over other venture firms. But as more SPACs launch, they'll be more competition to win over the best candidates poised to go public.
As the pandemic continues to upend the ways people shop, direct-to-consumer startups are continuously looking for creative ways to reward customers through the launch of new loyalty programs. Handbag brand Dagne Dover launched its first-ever loyalty program last week, through which customers can earn points not only for buying product, but also for writing a review, or following the company on social media. Hair care startup Prose also launched its first ever membership program over the summer, incorporating perks like access to one-on-one virtual consultations and a wellness podcast. It's a trend that started before the pandemic, but now it's more important than ever that companies find ways to reward their loyal customers, even if they're not able to buy product right now.
Social media complaints have been piling up on social media for direct-to-consumer furniture brand Joybird. Some customers Modern Retail spoke with said that not only are deliveries being delayed -- a common occurrence amongst all retail companies during the pandemic -- but that they are receiving incomplete orders, like only part of a sectional or a table with no legs. And, that when they've reached out to Joybird's customer service teams, they've struggled to get an explanation.
An Apple iPhone update is about to upend the advertising strategies of e-commerce companies. The update has the greatest implications for app developers, but it also will significantly impact e-commerce companies who spend most of their advertising money on Facebook and other mobile ads. Here's what every e-commerce company needs to know about the iOS14 update, and how to prepare for it.
Airlines are promoting their excess food in part because they have so much of it in storage. But by bringing their food and drinks more closely into people’s lives, they are also building their brands. For the airlines, this might signal a brief lifestyle brand pivot, where the snacks and drinks they keep onboard become part of the larger pitch for why a customer should fly with them.
For the DTC brands still betting on physical retail, expansion is on hold right now. But those in booming categories, such as homeware, are finding opportunities to expand into brick and mortar through wholesale partnerships. One example is Parachute, which launches at 65 Crate & Barrel stores this week.
Last year, many direct-to-consumer startups saw record sales -- but they also struggled to produce and ship enough product to keep up with customer demand. If the first few weeks of 2021 are any indication, those issues are likely to continue well into the new year. Since the beginning of the pandemic, startups have been scrambling to find ways to speed up production, mostly by adding more suppliers and placing orders for products further in advance. A year later, and the problems persist.
The direct-to-consumer startup boom has also fueled the rise of a number of secondary industries — for example, buy now pay later services. Affirm just went public this week and if its Wall Street debut is any indication, it’s got some staying power. Affirm disclosed in its S-1 that it generates nearly 30% of its revenue from just one company: Peloton, one of the darlings in the DTC space. But the relationship between buy now pay later services and DTC startups runs deeper than that.
Outdoor furniture company Outer pays its customers to turn their backyards into "showrooms," which prospective new customers can check out as they're deciding whether or not to buy a sofa or a rug from Outer. It's something that the startup has done since launching in mid-2019. But 2020 was the year in which Outer started to prove that its model has traction. The company did more than $12 million in sales in 2020, up from $1.1 million in 2019. Now, the company plans to lean on its customers more to help fuel its growth, as it seeks to expand the showroom model.
There's two competing narratives right now taking shape in the direct-to-consumer space: one, that venture capital funding is starting to fall out of favor with DTC startups. And two, that it's a great time to raise venture capital funding as a consumer startup, as more investors are finally waking up to the fact that there's a huge opportunity for these companies as more people do more shopping online. But these two concepts aren't necessarily mutually exclusive. Some DTC startups are still raising venture capital money, they're just doing so later on. Or, if they take VC funding, they are taking steps to ensure their cash lasts longer.
New DTC furniture brand Model No. is attempting to corner a market looking for high end designs at affordable prices. But its differentiator, CEO Phillip Raub said, is the automated 3D printing process, which allows for faster assembling and shipping times, along with zero waste manufacturing.
Direct-to-consumer startups were among the biggest beneficiaries of more people doing their shopping online in 2020, with some startups like Brooklinen and Prose reporting that their sales more than doubled or tripled this year. Now, going into 2021, DTC startups are out to prove that the sales growth they reported this year isn't just a flash in the pan.
The DTC bubble was supposed to pop in 2020; instead, it became even more inflated. Fears that the pandemic would lead to a dip in consumer spending never panned out for most DTC startups, as the people most likely to be their customers -- young professionals working from home -- subsequently spent more of their money shopping online. Over the course of the year, companies in categories as disparate as hair care and bedding reported that their sales doubled or tripled over the course of the year, even as stores were ordered shut. Now, going into 2021, direct-to-consumer startups are trying to figure out how to best capitalize on the growth they saw this year.
In 2020, new-to-market startups started to do away with branding tactics that have historically been popular on Instagram. Pastels and Sans Serif font have been replaced by bright colors and oversized lettering, while startups are centering their social media centering their social media strategy around busting taboos or reaching customers that have historically been overlooked. As the direct-to-consumer startup space has gotten more crowded, startups have found that they need a different proposition than just creating a new e-commerce experience for mattresses or luggage -- and that requires a new branding playbook
Watch this on-demand webinar where experts discuss the changes to the back-to-school season and what it means for retailers now and in the future.
At the Modern Retail Summit, retail executives will come together to discuss effective strategies for driving sales by building a loyal customer base both online and offline.Book Passes