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Since launching last year, seed-stage VC fund Vice has invested almost exclusively in these categories, which is currently proving to be a success. Vice-backed startups include CBD seller Plant People, which saw a rough 30% increase in mid-March without the use of marketing spend. Similarly, CBD beverage Recess also doubled its e-commerce sales over the past two weeks. Meanwhile Lucy, the nicotine harm reduction platform in Vice’s portfolio, experienced a 50% increase in sales in recent weeks. Those figures are attributed to news of young smokers’ coronavirus mortality rate being higher than non-smokers, thus driving traffic to the site.
With physical fitness facilities deemed non-essential and workout equipment selling out fast, virtual fitness startups are having a moment. Strength-training system Tonal, which launched in 2018 and retails for $2,995, is seeing a surge in sales this month. The wall-mounted weight simulation product is getting a second look from customers searching for exercise activities in confined spaces.
Many reports say VC cash is drying up due to the drastic change in the economy. But some investors are still looking for new opportunities. Modern Retail talked with Coefficient Capital, run by two VCs who navigated the 2009 financial crisis. The founder partners shared their insights into the rough terrain ahead.
"There is always going to be room for companies that understand a customer’s needs and deliver products with value."
David Dobrik, a 23-year-old YouTuber with 15.9 million subscribers, changed the way SeatGeek works with influencers by convincing the company to be a character in his videos. Since then, Dobrik has been able to use that content to get other brands, like EA Games, to do the same thing. Dobrik explains how he’s branching out from YouTube and if he’d get married again for a prank.
The health and wellness startup Hims, and its newly launched brand Hers, was one of the breakout success stories in DTC since launching in 2017 -- reaching, at one point a sky-high $1 billion valuation thanks to a $100 million additional round it raised a year ago. The company, which began with a goal to provide male customers with taboo healthcare treatments for erectile dysfunction treatment, has recently added dozens of products such as skincare, haircare and women’s birth control.
With the uncertain future of the declining established names in the underwear and bra space, including Victoria’s Secret’s upcoming planned sale, the category’s fractured market is up for grabs. As one of the first bra challenger brands to launch, ThirdLove is currently focused on bringing those lost shoppers on board. This includes shifting ad spend to appeal to potential customers beyond the Instagram-scrolling, hyper DTC-aware crowd, and of course, opening stores. With the help of a growing brick and mortar presence and tweaked e-commerce tools, among other revenue growth strategies, the company now wants to scale nationally and acquire bra-shopping customers across different markets. Co-founder and co-CEO Heidi Zak spoke with Modern Retail about how the company is attempting to convert every type of bra shopper into a ThirdLove customer. This interview has been edited for clarity and length.
Venture capitalist and Shark Tank star Kevin O'Leary recently invested in the DTC eco-friendly cleaning product brand Blueland. In his opinion, online remains the best place to grow a business. Modern Retail sat down and talked with him about the direct-to-consumer landscape, and he had a few warnings for companies that don't have their margins in check.
Since San Francisco-based Forerunner Ventures launched its first venture fund in 2010, the firm has backed some of the fastest-growing direct-to-consumer startups in recent years, from Bonobos to Away to Glossier. Now, as there are DTC brands in every category from toothpaste to pet food, Forerunner is making a more diverse array of investments in commerce. This year for example, Forerunner started investing in more companies like supply chain company Attabottics and returns startup Narvar that help address the logistical challenges these DTC brands face as they scale.
Every brand under the TechStyle umbrella is powered by FashionOS, TechStyle’s proprietary technology platform that powers the e-commerce sites, in-store tech and point-of-sale, customer service, fulfillment centers, media buying, customer acquisition and data science and analytics.
Robin Li, principal at GGV Capital, believes that as more e-commerce and direct-to-consumer brands are looking to diversify their marketing mixes, they should be more open about sharing what's working for them on different channels.
As Ro, the parent company of telemedicine brands Ro, Rory and Zero, looks to diversify its marketing mix, the company is looking to partner more with institutions that its target audience already trusts. Earlier this month, Roman, its men's focused brand which sells generic hair loss and erectile dysfunction medication over the internet, announced that it signed a multi-year deal with Major League Baseball to sponsor its television and digital media coverage around Father's Day.
Physical retail strategies have become integral to the growth of direct-to-consumer brands, as they seek out customers they can't reach online. Members of the first generation of DTC, like Warby Parker and Casper now have aggressive store expansion plans. Home goods brand Parachute is one such brand that's undergoing a rapid physical expansion.
It’s Tim Armstrong’s belief that everything, eventually, will be direct-to-consumer, and he sees the issues currently burdening the DTC category as symptomatic of a burgeoning industry trying to grow up. There will be a tech-like shakeout, yes, but the successful brands in the space are rewriting the rules of how consumer companies develop product and market to customers, because at their cores, they actually know who their customers are.
Outdoor Voices' vp of technology Kevin Harwood discussed Outdoor Voices' in-store strategy, what kind of results it has seen from Instagram Checkout and how the brand is thinking about investing in mobile and personalization.
Apparel retailers faced numerous headwinds in the first quarter that dampened bottom lines including continued supply chain pressures and inflation. Moreover, apparel preferences are rapidly changing from stay-at-home basics to workwear and partywear.
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