This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →
The months of November and December are awash with steep promotions, as brands try to win over customers with offers of up to 70% off, or buy one, get one free deals.
But some direct-to-consumer startups try to stand out by not offering deals, fearing that participating in any sales will result in a race to the bottom, as they eventually resort to offering steeper discounts every year. Bearaby, which is known for its weighted blankets, is one such brand. According to founder and CEO Kathrin Hamm, the five-year-old brand has never offered discounts. That means Bearaby doesn’t offer customers incentives like 20% off on their first purchase, and it doesn’t participate in sales-heavy days like Black Friday.
According to Hamm, Bearaby’s revenue during the week of Black Friday was still up 4X compared to the week before, indicating that customers were still willing to shop from the brand even though there were no deals to be had. Instead of offering discounts, Hamm said that Bearaby invests in new product launches during the holidays to drive revenue and build brand awareness.
But the key challenge for a discount-averse brand like Bearaby is how long they can stick to that promise. The DTC startup world is filled with once-hot startups like Everlane and Allbirds that previously refused to offer discounts on Black Friday, but have since relented.
On its website, Bearaby has created a dedicated page explaining why it doesn’t offer discounts; Bearaby wants to sell responsibly-made, sustainable, high-quality products, and believes that offering discounts is antithetical to that mission. This page is also the first non-sponsored search result that shows up on Google when someone looks for “Bearaby discounts.”
Bearaby has experimented with a variety of tactics over the years to both promote its anti-discounting approach while building brand awareness.
In 2020, the brand released a “mindful edition” Black Napper, in which people received a message encouraging them to “pause for one moment” before buying the product — alluding to the fact that many people make impulse purchases on Black Friday. In 2021, building on that premise, Bearaby invited people to “pause, reflect, and share their feelings before making Black Friday purchases.” And in 2022, Bearaby decided to shut down the pop-up it was running at the time on Black Friday.
In the past, Bearaby has worked with researchers at Duke University to survey people about their mood in the period leading up to and following Black Friday. According to Hamm, the results showed that on “Black Friday, anxiety skyrocketed, and there was a second spike on Cyber Monday.”
The theory then was that if shoppers were stressed, if they were buying products based on impulses and fear of missing out on a deal, that they would be more likely to return the product. Bearaby tracked the customers who were presented with the “pause for one moment” messaging during Cyber week in 2020, and found that customers who paused before making their purchases were five times less likely to return products through the first quarter of 2021.
That is one of the big reasons why Bearaby still holds firm on its anti-discounting strategy — to cut down on returns. Hamm said that Bearaby has a single-digit percentage return rate. But, another key metric by which Bearaby measures the success of its anti-discounting strategy is whether or not it is able to actually grow sales. And Hamm said what has been most effective in driving sales around the holidays without discounts is new product launches — in particular, lower-price point items.
“We get a lot of first time purchases who are like… I don’t know about paying more than $200 for a full blanket,” Hamm said. “But let me try a weighted eye mask for $49.”
This year, in early November, Bearably released the “warmables” a series of weighted products designed to be heated up, like a neck wrap, that start at $69.
Bearaby’s “birthday” as a brand also falls around Black Friday and on Tuesday, the company is releasing a series of weighted stuffed animals to honor the occasion.
This year, Bearaby’s sales have also benefited from some organic media moments. Earlier this fall, Bearaby got a shoutout in GQ’s video with musician Olivia Rodrigo about the 10 things she can’t live without.
Jason Goldberg, chief commerce strategy officer at Publicis, said that an anti-discounting strategy is not unique among startups.
“For small brands, your ability to get away with this somewhat depends on your ability to build a distinct value proposition,” he said. The challenge many brands eventually run into, he said, is that if they sell a commodity, they might have to contend with 10 other competitors who essentially sell the same product, but do offer discounts on Black Friday. If that’s the case, and shoppers are heavily persuaded by price, then the company that doesn’t offer discounts risks losing out on a lot of market share.
But, if a brand sells a more unique product, Goldberg said that they might be able to get away without discounting for longer. He pointed to brands like Patagonia, who have been able to build a loyal following without being overly promotional and without participating in heavy sales days like Black Friday. But as to whether a brand has been able to successfully hold off on never offering discounts, “it is hard to talk in perfect absolutes,” he said.
Bearaby’s Hamm said that for the foreseeable future, the company has no plans to offer any discounts. There are a few growth opportunities that Bearaby misses out on because of its anti-discounting strategy. For example, Bearaby doesn’t participate in some affiliate marketing opportunities that want a specific discount code. But Hamm said she hasn’t gotten any pressure from her team, or from her investors, to change Bearaby’s discounting strategy.
“I think if you stay consistent with it — yes, we still get people asking [if] we’re participating in Black Friday,” Hamm said. “But I think now people who know us are repeat customers. We get the questions less and less [about] if we’re participating in Black Friday.”
What I’m reading
- Activewear brand Bandier is going through an assignment for the benefit of creditors, an expedited sales process that is an alternative to bankruptcy.
- How The North Face responded to a viral TikTok from a person complaining about one of its jackets.
- Farfetch is desperately looking for a buyer, Business of Fashion reports.
What we’ve covered
- How young startups like Apollo and Foria are crafting an affiliate marketing playbook as the space becomes more competitive.
- It feels like the terms “Black Friday” and “Cyber Monday” are losing their meaning as deals get extended for weeks on end. Startups like Win Brand Group and OurX share why they decided to run extended Black Friday deals.
- How food startups like Somos and Cheerie Lane are trying to acquire new customers through gift sets this holiday season.