DTC Briefing: Startups feel Black Friday pressure to win over discerning customers

This is a trend that’s been growing for a few years, but one that’s been especially prevalent this Black Friday and Cyber Monday, as sustained inflation is making shoppers increasingly picky about what they buy. In speaking with a handful of direct-to-consumer brands about what type of shopping behavior they observed this Black Friday and Cyber Monday, the biggest takeaway was that shoppers continued to be selective. How that manifests itself is different depending on the category. 

Brands that operated in more essential categories, like body care or basic apparel, noticed more existing shoppers return to their websites during the Black Friday period to stock up on these items. Meanwhile, brands that operated in non-essential categories picked up on various signs indicating that first-time customers had done a lot of research before picking which brands to buy from on Black Friday. 

Jordan Nathan, founder and CEO of cookware startup Caraway, said that the brand’s survey data shows that only about 10% of customers who bought from the company during the Black Friday and Cyber Monday period had just heard about Caraway that weekend. That means most BFCM shoppers weren’t acting on a last-minute impulse purchase they made based on a steep discount. It was something they had been thinking about for a while. 

“We spend a lot of time building the brand, testing marketing channels [and] top of funnel, throughout the year,” Nathan said. For Caraway — and for many DTC startups — the Black Friday period is a culmination of those efforts to convert customers who may have been on the fence before about buying. 

At a high level, it was another record Black Friday period for direct-to-consumer brands. Shopify said that, collectively, its merchants brought in $11.15 billion over the Black Friday-Cyber Monday period, which represents a 24% increase over the same period last year.  

But on an individual brand level, results were more varied. “I would say, in speaking with other brands, I’ve heard a mixed amount of results,” Nathan said. He said Caraway had its most successful BFCM weekend ever and ended up beating its sales projections. He attributed that to the fact that Caraway has stayed firm in not offering too many discounts this year outside of big sales events like Amazon Prime Day. As such, more people were ready to buy come Black Friday. 

Other brands I spoke with last week said that the first few days of their BFCM sale were softer than expected, but that activity picked up during the big tentpole days of Black Friday and Cyber Monday. And on social media, some brands reported being crushed by a higher-than-expected increase in CPMs on Meta but not seeing as high of an increase in conversion rates. 

Billy May, CEO of home goods brand Brooklinen, said that overall, he “felt pretty good with where we ended up for the week.”  

“We certainly had strength right out of the gate with customer response to our offering, and we felt like our playbook certainly resonated as we got closer into Black Friday,” May said. ”Leading up to that promotional time period, the market got noisy and the promotions became highly competitive.”

For some brands, the focus this year wasn’t so much on driving as much sales volume as possible but driving more profit or attracting a more valuable lifetime customer. Matt Mullenax, co-founder and CEO of men’s body care brand Huron, said his brand — which sells shampoo, conditioner, body wash and cologne among other products — ended up lowering its discount this year; the brand ended up offering a 20% sitewide discount compared to 25% last year. 

To focus on drawing in more high-value customers, Huron advertised 30% off subscriptions for the first time this year. Huron also offered a gift with purchase when a cart hit $75 or $100. To make its Black Friday period more valuable overall, Mullenax said his brand “pulled back pretty substantially on Meta.”

As a result, while Mullenax declined to share specific Black Friday sales results, he said that sales were up but also that his brand was “growing the bottom line at a faster clip.” What’s more, the brand’s AOV is up roughly 43% month-to-date. 

Differences in new versus existing customer behavior
As a whole, Mullenax said Huron has shifted its thinking around Black Friday to focus more on existing customers. “The general thesis is, yes, it’s a great time to acquire new customers, but Black Friday/Cyber Monday is largely about bringing folks back into the fold,” Mullenax said. “I think our category is interesting in the sense that these are utilitarian products that you buy in bulk.” 

But whether brands decide it makes more economic sense to focus on bringing in new or existing customers during Black Friday varies on the brand. Caraway is a bit of an anomaly in that it runs its Black Friday sale technically for two months — it runs a tiered discount, that goes up to 20% as people buy more, from November 1 to December 31. 

That’s because, according to Nathan, Caraway tends to bring in a lot of new customers during Black Friday. The company hopes that by running this discount for two months, Caraway will convince first-time customers to come back and buy other products from its assortment before the year is up. 

Toral Patel, vice president of marketing and e-commerce at Kopari Beauty, said that the brand draws slightly more sales from existing customers during the BFCM period. Like other executives, Patel noticed that customers seemed to be waiting to do more shopping until BFCM sales kicked off, as evidenced by the high conversion rates Kopari Beauty saw in the first few days of its sale. Kopari Beauty offered 30% off sitewide and gave VIP customers early access by a few days. 

Patel said that while people are still stocking up on tried-and-true products, there seems to be more of a willingness to experiment with new products, so long as its from a brand they trust. Patel said that a tanner — a product that Kopari Beauty launched roughly six weeks ago — performed better than expected during BFCM. At the same time, its best sellers were still some of its hero products, like its body butters. Overall, sales outperformed last year. 

Brooklinen, meanwhile, has been focused on building demand ahead of BFCM, according to May. Given that there are only three weeks between Cyber Monday and Christmas this year, the brand reasoned there would be even less time this year for Brooklinen to push any undecided shoppers over the fence. So, Brooklinen wanted to do more brand marketing ahead of BFCM this year. 

These mid- to upper-funnel marketing pushes included a smoothie collaboration with Juice Press and a partnership with Reese Witherspoon’s book club. Brooklinen offered up to 25% off during BFCM during Black Friday, and May said that the brand made sure to communicate on social media that that discount would not change, so customers wouldn’t hold out until Cyber Monday in hopes of a better deal. 

May said that one major takeaway from the BFCM period is that Brooklinen’s existing customers tend to be extremely loyal; one longtime customer emailed the company over the weekend to say that they bought five sets of sheets because they knew this was a good time to stock up.

Still, the average customer is being more discerning — and that’s something that Brooklinen is thinking about beyond Black Friday. 

“We’re seeing that customer browse multiple times, so we need to reach and touch that customer multiple times — whether through brand marketing, whether [that’s] through performance marketing… We need to touch that customer multiple times to get them to open up their wallet,” May said. “That’s no different than at any other time. We’re just seeing that customer being a bit more intentional with their shopping behavior this year.”

What I’m reading

• The Wall Street Journal spoke with brands who are sending their customers emails and Facebook ads, encouraging them to buy now before potential tariffs kick in next year.
• Nike is shutting down RTFKT, a virtual sneaker and fashion brand it acquired at the height of the NFT boom. 
• How the Bonne Maman advent calendar became a hot commodity. Since it introduced the product in the U.S. in 2017, the company has had to increase production by more than 400 percent to meet demand.

What we’ve covered

• Digging into Cyber 5 further, by the numbers. 
• What a Trump-led FTC could mean for retail M&A next year.
• Simple Modern launched a new brand called Trevi, which will sell electrolyte packets as it aims to tackle “everyday hydration.”