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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.
The resale industry has been one of the biggest winners in 2020, culminating in resale app Poshmark filing to go public. Poshmark's S-1, which was published on Thursday, reveals that the startup was actually able to turn its first profit of $8.1 million during the first nine months of 2020 -- a rarity among consumer startups looking to go public. But Poshmark still faces a number of challenges ahead in its quest to become a public company. Here's our detailed look into the company's just-released financials.
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.
Thanks to record e-commerce sales, it's been a good year for direct-to-consumer founders. Except, maybe, for founders of direct-to-consumer razor startups. Months after the FTC blocked Edgewell's proposed acquisition of Harry's, the FTC announced that it would be suing to block another proposed acquisition in the razor category: P&G's intended acquisition of women's razor startup Billie, which was announced in February. Founders and investors that Modern Retail spoke with pointed to the fact that the razor industry is highly consolidated, and even two blocked acquisitions in this category would not spell trouble for other DTC startups looking to sell to a CPG conglomerate.
In a pitch deck obtained by Modern Retail, the national pharmacy showcased it vast retail footprint and first-party data. Walgreens is the latest retailer to trying to update its digital program. Over the last few months, it has been launching new digitally-focused services, including an updated app and loyalty program. But it faces headwinds a number of headwinds. Namely, convincing large brands to invest in a niche and nascent media network that's yet to be proven out.
After surviving the Black Friday rush, direct-to-consumer brands have a new challenge at hand: how to ensure their holiday sales aren't hampered by long shipping delays and going out of stock on certain items. Founders say that they are trying to incentivize customers as much as possible to order early, as well as giving as many details as possible about warehouse and supply chain challenges, in the hopes that shoppers will be as patient as they were in the spring.
So much for staffing up on seasonal store associates. According to a November 2020 Glossy and Modern Retail survey of brand workers, in preparation for this holiday season, brands shifted their resources away from stores to investments that better serve online shoppers. Read more in our latest research brief.
If the last nine months did nothing else for retailers and brands, it made them realize that there are some downsides to being precious and exclusive about where to sell products. A Modern Retail and Glossy survey, in which we queried employees at brands and retailers, found that more companies this year plan to try out a variety of new digital sales channels they never did before. Here's a look at our most recent holiday related data.
This year, some retailers and major marketers are treating Cyber Monday as a Cyber Week or even as an unofficial Cyber Month, boasting sales once reserved for a single day for much of November. Lengthening Cyber Monday from one day to several days or weeks isn’t all that surprising given the rise in e-commerce due to the pandemic. With more holiday shopping happening online this year, getting shoppers’ attention with early deals is a logical move, according to industry analysts who say that worries about shipping delays has people shopping earlier for holiday deals this year.
One year ago, Clorox launched a direct-to-consumer supplement label called Objective Wellness. Now, Objective is taking another page out of the DTC playbook by partnering with Gravity Products, the maker of the weighted Gravity Blanket. The two are selling 'beauty sleep kits' on each of their respective websites. The move shows that even big CPGs are taking cues from the DTC playbook.
In the five days following Thanksgiving, there's usually a wave of retailers offering anywhere from 20% to 50% off of their products. But this year, the wave of brands offering deals between Black Friday and Cyber Monday will feel more like a never-ending tsunami as brick-and-mortar retailers try to make up from revenue lost during the spring. Still, eight direct-to-consumer startups Modern Retail spoke with said that they plan to swim against the current, and don't plan to offer any steeper discounts during Black Friday than they did last year.
This year, retailers and brands are focusing on building out their digital fulfillment programs and are expecting record e-commerce sales, according to new research from Modern Retail and Glossy. As such, they are forecasting a digital windfall. What's more, the brands surveyed said they are implementing a bevy of services and offerings to better facilitate. Here are some takeaways from our most recent November survey.
Brands are changing things up this holiday season. In a November survey of 27 Glossy and Modern Retail readers who work for brands, 37% of respondents said their companies will be running promotions for eight weeks or more this holiday season, while just 18.5% said they ran promotions for eight weeks or more in 2019.
Eight years ago, startups turned to Shopify primarily to sell products online. Now, a startup might turn to Shopify to help fulfill orders, get some cash for their business, or use its point of sale system when it opens a physical store. As the startups that launched on Shopify, like Allbirds and Glossier, have grown up, Shopify's influence over the e-commerce ecosystem has ballooned. Now, the company is at an inflection point. The bigger that Shopify gets, the more calls the company faces for it to launch services that solve the biggest pain points of its merchants -- but it could risk diluting Shopify's focus.
Podcast advertising is booming -- particularly in light of the news Spotify recently announced that it is acquiring podcast advertising and publishing platform Megaphone. And direct-to-consumer startups are helping fuel that boom, considering the long-running joke that Blue Apron, MeUndies and Casper are essentially underwriting the shows they advertise on. The Spotify-Megaphone deal could have significant implications for what types of DTC brands are able to advertise on podcasts.
For brands and advertisers wondering how to approach fitness and wellness consumers in a time of great change, register for this webinar. Healthline Media and Digiday will unpack strategies for meaningful engagements alongside a panel of experts from leading fitness brands, highlighting the six trends marketers need to know in 2021.
Amazon recently announced that it was cracking down on QAnon merchandise. Even if the company is truly shifting its approach to how it polices product listings, its ability to cut down on disinformation merchandise will be hamstrung by its own algorithms. As long as Amazon’s product recommendation algorithm takes a purely neutral approach — even to anti-vaccine or white nationalist products — it will continue to give them prominent slots in search results.
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