5 Innovative & High Growth Direct-to-Consumer Retail Brands to Watch
Direct to consumer brands are taking the retail industry by storm. What took many retailers several decades to accomplish, direct to consumer brands have been able to achieve in some cases within only a few years. With digital technologies allowing businesses to reach customers in ways that were not possible before, several innovative retailers have emerged and are reinventing retail. From beauty brands to home furnishing companies there are several direct to consumer brands that have been able to achieve the coveted unicorn status (a $1 billion plus valuation) in less than ten years. Here are five retailers that you should keep an eye on as they continue to redefine how we shop while grabbing market share.
1. Glossier emerged out of the popular blog Into the Gloss which was launched by Emily Weiss in 2010. Prior to starting her blog Emily Weiss worked at Vogue, Teen Vogue and W magazine. The blog gained traction due to Weiss’ popular interviews with beauty mavens such as Kim Kardashian who provided insight into their beauty secrets. Overtime Weiss became known as a beauty expert who had tested and reviewed hundreds of beauty products. The blog also enabled her to gain a deep understanding of what types of beauty products customers want. Weiss then translated a dedicated millennial readership as well as an Instagram following into a set of loyal customers when she launched Glossier in 2014.
Instead of launching many products at once, similar to Kylie Cosmetics which started out with a small product line, Weiss launched with only four items: Soothing Face Mist, Perfecting Skin Tint, Balm Dotcom and Priming Moisturizer. Glossier is now a mostly online beauty company (it has two stores) valued at $1.2 billion.
2. California based shoe company Allbirds started out with a wool sneaker in 2016. Its shoes quickly became a Silicon Valley staple. As a result of this Allbirds went on to sell one million pairs of shoes within two years. Its shoes are made of natural and environmentally friendly materials including eucalyptus tree fibre and merino wool. Its shoes are also comfortable with Time magazine calling them: "the world's most comfortable shoe." Last year Allbirds launched a flip flop called SweetFoam with soles that are made from sugar cane. Tim Brown, Allbird’s Co-Founder has said: “our thought is, if we can put a man on the moon, you should be able to make a T-shirt and a pair of sneakers that are carbon negative or carbon neutral”. The company now has three stores. Allbirds is valued at $1.4 billion.
3. One of the growth areas in eCommerce sales within the luxury sector comes not only from individual brands’ eCommerce sites but from online marketplaces like Farfetch. Farfetch launched its eCommerce marketplace in 2008 and only sells luxury brands. Farfetch was created with the goal of: “redefining how fashion is bought and sold ”through technology, data and innovation. A decade after launch, at any time there are approximately 280,000 items for sale on the Farfetch’s site and the company’s customers are from over 190 countries. Marketplaces are convenient, offering customers the ability to shop from hundreds of retailers in a more efficient manner. They are really, from a customer perspective, the online department stores of the retail industry.
Farfetch’s website has a very different look from other online marketplaces such as Amazon. A high-end design aesthetic and content from industry insiders and icons (one of the current interviews on the website’s home page is with Sandra Choi, Jimmy Choo’s Creative Director) distinguishes this marketplace. The site feels more like a fashion magazine meets high end boutique but the digital version. The retailer is valued at over $7 billion.
4. Casper is a direct-to-consumer mattress company that launched in 2014. Having cute Instagram friendly packaging (a mattress that fits in a box the size of a mini fridge) which has been marketed by social media influencers like Kylie Jenner helped fuel the growth of this company. Sales hit the $1 million mark in the first month after launch.
While the company started out by selling only one mattress model, Casper’s goal is to become the world’s largest end-to-end sleep company. To achieve this goal it has expanded its offering by selling pillows, bedding and sleep accessories. The brand like many digital natives started out on line but now has 23 stores. The brand appeals to consumers who do not like mattress shopping. Instead of testing a mattress in store customers can order a mattress online, try it out for 100 days and return it if they don’t like it. The company has called itself the “Warby Parker of mattresses.” Speaking about the traditional way of mattress shopping, co-founder and CEO Philip Krim said:"it's still a very antiquated experience where you go to the store on every corner, you walk in in your street clothes, you're expected to lay on a mattress under fluorescent lights and then know how you'll sleep. It just seemed very perverse to us. That's where we came up with the idea of letting people try it in their home and actually sleeping on the product before they were committed to it." The company was recently valued at $1.1 billion.
5. Rent the Runway is a digitally native women’s clothing retailer that allows customers to rent clothing that ranges from casual items to designer gowns. The brand launched online in 2009 and it opened its first free-standing store in 2014. It has two plans within its subscription service. One for $89 per month and one for $159 per month. The difference between the plans is that under the cheaper plan customers can get four items per month and can have one item swap per month. With the more expensive plan customers can receive unlimited items and unlimited swaps of items. The fee includes shipping, dry cleaning and insurance. Insurance covers even a simple stain the customer may get when wearing the clothing. Rent the Runway now has two stores.
89% of Rent the Runway’s members report saving time and money on clothing and 71% of members report finding a new fashion designer through the process. Rent the Runway launched 10 years ago and was valued at $1 billion by the spring of 2019. Last year CNBC named Rent the Runway the ninth most disruptive company in the world.
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