Meet 6 Retail Unicorns, Startups with $1 Bln+ Valuations That are Disrupting the Industry

Man looking at tablet with coffee on the table

By Tricia McKinnon

A unicorn is a startup with a valuation of at least $1 billion.  There are a number of unicorns that are taking the retail industry by storm. Companies from Glossier in Beauty to Rent the Runway in fashion have been able to transcend the headwinds in the retail industry to build big businesses in a short time frame, less than ten years.  

What has enabled these companies to grow at such a fast rate? All of the retailers on this list started out as direct to consumer businesses. With the ability to reach consumers quickly and relatively cheaply (at first) these companies have figured out how to connect with customers in a way that traditional brands have struggled to. For example, who would have thought that a $1.2 billion dollar beauty business could have been borne out of a blog? Clearly Emily Weiss founder of Glossier saw something that others did not when she founded her blog Into the Gloss.  Weiss created inspiring content as well a system for listening to readers’ wants and needs.  Then she took that data and translated it into a set of beauty products that are coveted by millennials.  

These companies have also proven adept at solving an existing problem or providing a better solution to what already exists. Sounds simple, but it works. That’s what Rent the Runway did when it allowed customers to rent instead of buying clothing.  Renting clothing is more economical than buying especially with a generation that doesn’t like to wear the same thing twice on Instagram.  Pair that with a desire to be more socially responsible by eliminating clothing waste, the company has become a hit.  

While each of these retailers have had different journeys what they have in common is the ability to leverage eCommerce to reach consumers and solve needs in new ways. Keep an eye on these unicorns, they are defining the future of retail.

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 by selling a wool sneaker online in 2016. Its shoes quickly became a Silicon Valley stapleAs 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.  Farfetch launched its eCommerce marketplace in 2008 and only it sells luxury brandsFarfetch 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.  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.  

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 brand like many digital natives started out on line but now has 23 stores.  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. 

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. 

6. Stitch Fix is an online personal styling company launched in 2011 that does the work of looking for the perfect outfit for you.  When a customer signs up to use Stitch Fix,  they get started by completing a detailed online questionnaire.  The questionnaire covers a wide range of areas to provide an understanding of the customer’s style, size, price preferences and how often they need new clothing for various occasions (i.e. work, dates, events etc).  Using over 85 meaningful data points provided by customers, merchandising algorithms based on artificial intelligence are built and used to make personalized clothing recommendations for each customer.  Then personal stylists add an essential human touch by overriding the recommendations made by the algorithms if necessary.  Based on this analysis five clothing items are sent to the customer and if they like them they can keep them, if they do not, they can return them for free. Stitch Fix, founded in 2011, generated $1.2 billion in revenue in 2018 and has nearly three million active customers in the US.  Stitch Fix is valued at nearly $3 billion.

 

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