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- Some digitally native direct-to-consumer companies are avoiding the pitfalls of major retailers.
- Brands like wedding dress customizer Anomalie and cereal company Magic Spoon have experienced a surge in business since the pandemic began.
- Business Insider spoke to 10 CEOs from various DTC companies who revealed how their brands were poised for success when the pandemic began.
- Overall, they explained that companies that offer valuable products at a reasonable price point are more likely to be able to weather the storm.
- Visit Business Insider’s homepage for more stories.
The coronavirus pandemic has upended brick and mortar retail. But as stores shutter across the US, some digitally native direct-to-consumer brands are avoiding the grim fate of other retailers.
For examples, sales at Thinx — a feminine care direct-to-consumer company — are 40% higher than the same time last year. And Peace Out, a DTC skincare company, has seen its overall business and traffic to its site quadruple from the same time period last year.
“The number one factor for a business to be doing well during the pandemic is that the value of their service or product can be provided digitally or through home delivery,” said Alex Song, the CEO of Innovation Department, which invests in and launches startup brands.
Song added that price point is also an important element that can determine which brands will succeed in the pandemic.
“People still want to consume as purchasing behavior can be comforting during this difficult moment,” Song said. “They’ve shifted their buying towards lower price points and functional items that can be actively used, worn, or consumed while at home.”
Business Insider spoke to 10 CEOs from various DTC companies across categories like active wear, skin care, cereal, and wellness to see why their companies have seen increases in sales, scroll through and conversation rates, and engagement during the pandemic.
From the CEOs of Magic Spoon, Anomalie, Thinx, and more, here’s how some DTC companies were poised for success when the pandemic began and how the playbook for these companies will change when everything goes back to normal.
Ten Thousand (men’s activewear)
Ten Thousand, an NYC based men’s activewear DTC, has been notably thriving amid the coronavirus pandemic.
Year-over-year sales for March were up a full 100% and the company has not seen a downturn in conversion rates or business; revenue was up 130% year-over-year, and 20% month-over-month in April.
Ten Thousand’s cofounder and CEO Keith Nowak explained to Business Insider why his still-profitable company was able to survive and thrive when crisis hit.
“First and foremost, the focus for any brand has to be on making an outstanding and differentiated product, and building a community of passionate and loyal fans. That should have been the DTC playbook all along,” Nowak said. “But I think that’s been replaced in recent years with a focus on top line growth, transactional marketing, and VC funded marketing budgets. And that’s put companies in a very fragile position to deal with any dips in their business.”
Since the company’s strong core of repeat customers was already generating enough revenue to cover the company’s operating costs, Ten Thousand was safer than most companies when the pandemic hit. Plus, Nowak immediately made the decision to turn from an aggressive growth plan to a focus on profitability at the first sign that there would be changes to his business.
Despite the currently unpredictable state of retail, Nowak believes a return to normalcy is possible.
“I think the post-pandemic world will favor companies that have both a strong ecommerce presence and a smart physical retail strategy,” he said. “Those things together will make a brand resilient, adaptable, and anti-fragile. And the opportunity to have both is only going to increase as rent prices drop dramatically.”
Anomalie (custom wedding gowns)
Anomalie, an $18 million backed digitally native company that designs and customizes dresses entirely online, has experienced a 25% increase in signups since the pandemic began.
“We’ve been seeing not only higher signups but higher conversion rates to sales,” Anomalie cofounder and CEO Leslie Voorhees Means previously told Business Insider. “It’s definitely feeling like there’s momentum behind our process right now.”
Means explained that while the pandemic has essentially upended the traditional bridal industry, which generally relies on in-person consultations with brides, the digitally-native Anomalie was already positioned to weather the storm of change.
According to Means, almost nothing on the client-facing side of the business changed as a result of the pandemic. With no physical stores, Anomalie was already used to connecting to clients through technology.
While Means said that she’s grateful to get to continue helping brides find their dream dresses during a pandemic, she believes this situation will change the bridal industry forever as more retailers turn to remote service and online appointments.
Mack Weldon (men’s lifestyle)
For men’s lifestyle brand Mack Weldon, product relevancy was one of the key factors that made the company poised for success when the pandemic hit.
“We are fortunately in a position where many of our products remained relevant despite the major shifts globally,” said Mack Weldon’s founder and CEO Brian Berger.
As a result of the shifts in consumer behavior, Mack Weldon’s comfort/lounge category grew on average 60% when compared to the days before most people were working from home. Socks increased by 40% and certain lounge pants nearly doubled in sales.
In addition to desirable product, Berger said that his company’s customer loyalty and marketing expertise mixed with an efficient and nimble team was all a part of helping Mack Weldon get through this turbulent time with grace.
When it came to changes, Berger said his company had to adapt to working from home and coordinate an entire shift in its marketing strategy.
“The way in which we speak about our products and the marketing calendar itself, many aspects of it were no longer relevant, and it was really important for our team to present marketing that was reflective of where consumers are at during this crazy time,” Berger said.
To Berger, on top of product relevancy, the ability to fill increased demand and understand how to drive new consumer awareness and sales amid the pandemic is what can make or break a DTC company in this time.
Peace Out (women’s skincare)
DTC skincare company Peace Out saw overall business and traffic to its site quadruple when compared to the same time period last year, founder and CEO Enrico Frezza said. The company’s website has seen some its highest levels of traffic as more customers purchase four or more products at a time. Plus, the amount of people spending more than $500 in one checkout has doubled.
Frezza said that the company started working on contingency plans in early March. Peace Out worked with Sephora, its exclusive retailer, to fully shift sales to online, shifted to work from home for employees, and expanded its marketing efforts and even started exploring TikTok.
Frezza said that his brand’s success amid the pandemic is owed to his team’s ability to communicate and execute these key changes to the business.
“Our team went full throttle into planning, strategising, executing, communicating with and empowering each other as we shifted operations and our go-forward plan,” Frezza said. “From the start of the pandemic, Sephora has supported our sales and marketing initiatives. We also never stopped working on any programs or objectives we already had in place with Sephora.”
Frezza also said his company was lucky to be creating a product that people need and trust.
“Our skincare solution products are the top reason we’ve been able to navigate the pandemic with relative ease,” Frezza said. “In trying times, people gravitate toward things they trust. Peace Out Skincare products work and they know it. That’s why they have seen our sales and average order skyrocket since March.”
Magic Spoon (cereal)
Even a pandemic can’t halt demand for shelf-stable food like cereal.
Magic Spoon, a company that sells low-carb, high-protein cereal for adults, has seen an increase in demand from both new and existing customers amid the pandemic, which has translated to positive impacts in sales.
According to Magic Spoon cofounder Gabi Lewis, the company’s “agile” supply chain has allowed it to keep up with this increased demand during the pandemic. Cofounder Greg Sewitz added that the company’s production and distribution wasn’t dramatically affected by the pandemic, despite the influx in orders.
“It also doesn’t hurt that we have a product that is shelf-stable for several months,” Lewis said, explaining why the cereal is still desirable among consumers in the pandemic.
Like most companies, Magic Spoon had to adapt to a work from home situation when the pandemic hit. The company also had to make sure to focus on the health and safety of its fulfillment workers.
According to Lewis, having a reliable supply-chain, existing customer loyalty, and an engaging social media presence is what helped the company survive and thrive during the pandemic.
But Lewis said transparency and honesty with consumers is probably the most important element for a DTC company to have in this uncertain time.
“We’ve found that now more than ever, always being completely honest and just treating our community as humans first and customers second, is incredibly important,” Lewis said.
Vuori, a men’s and women’s activewear brand, had its biggest e-commerce day on record on April 5, which brought in 420% more in sales than on that day the previous year.
Overall, the activewear brand has seen massive growth in comfort and function categories as more people move toward this type of attire as they work from home. In particular, interest in joggers has skyrocketed and sales of the garment were up 1137% year over year from the period between April 1 and 16.
“Vuori has always prided itself on being nimble and our culture of creativity and flexibility lends itself well to this new environment,” Vuori founder and CEO Joe Kudla said of his company’s ability to find success during the pandemic. “Our in house creative and tech teams allow us to concept, implement and pivot new ideas quickly, which is key in an ever-changing landscape. It also doesn’t hurt that we happen to sell the most comfortable sweatpants in the world.”
Kudla said his company recognized early on that a creative strategy that aligned with a new reality was necessary to keep business going during a lockdown.
“Despite the closing of all of our stores, we wanted to keep our team fully employed so we developed programs focused on training and redeployment across the organization to departments that were seeing increased demand, namely marketing and customer service,” Kudla said.
This ability to pivot and adjust in this new landscape is what sets apart the successful DTC companies from those who are unable to manage, Kudla explained.
“Companies that value flexibility over locked-in strategy will win in the new environment,” Kudla said.”That’s always been our strategy for e-comm, but we believe it’s more important now than ever before to be in tune with the customer mindset as it evolves and adjust messaging accordingly, all the while being true and authentic to your brand.”
Thinx (feminine care)
Thinx, the feminine care DTC company popular for its reusable menstrual underwear, has experienced a surge in sales amid the pandemic.
“Periods don’t stop for pandemics,” Maria Molland, CEO of Thinx, told Business Insider’s Bethany Biron in a previous story.
According to Molland, sales at Thinx are up 40% from the same time last year, and business has grown week-over-week since shelter-in-place orders went into effect.
As makers of essential products, Thinx has found itself in a lucky spot, Molland told Biron. Additionally, Thinx products are reusable, an attractive feature for homebound Americans who don’t want to leave their house to pick up new feminine care products at a pharmacy.
A Thinx spokesperson added that most of the brand’s customers in the past month have been new to the company.
In terms of changes, the Thinx team has shifted to a work from home situation, which was not offered at the company prior to the pandemic.
“As with many other brands, we have learned that we can fully operate from home as a company,” Molland told Biron. “Prior to the pandemic, we didn’t have a work-from-home policy for employees, but I’ve watched our team come together and bring out some of their best and most creative work. I expect we will have more work-from-home opportunities for the team.”
Hydrant (hydration and wellness)
For Hydrant, a wellness company focused on hydration, things have been pretty much business as usual since the start of the pandemic.
According to Hydrant CEO and cofounder John Sherwin, the company saw a bump in sales close to the start of the pandemic as a result of people panic-buying to ensure they had enough of a supply to carry through a possible quarantine or lockdown.
“One of the first things health professionals tell you when you’re sick is to drink lots of fluids and stay hydrated,” Sherwin said. “As people started to prepare for potentially getting sick, we did see our sales number increase in the beginning of the pandemic.
Since then, things have been stable, a feat Sherwin attributes to his company’s nimble supply chain and fulfillment center set-up, which enables the brand to keep fulfilling orders if one center had to shut down. The company, which has shifted to work from home for many employees, has even been able to make a couple of new hires in this time and has adapted its hiring and onboarding process to reflect a new work-from-home culture.
When it comes to long-term success coming out of this pandemic, Sherwin said DTC companies should focus on having diversified acquisition channels for winning over loyal customers.
“A ‘DTC winner’ will need to have a deep focus on customer retention and lifetime value,” Sherwin said. “If you’re acquiring customers who buy once and never again, it’s going to be a tough road ahead.”
Andie, a leading DTC swimwear brand, saw a massive bump in customer engagement in various channels when the pandemic began.
“Our community reaction has been incredible during this time, with engagement across all our channels increasing dramatically,” Andie founder and CEO Melanie Travis said. “Whereas pre-pandemic we would have seen a small bump in responses to an SMS outreach, we have been seeing 400+ [sic] responses to a text message that is showing our team behind the scenes or just saying “hi.'”
Travis said that her dynamic, digitally-savvy team was a large factor in positioning Andie for success during this time.
“For example, our robust CX team is personally reaching out and interacting with our community about any and all of their concerns,” Travis said, explaining how Andie made an effort to become more transparent with customers during this time, which has also seen an enormous response.
Travis said that a brand’s ability to rely on its community is what will position them for success in the future.
“We have had a transparent voice that acknowledges that Andie is a small business and we rely on sales to succeed, but that we are also listening to what the customers want during this time and how we can deliver that has been a huge success for us,” Travis said.