This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. To receive it in your inbox every week, sign up here.
Despite holiday sales starting earlier every year, direct-to-consumer brands aren’t seeing a ton of shoppers rushing to buy gifts now.
This year, the start of the holiday shopping season was moved up even earlier due to Amazon running a second Prime Day event last week.
In turn, some brands with a DTC channel decided to either run a counter sale or participate in the shopping event to generate early holiday revenue. However, the results were mixed, according to executives who spoke to Modern Retail. While pushing holiday promotions at the start of October yields some orders, the majority of customers’ behavior still points to a wait-and-shop mentality.
Kaylin Marcotte, founder of Jiggy Puzzles, said the company used the second Prime Day to test the water on new products.
“We wanted to test a seasonal design, so we decided to feature one of our best-selling Christmas Puzzles, the Cozy Christmas, to see what the appetite was for a holiday offering,” Marcotte said. Thanks to the weekday bump in traffic on Amazon, Jiggy saw a strong boost of a 60% increase in sales compared to the previous week.
Marcotte said the brand decided to participate in the October Prime Day event after opening an Amazon store earlier this year. “We are still relatively new to Amazon, having focused solely on our own e-commerce for the last two years,” she said. “So we decided to participate as a way to continue building our visibility, sales and reviews by leveraging a high traffic day.”
Marcotte said that some of Jiggy Puzzles’ customers are starting their shopping early, possibly out of fear of shipping delays in the past couple of years. “We started getting requests via social media DMs and emails to shop our holiday designs as early as September,” she said.
“We’ve seen a lot of interest in gifting our subscription Jiggy Puzzle Club, a monthly, bi-monthly or quarterly puzzle subscription membership,” Marcotte said. “Because of this, we’re prioritizing pushing the subscription even more this year from a holiday shopping [point of view].”
Other brands who ran their own website sales during the event saw mixed results. Brooklinen, for example, is using October to drop new inventory and keep momentum going in between the summer and official Black Friday sales rush.
Alieu Fye, Brooklinen’s vp of marketing, said the brand decided to run a surprise October sale — coinciding with the second Prime Day — because “October is usually a slower month for consumer goods sales, while at the same time being a ramp up period before the big holiday shopping season.”
Fye said that Brooklinen saw these variables “as an opportunity” to build up its customer base pre-holiday. For the company, early October is starting as expected – coming off of the September Labor Day period, “volume typically begins to slow as consumers hold off on holiday shopping,” Fye said. “The combination of Prime Day and early rollouts from other large retailers did, however, create an appetite for shopping and higher volume towards the latter part of October.”
To kick off the seasonal offerings, on Oct. 4, the company released its first-ever holiday collection, which includes gifts “starting at $15 to meet every customers’ needs this season,” Fye said. He said the company expects these lower-priced limited edition items, such as the Cashmere and Lambswool Throw Blanket that’s under $200 – to sell well throughout the rest of the season.
Still, Brooklinen doesn’t expect a bigger rush of orders this October compared to previous years. Fye said this is mainly due to macroeconomic factors, such as tightened budgets and inflation. “We still believe the bulk of the volume will come at more traditional shopping times in November and December,” he said. “However we do expect a lift from early sales and offers to push volume over last year’s performance.”
Another founder confirmed that while teasing holiday discounts helps kick off the seasonal buzz, most customers are waiting around for the official sales to start.
During the week of Oct. 10, journaling brand Silk & Sonder began offering a 15% off discount on new monthly subscriptions. Founder and CEO Meha Agrawal told me that while the company saw some lift from some shoppers who were on the fence and took advantage of the annual membership discount, she expects the chunk of holiday orders to come later in the season. For Silk & Sonder, this includes promos that veer from the standard 15% or 20% off discount and offer more unique limited-time promotions, like sets and gift-with-purchase.
Agrawal noted that despite the retail industry’s push for earlier and earlier end-of-year sales, marketing challenges continue to make it difficult for DTC brands to reach customers during this noisy period. She cited the current digital advertising environment as the primary reason; “we still don’t see a big influx in sales this early,” she said — pointing to Meta ads’ decreasing effectiveness.
With the iOS 14 update in place, Agrawal said it’s been even harder — given the higher costs and lower conversion rates — to acquire customers during busy shopping periods. Instead, Silk & Sonder focuses on organic marketing to existing customers and selectively running social ads around new product releases.
“We also still haven’t pushed the full range of products yet,” she said. In the coming weeks, the company will begin to roll out gift sets and bundles that Agrawal says tend to be a big draw for gift-giving.
“Last year we ran a gift-with-purchase promo that captured that nostalgia for department store holiday purchases, which our customers loved.” The plan is to bring the bundle back again for the Black Friday and Cyber Monday period. “As we get deeper into Q4 and New Year, we’ll really start to push gifting and self-gifting opportunities in our campaigns,” Agrawal said.
Even if the month of October doesn’t result in as big of sales compared to November or December, Fye said that this period is helping Brooklinen gain new insight into the early shopper’s behavior.
For one, he said there’s less urgency around shopping during this period, so these customers tend to spend more time in the research and consideration stages than the typical holiday shopper. “They also tend to buy higher priced items,” Fye said. “So these purchases tend to be less gift-focused and centered more around seasonal needs as we move from summer to fall.” — Gabriela Barkho
Following $35 million fundraise, Caraway launches in Target
Weeks after announcing it had raised $35 million in funding, Caraway announced that it is launching into 350 Target stores, making it the DTC cookware startup’s biggest physical retail partnership to date.
Founder Jordan Nathan said that Caraway first started talking with Target three years ago, not too long after launching. Caraway first started selling its products through Target’s website last year. But launching into stores was a different beast — Caraway had to figure out how to reduce the size of the packaging for its best-selling cookware set, to ensure that it fit on Target’s shelves.
Nathan claims that Caraway is one of the first high-end brands that Target is carrying in the cookware category. Caraway’s most expensive product is a seven-piece cookware set sells for $395, and while Target does feature higher-priced cookware SKUs, many of them are more comprehensive sets, like a 13-piece Cuisinart set that retails for $500.
“We really had to figure out a way to elevate a category in Target that doesn’t really have a high-end [brand],” Caraway said. “We really leaned into the education and branding, and the display is something that we are really proud and it is really different than anything they have ever done in the category.”
With the Target launch, Caraway’s products are now available for sale in roughly 550 stores, including select Crate and Barrel, Nordstrom and Bed Bath & Beyond locations. As with other retail partners, Caraway is launching a new color, a slate blue, that will be exclusive to Target stores.
The Target launch isn’t the only iron Caraway has in the fire. With its new round of funding, Caraway has significantly been ramping up its product expansion, launching a tea kettle in August. Later this week, the company will also be launching food storage containers. — Anna Hensel
What I’m reading
- Beyond Meat is laying off 19% of employees as plant-based meat startups continue to struggle with declining sales and slower growth rates.
- Walmart-owned Bonobos named a new CEO: John Hutchison, formerly the president of workout equipment purveyor TRX.
- Goat Group is acquiring Grailed as it seeks to extend its reach in peer-to-peer resale.
What we’ve covered
- Subscriber exclusive: At the Modern Retail DTC Summit, Three Wishes founder Margaret Wishingrad spoke about how the cereal brand is trying to break into larger grocers.
- Shein launched a resale app as it attempts to combat criticism that fast fashion causes textile waste.
- Vuori opened a new flagship store in New York — its largest physical location to-date — as it ramps up efforts to grow globally.