New DTC toolkit   //   January 23, 2023

Why DTC brands like Lunya are introducing new brands to its customers

Before launching Lunya’s The Rest Shop last fall, founder Ashley Merrill wanted to try everything she could to curate a top-notch assortment of sleep hygiene products. From incense to body balsam to pillow mists, she wanted to sell best-in-class products that would complement the DTC brand’s signature luxe pajamas.

“In some ways, we’ve become a really trusted brand in rest. And so we felt like we were in the right credible position to help our guests and customers sift through all the products out on the market to determine what really are the best things,” said Merrill.

The Rest Shop launched in October 2022 as a way for Lunya to grow its business while providing new offerings to customers. It operates as a separate category on Lunya’s website that has grown to offer more than 30 products in its first three months. Items are also available in Lunya’s stores in New York, Los Angeles, San Francisco and Atlanta.

So far, the shop has seen at least a dozen products sell out — including the super plush $125 ROAM slippers. OSEA’s Vagus Nerve Bath Oil, sold for $48 and Vitruv’s $229 humidifiers are also quick to sell out upon restocking. The majority of customers — 92% — who’ve made purchases from The Rest Shop are also buying a Lunya product. Overall, 37% of The Rest Shop customers are first-time Lunya shoppers.

Merrill declined to share revenue or sales figures from The Rest Shop. Inventory purchases and wholesale agreements vary based on each partner brand, she said. Moving forward, plans are in the works to expand it, including adding more nighttime skincare products.

Selling related products from other brands is an increasingly common way for DTC brands to give more options to their customers. Retail experts say not only does it increase cart sizes, but it increases customer loyalty. But brands are careful to consider what to stock, in order to avoid jeopardizing its own reputation with a subpar product or poor customer service from the featured brand.

For Lunya, a private company founded in 2014, adding the new products is a way for the brand to continue to build trust with customers, Merill said.

“I think it validates what I had hoped, which was that people are looking to improve their rest, and that they trust us to help them find sort of a breadth of products around that category,” she said.

Specific curation

Merrill decided to launch the The Rest Shop based on her own experiences using products in a nighttime routine. That included trying a range assortment of what was on the market, including reaching out directly to other founders about their interest in being featured in The Rest Shop.

“I offered myself as a human guinea pig,” she said. “I wanted to be able to stand behind the pieces that we offered.”

In selecting products, Merrill is careful not to offer duplicates. Amazon has “a thousand melatonin options” that can be overwhelming to sort through. Shoppers might wonder what ingredients they can trust or which ones work the best. The Rest Shop’s current melatonin offering is Goop’s Knock Me Out chews, priced at $30 for a 30-pack.

“In a world where you can get anything you want at a moment’s notice, the problem is curation,” she said. “What I wanted to do is really simplify the process for people. So I’ve tried not to do a lot of duplication, and different categories.”

Merrill said choosing to work with other brands, rather than white-labeling products, was a way to create a new sales avenue in areas where the company doesn’t yet have expertise. And while Lunya may dabble with creating other types of products in the future, for now Merrill said she’s focused on finding the brands that are already best-in-class and offering them to Lunya shoppers.

East Fork Pottery is another DTC brand that’s seen success with offering related products from other brands. While it’s known for its pottery made in Asheville, North Carolina, the brand’s two flagship stores in Asheville and Atlanta plus its website offer other kitchen items, candles and housewares. Relationships with other brands can look like sourcing items wholesale to be resold in the shop or working collaboratively on a special collection that’s sold by both brands.

Some current items in the assortment include flatware made in France from Sabre Paris, and placemats from Appalachia-based Sew Co. East Fork has also partnered with Diaspora Co. spices on collaborative products and pop-up shops – the Oakland-based brand that pays spice farmers six times more than typical commodity pricing.

“We want to make sure we’re introducing people to value-aligned organizations and providers where possible, and we want to make sure that we are providing products that have a long life to them,” said creative director Devin Bambrick.

This year, it will experiment with launching a boxed-up product that includes its “bitty bowls” meant for spice pinches alongside other brands’ culinary and food items.

“We kind of see that as a fun discovery opportunity with a lower price point that still includes some East Fork pottery,” he said. “So there’s a little bit of a collector’s desire in there for the colors of the bowls. But then we’re also helping introduce people to new tastes and new things to keep in their kitchen.”

Extra insights

Greg Carlucci, an analyst with Gartner who focuses on DTC brands, said one of the main reasons companies expand sales to other brands is to focus on sales growth. But customer engagement, retention and lifetime value aren’t far behind.

“Whether it’s DTC or brick and mortar is always looking for opportunities to either keep a consumer in their brand family, or provide trade-up opportunities,” he said.

In selecting products, most focus on products that apply to the same use case as their own products – as well as those brands that share environment and social values.

“For a lot of direct consumer brands that have built very loyal customers, there is an increased risk of trying or developing a new type of category product that they haven’t done before,” he said.

It’s also a valuable way to get insight into customers’ wants and needs. Carlucci anticipates that maturing DTC brands will continue to expand on product assortments the more information they are able to obtain. “You can develop a 360-view of customer data points across their purchase journey to really have a good relationship and understanding of your customers,” he said.

Lunya’s Merrill said the experiences with The Rest Shop so far have shown that there’s demand for customers buying products related to their skin and overall wellness. That includes a popular exfoliating $22 body glove from Cinq Mondes that is meant to help erase small white bumps on the skin known as keratosis pilaris.

“I’m letting the customer drive what stays in The Rest Shop, and what products we’ll add,” she said.