eTail West   //   February 28, 2024

At eTail West, DTC brands are thinking about AI, product drops & growth strategies

This story is part of Glossy and Modern Retail’s series breaking down the big conversations at eTail West.

Among the hundreds of direct-to-consumer brand reps gathered in Palm Desert, CA for eTail West this year, the pathway toward growth was top of mind for many. Numerous panels focused on omnichannel strategies and personalization tools, while vendors hawked software aimed to show how their tools could drive customer acquisition.

Functional fitness company Pvolve has a diversified revenue stream that includes selling fitness gear online, an app-based subscription service and a franchise network for in-person studios. But Karina Kogan, chief marketing and commercial officer, said one challenge she hoped to discuss with other eTail attendees is whether Pvolve should team up with a retailer with broad reach. 

“We sell our product through our own owned and operated channels and we’re looking to continue to scale on Amazon,” she said. “But it’s not off the table for us to add another retail partner down the line. So I’m interested to see who else is doing what and where, and does it make sense to open up more distribution channels.”

With customer acquisition costs going up, cookies slowly disappearing and consumers increasingly taking on debt, many brands came to eTail hoping to pick up strategies and tactics to drive growth. Some were considering different technology or marketing strategies, like AI-driven search algorithms or chatbots to help new customers convert. Others were thinking big-picture about where and how customers find their product, like how to get on the coveted Target shelf.

Grace Na, founder and creative director of denim brand Pistola, said one of her main goals for the business is expanding the DTC strategy. The company has a robust wholesale operation thanks to relationships with major department stores like Nordstrom and regional specialty boutiques. But around 20% of the business is still direct-to-consumer and Na said she hoped to discuss ways to grow that share through pop-ups, brand activations or other experiments. While department store performance can rise and fall, Na said bolstering the DTC channel is one way she can control the brand.

“We can control the business, we can control the narrative and we can control what happens,” she said.

Growth through AI

Unsurprisingly, vendors and DTC brands alike were looking to artificial intelligence models to help streamline business operations in the name of growth. Some brands were on hand to talk about the pros and cons of those efforts. Barbara Hagen, senior vice president of marketing at Thriftbooks, said increased AI-driven personalization effort helped generate a 20% sales lift in the 2023 holiday season compared to the prior year.

Hagen said Thriftbooks, which operates an online marketplace of more than 19 billion used books, is able to use AI to help recommend other books to shoppers beyond related titles. The tools can look at what past purchases have been and generate suggestions that might be something the reader otherwise wouldn’t come across, she said.

“It’s leaning into engagement and loyalty and helping them find what they want,” she said.

Marcus Cheung, COO at lifestyle and housewares retailer Coyuchi, said the brand has put a strong focus on profitability and now wants to find more efficiencies in its operations. He was particularly interested in ways that AI could be used for customer service. 

“I’m hoping to see where AI is helping customers resolve their questions more quickly and creating efficiencies for customer service teams so they can focus on the questions that live humans are better equipped to answer.”

Launching new products

Beyond the tech stack, some DTC brands discussed ways that they were looking to drive business among current customers. In some cases, that means getting into new areas or launching new products.

Little Spoon, a meal delivery service for baby and kid meals, has added products to its lineup to help keep subscribers coming back. Angela Vranich, co-founder and chief product officer at Little Spoon, said initial launches in 2017 focused on purees, followed by “heat and eat” toddler meals. But customer subscriptions would drop off for a few months in between.

This discovery led to the launch of “Biteables,” last year, which are pre-cut foods safe for babies under 1 that are learning to hold their food and feed themselves. Vranich said this launch has allowed Little Spoon to keep its customers during the transitional phrase, as well as attract new ones. Now, more than 70% of its customers try more than one category, she said, and AOV has gone up by 46% in the past three years.

“We’ve launched new products to grow with our customer,” she said, “We’re growing deeper and wide in there category we’re playing in, and finding opportunities to tap new customers.”

Vranich attended eTail to discuss Little Spoon’s strategy of using product innovation to drive loyalty. While onsite, she said she was also interested in hearing about social strategies, noting that Little Spoon’s audience of parents ares frequently engaged on social.

But Vranich said that, ultimately, the direct relationship the brand has with its customers is why it’s able to come up with the right expansions strategy. When launching Biteables, Vranich said the feedback from customers who no longer needed purees but weren’t ready for toddler food was the jumping-off point — something they may not have realized if they were selling items on a third-party store shelf.

“The beauty of DTC is it allows us to be nimble,” she said. “If we have a good idea about something we can iterate on it pretty quickly, and put it up on our website and see if it resonates with people. And if not, maybe we tweak it or get rid of it and try something different.”

Landing in wholesale

For some brands, a wholesale partnership with a major retailer like Target may be the dream complement to their DTC business. And some panels spoke directly about this subject.

ETail attendees inside the conference hall heard a bit about how Target chooses its partners from svp of apparel and accessories Gena Fox during a panel with Glossy’s Jill Manoff.

Fox said her team looks for the “magic mix” of brands to partner with, whether that’s for permanent relationships or limited edition collabs. In some cases, it’s both; when Target brought in Levi’s to sell higher-end denim it also launched limited edition home and pet collections that were “an incredible way to kick that off,” Fox said. “It was so synergistic.”

And while having tried-and-true favorites is one way to cater to Target shoppers, Fox also said that Target’s limited-edition collabs are meant to have something interesting and unique that they can’t find elsewhere. In the case of the Diane von Furstenburg collection that launched this month, there’s a signature wrap dress but also home and beauty items, Fox said.

Fox also said that the recent addition of Kendra Scott jewelry is an example of how Target tapped a DTC retailer to create a more accessible but still on-trend style. The pieces are frequently seen in “outfit of the day” videos on TikTok, and Fox said Target takes cues from what’s popular on social to help inform its strategies.

“It really has changed everything in terms of how we think about the guest,” she said.