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Category: DTCTrends

DTCTrends

  • We Want To Be the World’s First Global Sleep Brand, Says Casper CEO

    We Want To Be the World’s First Global Sleep Brand, Says Casper CEO

    “We really consider ourselves the sleep company,” says Casper co-founder and CEO Philip Krim. “Everything we do is about helping our customers sleep better. It’s about getting a great mattress but it’s about everything that could help you sleep. We’re trying to take products to market that are end to end about sleep solutions. We want to be the world’s first global sleep brand and we think we’re well on our way to doing that.”

    Philip Krim, Casper co-founder and CEO, discusses how Casper, a highly successful direct to consumer brand (DTC), is still in the early days of growth in an interview on CNBC:

    We Want To Be the World’s First Global Sleep Brand

    We actually think Casper stands alone. We really consider ourselves the sleep company. Everything we do is about helping our customers sleep better. We think end to end about sleep. It’s about getting a great mattress but it’s about everything that could help you sleep. In January we launched a technology product, a lighting product, that actually helps you wake up better and fall asleep better. We’re trying to take products to market that are end to end about sleep solutions. We want to be the world’s first global sleep brand and we think we’re well on our way to doing that.

    We think we’re really one of the first of our kind. We were a digitally native business, having launched online with Casper.com, but we’re actually now scaling our business offline as well. We’ve opened up 23 retail stores and we have great partners with folks like Target. We believe that we will have a business where no matter how consumers want to shop for our products we have great products and great experiences. We actually think there’s really not a public company comp that’s done that journey.

    Repeat Revenue Increases Dramatically As We Launch New Products.

    Yesterday we launched our hybrid line which is actually the combination of innerspring technology and foam technology. We launched two different models around that. For us, we’re actually still able to compress those mattresses, ship them anywhere in the country, and they’re really phenomenal products that we’re in development for over a year in our Casper Labs program based in San Francisco. From a cost structure, it works just the same way as our foam mattresses. You can compress it, you can ship it anywhere, it’s super fun to open and they sleep really great.

    We make great pillows, we make great sheets, and we make great lighting products. We are seeing higher and higher attachment rates as we launch new products and we’re seeing repeat revenue increase dramatically as we launch new products. We’re only a five-year-old company, actually as of this month. We launched April of 2014. As we get our customers to be a little bit more mature we’re seeing them come back time and time again not just to buy mattresses but to buy our full suite of products. That’s really exciting for us.

    We’re In the Early Days of Scaling

    We actually changed the way that you would return a mattress. In the industry traditionally it’s a huge pain, but with us, you call us up and we’ll pick up the mattress. You don’t even have to pack it back up, nothing. We will come to pick it and up and then we donate it locally. We appreciate that you gave us a shot. We also are changing the way that people shop for the products. We have our Casper.com website where you can learn all about these great products but we have 23 stores that we’ve opened. We’re opening up over a dozen this quarter, two this week in fact, and those stores are a great complement to the online experience.

    We don’t break out profitability overall. Casper has a great product, we have a great business model, and we’re seeing that by taking it to market both online and offline that it’s actually growing our online business in a very efficient way. We think this go to market strategy is working well. We’re in the early days of scaling it and we believe we can keep building this out for years to come.

    We Want To Be the World’s First Global Sleep Brand, Says Casper CEO


  • Direct to Consumer is a Fundamental Platform Shift, Says Tim Armstrong

    Direct to Consumer is a Fundamental Platform Shift, Says Tim Armstrong

    Direct to Consumer, or DTC, is a fundamental platform shift, according to former AOL and Verizon digital properties CEO Tim Armstrong. “There have been a couple times in my career where there has been what is basically a fundamental platform shift,” noted Armstrong. “I felt like direct-to-consumer was something that was going to be a platform shift. Not for probably the obvious reasons, but some of the reasons that were less obvious, but things that I thought were important for the future.”

    Tim Armstrong, former AOL and Verizon Oath CEO and current founder and CEO of The DTX Company, discusses how direct to consumer (DTC) ecommerce businesses represent a “fundamental platform shift,” in an interview with Recode’s Kara Swisher and Jason Del Rey at An Evening with Code Commerce in Las Vegas:

    Direct to Consumer is a Fundamental Platform Shift

    About a year and a half ago I started spending a lot more time just on where the underlying infrastructure in the world was changing around the internet and mobile and all the things that we’ve talked about for years. One of the things that stood out to me was there’s been a couple times in my career where there has been what is basically a fundamental platform shift. I felt like direct-to-consumer was something that was going to be a platform shift. Not for probably the obvious reasons, but some of the reasons that were less obvious, but things that I thought were important for the future.

    One was data management, just in terms of things like GDPR and similar things that were happening. I think the power and data is going to shift back more towards the consumer side over the next 10 or 20 years. I thought that would fuel direct to consumer. The second is that the product development cycles that were happening at the direct the consumer companies were much faster and much deeper than what was happening in the normal channels of product development. I think that’s another thing that over a 5, 10, 15, 20 year period these companies are going to have a real advantage in terms of how they develop products and distribute them.

    Customer Communication: Two Way or No Way

    The third thing was just the two-way communication. At DTX we have a growing team, but one of the things we say is two way or no way. Two-way communication with the customer having a direct relationship with companies. The last thing is how the relationships between consumers and companies are going to change. This seems like a really important trend and probably there’s a really big opportunity here. There may not be but that that’s what got me interested in it.

    What we’re doing right now is really kind of two simple things. One is we’re putting investments directly into DTC companies and we’ve done a number of those and we’ll do a few more. The second thing we’re doing is spending a lot of time on an acronym that I hear all the time now which is CAC, customer acquisition cost. Really, on the operating side of the business what we’re doing is not CAC, it’s CRAC, which is an unfortunate acronym, but it’s customer revenue and acquisition cost. Having the balance on the equation of those two things we’re going to be testing things in 2019, some experiences and and other things that will hopefully put the R back in the CAC equation.

    DTC Might Re-Engineer the Entire Way Commerce is Done

    All of my experiences and basically all the stuff I did on the media side was all two-way relationships. The more time I started to think about really what happened was the reason I thought about DTC’s. I started to go back to those memories based on meeting a lot of the DTC founders and of coaching CEOs for DTC founders. I started to think about things like GDPR and some of the things that are happening underneath the surface that I think is going to change long term. I thought wow, this might actually re-engineer the entire way commerce is done and this is a really interesting opportunity.

    There are a bunch of spaces online now you can look at where people are piling money and where there’s probably over investment. But DTC overall, if you went product by product, category by category, industry by industry, in DTC, there are so many companies that you’ve never heard of and rightly so. The Casper’s, the Warby Parker’s, those are amazing companies and they get a ton of notoriety. There are also about 10,000 other categories. They don’t have ten people, they might have one or two, but they’re doing interesting things in them.

    People ask us all the time, is there a DTC ceiling, these companies can only get so big? That may be true but I don’t think it’s true. What will happen is the aggregate of all these things together. If you have ten thousand DTC brands and they’re $10 million or $50 million or $500 million they may not have to look like Google and Facebook right now, but when you add up all of them together over time and what’s likely to happen with a condensing of the market in the next 10 or 20 years (it is significant).

    DTC Could Be an Amazing Transformation

    There are two things that stand out to me. One is every major press article around traditional commerce tends to be negative. Not all the time, but there’s so much angst around what’s happening in retail overall. A lot of it is deserved, but there are a lot of interesting things happening in traditional retail. The second one is the DTC categories that are super hot, the four or five super hot categories, get 90 percent of the coverage and press. What we’re seeing and we have people coming in offices all day doing DTC and there’s just an amazing amount of ingenuity, invention, and innovation happening in different categories.

    I think again it’s one of these things you’re going to wake up 5, 7, 10, or 15 years from now and say, wow, this was like a really amazing transformation. It’s going to be for the reasons that these companies all talk to their consumers all the time. The amount of product innovation that’s happening is truly tremendous. If you take the Beauty category or any category and you dig into all of the DTC brands and micro categories within, if you went to a Procter & Gamble or Unilever and look at all of their products, each one of their products has multiple DTC companies trying to innovate that space.

    I think you’ll end up seeing the recreation of really large consolidated companies. It may not happen for years, but I think it will happen. The reason is not because they were cheaper than what happens in the Unilever Procter & Gamble it’s because the product innovation is hard. Having spent so much time now with DTC companies, the amount of product innovation that happens at that those companies with direct consumer interactions seems to me to be deeper and faster than it is at most other traditional companies.