EP 50: Rippling Ripple Effect

It’s our 50th episode!! But with this, there comes sad news. There will be no 🎂or 🥃 during it.

In this Golden Jubilee of an episode:

  • Subscription disruptors disrupted
  • Luxury finally caves
  • Children’s Place wins the toy
  • Weird News of the Week

Subscription Disruptors Disrupted

New subscription services are trying to be more granular and niche — to corner hot markets with their wares.

Most existing subscription services fall into one of two categories:

  • Curation: This type of subscription service introduces shoppers to new products, such as samples of new-to-market cosmetics. Examples include Birchbox in beauty and Stitch Fix in apparel.
  • Replenishment: This kind of service offers replenishment deliveries of regularly used, routine products such as men’s shaving items. Examples include Dollar Shave Club and Amazon Subscribe & Save.

A more niche third segment consists of services that give subscribers access to benefits such as deep discounts. Examples of firms offering this type of service include NatureBox and JustFab.

We are now seeing some US subscription commerce disruptors face disruption themselves. Two of the biggest subscription companies — meal-kits firm Blue Apron and beauty-box service Birchbox — appear to be struggling. Blue Apron has posted declining revenues and deepening losses, and website visitors to privately-owned Birchbox appear to be shrinking and the company has spent much of the past year looking for a buyer.

Two main challenges facing them:

  • High customer acquisition costs
  • Increased competition

In the first quarter of 2018, Blue Apron’s revenues fell by 20% year over year, accelerating from a 13% decline in the fourth quarter of 2017.

HelloFresh is fast catching up with Blue Apron. In 2017, HelloFresh reported US-only revenues of €545 million ($616 million), up fully 94% in dollar terms year over year. Based on company guidance, HelloFresh looks likely to increase its US sales by around 30%–35% this year

More: https://www.fungglobalretailtech.com/research/deep-dive-subscription-commerce-update-disruptors-face-disruption/

Luxury Finally Caves

Louis Vuitton owner LVMH has invested in online fashion search business Lyst as the world’s biggest luxury brands look to expand their presence online and capture younger shoppers.

The total investment raised was between £50m and £100m, a source familiar with the matter said.The firm’s existing investors include venture capital firms Accel, Balderton, Draper Esprit, 14W and a US hedge fund, Morton said. Bernard Arnault, the billionaire boss of LVMH, invested in a previous Lyst financing round through his family office in 2015.

Long wary that e-commerce would not sit well with their exclusive image, luxury brands are now piling into the market, chasing young consumers comfortable with buying expensive items online, and especially web-savvy buyers in China.

LVMH last year launched 24 Sevres, its own multi-brand shopping site, while Cartier owner Richemont is taking full control of rival platform Yoox Net-A-Porter.

Peers in this segment also include Farfetch, tipped for a US stock market listing this year, and Matchesfashion.com, now majority owned by private equity firm Apax.

Lyst operates as a search engine connecting shoppers to items they are seeking on multi-brand sites or fashion labels’ own e-commerce pages, taking commissions when purchases go through.

“Today 60% of our business comes from the US, and we’re planning to expand into Europe and Asia in the next 18 months,” Chris Morton, the Lyst co-founder and chief executive, said in an emailed comment.

The LVMH chief digital officer, Ian Rogers, will sit on Lyst’s board following the group’s investment.

Children’s Place Wins the Toy

There continues to be a brutal ripple effect from ToysRUs closure. But there may be a winner in all this.

Childrens Place has been in the right place at the right time it seems. Rival Gymboree went out of business last year and CP was able to snap up their business.

The children’s apparel retailer and wholesaler launched a “timely” new line of infant products, Bundles Baby Place, in February that Anderson estimates could add 2% to revenue in 2019 as Toys R Us winds down.
  • $300 million children’s apparel business, of which Carter’s accounted for $120 million
  • This year Hasbro could recapture 35% of its lost $438 million sales with Toys R Us, and Mattel could recapture 25% of its $505 million in sales

Weird News of the Week

A Pair of Adidas for a mere $12,350 USD

(sorry Adidas, didn’t mean to pick on you two episodes in a row)


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