Shopify COO Says DTC Is “No Longer A Fad” - 2/17/20

From the Simplr studios in San Francisco, this is your daily briefing.  

Introduction

This is Today in Five with Madison Huffman, for today, Monday, February 17th. Here are today’s headlines in digital disruption.

DTC has been a rapidly growing trend in the age of online shopping. According to Shopify’s COO, direct-to-consumer retail is more than just a fad, it’s here to stay.  

First, here are the latest headlines.

Stitch Fix Shop Your Looks Feature Out of Beta

The new Stitch Fix Shop Your Looks feature is out of beta and available to all women’s and men’s customers in the U.S. The company’s CEO announced in October that the company was testing the algorithm-led sub-service, which allows customers to choose among items that would go well with pieces they already own, rather than leaving that choice up to their stylist. By December, she reported the beta test had been expanded to about a third of its female clientele and would extend to men. She also said that those using the feature interacted with the company multiple times and that it boosted sales. The new tech introduces a level of traditional e-commerce that departs from the company’s curated boxes.  

L Brands Close to Deal to Sell Victoria's Secret

L Brands is nearing a deal to sell its Victoria’s Secret brand to private equity firm, Sycamore Partners, in a deal that could be announced as soon as this week, according to people familiar with the matter. For Sycamore, a deal to buy Victoria’s Secret would be a bet on a dominant player in the large intimate apparel industry. Bras are a $7.2 billion dollar category, and Victoria’s Secret, which also sells, pajamas, perfumes, and other accessories, had roughly $7.4 billion dollars in sales last year. Sycamore would also be betting it could reinvigorate the lingerie brand after it has faced several setbacks and losing share to competitors like ThirdLove, who prioritize comfortable styles.  

Walmart Shutting Down JetBlack

Walmart is shutting down its JetBlack personal-shopping service. Most of its 350 employees will be laid off after the retailer failed to find investors for the unprofitable operation. The company will stop delivery services on February 21st, according to a Walmart spokesman. Last year, Walmart worked to spin-off the unit, which had less than a thousand customers as of last year. The retailer discussed an investment with several potential partners, but people familiar with the matter said those talks have ended. The news comes at a time when Walmart is working to stem its losses from its smaller e-commerce units, selling acquired brands or cutting staff in those businesses.

Shopify COO Says DTC Is “No Longer A Fad”

DTC retail has emerged as a key strategy in the age of online shopping, with big brand names like Nike and Tesla Motors taking advantage of the trend. Now one of the top e-commerce platforms is saying their performance speaks to a broader shift in digital commerce. According to Shopify’s COO, the company’s holiday quarter performance is indicative of emerging retail trends. The e-commerce platform recorded almost $3 billion dollars of global sales over the Black Friday to Cyber Monday period last November, a 61 percent increase from the year prior. In an interview, the COO said, “That is the example where direct-to-consumer is no longer a fad...It is now a steady-state, and it’s being powered by Shopify. We’re at the center of that.” 

Shopify’s holiday numbers are part of a better-than-expected fourth-quarter earnings report. The company grew its top line by 47 percent year over year to $505 million dollars in the December quarter, crushing analyst estimates. The COO said, “This is the story of independent brands and entrepreneurs doing really, really well, and the consumers are voting with their wallets...I think Shopify is powering the entrepreneurship movement.”   

Closing

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Thanks for listening to this latest episode of Today In Five. We’ll see you tomorrow.