If you’re going directly to the consumer, you might as well have a bunch of stuff to bring to them. The recent move by Casper – the mattress folks who are among the pioneers in direct-to-consumer marketing -layering on a lighting product is only the latest example of how these companies are expanding their product offerings off their original bases.
These DTC sellers – Warby Parker is the poster child for the model of selling direct to shoppers in a product category just ripe for disruption – are finding that moving into allied merchandise is a good way to address the limitations of their original business plans. Specifically:
- Many direct sellers, be it in the mattress, home textiles or housewares segments, got off to fast starts, thanks to pent-up demand from shoppers who wanted a different way to buy products as well as the excitement created by the disruption process itself. But many have seen their business start to plateau as they max out on consumers willing to buy through this process.
- By specializing in one type of product or one product category, direct sellers were painting themselves into a (mail) box where once they made a sale there was no reason for a consumer to come back unless they wanted more of the same. All that blood, sweat and tears – not to mention SEO money – spent finding that customer is then wasted without anything else to sell them.
- Many of the DTC players, following Warby’s business model, have started opening stores, or at the very least selling their products through existing third parties, namely the traditional retailers they were supposed to be disrupting in the first place. The concept of more things to sell turns out to be just as valid in-store as it is online.
Let’s cut to the chase: direct sellers just want to make more money, increasing the value of their companies so they can go public, flip it or otherwise cash out. It’s the endgame of virtually every tech-based start-up today.
The DTC Expanding Universe
So, while Warby has basically remained true to its product roots – though it does sell some books in its stores now – home players have more closely followed the Casper playbook in expanding their offerings.
Casper began life with one product – a mattress – and four SKUs – twin, full, queen and king sizes. Then came pillows followed by sheets and bed coverings. Followed by more mattresses, bed frames for those mattresses, dog beds and now even a nightstand, which sounds a lot like a piece of furniture. Then earlier this year it introduced the Glow Light, a high-tech night light controlled by an app on your phone and containing, of all things, a built-in gyroscope that we suppose is handy if you were to suddenly find yourself on Apollo 13. Prices start at $89.
Another mattress seller is going a different route, expanding into rugs. Nectar, which many call the fastest growing online seller in mattresses with its DreamCloud brand, this past December introduced Wovenly, a separate brand of rugs and floor coverings. Curiously the company does not cross-merchandise the two brands, an odd choice given the home furnishings synergy it would be expected to capitalize on.
Other direct sellers are keeping it in the branded family. Look at Floyd, the online furniture seller that also started with a single product, in this case a table leg. Not an actual table, but just a set of legs that you could attach to any surface, creating a table. Floyd has since moved on and now offers the table itself, as well as a sofa and a bed, all ready to be assembled by the customer. Think of it as a new age IKEA.
Over on the soft home side, Parachute has been perhaps the most aggressive in expanding beyond its original sheet and bed coverings base. Bedding now features no less than 13 individual categories, including baby. There are now also towels, home décor items like decorative pillows, the seemingly required dog bed and in a tit-for-tat moment with the mattress sellers, its own mattress, dubbed “The Mattress” and stickering out at $1,899 in queen size. Candles, tabletop, laundry items and even a side table – yes, there’s that furniture again – complete the Parachute picture.
On and On…Online
Even just-started players are getting into the act, albeit modestly. Clare and Backdrop, two direct sellers of paint, each offer the accessories – brushes, etc. – needed to get the job done. Yearandday, which comes out of the dinnerware segment, also sells flatware and glasses. And Great Jones, in the cookware category, has a few trinkets like magnets and a tote bag.
If many of these companies are starting to resemble more conventional retailers who offer broader assortments and even have their own stores, it’s the way this direct segment is playing out. One consulting company estimated some $3 billion of venture capital has been invested in these businesses since 2012 and all those VCs want their money back sooner rather than later.
In the meantime, the expansions, line extensions and quests to add on more continue unabated. All with the hope that this leads … well, directly, to success.
Warren Shoulberg is a business journalist who can also be found at his own blog, Stupidbusiness.com. He didn’t know he needed a lamp with a gyroscope.