Dollar Shave Club, Jet.com and the Future of Retail & CPG
- Jet.com acquired by Walmart for $3.3B.
- Dollar Shave Club acquired by Unilever for $1B.
What do these acquisitions tell us about the future of Retail and Consumer Goods?
A couple of different themes seem to be at play, which have significant ramifications for both Retailers and Brands...
Let's start with brands:
US brands should consider themselves lucky - British consumers wouldn't care if 94% of brands disappeared!
Brands will of course have to be more authentic, relevant, informative and fun for customers to engage with. But more importantly, brands will have to maintain a direct channel of communication with their most loyal fans, and through them, to a wider audience.
Social and Mobile will be important media to maintain that personal touch. Ultimately, as many CPG startups are proving, the best value may be had in going direct to consumer:
But what about Retail?
Remember when Amazon expanded into the "Everything Store" in 2000, it was easy to dismiss them as a small fish in the retail ocean. And now the giants tremble when they hear of Amazon.
Similarly, Mobile is right now an easy to dismiss side item in most retailers' Digital / online / e-commerce strategies. Most of the large US retailers' mobile apps still leave something to be desired in terms of ease of use or giving a great Mobile experience, leave alone an optimized omni-channel experience to drive further sales across all channels.
This, despite most millennials being Mobile-only. It is crucial for retailers to win their loyalty while there is still a chance, or pay the price as they did with Amazon. Together with Mobile, a rethinking of distribution channels is needed to make ordering as easy and natural as possible:
Interesting startups to watch and learn from, in the CPG space:
- Vertically integrated players like Warby Parker, which is shaking up the $34B vision care industry, by offering eyeglasses at $95 a pair:
- Honest Company, built on family-friendly ingredients and transparency which sells both direct-to-consumer and through retail channels.
- Subscription services like Birchbox, which lets users try beauty product samples for $10/month.
As the recent acquisitions of Dollar Shave Club and Jet.com prove, it is important to get your e-commerce, Mobile and customer strategy right early, or pay a hefty price tag later...
Further reading:
- CB Insights Presentation: The Changing Landscape Of CPG
- Walmart and the Multichannel Trap by Stratechery
- Originals book by Adam Grant goes into great detail on Warby Parker
I'd love to hear your thoughts below.
Connect with me on LinkedIn or Twitter to keep in touch...
Security, Cloud, Data & AI/ML Product Leader
7yJust like retailers rushed to create their own websites for e-commerce after the internet boom in late 90s, this decade seems to be the turn of subscription business. I expect more M&A activity from retailers that do not offer this type of service. One thing's for sure. Large companies, typically, are willing to experiment with technology and products, but never with a new business model. Probably that's why Unilever and Walmart paid $1B+ for subscription businesses that were way smaller than any other retailer selling similar items. As you noted, Amazon is multi-steps ahead of Walmart and other brick-and-mortar stores. It has new channels for buying products that Walmart will not be able to catch up with anytime soon!