DTC Dispatch #020

🥺 Beyoncé's TikTok Slight-of-Hand is Giving Trust Issues

🌷 Spring is here to stay!

This week in DTC Dispatch:

💄 How E.l.f. Cosmetics drove a 125% increase in monthly active app users

🛍️ Who’s the aspirational luxury consumer? Many different people

💇 Beyoncé's new haircare line and why you can’t trust anything


How E.l.f. Cosmetics drove a 125% increase in monthly active app users

At the heart of E.l.f Cosmetics’ e-commerce strategy is its popular loyalty program, Beauty Squad. But even a strong strategy needs to be updated occasionally. The Beauty Squad has over 4.5 million members, with enrollment growing 30% year-over-year. Loyalty members drive almost 80% of the brand’s sales on ElfCosmetics.com and 95% of the brand’s app transactions. But as E.l.f. Cosmetics evolves, streamlining its efforts and developments is a focus.

The loyalty program has gone through various iterations since its introduction in 2016. The program is now in what Ekta Chopra, chief digital officer at E.l.f Beauty, called phase five. In this phase, the brand is taking its consumer insights about where and how customers shop, trying to gamify the experience, and offering a more holistic shopping journey that incorporates multiple touch points.

After implementing the loyalty program, E.l.f Cosmetics saw a significant increase in app users, loyalty engagement, and conversion rates. Between March 2023 and October 2023, the number of monthly active app users rose by 125% compared to the previous year. Additionally, there was a 76% increase in average monthly loyalty engagement and a 77% increase in average conversion rates for automated communications.

Our take: Brands are well aware that their loyal customers play a significant role in driving sales and ensuring overall success. Hence, loyalty programs have become crucial in enticing consumers to not only join but also remain engaged through consistent promotions and enticing benefits. E.l.f. Cosmetics, in particular, has excelled in this aspect by actively studying and understanding the preferences of their loyalty program members, subsequently making necessary improvements. As a result, the brand has witnessed an impressive 125% year-over-year growth in the number of monthly active app users, a testament to their commitment to understanding and catering to their customers' shopping preferences.

Why subscription giftbox DTC FabFitFun is buying PupBox from Petco

FabFitFun is a brand that has been selling subscription gift boxes for women for 12 years. They offer products related to beauty, fashion, fitness, and wellness. Now, they are expanding their target audience to include a cute and hairy member of the household who is not a child or spouse.

The company has acquired PupBox, a monthly subscription box for dogs, from Petco, for a price that FabFitFun declined to disclose.

Daniel Broukhim, co-CEO and co-founder of FabFitFun, told Retail Brew that PupBox will continue to “maintain its own identity and character.” Asked if it might bundle the two subscriptions together in the future for a cheaper price than getting them individually, he said such details are TBD.

“It’s probably something we’ll look at,” Broukhim replied. “There’s a good chance that there’s going to be some sort of bundling like that.”

According to FabFitFun, 61% of its subscribers have dogs, well over the 44.6% of Americans overall who do, per American Veterinary Medical Association data.

Our take: Subscription gift boxes have gained immense popularity among consumers who relish the opportunity to explore and experience a diverse range of products that they might not typically buy individually. FabFitFun, being astute in their market analysis, discovered that a staggering 61% of their loyal subscribers are proud dog owners. Recognizing this valuable insight, they made a shrewd business decision by introducing PupBox, a subscription box tailored specifically for our furry friends. Moreover, the forward-thinking minds at FabFitFun are contemplating the possibility of offering a bundled package that combines both their flagship subscription box and the PupBox, thereby providing their customers with an even more enticing deal at a reduced cost. Undoubtedly, this strategic move exemplifies the brand's acumen and will undoubtedly contribute to their continued success in the market.

Walmart adds oral care brands targeting Gen Z and millennial shoppers

Walmart expands Zimba and Plus Ultra’s distribution nationally.

Plus Ultra is focusing on sustainability in its marketing. They are bringing two products to Walmart: electric toothbrush replacement heads made from recycled plastic that work with Philips Sonicare and Oral-B, and teeth whitening strips in different flavors like coconut and mint. Zimba will also offer teeth whitening kits at Walmart, which include the strips, an LED light, and a teeth whitening pen.

“We are excited by the launch of both brands into Walmart, which marks a very significant step,” Christina Ramirez, founder of Plus Ultra and president of both brands, said in a statement. “Younger consumers especially, Millennials and Gen Z, are seeking new affordable, sustainable lifestyle products to become part of their everyday personal care routines, and Plus Ultra and Zimba resonate with shoppers who care about product efficacy and the planet.”  

Our take: While oral care products like toothbrushes or whitening strips might not initially strike as particularly alluring, Walmart is capitalizing on a strategic business move by incorporating these highly sought-after brands into their stores. These brands have garnered immense attention and achieved viral status on various social media platforms, such as TikTok, over the past few years, and it is almost certain that their products will fly off the shelves. The younger generations, namely Gen Z and Millennials, will undoubtedly be thrilled to learn about the expansion of these products into Walmart's inventory, eagerly continuing their previous purchasing patterns.

Who’s the aspirational luxury consumer? Many different people

There is no size fits all when it comes to the aspirational luxury consumer.

A cluster of spenders who both helped fuel the luxury boom post-pandemic but then contributed to its stall as they cut back spending, resulting in lower sales growth for major brands, the aspirational luxury consumer is many different people.

A study presented by McKinsey & Company at Zalando's "Changemakers in Luxury Fashion" conference showed that both a middle-aged man from Switzerland who buys heritage designer goods and a young woman from Germany who likes up-and-coming designer names and British luxury brands are important customers for Zalando. They both spend 30,000 euros a year on the platform.

She would define both as aspirational luxury consumers and said the cohort has been consistently growing year-over-year for the German e-commerce site.

The McKinsey study tried to unpack the complexity and differences within that cohort. It noted that different brands the consultancy polled offered, themselves, a broad set of perspectives and descriptions as to who the aspirational luxury consumer is.

Contrary to the common view, McKinsey said, aspirational luxury consumers are not all under 30 or living outside Europe or the U.S.

The research focused on customers who buy at least one luxury item every year. These customers spend an average of 10,000 euros annually on luxury goods like clothes, beauty products, leather goods, jewelry, watches, and accessories.

Our take: The definition of a luxury consumer can be extremely varied and multifaceted, encompassing a plethora of factors that contribute to their identification. While some individuals may choose to define this person solely based on their purchasing history, others may take into account their lifestyle choices and the exquisite garments they adorn. In an effort to delve deeper into this intricate realm, McKinsey & Company conducted extensive research, utilizing transaction data to meticulously define the elusive 'aspirational' luxury consumer. It is important to note that for each distinct brand, their target luxury consumer may differ significantly, as they cater to diverse cohorts with unique preferences and aspirations. Ultimately, it is the culmination of one's purchasing history that truly defines all consumers, placing them into specific categorizations or "buckets" within the realm of luxury.


Beyoncé's new haircare line and why you can’t trust anything

Twitter user Ashwinn, a seasoned professional in the field of consumer brands and marketing insights, delves deep into his analysis of Beyoncé's highly anticipated haircare line and the ingenious marketing strategy employed to generate buzz around the brand. In a turn of events, a series of captivating videos surfaced on social media, seemingly originating from an anonymous account that bore an uncanny resemblance to a devoted Beyonce fan page. These videos, featuring an enthusiastic fan discussing an influencer trip organized to promote the clandestine launch of haircare line, quickly garnered an astonishing 1.5 million views on the popular platform TikTok.

However, it is revealed that this entire spectacle was nothing more than an elaborate marketing ploy orchestrated by none other than the official brand account itself. The anonymous account, as it turns out, was merely a clever disguise, concealing the true identity of the brand behind the scenes. With the unveiling of the official Sacred launch video, the curtain is lifted, and the world is introduced to the captivating world of Beyoncé's groundbreaking haircare line.

Our take: With the market being incredibly saturated with numerous brands vying for attention, it has become imperative for companies to devise innovative and distinctive marketing strategies to effectively connect with potential consumers. Remarkably, the mere existence of a video dissecting this particular marketing approach has inadvertently bestowed Beyoncé's company with an invaluable gift of free media exposure, igniting conversations among people far and wide. Regardless of the effectiveness of the marketing ploy, it undeniably succeeded in catapulting the brand's visibility to unprecedented heights, ultimately achieving the ultimate goal of widespread promotion.

Thanks for reading this week’s edition of the DTC Dispatch.