The Modern Retail Podcast

When people go shopping for mattresses, according to Resident co-founder Eric Hutchinson, they often know more or less what kind they're after."The person who wants a memory foam mattress opts into that category very quickly," Hutchinson said on the Modern Retail Podcast. "They say: 'I am looking for a memory foam mattress,' so they're doing the comparative shopping versus other memory foam brands."In other words, people don't go mattress shopping as much as they go "memory foam" or "traditional" mattress shopping, right out of the gate. "Once we understood that, the notion that we would have a portfolio of brands was pretty clear to us."That's why Resident, a DTC holding company formed last year, has four mattress brands to its name, giving it the ability to meet consumers even after they've written off certain mattress categories. The company is "right at the point of break even profitability," Hutchinson said, and it's expanding to other parts of the home furnishing shopper's list."The idea is to have products that resonate with the consumer across the entire furnishing life cycle of a home," Hutchinson said.Obviously, the coronavirus pandemic poses problems for any consumer business's plans. "Uncertainty is the most difficult thing to manage to," Hutchinson said. But he added that although retail revenue plummeted "almost overnight," the DTC side of the business is strong."Right now consumers are online, so we pivoted our business and really have been able to make up the ground that we lost to the retail," Hutchinson said. He talked about the "aspirational" vibe of new DTC companies' brick-and-mortar stores, surveying customers and what digitally-native really means in his book.

Much has been written about the Chinese consumer that shops abroad in stores. But there is a growing movement among customers in China that, through livestreaming apps like ShopShops, are shopping at stores outside China, just through their phones.ShopShops founder Liyia Wu explained the experience from the customer's perspective: "Open up your phone, and with a click of a button you can be [on] any street, anywhere, opening the doors of stores that are interesting."The app allows viewers to watch hosts -- experienced salespeople or fashion influencers -- as they display clothes and accessories, QVC-style, for several hours. Customers can buy what they see and interact with the host and other shoppers via a chat function. ShopShops then makes a commission on purchases.The four-year-old company, based in both New York and Beijing, also completes the last leg of delivery within China. "Everything is shipped to us in bulk. We help to facilitate that last mile," Wu said.In the future, Wu hopes to expand ShopShops to hosting livestreams in other languages and on social media platforms rather than just the app itself.

Shark Tank investor and co-founder of RSE Ventures Matt Higgins thinks a change is coming to the DTC playbook."I think it's amazing that you can come along and challenge taboo thinking around ED, or you can go ahead and create an entirely new cereal brand, launch it right away and get scale. That's not going away," Higgins said on the Modern Retail Podcast.What is going away, he added, is the idea that digitally-native companies can stick solely to the online world and survive. "That part is not true, but it's kind of obvious, looking back," Higgins said. "You're going to go where the customer is."Higgins talked about his prescription for Casper, Harvard Business School's week-long course on the DTC model and how it's time for a brand affinity metric.

When it comes to financial technology, China has Silicon Valley beat. WeChat is a big part of that.What started as a messaging app in 2011 is now a mobile payments giant. "People use it for everything. For utilities, for gaming, obviously to communicate with their family and friends, and to do business," said Yiren Lu, a software engineer (at Google) and a writer who covers WeChat and Chinese technology.WeChat users can transfer money to their friends. But they can also pay for groceries, look through menus or place an order at a tea shop without standing in line or handling cash -- or a credit card."There are hundreds of millions of Chinese people who were unbanked, who did not have bank accounts. It was a very cash-heavy society," Lu said. WeChat and its main competitor, Alibaba's AliPay, "basically became banks," Lu added.She chalks WeChat's success -- some 34% of China's data traffic goes through the Tencent-owned app -- to this quickly solved pain point, but also to the country's rejection of American tech companies.In 2009, "China basically kicked out all of the U.S. tech companies," Lu said. China's "Great Firewall" blocked Facebook, Google, Twitter and Vimeo that year.If China offers a rapidly growing middle class -- one with less "antipathy towards the idea of consumerism," as Lu put it -- it is Chinese companies that are getting to it first.

The direct-to-consumer model didn't exist when Ariane Goldman started her first clothing brand in the mid-2000s. But by the time her second company, Hatch, launched in 2011, "the only way to really start the business was DTC," Goldman said on the Modern Retail Podcast.Hatch makes clothes to be worn at all stages of pregnancy -- and before and after too -- sold both online at stores in New York and Los Angeles."The genesis was really what didn't exist out there. I was pregnant with my first daughter and looking for something to make me feel better," Goldman said. "Why wasn't it there? If I needed it, there must be millions of other women that need it too."The company landed $5 million in Series A funding last year, but Goldman is wary of the inordinate amounts of cash being stuffed into the DTC market."Why are these great ideas all of a sudden being beaten up by inflation and numbers and greed?" she asked. "Sometimes I find myself wondering what it's all worth if you're not actually building something."Goldman talked about the advantages (and inevitability) of going DTC, what she learned from her first clothing brand and Hatch's expansion into beauty products.

Studs co-founder and CEO Anna Harman recently got a second piercing in her ears. One place she looked at would have charged her $500. The other, which she went for, was a tattoo parlor."And while the piercing experience was great -- they pierce with a needle, it was healthy and safe -- the overall environment was really not suited to me. I felt really personally out of place there," Harman said on the Modern Retail Podcast.She reached out to Lisa Bubbers, who would go on to co-found Studs -- a store that pierces your ears and sells you jewelry as well -- with her last year. "I said to Lisa 'wow, it feels like there's a real opportunity here to reinvent this experience end-to-end,'" Harman recalled. "We really thought the opportunity was to combine healthy and safe needle piercing with really accessibly-priced, fun jewelry in an environment that the customer was excited to spend time in."Studs has a flagship store in Soho and is taking advantage of trends in the world of brick-and-mortar. "How do you physically expand in a way that's not incredibly capital intensive?" Harman said. "You will likely see Studs do things like shop-in-shops and kiosks."Harman joined the Modern Retail Podcast to discuss the dreaded piercing gun, and what she's learning from both the direct-to-consumer zeitgeist and her time at a hedge fund.

Coulter Lewis got the idea for Sunday when he saw the state of his local Home Depot's lawn care aisle."You can smell it before you get there," Lewis said on the Modern Retail Podcast. "It's pallets stacked high with bags of chemical fertilizer, covered in caution labels."That was in 2017, the year before he launched the company out of Boulder, Colorado. First, Sunday asks customers to ship it a bit of soil from their property. Then it analyzes that alongside pre-existing soil and weather data before sending a regimen of pesticide-free products for you to apply via pouches that attach to your hose.Customers pay on a subscription basis annually, receiving four boxes a year. Plot by plot, the company is hoping to eat big retailers' lunch; the outdoor lawn and garden sector brings in $13 billion in retail sales for Home Depot and Lowe's, Lewis said, and the grand total is more than thrice that)."We're really not about coastal millennials. That's not our focus at all," Lewis said. "We're appealing to a more mass market."

For the Body Shop, it's about selling where the customers are -- even if that means it's not necessarily on your own sites or in your stores."Stores for us are the bread and butter of the business, the biggest portion of the business, and will always be," U.S. general manager, Andrea Blieden said on the Modern Retail Podcast. At the same time, being on Amazon has been a big boon to the business, mostly because that's where a significant part of new customers are. "I just don't think that you're moving Amazon shoppers off Amazon that much," Blieden said. "If you want to capitalize on the fact that over 30% of Americans are using Amazon, you gotta go there."Blieden talked about the changes brought about by L'Oréal's sale of the company to Natura & Co. in 2017, The Body Shop's investment in Amazon and what it's like working at a company that speaks out on social issues.

Lo & Sons launched as a direct-to-consumer brand in 2010. That's practically prehistoric as far as the recent crop of DTC companies is concerned."We were kind of an accidental DTC company," co-founder of the brand, which makes high-end handbags, Derek Lo said on the Modern Retail Podcast. "We started before the term even existed."The idea to start a family business came from Derek Lo's mother, Helen Lo, who despite her frequent travels couldn't find a bag that was easy on her back. She started a blog about light-weight bags -- Derek's brother Jan helped set it up on Tumblr -- before convincing her sons to quit their jobs and give their own company a shot.The company became profitable in 2013, according to Lo, and it did so while eschewing the typical playbook of so many DTC brands that came after -- outside investment, millennial-focused subway ads and the inevitable expansion into brick-and-mortar stores.The company's independence has helped Lo & Sons survive, in Lo's estimation. "We want to be a brand like Patagonia that's going to be around for decades, that's making a positive impact on the world," Lo said.Lo talked about the company's origins, marketing strategy and product innovations -- like a separate compartment for shoes.

Iris Nova founder Zak Normandin is betting on a suite of "no or low" sugar drinks -- sparkling teas, seltzers and lemon juices -- and on a new way to sell them."Every brand has a phone number," Normandin explained on the Modern Retail Podcast. "When you want to place an order for a product you just pull out your phone, you text the brand directly."His lemonade brand, Dirty Lemon, has sold more than 2 million bottles since its founding in 2015, and per Forbes, 90% of those sales happened via text. And Iris Nova now is growing more, thanks to a cash injection of $15 million from Coca-Cola -- to whom, he said, he's open to selling to. "I think that that's probably the best path forward for us unless we can get to a place where, very quickly, where the company is profitable," Normandin said.Normandin called his research into the Asian market "inspiration" for the text message payment system. "I found that in Asia it was probably the most exciting, just the speed at which the market is moving is much different than here in the States," Normandin said.He talked about the fading clout of influencers, the tough path forward for direct-to-consumer companies and the value of text robots (even if none has passed the Turing test) on this week's episode.