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Discussion – 


Discussion – 


It’s hard out there for a D2C darling

direct-to-consumer brands

Not so long ago, virtually everyone was thinking within the box. From cosmetics to dog toys to underwear, there is a subscription box for almost every interest. But a slew of hits to big direct-to-consumer (D2C) brands could spell bad news for the business model as a whole. Let’s take a look, shall we?

Layoffs at Birchbox

Launched in 2010, Birchbox is one of the OG D2Cs. The beauty brand got its start shipping curated selections of cosmetic samples and offering the option to purchase full-size versions, often at a discount. And it’s been a formidable force in facial creams.

But last week, it announced it will lay off a quarter of its global staff, including 44 of the 94 in its New York office.

Part of the problem is that the company failed to raise new rounds of funding after its initial $90 million VC payday. It also struggled to bring in new customers through its advertising efforts, and then it had to contend with subscription-box competition from the likes of Sephora, Ipsy, Target, and even Allure magazine.

Casper’s IP-woes

Casper Sleep, the mattress-in-a-box startup, went public on Feb. 6 with shares listed at $14.50. This brought down its value to $468 million—a far cry from its $1.1 billion valuation. Stock prices have continued to fall, a possible investor response to other growth-focused businesses like Uber and WeWork crashing and burning.

Like these erstwhile unicorns, Casper was never able to pull in a profit, but it spent marketing money like there was no tomorrow—$114 million in the first 9 months of 2019, if you want to be precise.

To be sure, the advertisements were clever, and they were everywhere. If you somehow missed their digital presence, well, you probably didn’t go online. But that’s okay, because Casper advertised in subways, on podcasts, and on TV. There was no getting away from them.

The FTC’s just wild about (shutting down a) Harry’s (acquisition)

And then there’s the razor brand Harry’s. The FTC has sued to block Edgewell Personal Care, which owns the shaver sheik Schick, from acquiring the company for $1.4 billion.

The reasoning? According to the FTC, such an acquisition “would eliminate one of the most important competitive forces in the shaving industry.”

Although Schick and the Procter & Gamble-owned Gillette controlled the greatest portion of wet razor market share, Harry’s and Dollar Shave Club—another D2C subscription shaving service now owned by Unilever—had been disruptive enough to force the two grooming titans to lower their prices. According to the FTC, whose 5 commissioners voted unanimously on the matter, Edgewell would “short-circuit competition” and have the potential to harm consumers.

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