Why Billie, Safely, Lola and Other DTC Brands Love Walmart

Direct-to-consumer razor brand Harry’s and big-box retailer Target generated a lot of buzz in 2016 when they announced a partnership intended to marry the best of DTC with physical retail. Shortly after, according to research from analytics firm Numerator, Harry’s sales tripled as big-name competitor Gillette saw a “substantial decline in share” at Target. Today, Harry’s products can be found at a range of traditional retailers, including Bed Bath & Beyond, CVS and Walmart. In fact, while Target had one of the most noteworthy early deals, Walmart has proven to have a hearty appetite for DTC brands itself. Since Harry’s expanded to America’s largest retailer in 2018, it has been joined by a flurry of additional DTC brands, including feminine care brand Lola, skin care brand Bubble, health care brand Ro, razor brand Billie and cleaning brand Safely. And it's kind of a no-brainer why. For both parties, the potential rewards are sizable, while the risks are minimal. Scale The most obvious reason DTC brands are flocking to Walmart is size: With 4,700 U.S. stores and more than 140 million weekly shoppers, a Walmart placement means big exposure for a small brand. “A retail partner like Walmart really puts you in a great place in terms of additional store space and broad access to a number of consumers that you wouldn't necessarily have access to prior,” said Chelsea Gross, director analyst at research firm Gartner. What’s more, Zach Weinberg, vp of ecommerce at performance marketing network Reprise Digital, pointed to the rising cost of acquisition on social channels such as Facebook and Instagram, which have historically been key for DTC brands to scale online. “If you want to continue to demonstrate top-line revenue growth as a DTC, moving out into wholesale is one of the key next steps that you need to demonstrate,” he said. “It provides a whole new stream of revenue with physical retail customers that may end up being a lower cost of acquisition.” Case in point: Mike Forbes, CEO of Safely, said the Walmart partnership allows the year-old cleaning upstart to “dramatically increase our reach across America.” In its first month on Walmart shelves, Safely "saw its DTC grow 110% month over month," along with a complementary increase in ecommerce transactions, he said. According to a Safely spokesperson, the brand has seen double-digit increases week over week. In addition, Forbes pointed to brick-and-mortar-only advantages like a scent experience in 1,700 stores, which allows shoppers to “experience our luxurious premium scent before purchasing.” Now, Safely plans to add more products to its Walmart lineup. Meanwhile, Walmart no longer has to worry about these DTC brands chipping away at its sales. “The partnership helps fortify retailers’ distribution strategies, so that there aren't a number of exclusive products out there in the ecommerce environment that they don't have distribution with,” Gross added. (Walmart did not respond to Adweek's request for comment on this story.) Risk vs. reward Perhaps the greatest advantage—at least according to Weinberg—is the possibility of an exit. “Walmart has an appetite to acquire these brands. We have seen [that] more so than some of the other big-box retailers,” he said. That, of course, includes its $3 billion acquisition of ecommerce platform Jet.com in 2016 and the trio of startups it snapped up in 2017: Bonobos, Modcloth and Moosejaw. In addition to new potential customers and data, acquisitions also bring in talent—most notably, Jet.com’s Marc Lore, who headed up Walmart’s U.S. ecommerce business from 2016 to 2021. “A massive organization like Walmart probably fell a little bit on its heels as Amazon, over the last decade, has really encroached on its market share,” Weinberg said. “It was certainly looking for ways to continue to differentiate itself, and DTC brands was one way.” But, like any relationship, it’s not devoid of challenges, which include the pressure on DTC brands to demonstrate their value. Per Gross, the biggest risk to both parties is that the DTC brand is unable to meet the demands of higher volume. But Walmart has the advantage of cutting ties and moving on. Beyond ironing out supply chain kinks, Weinberg said, the key to DTC success at Walmart goes back to classic branding and standing out on the shelf. “That [visibility is enhanced] through digital means to make consumers aware that their brands are now available at Walmart,” he added.

Ecommerce News

DTC Brands Flock to Walmart and Find a Mutually Beneficial Relationship

Smaller brands get exposure while the big-box retailer gets more growth in a category

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