All is fair in the game of ecommerce—even working with a potential competitor.
It’s why an increasing number of direct-to-consumer brands are using Target to test a retail strategy—and why the retailer is open to it. As both try to compete with Amazon’s ever-increasing dominance, it’s one way these companies get to fight the ecommerce giant. Direct-to-consumer companies like Quip, Harry’s and Native have joined Target to see if retail works for them.
“Everyone is out for themselves,” said Bruce Winder, a retail analyst. “Both sides will use each other a bit in the short run. Target gets a new credible brand to sell and the brands get to learn whether they can appeal to a different market [and] they get incremental revenue.”
The latest two brands to join the Target family include Quip, an electric toothbrush company and Native, a natural deodorant upstart. Native joined in September 2018 and according to Moiz Ali, Native CEO, the coconut and vanilla scented deodorant is now the No. 1 deodorant item sold at Target.
Ali said the partnership works because the two brands share the “same ethos and customer base,” and Target lets Native keep a lot of its branding—such as a special end-cap installation where Native is written vertically versus horizontally. (An end-cap display is when an aisle showcases a single product or brand.) Ali said the two companies share data and ideas with each other, but wouldn’t share more nor any sales data, other than revealing that Target buys Native products at wholesale.
According to a Gartner L2’s Big Box U.S. 2018 report, Target experienced mores sales growth than Walmart in 2018. But Bill Duffy, a senior principal at Gartner, said while Target posted 5.1 percent growth in its Q3 earnings report and Walmart only posted 3.4 percent growth, Walmart’s ecommerce business is still larger than Target’s. Target does have one thing Walmart doesn’t: 3.4 million followers on Instagram compared to Walmart’s 1.5 million—which makes a difference, at least for Quip.
“The huge thing that we see every day [is] the amount of mentions that we get from people in-store through Instagram and Instagram stories and social media as a whole who are either Quip members who are very excited to see the brand in a store that they love or of course, new people who are seeing our brand for the first time,” said Simon Enever, CEO and co-founder of Quip. “[It’s] obviously a huge reason why brands like us are excited about working with partners like Target, who are typically opening up your brand to a whole new audience at a large scale.”
The company joined Target in October 2018 and like Native, also had an end-cap experience in the oral care aisle in which Target let Quip control the customer experience.
“For Target specifically, I think it’s that balance of scale [and] maintaining that brand equity as it were,” Enever said. “We have essentially free rein to tell whatever story or visualize Quip however we want. It’s a huge opportunity and something that made a lot of sense and really attracted us to this option.”
As part of the relationship, Enever said it gets data from Target such as how many people are buying Quip, which stores are selling it and how many Quip products they’re selling. Quip, which has a subscription plan as part of its toothbrush program, also has a unique code for Target customers who choose to join, letting the Quip team see how many people are actually signing up after buying it in-store. (Native also has a subscription aspect as part of its business but has chosen not to implement it—yet—in Target stores.)
Harry’s, the men’s shaving company (which recently expanded into women’s shaving products), first came to Target in 2016, after seeing an overlap between the two customer bases. For Harry’s, a big part of coming to Target was to still make the customer feel like they’re in a Target store but bringing the brand to life in the aisle.
“The way that we see this is if there’s a Harry’s guest that shops at Harrys.com and they shop at Target [then] they need us to be there at this moment,” said Lee Lenox, senior director of sales at Harry’s. “I think our goal as well is to introduce guys who may not know about Harry’s yet to the brand and the partnership enables us to do that.”
Lenox declined to share any sales or revenue numbers of Harry’s products in Target stores but he said the two share customer insights to convert new customers into repeat ones.
A Target spokesperson said each of these relationships vary, with some brands getting more of an in-store marketing treatment, like Harry’s. They also shared that the relationship between Target and the direct-to-consumer brands is “no different” than other products in the store, and buyers are always updating the brand on what’s working and what’s not, and tweaking along the way.
“When we’re bringing in these brands, we want to ensure that the brands know at the upfront that we want to embrace their brand as they are,” the Target spokesperson said.
Winder said this is why these brands go with Target first; the retailer is “gentler” with the brand. But, while many of these brands are in Target and plan on staying there for some time, Winder said both companies will “use each other for a bit” and then leave.
“Target wants to keep it fresh too,” Windersaid. “Unless it becomes an evergreen brand, Target will change up the brands every two to three years.”
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