8 DTC brands to keep an eye on in 2024 - The Entrepreneurial Way with A.I.

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Tuesday, January 16, 2024

8 DTC brands to keep an eye on in 2024

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2023 marked a pivotal year for many DTC brands.

While overall deal count was down from the peaks of 2021, a number of brands were able to successfully stage their exits. Il Makiage and Spoiled Child parent Oddity, as well as Birkenstock filed for initial public offerings. And Mielle, Great Jones and Otherland were all acquired.

But the year also revealed challenges for a number of original DTC darlings. Allbirds, for instance, enacted layoffs, faced a C-suite shuffle and introduced a transformation plan, which included pulling back on store openings, as it works to reach profitability. Grove Collaborative also faced challenges, including its co-founder stepping down as CEO, declining sales and a shrinking customer base

A number of brands also fell into bankruptcy, including Hello Bello, Lunya and the owner of Morphe.

The original DTC playbook is changing, and young brands are finding new ways to connect and resonate with customers. As 2024 kicks off, we highlight some of the rising stars to watch in the DTC space.

1. Merit

Courtesy of Merit

 

Merit launched in January 2021 touting “minimalist, clean, luxury” products.

The makeup brand offers products including a complexion stick, bronzer, blush, mascara, and more recently eye shadow. The company was founded by Katherine Power, who also founded brands like wine company Avaline with Cameron Diaz, skin care brand Versed and media property Who What Wear.

“Merit was founded on the principle that better products have the power to simplify your morning routine,” Power said in a statement in 2022.

The brand uses Power’s philosophy of “five-minute makeup” by streamlining the products it offers.

Merit quickly expanded into wholesale, launching an exclusive partnership with Sephora one month after launching. In February 2021, the brand said it would be available in more than 500 Sephora stores across the U.S. and Canada.

The company raised $20 million in a Series A funding round led by the Growth Fund of L Catterton. There was additional participation from Marcy Venture Partners and Sonoma Brands. Merit at the time said it planned to use the fresh capital to fund its omnichannel expansion.

2. Rhode

Celebrity-backed brands have been gaining steam recently. More than half of celebrity-backed brands fall within the beauty category, and 60% of them were founded in the past six years, according to a JLL report from July.

Hailey Bieber’s Rhode beauty brand quickly grew in popularity since it was founded in 2021. 

“My journey towards healthier skin inspired me to develop products that really work, in a way that’s accessible to everyone,” Bieber said on Rhode’s website. “Rhode is dedicated to making products based in science and great formulation, simplifying many of the mysteries and complex narratives behind efficacious skincare.”

The brand received a growth score — a measure to track how fast a brand is growing, according to Charm.io — of 88.9, on a scale of 100. Charm.io looks across various social media platforms — including Instagram, LinkedIn and TikTok — to analyze likes and engagement, as well as the brand's website traffic to determine its growth score. Rhode also touts 1 million followers on its Instagram page. And as of December, the brand’s website saw a 125% year-over-year uptick in visits, according to data provided to Retail Dive from SimilarWeb.

The brand sells a variety of products, including the Peptide Glazing Fluid, Peptide Lip Treatment and Barrier Restore Cream.

While celebrity-backed brands, especially those in the beauty space, have become increasingly popular, not all have found success. Kristen Bell's CBD skin care brand Happy Dance last year shut down, and Ariana Grande bought back the assets of her beauty brand R.e.m. Beauty after the brand's parent company filed for bankruptcy.

3. True Classic

True Classic was founded on the idea of providing men with a well-fitting T-shirt at an accessible price point.

The company officially launched its first tee in 2019, but has expanded its assortment to include activewear and chino pants.

The DTC company has brought its apparel offline through pop-ups with retail platform company Leap, as well as through owned and operated stores. The brand said it plans to scale to 50 to 100 stores over the next two to four years.

Courtesy of True Classic

 

True Classic has generated net sales of $250 million in four years, according to Matt Kawadler, chief operating officer. Charm.io gave the brand a growth score of 88.3.

A core part of True Classic’s business is giving back to its community. The brand has partnered with Tiny House Project to help bring awareness to the issue of homelessness within the veteran community. True Classic has expanded its donations to other homeless shelters, schools and communities in need.

4. Quince

Quince was founded on the principle of “making exceptionally high-quality essentials at a price within reach.”

The company, which was founded in 2018, uses premium materials and classic designs, but with an affordable price tag. Quince is able to do that by looking beyond DTC: The company said it “pioneered a manufacturer-to-consumer” model where factories produce inventory that ships directly to consumers. The company’s “factory-direct” model cuts out supply chain middlemen and reduces costs.

Quince sells a range of products, from cashmere sweaters, to leather handbags, to linen duvet covers. It compares itself to well-known retail brands, including Everlane, J. Crew, Brooklinen and Serena & Lily. Quince also prioritizes sustainability by choosing organic materials, using environmentally conscientious packaging and fostering ethical business practices. The company is working toward eliminating its use of virgin plastics and uses 100% compostable packaging and recyclable mailers.

The company in May announced it raised $77 million in a Series B funding round led by Wellington Management. GGV Capital — as well as existing investors Basis Set Ventures, Insight Partners, Lugard Road and 8VC — also participated in the funding round. At the time, Quince said it looked forward to building out its team and continuing to grow its assortment.

Similar companies have cropped up in the space in recent years, including Italic and Few Moda, offering consumers quality pieces at lower prices.

5. Studs

Cara Salpini/Retail Dive

 

For years consumers headed to the mall to visit retailers like Claire’s or Piercing Pagoda to get their ears pierced. 

Studs aims to change the piercing experience. The company, which was founded in 2019, “was created to modernize the traditional ‘mall piercing’ experience.”

Studs says it uses needles for its piercings rather than piercing guns, while providing customers with a wide selection of jewelry. The company assists consumers through the piercing process through “earscapes,” which is using ear piercings and stackings to create personalized looks.

Studs in October 2021 announced it secured $20 million in Series B funding, led by Spark Capital with additional participation from Thrive Capital, First Round Capital and Lerer Hippeau. At the time the brand had raised a total of $30 million.

The brand said it would use the funding to drive its physical retail expansion.

“This strategic funding will help accelerate our growth so we can bring our industry-leading piercing experience to more markets across the U.S., while expanding our online offering to meet the needs of our growing customer base,” Anna Harman, Studs CEO and co-founder, said in a statement at the time. “Customers are celebrating self-expression and marking milestones with multiple ear piercings, and we’re excited to help them upgrade their Earscape through a truly differentiated experience.”

Studs this past May opened a store in Washington, D.C.’s popular Georgetown shopping neighborhood.

6. Aura Bora

Courtesy of Aura Bora

 

The beverage aisle in recent years has exploded into a rainbow of different options from countless brands. Among those is Aura Bora, which launched in January 2020.

The brand focuses on sparkling waters made with herbs, fruits and flowers. The products are calorie-free, sugar-free and sodium-free, using natural ingredients.

"It all started when my wife, Madeleine, and I were just messing around with our SodaStream," Paul Voge, CEO and co-founder of Aura Bora, said in a statement in 2020. "We happened to have all these herbs and botanicals in our pantry. One thing led to another, and Aura Bora was born.”

With flavors like Cactus Rose, Lavender Cucumber and Strawberry Basil, Aura Bora’s products aim to provide alternatives to the historically “mediocre flavors” with artificial ingredients in the soda aisle.

Aura Bora also touts its branding as a key differentiator to traditional soft drink brands. The brand took inspiration from nature, with each can featuring illustrations of owls, crocodiles, porcupines and other creatures.

And the brand has teamed up with other food and beverage startups. Aura Bora last year partnered with popular olive oil brand Graza to launch a non-alcoholic olive oil martini cocktail.

7. Made In

Courtesy of Made In

 

While Made In was officially founded in 2017, the idea stemmed from the founders’ 100-year-old, family-owned restaurant supply business.

“When we finally made the leap from supplying to creating, we did so with generations of expertise, passion, and industry knowledge,” the company said on its website. “Not only did we understand what chefs were looking for, but we knew the major pitfalls of the options available to them.” 

The brand sells cookware in a wide range of materials, including stainless clad, nonstick, enameled cast iron and copper. Made In also sells complementary products like knives, plates and glasses.

Made In has expanded its channel distribution by opening stores of its own, beginning with two locations in Austin, Texas.

“We’re proudly found in thousands of restaurants across the world, some of them Michelin-starred. We’re in hundreds of thousands of home kitchens, too,” the company said. “Our goal remains the same: combine the artistry of traditional craftsmanship with the expertise of professional chefs to create new heirlooms that reflect the modern food landscape.”

8. Droplette

Skin care brand Droplette officially launched in early 2021. The company developed a device that delivers a micro-mist of skin care products deep into the skin.

Droplette was founded by Madhavi Gavini and Rathi Srinivas, two MIT-trained scientists. The company has expanded its assortment over the years, launching the second generation of its skin care device, the Droplette 2, this past May. The new product features hardware updates as well as an improved mobile app experience. 

The company in 2021 raised $21 million in a Series B funding round led by Spark Capital and Visible Ventures, according to Crunchbase data.

While Droplette is currently only available to purchase on its website, the brand said it is “considering some retail partnerships soon, so our footprint may expand in the near future.”





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Caroline Jansen, Khareem Sudlow