1) The secondary watch industry is pushing established players to evolve their approach, echoing developments in the sneaker market.

WHAT HAPPENED: Raymond Weil partnered with the second-hand watch retailer TrueFacet to create authentication programs and Richemont acquired a pre-owned watch seller called WatchFinder.

Why it matters

  • Luxury players have been reluctant to embrace secondhand for fear of diluting their brand with pre-used and/or inauthentic items. But shifting cultural tides are driving more brands to jump on activity seen in both secondary and secondhand markets. As sneakerhead culture blossomed, sneakers took on new status and meaning. Once consumers began selling them on the secondary market—often to the chagrin (and financial loss) of established retailers—these players decided to take control. In February 2018, LVMH Luxury Ventures invested in Stadium Goods, an ecommerce marketplace for buying and selling sneakers—since then, Stadium Goods has opened a shop at Nordstrom’s standalone men’s store in New York and began selling on Farfetch.
  • Pre-used watches are a more promising venture for luxury retailers than they might appear. For one, they are a long-established and time-tested market (pun intended) with higher retail prices. Secondly, many luxury brands have built their brands on legacy—a large part of the value prop behind secondhand watches, which can also attract shoppers as a scarce resource if their model is no longer manufactured. At the same time, watches function so long as they have a working chronograph or battery. NPD Group estimates that the pre-owned watch market is three-times bigger than the regular watch market in the U.S.—an opportunity for brands in the watch and jewelry sector that are falling behind. Given the preexisting consumer confidence in these legacy players, companies only need to authenticate the secondhand items. And unlike the traditionally decentralized sneaker market, premium watch retailers have fewer obstacles to cross as the watch market already aligns well with the luxury industry—it’s just about officializing the secondary market.

2) Quip, the digitally-native, subscription toothbrush company, has now raised a total of $60 million, but as it builds out a holding company, it should bear the lessons of its predecessors.

WHAT HAPPENED: Quip will use its new $40 million round to fuel Quip Labs—a “venture studio” started in May to house oral care products, services and platforms—but Quip’s evolution is echoes the path of other digitally-native brands that raised too much and grew too fast.

Why it matters

  • So far, Quip Labs has acquired Afora, a dental insurance company. In addition to forming a holding company, Quip also entered Target in October—the brand’s first foray into brick-and-mortar, aimed at attracting new customers beyond its distribution program with dentists. But taken together, this evolution is familiar: Harry’s, another digitally-native company that began as a subscription for men’s razors, has raised a total of $475 million in funding, purchasing a factory and establishing Harry’s Labs to create and acquire new brands in myriad categories beyond men’s hair.
  • So far, Quip’s funding is merely a fraction of Harry’s, but as the oral care brand’s pace quickens, it should be wary of growing too fast. It’s unclear whether creating Quip Labs and acquiring Afora was part of the company’s original plan or a growth mechanism that became necessary after Quip raised more capital. Regardless, with so many brands competing to establish dominance over the wellness and healthcare category, Quip can learn from its predecessors, bringing more of its supply chain in house and building its own brand, as opposed to focusing on fundraising and scaling fast.

3) The text-only, ad-free product recommendation site Good, Cheap and Fast cuts through the noise of Amazon, but continues to attract traffic to the ecommerce site.

WHAT HAPPENED: Good, Cheap and Fast (GCF) wants to provide consumers refuge from Amazon’s mountain of products and corrupt reviews, but despite its critique, GCF exists thanks to Amazon and continues to funnel more traffic to the site.

Why it matters

  • Product recommendation sites are predicated on building trust with consumers as they sort through the cacophony of online—something that the Wirecutter excels in as a “New York Times company” and before its acquisition thanks to its tech journalist founder (a former editor of Gizmodo). The company utilizes a scientific approach that combines interviews with industry experts and hours of hands-on testing. GCF is more of a cottage industry, promoting a minimalist shopping approach and serving as a watchdog of fraudulent product reviews perpetuated on Amazon; it mines preexisting and freely available Amazon reviews, “scrubbing” out spam to determine lower-priced, but quality recs. Unlike the Wirecutter, GCF does not take affiliate fees, though all of its links send consumers to Amazon.
  • But regardless of their consumer philosophies, both the Wirecutter and GCF drive more traffic straight to Amazon—in fact, their mere existence speaks to the prevalence of the largest ecommerce platform, one so extensive that spinoff sites have sprouted just to make sense of its breadth and depth. It’s confusing because GCF seems more likely to align with a company like Brandless, which performs extensive research to manufacture a single SKU per product category, thereby diminishing the paradox of choice that burdens so many consumers. Regardless, as more product recommendation sites and social-media discussion platforms emerge, GCF is perhaps more importantly a wake up call for Amazon to clean up its customer experience if it wants to keep selling everything.

4) Parachute, the digitally-native bedding brand, plans to open new physical stores, joining a slew of other digital brands expanding their multi-channel strategy.

WHAT HAPPENED: Parachute, founded in 2014, plans to grow its physical presence from five permanent stores to 20 locations by 2020.

Why it matters

  • Parachute’s brick-and-mortar expansion is an increasingly favored strategy among digitally-native brands: Casper plans to open 200 stores by 2021, Warby Parker will be operating 100 stores by the end of 2018, and Adore Me intends to break ground on 200 to 300 stores in the next five years.
  • These expansions are not just about moving offline—instead, they are proof that it’s not enough to be digital-only. Brick-and-mortar stores help spin the flywheel between multiple channels at once, augmenting sales and acquiring new customers all around—for digitally-native brands, they also essentially serve as shoppable, in-person advertisements. Parachute says that its in-store conversion rate is 50% and that average online spending increases by ten times in areas where a physical store exists. Warby Parker has noted a similar online-offline symbiosis and both brands have worked to indoctrinate lessons from preexisting stores to creating new ones, bringing greater efficiencies to the costly buildout of new stores. Parachute reports that its current stores are profitable—as it grows a physical presence, applying its growing body of expertise will help the company evolve sustainably and with purpose.