1) Hotels and airlines advertise on Instagram Stories, speaking directly to travelers.

WHAT HAPPENED: More hotels and airlines are using Instagram Stories to advertise, spurring travel bookings that start on the social media platform.

Why it matters

  • Instagram has long been home to bewitching photographs of travel destinations and luxurious hotel rooms. At the same time, interior design is captivating more attention on the platform, which more apparel and accessories brands including H&M and Asos are capitalizing on by selling products in the home goods category. Letting consumers start booking a trip directly on Instagram is a natural extension of these pre-existing trends. Though bookings were previously offered on Facebook and received underwhelming traction, Instagram engagement is much stronger, making Instagram Stories a more promising investment.
  • While the cost of Instagram Stories ads will inevitably rise, using it as a marketing channel comes with a range of benefits. During Facebook’s Q4 2018 earnings call, the company announced that Instagram Stories have 500 million daily users. As long as Instagram Stories prices remain relatively low compared to other social media ad products, companies in the travel industry can take advantage of the channel and use it as a way to self-promote outside of Google, Booking Holdings (owner of sites like Kayak.com and Booking.com) or Expedia—three monopolies on the booking process. Instagram Stories also keeps the brands using it in control of their own voice and visuals, which they otherwise surrender on these large booking sites. For example, a marketer from HotelTonight spoke directly to Instagram users in a recent Story, outlining her favorite places to stay on work trips. Using Instagram Stories also directs additional traffic to the companies’ personal booking apps where consumers are able to finalize their purchases.

2) Dig Inn ditches third-party delivery services, embracing “farm-to-desk” to strengthen its own brand.

WHAT HAPPENED: Dig Inn is testing an internal delivery service called Room Service that it hopes will solve for problems core to third-party delivery while also elevating its brand.

Why it matters

  • Digital delivery has been upsetting the restaurant industry for a while—Morgan Stanley estimates that it will comprise more than 10% of U.S. restaurant sales by 2022. But as restaurants race to conquer online delivery, logistics—from timing and temperature, to real estate, capacity and travel—are not only eroding brand equity, but also require many restaurants to turn to third-party delivery services for order fulfillment. At one of Dig Inn’s Manhattan locations, customers sometimes wait 90 minutes for an order to arrive—one company rep noted that, “If you look at Yelp scores for delivery vs. guests who come in, it looks like two different brands.” But with delivery accounting for up to 30% of sales at a single Dig Inn location and 70% of all orders made through Grubhub, the company needed to improve its supply chain, both for customers experience and to evade steep third-party commissions.
  • To do so, Room Service is grounded in exclusivity and a streamlined supply chain instead of a less-than-optimal version of the in-house restaurant experience. All orders stem from a centralized kitchen with an entirely separate menu from Dig Inn proper that’s only available on the company’s app or site. Food is optimized for travel—hot and cold items are separated, and many dishes are designed to finish cooking en route—to arrive within 30 minutes of an order. An algorithm also scans order history to gauge consumer demand on menu options. While Dig Inn’s new delivery service isn’t fully verticalized—it will work with Relay Delivery, a logistic company—it manages to bring much more of delivery under its wing. Hopefully Room Service will meet a better fate than its predecessor, David Chang’s delivery-only restaurant Ando, which folded after less than two years in business after facing issues with food quality.

3) Flamingo, a women’s shaving brand under Harry’s Holdings, lands at Target, strengthening the parent company’s partnership, but pointing to the waning effectiveness of selling direct-to-consumer.

WHAT HAPPENED: Flamingo, which Harry’s Holdings launched in October 2018, is now available at Target.

Why it matters

  • Flamingo’s swift move to Target—just over three months after launching online—is proof that the retailer will be a valuable wholesale partner for the parent company as it expands its brand assortment. Harry’s, the company’s inaugural shaving brand for men, was founded in 2011 as a direct-to-consumer subscription, entering Target five years later in 2016. Thanks to this pre-existing relationship, Flamingo can easily broaden its reach without much extra work for either party, while reaping the benefits of Target’s mass appeal and square footage.
  • Harry’s Holdings first began wholesaling at Target because it needed new revenue streams that went beyond its online subscription. Increasing sales became all the more necessary as the company continued to raise capital (at $475 million to date). Because Harry’s Holdings purchased a factory back in 2014, growing its wholesale presence didn’t chop its margins as sharply as this channel strategy would otherwise. But now the question is how long Harry’s Holdings will continue sending its brands to Target before opening retail of its own. Upon forming Harry’s Holdings, the company noted its plan to invest in, acquire and incubate more brands across a wide swathe of product categories. Once Harry’s Holdings product expansion crosses a certain threshold, owned retail will become a worthy investment, increasing the parent company’s vertical integration in the process.

WHAT HAPPENED: Precision Run, which stems from Equinox’s popular running class of the same name, will open in New York and Los Angeles.

Why it matters

  • Equinox’s decision to unbundle Precision Run as a separate gym comes after the fitness company found that 500+ Precision Run classes per week across all Equinox gyms wasn’t enough to satisfy consumer demand. And, because a few Equinox locations already built out rooms specifically designed for the running class, it has also effectively de-risked the concept. But more importantly, Precision Run raises the question of how much unbundling can occur before Equinox’s core brand unravels.
  • Equinox acquired PURE Yoga in 2007, purchased SoulCycle in 2011, and invested in boxing gym Rumble in 2018, while continuing to offer cycling, yoga, and boxing classes through its main gym. But these acquirees were already standalone brands in their own right, as opposed to Precision Run, which was incubated at Equinox. At the Precision Run studio, anyone can sign up, giving non-Equinox members a taste of the boutique fitness brand without committing to a monthly or annual membership. Still, it’s unclear if the new running gyms are meant to stand alone, complement an Equinox membership or act as a gateway to a main gym membership—it’s also not certain how many Precision Run gyms will be built and whether the class will continue to be offered at the main gym. A more horizontal approach may work well for Equinox, but further unbundling from the eponymous gym will necessarily affect the resonance of the core fitness membership. At the same time, Equinox is keeping all of its offerings out-of-home, which further differentiates its brand of boutique fitness from at-home cycling competitor Peloton.