1) Venmo evolves from a mobile peer-to-peer payment platform to a more robust set of financial services.

WHAT HAPPENED: PayPal, Venmo’s parent company, is seeking to monetize the peer-to-peer payment platform by extending it to online retailers.

Why it matters

  • Since launching in 2009, Venmo has become an omnipresent mobile payment method—a seamless way to send a roommate your half of the monthly utilities payment or request your friends for their portion of the dinner bill. The platform has an estimated 38 million users and $19 billion was exchanged via the app in Q4 2018 alone, up 80% year over year. However, these peer-to-peer transactions are not profitable for the company, which PayPal has tried to counteract after acquiring the payment platform in 2014. To do so, Venmo is growing into an array of financial services. In October 2017, Venmo was extended as a checkout option at every online retailer that accepts PayPal more than a year ago (more than 2 million). Some retailers also sell Venmo debit cards—a partnership with MasterCard, which allows consumers to pay with the card wherever MasterCard is accepted, as well as withdraw money from a Venmo balance at an ATM machine. Every transaction is recorded on the Venmo app, seamlessly merging the company’s offline and online presence.
  • Other mobile peer-to-peer payment platforms have sprouted to obtain a share in the market, including Zelle—created by Bank of America, Wells Fargo and JPMorgan Chase—which was responsible for $75 billion in 2017 transactions, compared to Venmo’s $35 billion. Venmo, however, has a leg up on these competitors thanks to its strong millennial base, likely tied to the sociability of the platform, which showcases a feed of transactions, much like that of Instagram or Facebook. And now that Venmo is being offered by more online retailers, it could see greater resonance as more shoppers vie for a frictionless payment service.

2) Instant Brands matures beyond its viral beginnings to grow into a sustainable business.

WHAT HAPPENED: Instant Brands Inc. is merging with Corelle Brands LLC, known for Corella, Pyrex, CorningWare and SnapWare.

Why it matters

  • Since it launched in 2010, Instant Brands skyrocketed to consumer stardom with its viral product, the Instant Pot, which serves as a pressure cooker, rice cooker, slow cooker, and electric cooker all in one. The company started by selling via Amazon, where it became a bestseller. Its popularity, which spurred various websites and Instagram accounts devoted to cooking meals using the Instant Pot, also helped the company incorporate ideas from consumers to improve the pot, releasing an updated SKU every year to 18 months.
  • But like other viral brands, the company had to work hard to sustain itself and grow. Prior to the merger, it grew by updating its original model—which can only happen so many times for a pot that is supposed to do everything—and expanding its product assortment to new items like a blender and a sous vide. However, insights from Google Trends shows that Instant Pot’s searches on Google Shopping peaked in December 2017, making a new form of growth like a merger all the more necessary. While Instant Brands will relinquish some autonomy and equity after the merger—Corelle’s parent company, Cornell Capital, will own the majority of the combined company, which will be led by Corelle’s CEO—the merger will help it grow much more sustainably and widely, opening up Corelle’s global supply chain and marketing expertise to the younger brand. Pyrex, founded in 1915, is a particularly well-known cookware legacy brand that its parent company reports has 80% penetration into U.S. households—60% more than Instant Brands—and Corelle’s brands also benefit from a strong presence in Asia.

3) At Nordstrom, off price triumphs, which the full-price retailer is attempting to counteract with a rejuvenated loyalty program.

WHAT HAPPENED: Nordstrom’s 2018 year over year net sales fell, while its off-price store saw revenue growth during the same period—something full-price retailer wants to combat with renewed focus on its loyalty program.

Why it matters

  • Nordstrom’s loyalty program, the Nordy Club, officially relaunched in October 2018 after getting a makeover—the new program provides more personalized perks and showcases members’ reward status and points. The company also began using its email marketing to spotlight the loyalty program, according to the Q1 2019 Loose Threads Megaphone Report. All of the 35 email campaigns that the full-price retailer sent in February 2019 included a section at the bottom inciting shoppers to look into the perks of joining the Nordy Club. But more importantly, 40% of these emails also included a prominent section highlighting the loyalty programs’ exclusive offers, up from just over 5% in December 2018.
  • While Nordstrom is far from the only department store or retailer to put faith into loyalty programs for growth (both Macy’s and Target recently revitalized their own), it does serve as a way to further differentiate full-price Nordstrom from off-price Nordstrom Rack, which is not always clear in the retailers’ messaging. The program—Nordy Club—currently has about 10 million members who have access to exclusive benefits, highlighting Nordstrom as a premium retailer in contrast to Rack, which is synonymous with discounting. If the revamped and higher-frequency messaging around Nordy Club can grow membership, it would be a positive boost for Nordstrom not only vis-à-vis Rack, but vis-à-vis other retailers: The company has reported that current participants in the program spend four times more and shop three times as often at Nordstrom than non-members.

4) e.l.f. Beauty will shutter all of its owned retail, narrowing its multi-channel strategy while other digitally-native brands broaden theirs.

WHAT HAPPENED: e.l.f. Beauty will close its 22 operating retail stores, which the company says will help it focus on ecommerce operations.

Why it matters

  • After launching online in 2004, e.l.f. Beauty grew as a luxury-quality-drugstore-prices brand, standing out among its beauty aisle counterparts and amassing a large community on social media, mostly comprised of millennial consumers. While it established wholesale partnerships with Walmart, Target, CVS and Ulta Beauty, it also began opening its own stores in 2013. Then, in 2016, the company went public, raising about $141 million.
  • e.l.f.’s decision to retreat from a multi-channel strategy stands out among other digitally-native brands that are attempting to juggle ecommerce, owned retail and wholesale. At the time of e.l.f.’s IPO, the owned retail stores were considered a potential growth vector, which clearly never panned out. In the company’s 2018 filing, it recorded that its owned retail contributed to only 5% of company sales in the last year, while its wholesale partnerships raked in 87% of revenue—its two largest partnerships were Walmart, which accounted for 30% and Target, which accounted for 21%. Thirteen percent stemmed from its direct-to-consumer channels and net sales decreased 1% to $267 million. Ideally, owned retail should serve as a real-life, interactive marketing mechanism for digitally-native brands, which e.l.f. was not able to achieve. At the same time, owned retail is a costly venture, and shutting down these stores will likely help the brand save money, which perhaps it will use to grow its notoriously low marketing budget in order to boost ecommerce and wholesale revenues.