1) Airbnb diversifies its platform to capitalize on the growing experience economy as it prepares for an IPO.

WHAT HAPPENED: Airbnb, planning to go public in early 2020, acquired HotelTonight to further integrate and expand hotel bookings on its platform, but it may be looking further for growth.

Why it matters

  • Airbnb’s purchase of HotelTonight for an estimated $450-500 million, was its biggest acquisition thus far and a good match; Airbnb claims that same-day bookings doubled in 2018 YOY and HotelTonight lets travelers book discounted, last-minute reservations. It will also give Airbnb users who are less inclined to stay in someone’s home with more options, pointing to the company’s burgeoning diversification efforts. The more booking mechanisms it can embed in its platform—the more vertically integrated it can become—the more Airbnb can reap the gains of an industry expected to be worth $1 trillion by 2022, even as competition mounts.
  • Now, there is speculation that Airbnb will snap up Resy, a restaurant booking platform that’s more upscale, though smaller, than OpenTable, which has more than 20 times the restaurants in its database. Resy, which has a mystery potential buyer, is also currently expanding its global presence, which would align well with Airbnb’s international footprint—in fact, Airbnb invested $13 million in the platform in 2017 and integrated the reservation system with its own booking site. A merger with Resy would safeguard Airbnb against competitors like Booking Hotels, which acquired OpenTable in 2014, but Airbnb may also look to flight booking platforms for future growth.

2) Fitbit seeks to gain customers via a new rewards program, but its partners may not be enough to provide the much-needed boost.

WHAT HAPPENED: Fitbit is partnering with Adidas, Blue Apron and the music streaming service Deezer for its beta rewards program, expected to launch as a paid version later this year.

Why it matters

  • Fitbit introduced its activity tracker in 2009, capturing consumers bent on the burgeoning fitness trend. The company obtained healthy margins as a direct-to-consumer brand, and later expanded its presence by wholesaling at Best Buy and other retailers around the globe. It also worked to introduce new ways to track activity into its products and debuted the first wireless fitness tracker in 2012. But since its rise, Fitbit has fallen out fashion—largely a symptom of Apple Watch’s dominance. Fitbit sold 13.9 million wearable devices in 2018 (down 9% YOY), compared to an estimated 21.9 million Apple Watches, which are more expensive and more versatile than Fitbit devices. The point-based rewards program, which ties various activity goals to discounts at the above brands, is meant to combat this decline, as are Fitbit’s newly released, less expensive devices (its new $159.95 smartwatch is $40 cheaper than its main fitness tracker, and about $240 less than Apple Watch’s cheapest option).
  • But some of its partners in the rewards program could wreak further damage to the fitness brand. Blue Apron, for instance, has stumbled as fewer consumers consent to spending on high-priced meal kit delivery—neither Blue Apron’s partnership with WW (formerly Weight Watchers) nor its $7.99 Knick Knacks meal kits exclusive to Jet.com (which do not include protein or produce) have reoriented the brand on a healthy revenue growth path. Adidas makes more sense to mirror Nike and Apple’s partnership, but overall, Fitbit should focus on indoctrinating new activity-related devices into its own brand. In February 2018, for example, it acquired a platform called Twine Health, which allowed the company to provide customers with an HIPAA-compliant, cloud-based health management platform—a benefit to users that doesn’t rely on any other brand.

3) Harry’s and Heyday team up for a co-branded face mask, reaping the best of each other’s worlds.

WHAT HAPPENED: The limited-edition face mask will sell on Harrys.com, Heyday.com, as well as at Heyday’s six locations across New York and LA where it will be selectively included into spa services.

Why it matters

  • The grass is always greener. Digitally-native Harry’s didn’t renew its lease at its sole brick-and-mortar store/barber shop, the Corner Store, in 2018, and thus lacks a space for customers to sample its products (though it maintains wholesale accounts at J.Crew and Target). Heyday has a growing offline footprint, but uses only third-party products for its facial services that it also sells in-store and online. A collaboration between the two brands gives Harry’s a test space for its expanding product assortment and opens a window for Heyday to learn about R&D that it can use to launch a private label in the future. Though the face mask is unisex, Heyday wants men to comprise about 50% of its clientele (and can learn from Harry’s about how to do so), while Harry’s recently launched its first women’s brand, Flamingo (which it can strengthen with insights from Heyday).
  • This collab marks a departure from Heyday’s previous statements about selling products in its spas, which it specifically built to offer a diverse range of products from about 12 brands. This tactic was intended to create a more realistic, customized experience for clients who likely don’t use products from one brand only. But this concept is ideologically antagonistic to the business model of Harry’s, which wants to become a one-stop-shop for household, baby, men’s and women’s products. With the collab, it seems that tides may be turning at Heyday, which also bolstered its ecommerce operations last year and hinted at the possibility of a private label after it raised $8 million in November 2018.

4) Streetwear brand Kith debuts a beauty collab with Estée Lauder, but it won’t save the Estée brand.

WHAT HAPPENED: Kith x Estée Lauder is a limited-edition beauty kit that includes five Estée skincare products with a Kith makeover.

Why it matters

  • Beauty continues to boom, which rationalizes Kith’s entrance into the market, but both brands are relying too heavily on aesthetics to make it meaningful. Other streetwear brands have tapped into luxury legacy brands for collabs—see Supreme x Louis Vuitton—and the novelty of these partnerships have garnered viable consumer traction. Kith is attempting the same, pulling a vintage Estée logo from 1946 for the product packaging and designing a canvas bag and acrylic case to house the skincare items. But all five Estée products included in the kit are pre-existing. While it’s true that streetwear is largely based on labels and appearances, unless a customer is carrying around the acrylic case, no one will know that she is wearing any of the skincare products in the Kith x Estée collection.
  • While Estée shoppers wouldn’t normally overlap with those of Kith and vice versa, Estée can use the collab as a marketing vehicle to attract younger audiences to its brand. This is a positive move; Estée recently acknowledged that its digital ad spend rose from 22% of total ad spend to 75% in the past five years—the company also mentioned it would double its marketing budget in the next three years. As a legacy company, it’s also lost traction over the explosion of digitally-native brands, and past attempts at collabs have floundered. In 2015, Kendall Jenner designed an exclusive Estée lipstick, which promptly sold out, but the company failed to expand the strategy, instead limiting Jenner to brand ambassadorship. Letting Kith redesign its packaging echoes this superficial collaboration, and Estée will have to go after more transformative strategies to remain a relevant brand in the 21st century, especially as newcomers strive to become the next big conglomerate.