The Current, delivered daily.
Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in the ecommerce and consumer goods landscape.
This week, Walmart takes a stake in a tech partner, Moët Hennessy brings on a Napa Valley legend and a group of ecommerce software companies are reporting big funding rounds.
Take a look at this week’s activity:
Walmart takes a stake in Symbotic
Walmart partnered with Symbotic in 2021 to bring more automation to its warehouses, and in May expanded its use of the company’s technology to all 42 of its regional distribution centers in the coming years.
This comes a few weeks after Symbotic made its public debut on the Nasdaq by merging with a SPAC that is affiliated with prominent investment firm Softbank.
Walmart has said Symbotics' technology plays a key role in its ongoing supply chain improvements. Specifically, Symbotic creates palletized loads of department-sorted inventory. This gets products onto shelves at its stores more quickly, and makes materials handling safer. It's part of a big upgrade to fulfillment and distribution center technology planned by Walmart in the coming years, as the company seeks to build out ecommerce operations to rival Amazon.
Moët Hennessy acquires Napa vineyard
LVMH-owned Moët Hennessy is adding a fine wine legend to its luxury offerings.
The wine and spirits division acquired the Napa Valley wine collection of Joseph Phelps Vineyards. Known for the Bourdeaux-style blend Insignia, the winemaker was of the pioneers that made California a wine destination.
“Joseph Phelps has been to the Napa Valley what Nicolas Ruinart, Mrs. Clicquot, Joseph Krug and Claude Moët were to the Champagne region, and likewise we will continue to develop this new House in the respect of the founder’s heritage and vision,” said Philippe Schaus, chairman and chief executive officer of Moët Hennessy.
Henkel, Shiseido close on professional haircare acquisition
Henkel has completed the acquisition of the professional haircare business of Shiseido, the companies announced this week. This includes the brands Sublimic and Primience. With the deal, Shiseido will retain a 20% stake in the business.
Initially announced in February, the deal will help Henkel bolster its presence in Asia, the company said. Henkel also plans to set up a J-beauty innovation hub in Tokyo to develop new products for Asian consumers.
It adds to a portfolio that also includes hair color brand Schwarzkopf Professional, as well as Bonacure, Igora Royal and Authentic Beauty Concept. Henkel is planning to merge its beauty care and homecare divisions into a newly-created Henkel Consumer Brands unit next year.
Bodybuilding.com partners with Retail Commerce Ventures
DTC online fitness store Bodybuilding.com has a new partnership with digital marketing experts at Retail Ecommerce Ventures.
Founded in 1999, Bodybuilding.com specializes in dietary, sports, and bodybuilding supplements, offering private-label and third-party brands. It also has an app, and a loyalty community with over 15 million registered members.
For its part, Retail Commerce Ventures works with brands to build ecommerce capabilities, with a focus on helping legacy brands move from brick-and-mortar to digital storefronts. In the case of Bodybuilding.com, the goal is to expand its online presence. Founded by Tai Lopez and Alex Mehr, it has a portfolio that includes Pier 1, Radio Shack, Dressbarn, Ralph & Russo, Stein Mart, Franklin Mint, Modell's, MentorBox, FarmersCart, Linens 'n Things and more.
"This company's history is only in its first inning, and at a time when there's so much noise and confusion on the internet, Bodybuilding.com's trusted content, products, and community are more valuable than ever,” said Lopez of Bodybuilding.com, in a statement.
Shop Circle raises $65 million
UK-based ecommerce app operator Shop Circle launched out of stealth mode last week with financing of $65 million.
The funding was led by NFX and QED. Investors, with participation from 645 Ventures, FirstMinute Capital and Triple Point Capital. Global law firm Orrick participated in a strategic advisory capacity.
Founded by Luca Cartechini and Gian Maria Gramondi in 2021, the company created a “one-stop shop” for Shopify merchants to find the best apps for their needs, without having to search through the 7,500 apps available on the platform. It says it is behind six apps with 40,000 downloads by merchants. The company’s business model includes options for app entrepreneurs to sell to Shop Circle, or join the company’s team and work alongside its teams to grow.
“With the funding, we are able to rapidly increase our portfolio of apps and support more direct-to-consumer brands in building experiences their customers will love,” said Cartechini, the company’s CEO, in a statement.
Nautical Commerce raises $30 million
Nautical Commerce executives. (Courtesy photo)
Nautical Commerce, which helps brands, retailers and B2B businesses launch company-operated marketplaces, raised $30 million in a Series A round.
The funding was led by Drive Capital, with participation from existing investors Accomplice Ventures and Golden Ventures.
With leaders bringing experience from Apple, Visa, Top Hat and TouchBistro, Nautical offers a platform that allows companies to launch multi-vendor marketplaces in as little as 90 days.
With the funding, it is planning to add over 40 new team members this year.
“Ecommerce is becoming more distributed and single-vendor platforms were not built for this multi-vendor future. Ryan and his team built the only multi-vendor ecommerce platform and are serving a huge need in the market,” said Drive Capital’s Masha Khusid, in a statement. “We’re impressed by what Nautical has already accomplished and are proud to enable them to deliver on their mission to democratize marketplace technology.”
Y Combinator leads $6M seed round for Promoted
Promoted, which unifies search, feed, ads, and promotions for ecommerce marketplaces, raised $6 million in seed funding.
The round was led by Y Combinator, and included participation from Interlace Ventures, Vela Partners and angel investors including Michael Seibel, the managing director at Y Combinator.
Typically, teams at ecommerce marketplaces have separate teams for ads, merchandising, search, and recommendations. This leads the data to be siloed, as well. Promoted solves this by:
- Measuring everything in its client’s app or marketplace.
- Aggregating and joining the data in real-time with reporting.
- Using AI to create a complete picture of the data to predict conversion and clicks for the client’s search and feed.
- Creating a “‘unified currency’ for optimizing trade-offs between the optimal user experience in search and feed, seller experience using ads and promotions, and marketplace profitability versus growth.”
With the funding in hand, the company will continue to develop its streaming data infrastructure platform, and hire additional engineers.
“Promoted helps large marketplaces and ecommerce apps achieve profitability at scale and react in real-time to how ads, search, listings and promotions perform,” Seibel said. “Promoted’s tools optimize marketplaces -- leading to double digit conversion increases -- and are becoming an integral component of how marketplaces make money. We are excited to continue to work with the Promoted team, who have deep experience in adtech engineering."
SleekFlow raises $8 million
The SleekFlow team. (Courtesy photo)
Hong Kong-based Social commerce platform SleekFlow said it raised $8 million in a Series A funding round.
The funding was led by leading tech investor Tiger Global Partners, with participation from Transcend Capital and AEF Greater Bay Area Fund, managed by Gobi Partners GBA.
The company makes an omnichannel social commerce platform that enables the processes behind the selling of products directly through social media channels. This includes features such as a system that generates payment links in chats. It also integrates with 2,500 tools and messaging channels, and helps businesses track and retain potential sales leads from both online and offline channels.
Following the funding round, the company plans to grow in Southeast Asia, where it currently has a presence, and expand to the UK and Europe. It also plans to invest in product development, with a focus on areas such as one-click checkout.
Trending in Operations
Product innovation, marketing and ecommerce helped boost sales 49% in the holiday quarter.
The clouds are getting darker in today's retail environment, but e.l.f. Beauty is shining. Digital commerce and marketing growth is a primary reason.
The makeup and skincare brand posted the following results for the quarter ended Dec. 31, 2022:
- Net sales increased 49% to $146.5 million year-over-year, driven by retail and ecommerce.
- Adjusted EBITDA was up 69% year-over-year, accounting for 25% of net sales.
- The outlook for the fiscal year was lifted. Net sales are now expected to be $541-545 million, up from $478-486 million.
The brand is also outperforming category trends. The cosmetics category grew 8% over 2021, while e.l.f. grew 36%.
“We grew our market share by 150 basis points and increased our rank to the #4 brand as compared to #5 a year ago,” CEO Tarang Amin told analysts. “We continue to be the fastest-growing top five brand by a wide margin.”
The strong results proved validating for a brand that prides itself on offering affordable cosmetics, and digital-forward marketing. They were also another sign of the resurgence of beauty as people return to in-person experiences post-pandemic and seek affordable luxuries that can provide joy despite tougher economic conditions.
Here’s a breakdown of the digital drivers of growth for e.l.f., and how it is showing strong results in a tough economic environment:
Marketing: Viral brands and sustained investment
A special @elfyeah radiance report: It's an E.L.F.ING GLOW STORM! Please exercise ✨extreme iridescence!✨ (and thank you @weatherchannel for inspiring the glowcast!)🤍 #elfpartner
The brand prides itself on marketing that is both bold and pioneering on emerging channels.
One example came in the form of a holiday kickoff with the singer Meghan Trainor delivering a Weather Channel-informed report on social channels to celebrate the restock of the brand’s Halo Glow Liquid Filter, which was a viral sensation.
“The trifecta of e.l.f., The Weather Channel and Meghan Trainor helped us reach new audiences and entertain our community,” Amin said. “The campaign generated over five billion press impressions, exceeding last year's holiday campaign by a wide margin.”
The combination of innovation on product and virality in marketing helps attract a new audience for the brand.
“They see the viral buzz,” Amin said. “They see other people talking about this prestige quality, these great prices and particularly these days with platforms like TikTok, we get consumers doing their own demonstrations and comparisons.”
When it comes to metrics, Amin said the brand explores, “What percent behind each product are we pulling in new users?”
It's often up more than 50%, and attracts the core consumer in Gen Z as well as millennials and Gen X.
“I think the quality of these products at the prices we have and our ability to engage them really are attracting even more consumers to our franchise,” Amin said.
e.l.f. also deepened its marketing investment. The overall share of marketing is now 16%, as compared to 7% three years ago. It will increase to 17-19% this fiscal year.
“We recently completed our annual Nielsen marketing mix analysis and again saw exceptional ROI results, giving us further confidence that our marketing and digital initiatives are driving brand demand and delivering profitable growth,” Amin said.
Strong ROIs were observed across digital advertising and influencer marketing, while PR was “off the charts,” Amin said. Experimentation also plays a key role in developing these channels.
“The other thing about us is, we're not afraid to test and learn our new platforms. So we were one of the first beauty brands on TikTok. In the early days, it was hard to get attribution on TikTok. We now can see almost immediately when something goes viral on TikTok, the impact it has on our business and our ability to be able to attract that,” Amin said.
Ecommerce: Growing the squad
When it comes to ecommerce, Q3 digital consumption trends were up over 75% year-over-year, said CFO Mandy Fields. Digital channels drove 17% of total consumption in Q3, up from 14% a year ago. In the quarter that includes the holidays, digital channels were particularly strong through Black Friday and Cyber Monday.
A big point of emphasis for digital growth is the company’s Beauty Squad loyalty program, which provides early access, exclusives, free gifts and bonus points. The program grew enrollment 25% year-over-year to 3.5 million members. The loyalty program helps to boost the value of individual customers.
“Our loyalty members drive almost 70% of our sales on elfcosmetics.com have higher average order values, purchase more frequently, have stronger retention rates and are a rich source of first-party data,” CFO Mandy Fields said.
No slowdown in sight
Plenty of brands and retailers reporting earnings over this week are speaking of a slowdown in demand as a result of inflation and cooling demand in the economy. They also talk of consumers trading down to more affordable and smaller products that challenge margins. Amin batted away that kind of talk.
“No, we've not seen any slowdown in demand,” Amin said.
The response spoke to the unique place that beauty sits in this moment.
“What I'd tell you is, historically, mass color cosmetics, mass skin care has fared really well in…recessionary environments,” he said, referring to the Lipstick Index that posits beauty sales rise during economic downturns as people seek the small joys when they have less to spend on bigger items.
But there’s also a timing factor coming out of the pandemic.
“This is a category that really did suffer during the pandemic when people were restricted from their normal behavior,” Amin said. “So I've long felt there's a lot of pent-up consumer demand for the categories in which we compete, and we very much are seeing that.”