Economy
08 August 2022
The Week Ahead: Inflation, earnings and eTail
Here's a look at ecommerce happenings for Aug. 8-12.
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Welcome to a new week. Inflation will be in focus for the economy amid a busy week of ecommerce events. Here’s the agenda:
Events
eTail: The ecommerce and omnichannel conference in Boston features leading brands and retailers, including speakers from Crocs, Best Buy, ThredUP, Lowe’s and more. Daily sessions focus on changing retail customers, and ecommerce experiences. (Aug. 8-10)
Camp Miva: Ecommerce shopping cart software Miva brings together merchants and partners in San Diego, California for learning and networking. (Aug. 10-12)
Ecommerce Day: Held at the Hilton Los Angeles Airport and streamed virtually, ecommerce.io presents speakers from brands and leading ecommerce software companies, networking and more. (Aug. 12)
Economic indicators
Consumer Price Index: The US Labor Department’s report on July inflation arrives as businesses, consumers and policymakers are looking for signs of price relief. June’s report delivered a year-over-year increase of 9.1%, which was a new 40-year high. (Aug. 10)
Producer Price Index: Also known as the wholesale inflation rate, this index measures the price of goods before they reach retailers. In June, the rate was near a record high, offering another sign inflation was still heating up. (Aug. 11)
Consumer Sentiment: The University of Michigan will deliver its preliminary report for the month on consumer attitudes and outlooks for the economy. In its final reading for July, this measure was near its lowest on record due to inflation. (Aug. 12)
Earnings
Second quarter earnings reports continue this week. Here’s a look at the companies that are reporting in ecommerce and consumer goods:
Monday, August 8: Allbirds, Blue Apron
Tuesday, August 9: Ralph Lauren, Purple Innovation
Thursday, August 11: Warby Parker, Utz, Canada Goose, Flowers Foods, HanesBrands
Stories we’re following
So, no recession?: Friday’s jobs report was better than expected, as employers added 528,000 jobs in July and officially recovered all of the jobs lost during the pandemic. This was taken as a big sign that the economy is not in a recession, but it also may go down as a leading indicator that this period is rewriting economic rulebooks.
Third-party cookie demise delayed: Google announced recently that the demise of the third-party cookie will be delayed another year, to late 2024. How are brands and advertisers adjusting as a result?
What’s next for DTC? Model shifts and recent layoffs at Allbirds and Glossier signal changes are afoot at the companies that wrote the direct-to-consumer playbook. How will these companies shift, and what new models will emerge for this era?
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Marketing
26 May
e.l.f. Beauty grew quarterly digital sales 75%. Here are the drivers
Upping marketing spend, growing loyalty members and multichannel sales are key to the beauty brand's strategy.
Photo by Andrea Castro on Unsplash
Digital commerce is helping e.l.f. Beauty pour fuel on the fire.
The brand continues to be one of the shining examples of the staying power of beauty products despite consumer pullback in other areas of discretionary spend. e.l.f. grew net sales 48% in the fiscal year ended March 31 as it reached $500 million in sales for the first time. For the most recent quarter, sales grew by a whopping 78%. The company is seeing profit gains as well, as adjusted EBITDA grew 56%.
With the top-line revenue flowing, the brand was opportunistic about how it invested in marketing in the most recent quarter. After upping spend to 33% of net sales in the quarter, the company ended up with marketing and digital investment at 22% of net sales for the year. That was well above the higher end of its 17% to 19% outlook. In the coming year, it expects 22% to 24%.
The fact that digital and marketing fall in the same category reflects the brand’s approach to marketing. It's a favorite among Gen Z, and has found a home on the social apps that are popular with the generation.
“Our disruptive digital-first marketing engine has built strength across multiple social platforms,” CEO Tarang Amin told analysts on the company’s earnings call. “We are a pioneer on TikTok and are now a four-time TikTok billionaire with our last hashtag challenge garnering nearly 15 billion views. We were the first major beauty company to launch a branded channel on Twitch and the first beauty brand on BeReal.”
As a sales category, digital penetration is now 17%, growing from 14% last year. The channel grew 75% in the most recent quarter.
Amin laid out three factors driving this trend:
Marketing. The marketing investment that e.l.f. made brought strong returns, and the digital-first nature of those ads are bringing people to the brand’s digital sales channels.
Loyalty. E.l.f.’s Beauty Squad loyalty program has 3.7 million members, which is a 25% year-over-year increase. Loyalty members are the biggest driver of the brand’s digital business, accounting for over 80% of sales on the brand’s DTC site.
Multichannel. e.l.f. is the only one of the top five mass cosmetics brands that has a DTC site, Amin said. It is also seeing strong growth at Amazon and other retailer ecommerce websites. The growing presence is “building upon itself,” Amin said.
With digital growth, the brand is seeking to expand capacity in the supply chain that will provide more efficiency and faster delivery, as well. It is shifting to a more distributed ecommerce fulfillment model. Previously, it had one automated warehouse in Columbus, Ohio, which meant shipping to the West Coast could take time. Now, it is moving to a multinode distribution network. With the first couple nodes up and running, there is already improvement in delivery times.
The brand is also adding distribution capacity to its main warehouse in Ontario, California.
As marketing helps more people discover and buy from the brand, the operational improvements will help create a customer experience that lives up to the hype.
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