Ten brands founded 10 years ago and how they’ve succeeded

A decade on, these retailers show strength and resilience

Tin and aluminum are traditional gifts for couples celebrating their 10th wedding anniversary. While perhaps not as glamourous as crystal (reserved for 15 years) or bronze (eight years), these materials embody pliability and strength.

Retailers who make it to their 10 -year anniversary also have had to draw on these qualities. Many of the brands that launched in 2011 and continue to thrive reinvented prevailing business models. Most embraced the growing range of commerce: ecommerce, mobile commerce, re-commerce and social commerce, often along with bricks-and-mortar stores. While their products and customer bases differ, a few themes are common.

They’re David versus Goliath

“All are taking on much bigger companies,” says Aaron Cheris, head of the Americas retail practice with Bain & Co. To succeed as the underdog, some have focused on product differentiation, like UNTUCKit, while others created an experience that feels different or more efficient, like Warby Parker. 

They’re digital and direct-to-consumer

By going directly to consumers, these brands can bypass many middlemen, says David Ball, president of consulting firm The Grayson Company. As digitally native vertical brands, the companies typically address at least one of several problems: enhancing how customers access the brand, improving the product through innovation, offering better prices, etc.

They’re also in bricks-and-mortar

For many retailers, a mix of online and retail stores offers synergies in customer acquisition and retention. The result? Growth paths that are steeper than many single-channel businesses can attain, Ball says.

They’re focused

Most concentrate on a single-product or category, like Chewy in pet supplies. They attract niche, dedicated audiences and can swipe business from larger, less focused brands.

They leverage social media

Like the digital natives they are, these retailers maintain strong social media presences. ILIA Beauty, for instance, has captured more than 570,000 Instagram followers. Cheris says the shift from traditional to digital markets has made it cheaper and easier for new brands to create a sustainable splash.

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They use data to serve customers

These brands are adept at leveraging data analytics to boost and personalize their products, as well as their customer service and engagement; Cheris points to Stitch Fix, which uses artificial intelligence to help in styling its customers.

They target high-frequency purchases

A healthy subset of successful digital natives target products that consumers tend to purchase on a regular basis, like Hello Fresh for meals or Chewy.com for pet supplies. Not only is retaining customers less expensive than acquiring new ones, Ball says, the likelihood of selling to an existing customer is between 60 and 70 percent, compared with about five to 20 percent for a prospect.

Here are 10 retailers celebrating 10 years in 2021.

BHLDN

Pronounced “beholden,” BHLDN, which focuses on the bridal market, is part of the Urban Outfitters and Anthropologie family. Because weddings aren’t (usually, anyway) high frequency events, it’s hard for wedding retailers to leverage their customer acquisition costs. As one of a group of brands, BHLDN can leverage its sibling companies’ customer acquisition costs.

Chewy

Once most pets settle on a food product, they’ll often eat the same things for years, making an efficient replenishment experience key. Chewy provides that. “A 60-pound bag of food just shows up at their doors,” Cheris says, though a challenge, not surprisingly, is the cost of shipping. One way to offset high shipping costs is by enticing customers to purchase other items when they’re placing orders. Chewy makes that easier by offering thousands of varieties of pet toys and gear.

Hello Fresh

hello fresh

The meal delivery sector is expected to more than double by 2028, when Grandview Research says it will top $27 billion. Leading player Hello Fresh historically spent a significant portion of revenues on customer acquisition, Ball says. In 2020, when many consumers were under stay-at-home orders, its marketing investments started to yield higher returns.

To be sure, challenges await. Multiple grocers, including Amazon’s Whole Foods, have entered the meal kit business. To compete, Ball says the company may need to partner with grocers for bricks-and-mortar distribution, potentially cutting into margins.

The Honest Company

The Honest Company Inc, which offers eco-friendly personal care products, “has been really on-trend regarding the interest in products that are cleaner and developed with purpose,” Cheris says. Having actor Jessica Alba as a co-founder also helps. Sales for the company, which went public in May 2021, rose to over $300 million in 2020. However, losses have increased as its stock fell by more than half as of mid-August.

ILIA Beauty

ILIA Beauty offers cosmetics crafted with both organic ingredients and non-toxic synthetics. In its mission to “create radical beauty,” ILIA allows customers to send it up to five empty beauty product packages each month — its own or others — which it will responsibly break down. And in contrast with many beauty companies that focus on younger models, its social media posts feature people of all ages and skin colors.

Poshmark

A “social re-commerce marketplace,” Poshmark doesn’t own the articles sold on its platform. Instead, it facilitates transactions, making money through commissions on these sales, as well as on its premium boutique service, and by taking a cut of wholesale products sold on its site. A distinguishing feature of the company is the degree to which it incorporates social media elements, such as likes and followers, into its platform.

More than one-third of buyers are also sellers, facilitating the “whole to sell-to-buy flywheel,” Cheris says. Both Poshmark and The RealReal, which focuses on luxury items, can beat local consignment stores by offering more selection. They also can top generalists like eBay by paying greater attention to item condition and authenticity.

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Stitch Fix

By collecting data on its user’s preferences — Stitch Fix’s data science team numbers more than 100, Ball says — Stitch Fix can match customers with goods that fit their preferences. As customers continue to use the service, its data models become increasingly personalized.

However, while sales for fiscal year 2020 increased about 11 percent to $1.7 billion, the company ended the year with a loss of about $67 million. It’s incurring higher expenditures per unit of growth, Ball says, adding that the introduction of “shop by item” to its subscription box model may dilute long-term customer value.

The RealReal

This mostly digital marketplace — it also operates 10 retail locations — of authenticated, pre-owned luxury goods targets “the high end of eBay plus the low end of Sotheby’s,” Ball says. Like Poshmark, it facilitates the sale, but doesn’t own the goods.

As re-commerce marketplaces, both Poshmark and The RealReal can tap into consumers’ growing concerns about sustainability. In April 2021, The RealReal launched ReCollection 01, featuring of one-of-a-kind, upcycled creations.

One difference from Poshmark: Cheris notes little crossover between buyers and sellers on The RealReal.

UNTUCKit

A digital native that’s expanded to some 80 bricks-and-mortar stores, UNTUCKit’s shirts are designed to look “intentionally casual, but not sloppy,” Ball says. It also offers some women’s clothes. In 2017, Kleiner Perkins invested $30 million in the company, the first outside capital the company had received.

Warby Parker

Warby Parker disrupted the highly consolidated eyeglass market and converted “the pedestrian experience of buying glasses into a fashion experience,” Ball says. It had a few advantages: Its products are physically small, requiring small store footprints. The small size and low weight also helps with shipping costs. At the same time, transaction values are relatively high.

In June 2021, the company filed documents for an initial public offering, although it hasn’t set a date.

Bonus: The Company Store

Thriving after 10 years in business is an impressive accomplishment. Thriving after 110 years is almost unheard of. However, The Company Store, now part of The Home Depot, has achieved this.

The Company Store is one of a handful of brands that was able to effectively transition from paper to digital catalogs, Cheris says. One key to that has been a selection of proprietary products that offer great value. To compete in an ecommerce marketplace, differentiation is key, he notes: “Otherwise, it’s a race to the bottom [price].”

Looking ahead

All these companies have earned remarkable success in a brief period of time. Challenges remain, however. For starters, many investors have been patient as these upstarts incurred losses while growing their businesses, Cheris notes. That could change.

To sustain success, they’ll need to hold onto their “insurgent mindset,” Cheris says. That means identifying and pursuing the next frontier, while continuing to improve the customer experience and refraining from becoming too broad.

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