|Riding the e-commerce boom
The pandemic has put the e-commerce channel on an entirely new growth trajectory. One analysis shows that US consumers spent $861B online in 2020, an increase of 44% from 2019. And e-commerce now represents over 20% of all US retail spending.
Given these stats, it should come as no surprise that more than a third of new consumer and retail unicorns born in 2020 were e-commerce companies.
In the D2C space, one of the more prominent investment themes from Q1’21 centers around the home taking on greater importance for consumers in the long term.
According to one report, the pandemic will lead to a longer-term increase in spending on areas of the home such as offices, gyms, backyards, and gardens — and major deals from Q1’21 support this hypothesis.
Fitness: Last week, Tonal raised a $250M Series E at a $1.6B valuation. The company revealed that its 2020 sales grew 8x year-over-year.
Home furnishing: Resident, which sells bedding and other home furnishings such as rugs and furniture, recently closed a $130M Series B, and Outer, a California-based outdoor furniture brand, disclosed a $11M Series A round this quarter.
Pet: Toronto-based premium pet food brand Open Farm recently pulled in a $65M growth equity round, while Fi, maker of smart dog collars, raised a $30M Series B from investors including Lerer Hippeau Ventures and RRE Ventures.
We recently wrote about why interest in the pet industry was surging in this client-only brief.
The road ahead
While increased competition in the D2C space will likely lead to similar challenges around customer acquisition costs, digital-first companies playing in categories seeing a surge in consumer demand have plenty of room to grow as consumers spend more online moving forward.
Incumbents beware — even if these well-capitalized startups have yet to reach scale, they reflect broader consumer trends that any B2C company needs to be planning for, including health and wellness, sustainability, and digital connection.