‘Wholesale is an important part’: Why athletic brand Alala is bucking the DTC trend
When Denise Lee launched her athletic brand Alala, the company’s website went live at the same time as it launched collections in Equinox, Carbon38 and Bandier.
Five years in, Alala’s products can be found at a list of retailers: In addition to its launch partners, the brand sells at Shopbop, Nordstrom, Revolve, local boutiques and at gyms and studios, including Barry’s Bootcamp and Flywheel. It’s a mix of online and offline partners, and customers can also shop AlalaStyle.com. The brand also sells to retailers through traditional wholesale channels — no shop-in-shops or concession agreements. Its sales are 50 percent direct, 50 percent retail, according to Lee. The brand declined to share if it’s profitable.
“When it came to a strategy for a very young brand, I realized that this wasn’t how other direct-to-consumer brands were going about it,” said Lee. “But having wholesale was an important part of raising awareness for us, and it’s a great barometer for feedback on your product. The exposure gave us a foothold as one of the top new athleisure brands to watch for as the category grew.”
It’s almost a return to retail normalcy.
With the direct-to-consumer era, wholesale became a dirty word for brands like Everlane, Glossier and Allbirds. Dozens of similarly modeled brands have identified an opportunity to launch online and avoid retail markups, effectively funneling the money saved into production and other customer-facing values. But the flaws in the model are starting to show: Online growth isn’t limitless. Customers like to test and compare products in person. And value saved from cutting out the middlemen often has to be rerouted to expensive customer acquisition costs rather than production. For most brands, the answer to funding expensive launch costs without leaning on retail partners has been venture capital.
But VC tie-ups aren’t always appealing to young brands. Lee, who worked with Christopher Burch at C.Wonder and Armani Exchange before launching her brand, said avoiding VC money was a purposeful decision because it didn’t feel like VC and consumer retail was a fit. In its place, Alala began selling collections with retail partners who were, at least at the time of the brand’s launch, just figuring out how to navigate a relatively new category like athleisure wear.
“Getting feedback from our buyers and their customers is an interesting and crucial part of building our brand. It’s given dimensions to what we do,” said Lee. “You’re getting people to try things on, you already have a nationwide scale and you’re able to access customers in places they already go, rather than taking the steps to acquire them to come to your website. There are a lot of benefits to wholesale, even though it’s no longer sexy.”
While digital brands are still focused on owning customer data and relationships, other brands, like The Arrivals, Native Deodorant and Harry’s have also found that traditional retail partners might play an important role in business models after all. With scale and exposure, small brands can shoulder less of the burden of expensive retail and marketing costs.
“Direct purity is over for brands,” said Richie Siegel, founder of retail analytics company Loose Threads. “Online is just too saturated. But that’s not to say that these brands are going into wholesale blind.”
Lee said that it deals with the downsides of wholesale by communicating more with retail partners. As a young, digital brand, it has more leeway in the relationships. For example, it will often ask to be excluded from storewide promotions. If there’s excess inventory for a certain product, Alala will swap it out with a likelier to sell “core” product, like a classic yoga pant, so that it doesn’t have to buy back unsold inventory. When it comes to other concerns, like competing over AdWords and communicating the brand’s story through retailer employees, Lee said that it’s a trade-off. In exchange for getting more product to new customers, the brand will get the chance to tell its story on its own site to more people.
Selling through third-party stores can also act as an insurance policy. Every new collection will go on sale for about two to three weeks in retail stores before it hits the Alala site. This gives the brand time to hear feedback from buyers, and get early sales results before it places its own buys. Overall, Lee said, the retail relationships have sharpened her own skills as a brand founder.
“It’s forced us to become very well-oiled machine because you have outside clients relying on you to deliver something on time, that’s great quality, that can sell,” said Lee. “It’s not an option for Alala to be like, ‘Oh this set is coming in two months late, we’ll bump it to later. You need the discipline, and that’s something valuable for any brand.”
Cheat Sheet: Shopify’s Shop Pay integration will share customer purchase data with Google
Allowing retailers to sell for free, and adding more payment options, makes Google itself more of a shopping tool.
LG kicks off series of live stream shopping events produced in-house
If a consumer sees something they like, they can click on the product and will be taken out to the LG website to complete their purchase.
Loyal and App-y: How QSRs are leaning into rewards programs to boost mobile orders and sales
Brands were forced to find ways to reach customers in their homes and fast-food restaurants, including McDonald’s and Burger King, found answers by investing in loyalty programs.
SponsoredData-driven solutions: Charting a better way forward for brands and publishers
Travis Clinger, senior vp of addressability and ecosystem, LiveRamp Updates to mobile identifiers and browser data privacy policies have become an everyday part of life in the advertising industry. The browsers and device manufacturers have made privacy a competitive differentiator, as consumers have become increasingly concerned over how their data is being used. As an […]
Cheat sheet: Etsy beats earnings, turns focus to adding more revenue sources
Etsy is still growing beyond a blast of mask sales last year and now needs to manage 4.7 million sellers and 90 million buyers.
Member ExclusiveDespite hungry VCs, DTC brands are rethinking their fundraising approach
This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. Join Modern Retail+ to get access to the DTC briefing–as well as all articles, research and more. Before 2020, some founders and investors were starting to warn that most consumer […]