Online Consumer-Products Startups Finding Success Depends on Getting on Shelves

Last month, Wall Street Journal writer Sharon Terlep reported that, “American shoppers will buy almost anything online. But when it comes to household mainstays, from razors to tampons, the old-fashioned store still beckons.

That reality is hitting some of the world’s biggest consumer-products companies, which collectively have invested billions of dollars in startups in recent years that sold directly to consumers. Meanwhile, upstart brands are finding they must move into stores to compete outside of niche territory—for at least two reasons, executives and analysts say. Big retailers can give brands critical visibility, and consumers generally prefer buying household staples in a single shopping trip to enrolling in many subscription services.

More than three years after Unilever PLC, the European giant behind Dove soap and Axe body sprays, paid $1 billion to buy Dollar Shave Club, the razor subscription service still isn’t making money, according to people familiar with the matter.”

The Journal article noted that, “Dozens of online consumer-products startups are finding their success depends on getting on shelves of Walmart Inc., Target Corp. and other traditional retailers. Even some celebrity-fueled startups have made the shift. Kylie Jenner’s cosmetics brand, which recently sold a $600 million stake to Coty Inc., started selling in Ulta Beauty Inc. stores last year, although it didn’t cite a reason for the move.”

Ms. Terlep added that, “Some companies that sell online say demand is rising, and many brands that have moved into retail are increasing sales online as well. In addition to getting on store shelves, they are investing in TV and print advertising, finding they can’t rely on social-media marketing alone.

“Online sales accounted for roughly 15% of the $3.7 trillion in U.S. retail spending last year, according to the National Retail Federation. Where overall retail spending rose 4.6% from the year earlier, online spending grew by more than 10%.”

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