Jul 30, 2018

The big picture: Millennial-targeted startups face wild boom-bust cycles

Photo: Scott Eisen/Getty Images

E-commerce startups, especially those in the fashion and lifestyle spaces, are testing novel methods to keep young shoppers coming back in a saturated market.

Why it matters: Millennial spending habits on retail are impulsive as they spend more freely than other generations. New startups are popping up on their Instagram feeds to advertise free trials or referral codes to get them in the door — but retaining those free-flowing dollars can be more difficult.

By the numbers:

  • An average company has a 32% chance of retaining a customer who made one purchase for a second purchase, but once a customer makes two purchases, there's a 53% chance they will make a third, per a report from RJ Metrics.
  • 90% of female social media users interact with beauty brands, and 83% of interactions are related to clothing, according to Adweek.
  • The two top factors when buying clothing and accessories re low price and high product quality, according to a 2017 Statista survey.

The winners:

  • Birchbox, a monthly subscription service for beauty products, went through several restructuring methods this past year in a successful attempt to show profitability, per Retail Dive.
  • Letgo, the secondhand goods marketplace valued at over $1 billion, announced the launch of image recognition technologies to give users video listings and automatic pricing suggestions, TechCrunch reports.
  • Glossier's CEO Emily Weiss raised $86 million in venture capital for the beauty brand. The company's clean product branding has attracted a mass of young cultish fans, Recode reports.
  • ClassPass, a subscription service for fitness classes, has raised $85 million in venture capital to fund the New York City-based startup’s plans to open in 10 more U.S. cities by end of year as well as enter new markets overseas, primarily in Southeast Asia.

The losers:

  • Mobile shopping app Grabble folded in July after it deemed its progress in "creating a technology platform for native mobile commerce" as a failure to deliver, trade publication Drapers reports.
  • Blue Apron stock has taken a hit since it went public last year. Blue Apron CEO Brad Dickerson told Axios' Dan Primack that the company pretended to be a technology business when it wasn't. "It’s something we’ve seen lots of other consumer companies do," Primack reported on his Pro Rata podcast.
  • MoviePass ran out of cash just last week, freezing subscriber usage at the theaters. "Surge fees" consistently keep going up and the company’s owner, Helios and Matheson Analytics, filed for a $5 million loan to keep the company afloat, per Business Insider.

The bottom line: As Kirsten Green, the founder of Forerunner Ventures, wrote for Axios Expert Voices, "These trends most often direct transactions straight to brands and specialty retailers, and will only continue in popularity."

Go deeper

LATAM Airlines files for U.S. chapter 11 bankruptcy

A LATAM air attendant aboard one of the company's planes in March. Photo: Kike Calvo/Universal Images Group via Getty Images

LATAM Airlines Group SA said in a statement early Tuesday the firm and its affiliates in in the United States, Chile, Peru, Colombia and Ecuador have filed for Chapter 11 bankruptcy protection in the U.S.

Why it matters: Latam is Latin America's largest airline. "LATAM entered the COVID-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future," the firm's CEO Roberto Alvo said in the statement.

Editor's note: This is a developing news story. Please check back for updates.

30 mins ago - Economy & Business

Novavax starts human trials for coronavirus vaccine

Novavax's Nita Patel with a computer model showing the protein structure of a potential coronavirus vaccine at the lab in Gaithersburg, Maryland in March. Photo: Andrew Caballero-Reynolds/AFP via Getty Images

Novavax began clinical trials of a vaccine for the novel coronavirus in Australia on Tuesday, per a statement from the Maryland-based biotechnology firm.

The state of play: 131 volunteers in the Australian cities of Melbourne and Brisbane will undergo injections as part of the study, the company’s research chief Gregory Glenn said during a briefing, per Australian Associated Press.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 12:30 a.m. ET: 5,495,061 — Total deaths: 346,232 — Total recoveries — 2,231,738Map.
  2. U.S.: Total confirmed cases as of 12:30 a.m. ET: 1,662,302 — Total deaths: 98,220 — Total recoveries: 379,157 — Total tested: 14,604,942Map.
  3. World: Italy reports lowest number of new cases since February — Ireland reports no new coronavirus deaths on Monday for the first time since March 21 — WHO suspends trial of hydroxychloroquine over safety concerns.
  4. 2020: Trump threatens to move Republican convention from North Carolina — Joe Biden makes first public appearance in two months.
  5. Public health: Officials are urging Americans to wear masks over Memorial Day.
  6. Economy: New York stock exchange to reopen its floor on Tuesday — White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Charities refocus their efforts to fill gaps left by government.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 1 hour ago - Politics & Policy