Target has lots of brands born on the Internet hoping to appeal to younger customers who don't want the same Old Spice deodorant or Schick razor that their parents use.
Target has inked a handful of similar deals with so-called digitally native brands, including Casper for mattresses, Native for deodorant, Harry's for men's shaving essentials, Quip for electronic toothbrushes, and Bark for dog toys. The approach is somewhat different from that of one of Target's biggest competitors, Walmart, who has started buying some of these digitally original brands, such as Bonobos and Moosejaw. (Walmart started selling Harry's shavers in his stores last year after the Target.)
Another dealer who goes the same way as Target is Nordstrom. The department store has made a number of brands in recent months, including sneaker maker Allbirds, luggage dealer Away and Casper to sell in its stores, often for a limited time. The news has helped to generate buzz and draw customers in who will test these products offline. However, unlike Flamingo and Harry's, Allbirds, Away and Casper already have their own stores and grow the network today.
Coherence between traditional retailers and these up-and-comers makes sense for several reasons, including that collaboration can help young brands decide whether to open their own independent stores as a next step, according to Jake Mendel, of Silicon Valley Bank's earliest practice in New York. Many of these brands, born on the Internet, bring about cult-like successes – large Instagram audiences – like legacy dealers like Target and Walmart can potentially piggyback on, Mendel added.
"Large retailers are acutely aware that direct to consumer brands are building close and authentic relationships with their customers, who seem to be willing to be more flexible on terms than they historically have," he says.
It is also worth noting that many of these bindings so far have been in the consumer packaging space – for things like shavers, toothbrushes and deodorants.
"If you sell a product with a low absolute margin margin, even if your gross margins are crazy, you still need to move a lot of volume to build a large-scale business," Mendel said. "With [the large majority] consumer sales still going through retail channels, these partnerships are a great way to reach large quantities very quickly."