D2C grows up: Two big D2C brands have filed for an IPO

9/2/21 8:00PM

No more middleman

‍In the last decade direct-to-consumer (D2C) companies have been cropping up everywhere. From razors to mattresses, shoes to glasses, D2C companies have popped up selling pretty much every consumer item you can think of. All of them promise to deliver better quality or price than brands that have to go through traditional retailers or channels, and all of them have really slick adverts on Facebook, Instagram and TikTok.

This week two of the biggest success stories in D2C filed for an IPO; Allbirds, the sustainable shoe of choice for many a tech-bro, and Warby Parker, the online retailer of prescription of glasses. Both companies have scaled to an impressive size in their short lives, reaching hundreds of millions of dollars in annual sales in the last few years. Both companies also lose money every year.

‍Warby Parker lost $56m from its operations in 2020, while Allbirds lost $29m. Despite those losses, each company is hoping to crystallize their efforts into billion-dollar valuations, while avoiding the fate of Casper, the D2C mattress brand that has seen its share price more than halve since its IPO thanks to mounting losses. Can they do better? Time will tell.

Hyunsoo Rim

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The entrance of Allbirds seen from Hayes St. in San Francisco, Calif.

Allbirds, the once buzzy multibillion-dollar sneaker startup, is selling up for $39 million

That’s less than 1% of its peak market cap about four years ago.

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JetBlue is raising its bag fees as fuel costs squeeze airlines

JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.