Anheuser-Busch's global chief marketing officer reveals how its $1 billion innovation unit ZX Ventures is helping the company weather the coronavirus
Anheuser-Busch InBev has taken a page from its innovation hub ZX Venture to respond to the coronavirus, its global chief marketing officer and head of ZX Ventures Pedro Earp said. The company's response has centered on three major trends: People spending more time cooking, using in-home entertainment, and socializing in smaller groups, Earp said. It's also seen a "pretty significant acceleration" of its e-commerce business, Earp said. Last year, ZX Ventures brought in $1 billion in sales for the company. Click here for more BI Prime stories.
When Anheuser-Busch InBev created ZX Ventures in 2015, it had hoped that the innovation unit's investments in e-commerce, craft and specialty beers, and retail would eventually contribute to its core business. Last year, ZX Ventures brought in $1 billion in sales for the company. But its startup mentality has also helped the company adapt in the coronavirus pandemic, said Anheuser-Busch's global chief marketing officer and head of ZX Ventures, Pedro Earp. "In the startup world, if you don't understand consumers well, don't build solutions that really work and you don't scale fast enough, then you're dead," Earp told Business Insider. "And that's what we're trying to do in our core business as well — having a consumer obsession and the agility to put solutions out there." How Anheuser-Busch has responded to the coronavirus When the coronavirus started to spead, Anheuser-Busch announced that it would use its manufacturing lines to produce hand sanitizer. Since then, with people spending more time cooking, using in-home entertainment, and socializing in smaller groups, the company developed other initiatives including "Open For Takeout" to help bars and restaurants serve customers and the "Circuito Brahma Sertanejos" concert in Brazil that was livestreamed on YouTube. Its booming e-commerce business is making up for its on-trade business taking a hit ZX has grown the company's e-commerce business, selling to 250 million consumers per year and enabling it to collect more data on them. This growth has helped the company make up for its overall business taking a hit due to the spread of the virus, Earp said. He said Anheuser-Busch's e-commerce business was divided into three buckets: Its e-retailer relationships with the likes of Walmart in the US and Tesco in the UK; the online sales and delivery of its craft beers; and a one-hour beer delivery platform tailored to Latin America. Overall, the company's e-commerce business has seen a significant acceleration amid the crisis, he said. "We've had disproportionate exposure to [e-commerce] — our market share globally in e-commerce is ahead of the total market share," he said.Join the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button
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A startup that's helped brands like Hershey's and Petco make shoppable videos just raised $10 million to become an e-commerce platform that it says can help them drive more sales
Social video-turned e-commerce platform MikMak has raised $10 million, for a total of $14 million raised,...Social video-turned e-commerce platform MikMak has raised $10 million, for a total of $14 million raised, the company announced on Monday. The social-video-commerce platform turned into a broader enterprise-software platform in February and has been helping brands optimize their online sales. MikMak says it can help brands and retailers understand what channels, audiences, and creative get people to buy. MikMak says it works with more than 150 brands and retailers and has Colgate, L'Oréal, Hershey's, Petco, and P&G among its clients. Click here for more BI Prime stories. Social video-turned e-commerce platform MikMak has raised $10 million, for a total of $14 million raised, the company announced on Monday. Wavecrest Growth Partners led the Series A round, which included existing investors including Luminari Capital and Brave Ventures, and new investors including Lunch Partners and Madrona Venture Group. The funding comes as brands increasingly adapt to e-commerce at a faster clip amid the pandemic, with mobile e-commerce sales poised to hit $250 billion in 2020. MikMak said it works with more than 150 brands and retailers including Colgate, L'Oréal, Hershey's, Petco, and P&G, and that its revenue grew 50% between March and June. Until recently, MikMak helped brands and retailers sell products on platforms like Facebook, Instagram, and Snapchat. But in February, the startup shifted gears to becoming an enterprise-software platform that it says can help brands optimize their online sales. MikMak can show brands their e-commerce business in one spot through a new product, MikMak Dashboard, that shows what channels, audiences, and creative drive sales, MikMak founder and CEO Rachel Tipograph told Business Insider earlier this year. "I realized that from a product-development perspective, I could build something that wasn't just useful to the digital and social team, but also to the CRM team, shopper-marketing team, and the consumer-insights team," Tipograph said. "I wasn't providing visibility for what was happening real time in the market across platforms and retailers. And that's why I decided to build this product." MikMak says it can help companies make better and faster e-commerce decisions MikMak says the dashboard can help companies manage and track their sales across platforms and retailers based on channels, location, and influencers, and show what products are doing well by platform or retailer. Hershey's and Petco said they have seen positive results from using the platform. MikMak helped Hershey nudge consumers to not just buy products but also buy them in the right context, Doug Straton, the company's chief digital officer, told Business Insider in February. The company saw conversion rates higher than the industry average while testing the dashboard between December 2019 and February 2020, he said. Petco credits MikMak with helping it attract more brand vendors by letting Petco give the vendors control over their shopping experience, Tariq Hassan, Petco's chief marketing officer, said in February. It's also helped Petco reduce bounce rates on its own website by 23%, he said. But competition is heating up MikMak started out making short and catchy infomercials on behalf of brands on social platforms, then it built video technology to enable shopping on platforms. But with platforms like Instagram building their own checkouts, competition is heating up. Tipograph said those checkouts were just those platforms, while MikMak is building consistent storefront across channels with standardized reporting.Join the conversation about this story » NOW WATCH: Swayze Valentine is the only female treating fighters' cuts and bruises inside the UFC octagon
$1 billion startup Rent the Runway has furloughed 35% of its employees. Its future is now in question as coronavirus ravages retail.
Rent the Runway has furloughed roughly 35% of its corporate employees and cut overall headcount as...Rent the Runway has furloughed roughly 35% of its corporate employees and cut overall headcount as a result of the fallout from the coronavirus, the company confirmed to Business Insider. A slew of startups, from scooter company Bird to luggage-maker Away, have been grappling with the effects of the pandemic. As a flag-bearer for the new breed of direct-to-consumer brands, Rent the Runway's ability to withstand the crisis could serve as an important test case for startups facing the biggest business threat in a generation. Click here for more BI Prime stories. It was mid March and businesses were just starting to feel the impact of coronavirus — even highflying startups weren't immune. During a virtual company-wide meeting, Rent the Runway co-founder and CEO Jenn Hyman told staff that the clothing rental company would freeze hiring for the rest of 2020, cut its marketing budget, and that the leadership team would all take pay cuts. Some staffers were also told to negotiate better terms with vendors, like extended payment terms, by their managers. "We were all beginning to get worried, and knew that layoffs were a possibility," said a former employee who attended the meeting and was ultimately laid off. "But you always just hope it's not going to be you." Just a few days later on March 27, employees received an emotional video message from Hyman in their inboxes and were instructed to join Zoom calls where various department leads told members of their teams that they would either be laid off, furloughed, or receive a pay cut, according to three former employees with direct knowledge of the event. Former employees told Business Insider that their email accounts were disabled within 30 minutes of the calls. Rent the Runway has furloughed corporate employees — roughly 35%, according to the company. It also laid off "less than 10%" of its overall headcount, but wouldn't be more specific. The cuts are a result of the fallout of the coronavirus, the company confirmed to Business Insider. "We built Rent the Runway so our customers could 'show up' feeling powerful and confident every single day, whether they're at work or in a Zoom meeting," Hyman told Business Insider. "No amount of scenario planning could have prepared any business for the fallout of coronavirus, but our path forward remains unchanged, and even in a new normal, our mission is more relevant than ever. We will continue to be here for our customers so they can access the closet in the cloud with total flexibility." These cuts coincided with the startup laying off its entire retail staff late last month, on the heels of its retail stores in Chicago, New York, Los Angeles, and Washington, DC, being forced to shut in the wake of the pandemic. A slew of startups, from lingerie startup ThirdLove to luggage unicorn Away, have been grappling with the effects of the pandemic with states mandating the closure of non-essential stores and customers curtailing their spending. But as a flag-bearer for the new breed of direct-to-consumer brands, Rent the Runway's ability to withstand the crisis and avoid a repeat of past missteps could serve as an important test case for startups facing the biggest business threat in a generation. Particularly for those in the sharing economy, as consumers rethink borrowing rather than buying cars, apartments and clothes for safety reasons even once the pandemic passes. Business Insider spoke with 10 former Rent the Runway employees. Some were directly impacted by the layoffs and worked at the company as recently as last month, while others left the company over the course of the last 15 months. They said that they thought the company was on solid ground before the pandemic hit. These sources' identities have been confirmed by Business Insider but they requested anonymity because they are not authorized to speak publicly about the company. Unexpected roadblocks for the unicorn Rent the Runway pioneered the concept of women borrowing high-end designer clothes without shouldering the financial burden of purchasing them and has long been heralded as one of the hottest tech startups. Started by Harvard Business School classmates Hyman and Jenny Fleiss, it's raised $337 million and notched a valuation of $1 billion. But the company's ability to expand its retail footprint, grow its business, and go public is now in question. US retail sales, including clothes and accessories bought in stores and online, fell 8.7% in March, according to the Commerce Department — the largest decline in the nearly three decades that the government has tracked the data. Rent The Runway's business is no exception as consumer behavior has shifted in the wake of social distancing and mandatory work-from-home policies. With many customers working remotely, spending $159 a month for an unlimited office wardrobe may no longer make sense. And with few weddings or special events, there's little need for designer dresses. "There's a confluence of factors that, unfortunately, is all running counter to their business," said Sucharita Kodali, VP and principal e-commerce analyst at Forrester. "They're in apparel, where everybody's gasping for air right now; their core customers are not going out anymore; and they may have reservations about renting clothes and receiving packages in the middle of a contagious pandemic." The layoffs at Rent the Runway impacted employees across teams including operations, customer experience, talent, product and business development in offices across the country, a company spokeswoman confirmed to Business Insider. Temporary workers at the company's two distribution centers in Secaucus, New Jersey; and Arlington, Texas, did not have their contracts extended. Rent the Runway has also shelved plans to open an office focused on customer experience in Denver. The company has had growing pains In its first few years, Rent the Runway's business was focused on one-time designer wear rentals. But since then, it's added subscriptions tiers, retail locations, new sustainable brands and categories like home furnishings, and distribution and collection partnerships with companies including WeWork and West Elm. The idea was for the company to ultimately help people rent anything, from dresses to home furnishings, Hyman told CNBC last summer. "Our goal is to be the Amazon Prime of rentals and reach every single person in the US and the world," she said. But that expansion has come with growing pains. The company's culture was the subject of a 2015 Fortune Magazine report that described a "stressful and occasionally hostile" workplace at the startup and documented a high rate of executive churn at the company. In October 2019, a weeklong shutdown affected roughly 14% of subscribers and halted new membership. A recent Medium post by a former employee criticized its handling of COVID-19. While Rent the Runway has bounced back from these stumbles, according to the former employees, some said that they feared that it may not be able to shrug off the impact of the pandemic as easily. The company has said that more than 75% of its revenue is from subscriptions, while the rest comes from one-off rentals and sales of items. A reliance on subscriptions represents a challenge to Rent the Runway's ability to maintain profitability, the former employees said, because subscriptions — particularly the popular unlimited tier — have low margins. Rent the Runway has been creating new subscription tiers (it just launched a new plan between its single swap and unlimited tier that lets members exchange eight items a month), and entering into profit-sharing agreements with new brands and designers. These moves were a bid to improve margins, these former employees said. But the coronavirus coming out of the left field will likely make things harder, they said. "Rent the Runway was headed in the right direction," a former employee told Business Insider. "But it's a tough spot to be in right now, because rental fashion isn't the highest margin business to begin with, and combining that with a recession only makes things worse." Business Insider was unable to pinpoint the precise financial impact of the coronavirus on Rent the Runway's business, but some former employees said that the company is trying to weather the downturn by extending the duration of its sample sale, which is typically done to swap out clothes that can't withstand the dry-cleaning cycle. It is also giving subscription members two bonus spots for swapping clothes to get them to stick to their memberships versus canceling them, according to the former employees. As the coronavirus's spread threatens thousands of businesses and retailers, Rent the Runway's future remains uncertain. "There's not a lot that you can do except ride it out, preserve as much cash as possible, and cut costs with layoffs, salary cuts, and variable expenses with as much of your core assets intact as possible," said Forrester's Kodali. Got a tip about direct-to-consumer startups? Contact this reporter via encrypted messaging app Signal at +1-646-702-2530, email at firstname.lastname@example.org, or Twitter DM at @tanyadua. Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
Lowe's says its website has been a huge drag on the company, but it's hopeful that an overhaul will boost its sales
Lowe's CEO Marvin Ellison spoke about the company's omnichannel strategy during the company's Wednesday earnings call....Lowe's CEO Marvin Ellison spoke about the company's omnichannel strategy during the company's Wednesday earnings call. In response to a question about brick-and-mortar sales, Ellison said that the company is hoping that an e-commerce overhaul will boost the performance of its physical stores. "We think it's part and parcel that Lowes.com has to improve," Ellison said. Visit Business Insider's homepage for more stories. Lowe's is hoping to boost its brick-and-mortar sales by upping its e-commerce game, CEO Marvin Ellison said during an earnings call with analysts Wednesday. Ellison shared his thoughts on the retailer's omnichannel approach in response to a question from Cleveland Research Company CEO Eric Bosshard, who asked the leadership team what had been limiting core brick-and-mortar sales. Bosshard also asked what steps Lowe's planned to take to bolster its physical stores in 2020. In its fourth-quarter earnings, Lowe's posted a comparable sales increase of 2.5%, down from the 3.2% growth the retailer saw a year ago. "Our sales growth was driven almost entirely by our U.S. brick and mortar stores, supported by our investments in technology, store environment and the Pro business," Ellison said in a statement posted on the company's website. In the call, Ellison elaborated that the home-improvement retailer anticipated that an e-commerce overhaul would prompt a spike in Lowe's in-store sales. "A lot of home improvement transactions begin online," Ellison said in response to Bosshard's question. "They may not consummate online, but they begin online. It is a true omnichannel environment, where research and also product education happens online and then it drives traffic to the store." Ellison went on to say that limitations to Lowe's digital operations may be softening physical store sales. "Not only does it hurt your dot com sales, it actually hurts your brick and mortar sales because it limits the amount of traffic where people will show up after having quality, efficient research and decide to buy," he said. And e-commerce is one area where Lowe's has historically fizzled, according to its own leadership team. Back in November 2019, Ellison said the company was lagging when it came to its digital capabilities. At the time, the CEO said that it was "difficult" to increase dotcom sales "correctly" and in a financially responsible manner. "I would argue that there's not a brick-and-mortar retailer in the US that is our size that has such limited growth in the dotcom business," Ellison said during the November call. "Most US retailers that announce their comp growth for the quarter typically will have a dotcom number that starts with 20% growth, which is typical in this day and age. We're not there yet but we know how to get there." Lowe's is now in the process of switching from a 10-year-old system to Google Cloud. In a statement, Ellison said that the retailer has a "detailed road map in place to modernize our e-commerce platform and accelerate Lowes.com sales." "We think it's part and parcel that Lowes.com has to improve, and when that improves it lifts the entire company from an e-commerce standpoint, from an omni-channel standpoint, and from a brick-and-mortar perspective," Ellison said. SEE ALSO: Home Depot and Lowe's are gearing up to hire 133,000 employees for the springtime rush DON'T MISS: Lowe's CEO says e-commerce has largely been a 'mystery' for the company, and it reveals a stark reality for the home-improvement chain SEE ALSO: See what Lowe's looked like when the home-improvement giant first opened Join the conversation about this story » NOW WATCH: Robots are invading big box stores and want to help you shop