Hook + Gaff Switch to DTC Model; Shoes of Prey Closing Business

DTC’s Daily Digest brings you the latest news on the world’s fastest growing direct-to-consumer brands. In today’s edition: Hook + Gaff switch to DTC model; Shoes of Prey closing business; and Lyft gears up for IPO.

Hook + Gaff switch to DTC model

Hook + Gaff Watch Company, the South Carolina-based sports-watch maker with a focus on fishing, is transitioning to a direct-to-consumer only business model to be effective starting 15 March.

By eliminating its retail footprint, Hook + Gaff said it will cut out the “retail markup”, which means the watch company can offer its customers better value without sacrificing creativity or quality. Moving forward, Hook + Gaff watches will exclusively be sold online for a reduced retail price.

One of the key motivations behind the move, according to Michael Sims, founder, Hook + Gaff, is to “interact directly with our customers enabling us to build closer relationships with our fans”. Cutting out their retail presence means that all purchases of Hook + Gaff products will come via their owned platforms, meaning they can get a clear insight into who is buying their products, and what they are interested in. This data will also enable them to refine their product offering, making sure they can design products that consumers want.

It will be interesting to see whether this drastic shift in strategy leads to an initial sales dip, followed by an uptake, or whether the transition is somewhat smoother than that.

Shoes of Prey closing business

Shoes of Prey, a 10-year-old digitally native shoe brand launched in Australia, is shutting down after a seven-month pause in operations. The brand was built on the hope that personalisation and customisation would define the future of retail.

As the company scaled, including moving its headquarters to the U.S., partnering with Nordstrom, and hiring 200 employees, it opened itself up to a more mass-market fashion customer. Shoes of Prey co-founder Michael Fox says “we learnt the hard way that mass-market customers don’t want to create, they want to be inspired and shown what to wear”.

Shoes of Prey will stand as a cautionary tale that DTC is not a foolproof business model. The move to the U.S. didn’t go as planned, with manufacturing costs in America far more expensive than areas such as China, where most of Shoes of Prey’s competition turn for their manufacturing.

At the time of its closure, Shoes of Prey had raised USD$25.9m (£19.5m) since being founded in 2009. At ten years old, it was well-established for a DTC business, and will act as a warning to newer entrants about the risks of rapid expansion and marketing to the masses.

Lyft gears up for IPO

Ride-hailing business Lyft is readying itself for an IPO, announcing that it plans to offer 30,770,000 shares of its Class A common stock on Nasdaq.

The company looks set to raise around USD$2bn (£1bn), at a valuation of between USD$18.5bn-23bn (£13.9bn-17.3bn). The transport industry has been expecting Uber to beat Lyft to the punch when it comes to going public, so this will be perceived as a win for the San Francisco-based business.

Cumulatively, Lyft has raised approximately USD$4.91bn (£3.7bn) in outside capital over the course of many equity funding rounds. The company’s most recent round, a USD$600m (£452m) Series I round.

The fact Lyft has gone public before Uber may well reflect the fact that Uber’s reputation among consumers, as well as among drivers and governments, has been tarnished in recent years. On top of that, the business has not significantly moved forward in terms of innovation recently, while other competition, such as Lyft, Grab, and Ola, have come into the market to disrupt Uber and take their share.