Pre-pandemic spendings on BFCM, Meta's ad-free offer, ecom aggregators | D2C Digest

Hey there, great people of the D2C community who are building fantastic things! This is your host Berkay writing.

Here is what’s happening in the D2C world. Here is your weekly D2C digest!

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🤑 CMBF shoppers will spend billions this year

According to a recent article by BBC, experts predict that consumers will spend generously during the upcoming holiday season Despite financial constraints due to factors like inflation and increased living costs.

Retail forecasters anticipate a return to pre-pandemic holiday shopping norms, with US spending expected to exceed pre-pandemic levels for the first time.

However, higher prices and inflation will likely result in consumers purchasing fewer gifts. Shoppers are expected to focus their holiday spending during Black Friday and Cyber Monday, taking advantage of significant discounts, especially in categories like toys, electronics, and apparel.

Annd most importantly, online shopping is expected to play a substantial role, with over 60% of holiday spending occurring online.

So hope your inventory and operations are all set!

🔎 Meta to introduce an ad-free paid package

Last week, Meta announced that the company will start offering an ad-free subscription model to its users in the EU, EEA, and Switzerland.

This means users can choose to pay a monthly fee to use Facebook and Instagram without ads (€9.99/month on the web or €12.99/month on iOS and Android) or continue using these services for free with ads.

The company says this change is driven by evolving European regulations like the GDPR and a high demand by customers for an ad-free internet experience.

Yeeahh okay well, whatever…

Users who opt for the free version will still be able to control their ad preferences. And advertisers will continue running personalized campaigns.

For now, the subscription is for users 18 and older, but Meta is exploring options for teens.

Okay, great! But what does this mean for D2C people?

You guessed it right. Possibly higher ad costs… Sorry!

😶 Ecom Aggregators are having tough times

E-commerce aggregators, companies that acquire small profitable e-commerce brands, raised over $15 billion in 2021.

However, less than two years after reaching their peak, many are facing financial difficulties.

You might remember Thrasio, the Amazon aggregator that raised over $3.4B, laid off some of its staff in May 2022. Now the company has engaged restructuring advisors, indicating a possible bankruptcy announcement.

And Benitago went bankrupt in September. Benitago had approximately $7.5 million in cash when filing for bankruptcy. The filing noted that "consumer preferences shifted as pandemic lockdowns ended."

According to Ben Cogan, cofounder of Agora aggregator, ecommerce aggregators were seen as a new wave of VC-backed ecommerce, or “Ecom 2.0” as he puts it, focused on profitability, unlike the unprofitable “Ecom 1.0” DTC businesses.

Ben says the problem boils down to profitability, with most e-commerce aggregators struggling due to factors like high G&A expenses, questionable accounting practices, increasing interest costs, a drop in post-COVID demand, and other issues such as overpaying for brands and management teams lacking e-commerce expertise.

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