👋 Welcome back to Growthnotes!

Welcome to the DTC Report, where we analyze some of the best high-growth brands out there & tell you how they grew.

This week, we’re seeing how the VV (Vertical Video) domination is creating an increasingly homogeneous experience throughout different social apps.

💫 Random thought

Kind of crazy to think that there is a whole genre of elevator music that doesn’t even exist in elevators. Even crazier to think that elevator music was invented to calm fearful passengers who were riding an elevator for the first time. Makes a lot of sense that this music still plays in the dentist’s office.

👀 This week you’ll find

• 📱 Social media / Is TikTok becoming YouTube becoming Instagram becoming TikTok?

• 💵 Shopping Apps / What can DTC brands learn from Shein?

️📱 Social Media is becoming more of the same

Vertical video (VV) has taken over, and the fight is on.
Instagram is TikTok is YouTube 👇

TikTok is the pioneer in the vertical video space. It has built its powerhouse (1.8 billion daily active users) on the back of vertical videos, a nicotine-like media format that leaves you craving. It hits and it’s addictive.

Both Instagram (Reels) and YouTube (Shorts) have embraced the new format as teens are spending an average of seven hours a day, 39% of which is spent watching video. This means that TikTok, Instagram, YouTube and other social media are fighting for that 2 hours 48 minutes of attention. In the new red ocean meta-game, you need highly engaging content tailored to your specific users in vertical video format.

💡 Interesting

According to the same study, 26% of screen time is communication based (i.e, Direct Messages), where there is little possible ad placements. Even though this screentime is not monetized per say, it does serve as a strong retention mechanism, keeping people coming back into the app. YouTube is at a disadvantage on this front and Instagram is a clear leader.

👁 Copycatting > R&D

YouTube releases Stories, TikTok releases long-form video, Instagram releases a new feed that feels oddly familiar. All social media apps are participating in the build-up of what seems to be the final form of social media. We even have Reddit and Pinterest getting on the livestreaming boat.

👆This reddit livestream of two cats sleeping has more concurrent viewers (18,250) than we have people opening this newsletter every week (12,500). Maybe we should let these two cats become the face of the DTC Report.

👉 Predictions

Creators will become an inherent part of brand partnerships, as brands are notoriously bad at creating engaging content. These creators will become the face of brands and they will be rewarded handsomely, as they should be.

Platforms like Instagram, TikTok and Snapchat will pay their creators a bigger piece of the pie as they compete for user attention, which is directly tied to the creators (think of Spotify’s 200m+ deal with Joe Rogan that helped make Spotify a giant in the podcasting space). Oddly enough, this feels like we’re going towards a TV-channel model, where you tune-in for the content you love and passively stay for the rest.

TikTok and Instagram will be indistinguishable from one another just being one of the same.

This comparison aligns perfectly with head of Instagram Mosseri’s statement “We’re no longer just a square photo-sharing app.”

🤔 Actionable advice for e-commerce brands

• Triple-down on vertical video.

• Creators should be at the forefront of your video strategy. As a brand, work with content creators to generate content for your brand. Be careful of strict guidelines. Send them products and have them create content at their taste with very little guidance. Let them find cool ways to position you on social media. Good creators don’t care about your brand guidelines.

• Content syndication (the act of sharing your content on multiple social media platforms) makes more sense than ever. A TikTok vertical video can work just as well on Instagram, YouTube, Pinterest, Reddit and Snapchat. Double-down on distributing your content, and make sure to nail the subtleties of each platform.

🌊 Wavebreak

Wavebreak is a leading email & CRM agency for fast-growing DTC brands. They work with clients such Nutrafol, Casely and Caliwhite.

They have helped Casely double their revenues through email. Here is Mark Stallings said about Wavebreak:

“ We would not be where we are today without Wavebreak. They helped us double our revenue from email and allowed our lean team to focus on other parts of our business.”

Check out their website for more information on how they operate

💵 Shein is eating up e-commerce

Highlights

• Shein is outspending its competitors significantly when it comes to paid advertising.

• Shein wins on price and selection with over 2,000 SKUs being added daily.

• Shein’s mobile application is one of their biggest drivers of growth with 157.1 million downloads globally in 2021.

• Shein’s website follows the wish.com model with flash discounts, clearance and contests.

I never had any interest in Shein, until I observed my girlfriend’s 13 year-old sister scrolling through the thousands of new items (!) Shein had published on that given day. Fast forward forty-five minutes, and she had a whopping $600 in her cart. The final step was easy; negotiate with her father for a reasonable $300 instead of the initial $600 she had anticipated (anchoring). She went on to remove some nice but not really clothing she had in her cart and she placed her order.

Regardless of the statistical insignificance of this anecdote, this got me going down the Shein rabbit hole.

Shein is building an empire. They have surpassed Zara, and H&M in the US fast fashion segment (they own 28% of the pie).

👇 They are taking market shares away from every top-gun in the fast fashion industry.

This chart shows how Shein is dominating other players in the mobile app space.

👇 A couple of interesting points worth mentioning

• “[Shein] had six times the average number of social media advertisements compared to Princess Polly, Pretty Little Things, Boohoo, Zaful and Fashion Nova, according to BrandTotal.”

• They are winning big on TikTok with over 27.2 billion views on the hashtag #shein and 5.2 billion views on the hashtag #sheinhaul. To give some perspective, Nike has 23.9 billion views on the hashtag #nike.

• Shein uses gamification and behavioral principles that resemble those of a Candy Crush or a Clash of Clans. It feels like e-commerce brands still have a lot to learn from mobile app companies. This is consistent with the Chinese way of doing e-commerce (aliexpress.com and wish.com following a very similar model).

• According to Similar Web, the average visitor spends 8 minutes 53 seconds on the website on average. We can assume that the in-app average visit is as high, if not significantly higher than this figure.

Actionable advice for e-commerce brands

• Gaming mechanics are a great way to optimize conversions (spin to win, flash sales, contests, etc.) This is something that’s worth testing, although you should be careful as it can have a negative impact on your brand.

• Double-down on TikTok. Create a video concept that ties into your e-commerce experience, give it a hashtag, and promote it through micro-influencers. Get advice from creators that are on the platform daily to structure this. It’s hard to be cool.