Issue No. 178: The internet doesn’t let you shop.

C1msrXIXcAILeIe.jpg

Amazon: the retail search engine

Amazon’s ability to attract retail brands in droves has an unforeseen side effect, it has become the defect search engine for products. Dylan Whitman, CEO of one of two founders at Brand Value Accelerator recently tweeted:

Mid market is future of ecommerce. 10 years ago Casper would have swept. Now 20 competitors overnight. Easier to get big harder to get huge.

Dylan is a friend and professional partner of mine. For one, he throws great professional parties and seems to know how to scale an agency faster than Amazon scaled Prime. Needless to say, he knows what he’s talking about but I think that he is off here. As Google, Bing, and Yahoo continue to lose market share to Amazon in search, mid-market brands will be harder and harder to find unless they too are selling on Amazon. And the “Catch 22” is that if you’re a younger brand who sells on Amazon, your brand will suffer in the long run. Historically, this has been the sentiment and I don’t see it changing much.

Mid-market eCommerce ($2-25M) will get harder, not easier.

Last Word: The Trouble With Mall Brands

On occasion, I like to consider the words of my friend Paul Munford, the esteemed Editor of LeanLuxe. Today he riffed on the article linked above called: “The Trouble With Mall Brands.”

An excerpt from today’s LeanLuxe:

The old brands, as much as it pains us to say it, are being replaced by these upstarts. Because Gap is faltering has everything to do with Everlane being the new Gap, as it does Gap’s ongoing internal issues. Its time has passed, and Everlane was happy to swoop up Rebekka Bay after her stint at the Gap. They’ve given her a contemporary platform to do something better. No matter what analysts may say, no matter what executive boards may attempt to do to ‘right the ship,’ the fact is that these mall brands just aren’t part of the lexicon like they once were. Shoppers have been swept off their feet by MLCs, and try as you might to fix it, sometimes there’s really nothing that can be done once the tide has shifted in a completely different direction.

Modern Luxury (MLC) is his focus and it’s a worthy one as it happens to be quite a bit of my professional experience. So here is an exercise:

Let’s take every well-capitalized brand with PR firms good enough to keep their executives in the press each week: Outdoor Voices, Bonobos, Chubbies, Mizzen+Main, Ministry, American Giant, Bevel, Casper, Combatant Gentlemen, Dollar Shave Club, Everyone, Frank & Oak, Indochino, Jack Erwin, JustFab, Ledbury, MVMT, Mack Weldon, Snowe, Track Smith, Warby Parker, Rhone, and Harry’s.

These are called digitally vertical native brands or DNVB’s (Andy Dunn is a national treasure for that one) and before “brand” there is an emphasis on “digital” and “vertical.” The reasons for the crumbling of the mall economy have been extensively covered on 2pml.com and those reasons extend far beyond how compelling the brands are. So far, MLC’s have won on convenience and eCommerce plays a major role in their product availability.  As such, it may be a stretch to say these younger brands are greatly impacting the market caps of the incumbents. Well, so far. Digital won’t always be the most convenient for these younger brands. And this is where the crux of my argument has been for a few years now.

Extra Read: Wall Street Journal: eCommerce 3.0 — April 2013

Vertical brands are considered more convenient and narrow because they entered a market in an efficient way. This, as consumers began shifting towards eCommerce. When major retailers decide to readjust their market expectation and refocus on digital efforts (narrowing their offering and availability), the playing field will again level as the aforementioned MLC’s continue to mature. When the playing field levels, it is then when each brand’s value proposition will shift from digital and vertical to superior branding. When product grows old enough to become commodity, brand and marketing becomes the focus (and often the most difficult proposition). And if these vertical brands capitalize on building superior one, the new guard will become the old.

See more of the issue here.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.