Memo: The 2PM Digital Commerce Presentation

While much of the character makeup of DNVBs has stayed the same, the backdrop has changed drastically. New macroeconomic trends and market forces are influencing the DTC industry and the DTC industry is influencing the old world. 2PM’s coverage and analysis follows these trends closely in real time; it’s worth stepping back to assess the overall outlook for the future retail, Web3, supply chain, privacy, real estate, and the idea of ownership inside the metaverse.

In a presentation for Deloitte Digital, 2PM outlined eight forward-thinking ideas.

Physical-to-digital: Retailers are pulling back from third-party retailers [1] 

A leading strategy for brands of all sizes and status is to intentionally and carefully create a wholesale network that allows for inventory control and partnership over the spray-and-pray approach of retail generations past. Third-party retailers will play a smaller and different role than before as brands focus on their owned channels. Case in point: Nike will be 70% direct by 2027.

Digital-to-physical: DNVBs are opening owned shopping experiences [2]

For online brands, expansion is happening at the store level. Physical stores heighten the brand’s online halo and if done well, are money makers. The risk is avoiding over-retailing. In step with this expansion, the mall will be remade in DTC’s image.

Changes in advertising: Apple’s privacy update will have lasting effects [3]

First party data will define the next wave of advertising and sales. Brands and platforms are struggling now to adjust to Apple’s privacy update as Google plans a similar change for Android. Watch for a showdown, with Apple challenging Meta and Google as a primary advertising platform. Add in one-click buying and Apple’s dominance here isn’t hard to imagine. Also noteworthy to watch: The rise of gCommerce and the continued prevalence of the QR code.

CAC continues to rise, content partnerships become more critical for properties [4]

Apple isn’t the only change affecting advertising strategies. Customer acquisition costs are getting higher. In addition to the emphasis on first-party data, content partnerships will be a key strategy for advertisers going forward. It will evolve beyond the partnership, with brands acquiring media properties in order to get access to insights around product demand and community.

Growth in proximity payments precede eCom adoption in the U.S. [5]

The U.S. is currently eighth globally in mobile payment adoption. That will be tech’s next arms race in the country, as companies compete to become the biggest mobile payments operator. Prediction: the U.S. will reach 30% eCom penetration by 2027.

Air freight, container ships, and owned chains [6]

Supply chain disruptions have reshaped retail in the past two years. The biggest retailers will make moves to ensure that they are no longer beholden to forces beyond their control again, because they have the resources to own their supply chains. Expect Amazon, Target and Walmart to being acquiring more of their supply chain facilitators. This could make smaller brands more beholden to big retailers.

Malls will facilitate eCom returns to drive foot traffic [7]

What will the purpose of the mall be in five years? Follow retailer’s biggest pain point: Online returns. With so much extra retail space across America’s struggling malls, more will be turned into reverse logistics hubs in order to help brands ease the cost of online returns.

Web3 and DTC, retail on the blockchain [8]

The metaverse is here and by 2027, expect retailers to have invested as much in their presence in virtual worlds as they do in the physical one. Web3 can help brands establish new-age loyalty programs and communities while creating a revenue source not tied to the creation of more physical goods. Watch Nike and Starbucks to see where this is headed.

Here it is. PDFs are available to subscribers, just reply to the subscriber email and I will personally send it:

By Web Smith with Hilary Milnes, Christina Williams, and Alex Remy