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No. 262: Next Two Years | Part Two

The past is prologue, or so they say. While Part One (see 6-10 here) focused on the great stories of the last two years, Part Two focuses on what can happen within the next two years.

5. A 2PM “Top 50” Shopify retailer will acquire its eCommerce agency.

Somewhere a founder is saying, “Wait, we can do that?” And for a small handful, it can make sense. This simple question may persuade a top 50 retailer (see database here) to acquire their go-to eCommerce agency. There is a particular type of brand that this would make sense for. Here are the qualifiers. The digitally vertical native brand:

has a trusting and transparent relationship with their agency.
is focused on building the brand before the thought of hiring engineers
has founders with a non-technical background
is a company that does not employ an existing CTO
is a brand is doing $20M+ in online retail

The relationship between Glossier and Dynamo stretches back to when the beauty brand was first founded. In 2014, Dynamo took on Glossier as a client, helping to launch the brand in the U.S., developing its website and eCommerce platform and acting as what agency co-founder Bryan Mahoney called its “in-house tech department” in a post on the brand’s “Into The Gloss” blog in 2016. After helping to launch Glossier, Mahoney moved to New York to become its VP of engineering. Following the acquisition, Mahoney has been named CTO at Glossier.

Josh Kolm, Glossier Acquires Dynamo

4. Walmart will acquire another DNVB by the end of 2018.

Let’s face it, selling to Walmart is no longer a substandard exit. There’s a coolness factor at Walmart, these days. In the new commerce economy, it’s something to be proud of. Whether it is Outdoor Voices (no. 76), Eloquii (No. 42), Homage (no. 75) or Bevel (no. 79), I expect Walmart to drill down on their mission to attract more millennial consumers to the brand. These were just four of the brands that could make great sense for Marc Lore’s acquisition machine.

From Member Brief No. 5.

According to eCommerce CEO Marc Lore, Walmart continues to search for M&A opportunities that differentiate its online offering and attract millennial shoppers. He added that the company is “definitely still in acquisition mode,” and the acquiring of specialty brands can “help us get the fundamentals right” on both Walmart and Jet.com. He noted that future acquisitions will range from $50M – $300M.

3. Google wants to compete against Amazon.

Brands just want commerce to be easy for them, what’s adding one more node to the omni-channel operation. Google Shopping Action is a service by Alphabet that could be the answer to the shopping simplicity that Amazon has trademarked. Google’s understanding of the online retail consumer may be superior to Amazon’s. And this is good news for the search engine’s collective of launch partners.

[Google Shopping Action] has partnered with major retailers like Ulta Beauty, Target and Walmart by allowing them to list their products across Google search through the Google Express shopping service.

“The consumer is much more demanding,” said Daniel Alegre, President of Retail and Shopping Global at Google at ShopTalk. “In their minds they expect Google to understand the question really well and know so much more.”

Google Shopping Actions features a universal shopping cart and instant checkout with saved payment credentials across Google.com and Google Assistant. It enables one-click re-ordering, personalized recommendations and basket-building based on a customer’s purchase history and loyalty.

Daniela Forte, Multi Channel Merchant

From Member Brief No. 5.

Google to let users buy directly from search results. In what seems like somewhat of a competition with platforms like Shopify, Shopping Actions is a new Google feature which allows users to purchase items directly from search results.

Retailers can list their products on Google search, the Google Express shopping service, and Google Assistant on home devices and mobile.
Google provides a universal shopping cart across platforms
Shoppers can save their payment credentials and make purchases from retailers with instant checkout.
Google charges retailers a cost-per-sale fee.

2. Apple Pay becomes the new one-click.

The ad wasn’t well received but the technology has been. With online retail shifting from desktop to mobile, faster than ever, Apple Pay is vying to become the go-to ‘face’ for many of the growing number of vendors that are pursuing mobile-first strategies.

Here is the problem that Shopify is hoping to solve with their bet on Apple Pay for online retail:

A general manager of financial services at Shopify, told Karen Webster in a recent conversation, is that the checkout experience “is a weird three-page mess that really hasn’t evolved over the now almost three decades people have been shopping online.”

Granted, the UX has gotten a bit nicer, and some streamlining efforts have been baked in, but at its base, Hashemi noted that it’s the same bad experience: The customer has to enter their shipping data, billing data and card information “over and over again, and multiple properties.” “This is a checkout process that just desperately needs to go away,” Hashemi stated.

Pymnts.com

1. Spotify will release a hardware collaboration by the end of 2018.

Screenshot_2018_02_20_12.02.37 Spotify benefits from its platform agnosticism. If you try hard enough, you can use their service on any hardware device. That doesn’t mean that they aren’t experiencing hardware drama that could stall an IPO. If you ask your Alexa to play a song, it will use the Amazon Music service by default. If you ask Siri on HomePod, it will use Apple Music. If you ask Google Home, it will default to Google Play. Needless to say, Spotify has read the writing on the wall. The streaming service is afraid of being completely cutoff from the hardware ecosystem and will likely land a hardware deal with an incumbent speaker manufacturer by the end of Q3 2018.

Spotify wouldn’t necessarily need to build its own audio equipment from the ground up. The music app could instead partner with an established speaker maker like Bose on such a product. If this were the case, Spotify would have a hardware product where its services are at the forefront instead of an afterthought. Meanwhile, its hardware partner—a company similarly being left out of the smart speaker conversation—would have an additional avenue to compete against products by Amazon, Google, and Apple.

Christina Bonnington, Slate

Member Brief No. 5: Shoptalk Takeaways

Retailers

Is brick and mortar retail really dead? This was the question permeating throughout 2018’s Shoptalk, an event that one DNVB CEO and Executive Member calls “the Golden Globes to NRF’s Oscar’s – but in a good way.” But to answer this question, you have to be willing to hear some uncomfortable thoughts that were not mentioned at the heralded Las Vegas event.

This member brief is designed exclusively for Executive Members, to make membership easy, you can click below and gain access to hundreds of reports, our DTC Power List, and other tools to help you make high level decisions.

Join Here

No. 261: Two Years Later | Part One

On March 22, 2PM begins its third year. The purpose of the 2PM letter remains the same. It’s a weekly (or 2x/week) rundown of news, intel, and commentary that shapes our industry. It’s humanly-curated (with extreme care) and each week, the balance of the articles is influenced by the most read links from past weeks.

This project began as an initial letter sent to 30 industry friends with a simple philosophy: by studying adjacent industries, you can improve your own. As such, the letter has evolved into a trusted source of information and commentary for many of the brightest in media, commerce, data, and branding.

So with that, I’ve highlighted impactful storylines from the last two years. Part one of two will feature the first of five events, shifts, and developments that will influence your industry’s next three to five years.

10. Shopify solidifies its standing as a go-to for top 100 eCommerce.

Platform objectivity is really important here, there’s little evangelism here.Here are the most commonly seen options: custom cart, WooCommerce, Big Commerce, Magento, Salesforce (Demandware), or Shopify. I believe that established brands should build on the platforms that are best for them but the numbers are the numbers.

Based on some recent research, I’ve polled the most notable 110+ eCommerce brands and a resounding 40+% of them are hosted by Shopify. This has tremendous implications for the Shopify agency industry. Current leaders in that space: Bold Commerce, BVAccel, Pointer Creative, Wondersauce, Fuel Made, and Worn. I anticipate that one of them to be acquired by a top 25 brand in the next two years.

9. Affirm redefines consumer credit.

Early in 2015, I encountered Affirm for the first time (albeit late). I was constructing a luxury eCommerce platform for men and I was hunting down ways to bolster the site’s conversion rate. Affirm was one of the first company’s that I reached out to because the premise of the service was simple:

offer financing at eCommerce checkout
remove friction (long applications, credit checks)
keep interest rates low and honest

This process was perfect for the online retailing of higher end items ranging from $500-$10,000. Hodinkee executed this concept to perfection. And now, they are pushing “honest financing” into physical retail.

People can sign up through the website or at checkout on some web stores for financing from Affirm that’s paid off in monthly installments. On Monday, the company said it’s making the micro-lending program available through Apple Pay, letting customers tap their iPhones to pay in brick-and-mortar stores.

This essentially makes Affirm a credit card provider without physical cards or credit scores. The San Francisco-based company pitches itself as superior to traditional credit cards from American Express Co. or Visa Inc. because it’s transparent about fees and charges no interest on purchases from more than 150 retailers.

Julia Verhage, Bloomberg Technology

8. Walmart pivots towards a startup culture.

When Walmart acquired Jet.com, the legacy retailer acquired a new direction led by Marc Lore. Many in the industry remain skeptical of Lore’s ability to bolster Walmart’s position in a market that’s deeply influenced by Amazon, Alibaba, and digitally vertical native brands. But to his credit, Walmart’s market cap is rising. In fact, it saw an all-time high on January 28, 2018. I’ve applauded his innovations. These innovations include his streamlining Walmart’s omni-channel operations, acquiring popular online retailers, and incubating native brands like their new Allswell.

From Member Brief No. 2:

The Allswell brand is strong, it’s independent, it’s inviting. It looks like a Silicon Valley-backed DNVB for bedding and mattresses. But most importantly, it appeals directly to upper-middle class women. If you notice, the “King” bed is now known as the “Supreme Queen”, a nice touch in an era (rightfully) dominated by the rhetoric of feminism and gender equity. Allswell is a play to capitalize on this cultural momentum.

7. Glossier forges a new path for content and commerce.

One of the core tenets of 2PM’s commerce beliefs is that to succeed, you must control both key levers: content and commerce. I’ve called this linear commerce. There isn’t an operation that is executing as well as Emily Weiss’ Glossier.

From the brand’s inception – which spawned from the hyper-popularity of Weiss’s beauty blog Into the Gloss – the beauty company has gone against the proverbial grain of the beauty business. Marketing a sense of authenticity and belonging rather than the beauty industry’s traditional fictitious glamour story, the female-dominant company (Dear Tech People reports 79% of Glossier’s staff is female) captured the love and attention of the coveted Millennials.

Janna Mandel, Forbes

From Member Brief No. 1:

Glossier / Into The Gloss has achieved that proverbial line, the result of two planes intersecting to form infinite opportunity. Glossier is operating similarly to Kylie Cosmetics, but in a way that could be more sustainable for the well-funded D2C brand.

The majority of Glossier’s influence referral comes from their blog while the majority of Kylie Cosmetic’s influence referral traffic comes from Jenner’s Instagram and Youtube accounts. While Jenner’s influence is currently stronger, Glossier owns their influence plane.

6. Subscription media becomes the new standard.

Just ten years ago, paywall was a dirty word. And then the New York Times’ innovative commerce department developed a strategy that readers are willing to play for quality. In 2018, with the exception of Axios, Outline, and Inverse, there aren’t many examples of notable media startups who haven’t pursued subscription revenue as their focus.

I’ve cited TheSkimm, Skift, and The Information as innovators in this space.

The newsletter reports a 30% open rate. Since its launch, TheSkimm has expanded to offer podcasts, an e-commerce business and a paid app featuring a calendar of upcoming news and televised events. TheSkimm will use the new influx of money to build more subscription services, perhaps with the help of Google Ventures and Google, and enrich its video and podcasting options, along with plans for data analysis.

Melinda Fuller, MediaPost

In issue No. 262, 2PM will count down the last five storylines. If you have any feedback on 6-10, email me: web@2pml.com.

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