No. 324: Own The Audience


On the hidden costs of social platform innovation in retail. Where, how, and what we buy is constantly changing. A scenario where a consumer relies on their Amazon Alexa to order “the dress that Emma Hill wore on her Instagram post from Wednesday” is just as probable as buying that same dress, directly from Emma Hill’s Instagram account. The tools of the trade evolve, the funnel shortens and widens, commerce becomes linear. There’s no better example of this than on Instagram, where the lines between brand, promotion, and commerce continue to blur.

Instagram’s native cart is part of an industry shift shift towards linear commerce. Chinese superapps, like Little Red Book and WeChat’s Good Product Circle, have already turned the Chinese consumer’s collective review power into an integral part of their shopping experience. And, with American platforms’ ad models being under attack from regulators, adding social commerce capability is a hedge that will become increasingly common throughout audience-driven platforms. Stateside, platforms like Verishop include native promotional posts from Instagram and Snapchat influencers throughout the user experience.

No. 314: Law of Linear Commerce

The digital economy rewards the companies that work along the line that separates traditional digital media and traditional eCommerce. A great product needs an organic and impassioned audience. Captive audiences will need products and services tailored to their tastes. Linear commerce is the understanding that digital media and traditional online retail will eventually meet at the center – along the line – the most efficient path for growth. Brands will develop publishing as a core competency and publishers will develop retail operations as a core competency.

Powered by Instagram’s native checkout, social commerce has narrowed the line between promotion and consumption. We are just as influenced by the peers that we follow as we are by mass marketed influencers, brand models, and marketing campaigns. Linear commerce on social platforms like Instagram, Snapchat, and Pinterest represents the ultimate merger of consumption and influence. It moves the business of consumerism into creative pursuit, where the brands that are best rewarded are often the most creative. Today, social media has become, both, a driver of economic value and a canvas for artistic expression.

Retail tacticians are quick to celebrate wonders of the convergence between inspiration and the checkout funnel. As performance marketing continues to increase in cost as its value flattens, this form of influence-driven sales has emerged as a more cost effective alternative.

A great product needs an organic and impassioned audience. Captive audiences will need products and services tailored to their tastes

Platforms like Instagram have successfully monetized our attention. They are in the process of commercializing our network. This will increase the platforms’ power as gatekeepers, a strategy that we’ve seen before.

Member Brief: A Familiar Strategy

In 2010, the ten most popular brand pages on Facebook looked something like this: Pringles, Converse, Victoria’s Secret, Converse All-Star, Red Bull, Skittles, Disney, Oreo, and Starbucks, and the top brand: Coca-Cola. With over 22 million fans and Facebook’s once-famed organic reach at its peak, brands’ investments into growing their audience was a lucrative practice. Fast-forward nine years, and Coca-Cola’s page is now at 107 million. A recent post received just 1,500 likes. That’s right, just .0014% of Coca-Cola’s audience “liked” the post.

Strategically, there will be consequences suffered by brands who rely upon external social platforms to amplify commerce. Curating an independent audience is an involved process with long tail benefits and short-term headaches; marketing executives have long underestimated the value of this approach to community development and marketing. But while we extol the virtues of platform-driven linear commerce, it has an expiration date. The optimal path forward for brands is an independent one.

On Platform-driven Retail concerns:

Contributor: Member of Forbes’ CMO Next, Ana Andjelic has earned her doctorate in Sociology.

Products > Brands. Platform-driven linear commerce emphasizes individual moments over brands. Consumers are purchasing a look, not a particular brand. In this way, the brand equity of a product can be secondary to its part within a whole. In this way, the mechanics of social platforms have emerged as product seeders. This product-focused model does little for brand equity. It could also have a detrimental effect on sales in the longer term.

Taste Bubbles. If you read enough reporting on the issue, Instagram has replaced the mall. The difference is that your typical suburban mall isn’t partitioned by pre-set preferences. Consumers have little to no control over the shoppability of these platforms. Rather, they serve as recommendation bubbles. The dangers of content bubbles have already been copiously documented. Consumers are served content that they already approve of, creating biases that can quickly entrench a person’s concept of quality, availability, or preference. Now imagine a taste bubble, where consumers are served products in which they’ve already shown an interest. Here is a great example of an algo-driven interpretation of an understanding that was previously deemed subjective.

Longer Product Life cycles. If online retail influenced consumers away from physical malls, social platforms discouraged ownership. The total resale market is expected to double in value to $51 billion in the next five years,according to ThredUp. Traditional retail operates on product innovation and seasonality. In what could be another detriment to brands, social platforms may extend product life cycles. The same products can be marketed and remarketed as long as it’s a component of an influential capsule or influencer outfit. Consider retail influence app Depop. In the “about us” section:

After realizing that Depop needed a selling function, Simon re-envisioned the app as a global marketplace — a mobile space where you can see what your friends and the people you’re inspired by are liking, buying, and selling.

In turn, your friends and creative influencers all over the world can see the things you like, buy, and sell, and are inspired by you. This ecosystem has supported Depop becoming a global conduit of connection, not only in m-commerce, but culture, design, and creative communities around the world.

Shortened zeitgeist cycles combined with extended product life may impact retail operations, production, distribution, and merchandising strategies. These areas of the retail business have had to evolve to respond to real-time ebbs and flows of product preferences and tastes.

The rise and demise of brand dependence on social platforms will mirror media’s former dependence on these same platforms.

Today’s trends are the result of buying decisions made outside of the influences of traditional brands or advertising. Products are increasingly character driven, not brand driven. Look no farther than Lady Gaga’s launch of Haus, covered here by Lightspeed Venture Partners.

The rise and demise of brand dependence on social platforms will mirror media’s former dependence on these same platforms. The only appropriate solution is ownership of the audience; the savviest brands are becoming their own publishers.

The digital economy will reward the digital properties that operate along a line that separates media and retail. The line between the two industries is no longer a line of demarcation. It represents the influences of both. Linear commerce has become the retail strategy for the businesses that will endure.

Read the No. 324 curation here.

Report by Web Smith and Ana Andjelic, Ph.D. | About 2PM

No. 274: Merch has become fashion

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Cofounders of Everybody.World

The word merch is synonymous with throwaway. Or at least it used to be. In 2PM’s leading story, Quartzy discusses the changing demographics that have influenced the types of products that luxury brands sell. Gone are the days when famed fashion houses like Gucci focus solely on traditional luxury fashion. Today, their products reflect an affinity for sweat pants, tennis shoes, and modern t-shirt patterns.

This has trickled on down to the merchandise industry. Younger millennials and Gen Z’ers wear merch as a fashion statement and luxury has adopted this burgeoning trend. For merch providers, this means that the American Apparel / LA Apparel aesthetic has given way to something new patterns, styles, and definitions of inclusivity.

2PM recently took a deep dive into the types of merchandising campaigns that are moving the concept of merch away from throwaway and towards luxury. In this archived brief, we explored everything from platforms used to preferred t-shirt patterns and blanks.

Member Brief No. 11: Mega Merch 101

Social media and the normalization of digitally vertical native brands have enabled artists and influencers to create online retail brands as a primary source of revenue. In this report, we will break down best practices – including some insights from our editor’s work with a certain Youtube creator.

Bain Capital released a 2017 report on global luxury that emphasized this shift driven by millennial consumers. Here is an important excerpt:

The Millennial State of Mind: Success in the next decade requires brands to refocus on their customers to better anticipate and cater to their needs. The younger generation will be key as millennials and Gen Z will represent 45 percent of the global personal luxury goods market by 2025. Still, when analysing behaviours, it is more correct to talk about a “millennial state of mind,” which is increasingly permeating across all generations and is thus more a psychographic phenomenon rather than a purely demographic one.

Read the rest here.

To summarize Bain Capital, the Gen Z interpretation of luxury fashion has permeated throughout the entire industry. This has affected consumer industry across footwear, accessories, and apparel. There are merch providers that are well-positioned here.

Business of Fashion’s wrote a recent feature on the two founders of Everybody.World. The write up did a masterful job of explaining how one merch provider built a direct-to-consumer brand that fueled their high growth wholesale business. By working with a curated selection that represents the zeitgeist. This includes: style contributors, graphic designers, a well-designed basics line, and the one staple that has become the go-to for festival merchandisers.

Quality, too, has become increasingly important as concert merch has evolved from souvenir to fashion statement, underscored by merch-like pieces released by luxury brands including Gucci, Balenciaga and Vetements. “The demand is absolutely higher than when I started doing this six years ago,” said Allen, who sourced roughly 70,000 pieces of merch for 2018’s Coachella Valley Music and Arts Festival. “And the expectations for the product itself are definitely higher.”

That’s why, this year, Allen looked beyond the typical “blank” T-shirt companies — think Gildan, Bella Canvas and Hanes — to boost Coachella’s offering.

Read more here (unlocked)

Cofounders Iris Alonzo and Carolina Crespo have done an extraordinary job of positioning the Everybody.World brand by building a strong direct-to-consumer business. Something that LA Apparel head Dov Charney is having problems with, this second time around. Due to the successes that they’ve had with wholesaling their famed ‘trash tee’ for $2.90/unit, wholesale traction has allowed the two founders to grow a substantial, higher-margin, direct-to-consumer business. Their main vehicle has been zeitgeist-driven basis and unexpected collaborations with contributors (even Virgil Abloh is listed on the site).

In Q2, merchandise drops have grown to become a major part of the creator narrative. Beyonce’s Coachella performance and her subsequent eCommerce drop was studied in Member Brief No. 11. And above, you’ll see high profile merchandise drops to include: Kanye West, Kid Cudi, and Nas.

As creators continue to emphasize merchandising as an extension of their art (and business), it’s imperative for providers to observe the shifts in the meaning of luxury and how Gen Z consumers have begun to shape the merchandise-turn-fashion industry. For the time being, tees are no longer a dress-down device. And it’s not just about what’s on the shirt, these days. Patterns and fit matter more than ever.

Blanks are no longer viewed as commodity products to a growing segment of American buyers. In fact, the industry is supplying a key component of Gen Z’s fashion identity. There are several providers that are well positioned to grow with the youngest of American consumers.

Read more of the issue here.

By Web Smith | About 2PM

Editor’s note: the next 2PM database (releasing 6/21) will include the most notable of merchandising providers to include Pittsburgh, Pennsylvania’s “Blank” run by Michelle Sharp. This will be a growing database. Join the executive membership for access.