No. 285: The End of Ownership

Ownership
Scene: the perfect vacation experience, fueled by rented products.

Go on vacation and you’ll undoubtedly encounter at least one couple who snaps photos of their perfectly manicured brunch experience. They took an Uber to get to the general area, asking the driver to play their favorite Spotify playlist for the 17 minute drive. Rather than walk the final .7 miles, they both grabbed Bird’s to the brunch spot. Hey, it was more scenic and memorable that way. The husband followed along so that he could snap the perfect candid shot of his wife’s Rent the Runway dress billowing in the wind. And when they finally arrived to their seats, he snapped another photo of her with their DSLR from Parachut. It was the picture perfect experience.

Let’s breakdown access vs. ownership: 

  1. Rather than drive their vehicle, they accessed an Uber.
  2. Rather than listen to their music, they accessed a Spotify playlist.
  3. Rather than walk .7 miles, they accessed a Bird scooter.
  4. Rather than own the dress, she rented it from the runway.
  5. Rather than buying the iPhone, the husband has access to one through AT&T.
  6. Rather than configuring his own DSLR, the wife sourced one through Parachut.

But the memory of this was very much their own. They owned that memory and it’s well documented in the place where America stores their moments: Instagram. A place that keeps what we really care about owning. Above all else, we care about owning great moments. The couple accessed rented goods to own an experience.


Issue No. 265: Can A DNVB Achieve Modern Luxury

Buying experiences over buying consumer goods is a trend being adopted by the luxury-set. The interpretation of the word luxury means something altogether different for the types of customers who have the means and awareness to shop with DNVB brands. Skift’s latest research shows a clear shift in demand for more transformative travel experiences among upscale travelers (Skift / May 2, 2017). Whereas expensive products used to be the consumer desire: products, community, and service now play the role of enabling experience economy.


What’s the access economy? An economy driven by a business model where physical goods and services are traded on the basis of access rather than ownership: it refers to renting things temporarily rather than selling them permanently.

If you ask Joe Fernandez, CEO of Joymode, he’d tell you that a consumer revolution is coming. This belief is an increasingly popular sentiment held by founders and executives of the companies fueling the access economy. And there’s validity to it. Consider sector startups like: Rent the RunwayArmarium, Parachut, and For Days. These startups provide hard goods in exchange for a monthly subscription fee. For consumers, this shift isn’t just about personal economics or reducing the cost of ownership. It is a redefinition of what it means to “own” and whether or not permanent possession of a product is more valuable than access. Some would argue that access is ownership.

BMW is testing it’s new program called “Access” of all things. Here’s an excerpt by Andrew Hawkins of The Verge:

For $2,000 a month, users can choose between models like the X5 SUV, 4 Series, and 5 Series sedans, including all plug-in hybrid versions. For the higher-tier $3,700-a-month fee, they can get M4, M5, or M6 convertibles, as well as X5M and X6M SUVs, but it doesn’t include access to BMW’s highest-end 7 series. The fee includes insurance, maintenance, and roadside assistance, BMW says.

Consumerism is a part of America’s DNA, it’s what drives us. It powers our national economy, it fuels international trade, and it incentivizes entrepreneurial innovation. But even a casual observer can understand how the accumulation of goods, accelerated by eCommerce, can have detrimental effects. Consider this passage from a recent article in The Atlantic, “We Accumulate a Mountain of Things.” 

Thanks to a perfect storm of factors, Americans are amassing a lot of stuff. Before the advent of the internet, we had to set aside time to go browse the aisles of a physical store, which was only open a certain number of hours a day. Now, we can shop from anywhere, anytime—while we’re at work, or exercising, or even sleeping. We can tell Alexa we need new underwear, and in a few days, it will arrive on our doorstep. And because of the globalization of manufacturing, that underwear is cheaper than ever before—so cheap that we add it to our online shopping carts without a second thought. 

In many ways, Joymode is at the forefront of the movement to alter consumer behavior, with respect to the concept of ownership. At first glance, it’s easy to look at Joymode and reduce them to an events company, a place to go to have fun. But only at first glance. Upon further exploration of their offering, you’ll notice the featured products are everyday items. The platform rents everything from an Oculus Rift set to camping essentials. There is access to products for events and products for everyday life. It makes you wonder. If this is where things are going, how many products do we really need in our closets, cabinets, and basements?

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Essential products. Do we need to own them?

There is a massive backlash coming in the form of a cultural shift in how people consume. I love that we get to be a part of it. This weekend more than 15,000 products left the Joymode warehouse and it will all come back and go to different families next week. There are massive amounts of people fed up with the cycle of debt, clutter and waste.

Joe Fernandez, Cofounder and CEO of Joymode 

Fernandez, the former founder of Klout, is adamant about what he believes to be the future of ownership. He may have a tougher task ahead, when compared to companies like Rent the Runway. The barrier to entry in seeing value in paid access to clothing may be slightly lower than that of common household goods. But our analysis indicates that we will see more brands entering the rental service space. It’s no longer just about cost basis reduction.

There are numerous macroeconomic indicators that bolster Fernandez’s views: accelerating urbanization, increases in the housing rental community, millennial debt loads, the growth of streaming entertainment, and even how we travel. As a consumer, you will own fewer things. But those accessed items will be personalized to your specific needs.  People are beginning to redefine the need to buy because access is, in effect, ownership. It’s the community of like-minded consumers that they’re buying into. They’re paying for more than access to products. They’re paying for access to a collective who believes in an ideal. And that ideal could change retail, for better or worse.

By Web Smith | Edited by Meghan Terwilliger | About 2PM

 

Issue No. 238: Inclusivity has many forms

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I first mentioned Cotton Bureau in Issue No. 203, where I expounded on what I found fascinating about the Commerce startup (and fourth fastest growing company in Pittsburgh). Most recently, their focus has been on sizing inclusivity. In Issue No. 217, I wrote:

Cotton Bureau is one-step closer to filling a void left behind by American Apparel’s bankruptcy. They’ve begun manufacturing a new type of tee for all shapes and sizes. It’s called “Blank” and it has the potential to solve a gaping sourcing issue in a major fashion segment.Women and men needed better, more accurate t-shirt sizing. From this simple assessment, Blank was born. From the now-successful Kickstarter for the project: 

You see, finding a wholesale t-shirt manufacturer that fits all our criteria has been…challenging (to say the least). We need a brand with modern fits, a wide range of colors and fabrics, ethical manufacturing, reliable quality and consistency, always-available stock, and it’d be real nice if it was made in America. Finding a brand that checks all those boxes and oh yeah also fits women is damn near impossible. If you can find a women’s brand that comes in our preferred colors and fabrics, it’s only available in mega-tiny junior sizing. If it’s sized to fit most women, the cut is awkward, the fabric isn’t anywhere near our standards, and it comes in whatever color you want…as long as that color is pink. It’s frustrating for us as a company, and every bit as frustrating for you as our customer. 

In a recent conversation with a Senior Editor of a lauded men’s publication, the gentleman posed the question to us: “but what’s the angle to cover for men?” He asked this un-ironically but in doing so, it established why I believe there will be a successful product market fit for Blank’s offering.

Sizing woes can illicit a sense of embarrassment or even shame from consumers – especially men. Men seem to be more ashamed to seek a solution to sizing inaccuracies. But this is nothing new, it took a decade of female consumers lauding performance fabric sportswear for men to do the same. Now, athleisure is leading the industry in product innovations and companies like Lululemon and Outdoor Voices are widely accepted by all.

Long before American Apparel exacerbated the sizing issue by marketing their products as exclusionary, this practice was found in tween retailers. Many can remember being a normal-sized kid while needing to purchase an XXL tee from A&F or American Eagle. In a normal world, XXL would be worn by an NFL tight end. Today, you’ll see the same practices at Hollister and other retailers who target teenage and young adult consumers. 

For adults, sizing in t-shirts hasn’t improved either and the product shaming has only increased. American Apparel set this market trend, years ago. Though it’s now owned by Gildan, producing a wider offering with accurate sizing would still be viewed as detrimental to the brand.

By the conclusion of our chat, that Senior Editor recognized that there was, in fact, an industry problem and he welcomed the solution. I have a feeling that many consumers will welcome Blank, just the same.

See more of the issue here.

 

Issue No. 174: Reshaping eCommerce

10 Startups That Are Reshaping eCommerce in 2017

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Company: Affirm
Funding: $520M
Why? A widely trusted financing partner, I use them for our own eComm ops.

Company: OpenDoor
Funding: $320M
Why? Real estate as eCommerce removes bias and promotes intelligent transaction.

Company: Yeti
Funding: $67M
Why? Yeti is reportedly targeting an IPO at around $5B in 2017.

Company: Hollar
Funding: $47.5M
Why? America needs a reimagining of the dollar store.

Company: Gametime
Funding: $33M
Why? They did $50M+ in gross sales in 2016.

Company: Dia & Co
Funding: $25M
Why? Plus size clothing for the women who deserve to look their very best.

Company: TheSkimm
Funding: $16.4M
Why? They are the future of women’s eCommerce and most don’t know that yet.

Company: Away
Funding: $11M
Why? Us travelers all need smart suitcases.

Company: Mizzen+Main
Funding: $7M
Why? The company is set up to become a household name by next Christmas.

Company: Rogue
Funding: $0
Why? Quite possible the biggest eCommerce company that the industry “knowers” do not know.

Want to reach me? Email me at web@2pml.com or ping me at @web.

See more of the issue here.