Issue No. 207: Push it.

I’ve made some careful changes so far and I believe that it’s improved how many of you interact with 2PML on a daily basis. For one, I’ve reduced the number of letters from five per week to a more sustainable (and digestible) three per week. The percentage of readers who clickthrough to external articles (my measure of success) has risen from 23.1% to 31.2% in the last 20 issues. Additionally, the overall open rate rarely falls below 50% now, a good sign.
To build on this, I am planning a few additional improvements that will go into effect no later than Issue 240. For one, the next two partnerships will be announced: an eCommerce behemoth and a $1B+ venture capital fund. I’m extremely proud to have rounded out the longterm partners for this project. However, here are few improvements that will better serve you:
Update no. 1: Once per week, there will be a subscription-based, long-form analysis of the week’s newsworthy advancements in eCommerce, brand, or digital media. Professionally written, edited, and delivered to you before Saturday brunch.
Update no. 2: For the readers who want access to that content, there will be a custom-built forum for you to communicate with one another or even contribute content of your own.
Update no. 3: As such, 2PML will be hiring an analyst for the weekly long-form product. Email me for info:
Many readers use 2PML to influence decision-making in the fields of retail, investment, and business / fashion journalism. The upcoming private community and weekly content will provide another platform for no more than 600 leaders to consume and communicate with their peer groups.
Any questions? Ask away

See more of the issue here.

Issue No. 183A: Ways and Means



The Ways and Means Committee issued  this Jan 24th statement on the same day that a 100+ member delegation of retailers from Columbus, Ohio traveled to Washington to address the potential pitfalls that all (foreign-manufactured) major retail brands will face when this tax reform is enacted. The NRF-backed delegation included the Columbus-based brands: DSW, Ascena, Abercrombie & Fitch, and Value City. Columbus is also the headquarters to retail brands like: Victoria’s Secret, Bath and Body Works, La Senza, The Limited, and Express. The collective concern of Columbus’ retail delegation is palpable.

A major retail senior financial analyst submitted the following to 2PML:

Obviously this is a long way from being law, but I’m worried. It’s not cut and dry. Lot of retailers that may finish goods in the US use imported intermediate goods. This impacts everything.”

It’s an interesting time for fashion retail in the United States. While “Modern Luxury Companies” are thriving (they are extensively covered in LeanLuxe), it’s hard to ignore the many variables that will affect their ability grow. For one, the young brands that manufacture in Asia will have a complex set of issues to address.

For existing domestic manufacturers, the impending policy is a favored one. These startups and heritage brands have been managed to grow on gross margins of 45% vs traditional retail gross margins of 80-90%. Think everyone from Mizzen+Main to Filson, Red Wing Shoes, Gitman Brothers, and L.L. Bean. Brands like these will benefit from these tax reforms. But it’s not all fun and games when a projected six million American retail workers will be affected by these pending regulations.

The fashion industry’s low margins have punished companies such as the recently sold American Apparel, which tried to sell affordable, mass-market clothes while offering its employees living wages. The share of domestically produced clothing in the U.S. in 2015 was 2.7%, down from 10.2% in 2005 and 46.2% in 1995, according to the American Apparel & Footwear Assn. Over the same period, apparel consumption has grown more than 60%.

“There’s absolutely no possibility of fashion making a reentry to the U.S.,” said Bjorn Bengtsson, a professor at Parsons School for Design in New York. “The reason is labor. Most U.S. manufacturers are having tremendous difficulty finding skilled labor. We have to train people. But even then, salaries are not going to be as low as in countries like Bangladesh and Myanmar.” David Pierson, Chicago Tribune

eCommerce will very quickly become the go-to investment to reduce costs for many of these companies, large and small. As costs to manufacture rise, the retail workforce and their real estate will shrink.

However, these shifts could be a boon for digital advertisers and media agencies. But as mall retail continues to dive, as consumers shift to Amazon, etc. for retail, who knows how many of our great retail brands will maintain throughout the impending transition from bricks to clicks and foreign-made to domestic.

See more of the issue here.

Issue No. 75: Thriving, Retention and Marriage

Last Word: Are They Really Broken?
There is a great article that discusses the efficacy of marketing agencies, written by the principal of a marketing agency. One passage stood out to me.

This is one of the biggest problems when it comes to the relationship between companies and their agencies. They expect the agency to be a de facto CMO. The agency is responsible for coming up with the ideas, deploying them, managing the systems, and reporting everything back. In fact, we’re treated more like a CMO and marketing department all rolled into one. But again, we’re not you. Our message is always going to be slightly off from where you’d like it. We’re never going to know your customers as well as you do.

I don’t fully agree with his sentiments. I am a believer in marketing agencies, I just happen to think that beliefs and goals could be better aligned to achieve more, over the longer term. This could mean a few things: perhaps marketing agencies should have in-house management consulting expertise to assist in advising brands’ toughest decisions. Or perhaps brands’ securities should be a component of compensation packages for marketing agencies. When the brand does well, the firms’ illiquid assets are mor valuable.

More and more, agencies are becoming more accountable to brands. But often enough, the remedy is the alignment of risk and the potential of upside.

Read more here ⇢

See more of the issue here.

Issue No. 60: Snapchat 👻, Gawker eCommerce, and WWDC highlights eCommerce



In the past week, (1) Gawker bankrupted only to initiate a second act as an eCommerce-first, media site (2) a friend of mine sold his house through Zillow – in one day (3) Apple Pay launched for MacOS (4) Voice Commerce cemented itself as one of the next waves in Fintech (5) I’ve gotten word of four different (reputable) eCommerce agencies who are launching their own managed funds to invest in DNVB (digitally native vertical brands). M&A, in this sector, is at five year high.

With traditional adtech faltering at an alarming rate, we’ve begun to watch innovation shift towards fintech and increased eCommerce investments to enable a better version of the web, mobile, and watch experience.

Desktop sites can now enable Apple Pay, allowing consumers to purchase with thumb authorization via their iPhone or their Apple Watch. “One click” purchasing is officially yesterday’s news.

See more of the issue here.

Issue No. 58: View the top 10 car brands, the Subprime Ad Crisis, and Nike’s best promo yet



I’ve had the pleasure of meeting with several venture capital firms over the past several weeks. One thing that I’ve noticed is that opportunity is very much regional. In the above graph, derived from Shai Goldman’s data, you’ll see that the majority of venture capital financing is managed in California, New York, and Massachusetts. If you live outside of those zones, your barrier to entry is considerably higher. And this is only outdone by your barrier to receiving a term sheet – which is even less likely. Funds are typically apathetic to founders who do not operate within their ecosystem. Of course, there are exceptions.

See more of the issue here.

Issue No. 41: The Undefeated, Mav Carter, Affirm, ESPN, and Postmates



In yesterday’s “last word“, I highlighted the increasing probability of a retail recession due to the continuing failure of second tier department stores (J.C. Penney, Dillard’s, Kohl’s) and the uptick in failure at premier department stores like Macy’s, Nordstrom, and Bloomingdales. Details of current stock turmoil can be found at Retail Gets Downright Uglytumblr_o7c1sbRlqw1qaujk2o1_540

via Business Insider:

When Postmates first launched in 2011, food orders were 99% of the company’s deliveries. And now, that share has shrunk down to 80% where the other 20% is made up by delivery orders for retail, health, and beauty products. This is likely driven by another large partnership Postmates sealed last month with American Apparel. It is the first in-app partner to offer apparel, and is also the largest partnership that Postmates has landed as of yet.

Postmates retail push is helping appease consumers that are increasingly expecting faster delivery — 99% of US consumers consider same- or next-day delivery to be fast, according to Deloitte. Meanwhile, just 63% consider 3-4 day shipping to be fast. This means that for on-demand startups like Postmates, retail provides a valuable market for gaining new customers quickly.

There’s potential in a major retail partnership between retailers and logistics apps like Postmates. The prerequisite for this type of partnership will be the invest in omnichannel inventory tracking systems to replace legacy systems that currently hinder regionally-based eCommerce operations. This will allow users to purchase products from the likes of Macy’s, Nordstrom, and Bloomingdale’s through the Postmates app – having them delivered within the hour from the closest store that possesses the relevant product.

This provides a logistical structure for the type of instant gratification that Amazon has introduced to American consumers. It also transforms existing storefronts into working warehouses, allowing for the reduction of off-season, in-store personnel.

Nordstrom’s anticipated $300M investment in eCommerce in FY16 is the most capable of accomplishing this type of pivot. At scale, this reimagining of local eCommerce can work and even inch the odds in the favor of legacy stores – at least until Amazon’s drones are ready for flight.

See more of the issue here.