For the brands that are most suited to the modern retail economy: media and commerce operations combine to optimize for audience and conversion. This is the efficient path for sustained growth, retention, and profitability.
When we consider the dawn of the global brand era, we often cite the genius of Madison Avenue, the 1960s and the Mad Men style of advertising and brand development. However, we’d be doing ourselves a disservice if that’s where our research began and ended.
The Peacock Network is now in the eCommerce technology business. It’s worth repeating: shopping cart technologies may become commoditized. It will be the audiences that will be bought and sold.
The stronger the organic audience, the higher the premium on a company’s valuation. So why the resistance towards this approach? In short, it isn’t easy to do.
Audience-driven businesses have figured out how to monetize their visitors by providing value that captures attention. The alternative is paying the audience just to show up at your party.
The rise and demise of brands’ dependence on social platforms will mirror media’s former dependence on these same platforms. The savviest brands are becoming their own publishers.
From TikTok’s upcoming phone to three million dollar purses for Fortnite tournament victories, Generation Z’s influence on the market is creating unique outcomes. To understand the future, listen to the kids.
By reclassifying app downloads as the beginning of a sales funnel (rather than its end), digital content communities can reframe the value of their content.
With countless independent, traditional, and direct-to-consumer brands on its roster, Verishop is focused on delivering what is missing from today’s social media. Millennials and Gen Z want to shop online; they want to window shop. And most importantly, they prefer their ideas shared with their audiences. So imagine a platform with personalized shopping content and a machine-learned curation driven by photos, videos, and social sharing. It’s the most powerful marketplace for modern and traditional brands alike.
This era has begun to reveal sharp contrasts in how Americans approach the consumption of goods and services. Net consumption continues to grow despite a catastrophic number of store closures. Some in retail and media are quietly recognizing that the most competitive approach to growth is the pursuit of the modern luxury consumer – a cohort that seems to be invulnerable to these shifts.
As the pandemic underscored, the physical retail and service industries have squeezed the middle class. As consumers will search for ease and quality elsewhere eCommerce has a rebalancing act ahead of it.
When choosing between mass adoption or sustaining aspiration, don’t. Instead, pursue a compromise of both.
The early 21st century resembles a time when the middle class barely existed. For commerce and its adjacent industries, this new era is a correction that can no longer be ignored.
To achieve veblen brand status, cultivate patience. Those who have are still succeeding today.
Sears once thrived on the principles meeting customers where they were. Evolving customer needs requires leadership that understands where consumer mindshare and dollars are going.
The American Dream wasn't a promise but it was a hope. Equity in education was a path for many to meet that hope. That equity is being tested more than it has in nearly 70 years.
Between 1955 and 1975, shopping mall development exploded. Though, development was no longer tied to demand. Many were built as extractable retail assets only to be flipped for massive profits. This meant that development was no longer tied to population growth. Today, multiple malls and shopping centers exist for every small suburb in America, designed and constructed with no expectation to achieve sustainable demand.
Malls will always thrive as experiential distractions. But sometimes, a consumer wants a pair of pants from Saks at their door and before dinner. A Connected Mall can compete for a consumer in ways that Amazon cannot.
The mall began in the American midwest, designed to challenge automobile-dependency. Now, they’re simply shopping centers - relics of an incomplete vision.
Smaller neighborhoods are buzzing with the noise of DTC insurgents. Will malls listen?
We moved tens of millions of Americans to empty parcels of land with cars and more stores, per capita, than any place on earth. And we told ourselves that the bubble would never pop. To understand retail’s power and pitfalls, start with the German architect’s based philosophies. His solution for American sprawl in 1956 is a panacea for today’s empty malls.
Over the last 55 years, we developed suburbs into self-sustained cities and built shopping malls as if demand would never slow. Then: eCommerce entered the chat.
The HENRYs are advancers, not necessarily those who have cleared the wealth bar to America’s elite class. Unlike the traditional middle-class, HENRYs have the inclination to believe that they are on the path to the liquidity. A liquidity and safety net that is necessary for investing in long-term assets. HENRY is a transitional cohort, not a class. A cohort that can no longer be ignored.
Every week, there is a new retailer in distress. It’s time to consider how much of America’s retail economy was built on a class of consumers that was never as static as once believed: the middle class.
The signals of aspirational upward mobility have drastically changed. It was once a popped collar. It’s now a strategic subtlety.
Easy to miss: in their decade-long battle, Amazon and niche digital malls aren’t fighting for sales but attention. Every retailer will have to become a media brand. And every media brand will have to become a retailer.
In 1936, a young man from Ohio showed up to the Berlin Olympics wearing shoes designed by a young German cobbler. Our children know both of their names. They wear that cobbler’s shoes. What symbolism will come of our own interesting age?
The biggest indicator VCs should consider is whether a society is ready to embrace a new trend or an idea. Whether there is a brand to suit that shift is answered by studying society, not an algorithm.
The history of digitally native vertical brand (DNVB) goes back 14 years. However, the framing of the industry has evolved and so has its terminology. Appointed by Bonobos’ founder and current Walmart executive Andy Dunn in 2016, the DNVB acronym has given way to a simpler version: “DTC” or direct-to-consumer. But despite a shift in terminology, Dunn's term has appropriately defined a generation of internet-first retailers.
Can DTC insurgents kill the incumbents? Will they cool the embers of their cash reserves? And: can they sustain the innovation?
Generous activism, gentle marketing, and the fortune of good timing birthed the official Outfitter of Mental Health. LVMH agreed.
Of the 729 growing, private DNVBs we studied, the vast majority compete in the same three spaces of the home. The savviest will aim for #1 in an empty room.
The previous twelve years of DNVB development may be viewed as a preamble in ten years’ time. The first two weeks of the pandemic are a filter for DTC’s future.
“What marketing executive has ever said ‘ignore brand’?” Ask the 1,000 operators at CommerceNext.
It’s rare that the down-market brand maintains the advantage over the up-market competitor. But the data and observations suggest that Away is in rare air.
Time will tell who holds the advantage as brands compete on traditional grounds, but Andy Dunn is now a Walmart executive. This represents the end of the curve and the closing of the Book of DNVB.
Patience is a virtue. This virtue is a key to early brand development. Waiting for your first 100 "true fans" is a true competitive advantage.
The United States once led in the effort to digitize its economy. Today, we trail China by a factor of three. Our neglect may have damning consequences without a correction in our course. The direct-to-consumer industry can be myopic, even often worth ignoring. But studying DTC as a philosophy for modernization can be a competitive advantage for entire economies. For a moment, jettison words like luxe, digitally native, lifestyle, or even HENRY – they are symptoms of a shift. The focus here is on the core of that shift.
When DTC principles enter the big budget movie industry, it will present a tipping point for how we consume Hollywood films. Here, I argue that Disney will be first to upsell film debuts in their new Disney+ app.
For one of the most technically-advanced industries, commerce is as dependent on technical wizardry as it is on human resources. These roles will be as pivotal as ever.
Like the three revolutions before it, DTC-fication can achieve economies of scale that will inspire a stronger consumer confidence and newer opportunity. Releasing a blockbuster movie online could inspire the industry to follow suit.
A competition between Netflix and Disney+ left Quibi a casualty in its first year as a consumer product. Disney has proven that it wasn’t going to throw away its shot.
As Amazon cannibalizes the physical retail world that Walmart built long before it, it’ll be a chief executive choice between short-term discomfort and long-term growth, or short-term gain and long-term struggle.
I believe that we must begin viewing investments into our eCommerce infrastructure no differently than our predecessors viewed their investments into roads, bridges, and tunnels. This may sound grandiose until you consider how the rest of the digital and physical economies will depend on that infrastructure.
An election year effort to reinvigorate our retail economy may win hearts, but the new agglomeration isn’t within a trendy city or neighborhood, it’s on the internet. And retail will be too.
The purposes, discomforts, and requirements of this new infrastructure are akin to the winding roads that serve our industries today – the ones that Eisenhower envisioned.
No longer a relative luxury, eCommerce dependency must expand beyond tangible essentials. We have a new, great infrastructure. Our cities and its leaders will need to build on it, around it, and with it.
Computers became the bicycles for our minds. And now, mobile advancements are influencing physical mobility. The smartest cities will correct for these advancements before the markets correct it for them.
On the fourth day of the SARS epidemic, Alibaba changed how an entire country consumed products and services. With superior American infrastructure and connectivity, it’s time we do the same.
Product-based communities have augmented many consumers’ lives, influencing their senses of belonging. In this way, America has not become non-religious. Rather, we've spent the last several decades forging new communities. These types of communities don’t show up in political polls. We believe in brands.
Product is an incomplete notion without brand equity. And that equity cannot be sustained without deep camaraderie between unfamiliar people.
Some semblance of community and camaraderie is better than none at all. Because there are no atheists in foxholes. We all want to believe in something.
Gated media communities like Trapital, Stratechery, and Thing Testing have become the antidote to the noise of digital commonplaces. A subscription is a vote for the future.
At the intersection of influence and efficacy, sociological advantages have interfaced with an ecosystem of software as a service.
The next big moment will come from an improbable entrepreneur with an idea, an audience, and a product to sell. Empowerment is this era’s great economic innovation. For some of us, it’s almost like flight.
When we were younger, we built for a physical world. Generation Z and Gen Alpha are focused on building within digital worlds.
In 2003, China was a $13 billion market for online retail. The United States was a $53 billion market. When the SARS pandemic crippled the business-to-business market, Alibaba launched a peer-to-peer eCommerce platform that ushered the Chinese mainland into an era of eCommerce dominance. In 2019, China was 1.9 trillion market for online retail. The United States trailed at $602 billion. The U.S. can learn quite a bit from China's rise as the world's preeminent retail power.
With the current administration’s target on TikTok and its proposed acquisition, I began to think about the second- and third-order effects of the politicization of the digital media and commerce markets. This is one of the first moments in American history where government policy proposed a limitation on a widely used consumer technology.
For the middle-class masses, the new normal is a currency that is worth less than it was at the beginning of this year. The three- and four-star hotels that remain in operation are outfitted for essential travelers, medical workers, and the quarantined. In those hotels, there are five-day rotations for cleaning crews. Food, health, and fitness resources are rarely available. Customers who use these facilities are asked to lower their expectations.
International supply chains and air travel propels markets forward. In this same way, epidemics are more likely to become pandemics. China’s business community learned this lesson at the turn of the 21st century.
Generation Z is the largest, youngest, most ethnically-diverse generation in American history. With over 82 million members, this cohort comprises over 27% of the US population.
International customer acquisition is a dormant growth channel for the direct-to-consumer industry. America’s greatest export isn’t a product or a service, it’s our culture. The United States sells culture like no one else in the world. In fact, in some countries (Japan, Australia, and China), our natively-born brands often represents the zeitgeist of American culture. They are instantly marketable; these brands are adopted and beloved.
The growing contingent of Chinese consumers are almost exclusively target one buyers, the prime audience for modern luxury DNVBs. Chinese consumers are drawn to media-savvy, strong brands that allow them to bypass the initial consideration phase of the decision journey. Of the three brands typically considered for luxury purchase, the two with the most brand equity are the ones most often considered for purchase on 93% of occasions.
In what was a breakout year for original content across the creator economy, 2PM produced a number of relevant essays that shaped our discussions. These are the top ten of 2020. A special thank you to all who've helped make 2PM a reliable resource: Hilary Milnes, Andrew Haynes, Andrew Johnson, Joe Klokus, Brad Biehl, and Grace Clarke.
The “new normal” isn’t the same for everyone. For the few, the new normal represents quality levels of access, comfort, and availability that the wealth class is accustomed to. For them, it’s as though little has changed. Rather than walking into stores, these customers have adapted to appointment-only retail, elevating the experience with methods that independent boutiques have used for decades. Five-star hotels employ skeleton crews to service the needs of wealthy residents with half of the intended staff. At airports, lines wade into 30-minute territory for a Starbucks coffee. Across the corridor, the AmEx Lounge provides refuge for those with unlimited credit, metal cards, and extraordinary credit scores.
Shopify has made the industry more interesting, accessible, and newsworthy. But it is not the only participant in this burgeoning ecosystem: Magento (now Adobe), Demandware (now Salesforce), SAP, BigCommerce, Squarespace, BigCartel, WooCommerce, Webflow, Square, and Wix have played pivotal roles in the development of either enterprise or merchant-level markets. Shopify is neither the biggest platform with respect to merchant volume or gross merchandise value (GMV). It sits squarely at the center of the two extremes. Yet somehow, it became the de facto operator of the DTC era.
In the land of TikTok, the Hype House is a particular group of 20-something content creators who live in or around Los Angeles; many of whom cohabitate. The group includes a number of the best and brightest creators in the space, including former members Charli D’Amelio and her sister Dixie. Together, the sisters have amassed 10s of millions of subscribers across TikTok, YouTube, Twitter and Instagram. Some industry analysts argue that the D’Amelio family is the next Kardashian clan. Objectively speaking, that anointing is the golden calf of media and commerce opportunities.
I downloaded the app (currently No. 1 in the app store), manually inputted my address and billing information and then waited for the branded sandwich. Constructed within the kitchen of one of Robert Earl’s Bravo restaurants, the “I launched 300 burger restaurants nationwide” promise was met with operational efficiency. When I ordered the Beast Style burger, I was surprised that it arrived with 15 minutes of purchase. I photographed it and laughed at the fact that Jimmy “MrBeast” Donaldson was going to successfully store hundreds of thousands of new credit card numbers thanks to this promotion, including my own.
I’d never seen anything like it. It was my first time at Augusta National and I wasn’t just a casual observer of the craze – I was a willing participant. Within two hours of being at Augusta, I’d convinced my father to join me in observing one of the event’s grand traditions. The average attendee will spend over $700 on merchandise.
That summer’s flight was the last that I took before things changed forever. It was a pleasant trip but, knowing me, I found a way to complain about a minor inconvenience. The simplicity of walking to my gate and the ease of being unconcerned about domestic flight safety were privileges that I didn’t know that we had until they were gone. For a while, I thought we’d see those privileges again but I was wrong.
Deep generalism is at the core of how 2PM curates and publishes. Deep generalists excel in multiple fields and are able to identify connections between them. They are capable of analysis and adept at information synthesis.
When I published this, I knew that it would be of the most tumultuous weeks in America’s recent history. As such, I decided to take a different approach to this week’s memo. Though there remains political uncertainty, there is still an opportunity to invest in foundational education. By November’s end, things will again resemble our new normal. Colleagues will return to Zoom conferences and children will finish up their fall semesters. Millions of service workers, public servants, and other essential personnel will have carried on as if America’s federal elections were any regular week.
Many legacy retail brands, marketplaces, and department stores are at an impasse. For decades, they successfully marketed to a group of Americans that would neither rise nor fall from their economic standing. When that consumer cohort faced job losses or other financial uncertainties, retailers responded by offering promotions to attract them to their stores. In the previous decade, those promotional efforts haven’t let up. Few retail executives seemed to consider the longer-term sociological trends that impact class and consumer confidence.
The U.S. Postal Service is all three. When an American institution is 250 years old, it may as well be the ground that we stand on. The service has contributed services and innovations that we don’t readily attribute to it. Consider its contribution to the middle class: the U.S. Postal Service is one the country’s biggest employers with nearly 330,000 career employees and an average salary of $50,000. They are building the future of eCommerce, a still-nascent industry.
