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The Study

Law of Linear Commerce

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.

MEMO

Linear Commerce, 1889

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.

BRIEF

NBC and Linear Commerce

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.

MEMO

Food52 and Linear Commerce

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.

MEMO

On Linear Commerce

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.

MEMO

Own The Audience

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.

MEMO

Lyrical Lemonade Empire

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.

MEMO

In-App Audiences

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.

BRIEF

Instashop

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.

Bifurcation and New Luxury

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.

Malls and Over-Retail

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.

H.E.N.R.Y and Brand Sociology

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.

Digitally Native Brands

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.

The "DTC-Fication" of Economies

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.

The New Infrastructure

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.

Audiences and Communities

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.

International Commerce

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.

BRIEF

War Games

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.

MEMO

The Great Equalizer

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.

MEMO

The Fourth Day of Quarantine

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.

MEMO

Gen Z Arbitrage

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.

BRIEF

Going Global

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.

BRIEF

The China Strategy

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.

The Year End Recap

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.

BRIEF

The Great Equalizer

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.

MEMO

Shopify and the Cool Kid Paradox

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.

MEMO

Type House

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.

MEMO

Enter MrBeast

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.

MEMO

On Linear Commerce

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.

MEMO

When the Dust Settles

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.

MEMO

On Ideas Taking Shape

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.

MEMO

The Essential Reading List

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.

MEMO

HENRY Revisited

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.

MEMO

Save The USPS

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.