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ECOMMERCE: Sales at Urban Outfitters were up in November, with double-digit comparable sales gains on Black Friday and Cyber Monday, leading Hayne to think "things were looking very good." Then came December, and demand plummeted. Shoppers came back to buy last-minute Christmas gifts, but ghosted again shortly after the New Year began.
ARCHIVE: Great, digital journalism deserves a home that is undettered by traditional advertising constraints. This is the appeal of Medium and new-media sites like The Player’s Tribune. Sure, The Ringer probably doesn’t need to make money anytime soon. But why not demonstrate how new-age longform can achieve profitability? I mean, ESPN could learn a few things.
BRICKS AND MORTAR: And “Segment C” is vendors that the company plans to eliminate from stores, a process that Dick’s says it has already begun. Company executives talking to analysts on the company’s conference call did not discuss which brands would be cut, but said they would be “across the board,” though the “top 10 vendors” that they do business with would not be included.
ECOMMERCE: Warby Parker and Gentle Monster already have flagship stores, while Izipizi is poised to open its first retail store in Paris this month and plans to open several others globally over the next five years. “We really want to build a worldwide brand,” says Brun, who declined to share financial figures. Expanding in e-commerce is also a major focus for the company. “Online is growing and we want to develop that. Also it’s the best way for us to know better our final customers, and to have their feedback.
BRAND: But it's more than metrics and storytelling that power a good brand. Here, in his own words, are the five elements that Reynolds found essential in bettering Clorox's brands: focus, data, mystery, patience and curiosity.
ECOMMERCE: Wayfair, as an online-only furniture retailer, has the hurdle of selling large, high-ticket items to shoppers who cannot physically touch the products. Producing 3-D images of products helps the e-retailer overcome this obstacle by allowing shoppers to visualize products in the context of a home, says J.P. Gownder, vice president and principal analyst at research firm Forrester.
ECOMMERCE: Shoppers cite the $99 annual membership program as the main reason they buy from Amazon, according to a Feb. 17-22 survey of 1,000 Amazon shoppers. E-commerce technology provider Branding Brand conducted the survey which polled consumers who make the majority of purchases for their households. 31% of shoppers say their Prime memberships are the top reason they shop at the web giant, followed 29% who list low prices as the main reason.
ECOMMERCE: Actress Emma Watson recently revealed she has a particularly interesting way to shop. The 26-year-old uses one of the most popular social networking platforms — Instagram — to find products and new, sustainable brands.“I use Instagram [to shop] a lot more than I used to, because I find lots of brands through it. I would often find I was going into stores and feel like, ‘Oh, I’ve only got an hour, I need to buy something, this isn’t what I came in for but it’s here, so I’ll purchase it.’ I never do that now,” she told Marie Claire.
BRAND: Sales of retro sneakers like Superstars and Stan Smiths have boomed over the past year, and similar fashion items have helped Adidas to regain ground against rival Nike in the critical US market: Adidas more than doubled its share of the US athletic footwear market to 10% in January.
ECOMMERCE: Instacart now charges the correct amount for bottle deposits. In the last year, it made a similar adjustment to how it accounts for local sales taxes, which has saved another 20 cents per delivery, according to the company. The penny-pinching is part of a new strategy designed to show investors that Instacart can rise above the pile of on-demand startups that have bled venture capital.
Last Word: 7 Thoughts on DNVB's
We discuss the macroeconomics of eCommerce quite a bit. At least once a week, we will discuss digitally-native vertical brands (DNVB’s) ranging from consumer packaged goods startups to athletic apparel and high fashion upstarts.
In a recent discussion with Hendrik Laubscher on the longterm viability of vertical brands, he made some interesting points on influences that will determine brand durability.
How do DNVB’s succeed in an economy that places premiums on horizontal eCommerce (Walmart, Amazon, Target)? They enter new spaces and establish consumer loyalty. The consumer relationship can be just as important as the product itself.
There is no middle of the eCommerce market in any vertical. Either you’re great or you’re gone. Amazon destroys “middle” by using their financial muscle to drive said business into the ground.
So how are the DNVB’s doing as a whole? A lot of the supposed winners are cash hungry, burning platforms of doom. I am not going to name anyone but ask yourself one question — why are certain brands constantly in publications such as Recode, TechCrunch, or Fortune? Fashion public relations is often a cost-center disguised as a profit-center.
Consumer Packaged Goods startups (Harry’s, Walker and Co., Dollar Shave Club) have a lot of upside as publicly-traded incumbents are in need of millennials for continued growth. There is a premium on CPG-specific DNVB’s for this reason.
For DNVB’s to survive they must be both vertical and specific. What do they possess? (1) A limited selection of products with marketing and operations optimized for longterm margin growth and (2) an authentic story. Tracksmith, Tuft and Needle, and M.Gemi have stayed true to their roots, are cash efficient, and are run by driven entrepreneurs. They have solved customer retention woes by using tech, clever brand-differentiation, and the sourcing of excellent products.
The sudden growth of the vitamin and supplement category has long term growth prospects. As health becomes a global driver of decisions these MLCs are able to access educated customers with a new breed of products that are cost effective and have repeat purchase implications.
For DNVB’s to be sustainable — LTV, retention costs, and unit economics need to be the priority on day one. The brands that succeed have to operate like they’ve raised little to no money at all.