Issue no. 250 (oh wow). The last one had a 43.59% open rate. The most-read link (12.63% of you) was on Nike's recent foray into Amazon wholesaling. In short, it's not working. Check out this quick excerpt:
Becoming an official partner doesn’t mean Amazon is going to play nice. Amazon is known to favor the brands that will distribute products directly on the site. But, as it turns out, the retailer has pretty strong loyalty to the third-party sellers that have a lot of reviews and a long purchase history. Even after Nike began selling on the platform, the “Amazon Choice” product for the brand was an item fulfilled by an outside seller.
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These direct-to-consumer, or D2C companies, are able to manufacture and ship their products at much lower costs than traditional consumer brands because they own all of their customers’ data and maintain end-to-end control over the making, marketing, and distribution of products.
Retail Apocalypse: Distressed bond issuers in the U.S. retail and apparel markets are nearing recession levels, tripling in the past six years, according to a report released by Moody’s Investors Service. The report found 13.5% of Moody’s retail and apparel portfolio is distressed, compared to 16% during the Great Recession. Debt maturities are also headed toward record levels over the next five years and retailers are filing for bankruptcy at a record rate.
Retail: A new Walmart subsidiary, called Code Eight, has recently started testing a personal shopping service for “busy NYC moms,” according to multiple sources, with the goal of letting them get product recommendations and make purchases simply through text messaging. The target customer of Code Eight is described in an online job listing as a “high net worth urban consumer” — translation: A rich city dweller — certainly not the historical sweet spot for Walmart’s main business.
eCommerce: This spring in the U.S., the company will run a pilot with online styling and delivery service Stitch Fix with personalized women's merchandise, and will expand its pilot with Amazon, which is "going well," CEO Mark Parker told analysts, according to a transcript from Seeking Alpha.
Retail: Central in all of these business models, though, is the question of whose problems are worth solving, and maybe nowhere are those judgments clearer than in the world of fashion startups, with their dedication to reinventing the wheel for what is already the world’s most extravagantly well-served apparel consumer base: thin women.
Digital Media: Fake news and brand safety are nothing new but were catapulted into the spotlight this year as some of the world's biggest advertisers began to fully grasp just how little control they have over their ads once they're unleashed online. In April, Forrester Research found that marketers in the U.S. spent upwards of $7.4 billion on low-quality ads last year, with more than half going to either fraudulent or unviewable inventory.
Retail Apocalypse: Consumers are still spending on retail, but which stores they’re going to and what they’re spending on is fundamentally changing. The year wasn’t so much an apocalypse as a reckoning, and the common thread through these events has been brands big and small forced into pondering fundamental questions about the purpose of physical spaces. Why does a store need to exist? And what should a store actually do?
eCommerce: While many companies are selling more traditional products – such as food (Blue Apron and HelloFresh), grooming products (Dollar Shave Club and Harry’s), beauty supplies (Birchbox and Ipsy), and clothes (Stitch Fix and Trunk Club) – there are hundreds of companies with more unorthodox products catering to the “long tail” of consumer tastes, including Harry Potter toys, survivalist products, and moss.
DNVB: Private labels have been a huge success for Amazon, and Whole Foods will help strengthen its portfolio of in-house brands. Amazon’s children’s clothing brand Scout + Ro posted 543% growth year-over-year (YoY) in H1, for example, while four other Amazon brands saw sales double during that period. AmazonBasics reached $210 million in sales in the first half of the year, making it the company’s most successful private label.
eCommerce: While you might think this is a battle Amazon is destined to win, don't count Walmart out in this battle for e-commerce glory. Market intelligence leader, SimilarWeb, shared its insights on the digital factors impacting the Walmart and Amazon battle — the data might surprise you.
eCommerce: The company said its number of active clients in the first quarter mushroomed to 2.4 million users, up nearly 30 percent from a year ago. An active client, according to Stitch Fix, is one who "checked out a Fix" in the preceding 12-month period, indicating which fashion items he or she is keeping either through the mobile app or website.
Digital Media: It’s basically a flip from the beginning of the year: In January, Facebook provided nearly 40 percent of publishers’ external traffic; now that’s down to 26 percent. And Google, which started the year at 34 percent, now generates 44 percent of traffic. Parse.ly’s data comes from some 2,500 publishers that use its analytics service, including the Wall Street Journal, Time Inc., Mashable and Huffington Post.
2018: Listen up!
The 2PM community is a vibrant one of thousands of smart, curious, and polymathic-types who lead in professions to include: branding, commerce, data, and digital media. 2pml.com covers the many ways in which these industries converge and where there is disruption or opportunity.
After a few months of lobbying by my wife (and great feedback from subscribers), 2PM will begin releasing a weekly podcast that will recap news and developments. In addition to recaps, there will be a scripted deep dive into one retail touchpoint each week. If you're a member of this community and you have something to contribute, expect an invitation to join the pod.
The format will be 20-25 minutes per week, with a link to the audio in your inbox at 2PM EST on Monday. The pod will be direct, succinct, and digestible - just like these letters. Expect more news on format and partners in the final few issues of 2017's letters.