This is issue no. 237. The last issue had a 46.8% open rate with 4.98% of you reading up on the historical rise of Supreme.

DNVB Brief: I had the privilege of watching the first few days of a well-executed Kickstarter campaign. But this time, from the inside. For anyone who has seen a crowdfunding campaign succeed, it takes a tremendous amount of planning, grunt work, and execution to succeed in this manner. Cotton Bureau's goal of $48,000 was achieved in 27 hours. Click the diagram below to better understand why consumers are drawn to this project.
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Today's Top Intelligence (15 Reads)
Analysis: Amazon’s Private Label Business is Booming
DNVB feature: The company’s strategy for its private labels differs from brand to brand, however. In some cases, the brands are exclusive for Prime members, while others are broadly available. Brands like Kindle, Echo and Fire are well-known as Amazon products, as are those with “Amazon” in their name. In fashion, Amazon is hiding its association for the most part, beyond the everyday wear found in Amazon Essentials. That’s typical for private label fashion, though – Target and Walmart do the same.

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Retail Real Estate: Often that arrangement has served Foot Locker well. At the moment, it’s dragging the chain down. The company reported earnings that sorely disappointed investors today (Aug. 18), including a 6% fall in sales at stores that have been open at least a year. The results prompted a drop of nearly 25% in its share price.

Logistics: The migration to the skies represents the latest volley in a clash between Wal-Mart and Amazon to grab shoppers’ attention, loyalty and dollars. In the process, the companies are increasingly treading on the other’s turf: Amazon is opening physical stores and agreed to pay $13.7 billion for upscale grocer Whole Foods Market Inc. Wal-Mart, meanwhile, has beefed up its e-commerce business through acquisitions and offers like free two-day shipping.

eCommerce: Next month e-commerce will change forever thanks to Amazon. September 12 marks 20 years since Amazon filed for their 1-Click patent. This means that the patent will expire and the technology behind it will be free to be used by any e-commerce site. Starting next month more and more sites will be offering a one click checkout experience. Most major sites have already started development with plans to launch soon after the patent expires.

eCommerce: Forrester predicts that online sales will account for 17% of all US retail sales by 2022, up from a projected 12.7% in 2017, according to Forrester’s new Online Retail Forecast as cited by Digital Commerce 360. The report also expects US online sales to grow 13% YoY in 2017, which is five times faster than projected offline sales growth, and in line with the National Retail Federation’s estimates.

Real Estate Retail: While the major players all posted relatively improved comparable store sales, Kohl’s and Nordstrom led the pack with higher operating profit performance, which Moody’s analysts led by Christina Boni attributed to strong loyalty programs that helped the retailers build relationships with their core customers. Macy’s, the analysts noted, is trying to follow suit with a new loyalty program set to roll out in October, as 50% of that retailer’s business comes from just 10% of its customers.

eCommerce: Above a basic level of scale, online retail is largely a variable cost business, whereas physical stores succeed by driving sufficient revenue to leverage their mostly fixed costs. At the risk of oversimplification, this means that to make money online gross profit/order needs to exceed the variable costs associated with that order. The reason that many eCommerce companies (or the e-commerce divisions of "omni-channel" retailers) don't make money is that the marginal cost of acquiring a customer, plus the supply chain cost of fulfilling that order, exceeds the gross profit (essentially, revenue less the cost of goods).

eCommerce: The most important reason for subscription companies' growth is that retail tastes have changed. It's not enough anymore just to give consumers what they're looking for, if they know what they want they can get it with a click any time. To get a consumer excited, you have to offer something they're not expecting and subscriptions are an ideal instrument for surprise.

Retail Real Estate: As malls across the country succumb to declining foot traffic and the lure of online shopping, a development in Los Angeles’s artsy Culver City neighborhood is proving that it’s still possible to draw customers in person—if you design the right experience. Called Platform, the year-and-a-half-old space is a cluster of boutiques, workout studios, offices, and restaurants by up-and-coming chefs, all housed in an Instagram-worthy refurbished industrial complex. 

Data: Keyword search for shopping is not enough anymore. The ability to use text, voice, and photos is becoming the new norm because these avenues provide users with a much richer and more efficient way to express their initial shopping intent. We call this “multimodal shopping.” And these new types of consumer interactions yield a tremendous amount of user data that can be poured right back into AI algorithms to improve contextual understanding, predictive modeling, and deep learning.

eCommerce: Spanish brand Loewe announced earlier this month that it will hold a flash sale of its iconic “Barcelona” handbag on Alibaba’s Tmall platform, marking the LVMH-owned luxury house’s first venture into China’s e-commerce market. In honour of Chinese Valentine’s Day later this month, Madrid-based Loewe had even designed the “Hearts” Barcelona bag with a price tag of 15,900 yuan, exclusively for China’s online shoppers.

Media: After a year of this, Weiss had amassed 10 million page views a month, several successful corporate partnerships and a small staff. She quit her job at Vogue to focus on the site full-time. But she sensed there was a wider audience to reach. Into the Gloss had succeeded in democratizing beauty, in a way, but it was still undeniably prestige. The women profiled weren’t always relatable, zits or no; the products they suggested weren’t always readily available or affordable. “That wasn’t helping the mission,” Weiss recalls, “which was really about creating your own idea of who you want to be and using beauty as just one way to do that.” 

Brand: To make way for the 1986 Italian-produced Air Jordan II, Nike heavily discounted the remaining stock of Air Jordan 1s so skaters jumped on the $30 sneakers in droves. Nike even sent The Bones Brigade a box of Jordan 1s to wear when filming their 1987 era-defining video The Search For Animal Chin with all members of the team bar Tony Hawk (who still had a box fresh pair of Vans Sk8-His saved especially) wearing them throughout.

Media: As the appetite for news coverage with a feminist point of view grew during the 2016 election, the Cut was already resonating with an audience of millennial women who cared as much about style as they did reproductive rights. Since the relaunch, the site has expanded its scope to also include motherhood and health, careers and ambition.

eCommerce: Their surge, which has taken place inside a tightly controlled internet space that has blocked international companies like Facebook, has increasingly set them apart from the rest of China. Despite headline numbers that suggest stable growth, the Chinese economy is grappling with many problems, including heavy debt and continued reliance on rusty industries like steel. Yet Alibaba and Tencent this week both reported financial results that blew past investor expectations, suggesting the future of the Chinese technology world is bright.

Graphic of the Month
Zuckerberg on Spiegel: "Finish Him."
The Takeaway: While work is clearly being done on the underlying technology for Facebook's smart glasses now, don't expect to see the device anytime soon. Michael Abrash, the chief scientist of Oculus, recently said that AR glasses won't start replacing smartphones until as early as 2022.
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