2PM - Letter No. 905: Profitability in Focus

Partner: Bold Metrics sizing solutions leverage Machine Learning algorithms trained on over 45 Million AI body avatars to match your shoppers to their best fit based on their unique body measurements.

Practical: Retail is all about EBITDA. The keys to profitability for eCommerce-driven modern brands in the fashion retail space are:

• develop a sustainable omnichannel strategy
• master first-party data collection and retargeting
• minimize returns by providing the best tools for fit-sizing and customer service

For nearly a decade, it seemed as if the digitally-native retail class of internet companies would never realize a string of positive outcomes. The prospects for most digitally-native vertical brands (DNVB) were minimal at best and exit optionality remained slim even when that brand demonstrated a strong “tech-like” growth curve. Cap tables were bloated and war chests were filled. But over time, many investors began to realize that industry shared an unfavorable attribute: there was little to no strategy for long-term sustainability or a potential exit.

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Get ready for the fourth wave of eCommerce

DTC / Inc. Magazine: The first wave of e-commerce began in the 1990s, with the creation of websites of brand manufacturers and retailers like Amazon. At this stage, e-commerce was a novelty. The second wave of e-commerce began in the aughts, when most consumers routinely used e-commerce. The third wave of e-commerce began in the 2010s, when retailers, particularly e-commerce retailers, began to substitute their in-house products for brand manufacturers' products, using the consumer information advantage they had over the brand manufacturers. 

This delivery issue leads to cart abandonment

Logistics / Chain Store Age: According to the 2023 Bringg Barometer: 87% of survey respondents admit to issues with digital cart abandonment, with lack of clarity about delivery options prior to checkout as the top reason (44%).

Retail CEO crisis: Why the industry's top job is hardest to fill

Human Resources / Insider: Experts told Insider the burst of turnover traces back to the pandemic. Supply chains got snarled, shoppers stopped visiting stores, and stimulus payments spiked demand, each making it difficult to measure how business was doing. As pandemic restrictions have eased and a possible recession nears, boards of directors are getting a better look at the underlying numbers and doing some "housecleaning," but struggling to find good candidates.  

Savage X Fenty launches pop-up shop ahead of Super Bowl

Savvy Advertising / Retail Dive: Rihanna’s Savage X Fenty brand seems to be continuing its momentum from last year. About a year ago, it launched its first physical store in Las Vegas and had plans to open more stores in Houston, Philadelphia, Los Angeles and Washington D.C. Its Las Vegas location featured Fit:Match technology, which enables users to get a customized body scan that creates a 3D avatar of their bodies and gives personalized product recommendations. 

Kardashian channels 'White Lotus' for Skims

Savvy Advertising / WWD: Kim Kardashian is paying homage to "White Lotus" this Valentine's Day. The fashion entrepreneur and media mogul has cast Beatrice Grannò and Simona Tabasco, two of the stars on the wildly successful television series, in this year's Valentine's Day campaign, entitled the Valentine's Shop.

Updated For January 21: All categories of the list have been updated with major movement throughout the list. Of the major movers, look at the following brands: Black Rifle Coffee, Supergoop, ThredUp, Parade, Parks Project, Misfits Market, Modern Fertility, Care / Of, ButcherBox, and Summersalt. We’ve updated the “previous” column to better illustrate positive (+) and negative (-) movement. A “0” means no movement at all. A major update to the list is in the works.

8 DTC retail trends to watch in 2023

Trends / Retail Dive: Growth at all costs? That infamous startup mindset isn’t exactly welcome going into 2023, due to a variety of market factors. More companies have begun charting serious paths to profitability, with some noting how difficult it has been. “The expectation to be profitable shifted overnight,” Everlane CEO Andrea O’Donnell said in a memo to employees about layoffs earlier this month.

Why media & tech layoffs are skyrocketing

Human Resources / Variety: Less than one month into 2023, and the flurry of layoff headlines continues to make heads spin. After getting hit the hardest in 2022, the momentum has carried over into the new year for the tech sector. According to global outplacement firm Challenger, Gray & Christmas, 2022's total of 97,171 was the highest number of total job-cut announcements in tech since 2002.

U.S. sues Google for antitrust violations in its ad-tech business

Advertising / WSJ: The Justice Department filed an antitrust lawsuit alleging that Google abuses its role brokering digital advertising across much of the internet, a major expansion of the legal challenges the company faces to its business in the U.S. and abroad. The suit, the Justice Department's second against the Alphabet Inc.

Relevant: The Step Function in Retail Media Networks 

Member Brief (🔐) / Practical: DTC 4.0 will be marked by the importance of first-party data and optimization of acquisition costs. And the physical store is once again a wise investment for both.

DTC 4.0 might as well not even be called DTC. The title is a misnomer – or at least it is in the way that DTC was once used.

Inc.com predicted that 2023 will be the year of omnichannel for direct-to-consumer brands. In truth, DTC has already given way to an omnichannel approach. The pandemic may have stalled store strategies for a time, but DTC brands from Warby Parker to Allbirds to Outdoor Voices to Mejuri and more have long since realized the need for the physical store as well as as the marketplace partnership strategy. Many brands that once touted the ease and efficiency of online-only have since said they see the store investment as a marketing channel that converts purchases and encourages brand loyalty. And now that in-store shopping has returned since peak pandemic and lockdowns, they’re an even smarter investment. 

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