DTC Meat, Alt-Meat And Why CMOs Struggle

Sponsor: A top beauty retailer drives 6% of their total site traffic from Optiversal landing pages. The demo left me legitimately impressed, as this application of GenAI is still novel and under-utilized. Optiversal helps enterprise retailers generate landing pages, product copy, and evergreen marketing content to attract customers primed to buy. 

Commodities (Read Here): It’s one of the most difficult tasks in marketing or advertising.

Over the course of the last year, I have tried and tested over a dozen direct-to-consumer brands that have each taken a stab at de-commodifying a commodity. The most recent: a DTC service called Just Meat. The product’s ease of use is enough of a differentiator to make it interesting. But even that will not be enough to overcome the obstacles it will face further along the growth curve. Over time, I have observed a correlation between meat and alt meat’s growth curves and their new woes.

Amazon is piloting a new $9.99 monthly grocery subscription

Lead Memo / TechCrunch: In my opinion, this further displaces the need for traditional subscription (as long as the retailer is within the Amazon system). The pilot program, part of Amazon's strategy to enhance its grocery shopping experience, is being tested in Denver, Sacramento, and Columbus. This initiative aligns with Amazon's broader focus on the grocery sector, which includes expanding delivery services to non-Prime members and redesigning its stores.

Alt-meat brands are grappling with a harsh reality

Lead Memo / Time: Despite initial success and growth in the sector, recent economic factors like rising interest rates and inflation, along with targeted meat industry campaigns and consumer habits, have led to a downturn.

On the "meat from plants" industry

Lead Memo / AP: In the U.S., the initial surge in plant-based meat sales from 2017 to 2020 plateaued with only a 2% increase from 2020 to 2022, while traditional meat and seafood sales grew by 13%. Conversely, in Germany, plant-based meat sales continue to rise, with a 22% increase recently and a tripling since 2018, as meat consumption fell to a 33-year low. 

ModifyHealth: "Food alone won't retain meal kit subscribers"

Lead Memo / PYMNTS: The company is addressing the common challenge of customer retention in the food subscription sector by offering additional health services. ModifyHealth is also shifting its customer acquisition strategy by leveraging doctor recommendations and affiliate marketing, rather than relying heavily on more costly digital marketing channels.

Also read: PYMNTS' subscription commerce readiness report

New Update to the DTC Power List, presented by Bold Metrics. For the new feature on polled secondaries interest, we combined a poll (n=97) with internal data on this update’s top 251-500 brands to assess whether those polled and others would pursue an interest in secondary stock sales. We weighted the poll as 90% of the the assessment and we plan on growing the list to the full 800+ in the coming weeks. We believe that interest in purchasing secondaries is a positive indicator for the current brand equity, potential brand equity, and current financial health of the retailers mentioned.

800+ Brands Measured

What's the better business model for brands - DTC or retail?

DTC Brands / FIGs: This report is really good. DTC brands tend to invest heavily in marketing due to the need to acquire each customer individually, whereas traditional retail brands allocate more towards product development and less on marketing. This breakdown (with embedded graphic) was pretty fascinating and definitely worth your time. 

Mickey Drexler: "You have to be difficult."

DTC Brands / Alex Mill: This excerpt by the legndary retail Chief Executive features the take of all takes. "They say I’m difficult. Steve Jobs was very difficult. He was the smartest guy in every room. But you have to be difficult. You have to have high standards. I was on the board of Apple for 16 years. I actually recommended on LinkedIn, I suggested there should be a Steve Jobs day, like how you have a Martin Luther King Day and a George Washington Day, because of what he’s done for the world. I don’t think I got many people who responded."

The American store is shrinking

DTC Brands / Crumbl: The cookie company Crumbl, which sells a rotating menu of six gourmet cookies for takeout, delivery and catering, has opened more than 900 stores across the U.S. since 2017, most smaller than 2,000 square feet. Inside are open-concept kitchens with up to six refrigerators, ovens, mixers and storage for ingredients, said Nathan Christensen, who works for the corporate office’s area development team to locate future bakery sites. 

Marc Andreessen on 'the future of consumer products'

DTC Brands / Skims: Andreessen argues that the traditional model, where conglomerates like Unilever, Kraft Foods, and Procter & Gamble dominate the consumer product space, is rooted in the media landscape of the past. In contrast, the emerging trend is where individual personalities, like YouTube stars MrBeast and Logan Paul or celebrities like George Clooney and Kim Kardashian, drive brand creation and consumer engagement.

The store is for people, but the storefront is for robots

Media Trend / Verge 👇🏽: While Dziura maintains a personal blog with genuine content for human readers, she also creates a separate blog for her online store, which is packed with SEO keywords and phrases and generated using AI tools. This blog is designed to attract Google Search traffic rather than provide meaningful content for readers. This dichotomy highlights the growing influence of search engine algorithms and AI in shaping online content

A practical guide for marketers who want to use GenAI

Media Trend / HBR 👇🏽: Many businesses are hesitant to adopt generative AI due to risks like producing inaccurate content (confabulation), consumer resistance, copyright issues, and cybersecurity threats. The article suggests a balanced approach, using the DARE framework (Decompose, Analyze, Realize, Evaluate) to assess tasks for AI implementation, emphasizing that generative AI should augment rather than replace human creativity and decision-making in marketing.

The art and science of hyper-personalised shopping

Media Trend / BBC: eCommerce brands are increasingly using AI and data analytics to create highly personalized shopping experiences for customers. This trend, known as AI-assisted hyper-personalization, involves using customer data to understand buying habits and preferences, thereby enabling brands to tailor their marketing and communication strategies effectively.

The long tail and multimodal search

Media Trend / Econsultancy 👇🏽: The introduction of features like Google's interface suggesting additional keywords for deeper searches and the Multitask Unified Model (MUM) indicates a shift towards more nuanced and complex search queries. Additionally, the growing prevalence of visual and multimodal searches, such as Google Lens's multisearch feature, presents new challenges for SEO professionals

In April 2023, Shopify launched its AI tool to develop product descriptions using a retailer's keywords. The field of GenAI in retail SEO has only popularized since then. Generative AI (GenAI) is this week's media trend spotlight as it is rapidly transforming the eCommerce landscape, offering customization, creativity, conversational interfaces, demand generation arbitrage, and operational efficiency. With insights from the above links, 2PM looked to better understand GenAI's transformative role.

Customization and creativity at scale: GenAI's most significant impact in eCommerce is its ability to personalize customer experiences at an unprecedented scale. Platforms like Spotify showcase this by creating unique listener experiences, tailored to individual preferences.

Enhanced customer service: Conversational AI, powered by GenAI, is reshaping customer service in eCommerce. It's making interactions more efficient and responsive, meeting the growing expectation for instant, round-the-clock customer support. By 2026, a significant portion of customer interaction is expected to be AI-automated, streamlining the online shopping experience and providing customers with personalized guidance throughout their purchasing journey.

Arbitrage in GenAI: By November 2022, GenAI was part of the zeitgeist and by Summer 2023, tech was employing it in full force. As we move into 2024 and AI continues to jump the chasm from technical practitioner to common user, the rest of us are just now understanding what's possible for its applications in commerce. This is where it gets interesting.

Imagine if Walmart could outrank Dick's Sporting Goods, Amazon, and Best Buy overnight, for high intent, long tail searches involving fitness equipment. This arbitrage is now in use by brands like Sephora and Petco to drive interest from potential buyers with intent.

This emerging arbitrage in GenAI involves its use in identifying brand voice, rapidly developing SEO-optimized landing pages, and driving targeted traffic to retailers. This strategy is particularly beneficial for retailers outranked by larger enterprises. By leveraging GenAI's ability to analyze and replicate brand voices, businesses can create content that authentically represents their brand which resonates with their target audience. It would be hard to imagine for most laypeople two years ago, GenAI's emerging role is in the capacity to quickly generate SEO-targeted landing pages enables businesses to attract primed traffic, effectively competing with larger retailers who may dominate in search engine rankings.

Arbitrage opportunities like this are proving to be a cost-efficient solution, significantly reducing the cognitive load and time required for associated marketing tasks. This efficiency is not just about automation, it's about improving conversion while reallocating cognitive resources more effectively. This allows staffed human marketers to focus on more complex and creative aspects of their roles.

Generative AI is already reshaping the eCommerce industry.