2PM - No. 389: "Absolute Chaos!"

Our delivery system is breaking

A. eCommerce / Excerpt: One of my takeaways from this reporting is how powerful UPS and FedEx are, and growing more so. Those companies — more than the Postal Service — are the dominant delivery partners for most chain retailers. That makes it important to understand how they handle order demand, capacity, their work forces and their relationships with customers.

Editor's Note: The failing fundamentals of the eCommerce infrastructure are surfacing this holiday season and the pressures on retailers and logistics partners are being felt by all. On one hand, delivery companies are implementing added fees for holiday shipments — a move hopeful to control the total volume of shipments. Retailers are removing certain sale items now that new logistics costs no longer support those promotions. When you add in daily shipment limits on many retailers and FedEx and UPS' civil responsibility to distribute vaccinations - it becomes clear that the implications will last well into 2021. Here are 2PM's forecasts on this topic. They are valid as ever:

August 2020: On Black Friday and Failing Fundamentals
October 2020: Chaos and Q4 Logistics

UPS and FedEx say plans to ship the vaccine are underway

B. Supply Chain / New York Times: In a rare joining of forces, FedEx and UPS are teaming up in efforts to distribute newly approved vaccines. Distribution and delivery are already underway, with the whole process being meticulously tracked, monitored, and prioritized by the otherwise pressed eCommerce ecosystem.

COVID-19 drives a surge in online holiday shopping

C. Data / Digital Commerce 360: Based on the November survey, BMC and Mercatus estimate 38.7 million shoppers placed at least one online grocery order for delivery or pickup order during the preceding 30 days, up 3.6% from 37.5 million in August. Those shoppers said they placed an average of 1.62 online grocery orders per month, up 2% compared with 1.59 orders per month in August.

Function of Beauty enters Target in first retail expansion

DTC Brands / Glossy: Its first permanent foray into brick-and-mortar, Function of Beauty has a one-year exclusive deal with Target to offer its shampoo and conditioner products in-store and on Target.com. Function of Beauty’s DTC business also sells leave-in conditioners, hair serum and a hair mask. To translate its customized products, Target’s endcaps and shelves feature 12-ounce bottles with four base formula options for straight, wavy, curly and coily hair types.

"See! Go omnichannel or else. " - probably Chris Cantino. Function of Beauty, which raised a $150 million funding round from L Catterton at the beginning of the month and has an estimated $100 million in annual sales, according WWD sources. The brand has brought customizable hair care to online customers through an online quiz, making it a data machine and DTC business. The partnership is also a win for Target, and signals the power of mass retail chains to take specialty DTC brands mainstream, even when the personalized product journey was built for an online audience. Function of Beauty’s move into stores shows that even when you have personalization as a value proposition, there is a growth wall to be hit online, especially in the CPG category. 

What's next for Shopify, the other giant of US eCommerce

eCommerce / Adweek: As Shopify grows, comparisons to Amazon are inevitable. However, there’s a fundamental difference in the way the two operate. As CEO Tobi Lutke put it in a 2019 Twitter Q&A: “If anything, Amazon is trying to build an empire and Shopify is trying to arm the rebels.”

Editor's Note: Shopify's strategy is sound and clearly it is working for the software and logistics company. However, Lutke's "no marketplace" policy does leave the door open to asymmetrical competitors like DoorDash. Can Tony Xu and team solve the eCommerce problem for local retail? I wrote about DoorDash's grand opportunity here. 

The year fashion met reality

The New Normal / The Sociology of Business: After the year we’ve had, the theme of the fashion world is beginning to look like one of normalcy. Not in the sense of the industry status-quo, but rather in its representation of what is actually going on in the world. What sounds like a novel concept hasn’t always been: consumers shopping in the vein of reality, rather than aspirational escapism.

Editor's Note: another solid read by Ana Andjelic. She's been prolific in her publishing as of late. 

Inside Walmart's army of employee TikTok influencers

Linear Commerce / Modern Retail: Spotlight, which the company began testing this fall, remakes Walmart employees into public-facing company advocates. It’s an outgrowth of Walmart’s My Local Social program, which asked volunteer employees to post on behalf of their local stores. Now, under Spotlight, each employee is the brand. Spotlight is designed to showcase a behind-the-scenes look at life at Walmart.

The real reason local newspapers are dying

Media / NiemanLab: There are a lot of local journalists who do incredible work only to have it ignored or cannibalized by national outlets. There is a problem with large news conglomerates. But there is another problem, too. There is a problem of power and audience. There is a problem where business meets storytelling and where whiteness meets our conception of audience. And this is the story that isn’t being told.

How a tiny startup fixed the future of TV

Streaming Economy / Protocol: By now this is a mainstream problem — there's too much to watch! — with a new set of solutions. Universal search for TV shows and movies is available on plenty of platforms, and the notion of re-bundling the unbundled streaming landscape is on the top of everyone's mind. Much of that progress is due to Sanderson, who eventually quit Facebook, founded a company called Reelgood, and in the last five years has become an indispensable part of the streaming ecosystem.

What toys from the past can tell us about how we predict the future

Deep Generalism / Fast Company: Consider the Dick Tracy Wrist Radio from 1946, on exhibit because it may have “stoked the desire for, and helped inspire eventual development of, wearable communications devices including the Apple Watch,” an online pamphlet about the museum reads. Or Meccano, one of the first construction sets from 1901. It used interchangeable metal parts and was influenced by the concepts of the Industrial Revolution.

DoorDash has an opportunity to power an evolved, local commerce economy where urbanization has taken a back seat to remote work, the homestead is more relevant than ever before, and the “arming of the rebels” has yet to capture the imagination of Main Street businesses. This is bigger than late night takeout: Food delivery is to DoorDash what book sales were to Amazon.