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The News / U.S. Warns of Treadmill Dangers: The U.S. Consumer Product Safety Commission, issued an “urgent warning” after reports of 38 injuries and one death linked to the machine, which was previously known as the Tread. The agency said those with small children at home should stop using the machine, warning that the Tread+ posed risks to children, including abrasions, fractures and even death.
The Analysis: What Peloton won’t do is recall the treadmills, despite the CPSC’s call to do so. On Monday, Peloton shares fell 7% in premarket trading. Bank of America issued a note to clients on Monday saying that safety concerns could dampen the company’s subscriber growth.
In a crisis, responses matter. As Peloton doubles down on the safety of its treadmill, the focus shifts. It’s less about how safe the treadmills are, or what features are in place to prevent injury or death, and more about how seriously a company appears to take these issues. Hashing out a back-and-forth with the CPSC on the company blog, rather than recalling the product in question, is not a move likely to inspire the confidence of shareholders or subscribers. While a recall can do damage to a company’s reputation, insisting a recall isn’t necessary could have a more serious fallout.
Peloton has been on a high over the past year as more people convert to at-home workouts. Its treadmill is not its flagship machine, its bike is, and committed users who have come to rely on the classes (and have invested money into the Peloton lifestyle) are not likely to be swayed by this infraction. But it’s risking a ripple effect for new users who also have other options on the market. Take Tonal, which is set to IPO or and Rogue Fitness, who has emerged as a top competitor in the DTC fitness industry. Customer trust is paramount here, and it seems Peloton has faltered.
There are major concerns ahead. In a recent tweet, I explained that Peloton's core competency is its media operation. Peloton's fight with its in-home cycle rivals highlights that the company's intellectual property lies in its media operation (and on-screen interface) and not its hardware. It's likely that at some point, Peloton attempted to acquire at least one DTC fitness competitor. When you begin to understand where CEO John Foley invests, it should cause investors a bit of concern. If Peloton is having trouble with its first hardware extension (the treadmill), the company may also struggle to build its version of Tonal (patented technology) or Hydrow (supply chain shortages). Peloton's appeal was its all-encompassing vision of connected fitness. It's relying heavily on its low-tech assets (its famed instructors) to preserve that tech-enabled vision. For now, it's working.
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Brand / InsideHook: Peloton announced the Champions Collection, a collaborative partnership with nine very different elite athletes (eight Olympic competitors, one Paralympic), including the fastest man who’s ever lived: retired Jamaican sprinter Usain Bolt.
Editor's Note: See?
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A. Economics / Boston Globe: The signs are all there: Vaccination rates are rising, retailers are hiring, and signs of normalcy, such as sports games with fans and concert announcements, are sprouting with the warmer weather. A combination of pent-up consumer demand and sharp increases in savings for some and federal stimulus payments for others will fuel an unparalleled spending spree, said economist Eric Hilt.
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B. Advertising / New York Times: The big picture, though, amounts to a kind of optimism unseen in the gloomy digital publishing business for nearly half a decade. “I don’t know that I could’ve predicted it at this level,” said Bloomberg Media Group’s chief executive, Justin Smith. “We haven’t seen digital advertising growth in high double digits since maybe 2017.”
Archives: The Roaring 20s
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Sponsored: Placer.ai is of 2PM's favorite sources of data. This offering between Placer.ai and 2PM is available to a limited number of sign-ups and we welcome you to join us. These ad placements help 2PM build a stronger newsletter and collection of products. We only include them if they are a value-add to this community.
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DTC Brands / Campaign: Away noticed that U.S. travel became “nomad-based” last year as people rented vehicles for road trips and camping, and remote workers were free to work from different locations, Roan said. That prompted Away to shift its messaging away from air travel to promote day trips, road trips and weekend getaways. “We will always yearn to travel,” Roah said. “Let's just be truthful with what levels of travel we could actually pull off in 2020.”
DTC brand in focus: Hot Luggage Summer
In February of 2020, Away‘s website was ranked 16,500 on the internet according to the web traffic that it received. By July, that number fell to a ranking of 52,836, but climbed to a hopeful ranking of 24,882 around Christmas thanks to savvy marketing and promotion by new CEO Jen Rubio and her team. Today, Away has steadied around a 30,000 ranking according to data provided to us by Charm.io, representing a 20% drop in web traffic over the previous three months. This may be a lot of information to chew on but consider the implications: Away is perhaps the largest luggage seller in the United States by gross merchandising volume (though Samsonite likely sells more units of luggage and accessories).
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Agency Life / Influencive: The founders of Gin Lane shuttered their doors in 2019 to launch Pattern, a multi-brand consumer goods venture studio. This left a sizable gap in the marketplace for direct-to-consumer brands looking for a similar caliber agency that’s just now starting to be filled by Darkroom, a direct-to-consumer agency founded by Lucas DiPietrantonio and Jackson Corey.
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Ad Rem but curated by Andrea Hernández / Snaxshot. This was 2PM's most popular curation yet, so we are keeping it for one more week. Enjoy her work and subscribe to her newsletter if you're into the CPG snack industry.
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Logistics / FreightWaves: Stanton said the eCommerce shift to smaller, regional areas could disrupt supply chains that are not prepared. “If the population is moving around in a slightly different way or even a significantly different way than it was expected to, then businesses need to somehow respond to that,” Stanton said. “If last-mile deliveries have to drive another 10 or 50 or 100 miles to deliver that product to dozens of consumers, there is an additional cost to that. The more spread out delivery areas are, the more it adds costs to supply chains.”
Archives: The New Digital Electorate (11/2020)
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eCommerce / Quartz: Shein has twice ranked second only to Amazon as the favorite shopping site of upper-income US teens in a biannual survey of US teens by Piper Sandler, an investment firm. In the most recent installment, which included some 7,000 American teenagers, 7% of upper-income teens picked Shein as their favorite website for shopping.
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Data / RetailWire: The study showed 43 percent of Americans are knowledgeable about at least one DTC brand. Of the respondents familiar with DTC brands, 44 percent believe DTC brands produce a higher quality product at a lower price point than traditional competitors and 23 percent perceive DTC brands to be an authority of what’s cool and on trend.
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Supply Chain / Wall Street Journal: In a National Retail Federation survey conducted in March before the Suez Canal blockage, 98% of surveyed retailers said they had been impacted by port or other shipping-related delays. More than half the respondents said congestion was adding at least three weeks to their supply chains.
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eCommerce / Retail Dive: More than one-third (38%) of Gen Zers say they allow a brand just one second chance to fix a mistake before switching to a rival. About three quarters (74%) of survey respondents said they'll find another retailer if an online store is out of stock, while 37% have abandoned a purchase or posted a negative review because of a poor digital shopping experience.
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The concept of opportunity is deeply personal to me. Opportunity is earned through hard work, proximity, favor, and luck. For many, luck is the variable that wavers. But for others, it is often proximity. One of the last obstacles in eCommerce is the democratization of access and proximity to opportunity.
Amazon is a remarkable company that has improved the world in a number of ways. The retailer has fundamentally changed how Americans consume and, as the second-largest employer in the United States, how many of us work and live. But in one respect, the company continues to lag behind.
When Henry Ford built the Model T automobile, he fundamentally changed America. Not just by who drove the vehicles but by the diaspora of Americans who manufactured them. When Apple minted the idea of the personal computer, the company changed America. The common thread is democratization. This isn’t about what Amazon has changed, this is about what it hasn’t. Amazon changed America without changing America. And that’s a shame.
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