2PM - No. 798: The Market is Wrong

Cross-Border Commerce / TechCrunch: In what will be remembered as a nonsensical market reaction, Shopify traded lower after the announcement. This is not trading advice but no, that did not make sense. JD, often described as the Amazon of China for its heavy investment in logistics, will create a fast track for Shopify-powered brands to start selling to JD’s 500 million active buyers in as soon as four weeks. The platform will use tools like automated translation and price conversation to get sellers ready and will be flying goods via its fleet of cargo flights between the U.S. and China to start with. 

2PM Analysis (3 minute read): At 8 am on May 10, 2003, Taobao went online on the fourth day of the SARS quarantine. The homepage read: “Think of those who start a business in trying times.” Seventeen years later, and China’s online retail economy is the envy of the world. Currently with a nearly 37% online penetration and growing, analysts estimate that rate will reach 63.9% by 2023. It’s evident that online retailers like Alibaba, which owns Taobao, used the crisis to move China into eCommerce leadership that then belonged to the United States. China owes its eCommerce dominance to Alibaba, but its future may be with JD.com. (Read More)

How I quit Prime and survived

eCommerce / New York Times: In "Two Sides of the Algorithm" our essay began: "That 15 minute delivery of shampoo and kombucha may come with a deepening divide between the classes." This smart article by the New York Times provides an alternative for those who may be conscious about the increasing cost of commerce's human capital. Here is a snippet: "I did buy online regularly from Walmart, Target and other websites. I shopped in local stores, partly because I didn’t want Amazon and other giant retailers to be the only ones left after the pandemic. Without feeling as if I needed to squeeze value from a Prime membership, Amazon was just one option rather than the only shop that I considered."

How to deal with retail's returns frenzy

Returns Logistics / Business of Fashion: Retailers are seeing record volume of holiday-season returns amid rising eCommerce purchases. The cost to process these orders is growing. Providing information about how a product is made and how it fits can reduce return rates. Encouraging customers to bring unwanted orders to brick-and-mortar locations helps defray rising shipping costs.

While this is true, we proposed a different idea of sorts in a post-returns marketplace. Columbus, Ohio-based Loop Returns is working on just that. 

Microsoft to acquire Activision Blizzard for $68.7 billion

Metaverse / The Verge: There hasn't been a bigger bet on the metaverse than this. And perhaps more than Nike's digital push or Meta's recent investments, Microsoft's acquisition may move the concept towards ubiquity for good. "Microsoft plans to add many of Activision’s games to Xbox Game Pass once the deal closes. With the acquisition of Activision, Microsoft will soon publish franchises like Warcraft, Diablo, Overwatch, Call of Duty, and Candy Crush. “Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog,” says Microsoft’s CEO of gaming Phil Spencer. Xbox Game Pass now has 25 million subscribers, as Microsoft continues to acquire studios to boost the subscription service."

Updated For January 17: Estimated revenue has been updated for ~ 700 brands. This week’s biggest moves: Peloton (No. 4 to No. 2) for the first time since 2020, Oura (No. 45 to No. 7), The RealReal (No. 145 to No. 11), Hypebeast (No. 155 to No. 18), Reformation (No. 100 to No. 28), Warby Parker (No. 118 to No. 60), Black Rifle Coffee (No. 144 to No. 64), and The Sill (No. 198 to No. 86)

High-end brands are turning Texas into a fashion capital

Sociology / Glossy: The triangle of Austin, Dallas, and Houston has developed one of the most wealthy and stable consumer markets in America. This does an excellent job of explaining: "Brands have been drawn to Texas’ young, wealthy urban residents as well as the relative strength of its brick-and-mortar retail environment. In 2019, more than 12,000 people under the age of 35 making more than $100,000 a year moved to Texas. Balmain is hosting its only Barbie-themed pop-up with Texas-based Neiman Marcus in Dallas this month, Gucci opened its first Austin store in May of 2021, and Jonathan Simkhai will open its first Texas retail experiment on January 19."

Ford signs 5-year agreement with Stripe to scale eCommerce

Fintech / TechCrunch: This is exciting to see. As manufacturers go DTC, expect them to begin developing strategies that companies like Carvana are now known for. And without the limitations that are associated with the reseller model. "Stripe will facilitate transactions for vehicle orders and reservations, handle financing options for Ford’s commercial customers and route customer’s payments from the automaker’s website to the correct local Ford or Lincoln dealer. Ford plans to begin rolling out Stripe’s technology in the second half of 2022, starting with North America, but with aims to roll out in Europe, as well, according to the company."

Almost 6 in 10 US consumers shopped at a DTC brand in 2021

Additional No. 1 / Retail Dive: Just a little over half of Americans (nearly six in 10) have purchased from a DTC brand at least once this past year, according to Diffusion's 2022 Direct-to-Consumer Purchase Intent Index.

The 25 DTC startups that will soar in 2022

Additional No. 2 / Business Insider: One common theme among investors from firms like Coefficient Capital, Springdale Ventures and Forerunner Ventures was healthier, modernized takes on nostalgic childhood comfort foods like macaroni and cheese, cereal, ramen, and ice cream. 

Walmart prepares to go big on the metaverse

Additional No. 3 / Fortune: The retailer sought several new trademarks in December that show it intends to make and sell virtual goods such as electronics, decor, toys, sporting goods and personal-care products. 

Editor's Note: this doesn't seem like a psychographic match.

The online holiday shopping numbers are in from Adobe and we now have a better understanding of how the holiday season was impacted by the sociology of the times. The bottom line: people shopped online more, and it was more expensive. We recap the many why’s here.

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