2PM - No. 801: FULFILLMENT AND DISRUPTION

Shopify’s cut contracts / BI Premium: Shopify terminated contracts with several small eCommerce fulfillment companies this week. The move marks a strategic shift for the company's two-year-old Shopify Fulfillment Network. Once the changes are implemented, the network is set to have about half of its previous capacity.

2PM Analysis (4 minute read): This isn’t as much a story about Shopify as it is one about supply chain disruption and the assessment of the company’s risk tolerance. Logistics and fulfillment is now one of those disciplines that require a company’s full measure of attention and discipline. Amazon could do it, while Shopify cannot.

Shopify’s fulfillment network – and its ambition to compete with Amazon in the fulfillment game – has suffered a setback. Shopify is shrinking its network of warehouse and fulfillment partners by about half. We learned of the plan to scale back the strategy last week after an existing partner notified 2PM of the impending change. He noted: “Any merchants that use custom packaging, do wholesale, or kitting, won’t be serviced by the new offerings.” A recent report by Insider made it official. (Read More)

Marketing: The team at Ordergroove has presented 2PM with a unique offer. You can earn two months off with your annual contract. Boost retention and LTV with subscriptions. 

15 minute delivery is just the start

Last Mile Logistics / Quartz: As we've written, there is no industry that illustrates the class divide more than quick delivery. The industry would not be as big as it is without a bifurcating economy where wealthier users are trading what seems like nominal amounts of money for incredible amounts of time. The precursor to Instacart filed for bankruptcy after just three years of operating. Two decades later, the grocery share of the US eCommerce market is expected to hit up to 18% in the next three to five years.

MSCHF illegally using logos of eight brands for latest drop

Brand Law / WWD: The virtual checkered flag will be waved at 11 a.m. Monday, encouraging MSCHF app users and visitors to its site to buy one of eight shirts that illegally use the logo of a major company. If the shirt they purchase bears the logo of the company that is the first one of the eight brands that are being infringed upon to send a cease and desist letter to MSCHF, shoppers who chose that brand will receive an exclusive Grand Prix champion’s hat for free. Just one time, I would like to sit in the room with this team as they come up with some of these ploys. They don't seem to miss. 

Can virtual malls handle the crowds?

Metaverse Counterpoint / PYMNTS: An unpopular opinion is that we are quickly entering the grift phase of the Web3 / Retail boom. There might not be enough capacity for all these companies to follow through on their metaverse-related plans. It could be that those behind the scenes will be the ones who dictate just how successful these brands can be in the new virtual, augmented-reality world. 

His best ideas lied dormant for nearly thirty years. Today, it is reflected in some of the most successful mall developments in America. The new idea of indoor / outdoor malls surrounded by apartments, hotels, and entertainment was his idea. Developers in the 1950s didn't want it.

Published here in 2019, Victor Gruen has regained popularity in American creative and architectural circles. The Gruen Transfer is "the generalized desire to shop." It's a relatively new phenomenon. It's the effect of feeling lost in a mall, amplifying the likelihood of impulse purchase. In the macro, the concept is synonymous with a consumer's desire to spend time in a mall or walk a street of storefronts: shopping for the sake of shopping. Except, Gruen didn't want it this way at all. Our revised, original essay (2019) explained. 

Gruen's grand urban vision became our suburbs

Retail Real Estate / Tech Xplore: He wanted to re-create in microcosm the walkable, diverse and liveable town centres he so loved in Vienna. Part of his motivation was seeing how reliance on the automobile was affecting cities. Here's the first painful irony, then. Rather than developing the new mixed-use centre envisioned by Gruen, the only thing built was the mall and car parks. The grand vision was reduced to a monoculture of big shopping brands surrounded by massive car parks, all accessible only by automobile. 

Also: The painful irony behind today's shopping malls (Fast Company)

Billions character has heart attack on Peloton

Relevant / Forbes: CNN reported Sunday that, “... another TV show character experienced a heart attack on [Peloton’s] interactive bike. Then on Monday, according to the news network, “Blackwells Capital, an activist investor that owns less than 5% of Peloton, says it has ‘grave concerns’ about its performance and is calling on its board of directors to fire CEO John Foley immediately and explore a sale.”

Not quite sure it's possible to understand how two fictional television characters have heart attacks because of a Peloton in just one and a half month's time. The company is unlucky right now and our essay below explains the second part of Peloton's trouble, why an activist investor would call for major changes. 

The coming psychedelic-industrial complex

Sociology / Alta:The fate of the psychedelic underworld hangs in the balance. As it stands, the dismal statistics documenting access to legalized psychoactive medicines look no better than employment statistics for people of color at Facebook, Twitter, and other Silicon Valley companies whose employees and investors are (again) putting the Bay Area in the vanguard of the next movement.

We've covered the "shroom boom" at length here but we found this report to be both nuanced and informative in explaining how availability doesn't mean more access for everyone. 

Venture investors’ $1.4 billion bet on news faces a reality check

New Media / Bloomberg: Recent years have brought Air Mail, Puck, Punchbowl News, Protocol, Grid, the Information, Tortoise, Axios, and the Athletic, not to forget Substack, where writers can sell subscriptions to their own newsletters. A careful reframing of the goal of companies like Axios and Substack is that legacy media presented an opportunity for the digital age to finish its disruption and these companies are of the most likely to finish the job. Air Mail wants to replace glossy magazines, Axios is working to become a go-to in local news, and the Athletic was just acquired for the (costly) growth that it achieved. 

Being adopted by luxury buyers is a gift to manufacturers. Fashion houses, car manufacturers, and home builders understand that there is an element of appeal that cannot be quantified. They know that there is a level of discomfort that comes with that but, if embraced, brands can develop a flywheel that marketing and advertising spend cannot duplicate. Peloton had that until it didn’t.
 

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