December 6th, 2021: PopSugar partners with Target, Amazon’s sales soar, the Metaverse, and Amazon’s third-party logistics market.
It’s December 6, 2021 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
PopSugar Partners with Target for New Fitness Line
Cyber Monday Sales Drop But Amazon’s Sales Soar
What’s Really Going On with the Metaverse?
Is Amazon Already King of the Third-Party Logistics Market?
- and finally, The Investor Minute which contains 4 items this week from the world of venture capital, acquisitions, and IPOs.
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BUT FIRST in our shopping cart full of news….
PopSugar Partners with Target for New Fitness Line
Media company PopSugar is continuing to invest in traditional retail and will launch a new line of home fitness gear in partnership with Target this December.
PopSugar is a popular media destination that often blends commerce opportunities in with its content.
A few points on this:
Fitness is one of the strongest content categories and within that category, PopSugar has some of the most popular workouts on social media — so the fan base is real and could benefit both companies.
The deal is exclusive to Target, which gives Target something valuable while giving PopSugar distribution.
What’s interesting about this?
Well, first, PopSugar is partnering with a physical retailer which means the company is interested in making this a long-term play for the brand. As a digital company, PopSugar could have gone the marketplace route, but it’s difficult to introduce an entirely new product lineto the mass-market without retail.
Second, the fact that PopSugar chose Target and not Walmart or Kohl’s speaks to the strength of its content and brand.
Third, unlike Peloton and others that charge a monthly subscription fee for content, PopSugar is a media business first and finds other ways, like advertising and now eCommerce, to monetize the brand.
> I can’t help but think that Target is in such a good position right now. It has a supply chain that is optimized for the business, a brand and merchandise selection which meets customers’ needs, and it has managed to thread the needle between mass-market and up-market, which is almost impossible on its own.
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Our Second Story
Cyber Monday comes in slightly below last year - what does it mean?
According to CNBC, Cyber Monday reported a decline of 1.4% from prior year to $10.7 billion with the supply chain challenges definitely taking their toll.
Ultimately, this whole idea of comparing one Cyber Monday to another is a little bit nonsensical. What matters is the entire season given most of the promotions were pushed earlier.
The whole idea of Cyber Monday was an invention of Scott Silverman because people couldn’t buy online until they could use their office computers with decent internet. Now with mobile, the whole premise is outdated - everyone has a supercomputer at their fingertips.
That notwithstanding, none of it seemed to hurt Amazon in the market, which itself posted record Cyber Monday sales led by home, toys, apparel, and electronics.
Also, due to the lack of discounting among retailers this year, Amazon fared well and reported that its prices were 14% less than the typical retailer. Contrary to popular belief, Amazon isn’t always the low-price leader –just the most convenient – so the fact that it was able to hold prices down in this environment is another reason Amazon was able to capture share.
Finally, although this segment is about Cyber Monday, I want to go back to Black Friday to close this out. Research provider Numerator reported that Amazon was #1 on Black Friday across every demographic except Gen Z. Furthermore, Amazon captured 18% of all Black Friday sales.
And to bring this all the way back, who won more with GenZ this year? Our other two besties, Walmart and Target! In fact GenZ takes a higher share of shopping with Target than older segments, which is another good trend for the company.
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Our Third Story
What’s Really Going On With the Metaverse?
While everyone was focused on Black Friday, the number of inbound questions I received about the metaverse, NFTs and Augmented Reality significantly increased. I thought I would highlight a few options that were featured recently in Vogue Business and PYMNTS.com.
NFTs are ultimately about digital objects that you can collect, own, and resell. This plays very well in the creator economy where instead of relying on third-parties for revenues, creators get paid directly for their work.
Here’s one example that caught my interest in the beauty space.
Drest is a mobile gaming app in which users complete styling challenges often tied to a specific brand’s products being used on a virtual image themselves or a model.
I would love to see this extended further whereby users can mint their own avatar NFTs and then trade these with other fans.
So how should brands think about the metaverse and web3 topics?
First, it’s a way to engage with the best of a brand’s biggest fans. In one sense, NFTs could be part of the ultimate loyalty program and limited edition tokens could either be like collectibles, or badges you earn for completing tasks or attending events.
Second, it’s a way to learn about how the next generation of consumers view the world. The generation born starting in 2010 is gearing up to be called Generation Glass because they grew up tapping on glass to interact with the digital world, as opposed to previous generations that only grew up in the physical world.
Younger generations are not going to be your average passive consumers. They want to co-create and be a part of the brand’s development process. They want something unique they can call their own.
I already hear you saying that you have no room in your budget for experiments, but I assure you that you do. Every brand needs to reserve time for learning about new trends and conducting research and experiments to understand how a changing world can affect the brand.
If you think about your innovation budget as a portfolio of projects with various risk profiles and goals rather than a list of IT projects your team will never have time for, it can quickly get you in a better frame of mind when trying new things.
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And Our Last Story
Is Amazon Already King of the Third-Party Logistics Market?
A recent report from Supply Chain Management Review highlighted a few different facts about the Third-Party Logistics market. Here are a few points mentioned in the article that I thought interesting.
eCommerce and in particular SMB is the largest contributor to the growth of the 3PL industry.
Research firm Armstrong & Associates reported that U.S. 3PL e-commerce revenues reached $53.3 billion in 2020, producing a three-year compound annual growth rate (CAGR) of 28%, and estimated reverse logistics growth rates around 20%.
Amazon’s e-commerce 3PL market share in the United States is estimated to have grown from 50% of the segment’s revenues in 2017 to 60% in 2020.
I’m struck by the fact that most of the debate talks about Amazon’s carrier network and whether it is bigger than FedEx or UPS’s, and doesn’t talk about 3PL, which focuses on putaway, pick, pack, and selecting the right carrier services. The fact is that even if the parcel is not traveling on Amazon’s network, the company still has better UPS rates than any other facility can offer — which is where all the margin is in the 3PL business.
When Amazon’s full-fledged first-party carrier network comes to the United States, I don’t think it will look like a traditional carrier that prioritizes commercial deliveries and penalizes residential ones; it will be a residential-first network built on the back of one of the most extensive warehouse networks in the world.
>When this happens, expect the 3PL market to consolidate faster than almost any other industry in recent memory.
But it goes beyond this. Imagine Amazon’s lever into the carrier network is its 3PL. What happens to the shipping software companies like Stamps.com when Amazon controls the bulk of independent shipping volume, including to Shopify merchants?
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It’s That Time Friends, for our Investor Minute. We have 4 items on the menu today.
First
Checkout provider Bolt acquired embedded commerce provider Tipser. The company focuses on turning any content surface into a marketplace commerce experience. With Bolt’s growing reach, the company appears to be looking for new ways to monetize its audiences.
https://www.pymnts.com/acquisitions/2021/bolt-acquires-tipser-to-drive-rollout-of-remote-checkout/
Second
CPG retailer Boxed acquired New York eGrocer MaxDelivery
On the heels of it’s SPAC IPO earlier this year, Boxed decided to spend some of its money on the competitive New York City grocery market, but not in the 15-minute delivery segment. Instead, it seems to be going head to head with players like Amazon Fresh, Whole Foods and FreshDirect.
https://www.supermarketnews.com/online-retail/boxed-acquire-new-york-city-e-grocer-maxdelivery
Third
Houston-based Cart.com acquired marketplace agency 180Commerce
One thing an acquisition like this highlights is the battle for digitally-native marketplace talent out there. It’s almost as competitive as the war for developers or digital marketing talent.
And FINALLY ....
Speaking of marketplace agencies, WPP recently bought Cloud Commerce Group in order to help its brands expand to channels like Amazon, Walmart, Wayfair, and others.
Its internal team was likely doing a lot of manual work and this gives WPP a path forward, although it seems to me like Publicis invested ahead of them in this area.
https://www.adnews.com.au/news/wpp-s-next-play-to-help-brands-with-ecommerce
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That’s all for this week! Till next time Watsonians.....
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Hi, I’m Rick Watson, CEO and Founder of RMW Commerce Consulting and host of the Watson Weekly podcast - your essential eCommerce Digest.
Our show is produced by Citizen Racecar. Alex Brower is the producer and also wrote our theme music. The Executive Producer is David Hoffman.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.