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🏢 🚙 🤖 Issue 28: European DNVBs, US Retail and new e-Scooters

🏢 🚙 🤖 Issue 28: European DNVBs, US Retail and new e-Scooters
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Scott Galloway on VR: “No one is going to put anything on their face that acts as a prophylactic, ensuring they never have a child”

DNVBs in Europe Primer - What is a DNVB? It’s an evolution of the term direct-to-consumer (“DTC”), retailers who sell products directly to consumers online. This form of vertical commerce has some appealing underlying fundamentals compared to “traditional” e-commerce. High gross margins, 40% to 60% and comparatively higher contribution margin - whilst also owning customer engagement and experience. It’s never been easier to build an online brand, with the atomisation of the retail stack; Webstores (shopify etc), Advertising (Adwords, Facebook Ads), Third Party Logistics/3PL (Amazon) and Supply Chain. This is set against the backdrop of cash-rich/idea-poor retail incumbents as well as historically low levels of distrust for incumbent brands by consumers:
Thanks to Eze Vidra for this one
Thanks to Eze Vidra for this one
DNVB stands for digitally-native-vertical-brand and alludes to the fact these brands started as online-only retailers. What many DTCs experience is that after carving an initial niche, growth can be hamstrung by rising cost of acquiring new customers online, as well as competitive forces. Much in the same way that we saw retail digitise, we’re now seeing offline, or omni-channel, as a key strategic consideration for any DNVB, against the backdrop of:
  • The cost of online advertising has been increasing (FB+GOOG duopoly)
  • The cost of physical retail space has been in secular decline partly due to e-commerce
  • Physical retail provides a new channel to acquire a different cohort of customers
We’ve seen US counterparts such as Bonobos, Warby Parker and most recently Casper enact this playbook. (Sidenote: I would say the ultimate DNVB play has been Apple - who built online and offline stores in order to sell products to consumers directly and not have the customer experience reside with third-party stores (Target))
Europe has been somewhat slower in the growth and adoption of these new online brands - primarily due to more conservative consumers. Firstly, Europeans have a lower propensity to spend on new products - making the barrier to customer acquisition higher. Secondly, it’s harder for these new products to elicit a new regular consumption pattern - breaking in to a narrow set of products which Europeans consume is difficult. What this does mean however, is that when a new product does trigger a new consumptive habit European consumers are far stickier. Retail in Europe is ripe. In 2017, retail was €2.6 trillion industry, with a not insignificantly higher % penetration rate (5 largest EU countries) for ecommerce versus the US, 14% v 10%.
I am looking for products which offer high customer utility and are led by founders with a unique insight. I’m looking closely at food, sporting goods, pets and sexual health.
>> I’m currently pulling together a list of DTC/DNVB companies in Europe, which I will share soon. Please send me through any early stage companies you think are interesting
🛍 Code Commerce - is Recode/Decode’s conference on all things retail, it was held last week and had some stellar speakers and interviews. None more so than Professor Scott Galloway’s presentation (video) on the state of US retail, some key points:
  • Amazon: How do you compete with them? Advertising business: The giant hiding in plain sight. HQ2 road-show: the search for Amazon’s second US HQ, Scott believes this to a transfer of wealth from municipalities to shareholders - it’s hard to disagree with that. Valuing Amazon: the company values itself on a revenue multiple due to subscription model v EBITDA multiple for most of retail
  • US Grocery: the biggest single consumer market in the world and the last hold out in terms of innovation and a likely place for disintermediation of current business models
  • Education and healthcare: good candidates for being disrupted. Scott’s methodology for looking at industries ripe for disruption are industries where pacing outpaces inflation
  • Branded consumerism: we will subscribe to one brand and one bundle which provide a basket of products to you, a la Amazon Prime
  • The difficult middle for retail: money to be made at the high-end and the low-end. The displacement of the middle class is a significant factor in the failing middle for retail
Vague Scientist
News
Compass raises more $ - the NYC based real estate brokerage has raised an additional $400m from Softbank at a $4.4bn valuation
Amazon invests in a pre-fab home startup - Amazon really does want to “own” the home. The Alexa Fund has invested in Plant Prefab
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Mobility corner
Inboard Technologies’s new scooter - the company just announced a $1299 scooter with field-swappable batteries and a hefty 750w motor
BMW are now offering employees e-bikes for commute - an emerging trend of B2B light electric vehicles is emerging in Europe.
Tranport data - into transport data and geospatial analysis? Well look no further. This Medium post is choke full of great data resources
Chargepoint wants to install 2.5m EV chargers - the company is looking to 50x its current number of elecrtic charge installation points by 2025
Americans don’t trust AVs - 73% of Americans would still be too afraid to ride in an autonomous vehicle
The convergence ecosystem in mobility - Outlier Ventures presents their findings on how logistics, tranport, Iot and blockchain are all going to collide
#investigationsecured - Elon is being investigated by the SEC for the dumbest tweet in corporate history
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Sharing economy corner
“Uber for X” is really just Uber - numbers on the on-demand economy show that the majority of this new economic model growth is just ride-sharing and more specifically, Uber.
This really does beg the question why transport/Uber is so much higher up the stack than food delivery, home rental and services? Whilst subsides in venture backed ride sharing have been a boon for consumers, driver wages have been in decline for years. Does this speak acutely to the issues (and opportunities) that transport currently offers?
Airbnb shares the sharing economy - Airbnb wants to incentivise hosts with equity in the company. This week the company wrote and petitioned the SEC to change securities laws to allow a new shareholder class. It’s nice to see a company trying to solve incentivisation without the blockchain ;)
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Sam Cash // Physical World Technologies Newsletter

The intersection of the physical world and technology; with a focus on future mobility,real estate, retail and cities.

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