Distribution & Omnichannel Series
When millennials and Gen-Z discuss items like watches, sneakers, and eyewear, they’re several top-flight brand names that come to mind. From the retail exodus of big-box department stores to the DTC (Direct-to-Consumer) wave of pre-covid to the now complete revival of online shopping, several economic and global factors have positioned companies between themselves.
There comes a time in every product and service arc where function, price, and satisfaction are good enough for the customer. We like to consider these moments limited, but in modern times they come more often than not and for several brands.
The idea of meeting innovation’s peak in both design, supply, continually adapting to meet customer expectations is a good thing at first glance. However, as several examples may start to point out, the customer is not always benefiting from these surpluses.
Recent collaborations between brands, marketplaces, and channels of distribution have made it almost too easy for brands to reap some gains. Companies like Omega and Swatch, StockX, Nike, Adidas, and Warby Parker have gone so far as to disrupt the future of how their competitors enter the market.
In no way is this a slander on the brand’s success, but an overall question to pose as to where the future of product innovation, brand collaboration, and manufacturing surplus may take us as global consumers. Seeing how these brands have scaled the way business, negotiation, purchasing, and even product/service discovery are done.
Omega & Swatch
Normally one would never pair the Swatch brand with the Omega brand. Completely different customers and completely different price points. When you peel back the curtain, some simple research reveals that one company owns the other, and so ultimately, they are the same brand.
We all know that’s not how brand equity is associated though. The idea of the “Moonswatch”, modeled after the Omega Apollo 11 Moonwatch collaboration came around when marketers at Swatch Group confounded the idea that instilling a simple collaboration would not only reveal a completely new customer for both brands but provide future financial gains.
The style is meaningful, classic, and timeless. This collaboration was a way to introduce OMEGA to a whole new consumer who may have aspired to own one but didn’t have the resources at the time.
The idea comes as the purchase of a $250 Omega, Swiss-Quartz timepiece is not only a steal but leaves several questioning how it can even be done? The answer is Swatch group has reached a point of innovation optimization.
Not only is it possible, but it’s a huge hit! The watches were rolled out only In-store, globally, and allowed 1-purchase per person. They sold out within hours. The returns for these brands are not noticed now in the simple purchase of 1 Moonswatch, but in the future equity that a current Swatch/Omega devotee pays onboarding the discovery of the collaboration.
Stock X & Sneakers
The resale market for sneakers in the 21st century is the wild west and for many reasons. Companies like StockX and Stadium Goods have become heavy hitters in the global sneaker game and for good reason.
Not only are their online interfaces ripe with deals, recent releases, and a large returning customer base, but it is their flowing data that defines these companies. Their websites operate like stock trading floors, live with sneaker tickers and prices changing by the minute based on real-time bids.
It is safe to say that because sneaker companies like Nike, Adidas, Puma, and others have compounded through globalization they have now reached their innovation peak in terms of new research, design, and functionality. What is driving these markets is new collaborations, vintage resales, and collectors gauging limited stock.
Many that have attempted to be like StockX, have come and gone through the reseller game. Very few have matured to the point of requiring brick & mortar stores like StockX and Stadium Goods. Call it a happy tale of reverse-osmosis, but several of these sneaker resellers (mostly Nike and Adidas limited editions trades) build such a large DTC following, that their next natural move is a physical store off main.
This ubiquity and popularity for sneakerheads come at a cost. Those with the best connections and even family members involved typically earn their keep like once-highlighted StockX resellers. Some of them find their success through nepotism and others find a distaste for the difficulty of simply getting a nice pair of limited Jordans.
Analysts and authors have signaled this the gentrification of the sneaker market, but is it the gentrification of anchor brand innovation? Can we fault these brands for making something out of nothing? Sneakers haven’t evolved in 25 years, but the marketplace has.
Warby Parker & Eyewear
Warby Parker is another great case study when it comes to the fatigue of innovation and performance surplus amongst top DTC brands that have gone brick & mortar. Warby Parker was the bet in 2020! The company was riddled with strong valuations and it had just expanded into several key markets as a physical retailer.
The issue with the internal bet between Warby execs was that with their cheap price point and functional, stylish look, people would return purchase sunglasses like sneakers. This bet turned out to be all too risky because right as their projections were set to come positive, a global pandemic hit store shelves.
The future of Warby Parker in 2022 is in allowing the internal brand to extend to something new other than sunglasses. The idea that the brand equity could instill future financial value for their own maximized incurred expenses never bounced back.
The model of Warby Parker is successful, but the continued success of their brand equity largely depends on if ppl will continue to value their transparency, and well, simplicity.
The debate will likely continue as the digital era of post-pandemic opens up a retailer corridor for once successful DTC brands. The idea that brands can ultimately continuously innovate forever with no ceiling is a bit farfetched.
Collaborations like the Moonswatch are cool but impossible to lock down in stores as the lines have been incredibly long and unlikely to lead to stock shortages in all markets.
Companies like StockX have made reselling once hip sneakers and cool new limited styles easy, but not always affordable and trustworthy.
Lastly, industry visionaries and pioneering brands like Warby Parker eventually lose their luster when global pandemics hit, trends shift, and priorities refocus on functionality over fashion.
Where do product innovation fatigue and global supply collaboration leave the consumer? The answer is often, largely in the dark!
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