New Age Retail: Three-Legged Stool

We have spoken at length here regarding the evolution of brands and how new age retail requires the 3 legs of a stool (in no particular order): 1) wholesale; 2) etail or DTC; 3) retail. I was reminded of this need as I reviewed Merkle's latest Digital Marketing Report outlining a cost per click on Google up 10-12% year over year and CPM on Facebook up 70%. Buying eyeballs and clicks sure ain't cheap. 

Brands that start in wholesale eventually crave the high margins of etail. Once the brand acquires the captive loyal brand aware customers, they start to desire the allure of a store and justify the new expense as a new channel and marketing awareness vehicle. Key example is Canada Goose.

Brands that start in etail or DTC aggressively purchase ads via Google, Facebook (Instagram) and justify any acquisition through lifetime value as a customer. Once the growth slows, the brand will focus on wholesale opportunities that provide large orders they can typically buy and sell "hand to mouth." Key example is Casper or Harry's.

Unless you are a private company with investors not requiring growth, you must have 2 of the 3. This need will only compound as the cost of acquiring customers becomes more expensive with duopolies controlling the largest ecommerce markets.