1) Facebook opens pop-ups at Macy’s, bringing the shoppability of Instagram offline.

What happened

  • Facebook will debut pop-ups at nine Macy’s department stores for the holiday season. In operation until February 2019, the pop-ups will feature more than 100 of users’ favorite brands—small businesses that sell via the social media site and on Instagram, which Facebook owns. The pop-ups will be located in Atlanta, Fort Lauderdale, Las Vegas, LA, New York City, Pittsburgh, San Antonio, San Francisco and Seattle.
  • The brands will be hosted by The Market @ Macy’s, a retail concept that launched earlier this year to cycle in new brand collections based on an individual theme, much like Story, which the department store acquired in May 2018. Facebook will feature ads for The Market @ Macy’s and its pop-ups on both Facebook and Instagram.

Why it matters

  • Though it operates a massive advertising business, Facebook has had trouble establishing commercial opportunities on its platform. In 2011, Facebook attempted an ecommerce platform, Facebook Stores, but it didn’t catch on and was shut down the next year. Facebook Gifts was discontinued in August 2013 after just one year of existence in the U.S.—users found it too aggressive to receive notifications recommending that they purchase a present for a friend on their birthday. It then attempted a gift card business, which the company terminated in 2014. Instagram, on the other hand, which Facebook acquired in 2012, has become a hotspot for ecommerce where boutique and vintage vendors can attract a significant following and sell items, often over direct message—Instagram is now developing an ecommerce app of its own. Meanwhile, Pinterest has recently launched a feature called Shoppable Pins that allows users to purchase items they see on the social platform.
  • Without ecommerce success, the main question with Facebook’s pop-ups is how prepared the company is to take on a physical store. Still, broaching offline retail through Macy’s is a way for the company to enter the channel without devoting too much time or money to the prospect. At The Market @ Macy’s, brands pay an upfront fee to the department store for the real estate and keep all of the revenue—they can also commit to as little as one month of rent. Additionally, Macy’s employees provide all the staffing, letting digital-only brands enter brick-and-mortar without having to deal with hiring and training. These flexible terms are a good match for Facebook as it tests out this new concept.

2) Masse wants to monetize moms on Facebook by building a user-generated brand.

What happened

  • Elizabeth Shaffer and Lizzy Brockhoff, formerly of Jet.com, are the faces behind Masse—an ecommerce and social media platform based in recommendations on categories spanning cosmetics and home goods, fashion and baby products. The company raised a $3.5 million seed round in August 2018.
  • Masse’s app, launched in September 2018 in beta form, includes 3 million SKUs, sourced through partnerships with Glossier, Jet, Sephora, Walmart and Maisonette, a children’s apparel brand. Users can both ask for and offer their own recommendations on these items, in addition to others that aren’t already featured on the app. When a sale whose search began on Masse is finalized, the company takes an affiliate fee from the retailer.

Why it matters

  • Masse’s co-founders started their brand after feeling underwhelmed during their pregnancies by the available baby registry options. More than ever, shoppers want to hear what real people think about any given product—hence, the rise of influencer marketing—and Masse creates a space for friends, family and other peers to provide insights on items and dole out their own advice. Similar to Glossier’s rep program and marketing content that puts customers’ voices at the forefront, Masse’s model is built on trustworthiness while also giving consumers the authority to shape how the ecommerce platform evolves. They are strictly forbidden to sponsor content, removing the inauthenticity that accompanies many brand ambassadorships.
  • Masse’s model is similar to Pinterest’s new Shoppable Pins program, which lets users view and create boards of images they like and start purchases on the site or app itself. However, these two attempts are by far the only examples of social platforms entering the world of commerce. But the benefit of Masse, if it pans out, is that mothers are a strong cohort of consumers that lack a centralized space to communicate on the wide assortment of products for maternity, children, their homes and beyond.

3) Peloton creates more homebodies out of cyclers, threatening SoulCycle’s relevance.

What happened

  • Peloton unbundled cycling from the gym and brought it into customers’ homes, selling stationary bikes at $2,000 a pop and a $39-a-month subscription to access live-streamed and recorded classes with all-star instructors. But as the brand has grown in prominence, it’s posing an increasingly great threat to SoulCycle.
  • Second Measure, which analyzes consumer purchases to provide brand insights, found that while less than 3% of SoulCycle clients are also peddling on Peloton bikes, the cycling sphere is increasingly choosing one or the other—and more are vying for Peloton. In the quarter before a Peloton customer makes a purchase, almost 4% are SoulCycle customers—a year later, Peloton customers were 44% less likely to still be going to SoulCycle. But even more importantly, data shows that going to SoulCycle makes a cycler more likely to buy a Peloton: in the first quarter as a SoulCycle customer, they are twice as likely to purchase a Peloton—this probability continues to rise over time.

Why it matters

  • Peloton offers a higher-margin product that requires new customers to purchase a $2,000 bike (or pay in installments), in addition to their monthly subscription to classes. But Peloton customers gain the convenience of working out in their own space, on their own time and terms. In contrast, SoulCycle’s customers pay on a class-to-class basis ($36 each) or in multi-class packages—not to mention they have to reserve a class and show up on time in order to bike. The ease of riding Peloton has helped the brand retain customers at a 73% rate. Though the number has fallen from 96% reported 18 months ago, it’s much higher than rates for Equinox, whose customer retention sits at only 35% after one year of membership.
  • While many digitally-native brands are going offline to engage with customers IRL, Pelton manages this feat online with its expanding media offering. Bike owners get access to instructors who have flooded the brand with personality, essentially acting as influencers. Additionally, the company acquired a music startup called Neurotic Media in July 2018. To compete, SoulCycle launched a media division in June 2018 and then a talent agency in July, to bring new features like live concerts and motivational speeches to customers, some of which are available outside of the studio via Apple Music. The latter helps to engage would-be customers who may be working out on their own, building a relationship with SoulCycle that eventually compels them to join the studio. But Peloton is accomplishing the same task with its new subscription-based app, Peloton Digital, that’s available to anyone, regardless of bike ownership. As both companies create more content, what it really comes down to is whether cyclists are more incentivized to bike in a class or in the comfort of their own homes.

4) Wayfair acquires more active customers, but the gains are offset by growing ad spend.

What happened

  • Wayfair, the home goods ecommerce company that owns AllModern, Birch Lane, Joss & Main and Perigold, in addition to its namesake brand, reported that its active customers increased 35.2% YOY in Q3 2018, reaching 13.9 million shoppers. However, the company’s quarterly ad spend rose from $142 million YOY to $203 million in the same period.
  • With 3.6 million new customers this year and approximately $707 million spent on total marketing for the year, these shoppers cost $196 each. Considering that the average Wayfair customer spends $443 a year, if customers come back for multiple purchases this might not pose harm to the brand—but if they only buy once it’s a big problem.

Why it matters

  • Given Wayfair’s increased advertising expenses, it’s not unexpected that the company has seen more customers stream in. The bigger question is how Wayfair can find alternative ways to gain new shoppers. As digitally-native companies continue to inundate the consumer space, marketing is becoming a less effective—and much more expensive—method to stand out, particularly because these brands are beholden to social media platforms, which can raise the price of an ad at any time. As of November 2018, Wayfair had 226 active Facebook and Instagram ads, according to the Q3 2018 Loose Threads Megaphone Report, most of which feature products and some of which offer promotions.
  • As an online-only retailer, Wayfair has plans to open its first brick-and-mortar store in 2019, which will provide a new way for the brand to engage with and acquire new customers outside of advertising. The company also launched a $29.99-a-year membership program called MyWay in October, which includes value-added services like discounted installation and assembly, free shipping, next-day delivery and early access to sales. This is a step in the right direction for the company as it’s a way to build loyalty on its platform, much like Amazon Prime. But even though Wayfair’s membership is cheaper than Amazon’s $119 annual fee, the latter continues to build out new private-label furniture lines—it debuted two in early November—and offers many more products and categories beyond this that are included in its membership benefits.