1) Nike turns to Fortnite, tapping into the game as an advertising platform.

WHAT HAPPENED: Nike is working with Fortnite’s parent company, Epic Games, to create two new characters who wear Air Force 1s.

Why it matters

  • With digital marketing platforms increasingly saturated, Nike’s debut on Fortnite allows the company to get in front of younger faces—about 250 million of them—in an interactive way. Fortnite players buy characters, and Nike’s go for $13-18, though it’s uncertain whether the sportswear company collects compensation that way or if it is simply using the video game as a marketing tool for its brand and products. This isn’t the first time Epic Games launched a partnership with a consumer brand. In November 2018, the NFL debuted virtual jerseys on Fortnite; it also worked with the Avengers franchise to create a new game mode in May.
  • While Fortnite is free to play, it made $1 billion in 2018 revenue, largely from virtual merchandise, which allows players to alter the appearance of their avatars. Because the Nike deal is for a limited-time only, and because most virtual merchandise is released in incredibly short-term “drops,” Epic Games implores players to be online more often so they don’t miss out. This sets Fortnite apart from a brand like Supreme, which releases new (physical) products on a weekly basis at a specific time and place. On the one hand, Fortnite’s type of scarcity means that its consumer brand partners avoid the resale market, which builds hype but snaps up most of the proceeds for limited physical drops. But on the other hand, Fortnite’s drops are purely digital. While gamers attribute clout to the appearance of their characters, virtual Air Jordans are still less of a status symbol than real ones.

2) Airbnb and 23andMe partner to launch a heritage vacation service.

WHAT HAPPENED: Upon receiving their ancestry reports, 23andMe customers will soon be able to view Airbnb Homes and Experiences to travel in the native countries of their ancestors.

Why it matters

  • According to an Airbnb study in April 2019, more than half of its 8,000 respondents have traveled to at least one country of their ancestry—an opportunity it is now taking advantage of by tapping into both the boom in the travel economy and the advent of genetic testing, which seemingly went viral in 2018. Airbnb debuted Experiences in 2016 and expanded the program to more than 1,000 cities in February 2018, providing a way for travelers to engrain themselves more deeply in local communities. Now, heritage brings an additional cultural element to travel, although assuming that it’s personalized to individual family identity and customs is a stretch. At the same time, promoting more local experiences could possibly help offset the gentrifying effects of Airbnb in the communities where the rental economy has most strongly altered local life.
  • There’s also a question of whether Airbnb’s heritage tourism programming will work. 23andMe, among other companies, commodified genetic testing, bring the price down to a mere $99. But the cost of travel is significantly higher, meaning that only a portion of 23mandMe’s customers are likely to spend on Airbnb rentals and experiences. Airbnb won’t necessarily acquire new customers via heritage tourism, but it could raise lifetime value.

3) The streetwear media site Highsnobiety turned to Prada for its ecommerce debut.

WHAT HAPPENED: After raising $8.5 million in 2018, Highsnobiety aims to make ecommerce account for half of the company’s revenue.

Why it matters

  • Selling Prada’s newly relaunched Linea Rossa athletic line marks the debut of ecommerce for Highsnobiety since it was founded in 2005. Though the company has worked on product collabs in the past, its permanent online retail operation will feature exclusive collections and curated product drops across various product categories and price points. The Linea Rossa line, for instance, ranges from about $200 to $2,000 and all items are sold exclusively on Highsnobiety or Prada’s owned channels—a boon to the legacy brand as it attempts to reach a broader range (and age) of customers.
  • Highsnobiety’s decision to launch with Prada was intentional; the company said that it recognized its customer would pay high prices for luxury product. Reading between the lines, this points to the promise of the media company’s ecommerce operation: Highsnobiety can use the wealth of readership data—from consumers who trust the media brand—to inform its product assortment. Already a go-to site for more than 6.5 million monthly readers, it can build on this online community with editorial content tied to each collection, a strategy embraced by other media-brands-turned-ecommerce-sites as you read in Medium of Exchange. For the Linea Rossa line, Highsnobiety featured articles about Prada’s relationship to streetwear, as well as a video showcasing the collection in Berlin. Embedding its editorial work into the product will help convert readers to customers as Highsnobiety’s ecommerce evolves.

4) Wine ecommerce sales are growing, but independent wine shops have an advantage over direct-to-consumer sales.

WHAT HAPPENED: Despite the rise of direct-to-consumer wine sales, brick-and-mortar wine stores can continue to benefit from in-person interactions, particularly if they are able to strike a multi-channel strategy.

Why it matters

  • Direct-to-consumer wine sales rose 11.6% in 2018 and DTC wine now accounts for 10% of the wine retail market outside of bars and restaurants, according to Sovos and Wines Vines Analytics. At the same time, apps are streamlining delivery—since December 2018, Drizly has raised a total of $67 million to grow its one-hour delivery service, which pulls from 1,000 brick-and-mortar liquor stores in the U.S. and Canada. In 2017 alone, the company’s revenue grew 61.8% and it accounted for 19.2% of online alcohol sales, compared to 19.3% from Wine.com and 8.1% from Fresh Direct.
  • But the change in the wine retail landscape doesn’t necessarily spell death for independent wine sellers, a testament to the importance of personal interaction between buyer and seller. Stores and wineries offer information and experiences such as wine tastings, flavor pairings, and recommendations that customers simply can’t access online. Attendance to winery tasting rooms remained relatively flat between 2014 and 2018 and while 61% of winery sales were direct-to-consumer in 2018, the Silicon Valley Bank’s Wine Division found that all of these DTC sales were preceded by an in-person visit to the winery first. As with other industries, the wine market’s ability to stay afloat is dependent on its adaptability to multi-channel retail and the logistics of shipping heavy and fragile bottles. Striking a virtuous cycle between offline and online will also help independent sellers stay on top of larger mass retailers such as Walmart, Trader Joe’s, Target, and possibly Amazon, which are increasingly taking on private-label wine and selling it at affordable prices.