Loose Threads Intel
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Will any digitally-native brands out-scale and outlast the 20th century heritage brands that came before them? This is the most pressing question for the digitally-native gold rush, which has led investors to pump hundreds of millions of dollars into fledgeling brands. To answer it, one has to evaluate both brand cohorts against a number of vectors: their funding, retail growth, sales milestones, profitability and financial troubles.
This week the Carlyle Group, a big private equity firm, bought a stake in the one-of-a-kind brand Supreme for $500 million, valuing it at over $1 billion, making it the most valuable privately-held streetwear brand. Industry sources say Supreme has around $100 million EBITA, and while its revenue is unknown, it could be anywhere from $150-300 million. One must take these numbers with a grain of salt, since there have been different ones trickling out over the past week and Supreme, as a super secretive company, has no interest in proactively disclosing this info. Some say the silence is out of fear that it will continue losing its cool as it grows.
A few weeks ago, Dave Ambrose tweeted out the above image showing an Away suitcase and an Amazon Basics replica side-by-side. The Away bag costs $295 and the Amazon Basics one is $89.99. Away is one of the current darlings of the direct to consumer boom, and Amazon is, well, Amazon. There are many consumer goods categories that are commodity driven. This happens if 1) the products themselves are commodities; or 2) if no brand "owns" the space as a result of fragmentation and price pressure. Socks, underwear, luggage, bedding, razors and many other products existed in categories where price drove many purchasing decisions.
I've always been fascinated and perplexed by the rhetoric that brands use when talking about Amazon. It's usually a combination of uncertainty, confusion and absolutism. Most of this, understandably, comes from fear. As every day passes, the saying "Amazon can't get into this" or "Amazon won't get into this" becomes increasingly perilous and false. The world has never seen a company like Amazon before—it's unlike any conglomerate ever created, something I will expand upon soon—and anyone that claims to objectively know what the company will and will not do is lying.
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