Platforms

The retail disruption plot thickens.

Facebook doesn't break out numbers for Instagram, but there are increasing signs that it is becoming a beast for driving retail sales. Yep, Instagram. 

As we foreshadowed last week, we find the continued evolution of digital platform-based retail interesting. This week, Bloomberg highlighted how Instagram is "kill[ing] the retail store," noting how more and more entrepreneurs rely on the platform to sell their wares. Brick-and-mortar is merely a complementary channel, used mainly to create brand awareness and otherwise create an aura of scarcity and, well, "cool." Choice quote: "We make sure that our products are sold out quickly through retailers...[w]e create rarity, and then - boom! - we have waves of clientele coming to our website directly, no middleman necessary." No. Middleman. Necessary. Explains a lot, doesn't it?

It is a bit ironic, though. Because the middleman is increasingly the digital platform rather than the brick-and-mortar retailer. And Instagram will eventually figure out a way to monetize the fact that it maximizes "discovery."

In the same vein, other retailers are increasingly using WhatsApp (Net-a-Porter) and iMessage (Coach) as sales channels, highlighting that "conversational commerce" drives higher volume. Indeed, other brands like Patagonia, Everlane and Coach are abandoning their own (expensive-to-maintain relative to value added) native apps, opting to explore further the potential of leveraging the aforementioned platforms as well as others, like Facebook Messenger and WeChat. Which is to say that these platforms are becoming more and more meaningful in the overall retail story and it is not just Amazon eating the world - a somewhat lazy and partially inaccurate narrative too often relied upon by restructuring professionals.