December 4, 2022

E-Commerce Companies Bypass Middlemen to Build Premium Brand

But what if they left out most of those people? “I had been to the factories and knew what it costs to manufacture glasses and knew the cost didn’t warrant a $700 price tag,” said Neil Blumenthal, a founder of the company. Inspired by glasses they found in their grandparents’ attics, the founders sketched a few frames, hired the same Chinese factories that make designer glasses and started selling directly to consumers online. By doing so, they eliminated enough of the cost to charge customers just $95 a pair.

Warby Parker is part of a wave of e-commerce companies that are trying to build premium brands at discount prices by cutting out middlemen and going straight to manufacturers. They make everything from bedding (Crane and Canopy), to office supplies (Poppin), nail polish (Julep), tech accessories (Monoprice), men’s shoes (Beckett Simonon) and shaving supplies (Harry’s).

The result is generally cheaper products for consumers and higher profit margins for the companies.

Big retailers discovered long ago that controlling the supply chain benefited their bottom lines, which is why companies like Wal-Mart and Whole Foods sell many products under their own brands. At Macy’s and Kohl’s, such “private label” brands make up almost half of their sales.

Start-ups have traditionally struggled to match those efforts. They do not have as much brand recognition as big retailers, and persuading consumers to take a chance on, say, Warby Parker eyeglasses instead of Prada’s can be difficult.

“The challenge is, if you’ve never heard of the brand, you wonder, ‘Should I buy it when it’s 20 percent cheaper?’ ” said Raj Kumar, a supply chain consultant at A. T. Kearney. “Or should I buy a brand I trust?”

What is empowering the upstarts now is the Web’s ability to reach lots of consumers without the costs of operating physical stores as well as a change in manufacturers’ willingness to work with small brands.

The founders of Deal Décor, whose model was to sell furniture directly to customers, worked at Target and Home Depot Direct before starting their company. They said they saw an opening after the recession hit.

As home sales in the United States declined, and furniture sales went with them, Chinese furniture factories had excess capacity, said Craig Sakuma, co-founder of the company. Where the factories had previously been unwilling to take small production orders, they were now eager for business — but they were concerned about getting paid, as they were already chasing down payments from errant retailers.

So Deal Décor approached manufacturers with an appealing proposal: it would pay them as the products were shipped, rather than a month or more later.

Unlike traditional furniture retailers, Deal Décor’s model was to sell couches or bookshelves on its Web site before they were in production. It timed the deals for when a factory was producing similar items for other clients and could easily add Deal Décor’s order. Deal Décor ordered the exact quantity it had sold and had the items shipped straight from the factory to customers eight to 16 weeks later.

Because they are not dependent on third parties, these e-commerce companies can also introduce products much more quickly.

Crane and Canopy, for example, releases new duvet covers and sheet sets every other week and designs textiles based on current trends on Pinterest and elsewhere, instead of planning collections seasons ahead of time like most brands, said Karin Shieh, its co-founder.

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Advertising: A Sellout for Super Bowl Commercial Time

CBS, which will broadcast the Super Bowl on Feb. 3, said on Tuesday that it had sold all the available commercial time — unless a marketer wants so much to be included that money is no object.

“Yes, we are sold out,” Leslie Moonves, chairman and chief executive of the CBS Corporation, said with a grin, “but if one of those movie companies wants to come in and pay five or six million, we will find room.”

Mr. Moonves was referring to the penchant for movie studios to wait somewhat longer than other marketers to decide whether to buy Super Bowl commercials.

As for the fanciful price tag in his jest, it would well exceed the highest rates for which CBS has made deals; “we have sold some of our spots for over $4 million,” Mr. Moonves said.

CBS has sold most of its Super Bowl spots, according to estimates by agency executives, for an average of $3.7 million to $3.8 million for each 30 seconds.

(By comparison, the average for Super Bowl XLVI, broadcast by NBC on Feb. 5, 2012, was $3.5 million.)

Usually there are 60 to 70 half-minute ad slots during each game, plus promotional spots for the network carrying the game. Mr. Moonves said the network hopes to include a promotion for “Late Show With David Letterman,” as it did, with hilarious effect, in 2007 and 2010.

Mr. Moonves spoke at an event at the CBS Broadcast Center on the West Side of Manhattan that was billed as Super Bowl XLVII Media Day. It was meant to serve as a showcase for what Mr. Moonves called “probably the biggest day of the year for this entire corporation.”

Commercials during the Super Bowl are traditionally the most expensive of the year because the game is typically the most-watched program of the year. The game is “a national holiday,” Mr. Moonves said.

The average viewership for the game last year set a record, at 111.3 million people.

It was the third year in a row that a Super Bowl set a ratings record, driven, many on Madison Avenue believe, by social media like Facebook and Twitter, which encourage people to watch the game live so they can discuss it, and the ads, with friends and family.

The high price of national Super Bowl spots also applies to commercials on local stations owned by or affiliated with the network broadcasting the game.

Some 30-second commercials in the game on WCBS-TV in New York, owned by CBS, have been sold for over $1 million, Mr. Moonves said.

Mr. Moonves, and the CBS advertising sales executives at the event, declined to name the sponsors, locally or nationally. That is common practice; network executives usually leave it to the buyers to decide if they want to identify themselves.

It was once standard procedure for advertisers to stay mum until just before the game — or even until the game ended — in hopes of capitalizing on the element of surprise to generate coverage.

But the increasing interest among consumers in sharing information about Super Bowl ads in social media is encouraging sponsors to describe their Super Bowl plans earlier.

For instance, on Tuesday the Paramount Pictures division of Viacom said it would run a commercial for a coming film, “Star Trek Into Darkness,” during the second quarter of the game. Viewers who before the game download an app — from Paramount and the Qualcomm Labs unit of Qualcomm — will be able to unlock special content during the commercial and be entered into a sweepstakes.

Other filmmakers likely to run commercials during Super Bowl XLVII include the Walt Disney Company and the Universal division of NBCUniversal, part of Comcast.

Also on Tuesday, the Anheuser-Busch unit of Anheuser-Busch InBev said it would run one or two commercials during the game for a new beer, Budweiser Black Crown. Anheuser-Busch, the exclusive beer sponsor of the Super Bowl, may also run commercials for brands like Bud Light and Budweiser.

Other marketers that have announced Super Bowl sponsorships in the last month include Mars, for MM’s; the Paramount Farms unit of Roll Global, for Wonderful pistachios; Skechers; Toyota Motor Sales USA, for its Toyota brand; and Unilever, for Axe personal-care products.

Marketers that had previously disclosed Super Bowl participation include, in addition to Anheuser-Busch, Best Buy;; the Coca-Cola Company; Ford Motor, for Lincoln; Gildan apparel, sold by Gildan Activewear; GoDaddy; two brands owned by the Hyundai Group of South Korea, Hyundai and Kia; Mercedes-Benz; Oreo, sold by Mondelez International; PepsiCo, for brands like Doritos, Pepsi-Cola and Pepsi Next; Realogy, for Century 21; Samsung; Soda-
Stream International
; and two brands sold by Volkswagen of America, Audi and Volkswagen.

That is not all. At least two more marketers plan to announce this week that they have bought Super Bowl ad time.

One is the Taco Bell division of Yum Brands, which last appeared in the game in 2010. The commercial is being created by Deutsch L.A., which recently joined the Taco Bell agency roster along with its lead agency, the Irvine, Calif., office of DraftFCB; both are part of the Interpublic Group of Companies.

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Fair Game: The Banks Still Want a Waiver

HOW should banks atone for those foreclosure abuses — all the robo-signing and shoddy recordkeeping that jettisoned so many people from their homes?

It has been four months since a deal to remedy this mess was floated. Not much has happened since — at least not publicly.

Last week, banking executives and state attorneys general met in Washington to try to settle their differences. At issue was how much banks should pay, and how and to whom, to make this all go away. The initial terms, which emerged in March, were said to carry a $20 billion price tag.

But here is a crucial question: to what extent would such a settlement protect banks from future liability? Will the attorneys general strike a deal that effectively prevents them from bringing new, unrelated lawsuits against the banks?

If the releases in any settlement are broad, there will be joy in Bankville. If they are narrow, the banks will probably face more litigation, something they would rather avoid.

A looming issue relates to the potential liability stemming from the Mortgage Electronic Registry Systems, or MERS. This company, owned by the major banks, was set up in the mid-1990s by the Mortgage Bankers Association, Fannie Mae and Freddie Mac. Its goal was to expedite the home loan process.

By eliminating the need to record changes in property ownership in local land records, MERS ramped up profits for lenders. In 2007, MERS calculated that it had saved the industry $1 billion over 10 years. An estimated 60 percent of all home loans were registered to MERS.

But the MERS machine started to sputter during the foreclosure crisis. Lawyers challenged MERS’s ability to bring foreclosure proceedings because the system does not technically own the security or note underlying properties, as required. While some courts have not objected to MERS’s foreclosing in place of banks, others have.

New York courts, for instance, have been increasingly hostile to MERS. In a February 2011 opinion, Robert E. Grossman, a federal judge on in Long Island, wrote: “This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

Equally troubling for MERS is the fact that its officials have filed questionable documents with courts attesting to ownership of the notes and other significant matters.

These practices have consequences, as described by R. K. Arnold, MERS’s former president, in a 2006 deposition. “We are heavily at risk as far as, you know, having to follow the rules of the court and enforcing our rules that our members must go by,” he said. “We also have jeopardy as far as if we were to fail in the foreclosure realm.”

David Pelligrinelli, president of AFX Title, a title search company, said MERS contributed to the problem of thousands of mortgages lacking a complete ownership chain.

“You can’t go back and redocument all these things, because some of the companies aren’t around anymore,” he said. “Even if they are, the charters for these companies don’t allow for backdating of assignments.”

How MERS and its bank owners will fare with the attorneys general is unclear. The early term sheet for the possible settlement said only this: “Issues relating to the use and performance of MERS are reserved for further discussion.” Those further discussions may be taking place now. It’s a good bet that the banks want a comprehensive release from liability relating to MERS.

Officials at the nation’s top four banks declined to comment on the private talks. A spokeswoman for MERS said it was not participating in the discussions and could not speculate on them.

Lawyers who have examined this issue say it would be unprecedented to grant a broad release from liability to the banks that own MERS from claims that have not been investigated.

WHILE some states are scrutinizing MERS, most have declined to investigate its operations. That might seem surprising, given the apparent conflicts of interest in its business. Employees of law firms representing banks in foreclosures, for instance, are also officers of MERS. They can assign mortgages even though they represent a party with an interest in the outcome.

A broad release would vastly diminish the possibility of an in-depth investigation. Such a release might also make it harder for borrowers to argue that MERS has no right, or standing, to foreclose on them. The United States Trustee has supported this view in a number of recent cases, but exempting banks from future lawsuits on this issue would send a message that questioning MERS’s standing is of no interest to top state officials.

And if the banks are insulated from future state lawsuits, responsibility for any abusive acts by MERS would be pushed onto law firms that did the system’s work. With few assets, these law firms are virtually judgment-proof. The unit of MERS that held title to the mortgages also has few assets and was set up in such a way that lawsuits against it would probably reap little for plaintiffs.

MERS has begun to clean up its practices and paperwork. Officials are furiously assigning mortgages out of MERS’s name and into the banks’ names. One borrower in Pierce County, Wash., combed through records from April 1, 2011, to July 18, and found 1,956 assignments of deeds of trust executed from MERS to banks that service the loans or trustees that oversee mortgage pools.

Sure, the issues surrounding MERS seem mind-numbing. Some officials might want to wash their hands of the whole thing in a settlement. But at least one legal professional is offering to educate attorneys general — at no cost. She is April Charney, a lawyer at Jacksonville Area Legal Aid in Florida and one of the first to question MERS’s standing in foreclosures.

“You need lawyers in each state to be legal consultants to the A.G.’s so they’re on equal footing with the huge industry they are up against,” she said. “It would be an honor to consult on these highly complex, layered and nuanced state-based legal issues. Call it pro bono with bells on.”

It would be telling if no one takes her up on that offer.

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App Smart: To Improve Your Swing: Bend Your Knees and Find a Good App

I’d be less mystified if I could hold on to all the tips I get while watching golf broadcasts, but that wisdom is long gone by the time I get a club in my hand.

But now I have a smartphone in my hand, and that means I have golf apps.

Golf-related apps were among the early entrants in Apple’s App Store and the Android Market, but the software lineup has improved significantly with time.

Among my golf instruction apps, one is new this season (Tiger Woods: My Swing, $10 on Apple), one features recent upgrades (Golfplan with Paul Azinger, $1 on Apple) and one started out solid and has remained so (iSwing Golf, $3 on Android and Apple).

Unfortunately for Android-loving golfers, the newest is also the best. Tiger Woods: My Swing is the coolest and most refined swing-improvement app I’ve seen.

With My Swing, you use the video camera on the iPhone or iPad 2 to record your swing from two angles, and watch it in high definition. You can slow down the video or freeze it at different points to study your mechanics.

You need a friend (or a specially equipped tripod) to hold the device, but My Swing includes some nice touches to help capture a good swing for viewing. The viewfinder shows the outline of a golfer addressing the ball, so you need only place the video subject within those outlines.

You can also preview a swing to decide whether it’s a fair enough representation to proceed with the swing analysis. Here — in the app’s swing analysis features — is where My Swing justifies its $10 price tag.

Even though I have a good idea of what a legitimate golf swing looks like, I would struggle to break down the mechanics of my swing so that I could make meaningful adjustments.

My Swing places optional colored lines over your swing, representing the planes that Tiger Woods deems most important to a good golf stroke with each club in the bag (excluding a putter). The app also includes videos explaining in clear detail the significance of each line, and what happens when a golfer strays outside those lines.

It’s excellent instruction — insightful, but not so much information that a golfer would struggle to remember everything. You can skip the app’s other videos, which include fluff like a 20-second interview clip about Mr. Woods’s childhood baseball abilities.

Those with deeper knowledge of their own mechanics can also draw their own lines over a swing video.

If, during a swing analysis, users find flaws worth noting, like too much hip movement in the backswing, they can append text or audio notes to the swing video, which is kept in the My Swing library.

That library also exists at, a free Web site maintained by Shotzoom, My Swing’s developer. The Web element brings other benefits few other apps can match.

From Golfshot, you can share your swing with friends, along with the “Tiger Lines,” or whatever lines you’ve chosen to draw on the swing. The site also includes sections where you can record details about each round you’ve played and share that with friends who also use the service.

Shotzoom’s other app for golf instruction, Paul Azinger’s Golfplan, is also quite good, if not quite as elegant as My Swing. But for $1, Golfplan offers an enormous amount of value.

The app features a deep library of instructional videos with Mr. Azinger, a P.G.A. tour veteran. But rather than leave users to browse that library randomly, Golfplan delivers those tips it believes most relevant to those with a certain handicap. (You offer this information to Golfplan when the software starts.)

Since Golfplan is also connected to, it will use any statistics you’ve included on the Web site to help deliver more relevant tips.

The videos are ideal for those who have reached the driving range with no ideas of how to attack their most nagging flaws. If, for instance, you have logged in with an astronomical handicap — as, for instance, I have — the app will offer specific tips on how to avoid slicing the ball.

My one quibble is that Mr. Azinger moves too quickly at times, and without slow-motion replays or diagrams to explain some of his points, the nuances are sometimes lost.

Another flaw: the “play” button is placed remarkably close to the “upgrade to HD” button, which incurs a $5 charge. I’ll let less cynical people than me decide whether this is intentional.

Mr. Azinger recently updated the app with a series of videos for practicing at home. They’re decent, but they have a poorly lit, less polished production quality. But for $1, this shortcoming is easily forgiven.

Android users have nothing even close to this good for $1, but iSwing Golf offers some solid value for $3.

The app is actually closer to My Swing than Golfplan, in that users film themselves swinging a club and analyze the swing with slow-motion replays.

The targeting feature isn’t as good as the one on My Swing, nor can you analyze your swing with tutorials, as you would with My Swing. But you can draw lines on your video and build a library of swings, and iSwing Golf lets you compare videos side by side, in synchronized motion, which is useful for underscoring changes in your stroke.

For an added $4, you can add videos from Adam Scott, a P.G.A. tour veteran and 2011 Masters Tournament runner-up, to help understand a model swing.

Mr. Scott, by the way, finished just ahead of Tiger Woods in that tournament. In the mobile apps realm, however, Mr. Woods wins by at least a couple of strokes.

Quick Calls

Android users with young readers should consider Super Why! ($3), from PBS Kids. The app, which is based on the series of the same name, builds literacy skills through interactive stories. It is available on Amazon’s Appstore. It Happened Here ($3 on Apple and Android) points out events of historical interest, based on the user’s location. It is now available for Los Angeles, New York, San Francisco and Washington.

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