OSD 210: Your gucci is no good here
We had some fun in the OSD Discord this week talking about the Mystery Ranch x Dior collab that those two companies announced this month. Here’s a representative sampling of the products from Dior’s site:
On some level, yes, silly. They wrote “Dior” on some Mystery Ranch gear, made the zipper pulls shiny, and 15x’ed the price.
(Side note: these margins are a CFO’s dream. LVMH, the luxury conglomerate that owns Dior, has a gross margin — net sales minus cost of goods sold (COGS) — of 68%. And collabs like this probably pull that average up. Unreal. Although worth mentioning that after all other expenses, LVMH’s net income ends up at a healthy-but-not-eye-popping ~19% of sales.)
But beyond the surface silliness, there’s something to learn here about how products gain mainstream acceptance.
(Another side note: we like to steelman the case for silly purchases around here. If you like this piece, you’ll also like “OSD 119: I’m not a LARPer, I’m just ahead of the curve” and “OSD 185: Hypebeasts as honeybees”.)
Imagine a spectrum:
On the left end, you have a pure fungible commodity, where price is exclusively a function of the quantity you’re buying. Dollar bills, say, or barrels of crude oil.
On the right end of the spectrum, you have a Platonic Veblen good, where price/value derive purely from the cachet of the good’s high price.
In the middle, you have goods whose price is based partially on functional characteristics and partially on more qualitative factors, shifting increasingly to the latter as you move right on the spectrum.
You can map gun stuff onto this spectrum. Ammo isn’t quite at the left extreme of the spectrum, but if you filter down to certain ammo subcategories (“no-reman 124 gr brass 9mm FMJs), it’s pretty close to the left end. ARs are somewhere in the middle — you’ve got your workaday brands, or you can move right on the spectrum and get deep into diminishing-marginal-returns-on-functionality with KACs and LMTs and the like. And on the right of the spectrum you’ve got stuff like a custom pair of Holland & Holland shotguns, which will be no more reliable than a Browning that costs 98% less but which do come with cool engravings and a British man in a bespoke suit who’ll serve you champagne during the fitting appointments.
What this spectrum describes, as you move towards the right, is a process of persuading people that there’s something valuable about your product other than its raw materials (in the case of a fungible commodity like crude oil) or its purely functional aspects (in the case of a product on the second-to-leftmost notch on the spectrum, like ammo).
That’s why LVMH’s gross margin is 68% — the value its customers ascribe to its products is mostly not driven by COGS. The flip side of this is why the local lumber yard has no pricing power — the value you ascribe to its products is driven almost entirely by COGS.
There’s a word for expanding the definition of your product’s value beyond just the cost of its raw material inputs: branding. You probably don’t know the make of the 2x4s in your wall or the asphalt in your driveway. (Although knowing the readership of this newsletter, who knows, you probably do.) But everyone knows the make of their car or their phone.
Moving to the right on the spectrum means that people are starting to care about what your product represents. The qualitative aspects. The bigger the customer base and the more they pay, the more they care.
It’s fine to laugh about the Mystery Ranch x Dior collab, because hey, it’s funny and chaotic-neutral. Is it progress? Who knows. But it is the sort of thing that will inevitably accompany progress. So the more that gun stuff gains cultural acceptance, the more of this sort of thing you’ll see. Enjoy it as a good omen.
We’ll leave you with this screencap from the Instagram story of the fashion brand nothingknew (on Instagram as @itsnothingknew):
This is what the path to mainstream appeal looks like.
This week’s links
OSD crew on TFB’s podcast
Discussing cultural acceptance of gun rights, and navigating social media content policies. Three of us recorded this podcast with Pete, the editor of The Firearm Blog, at SHOT Show this year.
New Ahoy video on Barrett’s .50 cals
The first Ahoy gun video in three years.
Massad Ayoob on the shoot-me-first vest
You may not like it, but a backup sandwich is what peak performance looks like.
Facebook announces a change to its content policy enforcement process
Under the new system, we will focus on helping people understand why we have removed their content, which is shown to be more effective at preventing re-offending, rather than so quickly restricting their ability to post.
…The implications of overenforcement are real — when people are unintentionally caught up in this system, they may find it hard to run their business, connect with their communities or express themselves.
Our previous system resorted quickly to long penalties, such as a 30-day block on a person’s ability to create content. These long blocks were frustrating for well-intentioned people who had made mistakes, and they did little to help those people understand our policies. The blocks also made it harder for us to spot violation trends and sometimes had the effect of letting bad actors stay on the site longer.
This was just announced, so results tbd.
Top-quality hats, t-shirts, and patches.
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