The rise of online shopping created a huge opportunity for ambitious entrepreneurs who wanted to sell quality products at an affordable price. By cutting out the middleman, designing products in-house, and building a strong, authentic digital brand, they created non-traditional businesses with a global reach at a fraction of the cost.
Digitally native vertical brands (DNVB) like Everlane, Chubbies, CotoPaxi and Bonobos saw a gap in the market and offered an affordable solution. But, they didn't stop there. They combined an appealing price point with an exceptional customer experience. And, they have a few other things in common, including:
All these key points helped these brands differentiate themselves from all the brick and mortar stores and market themselves as the new solution for smart digital natives. These brands know who they are and understand a large portion of their target market values authenticity. They took it one more step further by making a shift to physical stores, and doing it well.
This article will go over how e-commerce brands can potentially do retail better than brands that started out in physical retail.
A lot of online-only brands began experimenting with opening a combination of temporary, semi-permanent and permanent store locations. This has worked out spectacularly for Warby Parker, an online store that sells stylish and affordable glasses. The company makes more than $3000 per square foot, which is more than Tiffany makes for the same space!
Physical stores add a certain air of legitimacy. They bring products into the physical world and make them tangible. But, physical spaces need to offer more than clothes on a hanger or products on a shelf. They need to add something to the shopping experience that ordering online doesn't.
One of the key reasons Everlane, Warby Parker, and Chubbys’ stores perform so well is because they optimize for the customer. They take the sales funnel they perfected online and alter it slightly to fit the real world. They offer an unforgettable experience and market it online, driving traffic to their physical locations through a combination of events and incentives.
When Everlane created a pop-up shoe studio to introduce their new shoe line they didn't recreate a traditional shoe store. There were no low mirrors, uncomfortable benches, and scattered boxes. Instead, potential customers put the shoes through their paces in a specifically designed, indoor urban space.
Every part of the experience is optimized for customer comfort and enjoyment. The team set up clear expectations and created a stress-free, enjoyable environment.
They turned trying on shoes into a unique, bottom of funnel experience and supported it with relevant content.
Traditional retailers try to maximize physical space and put as much of their inventory on display as possible. This can create a cluttered, unpleasant environment.
E-commerce businesses, on the other hand, understand that optimizing the use of space doesn't always mean packing it with inventory. Instead, they mirror upmarket stores and use open space and landscaping to enhance the area and make things relaxing. They offer affordable luxury and make you feel special.
The way we shop is changing, and if traditional retailers want to compete, they need to rethink their use of space and begin optimizing for the experience. To really do that, they need to start treating their e-commerce and storefront shops as the same business.
When customers see a brand, they see the whole thing, not a bunch of different teams in charge of various parts of the process. But, traditional brands approach e-commerce as an add-on service and don't really integrate it well with their physical stores.
The key is to start small and test customer responses. Cutting down on in-store inventory can be hard for traditional retailers because it will go against current customer expectations. So, for a start, they can start offering a small scale “try in store and order online from your device” experimental service.
That way customers can still come in, see the product and enjoy the ease of getting it delivered straight to their doorstep, combining the best of both worlds.
Traditional retailers can also team up with online-only stores. Higher end casual clothing brands can partner up with online services like MM. LaFleur that currently rely on showrooms and store pop-ups, and offer to share their retail space.
This can help introduce both brands to potential customers while keeping competition low and expanding offerings.
Traditional retailers aren't just falling behind because they treat e-commerce as an add-on.
One of the biggest differentiators between successful e-commerce-to-physical-retail versus unsuccessful retail-to-e-commerce stores is the way the two types of retailers brand themselves. In this new hybrid shopping space, authenticity matters and e-commerce brands know who they are.
Weekend enthusiasts Chubbies do a great job of staying true to their identity. They know who their customers are and what they stand for. That strong personality and confidence come out in every aspect of their brand, from their no-fuss, easy-as-pie returns policy to the beer fridge in their pop-up store.
Even down to the beer choice, Chubbies remained completely true to who they are going from online to physical. If traditional retailers embrace the same identity across all their ventures, they could reap some of the same benefits.
Traditional retailers developed their brands at a very different time. Many try to appeal to a broader market and end up diluting their messaging and fighting for competitiveness based on their price point.
E-commerce stores don't fight on price point alone. They draw their customers based on shared principles and a shared story.
Price doesn't build loyalty.
If traditional retailers want to compete, they need to get better at defining their target audience and understanding who their customers really are.
Figure out who you are and what you stand for.
The Chubbies team recognizes that they don't need to sell to everyone. In fact, they create a kind of exclusivity by stating exactly who their ideal customer is and isn't.
This move will scare some traditional retailers off as many attempt to offer a little something for everyone. However, making a stand can vastly increase conversions from your ideal customers.
As shoppers look for brands that fit in with their interests, beliefs, and self-perception, e-commerce brands that have a strong identity and aren't afraid to use it are at a distinct advantage.
By optimizing for the customer experience, creating a cohesive brand experience and trying to differentiate themselves by factors other than price point, traditional retailers can begin to regain some of that lost ground.