It’s no secret that the direct-to-consumer market is becoming like the New York City subway system: crowded and filled with people jockeying for position to the closest exit.
Many of these “upstart” brands are busy carving out a niche for themselves, using emerging technology and focusing on customer experience as important tools to battle the incumbents. At Shopify Plus’ Commerce+ first event, executives from companies like Knix, Rebecca Minkoff and Cuyana shared different tips and strategies on how the new kids on the block are hangin’ tough.
Retail is far from dead
Across several panels throughout the event, different brands spoke about the retail landscape and why it’s working for them. For Adore Me, a women’s lingerie company, the company is opening up stores for brand awareness and because customers are asking for it.
“[It’s] a really vulnerable experience to try on a bra,” said Stephanie Maes, vp retail, Adore Me. “We actually wanted to take the experience and not only make it comfortable but also fun, And that means getting them to try fashion styles that they maybe wouldn’t have tried online. It’s really about getting the customer fitted and getting them to stay in that fitting room.”
Maes shared the company has also learned that certain insights from a physical location could lead to better online strategies, such as learning that a plus-size customer has a higher average order value.
Luke Droulez, CMO of Parachute, a home essentials company, said it’s seen similar findings: such as higher conversion rates, a higher lifetime customer value and a lower amount of returns. However, for Parachute, opening a store was always part of the company’s long-term plan, which is now 20 stores by 2020.
“I think brands, in the same way that customers are choosing from a long tail of brands based on identity, I think the retail experience is an extension of that,” Droulez said. “Of course there are these cultural tailwinds that are going to make more people buy online but until that point, you still need to serve that customer need, especially for Gen X, baby boomers and more traditional customers.”
For Uri Minkoff, CEO of Rebecca Minkoff, retail still has “power” that lets the company test out different technology concepts in-store.
For example, the fitting rooms in Rebecca Minkoff stores let customers change the lighting, ask for more sizes and receive product recommendations based on what they have. Because of that technology, Minkoff said the company saw a 40 percent increase of people adding to that fitting room cart thanks to the recommendations, as well as finding that customers were either bringing in items that were all under $200 or over $800. It was proof point that the recommendations were working and serves as data for designers on what people are actually buying as well.
“It was this high-low thing happening,” Minkoff said. “We wouldn’t have known until we saw the pairing of product in that fitting room.”
Aside from customer insights, Minkoff said the “power around a physical location” isn’t “going away or can be necessarily replaced,” citing that ecommerce brands can grow sales quickly but when it starts to scale, “that cost of acquisition is starting to hit people in the face.”
He also points to a new type of retail that’s emerging, found in influencers and the reselling economy. People who line up at clothing drops for the label Supreme are the new “wholesalers,” as are influencers.
“Those are our new retailers of the day,” Minkoff said.
Customers rule over everything
At Knix, an intimates brand, CEO Joanna Griffiths said the company monitors “what requests are coming and the velocity of the request.” However, that doesn’t mean the company makes whatever customers are asking for. Griffiths said Knix takes a look at the market size, who else is in the space and if there’s an opportunity there.
So for example, nursing bras are a “great example” in that only “at any one time only a certain percent of the female population is pregnant,” so it’s not the best use of the company’s time or efforts to make one (right now at least).
“Actually going after like the high-impact sports bra market which is a $30 billion market, makes more sense from a resources standpoint,” Griffiths said.
Cuyana, a women’s clothing and accessories company, has a different problem with customers. Karla Gallardo, CEO and cofounder of Cuyana, said that when the company does up anything “innovative” to “delight” its customers, the industry starts to copy the same technique.
“It’s just constant innovation,” Gallardo said.
Cheryl Kaplan, CEO and cofounder of M. Gemi, a luxury Italian shoe brand, said this type of competition makes the company think about different and new ways to get the customer’s attention. For example, Kaplan said M. Gemi started out with regular influencers and then switched to micro-influencers and constantly changes its creative.
“We’re looking for constant new ways to pop up,” Kaplan said. “You can’t take a break.”
It’s not brand against brand
However, despite all the competition and copying, Rich Fulop, CEO of Brooklinen, a bed linen company, said all these companies that are similar are just proving that there’s a need for it in the industry.
“There are a lot of players that are similar to us but we’re all fighting the same battle,” Fulop said. “We’re really focused on changing the old shopping experience and those incumbents are not being quick enough to do that.”
David Heath, CEO of Bombas, a socks company, said the same—at least in regards to the New York direct-to-consumer startup scene.
“It is fascinating that we’re all competing for the same mindshare but we’re all fighting against the same institutions,” Heath said.
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