Major digitally native brands are moving into physical retail at a rapid pace. We explore why it might be worth following suit.
By Blackdog - one year ago
Amazon, Loaf, Casper. Some of the best-known eCommerce brands in the world are recognising they need to captivate people in the real world as well as their online heartland.
The clicks to bricks trend shows no signs of reducing, with dozens of other major eCommerce brands opening their own brick-and-mortar retail spaces to supplement their online sales.
But wait. Isn’t the high street ‘dead’? We’ve all heard the gloom-mongers’ cries.
So why are so many of the biggest and most successful eCommerce brands bothering to open their doors to actual real people?
We’ve pondered this and have some ideas.
We’re in the business of Captivating People and we think major brands are thinking the same.
The clicks to bricks (C2B) business model is one in which an eCommerce store opens up a physical retail store (the bricks) to augment their already successful online store (the clicks).
Online stores can be incredibly profitable, but they have their obvious limitations.
As brands grow and want to increase their market share, having a physical presence where customers can interact with your products becomes vital.
In-store shopping still makes up the bulk of retail sales in the UK. Online sales only account for 34.5% of total retail sales as of February 2021. Yes it’s growing, but reports of the high street’s death may have been greatly exaggerated.
There’s got to be a reason why so many major brands are ripping up the eCommerce playbook and building physical stores, right? Actually, there are several.
Increase Brand Visibility
Building an offline presence is a great way for eCommerce brands to grow their profile. Not only will you grab headlines, you’ll also attract impulse buyers and open your brand up to consumers who don’t frequently shop online. It’s hard to miss a physical retail store, after all, while the internet is a pretty crowded place.
Boost Brand Loyalty and Improve the Customer Experience
Even the most engaging online stores have their limits when it comes to creating a killer customer experience. While interaction with customers is limited by a screen, physical stores let brands interact with customers in an intimate setting, delivering expert advice and hand-selecting products.
We’re all people. And we believe that whatever marketing terms are in fashion, it’s all about People to People.
It’s the warm smile. The sales person going the extra mile. The bit of advice you didn’t even know you needed. And usually less annoying than a pop-up window.
Physical stores also let customers try products before they commit. It’s all well and good buying clothes online that are easy to return, but even though companies such as Eve are offering long trial periods for big ticket items such as beds, you can’t beat a good bounce in-store.
Reduce Delivery and Return Costs
Let’s talk balance sheets for a minute. From a practical point of view, physical stores are a great way for eCommerce brands to reduce delivery and return costs. Opening stores in major metropolitan areas like London and Manchester can cut last-mile delivery costs while allowing customers to drop their returns off in-store at the same time.
Drive More Sales
Generating more sales may not be the primary reason for building a physical retail presence, but it is a welcome result nonetheless. With so many people still shopping in person, more sales are inevitable. But the quality of customers means these stores are seeing significant profits.
Jennifer Fleiss, Co-Founder of Rent the Runway, for instance, reported that customers were spending more in their physical stores than they did online, and that this more than made up for the higher overheads.
Before you get carried away with signing your first lease, let’s cover some of the issues that come with opening a retail store.
Opening a brick-and-mortar store may be cost-prohibitive to some eCommerce brands. There are significant overheads when opening an online store. Rental fees, shopfitting, utilities and employee costs can quickly rack up.
That may stop some brands from launching a physical store full stop. For others, it will mean their store must turn a profit. While these stores certainly can drive significant revenues, there’s no guarantee they’ll cover your overhead.
The Learning Curve
Running a physical retail store is nothing like running an eCommerce store. There is a huge learning curve that shouldn’t be underestimated, even if your online store is uber-successful. Setting up the store comes with its own unique set of challenges, and those challenges only mount when your store is up and running. Getting specialist help will be essential for most stores embarking on this journey.
If you’ve weighed up the costs and benefits and still want to proceed, here’s how you can make a successful transition from eCommerce to physical retail.
Rethink the Physical Store
Your brick-and-mortar store doesn’t have to look like a run-of-the-mill shop. It can, of course, but C2B brands tend to find more success when they rethink the retail space and tailor the experience to their customers.
It could be a showroom, for instance, where customers can see a wide range of your products, or an experiential store where customers don’t so much interact with your products as interact with your brand. Either way, your C2B store shouldn’t compete with your eCommerce presence but supplement it.
Start With a Pop-Up
As we’ve already seen, physical retail stores come with all kinds of costs and risks that eCommerce brands probably aren’t familiar with. That’s why many brands start with small-scale pop-up stores to test the concept before launching nationwide.
Use Data to Influence Store Decisions
Online brands have access to huge amounts of data, often far more than their brick-and-mortar cousins. You need to use this to your advantage. Tailor your store’s experience based on how your customers shop online.
Brands should also let their digital experience guide their physical shopping experience. You need to understand how consumers interact with your brand online and what they love most about you — and then magnify these features in your physical space. A jarring experience for loyal customers could spell the end for your fledgeling store.
Best practices will only take you so far. For more inspiration on how to launch your own C2B store, it helps to look at what other brands are doing.
Not happy with dominating the world of eCommerce, Amazon launched its first physical convenience store, Amazon Go, in 2018. They have since opened 28 more stores in the U.S. and launched their first store in London in March 2021.
Why are the stores so successful? Because Amazon took what they knew about creating an awesome and convenient customer experience and translated it to physical retail. Not only do the stores offer a wide range of products, but customers don’t even need to go through the hassle of checking out. Video monitoring means Amazon tracks everything consumers pick up from the shelves and automatically debit it from their Amazon account. Now that’s an experience worth going to the shops for.
Loaf launched in 2008 and quickly became one of the leading online retailers of bedroom and living room furniture. They aren’t the easiest products to buy online, however, particularly when Loaf sells items at the premium end of the market. That’s why they launched a series of showroom stores that help customers experience what Loaf furniture is really like.
Like Loaf, Casper’s customers also benefit from seeing their products in person. They’ve taken things a step further with their store, however. As well as letting people try out their mattresses in-store, Casper also provides customers with a “nap destination” called the Dreamery. In the brand’s U.S. stores, customers can pay $25 for a 45-minute nap in a sleeping pod. What a great way to showcase their product and earn fantastic PR.
Talk to people who know people. We have a wealth of experience in the physical and digital retail spaces. That means we’re incredibly well placed to support any online business that wants to launch a clicks to bricks strategy. We’ll help you make the business case for opening a physical retail store, design what that space could look like, run a national roll out or create a pop-up concept store. We’ll even bounce on a few beds. Please get in touch today for more information.