If you know exactly what you want to buy, is there any better way than to pull it up on the internet, and have it shipped directly to your home in as little as a day? Sometimes you can even get your products in hours. It’s hard to beat that type of transaction. But what if you’re looking to try new things, and want to experience a variety of products before choosing which is right for you? The internet is not so well adapted for that sort of shopping. That’s where a number of smaller companies are working to beat Amazon and other e-commerce companies. Creating a better buying experience is their strategy for bringing customers back to stores. The FT reports:
Hero is one of the latest generation of technology companies trying to remake retail in the age of Amazon. The ecommerce giant’s hypercharged growth has thrown bricks and mortar stores into upheaval — even though upwards of 90 per cent of all shopping still happens in stores rather than online, according to the US Census Bureau.
As Amazon has set new expectations among consumers — from fast and free delivery to endless selection and easy returns — retailers are looking for an edge. Going head to head on price and convenience with a company that brought in $232bn in revenue last year is likely a fool’s errand, but a new breed of tech start-ups aims to help them differentiate in other ways.
Hero’s angle is personalisation. Another start-up, San Francisco-based Faire, emphasises its carefully curated selection of products, backed by data showing what is expected to sell well. A third, b8ta, highlights the experiential nature of shopping, letting customers try out tech gadgets from brands that do not typically sell in stores.
In each case, these start-ups are based on a single, perhaps liberating insight. “Amazon is great for buying, but it’s terrible for shopping,” said Adam Levene, co-founder of Hero. “It’s too transactional.”
The 17 b8ta stores around the country emphasise a touch-and-feel, playground-like experience unavailable on a website. In-store cameras even track shoppers, replicating in the analogue environment how “cookies” learn from online shoppers. Last month, b8ta expanded its reach into children’s toys — inking a deal to revive the Toys R Us brand with two store openings before Christmas.
B8ta, founded by four veterans of Nest Labs, the smart products company acquired by Google, passes off inventory risks as well, because the stores operate on a consignment model in which brands pay for space within its store. “We provide the logistics in the back end,” said Phillip Raub, president. “It works from a consumer standpoint but also for our clients.”
Faire, founded in 2017, bills itself as “a wholesale version of Etsy”, which hawks vintage goods and handcrafted decor online. Faire’s business model is to scout for unique products, purchase them directly from manufacturers, and then market them, risk-free, to a dizzying array of small shops across the country.
“If I’m a small shop, I have to spend a ton of money and take on a ton of risk to do my job, to go and find cool new products,” said Max Rhodes, Faire’s chief executive. “We take all the risk out of that equation. It’s actually try before you buy: they get 60 days to try the products out. And anything that’s not selling within 60 days, they can just send it back.”
Read more here.
Jeremy Jones, CFA
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