Clicks and Bricks: Why Online Retailers are Taking their Businesses Offline
With a major shift towards online mobile commerce, it’s surprising to see so many companies with a proven track record of crushing it online opening up physical stores around the world.
Even brands with no track record of selling online (but who have never sold through physical locations) are opening up brick and mortar stores. Kellogg’s cereal recently opened up a cereal café in New York City’s Times Square. Headed by award-winning chef, Christina Tosi, Kellogg’s NYC features the classic cereals of our childhoods served up with an undoubtedly elegant twist.
In a world where brands can get away with no physical presence (and ditch overhead expenses) while still satisfying the click-happy consumer, why is it that so many companies are setting up shop?
While it’s often debated whether or not the internet is infinite, it certainly feels crowded, with thousands of e-commerce sites at the consumer’s disposal. “It’s very hard to launch a brand these days that’s just online-only,” Sucharita Mulpuru, a retail analyst at Forrester Research tells The Guardian. There are reportedly more than 800,000 online stores, all fighting to stand out and attract consumers. According to L2 Inc., major department stores, Macy’s and Nordstrom both spent a collective $10.4 million in paid search listings for the top apparel-related keywords in the first quarter of last year. Simply put, opening up a physical location is a great way to set yourself apart and created a targeted space that consumers can look to when shopping for your product.
According to a 2015 study by IDC, omni-channel shoppers have a 30% higher lifetime value than those who shop using only one channel. Omni-channel shoppers are consumers who shop with a brand through more than one method (both on and offline). E-tailers are taking this as an opportunity to create a more seamless and extended shopping experience, further immersing the customer into their world. A perfect example of this would be the time I purchased my first pair of glasses from formerly desktop-only retailer, Clearly.ca. I perused their website for hours, searching for the perfect pair, even uploading a selfie so that I could “virtually” try on each frame. The detailed information allowed me to make my purchase confidently enough so that the following year, when Clearly opened up its first flagship store, I jumped at the chance to see what it was about. My next frames were also purchased online – but with an associate, after having tried on frames they had on display in-store.
The above leads to a larger and perhaps the most important reason online retailers are taking their businesses offline. It actually helps drive sales to their website. “The big benefit of the flagship stores is that they’re terrific marketing vehicles,” Jason Goldberg, Senior VP of Commerce and Content at digital agency Razorfish, explains. “Not only do those stores tend to be economically successful on their own but they generate a huge lift in incremental shopping to the online store.” Warby Parker, another popular online-only eyewear store, opened its SoHo flagship 3 years after it launched in 2010. They now have 20 stores worldwide and plan to open 20 more. “We also see a halo effect where stores themselves become a great generator of awareness for our brand and drive a lot of traffic to our website, as well and accelerate our e-commerce sales,” explains co-founder and CEO Dave Gilboa.
Make no mistake, it’s not just eyewear brands that have caught on to this trend. Popular beauty subscription-box service, Birch Box opened up a store in 2014, allowing shoppers to build their own boxes while also taking advantage of beauty services and classes. Shoes.com opened up a few shops, offering exclusive styles not previously available online as well as 2-hour delivery of in-store purchases. Health and wellness e-commerce retailer, Well.ca recently set up shop in Toronto, offering in-store pick-up and DIY workshops while hoping to gain more insight on its omni-channel shoppers.