By Peter Burgoyne:
Last month, web retailer Piperlime opened its first brick-and-mortar store in Manhattan’s SoHo, just up the block from the first freestanding store opened by online retailer DwellStudio back in June. But the motives for these two online retailers to open “on-the-street” are likely very different. And the reasons have to do with the nature of their offerings.
DwellStudio is a lifestyle retailer that only sells its own products, and the nature of those products is a tactile one. Sure, the company made a reputation for itself by putting bold graphics on sheets and accessories for adults and children, but at the end of the day, people want to touch the products, feel the thread-count, smell the candles. DwellStudio has a deep inventory on its site, but since it only sells products it manufactures, the inventory is not as deep as, say, a Zappos, which offers tens of thousands of different brands.
By contrast, Piperlime, the fashion retailer owned by the Gap, Inc., has an extremely deep inventory of products under hundreds of different brands on its site. But its store features a variety of designers that are representative of the Piperlime brand overall, rather than the site’s entire inventory. Celebrity contributors Rachel Zoe and Rachel Bilson have a presence in the store, and customers can purchase all of the items offered on the site, free of shipping costs, via three on-site, interactive kiosks. The fact that the Piperlime web site has the support of a retail giant like Gap means it can benefit from the Gap’s existing infrastructure. With its parent company’s stock on the upswing for the first time in years, moreover, a Piperlime store has the potential to further elevate the Gap’s image overall.
One online retailer that is a strong contender for brick-and-mortar (but not yet opening a shop) is Net-a-Porter. It amazes me that people are willing to buy $2,000 bags without actually experiencing the bags firsthand. But how would a Net-a-Porter store be any different than a Barneys New York? One strong differentiator could be location. If Net-a-Porter had a strategy to put these stores in unusual touchpoints – say, airports or subway stations – and to build paradigm-breaking convenience, Net-a-Porter could have an edge over its high-fashion competitors.
On the flipside, it’s no surprise that massive online retailers like Zappos or Amazon have not opened retail stores. Amazon won’t go there, as others retailers’ brick-and-mortar stores increasingly serve as “showrooms” for products available on the cheap from Amazon. If Zappos can undercut its competitors, it is because of the sheer volume of product it turns over online, as well as the amazing next-day delivery it offers. I could see a monstrous brand like Zappos considering an on-the-street location if it were positioned either as a showpiece – a physical marketing vehicle – or if the company wanted to push some of its more upscale brands, like Sigerson Morrison, Stuart Weitzman and Vera Wang. Providing a touch-and-feel experience for these $300-plus products, and offering the same type of fulfillment customers have come to expect from Zappos, could equal a retail homerun.
Here are three tips for knowing if your online brand is ready to go on-the-street:
1. Would your consumers benefit from experiencing your products in person?
2. Are you able to offer the same benefits, á la free shipping and fast fulfillment, in a freestanding store that you currently do on your site?
3. Can you create a unique experience that enhances your brand position, and does it help differentiate you in the marketplace?
If you can answer in the affirmative to all of the above, then starting a store might well be a smart strategic move. After all, many conventional retailers are racing to adopt channel-neutral (or so-called ‘omnichannel’) strategies in which distribution channels are inter-connected. This might well mean that, over time, consumers will cease to draw big distinctions between online and brick-and-mortar retail. Instead, they will simply expect their favorite retailers (online or otherwise) to offer seamless and consistent experiences across a variety channels — from smartphones, PCs and iPads, to catalogs and, yes, even real-world stores. Getting good at multichannel retailing, in other words, might just be the best way for today’s dot-coms to chart a course for the future.