Branding The Brandless Brand

Business Insider: Brandless, “which sells food and consumable essentials all for $3 and pitched itself as the “Procter & Gamble for millennials,” first launched in July … The brand is now moving into the physical world with a pop-launching in May, called ‘Popup with a Purpose.’ It will be a ‘three-dimensional experience of the values of what Brandless is really about,’ according to CEO and co-founder Tina Sharkey. The Brandless brand will be on display, but no products will be for sale. Instead, the 3,500 square foot location on Melrose Avenue in Los Angeles will be offering samples, and opportunities to “live, learn, and love with intention,” according to a press release.”

“The pop-up will be interactive and there will be panels, workshops, and talks by experts in the fields associated with the areas of food and wellness that Brandless has staked out. Along with the pop-up, Brandless is also launching a lifestyle blog that will be focused on educating consumers of the claimed benefits of, for example, ‘tree-free toilet paper’.”

“Sharkey sees Brandless as filling gaps where the ease of shipping and low point of entry can allow people to try new things — like gluten-free baking mix — that would otherwise be either too expensive or just hard to find locally in some areas … The B.more membership program, which previously only lowered the free shipping order threshold to $48 dollars, now makes all orders ship free. The company has since started focusing on offering B.more to repeat Brandless customers.”

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Wearhouse Hero: Boosting App-arel Sales

The Wall Street Journal: “Like many traditional chains, Men’s Wearhouse has had better luck converting store visits into sales than it has with shoppers browsing its website. Executives say they are turning to new technology created by a startup called Hero in hopes of improving results while still using the company’s existing workforce. Over the holiday shopping season, the company tested out the app in about 100 stores. It found that online shoppers were more likely to buy an item after chatting with a store worker, prompting an expedited rollout to the company’s remaining stores.”

“By September, more than 3,000 workers across both Men’s Wearhouse and Jos. A Bank will be able to chat with online shoppers. The employees can wave their phones over product tags to generate web links to purchase the items and set up appointments through the app … The app connects an online customer with an available salesperson in the nearest store. To ensure that employees don’t become too pushy, it lets shoppers rate them, much in the same way an Uber passenger rates a driver. The video chat is one-way: Shoppers see into the store, but workers can’t see the customers.”

“Alistair Crane, the CEO of Hero, said his technology is built on the fact that store workers were already texting customers and using social media sites, like Instagram, to showcase products.”

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Alibaba Opens Door to O2O Retail

The Economist: “The season for the best xiaolongxia (little dragon shrimp) is just beginning, and so on a recent evening four young friends tucked into a pile of steaming-hot crayfish. But rather than sitting in a restaurant they were at a table surrounded by supermarket aisles stocked with nappies, baby formula and cooking oil … ‘Eat-as-you-shop’ is one innovation of Hema Xiansheng, a chain of fancy supermarkets. And these shops are themselves the showiest elements of a bid by Alibaba … to master ‘online-to-offline’, or O2O, retailing, in which customers use digital channels to buy from physical businesses. Alibaba currently runs 40 Hema stores in ten cities. It wants to open 2,000 in the next five years.”

“Alibaba is hoping to apply its online know-how to them with Ling Shou Tong, a free retail-management platform launched in 2016. Through it, shop owners can order products sourced by Alibaba from partners such as Procter & Gamble. It then uses its logistics affiliate, Cainiao, to ship them. Shops are given advice on what to stock based on Alibaba’s trove of data—plenty of dog food in pooch-loving areas, say. In return Alibaba gets valuable data on spending habits in poorer cities, especially among older shoppers who buy offline.”

“A clearer signal of Alibaba’s ambitions as a provider of services to other outlets came on April 2nd, when it bought the shares it did not already own in Ele.me, valuing the food-delivery platform at $9.5bn. These services span online tools for inventory management to marketing and smartphone payments. They also include labour. Ele.me’s network lets thousands of small restaurants ferry dishes to the doors of some of China’s 700m smartphone users. Through the acquisition Jack Ma, Alibaba’s founder, added 3m delivery people to the 2m of Cainiao, boosting the group’s ‘last-mile’ delivery capabilities.”

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Dept. of Social: Community Shopping

The Wall Street Journal: “Going to a department store might seem like simply shopping, but it’s also a chance to practice civil behavior, to appreciate beautiful things, to feel a connection to others. In the 1970s, Bloomingdale’s was considered a New York City attraction on par with the Metropolitan Museum of Art, which, according to Robert Hendrickson, author of ‘The Grand Emporiums,’ was Bloomie’s only real competition when it came to meeting a possible romantic partner.”

“Last spring, inspired by memories of the excitement of shopping in New York in the 1980s, Bergdorf Goodman’s fashion director Linda Fargo opened Linda’s at BG, an in-store boutique stocked with her personal picks in everything from high heels to Squirrel nuts. ‘Online is efficient,’ Ms. Fargo said, ‘but nothing can replace touching things, looking in people’s faces. Sensuality—that’s what we can offer people’ … Nordstrom executives appeared to be thinking along similar lines in 2013 when they hired Olivia Kim, formerly of New York-based Opening Ceremony, to make the store more relevant to younger customers.”

“As Nordstrom’s vice president of creative projects, Ms. Kim has initiated a series of pop-up boutiques and brought in buzzy, Instagram-friendly designers like Marine Serre and Jacquemus. But her proudest achievement, she said, is seeing Nordstrom used as a hangout space by customers: ‘Not everything needs to be transactional. I’m more interested in that they’ve learned something, that they feel energized and excited’ … As Harry Gordon Selfridge, founder of Selfridges, once said, ‘a store should be a social center.’ Department stores are taking note.”

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Bingo Box: China Leads Robo-Retail Revolution

The New York Times: “A global race to automate stores is underway among several of the world’s top retailers and small tech start-ups, which are motivated to shave labor costs and minimize shoppers’ frustrations, like waiting for cashiers … Companies are testing robots that help keep shelves stocked, as well as apps that let shoppers ring up items with a smartphone … China, which has its own ambitious e-commerce companies, is emerging as an especially fertile place for these retail experiments.”

“One effort is a chain of more than 100 unmanned convenience shops from a start-up called Bingo Box, one of which sits in a business park in Shanghai. Shoppers scan a code on their phones to enter and, once inside, scan the items they want to buy. The store unlocks the exit door after they’ve paid through their phones … Not to be outdone, JD, another big internet retailer in China … put readable chips on items to automate the checkout process. At its huge campus south of Beijing, JD is testing a new store that relies on computer vision and sensors on the shelves to know when items have been taken.”

“While such technologies could improve the shopping experience, there may also be consequences that people find less desirable. Retailers like Amazon could compile reams of data about where customers spend time inside their doors, comparable to what internet companies already know about their online habits … In China, there is less public concern about data privacy issues. Many Chinese citizens have become accustomed to high levels of surveillance, including widespread security cameras and government monitoring of online communications.”

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Alexa Challenges Brand Loyalty

The Wall Street Journal: “For decades, the makers of packaged-food, personal and home-care brands have bought shelf space at retailers like Walmart Inc. and Costco Wholesale Corp. that guarantee them nationwide exposure. They have poured billions into branding to make their products instantly recognizable. Selling on websites offers some of those same advantages: Brands can pay for placement on a webpage and display their packaging and logos. Voice shopping, which currently offers customers just one or two product options, could chip away at that tried-and-tested model.”

“In a test conducted in October, Bain & Co. found that for customers making a first-time purchase without specifying a brand, over half of the time Alexa’s first recommendation was a product from the ‘Amazon’s Choice’ algorithm, which implies a well-rated, well-priced item that ships with Prime. Bain also found that in categories in which Amazon has a private brand, 17% of the time Alexa recommends the private-label product first even though such products make up just 2% of volume sold.”

“For now, brands can’t pay Amazon to offer their products to customers in response to a generic request for a product, like detergent or paper towels …Without that paid-search option, P&G has been tinkering with ways to get noticed by shoppers using voice assistants, such as a Tide-branded Alexa app that doles out advice on how to clean over 200 stains but doesn’t suggest Tide products … Unilever, owner of Hellmann’s mayonnaise and Domestos toilet cleaner, has developed Alexa apps that give free recipes and cleaning tips that may or may not incorporate Unilever brands. Unilever sees the apps as a way to market its products by offering customers useful information when they need it most.”

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Inman Makes Bricks Fashionable in China

The Wall Street Journal: “In the prospectus for its mammoth 2014 stock listing, Alibaba Group Holding highlighted online-only women’s fashion brand Inman as a success story in China’s e-commerce world … Since mid-2015, Inman founder Fang Jianhua has gone in a surprising direction. He’s abandoned the online-only model to open physical stores. To date, Inman has opened 450 stores, mostly in China’s smaller cities. Last year, while Inman’s online sales rose about 39%, its offline business, which is newer and smaller, grew 300%, to 330 million yuan ($52 million), and reached 35% of total revenue. Mr. Fang expects the online-offline breakdown to be 40%-60% in the future.”

“In changing strategy, Inman had spotted several long-term problems. Online sales growth for brands such as Inman is slowing as China’s e-commerce market becomes more competitive, with megabrands such as Uniqlo, Vero Moda and Gap making big online drives. Meanwhile, the costs of online advertising are rising as are the challenges of standing out in a crowded field.”

“In 2015, Mr. Fang figured it would cost less to reach customers in smaller cities through a physical store than via an online store. Given its years of insight into its millions of customers, Mr. Fang thought Inman could manage its supply chain and stores better than purely brick-and-mortar competitors. For example, women in China’s cold, northeastern rust belt aren’t big fans of Inman’s understated cotton and linen clothes, so no need for stores there.” He comments: “The question is not whether a fashion brand needs to be both online and offline. The question is how big you want to be in the two worlds.”

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Word of the Day: Convenience

Tim Wu: “Convenience is the most underestimated and least understood force in the world today … In the developed nations of the 21st century, convenience — that is, more efficient and easier ways of doing personal tasks — has emerged as perhaps the most powerful force shaping our individual lives and our economies. This is particularly true in America, where, despite all the paeans to freedom and individuality, one sometimes wonders whether convenience is in fact the supreme value.”

“Convenience has the ability to make other options unthinkable. Once you have used a washing machine, laundering clothes by hand seems irrational, even if it might be cheaper. After you have experienced streaming television, waiting to see a show at a prescribed hour seems silly, even a little undignified. To resist convenience — not to own a cellphone, not to use Google — has come to require a special kind of dedication that is often taken for eccentricity, if not fanaticism.”

“For all its influence as a shaper of individual decisions, the greater power of convenience may arise from decisions made in aggregate, where it is doing so much to structure the modern economy. Particularly in tech-related industries, the battle for convenience is the battle for industry dominance … The easier it is to use Amazon, the more powerful Amazon becomes — and thus the easier it becomes to use Amazon. Convenience and monopoly seem to be natural bedfellows.”

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Circular Logic: Paper Fliers Beat Banners

The Wall Street Journal: “One old-school retailing trick has survived the e-commerce shakeout—the lowly advertising circular. Some grocers and other retail chains have learned they risk losing business without a steady flow of paper mailings nudging shoppers to stores. Even online startups that don’t have physical shops are embracing the idea.”

“For now, paper fliers keep piling up on doorsteps because most people still read their mail, even as they easily ignore most online banner ads and many emails.”

“The biggest retailer, however, has cut back on circulars. Wal-Mart is sending out about a dozen mailings a year, down from a hundred two years ago. The retailer has asked suppliers to spend the marketing dollars that used to go into circulars on lowering their prices and chose to send out fewer circulars, a spokeswoman said.”

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Ling Shou Tong: How Alibaba Helps Mom-and-Pops

Quartz: “Alibaba has its sights set on a new goal: to bring its cloud-computing technology to all of China’s 6 million mom-and-pop convenience stores. In the process, it’s building out its physical footprint to tap into the 85% of the country’s retail sales that don’t yet happen online. Alibaba is using a retail-management platform called Ling Shou Tong (which roughly translates to ‘retail-integrated’) to help store owners optimize product procurement and boost sales.”

“Ling Shou Tong’s app gives store proprietors recommendations, based on sales analytics, on what to buy and how to display goods in their stores. In the background, it uses Alibaba’s cloud-computing and logistics businesses to create a digitally connected inventory-management system. Store owners can also use the app to place orders, fulfilled by Alibaba and shipped directly from its warehouses, eliminating the need for middlemen.”

Mom-and-pops have given mixed reviews about the impact Ling Shou Tong has had on their bottom line so far. Some say the storefront decorations and in-store training accompanying the platform’s adoption provides a cosmetic facelift to their stores and makes running them easier. Others worry that relying on Alibaba’s product selection forces them to directly compete with the convenience of online shopping.” However, Alibaba CEO Daniel Zhang comments: “We’re working to make the net in the sky and the net on the ground. We will cover all consumers seamlessly.”

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