Why Web retailers want to be in stores too

When shoppers can try on clothes and other merchandise, they don't have to agonise over a picture online and wonder whether it's worth the investment. Photo / Thinkstock

Many e-retailers are taking a page from their traditional rivals by offering an in-person shopping experience that can't be mimicked on a tablet.

When online jewelry shop BaubleBar opened a brick-and-mortar outpost in Manhattan, the retailer quickly realised just how different its in-store shoppers are from its Web customers.

Shoppers suddenly paid more attention to un-flashy pieces often overlooked online. More women bought multiple necklaces that could be worn together. And perhaps most importantly, co-founder Daniella Yacobovsky said shoppers typically purchased three times as much merchandise as an online BaubleBar customer. "Having the opportunity to touch and feel our product is a big value," Yacobovsky said.

After three years as an e-commerce darling, BaubleBar and many other Web retailing pioneers have discovered the old-school benefits of having a brick-and-mortar store.

Rent The Runway, which rents designer clothes by the day, plans to open a standalone store in Manhattan's Flatiron district in September.

Products from Etsy, a dominant online marketplace for handicrafts and vintage goods, will soon be available in independent boutiques and some major chain stores such as Nordstrom.

Birchbox, the subscription service that delivers beauty products to customers' doorsteps, opened a brick-and-mortar flagship in New York in July.

Upstart online retailers have emerged as a major challenge to traditional outposts such as Wal-Mart and Best Buy. But many of these sites are looking for new ways to distinguish themselves amid the flood of competitors while growing their businesses at a time when e-commerce still comprises just a small portion of overall retail sales.

Now, many are taking a page from their traditional competitors by offering an in-person shopping experience that can't be mimicked on a tablet or smartphone. When shoppers have a chance to test or try on clothes and other merchandise, they don't have to agonise over a picture online and wonder whether it's worth the investment. This heightened focus on in-store experience could be a sign that the retail industry definition of successful store is changing, analysts said.

"Retailers have to become much more agnostic," said Anne Zybowski, vice president at consulting firm Kantar Retail. "My point of view is that convenience is situational. What's convenient this week may not be convenient next week."

Harry's, the online seller of high-end men's shaving products that recently raised $123 million in venture capital funding, set up its first brick-and-mortar outpost last year in New York's SoHo neighbourhood. Instead of launching a traditional store that sells its razors and shaving creams, the company built a barber shop that co-chief executive Andy Katz-Mayfield said is designed to feel like a neighbourhood store.

"It's less about creating another channel to sell product," Katz-Mayfield said. "For us it's pretty different. It's about providing a really great experience."

Using a physical space to create a memorable, one-of-a-kind experience is core to what many online retailers' say motivated their move into physical stores. Jennifer Hyman, chief executive of Rent the Runway, said shoppers at the company's brick-and-mortar shops are able to get special touches not available online - including temporary hemming or strap adjustments as well as stylists' advice that might steer them to new brands.

After launching a men's apparel online retailer in 2007, Bonobos has found its physical stores essential. Known as Guideshops, the tiny showrooms allow customers to try on blazers, suits and dress shirts.

That is key for Ross Martin, 27, who stopped by a Guideshop in Washington, DC, this week to make an emergency purchase of a suit for a wedding this weekend. His other suit was ruined at a wedding the weekend before and he needed a new one in a hurry.

"I went online to look at their offerings, but I've always had trouble finding brands that fit," Martin said. By coming into a store, Martin said he felt more confident that he'd get something quickly that met his needs.

Guideshops have a small real estate footprint because they only carry one of each item in each size. Customers try on the clothes, then place an order online with the help of a sales associate. Within two days, their purchase arrives at their doorstep.

Bonobos announced in July that it plans to open 30 more Guideshops by the end of 2016, a move that will quadruple its store count. Transactions at Guideshops are double the average value of an online order. The company sells twice as many suits in Guideshops as on the Web and 50 per cent more dress shirts. The company has slashed its online marketing costs in half as purchases have increased at the Guideshops.

Some online retailers have pushed into brick-and-mortar spaces by partnering with existing stores. Etsy has set up a wholesale marketplace that connects boutiques and chain stores with Etsy sellers. The company will collect a 3.5 per cent fee from retailers for each wholesale purchase order. In some cases, in-store displays feature Etsy branding.

BaubleBar has launched partnerships that allow its merchandise to be sold in Nordstrom and Anthropologie. They've recently closed the New York store at their corporate headquarters ("We're growing, we need the office space back," Yacobovsky says), but the outpost was pivotal in helping the brand develop its strategy for brick-and-mortar shopping. Yacobovsky says they are continuing to look at other opportunities for selling goods offline, which may include standalone retail outposts.

Simeon Siegel, a retail analyst for Nomura Securities International, said that Web-first retailers may be on the leading edge of redefining how the retail industry thinks about success at brick-and-mortar outposts.

"Sales per square foot used to be the most important metric, and you're now hearing managers shy away from that," Siegel said.

In other words, the success of a store may be judged less on how many dollars it pulls in and more on its ability to function as a marketing tool for the brand.

- Washington Post