We want to give our special thanks to Pablo Marcote & Ricard Codina, the two students who co-authored this post.

Sometimes, big isn’t big enough. For Amazon, the world’s most significant e-commerce player, the online world isn’t enough to contain its ambitions. 

Amazon physical stores are part of the company’s well-planned entry into the retail landscape. And like everything it has touched, Amazon has all the expertise and financial punch to change the brick and mortar sector. 

Shopping and Amazon are synonymous. But for a while now, it’s the company that’s been on a shopping spree. 

This shopping spree is different from Jeff Bezos’s post-divorce purchases of a yacht that comes with another yacht or a mansion with a 9-hole golf course. No, this is about the company and not the new bachelor on the scene.

From Whole Foods to PillPack to Ring to Zoox, the online behemoth has acquired companies to build its portfolio, enhance its technological capabilities, and fuel its retail growth. As a result, its strategy is different from other online or big-box retailers. 

What is Amazon’s physical store strategy?

The company has been rolling out Amazon physical stores to widen the horizon of its offerings in the retail sector. 

Amazon Go, Amazon Go Grocery, Amazon 4-Star, and Amazon Lockers are only some moves to disrupt the market and enhance offline shopping experiences. 

After redefining e-commerce, the company, it seems, is now about to redefine commerce as we know it. 

Amazon Books, the company’s first venture into the traditional retail sector, was launched in 2015. 

Starting in Seattle, it’s now present all across America. The Whole Foods acquisition followed suit. Then came Amazon Go, Amazon Go Grocery, and others. With Whole Foods, the company now has around 600 physical stores worldwide, divided as follows: 

The strategy is to be an omnichannel marketplace instead of a single-channel seller. 

After a testing phase opening Pop Up stores in 2018 following the acquisition of Whole Foods, Amazon has rolled out a complete physical strategy. However, the company is definitely not in the testing phase regarding its physical-store strategy. 

For those interested in knowing, for example, where Amazon Go or Amazon Fresh is available, Amazon stores are mainly located in the US. They can be found in the following Amazon physical store locator. Nevertheless, Amazon plans to expand overseas, with the UK as a testing ground before a full-scale deployment in Europe.

But why the shift? Why is Amazon expanding to formats and delivery modules that are not in natural alignment with its traditional strengths? What’s prompting this retail expansion?

Seven reasons why Amazon is jumping to brick & mortar retail

1. The future of retail is omnichannel

Even though all the talk about the surge in online sales, especially the tremendous spike witnessed during the pandemic, offline commerce isn’t going anywhere. 

That’s primarily because the offline shopper behavior of consumers is different from their online behavior. One is driven by experience while the other, by convenience. 

This means that there aren’t exclusive groups of shoppers. Instead, most people prefer both kinds of commerce. What they want is a blend – and best – of both online and offline buying experiences. 

E-commerce offers an exceptional choice of products, prices, and time-bound discounts that are difficult to find offline. In addition, Offline gives consumers a more immersive shopping experience that’s difficult to replicate online. 

The tactile and sensory experience of being in a physical store adds a level of engagement that e-commerce can never compete with.

Amazon knows this and doesn’t want to be seen as just an e-commerce marketplace. They want to be where the customers are. 

2. Gathering data on offline shopping behavior

Another reason for the launch and expansion of Amazon physical stores is the enormous data they give the online giant. But, unfortunately, while the company has the shopping data of millions of users, it doesn’t have much on offline shopping behavior.

The online shopping data, while significant, doesn’t tell much about the retail activities of consumers. This isn’t surprising as product search and discovery are different in both spaces. 

By focusing only on one, Amazon would be missing out on a completely different set of customer insights. 

The Whole Foods deal has to be seen in this context. 

This deal gave Amazon detailed data on consumers’ consumption and behavior patterns of a well-established retail brand. 

Importantly, it also allowed Amazon to club the benefits of in-store shopping with its Prime membership using refined consumer data. 

In that sense, Amazon wasn’t acquiring Whole Foods. It was acquiring its customers.

3. Offline retail offsets shipping costs

Just because they’re a behemoth doesn’t mean rising costs don’t hurt them. Amazon, just like its customers, is always looking to save more. And when your shipping costs are around $61 billion a year, you want to bring it down. 

With brick-and-mortar stores, customers would pick up their orders, significantly lowering the shipping costs. 

They would also offer easy and inexpensive returns as customers themselves would be bringing back the products. 

Also, whenever a customer arrives to either pick up or return a product, an Amazon physical store would be tempting not to check out. 

They might find the product they were looking for or a similar one. This, without having to visit another store or open the app and search through several pages. 

In other words, an Amazon physical store would double as a retail outlet and a pickup and return center. 

4. Rising online acquisition costs

Customer acquisition is expensive whether you’re an independent online brand or the largest marketplace out there. For example, Amazon has to spend significantly on digital marketing to acquire and retain its customers. 

And considering the competition and the choices a customer has, it’s a game they have to play repeatedly. As a result, the company has targeted millions of keywords and invested heavily in AdWords and SEO.

But with Amazon physical stores, there won’t be any need to spend to acquire customers repeatedly. Customers are loyal to their convenience or grocery stores and are unlikely to go out of their way to find a new one.

5. Physical store operations are ripe for disruption

If there’s one thing that Amazon’s famous for, it’s disrupting the models and markets it has entered. 

And everyone knows that physical stores aren’t exactly known for their efficiency or ease of use. Legacy retailers have some legacy issues. 

One could argue that nothing much has changed in the brick and mortar space over several decades. 

It’s the same old process of customers locating the products on the shelves, picking them up, heading to a counter, waiting for the cashier to be free, and then checking out. 

These are all friction points that Amazon hopes it will be able to solve with its technology. 

Automated checkouts, cashier-less technology, and even staff-less stores are just some solutions already part of the Amazon physical store experience. 

If those sound innovative, imagine the ability to pay with one’s palm! Now imagine that you can already do it at some Amazon physical stores. 

6. A significant share of retail is still offline

Despite the growth of e-commerce, many consumers still prefer their offline shopping experiences. 

Contrary to popular perception, online sales have been picking up. Still, they lag behind brick-and-mortar sales in most categories.

According to a PwC Total Retail Survey, 70% of consumers still prefer offline grocery shopping. 

While this may not be surprising, what’s notable is that even for clothing and footwear and health and beauty, the majority still would instead buy them from a retail outlet. 

So, since Amazon cannot comprehensively change customer behavior, it’s ready to expand its business model.

7. Growing the Amazon ecosystem

Amazon isn’t just the world’s biggest online marketplace. 

It’s also an ecosystem of products and services that include everything. From Echo to Alexa to Kindle to payment services to probably self-driving cars in the future. 

While the company encourages shoppers to seek its in-house solutions, a retail presence would speed up the process. 

Consumers would be more encouraged to buy a Kindle or Echo when they see both in action. Once they roll out the grocery shopping through Alexa, it will elevate their retail game to a whole new level. 

Importantly, all these are directed at growing Amazon’s Prime subscriber base. That membership would open up a world of omnichannel benefits to consumers. From shopping to entertainment, all enabled by voice commands. 

8 Amazon physical store models you should know about

How has the omnichannel play from the largest e-commerce player worked out so far? 

Here are the 9 Amazon physical stores through which the company hopes to revolutionize the retail landscape.

1. Amazon Go

Launched in 2018, Amazon Go relies on advanced machine learning to make shopping seamless for customers. For example, sensors on the shop shelves would inform the system what products a customer has picked up. 

The best way to understand the convenience provided by the Amazon Go Concept is to watch this video: 

The shopper doesn’t have to check out or approach any counter. Instead, they can head out of the store, and Amazon will automatically charge their accounts. This cashier-less technology is called Just Walk Out and will be explained further in the Amazon Fresh Store section.

This is an excellent example of breakthrough technology. And the company is using it to disrupt an industry notorious for its legacy inefficiencies.  

2. Amazon 4-Star 

Sometimes it helps to answer questions that no one has asked. 

Customers never asked for the highest-rated Amazon products to be available offline. 

But that’s precisely what the company did through Amazon 4-Star, which features four-star ratings or above products. These include books, devices, home products, and Echo, to name a few. 

Consider it Amazon’s version of a Greatest Hits album. 

3. Whole Foods

Whole Foods is perhaps the most high-profile acquisition (before the recent MGM purchase). It was Amazon’s most compelling move to enter the brick and mortar space. 

With Whole Foods, Amazon wasn’t just getting close to 500 stores. It also got access to consumers who don’t mind spending extra on organic and sustainable food products. 

4. Amazon Fresh Store

If Whole Foods is for more high-end and health-conscious customers, the Amazon Fresh store, previously known as Amazon Go Grocery, is targeted at those consumers who are used to shopping at Walmart or Target. The stores stock a wide variety of products beyond the healthy staples found at Whole Foods.

One of the main innovations implemented by Amazon in its physical stores focuses precisely on Amazon Fresh stores, with the new Just Walk Out shopping technology. Customers opting for the cashier-less technology can use Amazon One to scan their palms, use the QR code with their Amazon app, or insert a credit card linked to the Amazon account. The technology enables Amazon users to shop, pick up the desired items, skip the checkout process, and leave the store freely. 

Does this mean that only Amazon users can shop at these new stores? Absolutely not. Anyone can shop at Amazon Fresh, whether using Just Walk Out or the traditional checkout lines paying by cash or a credit card.

5. Amazon Bookstores

No one forgets their first love. And for Jeff Bezos and Amazon, it’s always been books. 

Launched in 2015, there are around 25 Amazon Bookstores in the US where customers can enjoy the tactile pleasures of touching and taking in that exquisite aroma that can only come from books.

6. Amazon Lockers

This is one of the finest ways in which Amazon is merging its online and offline brand experiences. 

Amazon Lockers can be found in grocery stores, malls, and apartments. After ordering, customers will get a unique code to open the locker and get their product. 

Whole Foods has Amazon Lockers which encourage customers to browse their products when they arrive to take their delivery. This is the kind of synergy that Amazon hopes to see across its Amazon physical stores and product portfolio.

7. Amazon Pop-Ups

These are Amazon’s take on casual pop-up stores. 

The intent is to make it easy for customers to quickly browse trending products unavailable in stores through interactive displays. Unfortunately, in 2019, Amazon decided to close all its pop-up stores, terminating the experiment. 

Nevertheless, later in 2020, Jeff Bezos communicated the strategic decision to reopen the pop-up tests to better understand the physical customer experience and leverage the new data gatherings.

8. Hair Salons

Yes, we, too, were surprised. But at its only location in London, customers can use augmented reality mirrors to know how a style or hair color would look on them. 

They will also be given Amazon Fire tablets to entertain themselves. But, of course, they can also buy any cosmetic or beauty product by merely scanning a QR code. 

We’re not saying it isn’t a riveting success, but the company doesn’t have plans to open more salons. 

Amazon physical stores are the next stage in the evolution of a company with unprecedented domination in one space. 

As they get popular, customers would also expect such tech-enabled services from legacy retailers. 

It will also emphasize the divide between traditional big-box outlets and a technology-first company like Amazon, precisely what the company wants through its brick-and-mortar stores. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Amazon Physical Stores: A Successful Game Changer in the Retail Sector? appeared first on Apocalypse Retail.

We want to give our special thanks to Faraz Kavehei & Johannes Bareis, the two students who co-authored this post.

Quick commerce or q-commerce is completely disrupting e-commerce and Retail. 

In this post, we’ll explain this model in a nutshell, introduce key players and analyze the advantages and challenges in the q-commerce industry.

What Is Quick Commerce or Q-Commerce?

Quick commerce, also known as Q-Commerce, is THE big new topic in the retail sector. Covid accelerated the rise of this new delivery model that addresses the consumer’s need for responsiveness and convenience. 

Q-commerce changes the entire shopping experience, from the initial spark of interest in a product to the delivery rider knocking on your door.  

Wait—you’re thinking—I thought online shopping was e-commerce, not q-commerce. 

And you’re not wrong. 

Q-commerce is a form of e-commerce, but the turnaround time between order and delivery is much shorter in quick commerce. For example, instead of waiting a couple of days for a product, customers receive their order within one hour, often in as little as 10 minutes. 

This is why q-commerce is also called the third generation of e-commerce. On-demand deliveries that are executed almost instantly will be the new benchmark.

Q-Commerce was not born during the pandemic. But the increase in online ordering during the pandemic created the perfect tailwind for q-commerce.

Multiple industries took a severe hit due to the pandemic; q-commerce was one of the few sectors of Retail that flourished when folks had to stay at home. And that change of habit is here to stay.

How Does Quick Commerce Work?

You are expecting a few friends but did not find the time to prepare. You can simply go to the q-delivery app of your choice and order snacks and maybe one or two bottles of wine. About 10 minutes later, a delivery rider will ring the bell of your door.

But how does the magic happen?

Most q-commerce pure players warehouses, so-called “dark stores” or “micro-fulfilment centers.” These dark stores enable workers to quickly pick and deliver the products they have in stock. 

Dark stores typically have over 1000 products ready for distribution. These “flash supermarkets” are often placed in strategic locations and act as urban fulfillment centers for a city district. 

Until now, it mostly sounds like a regular logistics company that moved a bit closer to the consumer. But Q-commerce players use technology to make their processes more efficient and agile. For example, they use data to understand which locations are better suited to establish dark stores. 

They develop specific Order Management Systems to route orders to the closest store to fulfill the order. Next, they match your order with the nearest rider to fulfill your order.

All within 30 minutes or less. 

The Quick Commerce business models

There are different q-commerce players all over the world.

All have some specificity, but these are the few common factors:

1. Delivery in less than an hour (10min delivery best-in-class)
2. Locally focused delivery from dark stores
3. A fleet of two-wheeled vehicles to move faster

Most q-commerce retailers are like supermarkets, so-called flash supermarkets.

They have everything from snacks to cosmetics to cleaning products. 

Some q-commerce pure players are, in fact, “supermarkets” that hold their inventory. Other q-commerce players work with legacy brick and mortar supermarkets. They are third-party providers that perform the delivery.

What Are the Advantages of Quick Commerce?

1. Speed, Speed, Speed

Speed is the most significant advantage of q-commerce.

The genesis of q-commerce came from the need for ultra-fast delivery in the food industry.

Q-commerce sellers generally don’t have physical locations where customers can walk in and buy things. Still, q-commerce retailers have a unique selling proposition (USP) that sets them apart from competitors. 

2. Brand loyalty

Q-commerce today is a commodity. 

There are many players, and customers can easily choose from which one to be served. 

But it is a winner-takes-all market. Not necessarily globally, but most likely in your district or city.

The one company that can meet customer demands quickly and efficiently will have the most repeat customers. 

Customers are more likely to make a repeat purchase from a company that has consistently met their needs.

3. Ultra-fast delivery with 24/7 operations 

Dark stores can operate 24/7, leaving no gaps between demand and delivery (given that the local laws permit 24/7 ops)

This makes q-commerce flourish in areas that have limited business hours for physical storefronts. 

One of the main benefits of Q-commerce is to order anything you need at any time of the day (or night). 

4. Tech-oriented inventory management

With AI and smart technology, q-commerce ensures that products are readily available for people in the area. 

Q-commerce software analyses demand trends to help re-shelf stocks based on demand. And even if a product is unavailable for a short period. Then, the app will simply stop promoting that particular product and steer the demand towards other products in stock.

5. It is super easy

Once you’ve tried q-commerce, you understand its ease.

Q-commerce apps generally have straightforward UX/UI. They are built to have super simple sign-in processes and make repeat purchases very easy. 

If you forget an item on your shopping trip and don’t want to return it, you can open an app and have someone bring it to you. 

You don’t have to take your sweatpants off and put jeans on again. 

What Are the Challenges of Quick Commerce?

1. Q-commerce is a commodity

The biggest challenge of quick commerce is staying on top. 

All the q-commerce players have a similar model. It all comes down to the best inventory and the best execution.

The number of players existing today makes q-commerce a commodity. As a result, there are almost no switching barriers for customers.

This means that customers have plenty of choices to choose a provider. And it is just as easy to lose a customer as to gain one. 

2. Q-commerce customers have Zero tolerance for failure

The primary drawback of ultra-fast delivery is living up to the ultra-fast standard. 

It is a market where customers have zero tolerance for failure. 

They will only stay loyal if their customer experience is always great. 

A player that provides only “good” experiences loses its value and customers. 

This is a market that is built on customers that NEED ultra-fast delivery for whatever reason. Unfortunately, these types of customers are the hardest to please.

3. Q-commerce is an extremely risky business model 

With such customers, players have to constantly monitor efficiency across their supply chain. 

The entire industry is hinged on speed and accuracy for profitability. And as we said before, this is a winner-takes-all market. This means that players need to raise massive amounts of cash to establish operations quickly and win the market. 

And the entire business model is based on the availability of staff. Companies cannot scale and maintain their operations without enough riders and pickers available. 

Players like Getir, Gorillas, or Flink have provided their staff with employment contracts. Others are still relying on gig workers. However, most countries and cities have started regulating the gig economy, which will impact the business model. 

So, in the end, only one or two players will survive per area, and most players will burn through their cash. 

4. Convenience often comes at the cost of work conditions 

Delivery speed and convenience might come at the cost of agreeable work conditions. 

Of course, it’s fantastic to shop for a beer and some snacks at 3 AM on a Tuesday. But there’s someone out there who has to bring you the bag of chips. 

And as we said before, parts of the industry are based on the gig economy without full-time contracts or benefits. We’re not saying the gig economy is bad per se. But it has time and time again been proven to offer precarious work conditions.

But riders and pickers also have the freedom to decide where they want to work. Arguably, a job in a classical supermarket is also not more exciting. 

In most countries, quick commerce companies would make a strategic mistake to offer lousy working conditions. There is a significant labor shortage in the low-wage sector, and companies have difficulties filling positions.

The food delivery company Wolt offers a sign-on bonus for new riders. An Indeed study suggests that the number of job postings is skyrocketing (e.g., 88% increase in the Loading & Stocking sector).

Companies should not focus on improving margins by reducing labor costs. Instead, they should consider the opportunity costs when they cannot fill positions or have enough riders available.

5. The model might not work everywhere

Q-commerce is mostly available to urban consumers. 

The economics of the model is catered to densely populated areas in urban areas. As a rule of thumb, we could say that the sweet spot of the model is in areas with at least four-story buildings.

Some players serve more rural areas but with much longer delivery times. The economics of the model are different outside of the cities. 

Additionally, it might not work in every country equally well. Convenience and delivery business models work very well in countries with high inequality (Singapore or Hong Kong). It needs a population segment with high disposable incomes that looks for convenience. And a lower-income population segment that is willing to perform the gig work. 

It remains to be seen if the model also works in countries with small Gini-Coefficients, such as Nordic countries.

6. Q-commerce has a significant impact on local and small businesses 

Additionally, one of the main casualties of q-commerce is local and small businesses.

It took a global pandemic to get stores to come around to in-store or curbside pickup for online orders. 

Stores that are not adopting an omnichannel approach are being crushed. 

This is a good thing because most local stores had utterly failed to adapt to changes in customer behavior.

But q-commerce mainly sells items from big supermarkets or big sellers. The type of players who can afford their commissions.

Most local small businesses don’t have the volume or margins to become q-commerce sellers. So a lot of them will inevitably be crushed by q-commerce players. 

Is Quick Commerce Profitable?

Short answer: yes, at least in the long term. 

There’s a lot of opportunity in quick commerce when executed correctly.

A study from Deloitte revealed that 50% of shoppers spent more money to get what they needed quickly in the heat of the pandemic. Q-commerce players can capture this willingness-to-pay.

In the US, GoPuff is the first-mover. They operate their better warehouses with 40% gross margins and a 10% contribution margin. 

Of course, increased competition will put pressure on margins.

100% of GoPuff’s fulfillment centers became profitable after 18 months, and the best ones were even profitable after nine months. 

At the same time, classical supermarkets are much more capital-intense and need many years to break even.

Is Quick Commerce Sustainable?

It is hard to prove that q-commerce is more sustainable than traditional shopping. But a few things about it are encouraging.

Deliveries are usually performed with electric scooters or e-bikes. It would be more sustainable if customers would no longer have to get into their cars to drive to the supermarkets or shopping centers.

The way supermarkets work produces significant food waste. Q-commerce has the potential to reduce food waste big time. It has short turnaround times of products. Food can be stored more functional (e.g., dark and cold). It does not have to be displayed in a way that is appealing to customers (e.g., on a shelf with bright light)

Customers do not touch food, and q-commerce companies can also sell the “curved cucumbers” that would be neglected in a supermarket. 

Since q-commerce firms are more data-driven, they can better forecast demand. In turn, companies waste less food by ordering the right amount of non-durable products.

Food about to expire could be promoted or discounted on the app. If quick commerce players operate seven days a week, they would not have to deal with fresh food that could get rotten over the weekend. 

What is next for Quick Commerce?

Expansion of the product offering

Most players have started with grocery delivery. But their product portfolio will expand to other areas such as OTC (over-the-counter) pharmaceuticals. 

After all, we want to stay in bed when we are sick and don’t want to make our way to a pharmacy. Some do this already.

Beyond Groceries, Food, and convenience products

Quick commerce does not have to be limited to food delivery, groceries, OTC drugs, or other convenience articles. It could also solve that last-mile problem in the broader retail industry. 

Q-commerce players could also help brands deliver other items like fashion of consumer electronics. 

First, start-ups are already addressing this niche. For instance, Arive works with brands like Apple to deliver their products within 30min. The biggest challenge here is inventory. The products can be “flipped” with groceries within 2-3 days. With laptops or designer fashion brands, the warehouses would need to have a lot of expensive inventory. The products need to be readily available in many sizes, colors, or technical configurations.

Reshuffling of the marketing budgets of food companies

Food companies like Kraft Heinz spend a lot of money promoting their brand and products (let’s say a Bacon BBQ-Sauce) to a broad audience. 

The demand for their product by customers and their brand image helps them to engage in favorable terms with supermarket chains and retailers. 

But their marketing efforts (e.g., in the form of billboards or TV spots) have also targeted consumers that are highly unlikely to buy their Bacon BBQ-Sauce. 

Maybe because they are vegetarian or simply do not like BBQs. 

Quick commerce players can disrupt marketing in the food industry. Unlike brick-and-mortar supermarkets, they have very detailed information about the preferences and habits of individual customers. 

They can monetize that knowledge and address consumers in a much more targeted and effective way. 

Own Label products increase margins.

Quick commerce players will be offering their private-label products. They can do this because they have direct access to the customer. 

Instead of negotiating with giants like Unilever, Kraft Heinz, and alike, they can offer customers own-label products. This would increase their profit margins.

Who’s Who in Global Quick Commerce

Let’s look at the major quick commerce players currently on the market. 

The amount of money being poured into financing rounds for each player gives you a sense of how big the market could be. 

GoPuff

The GoPuff business model is considered the q-commerce role model. Based in the U.S., GoPuff brings food, alcohol, over-the-counter drugs, and more to consumers in multiple states. 

With micro-fulfillment centers, for a delivery fee of $1.95, shoppers have access to over 3,000 products within 30 minutes.

The company confirmed in July 2021 to have raised $1Bn to expand its global operations. GoPuff is consolidating the market and has acquired competitors such as Dija, Bandit, Liquor Barn, RideOS, Fancy, and BevMo.

Getir

Getir is a Turkish company that started with the speedy delivery of groceries and food from local restaurants. 

The company can also provide apparel, pet food, and sex health products within minutes. 

The Getir app has raised USD 550M in 2021 to expand to the US and other countries. The acquisitions of Moovand BLOK have accelerated Getir’s expansion. 

Weezy

Weezy is a U.K-based grocery delivery service that offers instant delivery within 15 minutes. 

It also highlights its stance as an anti-gig economy company, stating that its “riders are more than just riders.”

The company has “only” raised $25M in 2021

Cajoo

Cajoo is a prominent French q-commerce delivery service. 

Servicing ten areas in France when we wrote the article, the company specializes in grocery delivery. 

In late July 2021, Carrefour, France’s biggest retail company, acquired a minority stake in Cajoo. This investment is for an undisclosed amount. 

This investment will allow the Cajoo App to speed up its development. And it will also give Carrefour direct insight to ramp up its delivery operations.

Gorillas

Gorillas is a leading q-commerce start-up and the fastest German company in history to reach the unicorn valuation.

They started their brand to limit food waste by providing fresh food on demand. Their main offer is to deliver in ten minutes or less. 

The Gorillas app operates in the UK, Belgium, Denmark, France, Germany, the Netherlands, Spain, Italy, and New York City. 

The company has closed a $1B Series C round in October 2021 with the strategic investor Delivery Hero as the lead investor.

Flink

Flink is the second major player from Germany and operates in even more German cities than Gorillas. 

The company also expanded to France, Austria, the Netherlands, and Belgium.

Flink is backed by financial investors like Target Global and strategic investors with strong delivery experience such as DoorDash and Prosus.

The start-up has entered into exclusive cooperation with the retail giant REWE Group. 

Jokr

Jokr has had extremely rapid growth. 

It was founded by the Foodpanda founder Ralf Wenzel and other former Foodpanda and Rocket Internet employees who understand the food delivery market. 

They have expanded to dozens of cities in the US, Latin America, and Europe in a few months. 

The company has raised $170M in 2021 to expand its global operations. 

Glovo

Founded in Barcelona in 2015, Glovo is one of the “old” players in the q-commerce business. 

With Delivery Hero as their leading investor, Glovo has become a significant player for on-demand delivery in EMEA markets. 

With the rise of q-commerce, Glovo has been investing in its ultrafast delivery capabilities to compete in this market. 

They benefit from solid brand awareness and a robust presence in their current markets. So let’s see how they fare in the q-commerce business.

Rappi

Rappi is the Unicorn out of Colombia.

Same as Glovo, the company was a senior player in the delivery business founded in 2015. 

The company’s main activities come from on-demand delivery. 

They have risen to the top, establishing themselves as the dominant player in Latin America. They have become the most significant player in countries like Colombia, Brazil, or Mexico. 

In 2021, they launched a new Rappi Turbo feature, allowing for deliveries in ten minutes or less. This is the start of their q-commerce business.

Again, same as Glovo, they benefit from brand awareness and customer loyalty in their current markets. It will be exciting to see how they compete in the quick-commerce business. 

What will Amazon do in quick commerce?

The retail giant Amazon is currently standing on the sideline regarding quick commerce. For example, its fastest service Amazon Fresh needs about 2-3 hours of delivery time in major cities. 

Going forward, there are two possibilities for how Amazon will (re-)act. 

1. They will wait and acquire the leading quick commerce player
2. They will choose a different strategy (just-in-time instead of instant on-demand delivery)

Amazon could also decide not to become part of the quick commerce race. 

They are still way ahead regarding access to the customer and their household (think Smart fridges and Alexa). Amazon could bet on the convenience of automatic restocking. Your milk or guacamole could be delivered and restocked just in time before your current container is fully consumed. 

Conclusion:

There may be a lot of challenges ahead for Q-commerce. 

The market will consolidate, but several players might dominate in a specific city or area. 

So we do believe q-commerce is here to stay and will only grow in popularity. It educates consumers and changes consumer demands in the long run.

But we are thrilled to see who comes out on top in the long run.

If you know other players to include in this list, drop us an email, and we’ll add them. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Instant gratification: Has Quick Commerce or Q-Commerce changed the way we shop? appeared first on Apocalypse Retail.

We want to give our special thanks to Fanny Dorisse & Lili Azaroual, the two students who co-authored this post.

The future of Retail has been a hot topic in recent years, and the debate is turning towards sustainable retailers. 

More generally, the retail industry’s ethics and corporate social responsibility are being thoroughly questioned. And it’s no wonder with fast-fashion Retailers pumping out new collections every week. 

Consumers, on average, throw out 80 pounds of clothes every single year. So it’s no secret that many of our current practices are wreaking havoc on the planet. 

None of this is lost on the ethical consumer. 

4 Trends Driving Sustainable Retail in the Fashion Industry

There is a growing trend among European consumers that are turning more and more attention to the sustainability of the products they purchase. As of 2020, the average search growth for sustainable shopping terms grew by almost 7x. 

More and more people are making purchasing decisions based on Brands’ corporate social responsibility. 

They are also developing brand loyalty toward companies that focus on sustainability and ethical business practices. 

According to the Forrester Consumer Index, as of 2019, almost half of consumers switched to a different product because a brand violated their personal values.

Businesses that want to survive must know about the rise of ethical consumption. What does it mean in terms of environmental and social responsibility?

And what does it mean to be a responsible business today? 

Let’s look at four of the current trends in sustainable Retail:

1. Slow shopping
2. Fairtrade retail
3. Ethical retail
4. Recommerce

1. Slow Shopping: Removing Time Pressure From Retail Promotions

Online shopping and “one-click” purchasing have accelerated the pace of the buying experience. 

Still, a new trend is emerging, which intentionally slows things down. 

Instead of pressuring customers into panic buying, it encourages shoppers to take their time, enjoy browsing, and make considered decisions. 

What’s driving this move from convenience and quantity towards curation and quality?

Business savvy and intentional rejection of impulse purchases. 

Some of the biggest retail events have been built on flash sales and short-term deals that promote impulse buying. But, like slow food a few years ago, the latest trend in sustainable commerce is slow shopping. 

This forces retailers to offer something above and beyond price and promotions. They have to provide an experience and product quality that aligns with rising consumer expectations. 

This change offers a massive opportunity for brick-and-mortar retailers to provide shoppers with a more elevated experience and keep them longer within the store. 

This approach positions shoppers as guests rather than buyers, effectively fostering brand loyalty from customers. 

Stores have found different ways to invite their “guests” to slow down and spend more time on site. For example, they started adding cafes, lounges, libraries, and art spaces. Indeed, they encourage people to take their time and enjoy themselves. 

This kind of experience is far different from classical discount stores, which focus on the lowest possible price, no matter the product’s sustainability.

The slow-shopping experience is the antithesis of shepherding customers through overstuffed shelves and fluorescent lights.

2. Fairtrade Retail: How is Fair Trade Retail Sustainable?

Fairtrade is not a new concept, but it’s receiving renewed attention as demand for transparency in business practices is growing. 

Consumers want to know how brands treat and compensate their employees. 

There are headline-making events, such as the 2013 Dhaka garment factory collapse in India. During this event, thousands of workers were killed, bringing working conditions into the spotlight. 

There are also many reports about underpaid and overworked laborers in many industries. 

These reports have forced brands outsourcing their manufacturing to conduct corporate social responsibility audits and search for Fairtrade labels. 

But the term “fair trade” has come to mean many things. In essence, it means that products are made by workers fairly paid and provided with ethical working conditions. 

The demand for fair trade labels spans all industries, from food and beverage to clothing to home decor. 

3. Ethical Retail: What is it and what is sustainable about it?

Ethical Retail is an umbrella term that includes fairtrade and much more aspects of corporate social responsibility. 

An ethical retailer means you have a business model that provides social, environmental, and political responsibility. 

On top of these, materials and product sourcing must meet ethical standards. 

Predatory business practices and environmentally destructive operations are no longer benefiting from the blind eye. 

There are plenty of ways that consumers can assess how ethical a business is. 

Certified B Corporations, for instance, earn that distinction by meeting the strictest standards. B-corp labels certify that companies are true to their social, environmental, transparency, and accountability standards among these standards. 

More and more customers look for labels and certifications such as B Corp. But, in general, ethical consumers vote with their wallets, aligning their values to their shopping.

Some retailers have understood that there can be significant growth opportunities as a growing number of shoppers are willing to pay more for goods and services ethically produced. 

4. Recommerce: What is Reverse Commerce?

Retail was built on consumers looking for new products to buy. 

Buying used or second-hand products were reserved for very few industries like the auto industry, but it has never been mainstream. 

That is, until the emergence of Recommerce.

Recommerce, or Reverse Commerce, is one of the most critical trends in Sustainable Retail. It is at the center of the circular economy. 

Recommerce consists of buying and selling second-hand products. 

With the rise of online shopping, second-hand transactions have found an unparalleled growth opportunity. 

The ease and reach of online CtoC commerce has pushed the emergence of online marketplaces focused on Recommerce. 

People can sell products directly to other people on these platforms and even make a living out of them. 

But this trend is nothing new.

Over the last two decades, platforms such as eBay internationally, CraigsList in the US, Wallapop in Spain, or LeBonCoin in France offered C2C transactions of second-hand products. 

But all these platforms weren’t built and designed with a specific focus on the circular economy or Sustainable Retail. 

Over the last few years, some actors have emerged in the Fashion and Electronics industries. 

These new players are offering security and reassurance in the second-hand market. They do this by providing product or seller verification, guarantees, and even in some cases, refurbishing products. 

Back market is a French marketplace that is disrupting the European electronics industry. 

Their brand positioning is based on acquiring or selling refurbished products because they are cheaper but more sustainable. This positioning has quickly resonated with European audiences. 

In the Fashion industry, players like Vinted or Vestiaire Collective are taking full advantage of the circular economy. 

These two marketplaces allow consumers to buy and sell second-hand fashion items. In the same vein as Back Market, their brand positioning is not on finding cheap products but on making the fashion industry more sustainable.

Below is a list of some of our favorite fashion brands pioneers and leaders in sustainable Retail. 

Five Fashion Brands Leading the Way of Sustainable Retail

1. Patagonia: The Pioneers Of Sustainable Activewear

Known best for: Activewear and outerwear for all ages

Key sustainability initiatives: Certified B Corp, Fair Trade Certified, Organic Cotton, 1% for the planet member, environmental initiatives, philanthropy. 

Patagonia is a California-based activewear company.

They have been at the forefront of the environmental movement for a long time. They were among the earliest companies to prioritize sustainable choices in their products. 

Patagonia switched to organic cotton and recycled materials a lot earlier than most fashion brands. 

The company’s activism extends from protecting public lands to halting the climate crisis. It even implemented a “self-imposed Earth tax,” which implies they direct 1% of revenue to nonprofits that protect the environment. 

This “tax” is the basis for the one percent for the planet initiative, launched by Patagonia founder Yvon Chouinard in 2002. 

The brand has been in the news recently as it joined a growing number of brands boycotting Facebook as an initiative to stop the spread of hate content globally. 

This highlights the company’s stand, which is ready to lose on one of the major traffic acquisition sources to stand on its moral high ground. 

2. Sézane: Curated Apparel For Conscious Consumers

Known best for: Curated Women’s apparel and accessories

Key sustainability initiatives: Ethical labor practices, sustainable materials, recycled packaging, philanthropy, and renewable energy in manufacturing.

Paris-based Sézane creates curated women’s apparel for conscious consumers. 

The brand positioned itself away from fast fashion, releasing only four seasonal collections per year, plus smaller monthly capsule collections. 

Most of the company’s clothing is made with organic cotton, recycled materials, and vegetable-tanned leather. This enables the brand to increase the sustainability of their produced goods and reduce their environmental impact. 

The brand was born as a digital native vertical brand (DNVB), with no intermediaries to drive costs. Instead, materials are sourced with consideration, in particular to the origin and working conditions of the sourcing place. 

The quality and design of the clothing make them pretty much evergreen pieces to be worn with a Parisian-chic attached to them. 

Sézane also helms a philanthropic initiative called DEMAIN, from which it raises money to support a diverse range of charitable organizations. 

3. Veja: Recycled Shoes That Outlast Seasonal Fads

Known best for: Fairtrade footwear for all ages

Key sustainability initiatives: Ethical labor, recycled materials and rubber, transparency regarding carbon impact, and organic cotton.

Veja makes shoes designed to outlast seasonal fads so that they look just as good in ten years as they do today. 

One of Veja’s promises is that each pair of shoes has “one foot in design and the other in social responsibility.” 

The cotton and rubber used to make Veja shoes are sourced directly from producers in Brazil and Peru. 

Those producers use a range of recycled materials made out of 100% recycled plastic bottles. During this process, plastic bottles are collected, turned into flakes, and extruded into polyester fiber. 

Veja also earns top marks for its ethical labor and sustainable retail practices, particularly when outsourcing to other countries and their carbon footprint. 

There is an astounding level of transparency regarding the Veja Project on the brand’s website. 

They explain in detail how all shoes are made in a factory in Brazil, the working conditions in the factory, and the carbon impact of importing their shoes. 

4. Ecoalf: Fashion That Recycles Waste From The Ocean

Known best for: Apparel and footwear from recycled plastic bottles

Key sustainability initiatives: Certified B Corp, recycled materials, water conservation, and the Ecoalf Foundation to remove ocean debris

Ecoalf is a Spanish fashion company with the tagline “Because there is no planet B.” 

This tagline reflects the brand’s commitment to environmental sustainability throughout its vision and values. 

The company uses over 400 recycled fabrics in its product lines to remove debris from the ocean. As a result, its “ocean sneakers” are considered one of the lowest carbon footprints in the market. 

Ecoalf was also Spain’s first fashion company to receive B-Corp certification. 

In 2015, the Ecoalf Foundation was launched to upcycle ocean waste, reflected in their motto.  

The project has collected more than 600 tons of trash from the sea in the past six years. This is a significant action to reduce plastic waste in the ocean. 

5. Pact: Organic, Sustainable, Fairtrade Cotton

Known best for: Apparel for all ages made from fairtrade cotton. 

Key sustainability initiatives: Fair Trade Certified, organic cotton, carbon-offset shipping

Pact is a US brand that refers to itself as “Earth’s Favorite Clothing Company.” 

You could think that this title sets the bar pretty high, yet they manage to meet that bar. 

The brand is careful about every link in its supply chain to meet the highest standards in sustainability. 

Indeed, they control everything from sourcing their organic cotton to the manufacturing of the pieces. On top of it, they also work to offset the carbon footprint of their shipping options. 

They designed their shipping box to be reused to donate your used clothing to nonprofit organizations. This is called the “Give Back Box.” 

Pact also participates in a fair trade movement dedicated to improving lives and protecting natural resources in over 45 countries.  

The company received a Fair Trade certification regarding their manufacturing lines, respect for safe working conditions, and paying living wages. 

Key Takeaways of Sustainable Retail In Fashion

Sustainable Retail in all of its forms is gaining more and more traction with consumers. 

Innovative businesses are taking notes and are adapting, especially in the fashion industry.

The global pandemic is accelerating a shift in the public’s values and priorities, and consumers are looking for transparency from brands. In this sense, a lack of transparency is no longer an option for companies.

Consumers are increasingly expecting social and environmental responsibility from the brands they purchase from. 

As a result, some brands are prioritizing strong values of sustainable Retail. These brands are leading the way, showing that it is possible to have a sustainable business model with strong values.

The ones that do so will pull ahead and survive the waves of change from Ethical Retail. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Do you want to survive in the ever-volatile retail industry? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Is Sustainable Retail The New Standard For The Fashion Industry? Some trends to Watch in 2022 appeared first on Apocalypse Retail.

We want to give our special thanks to Ambre Kadmiri, Leila Benjelloun & Teseo Dori, the two students who co-authored this post.

Live Shopping, or Live Stream Shopping, sounds like a new term. It’s a mix of a concept we’ve known for years – teleshopping – and one that’s newer – influencer marketing on social media. But, what is Live Shopping exactly? What does it look like, and does it work?

What is the Live Shopping Experience?

Live Shopping is disrupting the E-commerce industry as we know it.  An interactive shopping experience where you can buy the promoted items on the spot. 

As Coresight puts it, “It’s digitizing QVC and HSN,” and using technology to make sales. Very successful in China, Live Stream Shopping was a $60 billion market in 2019.

This phenomenon is proving to be a big revenue source for brands globally. 

We can expect it to become far more popular in the United States as the idea catches on. 

Have you ever seen an influencer do a live try-on, or a brand does a live fashion show on Instagram Live? Welcome to Live Shopping!

How to Boost Sales with Live Shopping?

We know that Live Shopping is gaining traction fast and wide, but how does it generate revenue? 

Prompted by the COVID-19 crisis, Live Shopping takes advantage of the at-home shopper. 

With the pandemic, E-commerce sites have invested in their online shopping experiences. As a result, it’s far cheaper to sell online without having to pay storefront leases. 

Live Shopping hosts can expect a dramatic increase in sales and brand awareness.

What do Live Shopping Platforms Look Like? 

You can imagine the preparation necessary to make a Live recording without any flaws. 

Live Shopping is live, unlike Instagram Stories or television shows. 

There’s a lot more preparation behind the scenes than you may expect between the brand and the host. 

The host is usually someone famous, like the Kardashian’s. It happens on platforms such as YouTube, Instagram, and Snapchat.

An example would be Kim Kardashian showing herself using a teeth-whitening product on Instagram Live.

Live Shopping is Page Out of China’s E-commerce Playbook.

Many of the big live streaming platforms available in China are unavailable in the US.

Some examples are Taobao, JD.com, and Pinduoduo, an agricultural-based E-commerce site. These companies also provide buyers with same-day delivery and shipping – as good as Amazon.

JD.com and TaoBao have Live Shopping streaming integrations built into their websites. Unfortunately, the live shows don’t show salespeople selling a product that isn’t their own. Still, they are home to independent authors, creators, and emerging artists selling for themselves. 

These selling avenues are possible and welcomed on sites like TaoBao in China. This broadens the market and the selling opportunities for all types of businesses. 

What makes Live Shopping more profitable is payment platforms such as WeChat Pay. These platforms make live selling even more successful because of how accessible they are to mobile users. 

Live Streaming has proven to foster a comparable sense of customer loyalty and engagement to in-person shopping. But, as we know, technology, social media, and anything digital is addictive. 

Live Streaming platforms have created communities where hosts share their favorite products. Kim Kardashian shared her teeth-whitening kit with her Instagram audience, for example. The connection they make with their fans increases the chances of sales.

The power of Live Streaming comes from the endorsement of someone they admire. China has jumped on this trend and generates most of this industry’s $60 billion revenue.

How is Live Stream Shopping Beating Traditional Retail?

So clearly, Live Shopping excels in the Chinese Market. But, how does it compare in the US or European markets? How does it impact the Retail industry in other countries?

Live Shopping surprisingly benefits Retail stores that are unsuccessful in physical stores. 

Live Shopping is a way to promote fashion brands to create a unique social environment. It’s proving to support Retail brands with many smaller boutiques. 

In contrast to in-store retail, the shopper doesn’t have to leave their home, dress up, or interact with a sales associate, unless they’d like to. With Live Shopping, you can join from anywhere and stay for however long you’d like, whenever you’d like. 

It benefits the brand or store as well. With E-commerce booming, Retail stores can sell their items online, where most buyers are shopping already. So not only are they meeting their buyers where they already are, but they’re making it easier for themselves as well. 

E-commerce stores save on rent, pay staff, and only have to work when they’re making sales. In addition, this type of selling allows merchants to boost brand awareness globally instead of just where the store is. 

This awareness can be a crucial distinction between a highly profitable business and a struggling one.

In an increasingly digital world, more and more transactions happen online. However, things aren’t set to change anytime soon, so not only is e-commerce booming, but it is set to expand with services like Live Streaming. 

Live Streaming bridges the gap between 1-1, in-person shopping, and quick and easy online sales. It provides a vetted, honest opinion of a product and the ease of an online transaction, all in one. In the world we live in, this type of shopping is here to stay.

What Are the Benefits of Using Live Stream Shopping?

Is the future of sales going to be video? Rebecca Minkoff is convinced, but she is interested in making it an interactive customer experience like many other brand owners and designers. 

The benefit of video sales seems to be in the ability of the product in real life and a multidimensional view. On websites, you’ll see on many product pages how there’s often someone modeling the effect through a short video clip, along with photos. 

Video promotions are extremely popular and generate higher sales due to the product’s transparency and the shopper’s ability to make a more informed decision on whether or not they like the item.

On Live Stream shopping platforms, this is compounded with the ability of the host to speak about the product and answer questions live verbally. 96% of people who have made online purchases admit that they watch an “explainer” video before purchasing. 

This statistic indicates that videos transform the buyer’s journey, and 85% of product marketers have capitalized on using video as a marketing tool and have seen a positive increase in sales revenue. 

To build on this, the live video aspect of Live Stream Shopping appears to create a more robust personal engagement than regular e-commerce shopping or even in-person shopping. 

Ads on Instagram, Twitter, or YouTube have lost integrity over the years, with influencer’s taking on promotional language and photos that diminish any personal touch. With Live Shopping, hosts can answer shopper’s questions, show the product, and give real-time promotions, adding exclusivity and creating a shopping network. 

This type of online purchasing translates a true sense of authenticity, often masked behind edited and photoshopped promotional advertisements that have become too popular elsewhere. 

What Are the Drawbacks of the Live Shopping Experience?

Some have pointed out that Live Stream Shopping has a more personal, natural touch than regular e-commerce. Still, it doesn’t have a unique, 1-1 shopping experience. 

While the viewer can see the host or merchant, they can’t see the viewers and engage with them the same way they may be at a store. 

Unfortunately, some level of interactivity that the in-store shopping experience offers is lost in live shopping. For example, a sales associate telling a buyer that a dress looks fantastic on them isn’t possible like it is in traditional stores. 

What are the Most Popular Live Shopping Platforms?

PinDuoDuo, Douyin, Amazon, Instagram, and TaoBao are top contenders in the Live Shopping Market scene. 

But there are also smaller sites, apps, and social networks investing in this new shopping trend. While Amazon is certainly investing in the space with AmazonLive, they are not the first to do it. 

Smaller E-commerce unicorns include TalkShopLive, BrandLive, CommentSold, and Ntwrk – whose revenue doubled in April and March 2020.

Amazon has a daily live streaming channel, hosting daily live streams selling cooking, health, and fitness products. Facebook is doing a similar platform service. 

And if you’re a dedicated QVC fan, don’t worry. The network sees this opportunity as a natural progression of the business. They, too, have begun Live Streaming sessions on Facebook and YouTube and will soon roll out its platform. 

Instagram Live Shopping is also kicking off American-based brands. Like Instagram Live, this new integration adds an immediate shopping element where viewers can immediately purchase the products. 

These live sessions are mostly product demos that educate and engage buyers to build brand awareness and intrigue. They often collaborate with another influencer, brand marketer, or host to offer even more authenticity. 

These experiences ultimately take e-commerce to the next level. They create a human interaction that isn’t possible on a static shopping website. 

What is the future of  Live Shopping? 

We can expect Live Stream Shopping to be the latest, most successful version of e-commerce. 

With in-store retail becoming less attractive to buyers and sellers and e-commerce lacking a sense of community, Live Stream Shopping capitalizes on the at-home buyer’s tendency to live online. 

We can expect similar growth in the digital shopping space that China has seen in the past few years. Large companies like Amazon and Instagram catch on and look for ways to diversify and innovate social media marketing. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Live Stream Shopping: How Will This New Popular Trend Empower E-commerce? appeared first on Apocalypse Retail.

We want to give special thanks to Varvara Dyudina & Raphaël Delannes, the two students who co-authored this post.

By the end of 2021, more than half of all retail transactions will come from eCommerce platforms. 

According to EMarketer, eCommerce in China will account for 52.1% of the country’s retail sales. It is a massive boost from just 44.8% last year. 

China will become the first country where most retail purchases come from online platforms. Researchers also forecast 58.1% of Chinese transactions coming from the eCommerce market by 2024. 

Huge online shopping and online payment platforms have emerged with the growth of Chinese eCommerce. Companies like Alipay and WeChat Pay are now a payment standard in the Chinese market.

So what does this mean for eCommerce entrepreneurs and retail managers, exactly? 

They should look closely at the Chinese market as it could impact global retail.

This guide will cover the state of Chinese eCommerce and the main actors involved. Then we will go over the key dates and trends for eCommerce in China. And later, we will discuss how it could become the blueprint for 21st century retail.

China’s success in developing its eCommerce market is unparalleled. 

In the United States, eCommerce purchases in the retail industry only amount to about 15%. European countries are even less involved in eCommerce at 12.8% percent.

Who Are the Main Actors of Ecommerce in China?

In the past decade, many platforms have emerged to handle the demand of Chinese consumers who shop via online marketplaces.

There are several actors, but one thing to keep in mind about the Chinese e-commerce market is that it’s highly concentrated.

As of 2020, the top three e-commerce players (Alibaba, JD.com, and Pinduoduo) concentrated 90% of all e-commerce in China. Compared to the US, this is a very high concentration, where the top three players (Amazon, Shopify, eBay) concentrate “only” 50% of the market.

Taobao (Alibaba)

Owned by the e-commerce giant Alibaba, Taobao offers both C2C and B2C sales opportunities for users. That is what sets it apart from many other Chinese eCommerce platforms,

Taobao is a genuine and well-established eCommerce marketplace founded by Alibaba. It allows users to build their online shops and sell through Taobao. 

Small and medium businesses can also sell on Taobao. Though large companies are more appropriate for Tmall, a marketplace is covered below.

Tmall (Alibaba)

Also belonging to Alibaba, Tmall is the biggest B2C online retail platform in Asia. 

Part of Tmall’s popularity comes down to the fact that you can buy anything on its website. From not-so-great low-quality wholesale items to sophisticated, luxury, high-quality products. 

At the same time, the requirements for the merchants to enter the platform are stricter. For example, only “validated” is allowed to guarantee the quality of the service.

Think of Tmall as China’s Amazon.

Pinduoduo

Pinduoduo or PDD is another eCommerce platform rising to fame in China. 

This platform is successful because it provides customized recommendations for consumers. Search-based eCommerce platforms do not usually offer personalization features.

Pinduoduo has excelled in providing personalized customer journeys. Users can even use their friends’ lists and favorites to access tailored recommendations.

Another value proposition unique for Pinduoduo is the group buying option. We will cover it in more detail later on. 

JD.com

JD.com is one of the largest retailers in China and a Fortune Global 500 company. In addition, it is well known for platforming cross-border sales. 

Like Amazon, JD.com is responsible for much of the platform’s inventory. They also fulfill orders in-house through a massive first-party logistics network. 

The JD.com business model has lower margins than huge enterprises like Alibaba. However, it also ensures better quality control over products and delivery speed.

Kaola

Kaola is the go-to platform for Chinese consumers purchasing products from Western countries. 

This cross-border eCommerce website sells products from foreign brands. In addition, it allows sellers to market their goods through various Kaola-based marketing channels. 

These channels include online forums, various portals, and several advertising options. 

Little Red Book (Xiaohongshu)

Little Red Book is a Chinese social shopping network based in Shanghai. 

This unique and disruptive platform has over 100 million users. It caters to individuals who want to find the hottest beauty and skincare products. It focuses on products from international brands that are not available in China. 

Tons of brands around the globe sell on Little Red Book, but it isn’t that much of a shopping platform. Instead, it’s a place where users can post reviews and tips on products they’ve used.

VIP.com

VIP is an eCommerce website based in Guangdong. With an impressive 52 million users, VIP is the third biggest eCommerce platform in China. 

There are a few different reasons why VIP is so successful. In particular, its focus on international sales and discount sales models.

VIP Shop, the owner of VIP, is currently also building a financial service platform. The latter’s purpose will be to handle.” online payments and insurance.

Suning

Another example of a large retailer in China is Suning. It is a B2C retailer with a massive online eCommerce platform and 9,000 stores around the country. 

Suning sells all sorts of physical products and services and content merchandise.

Douyin (Tik Tok)

A relatively new competitor in the Chinese eCommerce market, Douyin is the sister app to TikTok for the Chinese market. 

It’s an eCommerce platform that focuses on live streaming to sell products. 

It became famous after staging an offline event, “ecosystem conference.” The event challenged many Chinese Commerce giants, including Pinduoduo and Alibaba’s platforms.

Key Dates for Ecommerce in China

China has its specific holidays and festivals that set the pace for brands to launch their promotional campaigns. Therefore, it is an excellent chance to attract as many customers as possible.

Chinese consumers are particularly attracted to discounts. That fact makes these campaigns truly important for the merchants.

There are a few key dates in the Chinese calendar to consider if you want to succeed in eCommerce in China. 

Single’s Day is The Biggest Megasale Event in the World

Single’s day is a 24-hour super discount period on November 11th in China. It was initially launched by Alibaba and followed by all the significant players of e-commerce in China. It’s similar to “Black Friday” in the United States. 

“Single’s day” has become a very appreciated and anticipated event in China. It is also a crucial period for local companies. 

On 11.11, consumers tend to purchase products they would not in standard time. The practice of buying a year’s worth of ordinary daily life items is also mainstream.

12.12 or Double 12 Festival

The 12.12 festival is a sequel to Single’s Day (11.11 day). It was launched to benefit smaller Alibaba vendors that couldn’t compete against more prominent brands during Single’s Day.

The festival has rapidly become another famous shopping festival in the country.

Chinese New Year

New Year in China is one of the most, if not the most, events of the year. It also has the particularity of being one of the biggest shopping festivals. 

It is common to return to your hometown during this festivity to celebrate it with your family. So, weeks before the Chinese New Year, there’s a rise in consumption as people buy presents to bring home to their relatives.

Golden Week 

In China, the national holiday is also known as the Golden Week. It is one of the most extended holidays in the country after the Spring Festival and takes place from October 1st until October 7th. 

People usually travel during this week, while consumption skyrockets in the country.

This also illustrates itself within eCommerce in China. For example, Tmall Global saw a 79% spike in sales during the golden week of 2020 (compared to the same period in 2019).

How Did Ecommerce in China Grow So Much?

Many factors are involved in the most recent boost in digital transactions. But most evidently, it can be attributed to the COVID-19 pandemic. 

Writer Owen Matthews in his article broke down the pandemic’s influence on China’s online market as a whole.

“COVID-19 stay-at-home orders were a huge boost for eCommerce in China as elsewhere,“ the article reads, “Although the country’s overall retail sales are down, Chinese consumers will spend 144.44 trillion yuan ($20.8 trillion) on retail eCommerce in 2020, up 16% from 2019, according to Emarketer.com. Chinese e-commerce companies have also adapted rapidly to the COVID-19 reality, both by supporting government initiatives — for example, JD.com deployed autonomous vehicles to deliver essential medical supplies in Wuhan — and by launching new services such as contactless delivery to make it easier for consumers to continue shopping during lockdowns.“

The growth of Chinese eCommerce companies is simply astounding, seen by the sheer size of numbers during Singles Day. 

In 2020, Alibaba and JD.com racked $74B and $41B, respectively. So to give you some perspective taking the combined global revenues from Amazon and during Black Friday 2020, it is 7x and 4x, respectively.

Chinese eCommerce companies have been going above and beyond regarding tech innovations. The aim is to create a more dynamic experience for consumers. 

Today Chinese eCommerce companies are as competitive as the whole Chinese market. Alibaba ruled it with an iron fist with a market share of 81% no more than a few years ago. 

Now, other online platforms offer innovative technologies and better customer service. As a result, Alibaba’s market share dropped to about 55%, where it currently stands. 

Competition has allowed eCommerce companies to take advantage of new technologies. 

Chinese companies pushed innovations like live shopping, digital payments, group coupons, and deals. Later, they started merging social media and eCommerce and instant messaging integrations. 

While other countries are still sticking to point-and-click eCommerce, China has a thriving and competitive market exploring the boundaries between shopping and real life.

Mcommerce is the Cornerstone of Ecommerce in China 

According to the Bernstein Ecommerce Outlook, the Chinese market had around 900M internet users in 2020. 

Let that number sink in. 

There is no single country in the world with as many internet users. It has almost three times as many users as the US and nearly twice as many as the EU. 

But you have to consider that the high growth of internet penetration in China came at the same time with the invention of the smartphone. 

China is the world’s leading smartphone market, so smartphone penetration is very high. According to Bernstein, 90% of Chinese users access the internet through their phones. 

This, in turn, encourages them to conduct their purchases through their phones. As a result, since 2015, more Chinese consumers have made purchases via phones than via computers.

Several factors make mCommerce particularly popular in China:

• Mobile payment apps such as WeChat Pay and Alibaba’s Alipay.  They make it very quick, easy, and convenient for buyers to pay for items using their smartphones;
• Multi-functionality. Social media apps are utilized for many everyday functions. You can book appointments, order food, plan overseas trips and pay bills. WeChat allows to do all these within a single app; 
• Cost-efficiency. Investment in mobile has become more attractive in recent years. The reason lies in the lower costs of mobile networks and falling cost of mobile devices;
• Better access. Mobile allows people living outside of the main cities and towns to have brands they would not otherwise have.

Another major factor is that western buyers embraced e-commerce long before smartphones emerged. With the internet being late to come to China, many Chinese netizens have bypassed desktop use. 

As a result, mobile internet access has a more prominent position in China than in Australia.

5 Trends Driving Ecommerce Growth in China

We have established that the growth of e-commerce in China is unparalleled anywhere else in the world. 

There are specific structural differences with other markets like the US, like the share of mobile e-commerce and market concentration. These differences encourage players in these countries to argue that China shouldn’t be the blueprint for 21st century Retail.

But despite these differences, there is no doubt that underlying innovations are pushing the growth of e-commerce in China.

Let’s look at five of these trends fueling the growth of Chinese e-commerce. 

1. Live Shopping

One of the biggest trends shaping eCommerce in China has to be live shopping. 

In an interview with Financial Times, technology entrepreneur Dan Dan Li noted the similarities between the old-school American shopping channel and the newly emerged trend of selling products via mobile video demonstrations. 

Live video is a massive part of China’s eCommerce apps like Douyin, Taobao, JD.com, and Pinduoduo. But Lin noticed that in the West, the nature of eCommerce is still very static and unchanged.

“Almost everything else is mobile-first,” said Li in the FT interview, “Entertainment is mobile-first, social is mobile-first, but eCommerce [in the US] is in the Stone Age.”

These dynamics can cause a significant change in other countries. For example, China’s growth in eCommerce has been casting a shadow on American and European markets for some time now.

2. Omnichannel engagement

Another quite popular trend in Chinese eCommerce is the use of omnichannel marketing. 

Omnichannel marketing is something that marketers are starting to pick up on in the US or Europe. 

In China, it’s already been an established must-do for eCommerce entrepreneurs. A cross-channel strategy isn’t just effective, but it could also be inexpensive. 

A unified approach to content creation across different marketing channels can result in significant synergies. Thus, reducing the cost of organic social media marketing and search engine marketing.

3. Social commerce

Social media shopping is another hot topic for Chinese eCommerce. Experts forecast such sales to reach $363 billion in 2021, tripling the results of 2018. They are also expected to account for 13 % of total eCommerce sales this year. 

Online social networking became an essential part of our lives, and advertisers took over social media platforms. So the latter’s transformation in an ecosystem for eCommerce was a question of time.

The multi-functionality of Chinese social media encouraged the development of social eCommerce. 

Mini Programs introduced by WeChat boosted the trend. These subcategories ease the experience for both merchants and customers. 

The Programs also became popular with residents of smaller cities who tend to use cheaper mobile data providers. It is preferable to have a single app for them instead of downloading several new ones.

Digital payment options like WeChat pay also contributed to the social eCommerce trend. As a result, customers can have a smooth, unified experience without exiting the platform.

4. Group buying

The growing popularity of group-buying also answers the Chinese eCommerce peculiarities. 

Pinduoduo is a significant contributor to the trend. Its unique value proposition made it the fourth largest eCommerce platform in China. One of the key features was the engagement of customers from rural areas. 

Group-buying implies bulk purchases by a community. But, first, a community leader creates a WeChat group to disseminate product offerings.

Then, he organizes bulk orders of different products directly from brands and distributors. First, the order arrives on the name of the leader. And later, he distributes individual orders among the community.

Such a method engages around 100-150 customers at once. It allows community members to benefit from low-cost delivery. It also helps to order items not available in the local stores.

5. Low-tier markets

One more trend occurring with Chinese eCommerce entrepreneurs is targeting low-tier markets in China. 

It makes sense to market and sell to consumers in big cities like Beijing. 

But consumers in smaller towns deal with lower living costs. Thus, they have more disposable income. Therefore, marketing to this demographic is clever as the Chinese market is big enough.

Is Ecommerce in China the Blueprint for Ecommerce in Other Countries?

Here is the million-dollar question: Could China’s eCommerce model become a global trend? 

Prominent American and European corporations have often underestimated Chinese companies. So the possibility of them adopting Chinese eCommerce trends seems a bit iffy. 

It doesn’t help that the Chinese market has few connections to other markets. But, again, it can be partly explained by the distance and protectiveness from the government. 

While this seems grim, a lot is still up in the air. It looks like China could be the blueprint for eCommerce in other countries. 

A whopping majority of retail sales are occurring through online platforms. It isn’t only inspiring for eCommerce entrepreneurs. It could very well become a reality in other countries.

As we’ve established, there are structural reasons why the Chinese e-commerce market might be unique. There is an unparalleled penetration of commerce, and the market is highly concentrated.

But players worldwide take a page out of the Chinese e-commerce playbook. Instead, players like Amazon or L’Oreal are dabbing into live shopping or social commerce outside the Chinese market.

So despite the structural differences, it is worth looking towards China for inspiration in the coming years. Or at least the most prominent global players are doing it. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Will Ecommerce in China Dictate the Model For 21st Century Retail? appeared first on Apocalypse Retail.

We want to give our special thanks to Soyeong Lee & Nicolas Oulianov, the two students who co-authored this post.

Conversational commerce is an e-commerce trend that has gained lots of traction lately. Since 2015, when Chris Messina from Uber coined the term, it has become omnipresent. However, conversational commerce is no longer a trend but an industry standard.

As a retail professional, you may not know what conversational commerce is. But as a customer, you sure do. Today, this form of commerce is everywhere. And customers expect companies to use it both in standard and creative ways.

This article tells you what you need to know about the new standard of commerce. We also show you inspiring examples of companies using conversational commerce. Finally, learn how to get started with this new form of commerce right now.

What is Conversational Commerce?

Conversational commerce is when customers can chat directly with your brand from anywhere. For example, from a messaging app, like Whatsapp, Facebook Messenger, Wechat, KakaoTalk… Or through a voice assistant: Ok Google, Amazon Alexa, Siri.

Customers can initiate a conversation with a company via a real human or a robot to engage or complete a transaction:

• Ask questions about the product
• Get a custom pricing
• Order products and pay securely
• Follow their delivery
• Ask for help or customer support

And much more.

The exact format of conversational commerce varies from company to company. For example, a live chat on your website lets the customer talk to a salesperson.

But this form of commerce can also get very technical. For example, it can be a chatbot on Facebook Messenger, from which the customer can order and pay right away. 

Chatbots understand users’ intentions with artificial intelligence, machine learning, and natural language processing. Then, with automated responses, chatbots offer quick responses to most queries.

For example, Pizza Hut developed a Facebook Messenger chatbot from which you can order food.

Facebook or Twitter users chat and order custom pizzas right from the Pizza Hut chatbot. The bot can remember their previous orders or customization for future purchases.  

The Pizza Hut chatbot also keeps customers aware of their latest promotions and provides easy access to the FAQ. 

Is Conversational Commerce a Fad?

The short answer is no, all the contrary.

Customers’ expectations of conversational commerce solutions are growing. This is because messaging apps are getting huge.

In China, people are already chatting with 1.5 billion businesses on the messaging app WeChat. Today, Whatsapp has 2 billion users, and Facebook Messenger has 1.2 billion. 

The demand for conversational commerce is real. Customers expect to reach out to your brand like they do with anyone on the messaging apps they use daily. Not through contact forms or phone calls.

Messaging apps are more casual and convenient. 71% of consumers say they are willing to spend more time with a brand on messaging apps than on the phone.

Is Conversational Commerce a Threat to Retail?

This form of commerce increases personalization in the shopper’s experience. And Brick and mortar lose some of its key advantages. A customer noFor example, a longer has to go to the store to get the customized recommendations of a connoisseur.

Conversational commerce’s ubiquity sets new standards for the whole retail and e-commerce industry. 

Customers are likely to complain if no instant messaging is available. They will publicly unleash their outcry on social media and destroy a brand’s reputation in a flash. 

But conversational commerce is also an incredible opportunity for traditional retailers. For example, the popular clothing retailer H&M created a chatbot to promote its e-commerce and physical stores. 

H&M sells many different clothes, and customers can quickly get lost on the website. So H&M developed the Kik chatbot, which recommends different clothes based on the user’s taste and preference. 

The chatbot asks customers to choose photos of clothing they like and to describe their aesthetic with keywords, like Boho or Grunge. Then, the chatbot suggests articles to buy according to their style profile.

Notice H&M’s use of conversational commerce is much more visual. This sort of commerce doesn’t mean you’re limited to text. You can use visual cues like emojis, gifs, and pictures to engage with customers.

How Conversational Commerce Can Make E-commerce Websites Stand Out?

With conversational commerce, you can increase conversion rate, customer retention, and brand advocacy. Indeed, this sort of commerce provides highly desired customization of the whole shopping experience.

But you have to do it right.

Conversational commerce can improve and ease out any step of the customer’s journey. The most standard ones help customers get information about the product and handle customer support after the sale.

For example, L’Oréal, helped by Haravan, added an automated virtual assistant called Mr. Bones. The bot embodies its brand Kiehl’s Vietnam. On Facebook Messenger, the bot took care of customers’ inquiries, and shoppers could buy right from the chat.

L’Oréal Kiehl’s Vietnam solution to generate conversations increased revenue by 22%. As a result, it became the first conversational commerce retail channel in South East Asia.

Is Voice Commerce the Future of Conversational Commerce?

In the future, a transaction initiated via a conversation will be using voice commerce.

With voice commerce, everything is done with voice by talking to a voice assistant like Ok Google, Siri, or Alexa.

But this is not something for the future. It is a very real solution we have at our disposal, which is only waiting to become a mass adoption solution.

For example, with Amazon Echo, shoppers can track their delivery. Then, with a voice command, the voice assistant Alexa will reply by listing their ordered items. They can also order a Domino’s pizza without having to take out their credit card. 

Voice commerce is relatively new. But it’s expected to grow as people use voice assistants more and more, especially since they are already available on any smartphone. 

In 2020, 38,5% of the US population used a voice assistant at least monthly. It’s 12% more than the year before. This is the highest growth in the use rate ever, caused mainly by the lockdowns in the US. 

The customer behavior is shifting. As a result, voice commerce will likely become very, very big.

How to Get Started?

You don’t have to be a big company to start doing commerce via automated conversations. Small e-commerce businesses can begin with conversational commerce right now. All they need is to create an account on social media and chat with customers.

But as you get more customers, tracking every conversation becomes near impossible. So instead, you can use more advanced solutions to reduce your workload and improve customer satisfaction.

These advanced solutions also let you be present on many channels. Like Facebook Messenger, Whatsapp, or voice assistants. Then, a bot or your salesperson replies to them from a single interface.

Here are six solutions to get started with conversational commerce as an e-commerce store:

• Zendesk: customer support and B2B sales
• Intercom: Facebook Messenger and bots for marketing & support
• Birdeye: customer feedbacks and reviews
• Tidio: enhanced and personalized live chat  
• Botnation AI: DIY Facebook Messenger chatbot

Conversational Commerce is Not a Silver Bullet

To deploy a successful conversational strategy for commerce, you should first think of its purpose. For example, when and why would a customer want to talk to your brand? What is the level of service the customer would expect?

Once the purpose is clear, map out the existing communication channels you have. See how you can already improve existing touchpoints with your users or even remove them. But to be sure to succeed, you need solid fundamentals and an omnichannel strategy.

Likewise, don’t put poor conversational experience for the sake of it.

Everyone hates bad chatbots and no customer will buy more just for having a chatbot.

To prevent this outrage against your chatbot, be open about what the bot can and cannot do. If there is an issue, allow the customers to reach out to a human.

Conversational commerce solutions can make a good customer service experience even better. But it will not fix your internal operational issues. 

Using chatbots and creating conversations with customers, you can create new opportunities for your business. But to be sure to succeed, you need strong fundamentals and an omnichannel strategy.

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Conversational Commerce: Everything You Need to Know to Implement it in 2022 appeared first on Apocalypse Retail.

We want to give our special thanks to Benjamin Lechtman & Gaspard Alcalde, the two students who co-authored this post with us.

Digitally native vertical brands or DNVBs are exploding in popularity. This new generation of highly disruptive brands is changing the world of Retail. 

These brands are direct-to-supplier and direct-to-consumer companies that design, build, sell, and ship their products in-house. 

While they only became popular over the last decade, we can expect DNVBs and other forms of Direct-To-Consumer commerce to be the new norm in Retail over the coming decade.

Brands that manufactured FMCG (Fast Moving Consumer Goods) and CPG (Consumer Packaged Goods) depended entirely on retail distributors to access their market.

But the rise of online shopping and smartphones opened multiple new channels for brands to access their customers. 

This is why DNVBs are becoming such a big deal. 

They are at the crossroads of two of the root causes of the Retail Apocalypse: the rise of direct-to-consumer and the rise of e-commerce.

In this article, we’ll guide you to understand how digitally native vertical brands work, where they come from, and give you some examples specific to the French Market.

What is a Digital Native Vertical Brand (DNVB)?

A Digital Native Vertical Brand in Marketing is a brand created online with a honed-in focus on customer experience across the entire customer journey. 

DNVBs always start online, and many will evolve into opening physical stores. However, unlike your average e-commerce company, a digitally native vertical brand controls its entire manufacturing and distribution process. 

The three critical aspects of a Digital Native Vertical Brand are:

1. Vertically integrated business
2. Deep focus on understanding the customer
3. Growth hacking at the core of their marketing strategy

1. A DNVB is a Vertically Integrated Business

These brands have total control over the business model, using technology to cut out the middlemen in their manufacturing, supply chain, or sales processes.

DNVBs often boast a significant price advantage over their competitors in the same industry since they have successfully cut out the middlemen to reduce in-between commissions. 

By taking this D2S (direct-to-supplier) and D2C (direct-to-consumer) approach, they significantly increase their margins while providing better prices than their competitors.

An e-commerce company tends to have a deeper understanding of its customer journey than an offline company. What separates DNVBs from general e-commerce is that they use this deep understanding of the customer to adopt changes in their manufacturing, supply chain, and sales processes.  

DNVBs can implement product design changes according to their wants and needs vertically integrated. And they can do it much faster than their competition, which gives them a competitive advantage.

2. A DNVB Focuses On a Deep Understanding of The Customer

Another element of DNVB is the approach they have to understand their customers to increase retention. 

As we’ve said before, e-commerce companies tend to have a much deeper understanding of the customer journey than offline companies. 

What is different about DNVB’s is they use this understanding at all moments of the customer journey to create a bond with the customer that transcends a single purchase. 

The focus is felt across the customer journey, especially in customer service, significantly better than the average brick and mortar Retailer.

The fundamental aim is not to acquire customers but to create fans of the brand. This fan-like status ensures retention and referral, thus reducing future customer acquisition costs.

A DNVB will use its websites or blogs and social media platforms to create a community of fans. As they control every aspect of the product, they can provide a unified experience across the customer journey. 

They successfully offer scalable personalization for the customer, which allows them to create intimacy with their customers and increase retention and referral chances. 

3. Growth Hacking is The Core of the DNVB Marketing Strategy

A DNVB will generally handle all of its marketing internally, often relying on growth hacking techniques to increase its audience through cost-efficient campaigns. 

Digitally native vertical brands in France and worldwide are often created with limited marketing budgets, which forces them to get creative with their marketing budgets. 

As a result, they generally use targeted ads on Social Media or Search platforms, like any other Retailer. 

What makes DNVBs unique is that they consider every single touchpoint across the customer journey, online or offline, as a marketing channel. 

By doing so, they approach every touchpoint with a test-and-learn approach to measure its effectiveness for customer acquisition and retention. 

As they have a deep understanding of their customers, DNVBs efficiently use their budget to launch campaigns across the customer journey to maximize customer retention and referral. 

This approach allows them to build significant fan bases at a fraction of the cost of a traditional Retailer to reach the same results.  

The Origins of the Name DNVB or “Digital Native Vertical Brands”

The term “Digital Native Vertical Brand” was coined by Andy Dunn, the founder of US clothing company Bonobos. 

In a blog post in 2016, Dunn described the growing emergence of companies created online and sell and ship their products. 

He specifically focused on why these companies can’t be considered typical e-commerce companies. Instead, he argued that these brands have a unique approach by managing their end-to-end distribution processes, giving them a specific edge over general e-commerce.

A DNVB Is Not Ecommerce, It’s Vertical Commerce

Dunn noted in the Medium post the competitive advantages of having a vertical integration: “The product gross margins are at least double that of e-commerce (e.g., 65% versus 30%). The contribution margins can be 4–5x higher (e.g., 40–50% versus 10%).” 

For Dunn, we are not simply talking about e-commerce; we are talking about vertical commerce. 

This competitive advantage in unit economics represents a radical difference from e-commerce: “Vertical commerce can make money. E-commerce, not so much.”

A DNVB Is Maniacally Focused On The Customer Experience

Another key trait of these companies, according to Dunn, is the focus on the customer. In the post, Dunn explained that a “maniacal focus” on customer experience is another common trait of DNVBs. 

These companies have an unprecedented focus on the customer as they are obsessed with customer experience. It begins with the quality and design of the products they sell and is constant across the customer journey providing a solid service experience before and after the purchase. 

For Dunn, it is also vital to consider that DNVBs should not be viewed as tech companies. 

They are indeed brands born online, and they mostly use digital channels. But what they are fundamentally disrupting is the Retail sector as they are Retail companies with a different approach to technology. 

What Is The Difference Between DNVB and D2C?

“Digital Native Vertical Brands” companies and “Direct-to-Consumer” companies are phrases that are often used interchangeably. Still, there are some significant differences between the two.

A DNVB is essentially a D2S (direct-to-supplier) and D2C (direct-to-consumer) mixed: a D2S2D2C, if you will. 

Direct-to-consumer refers to companies that sell their products directly to consumers without relying on wholesale Retailers (online or offline). 

For example, a DNVB is a direct-to-consumer brand, but they also have integrated their supply-side to cut out middlemen such as importers or distributors. 

In this sense, a DNVB is a D2C, but not every D2C is a DNVB. 

Success Stories: 11 DNVB or Digital Native Vertical Brands in France

Focusing on the French Market, DNVBs work similarly to other countries. 

As of 2021, french DNVBs had an estimated annual turnover of €640M and were growing at 3x the average growth of e-commerce players. 

With these numbers, it’s undeniable that DNVBs are becoming highly popular in France. 

According to the digital native study, as of 2021, there were almost 450 brands identified within the DNVB collective in France, adding more than 100 brands only in 2021. 

The one thing where French DNVBs are highly different is that most of them have a solid corporate social responsibility message. 

Impact and sustainable Retail is part of the DNA of most of these brands. As we’ll look through examples, most success stories among french DNVBs players are highly focused on making retail more sustainable.

Le Slip Français: Local Manufacturing For Chic French Underwear

Le Slip Français made its mark by creating gender-neutral underwear using 100% french textile manufacturers. This 100% Made-in-France approach has been a critical differentiator for the brand to sustain local manufacturing.  

Their motto, “Change fashion, change the world,” really exemplifies the products they make and how they are socially charged. 

They’re currently disrupting the fashion industry with a complete catalog of products from underwear to socks and pajamas. 

The brand was created in 2011 by Guillaume Gibault, a former HEC Paris student, and, as of 2019, generated more than 24M€ in sales. 

They started with a pure online focus selling from their website and currently operate 16 stores in France and sell through Retail wholesalers to generate additional volume. 

As of November 2021, the brand had 138k followers on Instagram.

Jimmy Fairly: The French Warby Parker

Jimmy Fairly is a famous French eyewear brand similar to Warby Parker in the US, but with a special french touch. The brand was created in 2011 by Antonin Chartier and Sacha Bostoni, a former HEC Paris student. 

They even contacted Warby Parker founders to look for synergies initially but got no reply. So they focused on growing in the french market and concentrated on high-quality eyewear and social consciousness. 

For every pair purchased, the company will donate another to someone in need. 

Using this social-impact practice, the brand gained significant traction online and built up a reputable brand presence among its followers with the Buy-One-Give-One program. 

Back in 2012, Sacha Bostoni said in an interview, “People say we’re a hipster brand, but when we look at our customers, they really love that we’re a brand with convictions.”

As of 2019, the brand had sold more than 280k pairs of glasses and donated the same amount. 

This Digital Native Vertical Brand is also an example of a brand that started online but rapidly found the benefits of having physical stores. 

The “cosy store” concept is considered one of the fundamental parts of their growth. Currently, Jimmy Fairly has 52 different storefronts around France and 3 in London.

As of November 2021, the brand had 165k followers on Instagram.

Tediber: The French Casper

Tediber is another French brand heavily inspired by another American DNVB, Casper, and a special French touch. 

The brand quickly built a reputation with its mission statement: make buying an “Incredible Mattress” affordable and accessible for everyone. 

The notion of an “incredible” product has been a trademark of the company as they expanded their catalog with the “incredible bedspring,” the “incredible pillow,” or the “incredible bed sheets.” 

The company was launched in 2015 by Julien Sylvain, Juan Pablo Naranjo, Jean-Christophe Orthlieb, and Aude du Colombier. 

They’ve found a ton of success by focusing heavily on the purchasing experience. In addition, their 100-day return policy is very generous and helped them build trust with their customers (as a disclaimer, this was the same strategy Casper used in the US). 

But the execution in the European markets is what has set Tediber apart, as they’ve harnessed strong support from existing customers. As a result, they boast more than 35k positive reviews on their website. 

In the Covid era, the mattress industry was significantly impacted, as mattresses are typically sold in showrooms where consumers can physically try out beds for their comfort level. Tediber offers a more digital experience at an affordable price by cutting out the middleman. 

Tediber has jumped to the physical world by opening three different storefronts in Paris, Toulouse, and Lille in the last few years. These stores are showrooms for the brand’s products where customers can effectively test the quality of their “incredible mattress.” 

As of November 2021, the brand had 100k followers on Instagram.

Gemmyo: The Jewelry Brand of the Rose Kitten

Gemmyo was created in 2011 to disrupt the jewelry industry. 

The company was founded by Pauline Laigneau, former HEC Paris Student, Charif Debs, Malek Debs, Alexis Joseph, and Fanny Boucher. 

In the beginning, the brand was exclusively using digital channels to grow. 

They smartly used funds raised in 2013 to launch a marketing campaign that significantly increased their brand awareness. They put billboards in the Paris Metro displaying a rose kitten wearing a ring in its right ear. 

Gemmyo has implemented technology across its customer journey to provide scalable personalization. Which has become one of their critical differentiators as it is not a common trait in the jewelry industry. 

Traditional Retailers in the jewelry industry fail to provide accessible personalization in their products. Using instant messaging like WhatsApp, 3D technology, and Lean Manufacturing, Gemmyo offers unique pieces for their customers according to their needs. 

Currently, the company operates four stores in France, which they use as showrooms for their products. They have also launched an online video platform where consumers can speak with a jewelry adviser to ask questions and get answers—a perfect solution in Covid times.

As of November 2021, the brand had 126k followers on Instagram.

Veja: French Sustainable Sneakers with a Brazilian Touch

Veja is one of the “senior” brands on this list. 

The brand dates back to 2005 when founded by François-Ghislain Morillion, a former HEC Paris student, and Sébastien Kopp.

Veja is a footwear brand with substantial success in Europe, mixing a clear commitment for ethical Retail and fair trade. 

The company has been involved with several Brazilian associations to finance fair trade extraction, ethically sourced cotton, rubber, and leather to make the sneakers. 

The brand is exceptionally transparent about the project. It openly discusses the limits of pushing ethical Retail within a digitally native brand that strives to be profitable. 

On their website, they openly challenge themselves: “While we’re proud of our sneakers and the way we make them, other questions beg to be answered. Do we really need to buy so many pairs of shoes?”. 

Perhaps it’s this honesty and level of transparency that their customers love, as the brand made over 65M€ in sales in 2019, almost doubling the revenues from 2018. 

The brand operates three stores in Paris, New York, and Bordeaux and has started selling through multiple online and offline wholesalers.

As of November 2021, the brand had 714k followers on Instagram.

Bobbies: Footwear With a Parisian Chic

Bobbies is another successful French DNVB that sells footwear with a Parisian chic. 

The brand was established by Alexis Maugey and Antoine Bolze back in 2010. Since its inception, the brand has focused on designing and producing high-quality leather shoes with a particular “parisian touch” and made-in-Europe. 

In addition, the brand’s vertical positioning allows them to offer these products at a much lower price than the competition of luxury leather shoes.  

The “parisian chic” has been at the heart of the branding strategy, which has worked very well. The company reported more than 8M€in revenues by 2017 and exceeded the 20M€ bar in 2020. 

Many DNVBs use social media to spread brand awareness, as it is relatively inexpensive and does not require the use of a third-party marketing firm. 

Bobbies, for example, consolidated a strong community of fans on social media, particularly on Facebook and Instagram. As a result, they have almost half a million combined fans on both platforms.

The brand has jumped to physical Retail by opening three directly owned stores in Paris and Lyon. 

The brand controls the entire experience in these stores and provides a unified approach to the “Parisian chic” journey. 

They also had a rapid international expansion via wholesale Retailers and other websites. As a result, their shoes are now sold in more than 50 countries. 

As of November 2021, the brand had 321k followers on Instagram.

Joone: Baby Care Products That Are Good For The Planet

Joone is a brand that has focused on disrupting the baby care market with a strong sustainability message. 

Launched by Carole Juge Llewellyn in 2017, the brand has concentrated on providing the highest quality baby care and skin care products while promoting “radical transparency” in environmental impact.

The brand has taken a radical approach to sustainable Retail, making local production and close-manufacturing circuits a key selling point for their diapers. 

The brand boasts that every product in the catalog is manufactured in France, keeping their carbon footprint as low as possible.

In the same vein as German DNVB Lillydoo, founded in 2015, Joone started with a subscription model for diapers that worked. 

Amazon had already disrupted the diaper industry with subscriptions, but what set Joone apart is the transparency regarding the sustainability of its products. 

This transparency has appealed to many French parents looking for less polluting diapers for their kids. 

This brand also focuses on a transparent DNVB that utilizes a subscription model rather than your typical browse-and-buy D2C approach. 

Joone is very transparent about its pricing and requires no commitment to use its service. Parents can enjoy a whole month’s diapers supply regularly. The service is set up to be customizable according to use and the number of children consumers have. If you purchase a product that isn’t a good fit, you can easily send it back.

Even if baby care products have been at the core of their catalog, Joone has expanded to women’s skincare products. Following the brand’s mission about transparency, they are aggressively expanding to disrupt the sustainable skincare market. 

As of November 2021, the brand had 79k followers on Instagram.

Respire: Bringing Sustainability to the Skincare Industry

Respire is another brand disrupting the skincare industry with an ethical approach. 

This success story is a favorite of ours as it combines excellent story-telling with the right mix of personal and company branding—all of this, of course, with fantastic execution to sustain scalable growth.

The brand was founded in 2018 by Justine Hutteau and Thomas Méheut, a former HEC Paris student. The company launched via crowdfunding focused on creating a natural made-in-France deodorant. 

The crowdfunding quickly gained traction using a compelling story of how Justine Hutteau was diagnosed with a benign tumor. 

After being diagnosed, she started paying attention to the ingredients and components of her skincare products. She quickly realized that there was no product made from natural products, so she decided to create it.  

Justine already had a strong community of Instagram followers, which she used to provide traction for crowdfunding. As a result, the crowdfunding had raised more than 200k€, selling 21k products in just a month.  

After the initial success with the crowdfunding, Respire has built a fantastic community in just under two years. They started selling through big Retail wholesalers like Monoprix and Sephora, building solid brand awareness. 

The brand sold 800k products in its first year and added products to the catalog, from shampoo to sunscreen. 

It has efficiently used a subscription-based model as consumers can automatically deliver their products at a specified frequency. In addition, by subscribing instead of directly buying, customers can enjoy percentage-based discounts. 

Their ambition is to become the leading skincare company in Europe by 2030, which may seem far-fetched. But given the initial success, it shouldn’t be impossible.  

As of November 2021, the brand had 157k followers on Instagram.

Bergamotte: Digitalizing The Flower Revolution To Make it Sustainable

Bergamotte is a digitally native vertical brand created and launched in Paris in 2016 by Romain Raffard and Loïc Reperant. 

In the same vein as Colvin, which launched in Spain in 2015, Bergamotte intends to disrupt the flower industry. This industry historically struggled to grow in e-commerce due to the complexity of distribution and shipping for its products.

What has set Bergamotte apart in brand positioning is its push to make the flower industry more sustainable. The brand’s mission is to build a “greener future,” which they follow with impressive transparency about their carbon footprint.

The company has a clear commitment to reducing its products’ carbon footprint, and since 2020 commits to selling European-only plants and flowers. 

This approach is radically different from the rest of the french flower industry, as 85% of flowers sold come from abroad. 

This approach to making the industry more sustainable has found an audience within french customers. The brand has built a community of close to 200k followers on social media. 

As of November 2021, the brand had 190k followers on Instagram.

Tiptoe: Sustainable Furniture With Modular Table Legs

Tiptoe is a sustainable furniture manufacturer and distributor founded in Paris in 2015 by Matthieu Bourgeaux and Vincent Quesada. 

The two founders launched the brand via crowdfunding to create a well-designed, sustainable, modular table leg that made furniture affordable.

 Then, building on their impeccable table leg design, they added new products to the catalog, including dining tables, bedside tables, desks, and chairs.   

They found significant success in the furniture sector by providing an excellent online shopping experience that does not require a physical showroom. 

In addition, the brand focused on having fantastic product photography and showcasing its sustainability practices in all its communications. 

In an industry that focuses on delivering fast furniture or “disposable” furniture cheaply made, Tiptoe takes an approach to create timeless furniture pieces affordable and high-quality. 

The brand has found a large audience in Europe by educating consumers about the environmental impact of mass-scale furniture disposal.

As of November 2021, the brand had 207k followers on Instagram.

Tikamoon: Made To Order French Decoration 

Tikamoon is another furniture and home goods brand that successfully became a digitally native vertical brand in France. 

Like Tiptoe, this brand focuses on designing furniture that lasts, rather than disposable, cheap items. 

The brand was founded in Lille in 2007, and after several years it was acquired by the Adeo Group, one of the largest home improvement companies globally. In 2021, the founders regained complete control of the company separating from the Adeo Group.

Despite being part of a large group for some time, Tikamoon kept significant autonomy and boasted its Digitally Native Vertical Brand status since inception. 

The brand is exclusively sold online, and most of the brand’s products are made-to-order. This feature could be limited in lead times, but the brand has done a great job explaining longer lead times to their customers. 

As of November 2021, the brand had 104k followers on Instagram.

If you know other players to include in this list, drop us an email, and we’ll add them. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post DNVB: 11 Digital Native Vertical Brands That Are Disrupting French Retail appeared first on Apocalypse Retail.

Black Friday has become a day that, for many people, symbolizes a celebration of consumerism. It is the unofficial start of the Christmas shopping season that has become a landmark event for retailers. 

For some retailers, it comes with increasing profits. For others, it can become a logistical nightmare. 

Their aggressive discounts and promotion strategies send consumers into a frenzy. 

Everyone has seen the pictures of people camping outside stores before opening, and even cases of people trampled by crazed shoppers.

But looking beyond consumer craziness, Black Friday and other mega sales events have been a target of critics for more sustainability in Retail. 

These critics argue that mega sales events encourage excessive and often unnecessary consumption, which has severe environmental and social impacts. 

Let’s look at what mega sales events are, how they started, and how big they have become. We’ll also look at these events’ environmental and social impact and what Black Friday alternatives exist for more ethical consumers. 

Why is it called Black Friday?

The Philadelphia and New York police in the fifties named the day after Thanksgiving Black Friday. 

As a US holiday that occurs on a Thursday, many people would take that Friday off work to have a long Thanksgiving weekend with their families. 

During Thanksgiving, most people exchange gifts, so retailers would stock up in certain products the month before the holiday. 

In the beginning, retailers used Black Friday as an opportunity to clear out excess inventory by discounting it. By clearing out excess inventory, retailers could make room for new products within stores for the Christmas season. 

So it was during the fifties, shoppers began to flock into the city to start their Christmas shopping. 

As consumers gathered in the city to find the most discounted items, the event started requiring more police enforcement. The police had to work longer hours and handle the chaos; they dubbed the Friday after Thanksgiving Black Friday.

But the dynamics of the event have evolved over the years. Black Friday stopped being a stock-clearance event for retailers and started to include high-demand items to attract more shoppers.

On top of this, Retailers started to entice shoppers with more aggressive discounts and significantly increased their advertising of the event. 

It was really in the 1980s that Black Friday became a frenzy in the US. 

People would queue outside department stores for hours or overnight to be the first ones into the shops. Security and law enforcement had their work cut out trying to contain the crowds fighting each other to get their hands on a discounted TV. 

Seeing the potential for increased sales, retailers kept investing in Black Friday, and the trend started spreading worldwide. 

And other mega sales events started popping up.

What are Black Friday Equivalents as mega sales events?

As Black Friday became a staple of American Retail, other mega-sales events started popping up worldwide. In some cases, these events are pushed by a single company or were based in a single country. 

With the rise of e-commerce and a more interconnected Retail, most of these events have become global. 

With Retailers everywhere aiming to take a cut of mega-sales events, some events have become very popular. But there are really three mega-sales events that are comparable to Black Friday in terms of size and reach:

1. Cyber Monday or Black Friday Weekend
2. Singles’ Day or 11-11
3. Prime Day

What is Cyber Monday or Black Friday Weekend?

Cyber Monday happens on the Monday just after Thanksgiving and just after Black Friday.

With the frenzy of Black Friday and the resources it takes in terms of law enforcement and consumer protection, cities have begun regulating Black Friday. 

In some cities, not all stores were allowed all day, and retailers had to follow specific rules for what could be advertised as a Black Friday deal. For example, to be considered as a Black Friday deal, some items needed to have a minimum amount of stock or an unchanged price for some time before the discount. 

The idea was to protect consumers from false advertising. 

But with the rise of online shopping and many stores wanting to avoid the Black Friday crowds’ craziness. 

In 2005, the National Retail Federation in the US officially dubbed Cyber Monday after a trend that retailers began to recognize a few years before. 

Online Retail is not bound by the same constraints of physical Retail to have a limited stock per store or fixed opening hours. 

So Cyber Monday allowed retailers to continue Black Friday deals one more day, with a less stringent regulation as fewer public resources are required. 

Today, most retailers mix deals between Black Friday and Cyber Monday. The event has really become a Black Weekend, with sales running for four days.

For some retailers, revenues generated during Black Weekend can concentrate up to 20% of their entire year revenues. So this weekend can literally make or break a year’s performance for these companies. 

Some e-commerce pure players have even started to push deals during the week with what they call Cyber Week, a term that appeared in 2013. 

What is Singles Day or 11-11?

As profitable ideas are quick to spread, other countries started to catch on to the benefits of mega sales events. 

The original idea came from an unofficial holiday in China to celebrate people who are not in a relationship. 

The date was chosen on November 11th as 11-11 as the number 1 symbolizes an individual or a single person. The number 1 also resembles a stick used in Chinese slang to refer to an unmarried person. 

Paradoxically, the date has become a massive event to celebrate weddings and give gifts which have greatly benefited online players such as Alibaba or JD.com. 

This massive online shopping event recently surpassed Black Friday and Cyber Monday sales as the world’s largest mega-sale event. 

With Chinese companies becoming global, the Singles’ Day event has spread to the rest of Asia and elsewhere. 

Companies like Lazada in South East Asia, MediaMarkt in Europe, or Aliexpress (a global arm of Alibaba) have made Singles’ Day campaigns across different countries. 

These companies have pushed to make this event an actual global mega-sale event. 

What is Prime Day?

Amazon has been one of the biggest retailers benefiting from the Black Friday and Cyber Monday sales. 

But same as any other retailer in the consumer goods industry, Amazon is highly dependent on the holiday season during Q4. 

In 2015, Amazon introduced the concept of Prime Day with a single promise: “Offer Black Friday deals in July” exclusively for members of their loyalty program.

Of course, Prime Day is an opportunity to attract shoppers during the “slow-season” of Retail during the summer. 

It is also a great way to offer an additional incentive for amazon shoppers to subscribe to their loyalty program, Amazon Prime.

But from a strategic standpoint, it has two additional benefits for a company like Amazon. On one side, it allows the company to absorb fixed costs during the off-season as most of the operational structure is under-utilized. On the other side, it is a great way to test new features and processes before the high season. 

Amazon has continued pushing Prime Day sales every year since 2015 and has deployed it in every single country they operate. 

Mega-sales events have become critical dates in global Retail. 

But as consumers become increasingly aware of the impact of mass consumption, many people ask if these events are compatible with more sustainable Retail.

Are mega-sales events compatible with sustainable Retail?

There are critics of Black Friday and other events in some European countries for being “too American.” These critics are easily dismissed, and these events have found many supporters across Europe

But these events are also being criticized as being the flagships of overconsumption. 

Black Friday and mega-sales events are the flagships of overconsumption.

As consumers become more socially responsible, they realize that there is an impact of having mega-sales events. 

It is impossible to separate the environmental cost of mega-sales events from the impact of general overconsumption.

Mega-sales events are built around heavy marketing campaigns and the scarcity factor of limited-time deals. 

You could argue that the entire event is built around pushing consumers to buy items using time-sensitive deals. But, in turn, these deals inevitably promote waste as people buy things they don’t need and unnecessarily use more resources. 

Supporters of mega sales events say that they give people with limited means access to products they wouldn’t otherwise be able to buy. 

They will also argue that Retail companies need these events to clear out stock or reduce dependency on the high season. 

Let’s not forget that this was the reason Black Friday started.

But the reality is that Black Friday has turned into a much bigger event with higher marketing spend and shopper frenzy, far from its original purpose. 

Today, Black Friday has become a race to increase revenues, extending deals as much as possible to promote consumption. 

There is nothing sustainable about overconsumption. 

Black Friday and mega-sales events have a tremendous impact on retail employees.

Black Friday and other mega-sale events are a logistical nightmare. 

For online and offline retailers, preparing for a mega-sale event can take an entire year. 

There is stress involved in preparing for the event. Stress comes from making sure you have the right amount of stock at the right place, pushing aggressive marketing campaigns, and working much longer hours than usual.

But there is also the stress of dealing with frustrated customers, which have even put lives at risk. There have been reports of brawls, fights, and even deaths related to Black Friday in the US, Brazil, or Mexico. 

With the rise of social media, more and more videos surfaced of brawls in 2017 and mall shootings in 2019. 

These events alone are enough to make people question if these mega-sales events are sustainable.

Questions come not only from an environmental point of view but also from a corporate social responsibility standpoint. 

Retailers should ensure the safety of their customers, as well as the security of their employees.

Ensuring customers’ safety has become a challenge during these events, especially during the effects of the Covid19 pandemic, with social distancing guidelines and other public safety measures.

So on top of questions regarding overconsumption, Black Friday and other mega-sales raise questions as public safety hazards. Which in turn raises questions about the sustainability of these events over the long run.

With the pandemic, some of them really thought it was the perfect storm to kill Black Friday once and for all. 

The impact of Covid19 on Black Friday: longer deals and more online shopping

The Covid19 pandemic did have an impact on overall retail sales, forcing the closure of stores.  

Public safety measures inevitably hurt the overall number of shoppers during Thanksgiving weekend. 

But Black Friday remains a huge Retail event worldwide. 

How big was Black Friday 2020? It slowed a bit but remains huge!

Thanksgiving weekend includes the five days between Thanksgiving and Cyber Monday, including Black Friday. As a result, these five days have become a single mega-sale event worldwide.

According to the National Retail Federation, Thanksgiving weekend attracted 186.4 M shoppers in the US in 2020. This number is down from 189.6 M in 2019 (-1.7% ’20 vs ‘19), but up from 165.8 M in 2018 (+12.7% ’20 vs ’18).

In terms of revenues, Thanksgiving weekend totaled $58.1B in 2020. This number is down from $68.6B in 2019 (-15% ’20 vs ‘19), but up from $51.9B in 2018 (+11.9% ’20 vs ’18).

So, it becomes clear that in 2020 the growth of Black Friday was slowed by the pandemic. But the reality is that most consumption instead transferred online, with a massive increase in e-commerce sales during the pandemic.

The Covid19 has far from killed Black Friday; instead, it has transformed it.

Black Friday and Cyber Monday are becoming global events for online shopping.

The covid19 pandemic had a negative impact by slightly reducing the number of shoppers in the US in 2020. But it had another significant effect on how these shoppers made their holiday purchases. 

According to the NRF, online shoppers during Thanksgiving weekend in the US increased by 44% in 2020 compared to 2019. If you consider only Black Friday, the number of online shoppers during this particular event surpassed 100 M for the first time ever.

If we analyze Black Friday and Cyber Monday numbers globally, online players are evidently thriving during mega sales events. 

During Black Friday and Cyber Monday, Amazon totaled $4.8B in Gross Merchandise Value globally, up 60% from 2019. Another player that thrived was Shopify which racked up to $5.1B in Gross Merchandise Value globally, up 75% from 2019.

The interesting part about Shopify is that the company generated triple-digit growth in European countries where Black Friday has been most criticized. Shopify sales grew in Italy +211%, Germany +189%, and UK +122%

Interest for Black Friday in 2020 varied globally

Perhaps one of the best ways to measure where Black Friday has the most strength is by looking at online searches.

According to Semrush, Black Friday’s global interest varied considerably between countries. 

Online searches for Black Friday-related keywords grew by +34% in countries like the US and Australia, with a peak growth in searches in Brazil, where it reached +48% in 2020. 

On the other hand, interest in Black Friday seems to be stalling in European countries. The countries where interest for Black Friday dropped the most were Germany, France, and Spain, where searches dropped by -16%, -4%, and -2%, respectively.  

Covid19 transformed how traditional retailers addressed the pandemic.

Giant retailers with physical stores used the opportunity in 2020 to change how they operated during Black Friday. 

To promote public safety and limit the number of people in stores, retailers like Walmart, Target, or Home Depot made significant changes to their black Friday deals. 

Instead of concentrating on a single weekend, they pushed for month-long deals or divided into smaller sales events during the season. 

These companies, which have many shoppers visiting their brick-and-mortar stores, worked to offer a safer shopping experience. 

The main changes from brick-and-mortar retailers during Black Friday 2020 included: 

• longer opening hours, 
• limiting the number of shoppers per store, 
• promoting curbside pick-up
• making deals available for several days to avoid in-store congestion. 

Walmart, for example, divided Black Friday 2020 into three separate events and opened their stores at 5 am during these events. As a result, the campaign was called “deals for days.” 

So, the reality is that big Retailers are moving away from Black Friday, but not because of corporate social responsibility. Instead, they are moving away from Black Friday to reduce the risk of a single concentrated event which has become a logistical nightmare. 

How big are Singles day and Prime Day?

Short answer: they are huge, and they keep growing.

In 2020, all the major players involved in these events broke records in terms of gross merchandise value and the number of products sold. 

During Single’s Day 2020, Alibaba and JD.com made more than $115B in revenues, with Alibaba making $74B (+26% vs. 2019) and JD.com making $41B (+33% vs. 2019). At the height of the event, a record number of 583k orders per second were recorded. 

Yes, you read these numbers correctly. In 2020, these two companies alone generated more volume than the entire US Retail thanksgiving weekend 2020 combined! 

During Prime Day 2021, which was held at the end of June, Amazon totaled $11.9B worldwide, up 7.6% from 2020. To give a sense of the event’s magnitude, the company founded by Jeff Bezos shipped more than 250M items during Prime Day 2021.

In other words, the global volume for Prime Day 2021 was almost 2.5x as big for Amazon as thanksgiving weekend 2020. Very few companies can create a global mega-sale event of their own and make it even bigger than Black Friday. 

Despite the environmental and health concerns, 2020 Mega-sales events broke records worldwide. 

One could even argue that despite a slight decrease in foot traffic in 2020 due to the pandemic, Black Friday and other mega-sales events are bigger than ever.

And forecasts for 2021 predict an even higher volume as consumers are flocking back to the stores.

But if we consider searches related to Black Friday, keywords related to sustainable black Friday alternatives are increasing sharply. 

According to Semrush, online searches for “shop sustainably” and related terms grew by an average of over 650% between 2020 and 2019. 

It seems that consumers are more interested than ever in looking for Black Friday Alternatives. So, what can consumers do?

Brands are offering Black Friday alternatives to answer consumer interest in sustainable shopping.

It’s clear that when consumers start to care about something, brands follow. 

A 2019 survey from Hotwire found that 47% of internet users worldwide claimed to have switched to a different product or service because the company that made them violated their values.

In this sense, brands worldwide embrace the rising consumer interest in Sustainable Shopping, which illustrates a significant shift in consumer behavior. 

To attract a more environmentally conscious consumer, certain brands are launching Black Friday alternatives. 

Some of these alternatives can be considered as pure green-washing campaigns. 

Companies are readjusting their strategies instead of competing during Black Friday, which is a logistical nightmare and has high traffic-acquisition costs. 

Some companies argue it’s driven by a mission to stop hyper-consumerism as flash deals often lead to rushed purchase decisions. 

But these companies are not stopping sales. They are making longer, less aggressive deals, benefiting their bottom line while getting great PR

True hardcore sustainability stems from only buying what we need and then making good use of it for as long as possible. 

This makes it challenging to balance the temptation for increasing sales with taking environmental actions.

We have selected a few alternatives that seem to stick true to the core values of retail sustainability: environmental and social responsibility.

5 Black Friday alternatives to empower ethical shoppers

First and foremost, we understand the best alternative to black Friday is simply to not purchase anything during that period. 

But since it is just before the holiday season, chances are you are looking for gifts to give, or maybe for items you need.

Here are what we think are the Black Friday Alternatives for sustainable shopping available today. If you have any other, don’t hesitate to tell us! 

1. Buy Nothing Day

As we just said previously, an authentic hardcore approach to sustainable shopping would be to boycott Black Friday entirely. And not just Black Friday, but all mega-sales events during the year which promote hyper-consumerism.

In this sense, the most obvious alternative to Black Friday is simply to buy nothing on that day.

This movement was born in 1992 in Vancouver, Canada, which has since spread to multiple countries in Europe and America. 

On their website, they argue that “The simplest way to celebrate is, of course, to avoid making any purchases on the day. That means dodging the Black Friday sales, no quick trips to the grocery store, no online purchases, etc. “

The passive approach is simply to buy nothing on Black Friday. Still, the Collective has since taken a more militant approach to organizing protests to draw attention to overconsumption.

They have organized credit card cut-ups, where participants stand with scissors on shopping malls, cutting credit cards as a sign of protest. Another creative form of protest is what they describe as the zombie walk, where participants wander around in stores with a blank stare.

2. Recommerce: making retail circular 

Recommerce or Reverse Commerce is a significant trend impacting Retail today. It can basically be summed up as purchasing (or selling) second-hand items. 

Over the past years, certain online players have grown tremendously by allowing customers to sell or purchase their second-hand items. 

Within the fashion industry, players like Vinted or Vestiaire Collective in Europe have demonstrated the true potential of second-hand fashion.

In other industries, some players have taken reverse commerce to the next level. Companies like Craigslist, LeBonCoin in France, or Wallapop in Spain allow millions of transactions of second-hand items from almost any kind.

Finally, other companies have taken full advantage of the refurbishing business model to offer a second life to pre-used items.

A company like BackMarket offers refurbished electronics items to tackle waste in the electronics industry. 

In the car industry, companies like Carvana, Cazoo, or Kavak are refurbishing used cars to extend their life and offer a more sustainable alternative to buying new cars. 

The concept of ReCommerce is not really something new, but with the help of technology, it can reach new heights. 

Sin 1989, the concept of ReCommerce was already at the heart of protests and support songs. 

In the words of Pete Singer in his song to support environmental policies in the city of Berkley in 1989: “If it can’t be reduced, reused, repaired, rebuilt, refurbished, refinished, resold, recycled, or composted. Then it should be restricted, redesigned, or removed from production.”

3. Brands donating proceeds during Black Friday

Eco-friendly veterans, Patagonia, have long fought against the linear economy. Instead, they design products using recycled plastic and repair and resell used goods to stop them from landfills. 

Patagonia was a pioneer in pushing back against the consumerism of Black Friday. Their viral campaign told consumers “Don’t buy this jacket” back in 2011, reminding people only to buy what they needed.

Five years later, Patagonia notoriously committed to donating 100% of their Black Friday sales to grassroots environmental organizations worldwide, which ended up being $10 million, over five times their original estimation. 

Patagonia has been involved in these kinds of actions for a long time. The founder of Patagonia, Yvon Chouinard, and the founder of Blue Ribbon Flies, Craig Mathews, started the 1% for the Planet initiative back in 2002. 

The initiative aims to prevent greenwashing and certify donations that effectively go to protecting the environment. The 1% for the Planet certification is given to businesses and individuals that donate 1% of annual turnover or salary to environmental causes

4. Brands closing stores and telling consumers to #OptOutside

Another outdoor goods manufacturer, REI, has also been battling Black Friday for many years now. 

They close their stores so that their employees can spend the day after Thanksgiving with their families and encourage shoppers to join in the #optoutside campaign. 

The idea is to spend this mega sales day enjoying the outdoors instead of giving in to the temptation of compulsive shopping. 

Even if the campaign was initially created for Black Friday, the #OptOutside hashtag has been used frequently on Instagram with over 18M posts. 

Another brand that took a decisive stance against Black Friday is the US skincare brand Deciem. 

During Black Friday 2019, the company closed all its stores and blacked out its website with a message saying: “We no longer feel comfortable being involved in a single day so heavily focused around hyper-consumerism.”

The brand became known for its stance promoting slow shopping, making less aggressive deals during more extended periods to remove the element of time pressure. In turn, they argue their customers have time to shop more mindfully.

5. Make Friday Green Again Collective

As a response to the environmental impact of Black Friday, there are also European initiatives like the Make Friday Green Again collective. 

The Collective is a group of 400+ retailers and e-commerce players in Europe committed to making Black Friday environmentally friendly. The movement is the brainchild of Nicolas Rohr, one of the co-founders of eco-friendly clothing company Faguo. 

All members decided to opt-out of Black Friday discounts. These encourage consumers to buy on impulse instead of what they need. 

Instead, their campaign aims to make consumers think about their clothes’ environmental impact during their whole life cycle. 

Their message was to use Black Friday not to shop but rather as a day to review our closet to see what we can still use, recycle, repair, or resell. 

This way, we make sure we extend the life of our existing clothes before giving in to the temptation of significant discounts. 

Many of the brands that collaborate with them are moving from fast to “slow fashion” or “slow shopping. They educate consumers to buy fewer items but of better quality and more responsibly made.

There is an undeniable rising interest in sustainable shopping. With more and more consumers asking questions about what they’re buying, who they’re buying it from, and their values, retailers can benefit from taking note.

Nevertheless, it is also clear that Black Friday and other mega-sales events are still a massive deal for the global retail industry. 

Some brands are making small, superficial efforts to make their overall campaigns more sustainable to answer consumer demands. Other smaller, more militant brands are taking measures to the next level to educate consumers and boycott Black Friday. 

Only time will tell how consumer interest varies over time and if the rising critics to mega-sales events make Black Friday finally stumble. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Is Black Friday Dead Yet? Here are Black Friday Alternatives to Empower Ethical Shoppers appeared first on Apocalypse Retail.

Today, more and more established product brands bypass traditional distribution and take a shorter route to put their products directly in consumers’ hands. 

In particular, Consumer Product Goods (CPG) brands and Fast-Moving Consumer Goods brands are growing their share of direct-to-consumer sales. 

To explain this, one could argue it’s only about profitability, but as we’ll explain in this article, there’s much more to it.

Starting with detailed definitions of DTC, CPG, and FMCG, we’ll then dive in and explore why DTC is an excellent strategy for brands dealing with CPG or FMCG. 

By explaining this strategy, we’ll cover how the growth of direct to consumer is one of the root causes of the Retail Apocalypse.

What is Direct-to-Consumer, DTC or D2C? 

Direct-to-consumer is a retail strategy that brands can use to access consumers directly, without going through distributors. 

These distributors can be online or offline, but they will generally take a margin to sell the products in exchange for their services and access to consumers. 

In a direct-to-consumer business model, a brand will control the entire purchasing experience with the customer without any middlemen or distributors. 

Direct-to-consumer can also be referred to as DtC, DTC, or D2C.

What is the difference between DNVB and DTC?

You’re likely familiar with Peloton, Bonobos, Dollar Shave Club, or Casper. 

Who hasn’t thought about sampling the five pairs of glasses Warby Parker allows consumers to try before buying?

Whether you need designer glasses or a fresh razor to show up in your mailbox, these digital native vertical brands (DNVBs) offer textbook examples of how DTCs should operate. 

DNVBs are products of the digital age and, by definition, are DTCs. In other words, DNVBs are just direct-to-consumer companies born in the digital age. 

Here’s how a DNVB model starts:

• Born on the internet
• No initial brick-and-mortar storefront 
• Source products directly
• Sell products directly to consumers
• Uses technology to scale 

Unlike traditional retail businesses, DNVBs control everything about product distribution in a vertically integrated company. So, to sum it up, it’s Direct-to-Supplier and Direct-to-Consumer or D2SD2C if you like to shorten words.

Today, instead of solely describing a method, the term DTC defines a specific distribution channel. In this case, DNVBs are part of the DTC business, but they do not stand alone in the DTC space. 

More and more established brands are joining the DTC party!

What are Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG)? 

Let’s start with the basics: do you eat Oreos or Pringles? or have you purchased toothpaste, deodorant, or dog food? 

All of these are classic examples of consumer packaged goods (CPG), but only some are examples of fast-moving consumer goods (FMCG)

Overall, you could use the same term in retail, but if you want to get technical, the main difference is the purchase frequency. 

FMCGs are technically a subset of the CPG category. However, FMCGs are, by definition, consumer products that are purchased with a relatively high frequency as consumers use them every day. 

Great examples of FMCG are toothpaste, potato chips, or shampoo, which are products that consumers tend to repurchase frequently for daily consumption.

On the other hand, CPG includes a broader scope of products with a short shelf life but is not as fast as FMCGs. 

For most people, these two categories include the same types of products, and the only nuance is in how short is the shelf life.

CPGs and FMCGs include products consumers use every day and need to restock regularly, including the following categories:

• Food items
• Beverages
• Cleaning products
• Personal care items
• Over-the-counter drugs

From a retail standpoint, CPG and FMCG products have a few characteristics:

• High volume
• Short shelf life
• Low price per unit with low contribution margins per unit
• Low engagement and effort to choose the product
• High repurchase frequency

The Growth of Direct-to-Consumer Removes the Toll of Middlemen in Traditional Retail Distribution

In a nutshell, every CPG or FMCG goes through a similar process. 

These products go through multiple channels before consumers ever see them on a store shelf. 

Here’s what the CPG supply chain looks like:

1. Manufacturer
2. Importer
3. Distributor / Wholesaler
4. Retailer
5. Consumer

The path from the brand to the consumer reads like a long and winding road. 

Eventually, products will get to the consumer, but many middlemen are involved in the journey. 

Of course, you have to consider that every middleman in the process takes a cut of profits, reducing margins for brands. 

This is where direct-to-consumer increases margin by streamlining the entire process. 

When a brand moves away from the traditional third-party method of getting products to the marketplace, they eliminate all middlemen involved. 

1. Manufacturer
2. Own Store (online or offline)
3. Consumer

As you can see, you’ll find no middlemen as products get to consumers directly from the manufacturer via the brand’s own store network.

Today’s Consumer is Ready for a Direct Relationship with Brands

DNVBs do many things right, but their obsession with the consumer’s experience is an area that established brands are looking at closely. 

Modern consumers have much broader access to brands thanks to online shopping and technology. 

The modern consumer is omnichannel in their behavior, meaning that they jump seamlessly from one channel to the other.

In this sense, the traditional retail experience is not enough to attract consumers and generate long-term retention.

Consumer values continue to evolve, along with their expectations. And today’s consumers value convenience and unique experiences more than anything.

So, to make them happy, brands should strive to reach consumers in every channel and offer them a unique experience to ensure repurchase. 

Customer studies, focus groups, and other types of market research cannot substitute for regular real-world consumer interactions.

In a more traditional retail distribution approach, CPG and FMCG brands have limited interactions with customers. Instead, it’s the retailer that develops a direct relationship with consumers through its distribution network. 

In other words, brands are removing the middlemen, the big box stores, the discount department stores, or the hypermarkets. 

By creating a direct relationship with consumers, brands get first-party high-value data to deliver value to each unique consumer. This is the foundation of a 360 view of the customer.

E-commerce is Paving the Way for the Growth of Direct to Consumer

We’re no longer living in the dawn of the digital age. 

Companies that haven’t embraced the power of digital channels are missing out on a new kind of relationship with consumers. 

It’s no longer about having an online presence. 

Having a website is not just about brand awareness and storytelling. Most brands realize that their websites are a powerful tool to build a direct relationship with their customers.

In this sense, brand websites are becoming their online store-fronts to interact and engage directly with their customers. In other words, brands are building an omnichannel engagement strategy.

Not only because brands have built their e-commerce stores, but also they have started selling through online marketplaces. 

Marketplace commissions are a fraction of the margins that traditional retailers take when selling to consumers. 

So brands can sell through online marketplaces and increase their profits, even if they don’t own the relationship with the customer.

In the old model, a brand company needed brick-and-mortar stores to reach consumers. The retailer, who played the gatekeeper, controlled what brands and products they allowed shoppers to buy. 

The physical store became the focal point, which meant the retailer, not the brand, owned everything about the consumer’s shopping experience. 

Through the help of e-commerce, brands are embracing the growth of Direct-to-consumer to control the entire narrative. 

Direct to Consumer is a Smart Move for CPG and FMCG Brands 

There is an undeniable advantage for any brand of cultivating a relationship with end-consumers. By focusing on gathering data from customer touchpoints, a brand can better understand its customers.

According to a study from Brandshop, 88% of consumers prefer buying directly from a brand if they are given the option. 

Consumers expect an engaging shopping experience when they buy from the brand’s online store and physical stores.  

But for CPG and FMCG, there is a strategic advantage to growing their D2C business. 

When they cut out the middlemen, they take away their tolls and increase their margins. 

Sourcing products directly from the manufacturer and selling them directly to consumers can significantly increase their margins. 

Those additional margins mean a CPG or FMCG brand can invest more in marketing than they could if they remained tied to regular retail distribution. 

These brands can increase their customer acquisition costs, as they have all the data they need to understand their customers and increase their lifetime value. 

In turn, a higher lifetime value pays for the increase in customer acquisition costs.  

It is no coincidence that CPG and FMCG brands are embracing the growth of direct to consumer. 

As we’ll see below, some of the most established global brands like L’Oréal, Adidas, Nike, Unilever, and Nestlé are investing massively to scale their D2C business. 

These brands alone expect to generate more than 50% of their revenues from DTC by 2025, if not sooner!

In summary, a DTC business model improves the following aspects for brands:

• Increase revenue
• Increase gross margins
• Minimizes the brands’ dependence on third parties
• Allows deeper relationships with consumers with higher lifetime value

That last point is what drives the success of digitally native vertical brands. 

The Growth of Direct to Consumer is Impacting Traditional Retail 

When a CPG brand moves to market directly to end consumers, there are many clear advantages. 

However, there are multiple casualties in the process. As you guessed, those casualties are the middlemen or traditional retail distributors. 

Traditional retailers are watching their entire business model crumble. 

More than 135 big retailers have filed for bankruptcy since 2015 in the great Retail Apocalypse. Of course, the impact of the Covid19 pandemic accelerated the end of traditional retail, but it’s not the root cause of the Retail Apocalypse. 

These companies built their entire business model upon being the point of distribution between brands and consumers. 

If consumers go right to the source and purchase directly from brands, it means they’re not buying from retailers anymore.

Here’s something else suggested by a 2018 study of DTC models—manufacturers no longer send their hottest new products through retail channels. Instead, they reserve those hot commodities for their direct-to-consumer channels. 

This is a process called selective distribution, in which brands keep the best products within their D2C channels. 

So, if traditional retailers want to survive the Retail Apocalypse, they must lose their dependency on branded products. 

They can either start their private labels and implement a direct-to-consumer approach. Or they can build stronger relationships with customers by offering better retail experiences so that customers continue to purchase from a distributor. 

We’ve discussed DNVBs as an example of D2C, but the growth of Direct to Consumer is everywhere in retail. 

Many established retail brands are investing massively to develop their DTC business. 

Five Examples of Established Brands Embracing the Growth of Direct to Consumer 

Established brands moving to DTC channels include both big and small players. As we’ve said before, embracing DTC channels is a brilliant move for brands.

Here are five established brands that are taking full advantage of the growth of direct to consumer business: 

L’Oréal 

L’Oréal is a global hair and skincare company with many top-of-mind brands. 

The company owns brands like its namesake brand L’Oréal Paris and some global brands like La Roche-Posay, The Body shop, Biotherm, Lancôme, or Garnier. 

L’Oréal is also dedicated to continued expansion in the DTC market. Currently, the brand offers consumers tools designed to help them customize makeup colors online. L’Oreal is also committing to market on Amazon due to the platform’s status as the beginning point for consumers to shop for cosmetics.

L’Oréal is massively investing in its e-commerce infrastructure. In a 2020 interview, former CDO Lubomira Rochet said the company went from zero to 25% of sales from e-commerce since 2010. 

The company has also set a very ambitious target to reach 50% of e-commerce sales by 2023. 

This is a really impressive share of sales to reach in such a short time.

Nike 

Everyone knows Nike. It’s the world’s largest sports brand and is not precisely a CPG brand, but it perfectly fits this list.

By the end of 2020, after a year in a global pandemic accelerating the retail apocalypse, Nike is thriving, and its share price hit an all-time high.

Over the last years, Nike has implemented a “Consumer Direct Offense” strategy, moving from third-party retailers to having a direct-to-consumer approach. 

Nike’s strategy is summed up in the following lines:

• Cut back on wholesale distribution and raise the bar for brand experience with wholesalers, which remained in the network. 
• Invest massively in content on digital channels
• Focus on community building with native Apps
• Deploy customization, data analytics, and logistics  

In 2020, Nike generated 35%, more than a third of its revenue, from DTC. This share is up from 15% back in 2010. Now that is a steep acceleration! 

Adidas 

The second-largest sports brand in the world refuses to be left behind by competitors such as Nike. 

Adidas has set up a strategy to generate half of its revenue from DTC by 2025. This threshold is no easy task, but the brand is investing massively to get there.

The brand has set its sights on doubling e-commerce sales and strengthening its data analytics and loyalty programs. Adidas also promises to refocus on women’s apparel and recently announced a new supportive activewear line designed for women.

Overall, the brand is trying to catch up with the DTC strategy implemented by its largest competitor.

Unilever 

Unilever is one of the world’s largest CPG producers within different categories, from food to cosmetics. 

Among the major brands from Unilever, they own Dove, Q-tips, Lipton, Tresemmé, Knorr, Maille, Hellmann’s, Magnum, or Ben & Jerry’s. 

In 2016, Unilever wowed the world with their $1 billion acquisition of DNVB Dollar Shave Club in the U.S. This acquisition marked a complete strategy of moving into the direct-to-consumer arena from razors to mustard. 

Speaking at a conference, Unilever’s former CMO stated that “Direct to consumer – whether that be content or direct-to-consumer sales – has changed significantly. The opportunity for a company like ours to serve consumers directly is very exciting.”

Nestlé

Along with Unilever, Neslé is one of the biggest CPG producers globally, from food to cosmetics. 

Nestlé owns some of the most influential brands like Nespresso, Nescafé, Gerber, Nesquik, Perrier, San Pellegrino, Nestea, Kitkat, or Purina. 

Nestlé has made two significant acquisitions in the last couple of years, signaling their intent to move into DTC, especially in e-commerce. 

With the acquisition of the U.S. meal delivery company Freshly in 2020, Nestlé moved to have a “better understanding of what and how people eat at home.” You value collecting data in a DTC strategy, considering that Neslé paid $950m for Freshly. 

Continuing in this move, in February 2021, Nestlé completed the acquisition of SimplyCook, a U.K. recipe kit company. 

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

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Every retailer, whether online or offline, must deploy an omnichannel strategy to unlock the full value of the omnichannel customer.

The goal of an omnichannel strategy is not simply having an online and a physical store. It is providing a unified and consistent experience across touchpoints in the customer journey to increase customer retention.

Over our last posts, we’ve covered in detail the five pillars of an Omnichannel Strategy, but we’ll do our best summary on this post. 

These are the Five Pillars of an Omnichannel Strategy

A bulletproof omnichannel strategy requires addressing the five pillars of Omnichannel Retail.

The five pillars of Omnichannel Retail are:

1. Omnichannel 360º View of the Customer 
2. Omnichannel Customer Engagement
3. Omnichannel Fulfillment & Logistics 
4. Omnichannel Product Offering, and Merchandising
5. Omnichannel Backoffice: Finance, IT & HR

A company must understand its customers and their journeys deeply, which can only be achieved with a 360º view of the customer across all their company touchpoints.

Once the company has built this view of the customer, they can start deploying the following pillars. 

They can build an Omnichannel customer and content engagement strategy to offer excellent customer experience and scalable personalization.

Then, with an omnichannel fulfillment strategy, the company can offer fulfillment options to meet the customer when and where they want.

To complete this, with an omnichannel product offering strategy, a company builds trust with its customers. 

Finally, an omnichannel back-office structure ties everything together with the proper organization, systems, and structure for omnichannel retail.

After this recap, it is essential to understand that an omnichannel strategy implies a complete transformation of the company.

The Omnichannel Transformation Must Be Met At Every Level Of The Company

We’ve discussed the need to implement an omnichannel back office for companies that want to survive the retail apocalypse.

We’ve discussed a complete change in the culture, organization, technology, and KPIs. 

The final step is that a company must make sure that the transformation happens at every company level. 

From top to bottom, every single company employee must be aligned with the omnichannel vision and have the right processes, technology, and metrics to deploy it. 

The problem is that, according to research, most retailers fail to cover these last steps. As a result, they fail to implement the omnichannel back office, despite the management having the right vision.

As the poll among retail professionals suggests, most retail company CEOs and C-level have understood the need to implement an omnichannel strategy.

But only about half of professionals believe they have the right processes, technology, and metrics to implement the strategy.

Companies must understand that management and vision will only get them so far. 

If they don’t implement the proper omnichannel back office, they won’t lead the company towards a true omnichannel strategy.

Six Steps To Implement An Omnichannel Strategy in Retail

We have provided over a dozen posts explaining the need to implement an omnichannel strategy.

In each post, we have provided detailed guidelines covering the five pillars of an omnichannel strategy. 

When we advise companies on their omnichannel transformation, we find it very helpful to sum everything into six steps every company must follow. 

1. Build a deep understanding of your customer
2. Gather, unify and structure your data
3. Build a detailed map of your customer journeys
4. Build your own omnichannel roadmap
5. Establish OKRs aligned with your omnichannel roadmap
6. Continuous improvement

1. Build a Deep Understanding of Your Customer: A 360 View Of The Customer

Deeply understanding your customer is the foundation of an omnichannel strategy. 

A company must understand who their customers are, how they shop when they buy, and what channels they use?

In the end, they need to understand what is the number one reason why customers buy from them.

2. Gather, Unify and Structure Your Customer Data for Scalable Personalization

Companies must bring the total value of their first-party data. Therefore, they need to have a customer data-gathering strategy across channels. A loyalty program is handy for this.

On top of gathering customer data, they need to structure and unify all the data and connect it to the right content. 

The end goal is to provide relevant, meaningful interactions with customers at every step of the journey.

A Customer Data Platform, Data Management Platform, and Digital Asset Management solution are IT tools that can make the whole process scalable. 

3. Build a Detailed Map of Your Customer Journeys

Once the company clearly understands their customers and has analyzed the data, they can build detailed maps of their customer journeys.

Customer journeys identify behaviors and patterns that will improve the chances of a visitor becoming a shopper. Or a shopper becoming a regular customer.

A detailed map of the customer journeys helps provide the right interactions for customers. The company sends the right messages to move the customer closer to a transaction at every step of the trip.

For this, you must answer questions about your customers and the channels they use to engage with your company:

• What is the number one reason a customer buys from you instead of your competition?
• How do customers discover your brand?
• Ho do they research your producs or services?
• What channels or touchpoints do they use?
• How often do they make a purchase ?
• How much does it cost to acquire a customer, and how profitable are they?
• Would the recommend or refer you to their friends?

4. Build Your Own Omnichannel Roadmap

Every single company will have a unique omnichannel roadmap according to its context and resources.

They will need to assess which features they lack regarding customer engagement, fulfillment options, product offering, and BackOffice.

They can design a roadmap to tackle each of these features in terms of investment and the resources they require. 

To build the roadmap, we generally advise two things:

1. First, organize tasks on what can be done now, in twelve months or three years. Some tasks will require significant resources, so this helps companies focus on quick wins without skipping longer tasks.
2. Second, focus on existing customer pain points rather than providing new experiences. Before launching a shiny new experience, companies should focus resources on ensuring that existing channels provide a great experience. 

5. Establish OKRs Aligned with Your Omnichannel Roadmap

Management by Objectives and Key Results is one of the best methodologies to ensure that all teams are aligned.

Once you have designed your omnichannel roadmap, ensure that your entire organization is focused on deploying that roadmap and measuring the positive effects it generates. 

This methodology helps teams prioritize projects and focus on the right objectives. 

6. An Omnichannel Strategy Reuires Continuous Improvement

As you continuously gather data and analyze your customer behavior, you can constantly improve your omnichannel experience. 

An omnichannel strategy is not just something you deploy once and forget. It’s a process to continuously make changes in the customer journey according to the customer’s context.

With this process, companies can quickly identify changes in consumer behavior and adapt to them. In turn, they are providing the best possible customer experience.

Adding value to the customer experience is a continuous improvement process. If you don’t keep on improving your processes, your competitors will.

In today’s retail, this is the key to surviving the retail apocalypse.  

Do you want more insights into E-commerce, Omnichannel Retail, and Digital Transformation? Subscribe to ApocalypseRetail to get insights sent directly to your inbox. Our content is designed for top business schools, retail managers, and eCommerce entrepreneurs who want to survive in the ever-volatile retail industry. Subscribe to our newsletter to join the fight against the Retail Apocalypse!

The post Six Steps to Deploy an Omnichannel Strategy to Survive the Retail Apocalypse appeared first on Apocalypse Retail.