A Warning to Ecommerce Startups: The Future of Online is Offline
When ecommerce first took the world by storm in the late ’90s and early 2000s, cutting edge marketers knew that the “information superhighway” was the future of commerce.
As we entered the information age, we were going to free ourselves from the shackles of brick and mortar, and virtual reality imagined by science fiction writers would become reality.
But the winds have been changing.
Something a bit unexpected happened: the mobile revolution. While some may have seen bits and pieces of it coming, nobody could have foreseen the way it would influence our daily lives. Rather than migrating into the digital world, we’re bringing the digital world into ours.
The future of online is offline.
Shopify, a top ecommerce platform with 70,000 retailers, recently released a point-of-sale system that will connect physical and online retail. Meanwhile, Amazon is quietly building a same-day delivery system that could change the way people shop forever. The secret will be to place warehouses in every city, complete with delivery men and women, a very offline way of thinking about online retail.
At the same time, Warby Parker’s co-founder Dave Gilboa found that, even though only 10 percent of their sales occur offline, those sales lead to customer retention and online success that wouldn’t otherwise be possible.
More generally, rather than becoming a new place to shop, the web has become part of the everyday shopping routine. Roughly 70 percent of shoppers research online before they shop in the store, and already 1 in 4 consumers pull out their mobile phone while in the store to research the products that they find there.
How should ecommerce startups react to this future? How do we adapt?
The Right Foundations
Source: John Ragai
Before we move on, I want to be clear that ecommerce isn’t going anywhere. Where offline retail is more convenient, in the sense that you get instant gratification, online retail offers consumers a level of variety and novelty that they can’t find offline.
That said, ecommerce is getting harder.
In 2012, 30 percent of shoppers turned to Amazon to research their most recent online purchase. Only 13 percent turned to Google. In such a competitive environment, it’s easy to see how offline exposure might actually be an easier way to build a customer base. In any case, it’s impossible to compete on price.
Justin Winter built an ecommerce business with a $12 million run rate in just 18 months. The business, Diamond Candles, sells home fragrance candles with a ring inside (valued between $10 and $5,000). He shared 7 shortcuts for ecommerce sites with Clarity.
I feel almost any successful ecommerce site is built on at least some these fundamentals:
- Fight a downhill battle – You want your product to be innovative, but you want to choose a billion-dollar industry that isn’t famous for its innovation.
- Don’t become the product expert – Your job is to bring innovation, novelty, and an interesting angle to your sector of the market. It’s not to become an expert on the product. Contract manufacturers are getting far better at limited runs for a decent price. Know who to pay to get the quality you need. Don’t waste time trying to become the expert, unless you already are.
- Design intrinsically shareable products – While we recently argued that full-blown viral marketing is a myth, there’s no denying the benefits that come with being worth talking about. We’re talking about Seth Godin’s purple cow here. While it’s clearly important for your product to be good, it’s even more important for it to be worth discussing.
- Copy the experts from other industries – Justin Winter suggests copying the poster-boy innovators that have been successful in industries that are known for being innovative. In other words, you aren’t copying people in your own industry, but you’re learning from the example of innovators elsewhere.
- Start with one channel – The advice here is simply to stick with one channel until you know how to make it profitable. He also advises picking a channel that is both “free” and “paid.” In his case, he chose Facebook. The point is to pick a channel that makes sense for your product and to stick with it until it works before you do anything else.
- Get a mentor – This is crucial. You need somebody who’s been there before so that you can learn from their mistakes.
- Optimize your conversions – Optimize your unique selling proposition, product story, social proof, security seals, and money back guarantees with split testing to get to profit as quickly as possible.
Without these foundations, it’s unlikely you’ll be able to have any success when you expand your business offline.
Going Offline: Start by Being Profitable
Source: Ninja M.
This title will probably get some laughs. Duh, we all want to be profitable. But I’m being serious here. Going offline is a big step. It typically means paying somebody to stand behind a cash register, paying rent and utilities, paying for maintenance, and more.
I’m going to suggest that you forego all of that at first.
Warby Parker’s initial “showroom” was their dining room.
Whether it’s doing things the Warby Parker way, setting up a kiosk, or selling out of your van, I suggest starting with a “minimum viable store.” This will give you an idea of your revenue potential, and what it’s going to take to be profitable when you expand.
In other words, I’m challenging you to find a way to be profitable in the physical world before you talk to a single investor or bank.
It’s this kind of real-world experience that’s going to give you the numbers and lessons you need in order to launch a full-blown retail location.
Conversion Rate Optimization For Online-Offline Retail
When I say that the future of online is offline, I mean just that. You’re still an online business, and that means that you’re going to use conversion rate optimization to sell goods in a physical location.
That means optimizing both your site and your store to maximize sales and retention through both platforms.
On Your Website
By now I assume you know how to optimize a site for sales, to grow an email list, and to boost social sharing. It’s not too much of a leap to use these same skills to drive offline sales, but it may not be immediately obvious how to make it work.
Thankfully, most websites for brick-and-mortar businesses are terrible at CRO, so you have that going for you.
The first thing you’ll need to consider is how much you should separate the ecommerce and brick-and-mortar elements of your online presence. There are several reasons you may want to do this:
- Most people who find your site won’t live in a location where they can reach your offline store. Calls to action centered around your physical store will create clutter, and may confuse your visitors into believing that they won’t be able to buy your products online.
- Your offline store may not have all of the same products in stock. If you accidentally create the impression that visitors will be able to buy all of these products in your store, you could create frustration and disappointment, doing more harm than good.
- Google incorporates local factors into its algorithm, and a site designed for a specific location will be much more likely to show up if it’s obvious that it’s meant specifically for that location. This means visitors will be much more targeted and satisfied with the result.
Once you’ve worked that out, you’ll want to consider some of the following elements of CRO:
- Your call to action is no longer a shiny button. It’s a phone number or driving directions. You want these front and center, complete with directional cues, proper use of negative space, and everything else you’ve become accustomed to.
- You have a new objection to overcome: is it worth driving to see your product in person? Don’t make the mistake of thinking that having a physical location means you can write shorter copy and overcome fewer objections. It’s more likely that the opposite is true. Don’t hide anything. Consumers want to see prices and product details. Give them more information than they could ask for. If you’re worried that the price will scare them off, take note that most consumers won’t even consider an option without knowing the price first.
- There’s basically no such thing as full-blown A/B testing for offline sales, however, you can do this to an extent with coupons. Since you can trace coupon codes to their respective landing pages, you can measure which landing pages are driving more visits, at least among the segment of the population that brings in coupons. While this isn’t a truly representative sample, it’s “good enough” for comparing landing pages and site designs. It will take more time to reach statistical significance with tests like these, so you’ll want to focus exclusively on big changes.
- Another way to A/B test as well as encourage visits is to provide a “reserve for pickup” button, or something to that effect.
In Your Store
- In the same way that you can use coupons or promo codes to track referrals from your website, you can use promo codes to track referrals from your store. Keep in mind that this is best used for building up an email list, since the best place to encourage immediate sales while somebody is in the store is…in the store.
- The store is also a great place to incentivize people to join an email list with a loyalty program (or ideally, something more creative). You’ll want to be clear that this email list is different. You’re not going to use it to spam them with coupons and deals. You’re going to use it to share useful and entertaining content.
Moving from online to offline is no reason to sacrifice the mind of an optimizer. The physical analogue to CRO is retail design. Trying to teach you everything you need to know about this discipline goes beyond the scope of this post, but it’s definitely worth discussing some important takeaways.
Entrepreneur magazine discussed five myths that can hurt retail design:
- “Neutral walls are best” – Not always. Generally speaking, it’s actually smarter to develop a “brand pallet” that matches with your logo and the story you’re trying to tell. If it has the same design feel as your website, you can expect better results.
- “Use fixtures designed for stores like yours” – As with your product, your store needs to be worth talking about, and using mass-produced fixtures isn’t always the way to do that. Found objects and unusual fixtures can give you an edge.
- “Your fixtures should be flexible” – While it’s important to test and experiment, much as you would with a website, using exclusively flexible fixtures is a bad idea. If everything feels temporary, the store takes on an air of impermanence, and hence, unimportance. Bold fixtures that incorporate lighting tend to make a stronger impression.
- “You can’t afford an interior designer” – This is probably the biggest one. While you probably can’t afford a full-time interior designer, you can consult with an experienced designer for under $100 an hour, and often a two-hour consultation is all it takes to set yourself apart from your competitors, especially if you come prepared with some images from your site and a strong idea of your brand identity.
- “Copy the big retailers” – To survive as a small retailer, you need to stick to the foundations that make you successful online. Again, this means you need to be intrinsically worth talking about, and the worst way to do that is to be a cheap imitation of big stores. If you must copy, copy the innovators in retail sectors that are nothing like yours, and be sure to bring at least one major twist into the mix.
A principle component of this is visual merchandizing, which is about developing floor plans and three-dimensional displays in order to maximize sales. Key attributes to play with include:
- Product information
- Sensory inputs
- Interactive installations
That last one is particularly vital for an online business. Interactive displays that are creatively linked with your online store will be particularly effective. The principle goals of visual merchandizing are:
- Allow consumers to find what they’re looking for easily
- Simplify the decision making process, and call attention to high-margin and low-selling products. (Many retailers make the mistake of hiding their worst sellers, instead of calling attention to them.)
- Educate consumers about the products in creative ways that appeal to their instinctual, emotional, and logical brains
- Increase serendipity by highlighting things that people will like, even though few people will be searching for them
In much the same way that web marketers are encouraged to retain their customers by being helpful and entertaining with their content, a savvy ecommerce startup will make an effort to make the physical retail experience fun and helpful. That means:
- A knowledgeable, helpful, friendly staff
- A unique shopping experience that is worthwhile in itself: worth talking about, and worth coming back to, even if you don’t spend a dime. In other words, the modern retailer encourages, rather than discourages, loitering.
- Build a community around your physical location, and blur the lines between this community and your online communities. Host events, take stances, and encourage participation. Interactive spectacles are the key to making a name for yourself, because experiences are more memorable than things.
While ecommerce certainly isn’t going anywhere, the most successful ecommerce businesses of the future are going to diversify into the real world, and leverage it for improved sales both online and offline.
Startups in this sector don’t necessarily need to make this move right away, but they should be thinking about how their business model is going to adapt to this change from the very start.
I hope this guide has helped you learn a few things about the intersection between online and offline commerce. If you did, we’d love it if you passed this along. Thanks for reading… and be sure to leave a comment below.