Now in its third year, Shoptalk has undoubtedly become one of the premier events for companies in the digital retail and eCommerce ecosystem. Whether fresh on the scene or a giant in the industry, the opportunity to showcase industry-transforming products and network with retail thought-leaders at Shoptalk is second-to-none.
ComCap also hosted its third annual DNVB forum at Shoptalk with resounding success. Senior executives, founders, and investors gathered in an intimate setting and discussed growth tactics, sharing perspectives on what has and hasn’t worked. We are pleased to share our notes and favorite quotes from our speakers below.
Bernardine Wu, CEO FitForCommerce:
NRF/FFC index tracks 120 brands and retailers – 20 are based purely online. The index tracks retail progress and participation in different feature sets (for example 41% support buying online/ pickup in store, 66% enable inventory access on the web or mobile). Good brands need a “Hipster, Hustler and a Hacker” to succeed. Increasingly brands are using Shopify, Magento, and Bigcommerce or other fairly off the shelf third-party tools and dedicating additional spending towards marketing or branding. Audience members emphasized the importance of open systems which provide rich data access to enable effective marketing and marketing attribution. “Data is like a rock star – if it’s not managed well – it will trash the place.”
Mike Mothner, CEO WPromote:
“When 100% of email is mobile optimized – there still are only a certain number of hours in the day… to really win you need to do something significantly better than par. [We work with many challenger brands] that have realized that the skills that got you here, are not the same skills that will get you there… there is some pain involved…
“Common threads for challenger brands that are succeeding are:
- You get out of an annual budgeting process
- The idea that I’d be on an [annual] cadence for evolving is really bad. You need a CMO and they need to really like and get the data.
- Marketing is no longer about the big idea… it is an iterative, data-driven, [daily] testing approach
“The third is a shift from looking at revenue today, to something that equates to lifetime value. And the realization that not all customers have the same lifetime value – you have some extraordinarily valuable customers and some that are not profitable at all. A single pair of shoes could be purchased by an avid runner that buys six pairs per year and a casual runner that buys one pair per year – they have very different lifetime values. The idea that in my customer base I have some customers that are 100 times as valuable as the average is a really important idea. Having (working) personalization is really, really important.”
Joe Megibow, Operations Advisor at Advent International:
“Most traditional brands still have an annual budgeting cycle with a finite budget. I expect to see eCommerce P&Ls disappear within five years. There are increasingly blurred lines as to what an eCommerce vs brick-and-mortar transaction is. If you buy online and pick up in store, or go to store and order from your phone, which P&L owns those transactions?
- Know your customer: in digital this is one of the biggest challenges – without being able to see the customers in the store – it is very easy to misidentify your key customer profiles online. People matter, it’s not just a math problem.
- Know your economics: even defining the KPIs around conversion can be difficult. What happens when one customer journey results in multiple economic transactions? Don’t oversell (e.g. marketing beyond what can be sold).
- Know your weaknesses: You don’t have to be great at everything, but you have to be good at everything. Strategic hiring vs. over-hiring. Looking beyond the transaction (e.g. contact center, returns process, in-box experience, and so on).
Getting this right oftentimes is really driven by having the right team and the right alignment of incentives.”
Erin McCarthy, VP Retail Development at General Growth Properties
Six years ago General Growth Properties optimized its 120 properties to focus on Class A and High Street Properties. Today the bulk of their portfolio is in Class A shopping centers (GGP owns 100 of the top 500 malls in the US)
- Three years ago GGP organized a team focused on digital brands and has been a thought leader in helping digital brands develop their retail strategy – they now have a whole division focused on foreign brands and digital brands
- Erin’s team has worked with 175 digital brands and believe that they are some of the most innovative parties in the retail landscape and has developed strategies to support their growth
- GGP is seeing a combination of both popup stores but also stores with a full selection of products – many customers of digital brands want to walk out of the store with the product
- GGP has worked with retail locations that have migrated away from certain segments of retail where there have been bankruptcy towards digital brands that have an exciting consumer value proposition
- Overall with the best portfolio of Class A properties and a dedicated team focused on digital commerce, GGP believes that retailers and brands need best in class physical retail capabilities with a digital interface (e.g. ensuring consistent deployment of WiFi, having a custom design and strategy team that helps online brands design an appropriate physical store strategy). As a result traffic in GGP’s stores is up (while mall foot traffic overall is down)
- GGP came up with a ground-breaking format called “IRL” (short for in real life). The theme was that of a home store and showcased fourteen digital native vertical brands in a collective in one storefront. IRL had detailed analytics to track consumer behavior in the storefront
- GGP has also developed a joint B2B and B2C social media offering to support the launches of new properties
- Costs of trying a popup strategy can vary between low five figures to low six figures of upfront investment
Other topics of conversation:
- The proliferation of apps and data is a problem. Google and Facebook are big beneficiaries of this as they have more data than anyone
- Cross-channel attribution is an increasingly large problem. Store promotions impact online sales and a strong eCommerce program positively impacts off-line sales
- Lifetime value vs. first unit breakeven
- With the rise of social and influencers as major channels – product quality
‘Wanderlust’, a fashion jewelry business based out of Asia which entered the US through listing on Revolve in LA. One key to success has been maintaining product quality through control of manufacturing.
More broadly, Marcelo has helped launch 80 brands in Asia, here are some key take-away’s:
- China dominates sales for brands with online sales in the rest of Asia representing less than 5% of total retail sales
- Conversion rates have high rates of variability – in some cases conversion rates can be 1/10th of that in the US
- Volume related to major promotions (such as Singles Day) can drive 100x volumes (compared to 8x or so for Black Friday in the US)
- Marketing can be challenging as Google is not as well established as a front end for eCommerce shopping
Facebook and the chat platforms can also be important channels which behave very differently than in the West. The cost of international customs and duties can be a big driver of consumer behavior, significantly increasing the cost of product to consumers. This should be considered when establishing a brand’s logistics locations and strategy. With this said, other players on the market also see the China opportunity and have driven up the costs of doing business there, which can make other large markets attractive for pilots (such as the Phillipines).
Finally, local requirements for consumer products can vary – China may require animal testing of certain products, India requires local production of certain products.
Sebastian Bryers, Co-founder and CTO Ora Organic:
The founders’ vision for the product was a cool, hip, millennial organic food brand that focused on sustainability and transparency. ‘Ora Organic’ launched on Shopify and Amazon, with 8 SKUs. They were able to differentiate through excellent customer interactions (via phone, chat and email) thereby building a loyal customer base.
Ora Organic were also able to grow quickly by spending on Facebook ads (prior to the price increases). After selling out of product, sales rankings fell on Amazon for about three months.
A video produced by the team was seen by a producer from the show ‘Shark Tank’ and Ora Organic were invited to pitch (an impressive achievement in a year when 30,000 companies applied to Shark Tank).
Inventory financing was a major challenge. The show aired three months after filming and although products sold out again, Ora Organic was ready and had production ramped up to handle the increased demand.
They started selling preorders to garner interest in new products. They hired an outsourced customer service team to handle the spike in interest; receiving 23k emails in a week. Next month Ora Organic will launch national distribution through a major retailer and expect volumes to triple.
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