The Cure For The Common Retail Fail: Community-Based Brand Commerce
By Tomer Tagrin, Yotpo
The past several months have seen a continuing trend across the retail old guard — closures. As heritage names like Barney’s and JCPenney take the brunt and shutter more physical stores, it appears the pace is picking up rather than slowing down. A reported 7,000 store closures in 2017 — an average of 583 per month — is already being dwarfed by the almost 2,000 this year. It would be easy to look at these numbers and conclude that shopping has become passé, that retail is at a point of no return, or that it’s impossible to compete with Amazon. But it’s not that simple.
Against a landscape of shuttered doors and startling headlines, there is something else going on. The Amazon-paralysis — a retail industry caught in the headlights of the oncoming freight train — is starting to wear off for some. And as it does, an evolved class of companies is rising from the ashes of Main Street. Direct-to-consumer sales will reach $16 billion by 2020 and these digital-first, vertically-integrated and customer-centric businesses have worked out that there is room and value in being in second, and even third place to a behemoth. And they’ve also learned how to take that spot. Enter the vCommerce challenger brands.
Companies such as Brooklinen, UNTUCKit, Leesa, and Away Travel are just some of this new wave. Having learned from Amazon’s obsessive focus on customer experience, these brands have taken the lesson and evolved it further yet. Rather than try to do everything pretty well, many staked their claim in one individual market — combining experiential service, affordability, and product excellence to foster an almost cult-like community. It’s a stake that is paying dividends, from day-to-day operations to billion dollar exits (Dollar Shave Club, anyone?!).
A recent report analyzing 75 digitally native, vertically integrated brands concluded that they are growing online sales nearly three times faster than the broader U.S. e-Commerce market. Retail’s death has been wildly exaggerated. But to survive in an increasingly promiscuous and fickle world, it is going to have to look and act very differently.
It’s not unheard of for a major athletic apparel company to spend millions on R&D for a pair of new sneakers, but go to market with minimum input from that market. Meanwhile, customers are central to how challenger brands operate. Leaving the transactional behind, they see consumer engagement as a two-way conversation. Whether founders are hosting monthly customer calls, showcasing customers (or their pets) in their marketing, or even being simply so kind as to leave a response to a review: every meaningful connection continues the conversation.
As part of the brand’s community, customers have a voice in what they create, how they serve, how they market and, most important, how they change to heed the voice of the customer. And where challenger brands can’t gather feedback directly, they use technology: to read all the reviews, listen to the social chatter, and send AI assistants to be everywhere, at all times. Building cult-like loyalty is not a result of million dollar marketing budgets, nor does it result from the high-profile, celebrity-filled ad campaigns of the past. Instead, challengers are relying on real-world interactions and authentic testimonials. The ability to harness feedback, along with fast iteration, is fueling the amazing growth of these brands.
A fundamental cornerstone of product development, sales and the marketing stack, the ability to see all of the conversations surrounding a brand and iterate or respond accordingly is powering these challengers to methodically planned, data-informed but seemingly ‘overnight’ success. Size and reach is no longer the strength it once was as technology democratizes the playing field. The wealth of data, business intelligence and insights to which vCommerce players have access allow them to combine the optimum product offering with unparalleled levels of service that draw a loyal fanbase. Retail can right their ship in much the same way. It all begins with creating that closed feedback loop with customers that would allow them to iterate more quickly and finally give them a competitive edge against Amazon.
Tomer Tagrin is the co-founder and CEO of Yotpo, the leading customer content marketing platform for commerce brands. Thousands of businesses — from established companies like Staples and TYR to fast-growing, digitally native brands like UNTUCKit, MVMT Watches and Esurance — use Yotpo to collect and leverage every type of user-generated content to increase trust, social proof and sales. Tagrin was a chip designer for Intel before co-founding Yotpo, and a software engineering major at Tel Aviv University before that. An e-Commerce junkie, he passionately believes that great brands are built on happy customers.