Why Online Pure Plays are Opening Physical Shops
At the end of 2012, the Get Elastic ecommerce analyst team made some predictions on what 2013 holds for tech and commerce. One prediction from our Ecommerce Industry Strategist, David Chiu, was "We’ll see more online pure plays establishing physical locations."
At first blush, the idea seems counter-intuitive (isn’t online killing enough brick and mortar shops?) But many online pure plays are infiltrating the offline world, and not just through “showrooming” off the backs of established physical stores. How -- and more importantly why -- are they doing it?
The simplest way for an online business to get physical with customers is to pop-up temporary shops. Handmade marketplace Etsy crafted its first in-person showroom in New York's SoHo district over the holiday season.
Like a modern-day craft fair, sellers were equipped with laptops to show their entire shop catalogs, with mobile devices serving as POS terminals via Square and PayPal.
The other four-letter marketplace that starts with E and ends in Y popped its holiday shop in London's SoHo. But instead of stocking real products, it featured images with QR codes and recommendations driven by social networks. Its exterior proudly displayed the hashtag #ebaysocialshopping, while some shoppers proudly publicized their finds.
The high fashion online pure play created its Window Shopping app for use with it's virtual pop-up "shopping walls," supporting augmented information and mobile transactions.
In celebration of the launch of its exclusive partnership with Karl Lagerfeld windows appeared in London, Paris, Sydney, Berlin and New York, with a physical pop-up shop in the West Village.
We've covered Tesco's Korean subway shopping experience before, its virtual stores are also found in bus shelters. Its virtual shops have produced 130% increase in online sales and 76% new registrations for Tesco online.
Perhaps it's Tesco's success that inspires so many other brands to try the same.
In-home virtual shopping
Using Tesco's API, Keytree built a virtual Tesco shop using Xbox Kinect to create an interactive layer that can turn your TV into an interactive storefront where you can literally reach out and grab products to add to cart.
At the end of this video you'll see some diagrams on how it works.
Though not built for Tesco, this project shows what brands or affiliates could do with the technology.
Keytree's creation also involves personalization. Imagine creating your custom Kosher or gluten free grocery store, for example.
The life-like way to navigate online shopping is reminiscent of Borders' in-store inspired Magic Shelf, which it claims increased conversion 62%.
A twist on the offline version, Google launched online-only pop-up shops around the web to promote pre-orders of its Chromebook product. Over a 48 hour period, the Chromebook store skipped across 12 different sites, closing after one hour's time, with URLs seeded and shared through Twitter.
Later, it quietly tested pop-up shops in the UK as well.
Why we'll see more pop-ups in 2013
Ecommerce has eaten away at a large chunk of brick-and-mortar shopping, but still lacks the value props of physical stores - tactility, instant delivery (aside from digital downloads and same-day shipping), and even social interaction (online co-browsing never did take off).
Online sellers are looking for innovative ways to "bridge the gap" between the online and offline experience, and pop-ups are a way to achieve this. Plus:
- Pop-ups make efficient use of retail space, allowing for tighter inventory (or no inventory in the case of 2D merchandising
- Outdoor display advertising can measure engagement and conversion rates
- Physical displays can attract new customers at potentially lower cost than online advertising and paid search
- Larger displays enable "mobile" shoppers to use their devices to transact, without depending on small screen websites and apps to explore the product catalog
- Pop-ups support real-time social electronic shopping in a way that co-browsing never achieved
- Pop-ups can combine human customer service with online shopping at staffed kiosks and pop-up showrooms
- Pop-ups enable local marketing for pureplays. Text alerts with directions to pop-up locations and special events can inject excitement to mobile marketing, especially when combined with exclusive offers.
Down the road, technological advances that may further bridge the offline-online experience gap are tactile holograms and 3D printing. Retail "showrooms" may become just that for some industries - showrooms that can manifest virtual but tactile replications of a long-tail of available products, or offer the ability to print products on-demand, cutting the costs of carrying inventory.
For now, watch for more brands to take it to the streets in 2013.