Contrary to the retail apocalypse narrative, brick-and-mortar stores are still very much alive and well.
A closer analysis of consumer shopping habits indicates that narrative is overblown. In 2018, ecommerce sales accounted for $517 billion spent in the U.S., representing just 14.3% of all retail sales. This tells us that despite the rise of ecommerce, over 85% of sales are still taking place in physical stores.
Retail is not dying, it is evolving.
In this “Clicks to Bricks” series, we’ll be speaking to three online brands that expanded into retail to learn how they executed their strategies. For part one, we kick off with online pet store, Pet Krewe, which expanded into wholesale retail. Read on to find out how it implemented its strategy to successfully go from clicks to bricks.
But first, what do we mean by “clicks to bricks”?
What does “clicks to bricks” mean?
Ecommerce retailers such as Warby Parker and Casper have recognized the need for physical stores, staking out brick-and-mortar locations across the country.
They represent a wave of online retailers that are going direct-to-consumer and moving from “clicks to bricks.” The aim? To create an omnichannel shopping experience to directly reach their customers wherever they are in today’s competitive retail space.
How Pet Krewe entered wholesale retail
Designer and manufacturer Pet Krewe launched as an ecommerce store in 2015, selling just a single product—a lion mane costume for dogs.
Allison Albert, founder and CEO of Pet Krewe
The company soon realized the role brick-and-mortar retail was going to play when customers and vendors started asking for it. “Physical retail was not on my company roadmap until I was approached by several vendors to carry our product,” said Allison Albert, founder and CEO of the New Orleans, Louisiana-based pet costume company.
I realized I was missing out on great opportunities to help out physical retailers with innovative and fun products that have great margins for them.
Allison Albert, CEO of Pet Krewe
In 2018, Pet Krewe expanded from clicks to bricks by entering the wholesale retail space through Petcetera, a pet specialty supply retailer. Today, it’s in over 500 stores with 52 stock keeping units (SKUs) nationwide. In the last year alone, its revenue has increased by 267%, claims Albert.
Below are three key points Albert says you need to consider before expanding from clicks to bricks, or more specifically in this case, from online retail to wholesale retail.
1. Repackaging and redesigning for physical retail
To ensure that it sells competitively in the wholesale retail space, Pet Krewe had to rethink how products are presented to grab attention of customers. In other words, would customers look at the products twice in-store?
“When a product is first made for ecommerce, the question of “How will this display on a peg or shelf?” is not one that pops up,” says Albert.
As an example, its lion mane dog costume—initially made just for its online store—was packaged in a simple poly bag with no hooks.
An updated packaging of Pet Krewe’s lion mane dog costume for retail stores
To make it more retail-friendly, Pet Krewe updated the packaging and design of its pirate dog costume with a sleek-looking bag and a hanger, along with an aesthetically pleasing hang card that could be used with or without the bag, depending on the retailer’s preference.
What you can do: Your packaging design is your best marketing collateral—it must educate and convince shoppers to purchase. To be effective, you can start by researching your competitors to see what kind of packaging they offer, then improve on that. If budget allows, consider working with experienced packaging specialists who will know what it takes to make your product stand out on the shelves to drive sales.
2. PDQ packaging: Customizing for every retailer
Pet Krewe’s sidekick artwork as a promotional vehicle
A PDQ display is a point-of-sale tray/rack that is easy to display in retail stores. They typically arrive ready to go on the store floor and don’t require products to be stocked or organized on the shelves. They are placed near checkout counters or areas in high traffic aisles to grab attention and drive impulse or quick purchases.
“We evaluated the use of each product to the retailer and the retailer’s customer,” says Albert. For example, its DIY bandana kits serve as single-unit peggable items for smaller retailers while promotional sidekick displays are designed (like the one above) for larger retailers.
“We serve both independent stores and national chains, and want both to feel comfortable with the quantity they can buy and the look that comes with that quantity,” says Albert.
What you can do: Eye-catching graphics, catchy one liners and value propositions all play a role in getting the attention of customers to encourage them to buy. When deciding what works best in PDQ displays, go with smaller products that can be placed in multiple rows. PDQs can be placed in mall kiosks, truck stops, convenience stores, and gas stations.
3. Ensure margins are compatible with retail expansion
Next, Albert examined her unit economics to ensure the business was profitable prior to the expansion.
Unit economics answers the critical question “How much profit am I making per unit sold?” as well as indicates how profitable a company may be (or not), and when it can expect to reach profitability.
Using an internal calculator on Google Sheets, Albert calculated unit economics using the formula below:
*Albert includes the unknown variable in her equation of about 10% total cost due to the current shift in global trade.
What you can do: Unit economics alone will not tell the full picture of how your business is going to shape up. Retailers should also measure customer acquisition cost (CAC) and lifetime value (LTV) alongside unit economics.
Key numbers to know:
- The costs to acquire a new customer.
- The value customers bring to your business over the life of their relationship with your company.
- The expected change in your unit economics over time as your business matures.
Finally, Albert’s advice for online retailers expanding into brick and mortar
Albert imparts the following wisdom to any business trying to move from clicks to bricks:
Establish your fan base early on
“The game has changed for any ecommerce company looking to expand into retail. Make sure you have the audience and fan base before launching retail. In the restaurant world, you have food trucks that open a restaurant after they have their loyal following. The same is true with retail. Build your fan base!”
How ecommerce software can help: Segment your customers to create consistently targeted emails that deliver highly personalized content to the right customers at the right time. Or deliver various promo codes to certain customers to increase purchase rate and engagement.
Rethink different ways of serving customers
“Going from an online brand to wholesale put more pressure on us to better service our customers. It now goes beyond being visually aesthetic online. In retail, you need packaging to have the same eye-catching properties. This has benefitted us as a brand by constantly pushing us to be a better version of ourselves with each new product.”
How ecommerce software can help: Using analytics, test and iterate with different deals to serve various segments of your customers differently. Or implement machine learning technology to recommend the right products to your customers.
New to ecommerce software? Learn which commerce software is right for you.
And, as always, our advisors are available for a free consultation at (844) 687-6771 to answer any questions you have about ecommerce or retail POS software.
Stay tuned for Part 2 of our “Clicks to Bricks” series where we speak to another online retailer about their strategies for expanding into physical retail.