Avant garde retailers and e-commerce

[Glennphilips]

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[lowrey]

arby2001 your post was removed. if you wish to address something or take part in the discussion, do so in a constructive manner. You may consider the other post a "rant", but at least it was backed down with something.

[mamooon]

(...)
I'm also in no way recommending that everyone adopt the luxury retailer model of Net a Porter etc, or worse, Amazon. I'm talking about avant garde retailers here. Stores carrying brands with very niche audiences who already know/understand those brands, and for whom demand is already very high. These stores already operate some form of manual ordering via email, my question was, why don't they simply integrate an e-commerce platform to their existing websites?

You do mention a few interesting points:
First of all sometimes the term 'e-commerce' already has sort of a negative smack/aftertaste for some as nowadays they simply make associations with someone sitting on his/her restrooms chinaware hitting the 'amazon dash'-button to order toilet paper via amazon same-day-ultra-urgent prime-delivery. But that's just one part of the e-commerce.

Then we need to differ: On the one hand there is the customer buying 45 different t-shirts at Zalando, H&M, Mango, Top-Shop, whatever each for 4,99 US$/EUR, partying all night long with the not-yet-paid clothes and then returning 44 sweaty and dirty pieces and then repeating this every week and keeping just a few pieces. But, as you mentioned, there are audiences also for niche products who do know, love, respect and understand brands and as we clearly can see at this forum, as an example, some buyers for sure have knowledge and know how some clothing/apparel needs to fit perfectly, i.e. they have experience and can decide for themselves if something's fine or if it doesn't.

Also worth mentioning: The shop assistant can for sure be a very helpful guide at a retail, but the shop assistant could also try to simply sell something to make some turnover or/and to get his / her commission. And probably not the Mango/Top-Shop-sales assistant will persistently tryin' to sell something. How many times hear women phrases like 'yeah, these pair of shoes look so beautiful on you and you're totally wrong if you think they don't fit properly, just walk in these shoes a couple of weeks and then you even won't notice 'em anymore and they feel sooooo comfy.' Well, one of the reasons maybe why so many women have so many shoes in their wardrobe they simply can't wear without blood starting to drip (grin). So, even the most well-respected retail could try to focus on selling. Well, as this is what retail does.

So a brand then usually selects the retail-stores very carefully to give the end-customers the best possible shopping-experience and forcing the customers that way to see, feel, touch and give the pieces a try. I'm fine with this even that way some of the desired audiences simply can't get the possibility to get the pieces they might love. To 'maybe' answer now your question:

By refusing to run an online-shop, offering a lil' form prospects / usual retail-customers can at least send a request and ask is there's a chance to get the item shipped. Let's say, you do own a BBS-collection worth 100k and see online the 'last item on stock' you need to have but there's no chance to visit the store in Berlin (you're on vacation or on a business trip or just live far, far away), so offering a request-formfield at least allows you to kindly ask if you might buy that desired item online.

That way the store 'verifies' you as well as a possible loyal customer with knowledge of the brand and - this is indeed important - avoids the chance of a return: As the large 'players' on the market have usually several items of the same kind/size on stock they can afford that millions worth of products is been shipped around the world, but a retail with sometimes just one item on stock of every kind/size maybe cannot afford this as there's always a chance a loyal retail-customer passes by, asks for an item, and well, the item is currently shipped and _might_ get returned during the next couple of weeks.

As our customers shipped approx. 30 millions of packages in 2016 i have a pretty decent overview of return rates / return reasons and the value of items which are that moment 'owned' by DHL/UPS/TNT/FedEx and and the amount of prospects who might return the items weeks later. Shops like 'planet sports' even allows customers to return items after 365 days (!), so this is something not every retail simply can afford. So, offering at least a possibility to send a request for an item is at least some sort of compromise.

I fully can understand all points of view all of you meanwhile mentioned, e-commerce isn't the holy grail as it has advantages - and disadvantages.

Why me does not like that dark land, well, that's another story ..
;)

[Nickefuge]

There’s an avant grade store in my town who had a sale some time ago. Because most of their clientele consist of rich old women and a lot of them live in the hills and can’t make it to the store (because of either lack of time or surplus of frailness) the staff photographed all the sale items and offered a WeTransfer link for anyone who was interested. That way, one could inform oneself if there was anything worth checking out in 'real life'.
It seemed like a good compromise.

[barryooi]

@tyhsien: I may be mistaken about GBS (as he's pointed out above), but the back wall was definitely on sale last time I was there. I picked up a Deepti shirt in July, there was a bunch of Taichi, PH, ED there too on sale. I'll pop back in tomorrow and check.

@newp: You said "I wonder if these brands know their products go on sale." Perhaps I'm missing something, but when a store buys wholesale from the brands, do/should the brands have any say on the retail price of past season items? If yes, what happens if the store can't move the items for a couple seasons? Genuine question.

@mamoon: You're right, Zam did comment about the same thing happening with his own e-commerce store and his stockists in another thread. It's a tough spot to be in.

@GBS: Hey now, I'm not trying to tell anyone what to do. The whole point of this thread is to have a discussion so that I (and perhaps others who may also be curious) can understand the industry a little bit better. I see an inefficiency, and I'm just wondering why more stores don't open up their supply to the world, and I've gotten some very insightful replies above, mainly from Mamoon, who at least appears to come from the same boat as I. Perhaps my question and the situation I've described doesn't apply to you, in which case, I congratulate you on your success. You, sir, are evidently an artist, and you naturally take pride in the designs that you create, and may naturally be offended by any talk of business/financials. However, my question was primarily about the retailers.

Your analogy of a Michelin-starred restaurant experience works only to a certain degree. I haven't been to Darklands yet, but I have been to l'Eclaireur (and even the Sandrine atelier next door), and I agree that the shopping experience is incredible. Gorgeous interior, super friendly and knowledgeable staff. However, a Michelin meal is to be experienced right then and there; you can't take the food home and admire it, or eat it again. You can't compare an experience to actual ownership.

I'm also in no way recommending that everyone adopt the luxury retailer model of Net a Porter etc, or worse, Amazon. I'm talking about avant garde retailers here. Stores carrying brands with very niche audiences who already know/understand those brands, and for whom demand is already very high. These stores already operate some form of manual ordering via email, my question was, why don't they simply integrate an e-commerce platform to their existing websites?

It's true that I lack the experience working at an avant garde brand/store, but there really is no need for you to be presumptuous and condescending when you misread my comments and take my attempt to start a conversation about retailers for an assault on yourself. I'm a consumer myself, I have the highest respect for brands and retailers in this niche, and I have been completely respectful in all my comments. For the sake of proper discourse, I only ask that you do the same, rather than telling me to "shut my mouth and keep out." This is a forum after all, isn't it?

[Geoffrey B. Small]

clarification GBS is not on sale at Eastern Market

Geoffrey B. Small is not at Eastern Market and is not part of any 50% off wall there. The person who started this thread needs to learn a lot more about this business than he or she is currently spouting off at the mouth about. And he or she needs to begin respecting human beings and their critical role in the entire process a lot more. I would suggest a good ten years in the industry from trying to learn to make clothes him or herself, to working the floor and backroom in a small successful specialty retailer-- then finally coming on this forum and telling us all how to revolutionize everything and do things more "efficiently." Otherwise, despite his or her extremely misinformed views of our trade and metier, I would suggest they shut their mouth and keep out. We are doing just fine without you and without any more fucking e-commerce. Like Faust tried to gently point out, this business is not about selling detergent or widgets or software downloads. It is far more akin to selling food. And our food is like a home-cooked meal or an incredible dinner at a 3 star Michelin guide restaurant prepared for you by a master. First and foremost, it is an experience both physical and mental that e-commerce is absolutely incapable of providing and that reason alone is enough for us not to want anything to do with it. The last place I want someone to be introduced to my work after I have done what I need to do just to create it (and that is a lot if you know anything about my work) would be in an Amazon-type warehouse surrounded by drones, robots and slave workers---or worse your bedroom or living room being pulled out of a cardboard box like a piece off-white fleecewear. Do some homework. Get your butt on a plane and go see our work at the new Darklands 5.0 (if they let you), or the new Hostem in London, or Eth0s in Shanghai or Eclaireur in Paris and how it is presented (including the human beings who you will need to interact with) and maybe you will begin to get an idea that your stupid ideas about efficiency have nothing to do with what we are about-- which is to make the greatest handmade clothes in the world. And in order to do that, efficiency is about other things than e-commerce platforms, which for us is the most inefficient manner possible to approach what we do so well. For example you do understand the product has to actually fit the customer properly? And to do this the customer must be able to try on the garment(s) not just by oneself in a mirror, but with the trusted and knowledgable expertise of a professional tailor or shop staff person who can be there to assure the best fit and wearing capabilities for the customer including alterations--another area where e-commerce is an absolute total failure--and a major factor in the business, are you aware that many e-com firms are running 30-80 percent return rates on clothing purchases but never report these numbers to the public for obvious reasons? How many of them actually make money? The majority ramp-up sales to show phenomenal growth projections, and then sell themselves off to larger buyers in the usual tech-world Ponzi scheme of overvaluing future market share projections on stock assets. Net a Porter was acquired by Yoox, but wasn't making money. MyTheresa followed a similar story and is a big part of the sinking story of Neiman-Marcus Group which acquired it. And the biggest of them all Amazon, still doesn't report a profit. Yoox seems incapable of selling anything off its site without massively discounting it first. Ditto for Farfetch. All these merchants seem capable to do is continously devalue the industry. You call that efficiency. I call that a losers game. I know what I am talking about. I put in the ten years I mentioned above and more. And I made and sold a million dollars worth of one of my white shirts out of house via direct-marketing before you were probably even born... and the fundamental logistical, customer experiential and service, fitting over distance, merch transportation, fraud and return risks are the same as they were in the 1980's. Computer and internet advances have changed only part of the basic problems, and the biggest are still there for everyone to fight with, and they are fundamental. Do your homework better, neither our type of metier nor e-commerce in its current state-of-the-art forms is easy for anyone. There is a lot more to operating a successful business than you seem to currently understand and what you lack is experience. If you want BBS so badly, stop whining and just get your ass on a plane to New York, Berlin, Hong Kong or Paris and buy some, it's not that hard if you have the money and a hell of a lot more fun and rewarding. Or relocate yourself back into civilization. But don't use that as an excuse to barge in and start telling me and my colleagues how to operate and distribute our work at the highest level of the game in the world.

And don't confuse GBS with being in a store we do not work with currently and being on a fire-sale rack or wall there.

Go try to sell your e-commerce business consulting somewhere else.

Thank you for your kind and prompt attention to this matter.

Best wishes,
Geoffrey B. Small

[mamooon]

(...)
@mamoon: I think there are plenty of synergies between online and offline that many businesses, including those who operate in both channels, aren't taking advantage of, and you've already mentioned a few examples. By virtue of the small, targeted niche audience and pretty inelastic demand, businesses are unlikely to lose customers from one channel to the other. In fact, they deliver entirely different experiences, and cater to entirely different characteristics of customers...but who all share the same rabid demand for these products. I sincerely believe the e-commerce impact to traditional avant garde retail businesses will be much less adverse than say, GAP.

Jein (i.e. yes and no) as we then should not forget that as a manufacturer you might serve customers (b2c) _and_ resellers/retailers (on&offline) (b2b), so then it gets a lil' more complicated (out of my experience):

Like, if the manufacturer starts his own online-b2c-business his b2b-customers might indeed loose customers. You're absolutely right, overall it makes a difference if we're talking about a niche-portfolio or about big players, but in fact we lost a customer some time ago: He's producing mid-priced jeans which are sold all over europe and finally started his own online b2c-shop in 2015 with an overhelming success right from the start. Already after a couple of months his b2b-retail-customers complained about decreasing interest & turnover made with his products and at the finally high point they simply sort of blackmailed the company: Stop your own b2c-business and we'll continue to order your products for our retail-stores or we are going to cancel the contract with you. Well, so, the online-shop was closed as the b2b still created the most important turnover. Or think about adidas trying to 'protect' their b2b-retail-customers by tryin' to ban online-vendors selling their products on ebay and amazon in 2012. ;)

But i do agree as well as indeed the risks could be not notable when talking about niche audience and products, so there are for sure synergies between online and offline and running an own online-shop simply opens new opportunities. Actually i just try to avoid the buzzword 'omnichannel' as it could mean anything and nothing as still retailers aren't able to define their real needs or still are offering senseless services the consumer currently doesn't take care about (click&collect is probably the most often offered omni-channel-'experience' of well-known brands which turned out as a total failure over here).
;)

[tyhsien]

Visited them two weeks ago and chatted with the staff, as i can recall there's no such thing of that 50%.
M_moria was already limited in stock left and Elena Dawson FW17 just came in, so nope.

[newp]

Woah there, that's a bit of an over-exaggeration! I simply meant that the business of fashion trades in goods, and like any other business, is subject to the same economic principles of consumer/producer surplus. Inefficiencies are inevitable but can be remedied.

@newp: Eastern Market has a whole wall at 50% off, including all those brands you mentioned, sans CCP...

@mamoon: I think there are plenty of synergies between online and offline that many businesses, including those who operate in both channels, aren't taking advantage of, and you've already mentioned a few examples. By virtue of the small, targeted niche audience and pretty inelastic demand, businesses are unlikely to lose customers from one channel to the other. In fact, they deliver entirely different experiences, and cater to entirely different characteristics of customers...but who all share the same rabid demand for these products. I sincerely believe the e-commerce impact to traditional avant garde retail businesses will be much less adverse than say, GAP.

@faust: The main difference in costs in my opinion is fixed vs variable. Online businesses can be much more nimble in managing their costs, whereas a retail store can't just end its lease or fire its retail staff. For most online businesses, you would have to spend a significant amount of marketing dollars to stand out from everyone else selling the same thing. For avant garde stores, however, the competition is much lower, and thus your marketing spend wouldn't have to be as high.

@mamoon: Yes, the data collected across both channels can be used for some fun marketing strategies, but they're really not necessary for niche boutiques. I'm just interested in reducing the obvious inefficiencies; all that fun data stuff is more for bigger brands/stores.

@lowrey: The designers may view themselves as artists and that's all fine and good, but the retail stores are the ones taking a gamble by buying wholesale. Cash flow is a real problem for inventory-holding businesses, and any time something goes on sale, that's a hit on their P&L too.

Geoffrey B. Small, Deepti, Paul Harnden on 50% off in Eastern Market? I wonder if these designers know it goes on sale there. Afaik they stock m_moria, is it 50% off there as well?

[barryooi]

Really? You understand you are talking about selling fashion and not laundry detergent, right?

Woah there, that's a bit of an over-exaggeration! I simply meant that the business of fashion trades in goods, and like any other business, is subject to the same economic principles of consumer/producer surplus. Inefficiencies are inevitable but can be remedied.

@newp: Eastern Market has a whole wall at 50% off, including all those brands you mentioned, sans CCP...

@mamoon: I think there are plenty of synergies between online and offline that many businesses, including those who operate in both channels, aren't taking advantage of, and you've already mentioned a few examples. By virtue of the small, targeted niche audience and pretty inelastic demand, businesses are unlikely to lose customers from one channel to the other. In fact, they deliver entirely different experiences, and cater to entirely different characteristics of customers...but who all share the same rabid demand for these products. I sincerely believe the e-commerce impact to traditional avant garde retail businesses will be much less adverse than say, GAP.

@faust: The main difference in costs in my opinion is fixed vs variable. Online businesses can be much more nimble in managing their costs, whereas a retail store can't just end its lease or fire its retail staff. For most online businesses, you would have to spend a significant amount of marketing dollars to stand out from everyone else selling the same thing. For avant garde stores, however, the competition is much lower, and thus your marketing spend wouldn't have to be as high.

@mamoon: Yes, the data collected across both channels can be used for some fun marketing strategies, but they're really not necessary for niche boutiques. I'm just interested in reducing the obvious inefficiencies; all that fun data stuff is more for bigger brands/stores.

@lowrey: The designers may view themselves as artists and that's all fine and good, but the retail stores are the ones taking a gamble by buying wholesale. Cash flow is a real problem for inventory-holding businesses, and any time something goes on sale, that's a hit on their P&L too.

[Faust]

Thanks, mamoon!

[lowrey]

1. Yes, the designers have their own terms, but I don't understand why. It's a business, first and foremost. You should aim to have your products in the hands of your customers and fans as soon as possible. Exclusivity is a quaint idea, but it's an unforgiving industry.

There are actually plenty of designers for whom it's definitely NOT first and foremost a business (as in sell as efficiently as possible), but their life's work, their art or whatever you want to call it. I think your thinking fails right at the beginning where you assume that everyone has the same mentality or to some extent the same goals.

[mamooon]

Is it a total consensus that running an online store is cheaper? Free shipping and returns (at an increasing rate, now it's common for people to buy two sizes and return one), warehouses, merchandise off the floor while someone deliberates whether they want it, etc.

For sure this question can't get answered over-simplified as there are other costs for running an online-shop, but there are basically some things helping lowering extremely the costs compared to running a retail. A few examples:
- Prices for renting a retail location at downtown at a metropolis versus renting an old warehouse somewhere located in an outlying area. Some of our customers even built their own warehouse from the ground up for kinda bargain.
- The retail location needs sort of an attractive, interesting, modern, maybe more or less expensive interior as customers need to feel good, the warehouse just needs a bunch of cheap storage racks / shelfs.
- Over here the occupational taxes at downtown for running a retail are far more expensive compared to the occupational taxes running a warehouse in an outlying area
- As at the retail (hopefully) the stuff needs to be skilled and trained concerning products and consultancy, for pick-, pack- and ship-processes for running an online shop you just need an ERP and some untrained temporary stuff with absolutely no affinity to the assortment. And even people working at the online shops customer service sometimes simply use crm- and ticket-systems with pre-defined faq/q&a and copy&paste-templates.
- Retail meanwhile more often accepts also returns within 14 days, i.e. customers can get seduced to buy a bulk of stuff for the 'try it at home'-concept, avoiding to try clothes at overcrowded and overheated retail stores, so retail as well as online-shops nowadays have to deal with returns and exchanges and refunds...

Sure, ERP / shop-technology, packaging, contracts with shipping vendors and payment providers etc. create costs the retail partially can avoid and pure-player-online-shops often have a larger stock (well, if the last piece at the retail is sold out, than, bad luck, it's gone) to serve more customers at the same time, but the savings at the mentioned as examples _can_ be vast. And as you have more data collected about your customers this allows you to use clever algorithms for campaigns/marketing, even to calculate potential returns, to mention another example.

There's no universally valid answer for your question, but as you can see, there are plenty of interesting parameters to look at.
;)

[Faust]

Is it a total consensus that running an online store is cheaper? Free shipping and returns (at an increasing rate, now it's common for people to buy two sizes and return one), warehouses, merchandise off the floor while someone deliberates whether they want it, etc.

[mamooon]

Thanks, some interesting replies here.
(...)
@mamoon: very good explanation of the inventory angle, but platforms like Shopify have an integrated solution for POS and e-commerce, with integrated inventories. My own company runs on such a platform. Some apps can even separate inventories by store if you have a chain of stores. Anyway, these stores are so low volume, the chances of something being sold online while a retail customer is trying on the last piece is going to be rare. Returns and refunds can be solved with a small "restocking fee". Accounting issues should be minor, again considering the low volume of these stores. My small company handles high volumes of sales and returns, I don't see why it should be so difficult...
(...)

Basically you're right and platforms like 'Farfetch' help entering and learning about the eCommerce-market as long as a retail is afraid of running its own online-shop. But i would not agree that it's so simple and easy as you need to take care about all the mentioned subjects, like, you need not just to take care about the the shipping, packaging, payments, taxes/vat, invoices/credits, returns/exchanges, refunds, emails, overall corporate identity, keeping track of the stock, maybe syncing a 3rd-party-pos, also the customer care takes time and we have not yet talked about marketing-campaigns, sales/discounts and all the 'fun' stuff which needs to get done to take care about an awesome shopping-experience for the customers. Also keep in mind about the increasing complexity of ordering / pre-ordering products at the supplier/'factory' in an amount you might sell as the more products you have on stock the higher the capital commitment which could 'hurt' smaller niche-boutiques. And we're both aware that we're not talking about cheap products nor never-out-of-stock-items. Indeed and you're right, basically the 'logistics' and the needed 'technology'-matters can get solved - and there are interesting chances and opportunities; slowly retail is awaking out of the deep sleep and rub its eyes about the possible chances on e-commerce. But as some boutiques didn't succeed, others did. Running especially an international online-shop for rare, expensive niche products / luxury products isn't simply the same as opening an online-shop to sell grandma's knitted scarfs on a local market. Possible scam and paypal-disputes are just the unavoidable crumbs and partially even avoidable when using payment providers taking over the risk, for example... ;)

I met the founder of myTheresa some weeks ago talking about an upcoming project, so he introduced himself first and told a bit about how everything began about 15 yrs ago: even he and his wife started shipping out of a lil' boutique at first, he was writing the invoices 'manually' and his wife was picking and shipping the goods. If you have a look what's the company nowadays worth and how many packages they ship out of 'their' (they sold the company a few yrs ago) brand new warehouse, well, in that case it's a good example that retail really needs to think about an omnichannel-strategy. And there are even providers of logistics helping, like brands simply asking Yoox to take care about, well, basically, everything. The brand delivers the goods and that's it, more or less, Yoox creates the shop, takes care about logistics and payments and customer service and everyone's happy. Well, not everyone:

The retail maybe then looses (local) customers as people change the way they do shop, switching to convenient eCommerce. And because of lower costs of running an online-shop compared to the retail, well, the online-shop then can offer a broader selection, attract more customers and finally the retail's closing its door and dyin' slowly. (Well, okay, that sounds like a fairy tale, but basically this is what's also happening, i.e. selling products online creates benefits but also creates risks.) Recently 'verypoolish' closed its doors (retail & online) with some dubious statements. Honestly, the store wasn't able to compete anymore with the overhelming assortment of highbrandfashion offered online. So, after all the 'bla' in short: "going online" has two sides of a coin.

Nevertheless, nice to hear that your company runs an online-biz, maybe you'd like to send me the link via pm as i am curious.
;)