Avant garde retailers and e-commerce

[barryooi]

I work in a women's fashion company that began online before moving to an omnichannel strategy, so I'm very aware of how important a good online shopping experience is. That said, why do practically all retail stores that carry avant garde brands stay away from a full e-commerce experience?

E-commerce platforms have proliferated, and it's mad easy and affordable these days to start up an e-commerce store these days. Most avant garde websites require you to send an email of inquiry, followed by back and forth email chatter before proceeding with a manual Paypal transaction. This is a process that is incredibly inefficient and needlessly invites suspicion and worry.

The only reasons I can think of are:
1. Some brands (Deepti comes to mind) are against the dilution of the exclusive luxury shopping experience. Hence why some webstores hide certain brands, or they put up a "Price on request" sign on those product pages. This can be circumvented with a simple private member login. You could even charge a recurring fee for this.
2. The assumption that it's too much work/too complicated/would require hiring a developer etc. Bollocks. Magento, Shopify etc are dead simple to use.
3. The store's insistence on personal touch and abhorrence of the impersonal nature of e-commerce. Nothing is more impersonal to me than having to wait for email responses to make a purchase. You're filtering out interest at the first and most important level, the impulse level. Leave the emails for more detailed inquiries and indecisive folks.

Exclusivity is a weak excuse when the designs and prices alone are enough to separate them. Plus it's downright contradictory when they post their products on social media.

Perhaps this reluctance to adapt to the evolving nature of demand and consumption is the reason why many of these stores (and brands, by extension) are struggling? Or am I missing something else entirely?

Man, I hate inefficiency. I'd love to help some of these stores set up their e-commerce stores.

[newp]

1. It shouldn't be circumvented. Designers have their own terms and conditions, trying to avoid that is disrespectful (and I can name only 4-5 designers with this rule: Geoffrey B. Small, Deepti, Paul Harnden, Elena Dawson, partial m.a+).
2. Sometimes it's just pure laziness and being conservative. Stores don't want to move on, also paypal payments could be a very big problem for small shops because of scammers.

I myself know only 2 shops dealing with the model you described (inquiries and manual payments), so I don't think that's the case. Small shops are staying out of online sales, large shops do it anyway.

[barryooi]

1. It shouldn't be circumvented. Designers have their own terms and conditions, trying to avoid that is disrespectful (and I can name only 4-5 designers with this rule: Geoffrey B. Small, Deepti, Paul Harnden, Elena Dawson, partial m.a+).
2. Sometimes it's just pure laziness and being conservative. Stores don't want to move on, also paypal payments could be a very big problem for small shops because of scammers.

I myself know only 2 shops dealing with the model you described (inquiries and manual payments), so I don't think that's the case. Small shops are staying out of online sales, large shops do it anyway.

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.

2. Paypal can be awkward, admittedly, but they do offer a layer of protection. Plus, some platforms like Shopify have their own payments gateways which are much easier to navigate.

There are many more than 2 such stores. Off the top of my head: Darklands, Ink's hidden designers section, Hide, Frida, L'armoire, BBSNY.

[darkart]

They just dislike fast fashion. It should answer all your questions.

I am a long time customer in Ink (In person) and darklands(online store)
I think both of them have their own way of selling stuff.
For example Ink, they hide Deepti, BBS, CCP, MA+ mainly.
MA+ doesn't let them to post stuff online.
BBS, They just unable to meet the local customers. To be honest, I think they have the best sales of BBS stock over the world. They used to sell few hundred waxed P13 in just one season online and instore. FEW HUNDRED. And due to the good lord BBSNY. A lot of small boutiques dropped BBS. I don't want to talk about this here.
CCP, Design just hate fast fashion. Production of a pair of sneakers takes 9-15 months depends on the desire of model and colorway.
Deepti, similar to CCP, they don't even want to show their collection. Not until they drop in stores. Why would they want to sell stuff online.
Basically there are a lot of constraints between brands and retailers. As long as stuff sells good and retailers are happy. They don't want to do any big changes to piss anyone off.
Big brands such as BBS, CCP, MA+, Geoffrey B.Small give good reasons customers to visit the store. And as long as retailers play by the rules, top designers could help enhancing their store status and sales.

[mamooon]

I work in a women's fashion company that began online before moving to an omnichannel strategy, so I'm very aware of how important a good online shopping experience is. That said, why do practically all retail stores that carry avant garde brands stay away from a full e-commerce experience?

E-commerce platforms have proliferated, and it's mad easy and affordable these days to start up an e-commerce store these days. (...)

Basically even it might be easy and affordable to open an online-shop, still what we call 'omnichannel' isn't _that_ easy as the complexity of data which need to get transmitted in real-time is oven underestimated. In fact, i am working for a company providing an ERP/WMS for e-commerce and some of our clients also run a classic retail-store and most of 'em still avoid to introduce a full omnichannel-experience because this needs a complex architecture. Just to mention a few things which need to be thought of:
- If you ship out of a point of sale/retail-location, the stock needs to get submitted in real-time to the online-shop, i.e. the pos-system needs to get synced 24/7 with the online-shop/shop's erp/backend to avoid selling items not on stock anymore as a local customer just bought it. Especially in the segment of luxury items you need to avoid that online-customers get disappointed because after they 'bought' the item you might have to inform 'em that the item is meanwhile sold out. In that case there's a chance you lost the potential customer forever, have to take care about a refund in case he paid already in advance, you might have to cancel the invoice your shop maybe has already created, i.e. there's a lot of work in case you have to cancel an already placed order.
- Even the item seems to be on stock, maybe at the point of sale a local customer took the item and tries it, so meanwhile you try to pick the item and simply don't find it. So, you need to wait 'till the local customer decides for/against the item. On the contrary, maybe a customer ordered online and as long as you don't shipped the item, you need to block/reserve it, i.e. you might have to take it out of stock, but: for online-customers there's always a chance that they'll return it. So if you dealing with a local customer and of one item there's just one left, you need to make a decision to whom to sell the item to. To a loyal local customer? To a loyal online customer? You might want to take the risk an online-customer will return the item as especially over here in europe you usually have the right to return an item for whatever reason. So: You need sort of a logic to make decisions, i.e. this is something software doesn't do.
- Stuff like click&collect or order online & return at a store brings up enormous difficulties concerning the invoicing and returns and refunds. Imagine, someone orders online, pays with his/her credit card, so the shop usually pays a transcation fee up to 3%, a few days later he visits the store to return the goods and asks for cash. That way you lost money, the POS's cash account book suddenly isn't "correct" anymore and if you're running different ERP (POS versus online-shop) your bookkeeping is going nuts because they finally have to match these kind of 'events'.
These are just a few examples. The company i do work for provides whitepapers (in german language only, sorry) why 'omnichannel' COULD make sense and why still so many retailers give a s... about 'omnichannel' as it's not as easy as it seems.

Darklands - for example - deals with prospects in a way they're trying to avoid at first instance returns of online customers, that way a huge part of their capital isn't get shipped around the world for 14 to 21 days. I dislike as well the way you have to be sort of a petitioner if you'd like to order at Darklands for the very first time and i had bad experiences with one of their employees, but i still can understand why they're avoiding to run an regular online-shop.

So, setting up an e-commerce-store is just one part, implementing the dataflow (stock, payments, invoicing, reservations, returns, bookkeeping...) of the online-ERP and POS is usually what makes the omnichannel-stuff really complicated and so many still try to avoid this as connections of different systems is usually very expensive. ;)

[newp]

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.

2. Paypal can be awkward, admittedly, but they do offer a layer of protection. Plus, some platforms like Shopify have their own payments gateways which are much easier to navigate.

There are many more than 2 such stores. Off the top of my head: Darklands, Ink's hidden designers section, Hide, Frida, L'armoire, BBSNY.

1. It's easy, low and limited stock and high demand. Geoffrey B. Small is a perfect example: if you produce 1-2 entirely handmade pieces for each garment of yours by valuing quality over quantity by a mile plus the nature of your garments is that it should be experienced and appreciated in person it's quite understandable you will try to limit the distribution to: 1) the limited amount of stockists when you can choose best of the best; 2) the brick and mortar model. Since the demand is already very high and you can't expand your means of production because of the very high quality of people working for you, limited amount of fabric produced etc. etc. it naturally comes to this.

Still, even one item scammed from a small shop could result in a heavy loss. I don't want to describe scamming techniques here but trust me they do exist. They just don't take the risk.

[barryooi]

Thanks, some interesting replies here.

@darkart: Fast fashion probably isn't the right term you meant; it doesn't just mean getting the product quickly into the consumer's hands. But that's another discussion entirely. Interesting insights into the brands, and I can see their point of view, but it seems a bit superficial. From an economics angle, there's significant deadweight loss.

@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...

@newp: Point taken with brands with extremely low quantities produced. That said, if you visit these stores, you'll still see heaps of stuff on sale, some even from like 3-4 seasons ago. That's a clear inefficiency, part of which could be solved by opening up your supply through an online channel.

The most convincing argument appears to be the risk of scam, which can be very burdensome in terms of the time it takes to resolve them (especially Paypal disputes, fuck Paypal disputes.) However, with the infrastructure set up correctly (which doesn't cost a lot, mind), the risk of this happening is rather low.

Maybe I'm just bitter I live in a city that doesn't stock enough BBS...

[Faust]

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.

2. Paypal can be awkward, admittedly, but they do offer a layer of protection. Plus, some platforms like Shopify have their own payments gateways which are much easier to navigate.

There are many more than 2 such stores. Off the top of my head: Darklands, Ink's hidden designers section, Hide, Frida, L'armoire, BBSNY.

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

[newp]

@newp: Point taken with brands with extremely low quantities produced. That said, if you visit these stores, you'll still see heaps of stuff on sale, some even from like 3-4 seasons ago. That's a clear inefficiency, part of which could be solved by opening up your supply through an online channel.

I don't know any store with a lot of GBS, Deepti, CCP, even PH lying around, especially on sale.

[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.
;)

[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]

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.
;)

[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.

[Faust]

Thanks, mamoon!

[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.