IDG Capital Partners has invested in 18 Chinese e-commerce startups this year.
Threadless has closed its one physical store but found other ways to get its artist-designed T-shirts and other products into bricks-and-mortar stores, as CEO and founder Jake Nickell explains.
The past couple years I’ve noticed a significant trend on the rise: strictly e-commerce sites expanding their presence to include physical bricks-and-mortar locations. It’s an interesting move to witness, considering common sense would indicate e-commerce retailers doing the opposite: pushing bricks-and-mortars off the map. After all, how could bricks-and-mortar stores compete with the likes of Amazon, eBay and fast, free shipping?
But crazily enough, well-known e-tailers like Fab.com, Warby Parker, Bonobos, Piperlime, and most recently, BaubleBar, have all taken a stab at this “reverse move.” Even e-commerce companies yet to have a full-fledged physical location, like Birchbox, experimented with pop-up shops first to give target customers the chance for a hands-on shopping experience.
And hey, I’ve been down this road with my own company, Threadless, which supports independent artists by printing their designs on products like T-shirts, iPhone cases, and wall art. We established ourselves first and foremost as a digital company, then tried our hand at opening a bricks-and-mortar location. While our physical store has since closed, the experience taught us a lot about expanding into the physical retail arena, and opened our eyes to other ideas for breaking into that environment.
So, why are e-commerce sites catching onto this trend, and what did we learn at Threadless? I’ll share with you a bit of the insight we gathered during our own process, and our ultimate decision to close shop and leverage partnerships instead to best stimulate our company’s growth moving forward.
Brand before bricks
It’s no secret: The digital arena is way more flexible and forgiving when kicking off a new business. E-commerce companies have the opportunity to build awareness among consumers, press, and investors as well as evaluate and modify their brand identity before making an expensive capital investment in a physical space and accompanying assets.
Basically, digital brands have a unique chance to experiment with their personality, efficiently testing which messages resonate with their target audience and which fall flat. Since a strong brand presence is essentially what attracts and maintains an engaged consumer threshold, solidifying it against measurable data becomes really important. This is especially so when e-commerce companies consider expanding into bricks-and-mortar stores: Creating physical brand assets is a costly investment, and, ideally, should only be executed once the numbers prove that the branding connects with the company’s audience.
After our establishment in 2000, the concept of Threadless—which relies on our interactive community to vote and decide which designs go into print—resonated with our audience fairly quickly. However, we took great care in the development of our true brand identity, and because we were living only online, we had the time and opportunity to do so. We considered expanding our model only once we felt that new members were engaging with Threadless because of brand recognition, not simply word-of-mouth.
Consumer-driven business decisions
There’s a lot to learn out there, and the digital environment sets you up for success here. The wealth of information e-commerce businesses gather from their online customer base can inform all sorts of smart business decisions when considering the move to brick-and-mortar. Data regarding sales trends, product insight, consumer demand, profitable locations, and more allow companies to tailor in-store experiences accordingly, so straight off-the-bat, you’re setting up physical stores for a much higher success rate.
Many years back, Threadless set up a vendor booth at a Dallas music festival armed with merchandise. It was our first attempt at selling T-shirts outside of the digital space, and we were ready to kill it. However, we hardly sold anything, and basically tanked. We were sort of dumbfounded at first, but then it hit us: Our brand and concept had become so distinct, that a more traditional retail environment wasn’t communicating our story and, therefore, not attracting our demographic.
When we decided to open a brick-and-mortar store in 2007, we based much of its concept on that learning. Instead of setting up the everyday shop, we essentially re-created our digital experience in-store. Monitors above a stack of tees showed a scrolling feed of community comments for the design, much like one would find for each design submission page online. At checkout, computers snapped pictures of customers wearing their new tees. The customer’s picture instantly filtered to large screens in the store’s front window, emulating the pictures we featured online of members in their new tees. Even our entrance and exit mats played a role—both shaped like logs, one read “log-in” while the other read “log-out.” It really is all in the details: These efforts helped us both distinguish ourselves amongst a crowded marketplace while also resonating distinctly with our audience.
A unique opportunity for partnership
Early this year, we closed our Chicago retail location. While a tough decision, we felt it time to shut some doors (literally) and open others. Namely, partnership and licensing opportunities, which is basically another pathway into bricks-and-mortar without building the physical space yourself.
Our experience adding a physical retail shop to what was once an entirely digital platform taught us an important lesson: A helping hand in retail can be both immensely beneficial and the key to company growth. If you’re currently a digital company and the move to bricks-and-mortar seems out of your league, consider leveraging partnership opportunities instead. They offer your products a unique entrance to a physical retail environment without the commitment and financial investment of opening your own.
Two years ago we launched a partnership with Gap, where the retailer featured several of our designs in-store nationwide. We worked together closely to create an area within each Gap that reflected our brand, including digital components like we had in our own store. Powered by the strength of our brands and the mix of both our core consumer groups, the line exceeded our expectations. A successful partnership with Redbox, where we sold T-shirts in vending machines in malls and grocery stores, introduced our physical product to a new demographic in ways we could never have done on our own. Our current partnership with Recycled Paper Greetings, where we featured our designs on greeting cards, put Threadless on Target shelves nationwide. And we’re only just beginning!