This is an excerpt from our latest ebook “The brick and mortar arms race: Omnichannel expectations that are shaping the storefront” by Ryder Ecommerce by Whiplash partner eZCom, who delivers innovative, cloud-based B2B and D2C supply chain software solutions to major retailers.
For a nascent brand, e-commerce offers a productive sales channel with a very low barrier to entry. An online store backed by savvy marketing can gain customers quickly without the need to develop retailer relationships. As a result, there’s no shortage of success stories from direct-to-consumer (D2C) digitally native brands. But there is a follow-up chapter for these brands—and it centers around the race to the storefront.
At some point, even the most revered online-only brands realize their growth is limited if they stick to a single sales channel. Fact is, people are still going in-store to shop—in 2022, some analysts predict that brick-and-mortar sales will account for 83% of all retail purchases.
For brands that found their footing online, that’s a lot of purchasing power to ignore. More and more digitally native companies are moving to expand their buying audience through traditional retail outlets, realizing it’s necessary for further growth. Why? It turns out that even the internet has a ceiling.
With a solid online presence established, these brands have an advantage when they begin developing relationships with established retailers or seeking capital to build out their own brick-and-mortar footprint. They may be new to the sales channel, but they have also cemented a reputation and developed a consumer following.
When they move their products into physical locations, these brands also bring a different approach to retail. Their service-oriented formula resonates with consumers, including Gen Z shoppers, who may want to touch and try products in a store before making a purchase online.
“Online-only doesn’t work. You still need stores. I think that’s why they [internet retailers] generate so much excitement—because they’re this kind of amazing testament to the power of physical retail.” — Michael Chernofsky, Placer.ai
It may be more accurate to say that online works—but only up to a point.
Larger success, further scale, and continued growth demand a physical store presence, whether it’s through partnerships with established retailers or the build-out of brand-specific stores.
Of course, moving from an internet-only strategy isn’t just a matter of flipping a switch. To sell through the wholesale channel, relationships with retailers need to be built.
Stores that are the most lucrative outlets for brands also tend to be the ones that can afford to be selective with their inventory. Online brands will need to make a strong case to be included.
Once a deal has been struck, the work is far from done. Brick-and-mortar retailers and major online marketplaces like Amazon or Walmart rely on a data format called electronic data interchange (EDI).
With EDI, transactions are completed through the exchange of specific documents, ranging from Purchase Orders to Advance Shipping Notices. Every document is assigned a number code that is always used, and the effective use of EDI adds efficiency throughout the supply chain.
Retailers rely on EDI to ensure that their own operations are not just seamless, but cost-effective. The focus on just-in-time inventory means that stores want a constant flow of goods and aren’t interested in filling their own distribution centers or stores with excess product.
EDI is a critical component of this agenda. Products need to arrive at specific locations in specific amounts at very specific times. EDI replaces back-and-forth email exchanges with a very specific information flow—it can speed up business cycles by more than 60%.
Retailers require that brands selling in their stores be compliant with their EDI requirements. Mistakes are penalized with chargebacks that are costly for suppliers, and productive relationships are damaged when items don’t land on shelves as planned.
Many consumers have gravitated to online brands because of their commitment to a higher level of customer service. The successful ones typically have generous return policies, ample support staff, and products that are available to ship quickly. To protect the equity these brands have built online, it’s important to replicate these qualities in brick-and-mortar retail locations.
In addition to ensuring that products are presented in an appealing way, inventory and fulfillment are critical. It doesn’t help a brand if their items are available to see, touch, and try in physical stores if the selection is thin, or if the colors and sizes are limited. For online brands to be successful at wholesale, the very qualities that captured consumer attention need to be continued across every channel. With EDI managed by a service-first provider like eZCom, that happens.
Clearly, inventory management and fulfillment are critical to retail relationships. That’s precisely why integrating EDI software and your WMS (warehouse management system) is so valuable.
When an EDI platform and a WMS are in lockstep, costly mistakes are eliminated. Inventory counts are always accurate, and fluctuations in demand can be forecasted. An integration process requires developers from both your EDI provider and your WMS to work together effectively, and it’s extremely beneficial if they have already established a strong relationship with a proven track record.
In other words, choose your EDI provider and your WMS in concert, knowing that your most efficient, productive workflow will be driven by seamless integration.
Successful digitally native brands can accelerate growth by moving products into the brick-and-mortar sales channel. It’s vital that brands recreate all the elements that drove their initial success—that visually appealing website should translate into exciting in-store experiences, the branding should be consistent, and the fulfillment process should be swift.
With the right partners for EDI and your WMS, great online storefronts can become standout physical locations. Make sure you choose yours wisely!
Enjoyed this extract? Check out the rest of our eBook on how the COVID-19 pandemic has shaped consumer expectations for fluid retail journeys: