s we move more into an era where the main social networks are starting to become established, where forecasted growth slows compared to previous years, everybody wants to look into the next 'trend' or high growth area. New businesses like Uber and Airbnb have disrupted industries, largely thanks to increased confidence and trust in the consumer internet. I mean, try telling people 15 years ago that your next holiday will consist of you staying at strangers' houses and you'll be chauffeured around not by the local taxi service but by the actual locals.
This is the result of an overall change in perception of the internet and its importance - not everything is a scam and not everyone on it is 'weird' or 'creepy'. Now, the internet has been firmly adopted as a legitimate place to do business, meet new people, find new products/experiences as well as many other functions.
Individuals were quick to benefit from social media, cultivating large, engaged and focused followings as a result of creating appealing content. However, many large brands have struggled with the quick shift, with many overestimating their significance in the lives of the general public. Gradually, many brands, especially those owned large CPG companies started to realise that people were not purchasing their products out of strong loyalty and affinity for the brand, but simply due to convenience. Simply put, they have effectively placed their products on the shelves of shops the end consumer frequents to purchase goods.
Unfortunately for them, this is an area the internet has also disrupted, with consumer confidence in online shopping rapidly increasing especially since lockdowns made this the only option for some to shop. Ecommerce sales are set to account for 22% of all sales by 2023, up from 3.5% just a decade ago, growing at a rate of over 20% YoY. Large investment in technology, safe payment systems like PayPal and Stripe can be attributed to this as well as an effort to improve logistics and distribution to ensure items arrive quickly to the end user following payment, reducing the fear of being 'ripped off'.
However, one of the biggest impacts has been the continuous development of ecommerce platforms like Shopify, BigCommerce and Magento. These have lowered the barrier of entry for people to sell products directly to others and minimise the risk involved in building a successful brand. This has resulted in many big brands being 'born' on the internet. Gymshark and Fashion Nova, which was the highest searched fashion brand of 2018 according to data from Google are noticeable examples. They are definitely not the only ones with brands in various categories, from nutrition, to prescription glasses, shampoo and even mattresses being successfully sold online.
Many of these brands with their roots online noticed that the audiences of people with high followings who create content synonymous with their brand; think fitness pages for Gymshark or technology for Warby Parker, could be a potential area to find new users. Instead of dedicating their marketing budgets to traditional media formats like TV or freeway billboards, they chose to explore the opportunities for partnering with those who cultivated an engaged following - 'influencers'. Initially, these partnerships started out with simple value exchanges, generally free items for promotion on their page.
This became highly successful, with brands utilising gift codes to measure the effectiveness of partnerships, with many being able to attribute a high ROI to this strategy. Originally, people were highly selective and often reluctant to feature brands on their pages, believing it would impact the perception of them from their audience. In contrast, followers typically reacted well to posts featuring products sent through by brands, putting them on to new products and product types they had not yet discovered.
More and more brands caught on to the benefits of this relatively new form of marketing, an adaptation of partnerships with 'mainstream media' celebrities, watching a combination of companies built on ecommerce platforms, backed by a few key influencers and user-generated content become multi-million dollar enterprises.
Daniel Wellington is a great example of this, a minimalist watch brand started in 2011 that has grown to over $200 million in sales, over $100 million of that profit - with founder Filip Tysander owning 100% of the company which is almost unheard of with traditional retail. Now, for many, unlocking further growth means transitioning from just being an online or 'Instagram company' to having a physical presence.
House of CB, founded by 27-year old designer Conna Walker has made this crossover, launching physical stores in the United Kingdom, United States and Australia. Daniel Wellington is also distributed in over 6,000 retailers in 75 countries. They are capitalising on the momentum built online and familiarity with their brand driven through association with influential social media personalities to create a tangible experience for customers.
More people are experiencing their first interactions with brands online, often through a third party and word-of-mouth recommendations have always carried significant weight into influencing purchase behaviour. The problem many are facing as they attempt to scale associations with influencers revolve around inauthenticity, simply, being they've diluted any meaning behind the brand and just want to appear against anything as long as they secure the extra impressions. An example I've noticed is a brand that offered products that 'straighten teeth' appeared within the feed of someone who early shared that they recently had veneers put on...
As more brands started to realise the impact presence within the feeds and stories of those who built large followings, many fairly requested financial compensation for this type of promotion - with brands previously offering affiliate relationships. High returns on investment and increased sentiment shown on social media, indicating a closer relationship with customers seen by companies meant they had no issue directing spend towards these influencers. After all, the main aim of effective marketing is to meet potential customers where their attention is focused and provoke action. Consumer behaviour was shifting and attention moved from traditional media to social media.
To master online-to-offline retail in a world post-Covid lockdowns, you need to make it 'cool' to shop at your store. People have rapidly gotten used to staying indoors and having things delivered to them, why should they come to you?
Cool isn't self appointed, unfortunately you need the validation of others and right now, social media is carrying the most weight in a similar vein to sports in the late '90s and early 2000's. Lebron James could dominate basketball in any shoes, but Nike knew the value of associating with somebody who would turn out to be one of the NBA's best ever players, inspiring a generation of athletes to try follow in his footsteps, down to their footwear. Fashion Nova have built a brand with over $400 million in revenue, largely due to their partnerships with many fashion conscious women on Instagram.
Now, significant attention is not just limited to top athletes and models, but tech enthusiasts, fitness fans, personable makeup artists, gamers etc. They all create content for highly engaged audiences, your aim as a retailer is to find ways to collaborate with these creators or the platforms that host content to build relevance within the communities they reach. Good examples can be found within the streetwear and sneaker community, retailers Flight Club and Stadium Goods feature prominently in Complex's 'sneaker shopping' series where they interview popular personalities, finding out about their fashion interests, extracting unique anecdotes.
Both stores have reaped the offline benefits of having online significance within the cultures associated with their brands, with people flocking to stores, particularly Stadium Goods NYC and Flight Club LA. They go to pick up exclusive trainers and follow the footsteps of some of their favourite personalities, taking pictures to replicate the shots seen on Complex. Flight Club merged with GOAT earlier this year to become the world's largest sneaker marketplace, whilst Stadium Goods was recently acquired by Farfetch for $250 million in an attempt to bolster their presence among younger audiences who are interested in obtaining luxury footwear.
The key to mastering online to offline retail in 2019 and beyond, is through treating it as one experience, not two separate entities as many do now. Companies, especially large ones, have different departments focused on the in-store experience and a brand's online presence, the two also do not communicate much so there is a lack of consistency between the two. You need to be involved in video content people within your target customer group are actively consuming, whether self-produced, or through other people and entertainment platforms. Ideally, you would have a combination of both. The two sneaker stores have generated large followings on Instagram, bolstered by the effects of their appearances on Complex.
Word is powerful and travels fast in this social media era we are living through. Some experiences, such as shopping for a new mattress, are initiated with initial interest online, followed through offline through testing potential options, then completed either online once satisfied. To ensure you cut through competition as market segments become more saturated, your brand will likely need to be on the radar of key 'influencers' who will be involved in content that provides much needed validation, guiding key purchase decisions which drives more business to you ahead of ample competition.
For retailers, it’s becoming increasingly difficult to engage with millennials, who are less receptive to digital ads and spending more time on platforms like Netflix and YouTube where ads aren’t a prevalent part of the experience. Most retailers seem to have been treating YouTube like an extension of their website, rather than a tool to build connections with a large pool of people with diverse interests and intentions.
At Limitless, we develop strategies for YouTube, where we take an unconventional approach to brand-created video. Helping brands unlock their distinctive value to their ideal audiences and convey that through engaging videos.
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