Consumers searching jackets on The RealReal can easily find a Stella McCartney jacket for $295 — marked down from an estimated retail price point of $1,155.
While impressive markdowns may initially lure consumers, data science and technology are instrumental tools in maintaining loyalty. The RealReal and other e-commerce marketplaces have manifested a sweet spot to appeal to deal-savvy consumers — particularly the ever-coveted Millennial set — with easy to search, even easier to buy and seamless omnichannel integrations. And while traditional retailers and established brands stumble through the industry’s digitization, these elevated online shopping sites have devised platforms and correlating strategies to thrive in a shrinking field.
Under the hood of these web sites reside well-oiled technologies that collect data to inform future programs. “At the onset, most of The RealReal’s customer knowledge was very transactional — based on purchasing or consignment or ex-post facto. We now have a much better understanding of the motivation or the predictive variables that affect these actions,” said Rati Levesque, chief merchant at The RealReal. “We use this data to refine our message and to predict products that one could buy or consign. The RealReal has also sold over five million luxury products to date so we have developed a pricing algorithm that allows us to price items based on what the market will pay for them.” There’s a reason behind that $295 price tag.
Dote, a self-coined mobile mall app, has maximized on brands’ need to improve online conversion, specifically via smartphones. Lauren Farleigh, founder and chief executive officer of the app said, “Few retailers have full access to the mobile opportunity because people don’t want 20 different apps for every store they shop, and the popular [social] apps don’t have clear paths to purchase. Dote allows retailers to be in the pocket of over one million users. Our average active user comes back to Dote 15 times a month. Most retailers we work with see monthly site visits one to two times per month, so Dote represents an enormous opportunity to get in front of users much more frequently.”
The visitation rate has much to do with delivering refined, personalized shopping journeys. “Dote leverages shopping data to inform our algorithms on what to show users and when to show it to them. We see purchasing patterns across retailers and categories that no one else has access to. We know where a user is shopping when she isn’t shopping at your store. We see behavioral markers that indicate exactly when she is most likely to make a purchase and can be very strategic about what we put in front of her at that moment,” said Farleigh.
For the luxury corner such as The RealReal’s niche, curating data collection whilst ensuring authentication requires a multi-prong, full-service CRM system that’s folded into its holistic digital strategy. “We are a data-driven company and data informs all of our decisions. We learn when a brand or item is becoming more or less popular and can adjust our pricing and merchandising strategies to reflect those trends. We also understand the affinity of brands or items across demographics, geography and brand associations,” said Levesque.
Conversely Dote’s retail partners are leveraging visibility to shoppers who are increasingly researching and spending on their mobile phone – a venture that’s largely proved a consistent burden for clunky outdated systems. According to NewStore’s “2017 Mobile Retail Report” retailers and brands have done little improve in the online arena in the past year.
“Today brands are challenged by legacy applications, organizational silos, and point solutions,” the report said. “All of these factors act as barriers to creating a true omni-channel experience, one in which consumers can buy anywhere, at anytime, through any channel, and still feel the same wonderful personalized experience throughout.”
According to Adobe’s Digital Index, online sales surmounted for $90 billion of holiday spend in 2016. And with the upcoming season looming, a retailer’s omnichannel profile stands in the way of taking a piece of the profit or suffering a huge hit.
“When you look at the data, Millennials and Gen Z are spending 68 to 70 percent of their time on their phones watching content. One-third of their purchases are motivated by online reviews and recommendations. And they are more likely to purchase on a mobile device than any other generation,” said Farleigh.
Having Real in its name puts the press on the company to ensure consistent quality. With its web site, app and soon-to-open physical store, The RealReal deploys its data to confirm product authenticity and build trust — and loyalty — with its shoppers, which goes far with wary Millennials.
“Luxury consignment cannot succeed without trust, authentication and curation. To enable this, we needed CRM solutions to manage our client relationships with customers and consignors, single stockkeeping merchandising and personalization, supply chain management and in-house authentication expertise to provide the best value to our consignors and buyers” Levesque continued. “Our proprietary digital platform allows us to scale this into an omnichannel environment with consignment pickup in up to 40 cities.”
This solution-based thinking has served The RealReal, it plans to open its Manhattan store next month. It’s a lighthouse for best practices — spotlighting that while a silver bullet to resolve friction points has yet to exist, devising answers to the values and priorities of consumers through thoughtful and purposeful data collection and analytics serves as a guiding light. That optimally priced Stella McCartney jacket for $295 doesn’t hurt, either.
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