If you think a retailer’s main concern should be making the sale, think again.
Pop-up stores and concept showrooms may have shifted the focus away from chasing in-store sales, but ultimately, the model relies on the retailer closing on the transaction — and that’s problematic, Vibhu Norby, founder of B8ta, believes.
His three-year-old company wants to upend the way retailers work by providing retail stores as a subscription service. In conversation with Alexei Agratchev of RetailNext, a store analytics firm, Norby said, “Nothing is sacred, including the business model.
“The only way to truly move away from the sale being the core we care about was to not make money from that,” Norby said. “No store exists today that doesn’t have that as a focus. We reinvented the metrics, the software, the way companies view success in our store is different.”
With B8ta, brands rent space in the company’s stores — be it a two-foot display or an entire room — paying a monthly subscription fee. The goods are handed over on consignment and 100 percent of every sale goes back to the maker of the product.
In-person experience is crucial to customer discovery, but the “traditional retail metric is just tracking that last part of the funnel,” he continued. “We met with one of the biggest retailers in Japan here and they did not know how many people were coming into their store, they only knew how many items that they are selling. We measure the rest of the activity, the awareness that we’re generating, the engagement around every product and the demonstrations and we do that both using cameras with machine and associates, we call them B8ta testers. They track every demonstration they provide for quality and for other variables and that information we package up and give to our brand partners in real-time through software and they can use that information on how to evolve their business.”
Each store they operate is profitable, Norby said, as subscriptions provide a predictable income stream while consumers are able to walk away with the information they need to make a purchase decision.
Norby also suggested that retailers are leaving money on the table and could look at earning revenue from other store interactions.
“Here’s the crazy thing: Once you stop thinking about the sale as the most important metric, and you start looking at other metrics — mostly for every one sale, 30 or 40 or 50 times a customer is learning about a product they didn’t see before,” he said. “I wonder why retailers aren’t monetizing all that other stuff.”
Although its core focus is on consumer electronics, the company has diversified into furniture and some hard goods categories. It would also like to get into apparel and beauty soon.
“I think the same challenges for electronics companies getting to market, managing opening retail stores applies to any direct to consumer brand applies to reach an audience,” Norby said.
Agratchev pointed out that “the business model in some ways applies better in beauty and fashion as there are more brands being launched everyday that need a platform like this.”
Norby agreed: “If I could have done this over again, I probably would have done this in beauty but me and my co-founder just didn’t have any experience in that category.”