So in the last video, we had a discussion about all the limitation of a direct to consumer business
model.
Now, in this video, we will understand how these consumer brand.
And implement the omnichannel strategy so that they can go deeper into the market.
So in this video, we're going to talk about a unique strategy that all these brands are using right
now so that they can expand deeper into the market.
And the name of this strategy is omnichannel strategy.
That means you will have more than one sales channel.
And some people also call this strategy as a click to brick strategy.
That means you are going from your website where people used to click and buy your product to opening
a retail store also known as your brick and mortar store.
So let's discuss about it.
Now to understand, click to break Strategy.
I'm going to give you three example of all the d2c brand that have expanded from an online website or
mobile app.
To hundreds of retail stores.
The first name of that brand is Warby Parker.
Now, Warby Parker is an eyewear brand.
And they used to sell these eyewear online using their mobile app and website.
But now they have more than 200 retail stores in the United States.
But people can still buy these product online using their mobile app and website.
But they have retail presence and we'll talk about that in a while.
That why a brand like Warby Parker is opening these retail store.
The second brand is all Bird, and they are selling shoes online.
They started their first store in San Francisco and New York, and now they have more than 30 store
where they are selling all of their product.
The third brand is Casper and Casper sell mattresses online.
They started their first brick and mortar store in NYC, and now they have more than 100 stores.
Now, recently I saw that Casper is somewhat struggling, but I still thought of including the brand
in this video.
Now let's just pick one out of these brand and let's go deeper into that and understand why the brand
is opening the retail store instead of just allowing people to buy online.
Let's go deeper with Warby Parker.
Well, if you look at the overall eyewear market in United States, you have brands like Warby Parker.
In India, you have brands like Lenskart and in the United Kingdom you have brands like Speck Square
and all these three brands are doing the exact same thing.
They started online by selling their eyewear on their website and mobile app.
Now all of these brands have multiple retail store.
Now, before we go deeper and understand about all the reason behind the omnichannel expansion, let's
start understanding about Warby Parker, how they decided to start their brand by solving a problem
and how they are expanding into these offline retail store so that they can go deeper into the market.
So Warby Parker started with this home trial program, so they had a website and a mobile app.
So if you really want to try out all these different frames, you can simply order five.
Different types of frame and the Warby Parker will mail all those frames to your address.
You can simply try out these five different frame for one single month and once you're comfortable with
maybe a single frame out of these five different frame, well you can simply choose that frame.
And Warby Parker will ship at just $95.
But if you don't really like any of these five frame where you can return all of these frames back to
Warby Parker and they will manage everything.
So that was their value proposition when they were selling all of these product using their website
or mobile app.
Now, after a few years of aggressive expansion, Warby Parker realized that they wanted to have more
than one touchpoint because in online you can just see the product, you can use AI to just try out
those spectacle on your face, but you still need to touch and feel the product.
And that's why to have a full omnichannel retailing experience working, Parker have decided to go with
brick and mortar retail store.
Now, these retail stores were having more than 1000 different types of frame, so you can simply pick
a frame, see whether that frame is good for you or not.
And then one of the sales executive will place your order online and then Warby Parker will ship that
order to your doorstep within like two or three days.
Or if you like, a product, you can order online by yourself as well.
So that was their strategy.
They wanted to increase the touch point.
So these retail stores are now acting as a touchpoint so that people can walk in into these retail stores,
they can see the different kind of frames they have and the order will be delivered to their doorstep
within like two or three days.
Now, after the first purchase, if the customer is feeling comfortable with the brand, then there
is a very high probability that the customer will place a second order without actually visiting the
retail store, because in most of the cases, on an average, a customer is trying out maybe 20 or 30
different types of frame in the retail store.
And he ended up liking multiple frame so he can add those frame in there with list or in the cart and
maybe he can purchase those product using the mobile app after six months or a year.
Now by opening these retail stores, Warby Parker was having the omnichannel strategy where they have
a very tight integration between their online and offline store.
Now the reason Warby Parker was so much interested in opening these retail store is because 75% of the
people who purchase these product from the retail store were really interested in the brand and they
tried out a couple of frames as well on their website, but those people were not really comfortable
buying those product online and that's why they need an additional touchpoint where they can touch and
feel the product.
And once they are comfortable with the quality and the kind of look the frame is giving to them, in
that case, they can walk in into these retail store touch and feel maybe 20, 30 different types of
frames they have.
They can see which one is good for them and then they can buy those product from this store.
And obviously Warby Parker will ship these product to their doorstep within two or three days.
Now in omnichannel, when you have more than one sales channel.
Let's talk about all the metrics that you need to measure so that you can understand how your offline
and online store is contributing to your revenue, profits or purchase.
The first one is obviously revenue.
So you have to track how much revenue you are generating from your offline store versus online store.
Then you also need to track the channel mix.
That means what is the contribution of your online sales to the offline sales?
Third one is growth and retention.
So you have to track growth and retention separately for these two different sales channel.
So what is the growth of your retail store versus your online growth?
And the retention of customer retention is nothing but repeat purchase.
Then we have a new matrix called four wall margin, also known as your average sales per square foot.
So let's say if you have two different retail store in an area.
So how will you exactly know that these two stores are performing?
And one of the way you can do that is by looking at the average sales per square foot.
So how much revenue they are generating divided by their total store area.
And that's how you can calculate your average sales per square foot.
That's one of the metrics that is only used by retail brand.
Last one is contribution margin and I'm going to cover this topic by the end of this video where we
will look at the financial statement of a company and then we will understand how can you calculate
the contribution margin?