Woolworths, Fable, Designerex talk the future of online retail
On day one of the Online Retailer 2023 conference, industry leaders came together to share insights into what the next stage of e-commerce will look like.
With the Covid-19 online shopping boom having slowed, and physical retail back in fashion, e-commerce is no longer the primary focus for many businesses – but that’s not to say there aren’t opportunities for growth.
Value and convenience are king
Michael Fox, co-founder of plant-based meat brand Fable, noted that, over the past 20 years of growth, online has emerged as a channel that is skewed heavily toward providing value and convenience to shoppers.
While premium online opportunities exist, customers looking to spend a larger sum of money are more likely to go in-store to do so, Fox said.
“I think, as a general rule, online retail really suits that convenience and value end of the market,” Fox said. “The premium end of the market is still in person.
“You can see this across different categories: food, for example. You have Domino’s online as convenience and value, versus fine dining. No one wants a fine dining experience online.”
Where convenience is concerned, online marketplaces are a massive part of online retail. Much of this growth comes from the convenience afforded by having many products, sometimes from completely different verticals, in one place.
However, according to Woolworths’ general manager of Everyday Marketplace, Mark Mansour, there’s a limit to how convenient it is to have a massive library of products, and maintaining a more focused offering can be key to a marketplace’s success.
“What we’re trying to do [at Woolworths] is ensure that we’re not an open marketplace. It’s not a free-for-all. We don’t take on any range from any seller, we’re trying to be quite curated, because our ultimate mission is to add more value to customers who are already on a shopping mission,” Mansour said.
“Other real platforms may have different objectives, [and] their aperture may be more open.”
By limiting the selection, and reducing the burden of choice, Mansour argued, customers will have an easier time choosing from the items on display.
According to Mansour, while online penetration has slowed since the end of Covid-19 lockdowns, e-commerce penetration as a whole is still growing – and there is an opportunity for retailers that can get their offer right.
“For me, it’s all about creating better experiences for customers, making them seamless and frictionless, and providing more opportunities to narrow down what they’re looking for,” Mansour said.
Delivering on a need
Kirsten Kore, co-founder of the fast-growing fashion rental platform Designerex, said there is still an opportunity to find a niche that hasn’t been monopolised and experiment in it. Not only with the offer itself, but also the logistics of the business.
Designerex offers high-end fashion pieces for rent. Instead of holding any stock itself, the business mainly serves as a technology company, enabling users to rent occasionwear to each other.
“Gradually, [a customer] might rent out a $4000 Fendi dress a few times and offset that price tag,” Kore explained.
“What we’ve found now is that [buying] designer fashion can be profitable. We’ve got over 7,000 lenders on the platform, [but] we have super lenders who go to designer labels and literally buy up all of their new season stock, list it, and turn it over really quickly.
“They turn a profit, and can repurpose a garment up to 40 times.”
Designerex takes a cut of each rental, as does any partnered designer or brand.
“We identified this niche, and it’s quite a big one, but we focus on it and we’ve never deviated from it. We’ve just doubled down on our customer experience and innovation,” Kore said.
AI is the big disruptor
While artificial intelligence (AI) is still seen by some as a buzzword, Fox noted that Fable is already using it to great success. Following a recent round of customer interviews, Fable put pages of customer data into Chat GPT and asked it to pull out any key themes, saving his team hours of work.
Similarly, the software suggested changing the name that Fable uses for its product in stores – from shredded mushrooms, to char-grilled shiitake – which led to an increase in sales.
“That’s now the best performing name across our menus,” Fox said.
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