On Monday, CNBC published their list of 50 companies that they feel are “disruptors” – companies that are changing the way their industry traditionally operates.
In the retail sector, they chose 5 “disruptors” who are changing how we shop online: Etsy, Pinterest, Shopify, Rent the Runway and Warby Parker. They are interesting choices, because they are all very different types of companies.
Etsy had sales of $895 million in 2012. Not quite Amazon’s $48 billion in sales, but sales were up 70% from 2011, and 2011 sales were up 70% over 2010, so it is growing quickly. These aren’t designer brands or celebrity endorsed products or the latest in-demand electronics, but handmade artisan goods. Who would have ever thought there would be such demand for these types of products, and that so many worldwide independent sellers (close to 1 million) could sell and operate successfully under one umbrella.
Shopify is an ecommerce platform that allows individuals and businesses to easily and affordably create their own independent online store. Setting up an ecommerce site use to be a significant financial investment, among other things, and the cost was a deterrent for many. With Shopify, it costs you as little as $14 a month (this is their basic plan; once your shop becomes more successful you will have to upgrade, with the highest rate plan being $179/month) and everything is done for you from SEO to setting up a shopping cart to store design templates. They have really taken down every barrier to entering the online market.
Pinterest is a social media platform where you pin photos you like to both publicly and privately viewed boards. It wasn’t intended to be a shopping medium, but it has become that as you can essentially window shop through photos, many of which are products, and clicking on the photo takes you to where it is sold on the Internet. This was actually an unusual choice in my opinion, because a variety of things are “pinned” on Pinterest, from recipes to blog posts to DIY videos, and it will bring traffic. But I am not sure yet how it has really changed online shopping unless a store can get potential customers to follow them in the first place and they constantly inundate their followers with photos of their products.
At Rent the Runway, you can rent top fashion designer clothes, jewelry and accessories for a special event. Say you need a dress for the prom. You can spend $200 for a dress you will wear once, or you can rent a designer dress that typically costs $800, for just $100. You don’t have to dry clean it, and they include a self-addressed return envelope to send it back the day after your event. This is a concept retailers didn’t consider that women would want to do, even though men have been renting tuxedos for years. It is another way to make sought-after, designer clothes attainable for those on a budget.
Warby Parker sells designer eyeglasses online, a market that has been essentially dominated by a few companies who have kept prices unreasonably high. Who would think people would trust eyeglasses to an online purchase as you typically need to try on the frames, see them on your face, see if they are too light or too heavy or pinch your nose, plus you have a prescription. Warby Parker addresses all of these concerns by letting you choose 5 designs, try them on in the comfort of your home for 5 days and then return them. You don’t even have to pay for the shipping. When you are ready to buy you just enter the details of your prescription and your new glasses are sent to you for significantly less than you would pay elsewhere, because selling online has allowed them to dramatically cut costs that typically come with a brick and mortar store.
So how can you become a retail disruptor? Take a look at the most successful online businesses. Now, address and correct what their customers don’t like and/or wish they offered, provide unique goods and services as well as the same high quality products for less, and make it very easy for customers to buy from you, and you could have a winning business model.
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© 2013 G.B. Oliver. All rights reserved.
