What’s in Store for Brands in 2021?

We are excited to see our portfolio companies enabling the future of retail for brands in 4 key trends emerging stronger than ever after the 2020 push for online retail.
February 5, 2021
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What’s in Store for Brands in 2021?

By now we are all well aware of the speed at which 2020 saw businesses move online. Once brands and retailers understood that the shift was irreversible and that customers, no matter the outcome of the pandemic, were likely to largely conserve consumption patterns adopted in the last few months, we saw an accelerated digital transformation. Online stores are fast becoming the primary place for shopping.

2020 was the year retailers truly understood that, without a compelling offer online, they would lose to their more digitally native competitors, and may not survive the pandemic. Brands invested both in new marketing strategies, customer acquisition channels, and in next generation tech stacks to fulfill and transcend expectations of the “online shopping experience”.

Getting through the noise, attracting the right customers from the most relevant channels, and offering the right products for an attractive price, maximising conversion at checkout, and fulfilling the order with an acceptable delivery time and process, are of course the basics.

But once most brands and retailers reach a basic level of “hygiene”, what happens next?

In an age with ever more marketplaces and consumers buying on social channels rather than traditional stores, how will retailers retain their customers? How will they keep control of their brands and own all the steps of the experience throughout the customer journey?

At Wellstreet, this is what we are obsessed with. This question is in fact central to our investment thesis when it comes to investing in the e-commerce industry.

Aside from winning the customer acquisition game, which entrepreneurs, businesses, services, products, and business models will allow brands to maximise efficiency, sustainability, and profitability along the supply chain, and at the same time optimise the customer experience and remain true to their customer promise?

In Q4 2020 and already Q1 2021, we’re delighted to see brands engage at an exponential rate with some of our portfolio companies to solve these challenges. They have understood that investing in services, technologies and partnerships that enable them to add direct value to their customers - while maximising their bottom line - will make them the winners in the long term.

So I wanted to share with you some examples of Wellstreet companies that are proving the best partners and enablers for these brands in 4 key trends, in a hope to inspire more to do so, but mostly to encourage other companies to keep thinking creatively for the best ways to fulfill these emerging needs.

Returns - Returns - Returns

CAC, cost of goods and logistics are the main costs for online retailers. But with returns averaging around 30% of online purchases (over 50% for fashion) compared to around 8% in physical retail, and 50% of shoppers abandoning a purchase due to a lack of choice of returns channels, the costs of returns are seriously impeding retailers to reach profitability. The returns ecosystem is a huge opportunity, and is currently still relatively underserved (compared to customer acquisition, conversion and check-out for example) in the b2b SaaS space.

Returnado allows online merchants to meet all customer expectations when it comes to returns, be it in submission, options, logistics, tracking or refund. Returnado also allows their customers to identify the reason for a return in real time to transform a return into a re-conversion and enables retailers to make sense of returns data. In 2020, Returnado grew its ARR 5x, and returns processed increased +400%. Some customers have seen 27% of returns re-convert into purchases and have been able to save up to 60% of costs in returns administration. You can check out their Royal design case study.

Customer engagement - the “post-purchase” experience

When we think about the “post-purchase” experience, we immediately think of customer engagement, community and loyalty. This space has been dominated by customer clubs, rewards and points programmes. But traditional loyalty and customer clubs have proven largely ineffective: often experienced by the customers as unsolicited comms (spam) and often focused on attracting unloyal customers, rather than rewarding loyal ones.

Enter Gamifiera: Gamfiera launched in 2019 and allows retailers to harness the power of gamification to create a unique and engaging experience for existing customers in the retailers’ own online environment. The results for their first customers have been overwhelming: User-generated content is up 2000% on the site, with  85x more customers interacting with member functionality, and 1.5 million brand new customer interactions in the first 6 months.

No bonuses or actual cash backs of any kind have been used. Not a single text or email has been sent to any customer. We can only begin to imagine the long term effects on SEO, traffic, conversion, average basket size, retention. Q1 will see Gamifiera launch with more retailers in different product categories, like beauty, fashion and even the non-profit sector, proving that the principles of gamification, if leveraged well, have a strong emotional appeal and increase value at multiple touchpoints to customers.

New business models

It’s no secret that consumers, especially millennials and gen Zers, are shifting their consumption habits as they become conscious of their own environmental and social impact. They are looking for brands that align with their values and allow them to make better choices, making purchasing decisions that don’t contradict and sometimes actively support these values and commitments. If brands don’t find a way to answer these calls for sustainable and ethical sourcing, production and distribution, they fear seeing consumers shift their purchasing power to newer, digitally native d2c brands that have no legacy and have powerful value-based messaging.

Online platforms like Hyber allow brands to offer their products for rent towards consumers who want to maintain a fast revolving wardrobe (in Hyber’s case, due to children growing up fast). This need has been reinforced in some  part by “fast fashion” brands, but these retailers’ modus operandi has become prone to scrutiny and growing criticism for their unsustainable practices.

Offering a product range on rental platforms allows brands to access these more conscious consumers and makes them visible alongside other brands with similar values. They can provide their customers with a new way of accessing their products, ensuring they evolve together with them. In January Hyber grew its user base by 396% compared to last year. 2021 will be the year for rental.

Bridging offline and online

With the pandemic accelerating the continuing shift from physical retail to online retail, businesses who can bridge the offline and online experiences, and offer the same level of customer support and engagement in online channels will fare best.

Kjell & Company’s partnership with Bambuser exemplifies this trend, with the retailer understanding the importance of the hands-on support customers are used to receiving in store. Translating this online by offering 1-on-1 video chat functionality to provide the full user journey is absolutely key in order to maintain customer satisfaction when purchases are made via their web store.

Skillbreak’s recent partnership with Granit is another great example of how this can be done. Through Skillbreak’s booking platform and its carefully selected experts, Granit has hosted workshops in store - live-streamed online -  offering their most engaged customers unique creative and pedagogic sessions and engaging them on a new emotional level.

Bambuser and Skillbreak offer retailers new tools for their customers to experience products in a refreshing and activated context. They also offer a great opportunity for the retailers to create authentic content from these experiences, to connect with their users in social media channels.

We are excited to see our portfolio companies enabling the future of retail. There are of course so many examples of initiatives happening in these four areas. Please do share with us any companies that you think are particularly exciting, especially if they are enabled by new technologies and business models, we’d love to meet them :)