Strategy and Transformation

Founded on Experience: Ideas from IRCE 2018

Last week, a few thousand online retailers, suppliers, and I packed the halls at IRCE 2018, this year’s installment of the Internet Retailer Conference and Exhibition. Retailers large and small came to share and learn in Chicago, where almost 150 years ago Aaron Montgomery Ward founded his pioneering mail-order catalog business. Ward was spurred on by the plight of Midwestern farmers and his connections to the city’s wholesale dry-goods trade, quickly building an empire that delivered a taste of the good life to the countryside.
While Ward’s innovation was using the postal system to outfit farmers with scarce staples available only in the big city, modern retail has evolved to serve needs that are decidedly more ephemeral. At IRCE 2018, presenters concentrated on perfecting the activities that surround the product: enabling product discovery, helping shoppers deal with overwhelming choice, and streamlining delivery in countless ways. As Forrester Research’s Brendan Witcher noted from the dais, “Customers don’t care about the product. Products are available everywhere. What customers care about is the experience.”
This shift from product to experience as a key source of meaning and differentiation is not news. But this year’s conference underscored just how important is it to get the experience part of the equation right — and the potential for a payoff when you do. Three of my favorite sessions involved eCommerce startups Warby Parker, Houzz, and Eloquii. Their founders each described how their firms continue to uncover new ways to turn user empathy, innovation, and emerging technologies into differentiating customer experiences.

Warby Parker: Status Quo Killer

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Great origin stories often spark from a moment of realization. For Warby Parker co-founder Dave Gilboa, that moment came when he, as a cash-strapped grad student, wondered why replacing a pair of broken eyeglasses cost more than his iPhone. As Gilboa told the IRCE 2018 crowd, that question led him and his partners to challenge the giants of the eyewear industry.
Armed with a belief in the disintermediating powers of said iPhone and the services of a crack fashion publicist, Gilboa focused on reinventing the experience of buying prescription glasses. In February 2011, Warby Parker hit the pages of GQ magazine with a “Netflix of eyewear” story and a small assortment of product with simple, all-in pricing of $95. The launch spiked orders beyond expectations and lifted the fledgling firm to near-overnight success. By allowing shoppers to try “5 pairs for 5 days” in-home before committing to purchase, Warby Parker showed how questioning the status quo could lead to wins on both price and experience.
Today Warby Parker boasts a category-best net promoter score of 86, topping perennial leaders USAA, Costco, and Amazon.

Houzz: Building on a Personal Vision

Another presenter who understands the importance of customer experience was Houzz co-founder, Alon Cohen. Houzz — an online home renovation resource — launched in 2009 by Cohen and his wife but offered no products for purchase for the first five years of its existence.
Born out of Cohen’s frustration with planning his home renovation project, Houzz began as a way to simplify the experience of viewing, sorting, and saving architectural and interior design reference photos. “All decisions were made as they were because this is the site we’d want to use,” said Cohen. Shelter magazines had been around for decades, yet they offered no easy way for homeowners to turn the magazines’ content into a personal vision or find pros to help them see it through. Cohen realized that by enabling homeowners to take control of the content, he could empower them to realize design possibilities as never before.
Houzz has since added a product marketplace and pioneered the use of augmented reality to help shoppers feel confident about how furniture and accessories will look once they arrive in their homes.

Eloquii: Data Over Design

Eloquii is a plus-sized women’s brand incubated by The Limited in 2011, shuttered in 2013, and then reincarnated as an online-only store in 2014. Having experienced first-hand the sweeping changes taking place in retail and fashion, Eloquii CEO Mariah Chase spoke to IRCE about the shift in influence taking place in the apparel business; an influence that’s moving away from instinct-driven designers toward consumers and the data they generate.
According to Chase, designers who rely primarily on their gut are increasingly outgunned when it comes to staying on top of product trends. Today, speed and the use of data are what separate retail winners from losers. With her “no trend is the new trend” mantra, Chase’s team employs “pretail” testing in which customers can shop for and waitlist new items up to four weeks before the items become available for purchase. This program enables non-sales demand data to inform real-time inventory and marketing decisions. Eloquii merchants divine pre-sales data to read the market and react before committing to a large buy. Her team is also using algorithm-based dynamic pricing on its website. Merchants can monitor shoppers’ interest in non-commodity items and adjust prices as frequently as needed, based on real-time demand and supply. Looking ahead, Eloquii plans to extend what it knows about plus-size customers’ needs to offline as it opens its fifth brick-and-mortar store this summer, paying particular attention to fitting room aesthetics and other amenities.
In today’s competitive retail arena, any organization looking to evolve from startup to established brand must also mature in its ability to identify and satisfy customers’ needs. With Warby Parker, Houzz, and Eloquii all making that leap now, it will be exciting to watch what moves their founders make to parlay initial success into long-term gain. Having demonstrated an aptitude for user empathy, operational agility, and the smart application of technology, no doubt these players are well-positioned to address challenges that lie ahead.

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David Stallsmith

David has expertise in applying user insight and design thinking methods to solve complex customer experience, marketing, and employee engagement challenges. He’s an accomplished strategist with extensive experience across a range of industries, notably branded manufacturing, technology, financial services, retail, and healthcare.

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