Ruslan Kogan says he is eating humble pie this week, having opened the first Kogan.com physical pop-up store in Melbourne this week.
Kogan is the first to admit that when he burst onto the Australian retail scene almost 10 years ago, he spoke “loudly and proudly about the benefits of shopping online” and even “made some statements about different business models in the retail industry”, some of which he was wrong about.
In a blog post this week, Kogan said he was wrong about physical retail stores and that Kogan.com will always be an online-only operation.
“I should not have used a blanket statement,” the entrepreneur said in the post.
“Lesson learned: never say never”.
The Kogan.com pop-up store is located on Chapel Street in the Melbourne suburb of Prahran.
But Kogan.com is not the only pure-play online retailer to dip their toes in the world of bricks-and-mortar retail this Christmas.
Online fashion retailer Beginning Boutique has also been experimenting with short-term pop-up stores, with its latest pop-up running in Sydney’s Broadway Shopping Centre this week.
Beginning Boutique founder Sarah Timmerman told Ragtrader opening pop-up stores is a way for the retailer to test the waters.
“As a company exclusive to the online platform, these pop-up stores allow us to test foot traffic in the retail environment and experiment with new markets to see where we can take the brand,” she said.
“It’s also a great way for us to connect with our customers and fans of the store and get a better understanding of what they think and want from the brand.”
Why Kogan is getting physical
While the Kogan.com retail store is a temporary outlet that will be run “differently to other physical retailers”, Ruslan Kogan said in his blog post it “is four walls and a roof”.
“What makes sense for a small business often doesn’t make sense for a larger business and vice versa,” he said.
“While Kogan.com was starting up, a physical store never made sense as every dollar was invested in finding ways to improve our sourcing, cut out the middlemen, and make our supply chain as efficient and scalable as possible through our website.
“This resulted in us having the best prices then, and ensures we have the best prices today.”
But Kogan said now that the business he founded has grown to a customer base of more than 2 million online shoppers, the business is “searching for new and exciting ways to interact with our customers and help them experience our products and brand”.
“We’re opening a pop-up store because we have huge amounts of data about the shopping behaviour of our customers that we can use to enhance their experience – whether they are shopping online or in a store,” he said.
Kogan said this data puts Kogan.com at an advantage when it comes to bricks-and-mortar retailing.
“We know where our customers are, what their interests are, what they like, what they don’t like, what products are trending in their area, and more,” he said.
“We also know the conversion rate of every product by location so we can ensure we’re only stocking the products most relevant to customers in that hyperlocation.
“We know how to use data and insights to create the most efficient retail model – whether it’s online or offline. It enables us to do things in this store that other retailers can’t do.”
Xero’s Cloud St helping other online players take advantage of the trend
A host of other online-only retailers will get a taste of bricks-and-mortar retailing this week, thanks to a pop-up venture from accounting software provider Xero.
Xero’s Cloud St retail showroom opened on Tuesday and will run until December 13 in Melbourne’s CBD.
Online brands Bellabox, Kester Black, The Club of Odd Volumes and Holy Funk will each take over the retail space for a day, opening between 10am and 8pm. On the weekend, the store will become a marketplace, featuring wares from five other online retailers: LVLY, Sweet Mickie, Douglas & Hope, ThankYou and Canary Jane’s.
Xero said in a statement it has created Cloud St to support small businesses.
“For many retailers, the holiday season is a ‘make it or break it’ time of year, especially for online-only small businesses that are competing with department stores and physical stores with foot traffic,” Xero Australia managing director Chris Ridd told SmartCompany.
“We’re standing up for small businesses and providing some of Australia’s most loved online only businesses the opportunity to experience life as a bricks-and-mortar retailer for one day in Cloud St, our pop-up store in Melbourne’s CBD. We hope Cloud St provides a boost to their business during the busiest time of the trading year.”
Sarah Hamilton, founder of beauty subscription service Bellabox told SmartCompany this morning the Xero initiative is “perfect to engage our customers and reach out to a new audience in the lead-up to Christmas”.
“We are an online player but the Bellabox experience is all about trying new products in the comfort of your own home,” Hamilton says.
“So having a shop for one day and offering our customers the chance to touch [and] feel our products and an event to build their own box is an idea we jumped on right away!”
Hamilton says the pop-up event also fits with Bellabox’s strategy to “surprise and delight” its customers, as well as convey the business’s positioning and message.
“Through our little blue box, our promise is to make beauty accessible for any women,” she says.
“We are very happy to welcome some of our brand’s key partners to our store so as to offer free pampering sessions and beauty consultations to any visitor.
“This is what we like – sharing our passion for beauty and helping our audience improve their routine, discovering new brands [and] learning about new trends.”
Hamilton says Bellabox is definitely open to similar initiatives in the future. However, opening a standalone Bellabox retail store “will all come down to performance”.
“If we see growth potential, we might consider running our own pop-up stores,” she says.
“However, we will always remain an online player and I still see the internet remaining our main channel in the near future.”
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