Dollars & Sense

Check Your Plates 🚗

Jinjoo Lee in The Wall St. Journal shares how the used car market has improved in the last 20 years because much of it is now conducted online.  When car buyers use the web, they are more likely to save money (saving about 2%), and dealers can, in theory, make more with dynamic pricing (about 2%)—thereby giving each party a win. Unlike 20 years ago, when we didn't have smartphones, today 95% of used car purchases start online. While 31% of used car purchases were completely in-person, 14% were done entirely online (with the balance being a mix of the two). Even dealers have adopted online buying--CarMax conducts 100% of wholesale auctions virtually. 

Unicorns at the Wedding Party
I believe there are parallels between the used car market and the gift registry industry. Much like car buyers, more registrants are starting their registries online and completing their experience using more online tools.  For most registrants, the process is a mix of online and offline. The online registry market has been such an area of growth that we've seen companies like Zola (an online-only provider with no physical stores valued at $1b+) arrive to cater to it. 

A Buyer, Seller, and Gift Registrant Walk Into a Bar Cart...
In the car industry, there are two primary audiences: the buyer and seller. In the registry industry, we have the buyer (aka the gift giver), the seller, and the registrant. Gift givers are adopting digital solutions quickly--maybe even as fast as the registrant. I estimate that online gift purchases make up 50% of most registry sales today, and I believe this number will grow in the future. There are a few reasons for this prediction. First, whereas the traditional process of giving a wedding gift (going to the store) can take an hour, the online route takes five minutes at the kitchen counter. Second, whereas a used car is a large purchase and returns are complicated, gift purchases are often $142 and given in the form of a credit to a registrant—making the gift “liquid” and easy for the registrant to use with minimal returns. Lastly, while grandma maybe didn’t have a smartphone in the past, the next generation of gift givers are more digitally savvy, which lends itself to online gift giving. In sum, we can expect fewer gift givers to walk in a store’s brick-and-mortar door tomorrow. 

Invest Where the Growth Is (Pst...That's Not the Physical Store)
Today, a wedding registry often brings in $3,200 for a store—with half of this amount coming in online.  Due to the factors I mentioned, I expect online-only gift giving to make up 70% of a retailer’s sales by 2030 (a 40% increase over today's amount).  Stores should take note because this trend should impact how they invest.  A store I know recently completed a multi-million dollar store renovation. Since in-store gift giving is declining, one may wonder why they invested in their physical store. Could that money have been partially allocated to bolstering online operations, such as the website, digital marketing, and warehouse and shipping services that support the growing online business? 

In the future, I expect to see most registrants using online and in-store services, with a gradual movement to online.  While websites are offering more pictures, dimensions, and videos online, it's fun to shop and see an item you'll use in your home for years. 
 
Store Owners Want to "Test Drive" Tableware in Person
As for online wholesale ordering, I anticipate the market will grow, but at a slower pace than consumer gift giving.  Stocking a store is like buying a car: Order amounts are larger, exchanges are tougher, and the stakes are higher. Stores want to get “behind the wheel” of that plate before they order 200 of them. Much like Zola arriving to service the registrants and gift givers online, Faire was created to tap the online wholesale market. But unlike Zola's consumer-facing market, Faire's B2B market has higher stakes and thereby relies more on in-person experiences.  Either way, brides, showroom managers, and car buyers have smartphones in their pockets. Digital services improve the experience and often do so at a fraction of the cost of analog materials. Businesses are being built for this future, and that's the road ahead of us. 

To our team here, thank you for helping us get this far. 

Homework:
These are questions one wants to ask about their industry:

• What percent of business starts online? 
• What percent of customers will never enter a physical location associated with the service or product? (For example, for Zola that answer is 100% because it has no stores.)
• In 2024, 2026, 2028, and 2030, what percent of customers will conduct their experience online only or in-store only?
• Based on the trends, what should your business do? 

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Read the full article about used cards at the WSJ.com:

https://www.wsj.com/business/autos/used-cars-sold-online-benefits-bb08e8de?st=aw66pt95ykriizg&reflink=mobilewebshare_permalink
 

Tags:
wsj wedding registry trends zola faire

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