CHECK YOUR PLATES by JASON SOLAREK

The Wall Street Journal recently shared 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’re more likely to save money (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 a mix of the two). Even dealers have adopted online buying; CarMax conducts 100% of wholesale auctions virtually.

There are parallels between the used car market and the gift registry industry. Much like car buyers, over the last 20 years I’ve watched as registrants and gift givers flocked to the web. As an example of this growth, my company started by servicing two stores and a handful of registries, and today it supports 1,400 merchants with 80,000 gift registries. The online registry market has been such an area of growth that we’ve seen venture-capital backed companies like Zola, an online-only provider with no physical stores valued at $1 billion (which the tech industry calls a unicorn), arrive to cater to it.

In the car industry, there are two primary audiences: the buyer and the 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 to 70% in the future. There are a few reasons for this prediction. First, 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, 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 didn’t have a smartphone, 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.

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. Maybe your store is considering a renovation. Since in-store gift giving is declining, one may ask if they should allocate that money to bolstering online operations, such as the website, digital marketing, and warehouse and shipping services that support the growing online business?

There is good news for brick-and-mortar stores. I believe registrants will continue to come into the store at a higher rate than gift givers. Registrants enjoy picking out items in person and testing items they’ll use in their homes for years. 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. Digital infrastructure is being built for this future, and that’s the road ahead of us.

I recommend you ask these questions about your business:

• What percent of business starts online?
• What percent of customers will never enter a physical location associated with your service or product? (For example, for Zola, that answer is 100% because it has no stores.)
• In 2024, 2027, 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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Jason Solarek created Shop Local, a collaborative e-commerce platform, to give independent retailers a fighting chance. Hundreds of retailers have chosen the platform to offer fully loaded, product-rich websites to push back against Amazon. Brands such as Baccarat, Versace, Le Creuset, Juliska, and Vietri use Shop Local to empower their indie stores. http://www.shoplocal.org

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View the original article at Tableware Today:
https://mydigitalpublication.com/publication/?i=826715

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