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Devouring everything there was in the retail track at South by Southwest this year, I couldn’t help but notice how, when it comes to commerce, physical seems to be the new digital.
While traditional brick and mortar brands still struggle with getting their e-commerce sites up and running, the digital-first players are opening their first physical stores; Amazon opened their first store last fall and is expected to open many more.
And we can expect smaller players to follow the big ones. A good example of this is Frank and Oak, an online retailer of men’s clothing. Founded in 2012 as digital-only, Frank and Oak now sport twelve physical locations, with more to follow. As Ethan Song, the co-founder and CEO put it, the era of transaction is done, in physical retail as well as online. In e-commerce, buying traffic from Google, Facebook and other platforms is expensive as it does not create a relationship with the customer.
People do not want to just buy things, they want to buy a story and an experience that reinforces that story. Ethan compared this to LinkedIn and Facebook where we all have hundreds of friends and contacts – yet we mostly maintain closer relationships with only a handful of them. This close relationship is what retailers want to build with customers using physical locations.
From physical spaces to experiences
Rachel Shechtman, the founder of retail chain Story, summarizes the trend as a paradigm shift from a space selling things to an experience that sells things. Story operates a chain of brick and mortar stores and does not do e-commerce – at least not yet. Their website resembles a magazine more than a retailer website.
Story brings together, well, stories. The stores and the selection they carry changes periodically and are curated like a magazine article. For example, they ran a story on creativity, where they held workshops and let their customers try out 3D printers and other DIY tools. With the color story, it was all about the different hues and products related to them.
Like magazines, they also do sponsored collaborations with big brands who want to beta test their upcoming launches. For tech companies, the space becomes a lab and a contextually relevant space to test their products. For Story, this is a good way of testing technology they otherwise couldn’t afford.
Brands like Diesel do not sell you clothes, they sell a lifestyle. Story does the same, but with multiple brands. A thirty-dollar dress is seen in a new light when it is part of an experience complemented by other products. The dress becomes a symbol of a lifestyle.
Is virtual reality the new physical?
The next logical step seems to be how the experience thinking can be extended into e-commerce. In his talk, Wired founder Kevin Kelly spoke about how the internet of information and the internet of things will merge into a new internet: the internet of experiences.
Kelly predicts that virtual reality will become as ubiquitous as the smartphone currently is. With unpreceded immersion capabilities, VR will definitely bring a new dimension of experience to e-commerce – among many other areas of the Internet. With numerous major players bringing out their VR headsets this year, we are living on the verge of something very interesting.
Judging from the past, the first virtual shopping experiences will be simple technology demos. But as with everything else on the internet, the evolution will be extremely fast. It will start with something simple, we will get feedback, and develop from there.