Online shopping has now become an indispensable part of our daily lives. Demand during the corona crisis is increasing as more people refrain from going out.
Coupled with the rise of e-commerce platforms and crowdfunding in recent years, an increasing number of companies are starting to retail through e-commerce. However, e-commerce faces several problems. For instance, some customers cannot be reached online, and some products need to be used directly in order to induce a desire to purchase them. How should we solve these e-commerce-specific issues?
To address these problems, b8ta, a retail store based in San Francisco, is establishing an increasing number of stores worldwide offering a new type of retailing. The company has adopted a model in which product display booths are set up in physical stores and booths are rented out to manufacturers on a monthly basis, rather than having a retail model in which products are purchased or consigned. Web cameras are installed in the store to analyze the behavior of visitors. The companies that rent booths can interact with users offline, collect the user behavior data necessary for product development and sales promotion, and hear user opinions.
b8ta plans to open its first Japanese stores on the 1st floor of the Yurakucho Denki Building and the 1st floor of the Shinjuku Marui Main Building on August 1, 2020. We invited Mr. Takuji Kitagawa, the representative of the Japanese subsidiary, to ask him about business development in Japan.
・Aiming to be a place where people can experience innovative products from all over the world. Creating a “media-like” store that offers surprises and discoveries
・The fusion of technology and retail stores generates new data that were previously difficult to collect
・“We want to create a Japanese b8ta together with everyone in Japan”: the new retail store that the company is aiming for
He joined a public relations company in 2004, and later worked in an IR consulting company. He served as the CEO of a startup and later obtained an MBA from Emlyon Business School in France. He joined Dyson as a retail manager in 2015 and opened the world’s first flagship store in Omotesando. He has been in his current position since November 2019, after working as the general manager in Tokyo.
Aiming to be a place where people can experience innovative products from all over the world. Creating a “media-like” store that offers surprises and discoveries
b8ta was founded in San Francisco in 2015. It currently operates 24 stores, mainly in North America. More than 3 million customers worldwide visit the stores every year. More than 1,000 brands have been exhibited so far, and more than 50 million consumer and product engagements have been created. Mr. Kitagawa, Japan national manager, sees the business model of b8ta as “offline media.”
Kitagawa: Media is about sending the latest information to recipients and offering them surprises and discoveries. The mission of b8ta is to “bring people new discoveries through retail.” Similar to media, we would like to create a store where a wide variety of products that are not yet known to the world are gathered and offer visitors surprises and discoveries.
Most of the products exhibited at the booths are cutting-edge gadgets developed by startups. However, automobiles and crafts are occasionally exhibited. We aim to be a place where people can discover, experience, and purchase the most innovative products in the world, regardless of product category.
Regarding the company’s services, it is a place that inspires the expectation of “if I come here, I will discover something new.” b8ta has added a “user experience” that can be experienced only offline.
The appeal of some products cannot be explained with videos and photos only. Take VR goggles, for example. If you have experience using them, please remember the first time you put them on. You were certainly surprised at the 360-degree virtual space that spread out in front of you. It is not possible to have that experience online. In addition, for products that appeal to the sense of touch and smell—such as clothing, fragrances, and body care products—actual experience often leads to buying motivation.
b8ta’s goal of aiming for “offline media” remains unchanged in Japan. For the opening, gadgets that will be brought to Japan for the first time and that are attracting attention overseas will be exhibited, such as swimming goggles with built-in AR display and a smart art campus that can reproduce the brush strokes and colors of real paintings.
The fusion of technology and retail stores generates new data that were previously difficult to collect
There are few opportunities to actually touch and experience products whose distribution volume is still small. A place where you can do that will be very attractive to consumers. Meanwhile, Mr. Kitagawa says that there are great benefits for the companies that become exhibitors.
Kitagawa: We are not just a store space-sharing service. One characteristic that gives us a competitive advantage is the ability to analyze the behavior of visitors in detail. Using web cameras installed on the ceiling of all booths, we analyze the number of times visitors pass in front of the booths and the number of times they stop. In addition, the staff collects information on the number of trials with a dedicated analysis tool, and exhibitors can check their data online.
The booths provided to companies are sections of approximately 60 cm x 40 cm. These can be used for a fixed monthly fee. The fee includes customer service provided by the store staff, inventory management, POS and distribution management costs, as well as the right to view the visitor data mentioned earlier.
Also, exhibitors can chat with the store staff, so they can also learn how visitors reacted to their product. Through these functions, companies can obtain valuable data useful for product development and sales promotion.
Many of the companies that exhibit their products at b8ta are startups that have recently launched. The user opinions and data obtained in the physical store should be useful for brushing up their products.
Kitagawa: In recent years, online shopping has become popular, and more companies are engaged in D2C (a mechanism in which a manufacturer uses its own website for the direct sales of products it has designed and produced). However, if there is no opportunity to actually touch the product, this will create a hurdle preventing the initial purchase.
Some users cannot be reached using the Internet alone, and it costs a lot of money to set up a physical store, including the costs of construction, staff, and inventory management. b8ta is appreciated by companies who want to make their products known because it can reduce the initial cost of going offline.
Most of the visitors to our store are early adopters who like new things. Although some of the exhibitors are major manufacturers who have already developed sales channels, we have received favorable comments, such as “We have been able to acquire users whom we had not been able to reach until now.”
As mentioned, b8ta currently has 24 physical stores. Since the exhibitors can choose which product to display at which store, it is possible to gain recognition and to survey across different regions and countries. Offline research and marketing for product development have been very costly, but if our company’s services become widespread, it will have a positive influence across a spectrum of corporate activities, from development to PR and distribution.
“We want to create a Japanese b8ta together with everyone in Japan”: the new retail store that the company is aiming for
For its expansion into Japan, the company will have stores in the Shinjuku Marui Main Building and the Yurakucho Denki Building, which will be partly owned by Mitsubishi Estate. What kind of spaces will these be?
Kitagawa: Targets differ depending on the store, with Shinjuku aiming for families and Yurakucho aiming for businesspeople.
Initially, more than 100 types of products will be exhibited for the opening. We have a wide lineup of gadgets that will be brought to Japan for the first time, as well as daily necessities such as bicycles, shoes, clothes, and chocolates made from 100% natural ingredients.
With this entry, the company expects a development unique to Japan.
Kitagawa: When we decided to open a store in Japan, b8ta had been recognized as a store that “gathers cutting-edge gadgets.” However, the characteristics of our stores change depending on the products that are being exhibited. b8ta is something we create together with the companies. That’s why we want to create a Japanese b8ta together with Japanese companies.
In expanding into Japan, we will be displaying products made with materials and technologies unique to Japan, such as functional slip-ons made from Japanese paper and matcha latte made from 100% Uji matcha from Kyoto. This lineup is different from that of previous b8ta stores, so we hope that people will be excited about this.
Starting with Japan, this company will open stores in other countries as well. What kind of development is expected in the future? Let’s ask about future brush-up plans.
Kitagawa: We are still a developing company; this is our fifth year in business. We are currently using a fixed-rent model, but we would like to introduce a system that is linked to sales. We would also like to offer our store behavior analysis system to other industries.
I don’t know if we will be able to implement this idea, but I would like to create a store with no customer service at all. Staff members at b8ta stores have to understand all the products and serve customers the way they are served at regular retail stores. However, some customers do not like this type of customer service. I think it would be good to have a store where visitors can experience the products as they like without having someone talking to them.
Consumer consciousness has changed, and the barrier between offline and online in purchasing is disappearing in the sense that “it doesn’t matter in which way you buy.” I think the customer journey will also change according to consumer consciousness.
In addition to the fierce competition offline, the retail industry has also become a red ocean due to fierce competition in online shopping. We believe that the way to go is for manufacturers to grasp the real trends and opinions of actual users. New opportunities will be created by adding data that can be collected by fusing physical stores and technology to the online data collected through e-commerce. We will continue to provide value to people through the retail format.
Retail stores have traditionally been the place to buy things. However, retail stores, such as stores that also serve as showrooms and delivery bases, are changing in line with changes in consumer consciousness and advances in technology.
Meanwhile, this company sees a store as a “place to experience products.” There are many ideas on “what should be” that occur naturally in the world, but if you look at the common sense and customs objectively, you can perceive the ideal state of the business.
The key in business is to prioritize the things users are looking for. There may be much to learn from b8ta, which has updated the common sense on retailing.
・ Instead of a retail model, b8ta uses a model of renting out booths to manufacturers on a monthly basis.
・ It regards its business model as “offline media” and aims to create stores that gather products that are not yet known to the world and to offer surprises and discoveries to visitors.
・ The characteristic that gives it a competitive advantage is that it can analyze visitor behavior in detail.
・ The monthly fee includes customer service provided by the store staff, inventory management, POS and distribution management costs, as well as the right to view the visitor data.
・ Although e-commerce has become popular, initial purchases may not happen unless people have an opportunity to actually touch the products.
・ It seeks to create a Japanese b8ta together with Japanese companies.
・ The way to go in retailing, which has become a red ocean, is for manufacturers to grasp the real trends and opinions of actual users.