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May 19, 2021

Success Seen by eCommerce Behemoths

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eBrandcast / Success Seen by eCommerce Behemoths

We’ve all heard of Casper, Warby Parker, and Harry’s. They’re not just giant eCommerce brands, they’ve also fundamentally reshaped customer behavior and reinvented outdated business models. The trap of trying to emulate their success, is the assumption that eCommerce has a natural, guaranteed edge over traditional retail. There’s no question, that one of the reasons these brands have been able to make other retailers irrelevant so quickly, is because the greater amount of customer data they collect online means they can more quickly and accurately respond to customer needs.

But when we take a closer look at each of these brands, the core lesson we can learn from them is that data and digital marketing are only as effective as a company’s brand. And it’s precisely these brand’s ability to adapt new technology to timeless branding truths that enabled them to breakthrough in such a crowded market. The good news? You can do everything they did right, too. And you can do it today.

You'll Learn

How the rules for eCommerce breakthroughs have changed since eBay and Amazon

How eCommerce giants use technology to support and improve their branding

Why branding is essential to their unprecedented success

Several in-depth eCommerce examples

Resources

Full Podcast Transcript

Hello Beings of Earth! I’m your host Neil Verma.
Welcome to eBrandCast, where we decode what branding truly is, so you can build a dominant eCom Brand.
Today, we’re going to do a case study on steroids.
Meaning, we won’t just be looking at one eCommerce brand, but a handful of them.
Because while in-depth case studies can be super helpful, it’s also easy to get distracted by the unique details and coincidences that contributed to their success.
At times, case studies can end up being de-motivating.
So by taking this approach, my hope is that we’ll get enough detail that this info stays practical, but we stay on a high enough level that the commonalities among these eCommerce behemoths shine through.
You know, the stuff you can actually use.
As you can imagine, we’ve got a lot to cover today, so let’s get started.
The past few years has seen a surge of innovative, direct-to-consumer companies, who’ve not only disrupted their respective industries, but are also fundamentally reshaping customer behavior and expectations.
Although the temptation has always been to blame the wave of retail closures on the effectiveness of digital marketing.
And there’s also a tendency to assume that because eCommerce consumers are largely driven by the convenience of online shopping and the ability to quickly compare products, that branding itself is outdated.
But when we look more closely at the mega-success many eCommerce companies have achieved, branding has been essential.
And with the reality of the pandemic setting in, it’s actually only becoming more important for today’s entrepreneurs.
eCommerce behemoths have flourished precisely because they’ve adapted core branding truths to new digital tools.
What has emerged are drastically different business models that are able to offer customers extra layers of convenience, and ease, that traditional retailers can’t.
As many retailers have discovered, it’s not the online channel itself that attracts consumers, but an overall better customer experience.
In particular, direct-to-consumer eCommerce companies, like Casper and Harry’s, have been best suited to pioneer this evolution of branding.
Just as a refresher, direct-to-consumer companies manufacture and distribute their products directly to customers, without needing retail stores or middlemen.
First of all, this allows these companies to sell products at a lower cost than their non-D2C competitors.
And without the high costs of having to maintain retail space and staff it, direct-to-consumers brands enjoy much lower barriers and costs to entering the market.
This allows them to undercut traditional prices, while still offering high-quality products.
They also have a more agile infrastructure to grow quickly.
But the major edge these direct-to-consumer companies have is because there’s no middleman.
And so because every customer interaction occurs online, these companies have a massive amount of data on their customers.
So they understand their customers much better than even a traditional retailer would.
It’s this depth of insight that empowers them to create a better customer experience, since they have a direct pulse on their customers’ pain points and needs.
Data also helps them more effectively reach out to their audience.
They know where their audience is online, and can craft more relevant, useful content which bonds them to the brand.
Having complete ownership of the customer relationship, means these direct-to-consumer brands are better equipped to create a totally seamless customer experience.
Branding has always been a strategy to better understand and serve customers.
Whether we’re talking about a company like Coca-Cola, whose been around since 1892, or Harry’s, whose website states they’ve been “respecting the face and wallet since like… right now.”
Brands don’t just differentiate themselves from competitors with a logo, better design, or a better ad campaign.
Branding is the process of transforming customer insight into products, and an experience, that’s both relevant and meaningful.
A unique brand experience can’t be replicated, and it’s a powerful draw to your brand for customers, when that experience is crafted to meet their needs reliably.
And as trust is driving purchase decisions online, particularly now.
Instead of making branding obsolete, if the success of eCommerce giants has taught us anything it’s that branding has simply evolved.
And companies that can’t or won’t keep up will sink, whether they’re a traditional retail company or an eCommerce start-up.
So, I want to take a closer look at a few of the key strategies that have propelled these eCommerce leaders to be household names, and the brand strategies that underlies them.
All of today’s major eCommerce brands, companies like Casper, BarkBox, Warby Parker, Dollar Shave Club, Bonobos, and Everlane, are intentionally designed to deliver an exceptional customer experience.
It starts with the basic insight that the essential advantage eCommerce has over brick-and-mortar retail is convenience.
What modern eCommerce brands are doing is taking the ability to shop 24/7 on any device and amplifying ease.
Simplicity is the modern mantra for eCommerce branding.
One of the reasons Amazon was able to secure early dominance over their retail counterparts, was their ability to sell millions of items.
For traditional retailers, shelf space is a precious resource.
They are simply limited in what they can sell by the physical space available in the store.
Even a large-chain bookstore, like Barnes and Noble, can only carry so many titles.
This means that carrying the most popular items in larger quantities makes the most financial sense.
Amazon captured a lot of market share with their ability to offer customers a range of titles bookstores considered too niche to carry.
And since their inception as a bookstore, Amazon has only continued to expand their offerings to every conceivable consumer product.
More than 1.3 million new products are listed on Amazon every day.
Another early eCommerce success story, eBay, followed a similar philosophy.
By offering consumers a platform to auction and sell their stuff, they quickly became a go-to source for hard-to-find collectibles and hidden gems.
Their tagline in the early 2000’s was even “You’ll Find it on eBay.”
But more recent eCommerce success hasn’t followed the same mold.
In fact, most of the biggest eCommerce companies offer minimalist product lines.
For instance, Casper started out only selling a single mattress model, and Bonobos only had one style of pants.
The fact is, although having a dizzying array or products used to appeal to customers, it doesn’t hold the same draw anymore.
Modern eCommerce brands have recognized the decision fatigue that’s setting in among consumers.
Tess Brigham, a psychotherapist whose client base is mostly millennials explained in a recent CNBC article that the most common complaint she hears is,
“I have too many choices and I can’t decide what to do. What if I make the wrong choice?”
Now, obviously the patients in her office are talking more about big life-choices like career path and life partner.
But FOMO – fear of missing out – is a pervasive cultural experience, which filters all the way down to the everyday purchase decisions we make.
And decision fatigue is a recognized psychological phenomenon, which explains that we only have the energy to make a certain amount of decisions, before the quality of our decisions begin to suffer.
Having endless options has become a feature of modern life, and not necessarily a helpful one.
By offering a bottom-line product selection, the biggest brands today are redefining what convenience means for eCommerce.
Now, it’s not just about shopping anytime, but eliminating the burden of having to research product after product in order to reach a decision.
A simple product line means an easier decision that doesn’t need to be second-guessed.
And not needing to wade through options has become a luxury.
When a brand offers no, or very few, options, it sends the reassuring message to customers that it’s because this one product is all you need.
Casper took this insight and ran with it.
Its co-founder, Neil Parikh, being the son of a doctor who specializes in sleep, was well aware that the traditional mattress industry is “a racket.”
Products were over-priced and overly complex.
Most mattress companies create models based on what “kind” of sleeper you are – whether you sleep on your side, your back, and so on.
Then there’s a long list of potential materials: innerspring, memory foam, latex, hybrid, air, foam, and futon.
Dealing with salespeople is often frustrating, and the same mattress models are often sold to different suppliers under a different name, which not even the salespeople can keep track of.
So if you find a mattress model in one store you like, you might not find it in another store because it has a different name, even though it’s the exact same model.
Casper threw this all out: they realized that most people shift position during the night, and needing a mattress tailored to the kind of sleeper you are is largely a myth.
They then chose foam and latex because they’re the 2 most popular mattress materials, and combined them into a single model that would be perfect for most consumers.
Their gamble was that by serving the needs of the largest market, they could offer a single mattress to simplify the selection process, and also streamline their business costs.
All of which would make up for the customers they’d lose who may have other preferences.
With one mattress model, and as a direct-to-consumer company, they can also offer that mattress at a much lower price than a traditional store.
Not to mention, they have a drastically simpler delivery process.
By fitting the mattress into a box UPS can handle, or that’s easily carried up flights of stairs, it’s not surprising that they reached $1 million in sales within their first month.
BarkBox, a brand that sells a subscription box for dogs that sends new toys, accessories, and treats every month, has also benefited from convenience as simplicity.
First, they narrowed their customer base from pet-owners to dog-lovers, which is still a huge market.
Its founder, Matt Meeker, saw an opportunity when he realized that not only were millennials now the largest market, but that they were more likely than previous generations to see pets as family members.
With birth-rates at an all-time low, pets now have a more important place in the family, and 92% of millennial pet owners buy their pets gifts.
However, big-box pet stores have a huge selection of toys and treats, and you probably don’t know if your dog will like any before you buy them.
To counter this overwhelm, Meeker created the BarkBox as a kind of monthly sampler.
If your dog doesn’t like something, you’ll get a new batch next month.
And BarkBox has positioned the surprise of what’s in the box like getting a gift.
Meeker explains that he saw in his customers a desire for the “right” options, not just more of them.
It seems to be working, too, because they have 600,000 subscribers and a 95% retention rate.
A third example of a huge eCommerce brand who’s excelling with a simple product line is Allbirds.
Its co-founder Tim Brown explains that one of the reasons he created the brand was because he found it almost impossible to buy a “very simple sneaker that wasn’t adorned with branding.”
Nike, for instance, sells hundreds of different shoes: there are product lines under 13 activity-based categories, 6 brand-based categories, 10 icon-based categories, and 12 sport-based categories.
Of course, each line has a broad selection of styles and different features, too.
Allbirds stripped the sneaker back to its basics.
They started with the shape, look, and feel of a standard sneaker and stuck with an unbranded design.
Their first big market was in Silicon Valley, whose residents are quasi-obsessed with hacking their lives for optimal productivity, so they’re well aware of decision fatigue.
Many of them thus wear what amounts to a uniform everyday, to save their mental strength for their intellectually demanding jobs.
The unbranded, simple sneaker was a natural fit for this audience and grew from there.
Today, Allbirds is valued at $1.4 billion.
This strategy to simplify the product line wasn’t developed in a vacuum.
It came from a recognition of changing customer needs.
In the early days of eCommerce, having a vast array of options was a distinct advantage, but today it has lost its novelty.
With such a simple product lineup, despite being huge brands, these eCommerce companies have stayed agile.
Especially early on, this simplicity allowed brands to quickly and easily respond to customer feedback and requests.
If needed, they can also improve and iterate their products quickly, without having to burn and rebuild a complex inventory.
And a simple product line has resonated with customers, because these eCommerce brands have expanded simplicity to be a full brand strategy.
Simplicity is found everywhere, from the very design of the products to the business model, to the customer experience.
By cutting out all the middlemen of traditional retail, this simple model has helped these brands focus on the quality of their products, as well as the quality of the whole experience.
For the customer, the ease of a simpler experience that doesn’t require choosing, is a draw on its own.
These huge eCommerce brands have done this with “good enough” products.
The mistake many entrepreneurs make is they see the opportunity of the direct-to-consumer model as finding a way to offer a commodity product at an undercut price.
That the ability of these brands to disrupt their industries has come from offering better value.
But, as I hope you’re beginning to appreciate, it’s an ethos of end-to-end simplicity that these brands are selling.
It’s an approach to selection, purchase, and customer service that elevates the brand above the value of the product itself.
Branding not only aligns all of these elements into a clear identity, it’s a process that helps you clearly communicate this to consumers, so they know the experience to expect when buying from your brand.
Casper has improved the full customer experience by going against the assumptions of the mattress industry.
Due to the nature of the product, there are over 9,000 mattress stores across the US.
Before Casper’s revolution, customers thought of mattresses as an item that you needed to see and try in person before purchasing.
And there are so many individual stores because, such a bulky product is harder to distribute to customers.
So proximity to customers is key.
In addition, Casper’s group of co-founders lived in a walk-up apartment at the time, and were all too familiar with the headache of trying to get a Queen-sized mattress up several flights of narrow stairs.
The idea to deliver the mattress in a shippable box was key to freeing Casper from the need for expensive retail space, salespeople, and a network of warehouses.
In fact, in New York City and Los Angeles, Casper is partnered with on-demand delivery services like Postmates and Stuart, so customers in these areas can order and receive their mattress within hours.
Finally, Casper solved another sore-point of the traditional market by giving customers a 100-night trial and free returns.
Prior to this innovation, most mattresses either couldn’t be returned at all, or brands required a restocking fee that was often hundreds of dollars.
Not only did this help Casper stand apart from the rest of the mattress industry, it relieved most consumers’ reservations about buying a mattress online instead of in-store.
With their new approach, Casper helps customers avoid the anxiety and frustration of the traditional mattress buying experience, and they increase the level of ease with buying a mattress online.
Warby Parker has also taken a traditionally in-store product online, and been able to massively improve on the customer experience in the process.
When they first launched, Warby Parker knew that most customers try on multiple frames before making their selection.
They like to pick up and feel several options before making their choice.
In order to lower the barrier to buying frames online, Warby Parker pioneered a “try before you buy” model that sent customers 5 pairs of their choice from which to choose.
Today, Warby Parker continues to build on this ease with innovative technology.
For instance, customers can now virtually try on frames with augmented reality and their webcam.
For any pair of glasses on their website, customers can see a live image of themselves, captured by their webcam, wearing the selected frames.
It’s a way to simulate the experience of trying on frames in the mirror.
Until recently, one advantage the traditional retail model has had over Warby Parker, is that most customers buy their frames in their optometrist’s office.
It has always been easier to get their eyes examined and with prescription in hand, buy frames at the same time.
For a lot of customers, even though this way is more pricey, it’s easier than saving the prescription, ordering options online, and then having to return any frames you don’t like.
Recently, Warby Parker has partnered with Prescription Check, an app that tests the user’s eyesight and sends the results to a doctor who makes a recommendation.
These results can then be automatically set to be filled into any frame the customer chooses on the website.
And importantly, this was an innovation driven by customer feedback.
Warby Parker knew that the hassle of having to book and visit a doctor’s office for an eye exam, was one of the top complaints customers had.
So being able to totally reshape this experience has ensured they’ve kept customers coming back.
Another successful eCommerce brand that has been able to revolutionize the ease of using their product is Soylent, a company that sells meal replacement drinks.
The backbone of their success has been an exceptionally strong community of passionate and engaged consumers around the brand.
Tapping into these relationships has sped up their ability to improve the product, making audience participation one of the core experiences of the brand.
The product began as a “biohacking” experiment by Soylent’s founder Rob Rhinehart, which he detailed on his popular blog.
He provided a list of ingredients and described the process of making it, allowing readers to tweak the recipe for themselves.
Once the concept caught on, Soylent started selling the product but retained their “open-source” ethos.
The brand has a vibrant online community of customers on Reddit, who share their own recipes and hacks.
Customers are free to order from Soylent’s site or download a recipe to make themselves, whether or not they participate in the community.
But it allows for an intense amount of personalization and an easy experience, precisely because the brand is so supportive of the community and actively participates.
So far, we’ve covered how today’s eCommerce success stories have managed to triumph over their traditional competition using better consumer data,
a closer customer relationship,
and a better appreciation of the value of a great experience.
But they’ve also leveraged the unique tools of eCommerce to outmaneuver the rest of the market.
One of the major advantages that traditional retail brands have had over eCommerce start-ups, is name recognition, and a marketing war chest.
And it has always seemed to be a given that in huge markets, like the mattress or pet industry, a few names dominate, and they’re hard to push off their perch.
In other words, eCommerce direct-to-consumer brands have learned the importance of quickly and widely gaining customer mindshare, but have had to do it with fewer resources.
Casper quickly understood the need to take an unconventional approach.
Realizing that most mattress heavy-weights, like Serta and Tempur-pedic, were headquartered in places like Illinois and Kentucky, Casper decided to launch by targeting 2 major centres: New York City and LA.
They figured these cities were the country’s cultural centres, and if they could catch on there, the rest of the market would follow.
Tailoring their message for these cities, Casper framed their brand and mattress as trendy and, above all, urban.
This was an image certainly helped by the fact that being shipped in a box, makes the buying process a lot more conducive to urban living.
In LA particularly, Casper focused almost entirely on getting influencers on board.
After they got an Instagram picture from Kylie Jenner with a Casper box which got 800,000+ likes, their mattress sales doubled.
By turning such a boring product into something cool and desirable, Casper was able to build virality into a mattress, and capture wide mindshare.
They then invested heavily in SEO to secure higher search ratings, but their real innovation here was designing thousands of search-specific landing pages, one for every keyword they can think of.
Not only does this approach give individuals a more personal and relevant ad result, it helps Casper be seen by the highest number of customers possible.
BarkBox, meanwhile, noticed a trend among their early adopters to post videos of themselves and their dogs opening their monthly box, fitting into the YouTube “unboxing” trend.
BarkBox realized that many of their customers were keen to show off their dog online, and created a strategy to encourage this kind of social sharing to boost brand awareness.
They did this by redesigning the box to feature large BarkBox logos.
They also make each box feel special by creating monthly themes that connect everything in the box, and upscaled their packaging.
BarkBox has turned opening their box into an art, by further encouraging customers to post content with a referral program, coupon codes, and hashtags.
Unlike traditional retailers, native eCommerce companies have a more natural grasp of the dynamics and trends online.
And so their ability to gain mind and market share with fewer resources, isn’t the disadvantage many traditional retailers assumed it would be.
BarkBox is a great example of this, because aside from leveraging user-generated content to generate brand awareness, they also hired a team of comedy writers and actors to form an internal ad agency.
This team focuses on creating funny content that often leverages memes.
For example, one of the brand’s turning points came during the 2017 Super Bowl, where this team shared a video of dogs that look like Tom Brady.
It got 2 million views and was shared more than 15,000 times.
The post even outperformed social posts by Petco.
Realizing the growing trend of ‘Instagram dogs,’ BarkBox has extended their internet-savvy approach to include forming relationships with these online stars.
Despite their small start, BarkBox has transformed themselves into an eCommerce behemoth partly by positioning themselves as an entertainment company.
What all the eCommerce success stories have in common is that they’ve managed to leverage better customer data and tech tools to create new kinds of value.
Whether it’s a simpler product selection process, easier delivery, making products easier to use and customize, or better customer service.
Not only is the overall customers experience better, more relevant, and often more personal with eCommerce direct-to-consumer brands,
they’ve been able to achieve viral growth by positioning social referrals and shares, as a core part of their product experience.
By leveraging their deep understanding of their customers, these brands are mainstays in their customers’ lives for whom there’s no alternative.
It hasn’t been by abandoning branding, but combining it with the unique tools of eCommerce that these brands have skyrocketed to be household names.
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