ETC Managing Director Mark Bienstock was featured in California Apparel News in their discussion of how brands are investing in crucial digital tools and traditional methods to reach customers. Click here to read the full article!
By; Carli Valinoti, Express Trade Capital
One of the newest sustainability trends is making old garments new again. Evrnu, a Seattle-based textile-technology startup, is making old clothes and fabrics into new fibers that can be used for recyclable fashion.
Although their products are still being tested, Evrnu has just launched a limited run of recyclable unisex sweatshirts for Adidas by Stella McCartney, calling them “EVER-new.” The hoodies will not be available for the public until 2020 but will be given to athletes to promote the new sustainable line. “Right now, in the U.S., consumers dispose of about 80% of their textiles directly into their garbage can. That’s the behavior we’re really trying to tackle,” said Stacy Flynn, chief executive and co-founder of Evrnu. Recycled textiles can be made into premium fibers which can be dyed and woven into new fabrics made for all different types and styles of clothing. In 2016, Evrnu teamed up with Levi’s Jeans and launched a prototype of jeans made only from repurposed cotton T-shirts.
Consumers are becoming more aware of certain industries’ toll on the environment, including the fashion industry. Although creating new fibers still has some detrimental impact, the process uses a fraction of the amount of energy and chemicals used to make polyester clothing. These recycled garments may end up having a higher price-point, but as more people become aware of how sustainability can help the environment, people may be willing to pay more.
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Sadie Keljikian, Express Trade Capital
Although fears of a “retailpocalypse” have mostly died down, the retail landscape is certainly shifting in favor of ecommerce, with more than 5,000 brick and mortar closures already announced in 2019. Many of the closures come from high-profile retailers like Gap, J.C. Penney, Abercrombie & Fitch, Tesla and Victoria’s Secret. Even Amazon has announced that it will close all 87 of its pop-up shops in Kohl’s, Whole Foods and malls nationwide.
A recent UBS study predicted that online sales will make up 26% of overall retail sales by 2026, from 16% today. Assuming current trends persist, roughly 75,000 more retail locations will close in that time. This amounts to approximately 8,000-8,500 closures per 1% increase in online sales. Amazon is expected to account for about half of the ecommerce market in the US at the end of the seven-year projection period. Of the 75,000 predicted closures, 21,000 clothing stores, 10,000 consumer electronics stores, 8,000 home goods stores, 7,000 grocery stores and 1,000 home improvement stores are expected to shutter.
Only time will tell whether these projections will come true, but on the bright side, Lasser and Sole say that the closures “should help the store productivity of surviving locations.”
Sadie Keljikian, Express Trade Capital
As technology becomes increasingly present in our daily lives, it changes the way we do nearly everything, most notably how we buy and sell products. Keeping up with the intricacies of digital sales can be overwhelming, particularly given the ever-evolving nature of technological functionality. Here are a few of the latest and most prominent ways in which technology has revolutionized sales techniques.
- Multi-channel approach.
Contrary to popular belief, physical store locations are not going away entirely. With more ways than ever to reach prospects and customers, a multi-channel approach is essential to successful sales. Whether you’re selling consumer goods, commercial equipment, or anything else, it is important to integrate your online presence with any brick and mortar locations as seamlessly as possible.
The recent trend in previously online-only businesses opening store locations (Wayfair, Warby Parker, Casper, and Untuckit among them) is a great example of this. While modern consumers appreciate the convenience of ecommerce, they miss certain aspects of the in-store experience and frequently choose to blend their shopping methods.
This has proven particularly popular in industries like apparel, where consumers are hesitant to buy items they can’t try on, or large appliances and furniture, where consumers often prefer to see the item firsthand and ask questions before they make a final decision. Some apparel retailers have even opened mini-locations with limited samples of each item for customers to try on before they order them online.
Some big-box stores use augmented reality to provide an in-store experience from home. Target, for example, launched an AR feature in 2017 that allows customers to take a photo of a space in their home and see an approximation of furniture pieces and home goods as they would appear in the space. This personalizes and simplifies the selection process significantly in terms of dimensions and style and prevents unpleasant surprises when items arrive.
Additionally, methods like individually tailored sales emails and social media marketing based on curated data are becoming the most popular strategies businesses use to market and sell their products and services. Brands are also expected to not only cater to each customer’s lifestyle and esthetic preferences, but to their philosophical beliefs as well. As a result, companies that make a point of using charged imagery or pointed messages in the way they sell their products are often among the most successful.
- In-store tech.
Many retailers that depend primarily on in-store sales have begun incorporating technology into the customer’s experience at their locations. In some cases, they use virtual reality to add an element of fun in select store locations. Walmart’s tech incubator, Store No. 8 offers an immersive VR experience followed by a gift shop.
Others offer a visual search station for customers to locate the items they wish to buy, saving them the difficulty of finding the product they need on foot. Other retailers have begun using interactive apps that allow customers to learn more about a product by simply pointing their phone camera at its label. Luxury resorts have started offering AI services to allow guests to plan their visits and personalize their experience by communicating with chatbots. Grocery stores and department stores have even started using mobile robots to monitor obstructions in the aisles and customer reactions to free up human employees to assist customers.
Systems like these not only give the customer a better sense of engagement and control of their experience, they also offer retailers similar insight into their customers’ habits and preferences. Consequently, on-site technology can be as useful to market research as web traffic and sales numbers, allowing brands and stores to further optimize the way their customers’ experience and buying habits.
Consumers have never had higher expectations of their retail experience. For big brands, this emphasizes the importance of diversifying their offerings and allowing their customers as many customizable options as possible. For smaller brands, it means homing in on the specific preferences and values that most accurately align with their target demographics. Ultimately, there are more ways than ever to use technology to guide product development and research markets, allowing brands and retailers to come up with solid solutions that allow their businesses to thrive.
Joseph Stern, Express Trade Capital
Amazon is one of the world’s largest internet retailers by revenue and market capitalization, providing sellers and buyers with a central marketplace to conduct trade. The platform has grown so large that many financiers, including Amazon itself, have begun to market funding solutions directly to Amazon sellers.
Amazon built two web interfaces to accommodate its sellers: Seller Central and Vendor Central.
Vender Central is utilized by manufacturers and distributors to sell to Amazon in bulk. Amazon will send weekly purchase orders for shipment to various warehouses. Vendor Central customers are partnered with Amazon, who will market and sell their vendors’ products to the best of their ability. Access to the program is invite only so not all vendors can join Amazon’s Vendor Central program.
However, Amazon vendors have several alternative routes for financing. Since vendors receive purchase orders from Amazon, they are financeable through traditional factoring and purchase order (“P.O.”) funding operators. Factoring companies allow vendors to draw funds against invoices to Amazon due in the future while PO funders give them access to cash to pay for production against purchase orders issued by Amazon.
Amazon’s other program, Seller Central allows merchants to market and sell their goods directly to customers. Sellers can fulfill orders on their own or outsource fulfillment. Amazon allows sellers to enroll in a program through which orders are fulfilled by Amazon (“FBA”). In FBA arrangements, Amazon takes on their vendors’ shipping, customer service, and returns for every order.
Since sellers do not receive large purchase orders, but rather, small orders, customer by customer that must be fulfilled at once, they are not eligible for traditional PO funding operators. Depending on the vendor’s payment terms with Amazon, factoring may still be a viable option. In such cases, vendors who need further financing should seek cash lines against inventory or merchant cash advances.
Inventory financing is a type of asset-based lending where sellers use their inventory as collateral for a revolving line of credit. An amazon seller with his own inventory may assign his inventory to a financier while waiting for sales. A financier may cut a deal with Amazon to target sellers using the its FBA or other programs.
A merchant cash advance (or MCA) is a form of receivables financing where a seller takes on a cash loan by offering up a portion of future revenue until the loan and its fees are paid off. Advances are typically capped at one to two times monthly sales with a factor rate ranging from 1.14 to 1.48. In other words, a lender will take a small percentage of the merchant’s credit card revenue until 1.14-1.48 times the loan amount is paid off, depending on the MCA’s factor rate.
Amazon offers its own loan program modeled after inventory loans and merchant cash advances. With an APR of 6%-16%, an Amazon loan will be far less expensive than a merchant cash advance of similar size, which can have effective APRs above 100%. Instead of taking a percentage of sales revenue, Amazon takes fixed amounts from their sellers’ accounts over the course of twelve months or less, thus qualifying its instruments as short-term loans. By targeting only its own qualified merchants, Amazon can utilize its control of the seller’s proceeds and even inventory to ensure repayment. Amazon can also cherry pick preferred vendors based on whatever criteria Amazon believes best serves its risk appetite. In 2017 amazon issued $1 Billion in loans to its merchants.
So far, information on Amazon’s lending programs is scant. Little information is published on default rates, average funding amounts, and the programs are still young enough that available data is still in its infancy. For now, the verdict is still out on how effective the financing programs are for Amazon and its vendors.
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Sadie Keljikian, Express Trade Capital
Recent studies have indicated that damage to the environment has progressed further than previously believed, so numerous corporations across industries are making changes to reduce waste and increase sustainability in their production processes. The produce industry is contributing significantly to this international shift, promoting more sustainable shopping and eating habits among its consumers.
One of the most prevalent efforts to this end is the recent “ugly produce” movement. As it currently stands, approximately 6 billion pounds of produce is wasted annually in the US. Much of the wasted food is perfectly safe to eat, but doesn’t meet the US Department of Agriculture’s appearance standards due to irregular size, shape, or surface imperfections like spots or minor bruising. Several grocery providers across the US have implemented programs like Imperfect Produce, Hungry Harvest, and Kroger’s Peculiar Picks that sell these items, which might otherwise go to waste.
Obviously, this movement is helpful in the global effort to limit wastage. It cleverly addresses the food waste issue and offers shoppers access to fresh, albeit slightly blemished, produce at discounted prices. However, the movement is the subject of controversy due to its perceived harm to food banks and independent farmers. Historically, grocery stores and suppliers would often donate some or all of their visually imperfect produce to food banks, who are obviously less choosy than the average consumer when it comes to the appearance of the food they receive. The arrival of the ugly produce movement concerned several experts, who speculated that consumers in search of a bargain would dip into supplies that were previously designated to food banks. Several food banks and other charities confirmed, however, that the quantity of wasted (but edible) food far outweighs the amount that food banks need to feed the underserved masses.
Another reason to embrace visually imperfect produce is that organic fruits and vegetables are treated with smaller amounts of less aggressive pesticides and are thus more likely to naturally vary in appearance. Recently, some experts have even asserted that visually imperfect fruits and vegetables may be tastier and healthier than their unblemished counterparts. Orchardist Eliza Greenman conducted an unofficial experiment on her pesticide-free apples, comparing those blemished from fighting off pests, excessive heat and fungus, with their unmarred equivalents. Remarkably, she found that the scarred apples had 2-5% higher sugar content. Likewise, another study found higher levels of antioxidant phenols and fruit acids in organic fruit when compared with those treated with more aggressive pesticides.
We’ve suspected the nutritional benefits of organic produce for some time. Although the spectrum of factors that contribute to antioxidant content isn’t fully understood, many of the antioxidants that naturally occur in fruits like apples develop in response to natural threats like pests and fungus. This means that attempts to artificially protect crops from these natural burdens makes our produce prettier, but potentially less flavorful and healthy.
In short, public embrace of “ugly” produce is good for the planet and apparently, good for our bodies.
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Sadie Keljikian, Express Trade Capital
Fears of the “retailpocalypse” have died down, but brick and mortar retailers may be overlooking some of the most pressing problems they face in their attempts to innovate and better serve modern customers.
Following dismal sales last year, retailers began frantically creating new, often diversified versions of their former stores. Some are combining low-cost fashion retail with items typically found at grocery stores, others have opened popups and smaller store locations where customers can try items on before ordering them online. Although these methods are objectively good ideas, they fail to address another widespread problem: retailers and developers often ignore the culture of the neighborhoods where they plan to open new stores.
Although brick and mortar sales are improving in general, chic neighborhoods like New York City’s Greenwich Village are plagued with long stretches of empty retail space. Vacant storefronts, particularly on Bleecker Street, are the result of some overeager decision making following the gentrification of downtown Manhattan in the early aughts. Soon after wealthy new residents started arriving, so did a variety of upscale businesses. Some were successful but, eventually, a number of luxury retailers began popping up. They made decent sales initially, but soon it became clear that there wasn’t a demand for so many luxury goods in the Village, and stores began to close.
The fact that high-end retailers didn’t find a demand downtown isn’t shocking in itself, but by the time they closed the problematic lasting effect had already taken place. Since so many luxury brands appeared in such a short time, real estate prices rose so quickly and so dramatically that even the retailers who drove them couldn’t keep up. As a result, many commercial spaces remained empty months or even years after their previous tenants closed up shop. And they continue to remain empty.
It makes sense for high-end retailers to “follow the money,” so to speak, but they should still consider the history and reputation of the neighborhoods where they open stores. Greenwich Village has a rich history of diverse culture and art, including the LGBTQ community, numerous immigrant communities, and artists of every discipline and type. Though many of the people who brought such unique variety to the neighborhood are no longer there, the association remains. Thus, wealthy newcomers choose to move to the village for its historical uniqueness and creative atmosphere, rather than for high-end amenities.
The missing link seems to be that the choice to move downtown says quite a bit about the new residents. Given the income bracket in question, these residents could choose to live in almost any neighborhood, including New York’s Upper East Side, famous for its high-end retail and “old money” residents. The choice to live downtown suggests an interest in creativity and diversity among both the people and the businesses that populate the neighborhood. Although they may have a passing interest in luxury goods, they probably don’t prioritize them.
This same principle applies to retailers across the board. It’s often wise for businesses to swoop in when a town or neighborhood sees an uptick in residents with disposable income, but some basic market research can help determine if the newly popular location will be worth joining. If a neighborhood is populated with young families, a nightclub probably won’t do much business. Likewise, young people who are drawn to famously creative communities probably don’t care too much about high-end brands in their neighborhoods.
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Sadie Keljikian, Express Trade Capital
Standing out in your industry can be tricky, especially if you work in a competitive field. To get ahead of your competition, it’s important to develop and demonstrate the unique qualities you and your business can offer. Here are a few ways you can distinguish yourself from other players in your industry and break away from the crowd:
It may be the most obvious point of comparison, but if you can distinguish yourself on pricing, you should do so and you should advertise as such. Compare yourself to businesses that provide similar or identical services/products and demonstrate your ability to fulfill the same need at a lower price.
Beware of competing with bigger businesses on price. Larger companies can generally underprice smaller ones because they typically have lower costs due to economies of scale. Moreover, although extremely low prices may bring a surge of new business, it is important to make sure your profits are sustainable.
However, lower prices are not always the answer. Sometimes, a higher price signals quality for which customers are willing, and even eager, to pay a premium especially if they believe those items are better in other ways . . .
If you can provide and demonstrate quality superior that of your competitors, it won’t necessarily matter if your prices are higher than your industry’s average. In fact, counterintuitively, higher prices may attract more purchases in the right circumstances. Many customers are willing to spend more for quality assurance. Whenever possible, use objective data to support your claims.
Some industries are notorious for taking a long time to process orders or engage services. If you have created an effective system to speed up your processes vis-à-vis competitors, let your prospects know! This is an especially attractive perk to offer when you sell products or services that your customers typically need upon demand. Customers want to know you can deliver quickly and efficiently.
- Scope of Products
If you have a wide variety of goods or services, and/or if you offer a combination of goods/services that is rarely offered in your industry, you’re already ahead of the game. Business clients particularly love a one-stop shop. If they find a business they trust and with whom they like working, they’ll want to take full advantage of that business’s range of offerings rather than shop around for multiple providers.
Having a wide range of products also allows for sharper pricing through bundling, which can increase cross sales by enticing consumers to purchase other products in your line. For example, you can cut the price of one product if a consumer agrees to purchase an additional product.
- Business Ethics/Values
Good policies and philosophies can be marketed to distinguish the quality of your business. Recently, advertising conscientious business practices has become a massive trend everywhere from independent retailers to international corporations. Whether you focus on helping the environment, meticulously sourcing your goods and labor to observe fair trade policies, charitable giving, or any other activities that demonstrate your business’s ethical beliefs, it’s a good idea to publicize your efforts.
- Reputation/Client Loyalty
This is more relevant to businesses that have been in operation for a while and have developed a following. One of the most favorable things a customer can hear about your business is that your clients/customers stay on board with you after your initial transaction. It means that you treat your customers well and run your business ethically, so always strive to keep existing customers coming back for more.
This is similar to business ethics and reputation. Unfortunately, many businesses stretch the truth in the sales process or pull bait and switch tactics to win clients. Many of your prospective customers have heard sales people make over the top claims and gloss over their disadvantages or imperfections. Fortunately, this creates an opportunity for good businesses to capitalize on the poor reputation of their less scrupulous peers.
While deceit sometimes seems like the best way get immediate sales in the short term, prospects will quickly discover the ruse and eagerly post poor reviews. Consumers respect you and your business more if you’re upfront about what they can expect from you, even if the truth is that you cannot deliver on certain requests. The more open your line of communication with them, the more inclined they’ll be to work with you long term. In the long run, it is often better to under-promise and overdeliver than vice versa.
- Flexibility and Customization
If you can provide more hands-on services or otherwise offer flexibility or customization, many customers are willing to pay more or forego working with larger or more established companies whose operations are too large to accommodate those personalized specifications. Some larger companies deliver goods or services in set ways that have little flexibility because allowing for individualized customization may cost too much to implement on a wide scale.
In fact, many larger companies systematize their processes, which reduces costs and increases efficiency for their clients in many instances. However, systemization can also make larger companies unable to service more specific and specialized consumer demands. Smaller companies can take advantage of this by filling in the gaps where their larger competitors are not willing to venture.
Many of the above listed qualities bleed into each other. For example, better quality allows for higher prices and honesty is directly related to business ethics and reputation which are both in turn facets of your quality. Meanwhile, good customer service and sales practices can improve the perception of your business in virtually all areas.
The key is to see your business on a variety of dimensions which will allow you to distinguish yourself on multiple fronts. A competitor may be larger and have many more years’ experience but they may be set in their ways and inflexible when consumers require them to deviate from their standards and practices. In short, dynamic businesses who stay vigilant can stay ahead of competitors by seeing and seizing on opportunities and gaps left by competitors.
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Sam Permutt, Express Trade Capital
Despite uncertainty in several consumer product industries, the pet product industry is not only surviving, but growing. Indeed, many would say it’s flourishing as sales of specialized pet services (including groomers, trainers, and boarders) and healthy food (non-GMO, organic, paleo) are on the rise. Last year, the pet food industry (close to $30 billion) grew three times as fast as the packaged food industry – and that doesn’t even account for the toys, Halloween costumes, and GPS tags we buy for our pets.
Here’s a snapshot by numbers of the industry as it currently stands:
- The industry is now valued at $86 billion.
- Sales have continually increased year over year, even during the 2007-2009 recession years; average annual growth since 2002 has been 5.4%.
- 65% of all US households have a pet – up from 56% in the late 1980s.
- There are more than 24 million millennial pet owners, the largest pet-owning population in the country.
- Average household spending on pet products is $500 per year, more than spending on alcohol and men’s and boy’s clothing.
- Total spending on pet products is growing about 50 percent faster than the retail sector as a whole.
76% of owners consider their pets “beloved members of the family,” so it’s no surprise that they spare no expense when it comes to their furry friends.
Happy International Pet Day!
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