Should you Take your Product to Retail or Ecommerce first?

*This article first appeared on the Web Talent Marketing blog. This is just a repost of this piece on this blog.*

The retail Home Run moment.

According to the latest data from Google, 90% of purchases happen in a retail environment. Despite the watershed of digital, retail reigns supreme for purchase intent. The niche product market is no exception. Despite a seemingly endless selection of products, the retail shelf is shrinking. More brands are paying slotting fees for placement, bigger brands are creating niche products to earn placement in Organic and secondary aisles and retailers are less interested in issuing a chain-wide distribution for a product without a limited store ‘test.’

Let’s outline an example, food. While many feel Amazon’s purchase of Whole Foods Market signals ecommerce disruption for the food market, estimates predict that 80% of food purchases will remain in retail by 2025. However, according to a Harris Poll, 48% of respondents state a major reason for purchasing online has to do with difficulty of finding the product in store. A long shelf life is the other major contributing factor. Add to that the fact that 34% of these consumers are more inclined to purchase a new brand online means that discovery and ultimately conversion can happen online, without a retail presence.

Wait, ecommerce vs. retail?

Keeping on our food example, consumers are increasingly interested in what they are putting in their bodies. Is the food made from sustainable ingredients? Are the ingredients of Organic origins? Basically, these individuals want to know if what they are about to ingest or apply to their body will not have a irreproachable reaction.

However, those promoting a product of this sort have to understand the moving target that is present in today’s market. Consumers are increasingly fleeting from the retail experience, of which they are exposed to a bevy of products, brought to you by the ever-increasing slotting fees paid by the world’s largest retailers to earn the coveted chest-high placement. The sheer nature of retail makes it difficult to keep up with the nebulous consumer demand for a particular niche sector. Unsatisfied with the selection in retail, consumers are moving to platforms with an endless shelf, ripe with a virtual kaleidoscope of options and a story unable to be told by retail, primed for their discerning palette.

We attend a great deal of trade shows and have had hundreds of conversations with many aspirational brands hoping for the home run placement in retail, thousands of consumers are not even considering retail for their niche product interests. Search is their primary vehicle of discovery. If brands offering discerning products for discerning people would realize the inherent serendipity of being present for these niche searches, in which the story and ingredients are even more important than a presence in retail, then they would realize the fleeting importance of home run placements.

As a former Brand and Product Manager, I get it… Placement for my flagship product historically would make or break my career. But we are in an age of discovery, of information, of the endless shelf in which products from the darkest depths of our existence, are delivered to your door in 1-2 days. The home run of retail no longer has a relevancy in today’s search market. The grocery store or mass retailer is no longer our medium for product discovery.

Here are reasons why marketers of a niche product should be in an ecommerce first mentality:

A variety of innovative products with niche audiences and limited distribution opportunities. While the general retail (or even niche retail) experience might not provide the level of volume required to justify placement fees, the low risk elements of ecommerce provide a viable option to even fundamentally prove concept and then, look to retail for scale.

With such a discerning product offering, education and story are fundamental to justify the pattern interrupt required to entice trial. These stories can’t be told in retail and lend themselves naturally to ecommerce. Remember when brands used to try QR codes to tell a larger story? Yea.. that didn’t work either, but a reading a blog article, Q&A, product highlights, and reviews prior to purchase… easy in the ecommerce marketplace.

The home run of placement is also missing one of the core necessities for retail, demand. Just because a product is on the shelf doesn’t mean it will sell through. Having an ecommerce first mindset will allow you to understand consumer demand, establish your flagship products, and allow you to bring your owned audience to the retailer.

This ecommerce to retail concept has been proven

Starting with an ecommerce first mindset isn’t anything new. Organizations like Bonobos, Warby Parker, Athleta, BaubleBar, and JustFab built an audience online and then further monetized that audience by creating unique retail experiences, of which they own the entire experience. And it doesn’t have to be a complete retail experience, brands like Bark Box started online and are now selling in retailers such as Target. Just look at the cosmetics space, as more than a dozen brands have started online and earned retail placement in Ulta and others.

ecommerce to prove concept, retail to scale

Retail penetration is important, but what is even more important is sell through. Marketers who are selling a unique, niche product that might require some education and storytelling prior to trial must think ecommerce first. This helps the marketer build an audience that will drive retail demand, which only comes from online and not exclusively social media. Building an audience of their existing and prospective clients, convince them of USPs, and then drive the retail demand or even earn the margin by selling direct to consumer. Retail placement is not required in the potential e-commerce disruption of food or any other niche retailer.