Thrasio. Star in the Amazon ecosystem

New business model. Bring together and accelerate consumer product brands in Amazon FBA environment (Fulfilled by Amazon)
Helix Amazon HO building Arlington Virginia Campus

Strong growth of the Amazon FBA segment

Around Amazon, with an annual sales volume of about 400 billion USD and growth of +38% vs. last year, it is normal that new business models be generated. “He who a good tree is still, good shadow shelters him.”
Amazon’s segment of third-party services achieves its highest growth and profitability. Thousands of small businesses offer their specialized products by leveraging Amazon’s commercial and operational coverage that receives a commission for its services in return.
In many cases, it is successful small entrepreneurs who are behind these companies and who encounter sustained growth and profitability issues from some billing thresholds. Their revenue is often concentrated on a class-leading, privately branded individual product with 90% of the sales through Amazon.

Amazon Sales per segment Percentage

 

Amazon Sales Evolution per segment Data Table

Sales LFL AMAZON

Thrasio. Growth and profitability for a unicorn. Unusual

Thrasio, created in 2018, is a clear example of a company growing at high rates and with positive operating results. Unusual exception in unicorn typology with a valuation of more than USD 1 billion. It is focused on identifying, acquiring, and improving consumer product brands marketed primarily through Amazon FBA.
Thrasio does a detailed job of identifying and selecting candidate brands for their acquisition and subsequent commercial and operational improvement thanks to their super specialization in the Amazon environment.
In its first two years of existence it has acquired 40 brands with incomes between 1-40 million USD in categories as disparate as home, kitchen, leisure. Among these brands are: Angry Orange, Best Gear, Creative Space, Maxim Fitness, Coffee Gator, Trail Buddy Poles…

 

Trailbuddy Thrasioangryorange Thrasio

Massimofitness ThrasioCoffegator Thrasio

 

Apply effective business and operational improvements after acquisitions.

To materialize these acquisitions Thrasio has reviewed 400 candidate brands with an advanced and well-shot Due Diligence process.
Once within their portfolio, their own marketing and operations teams make improvements by applying a proven tool kit in just 35 days in areas such as:

  • Positioning within Amazon, consumer ratings and comments
  • Content and visual communication tailored to the Amazon environment
  • Packaging
  • Product design
  • Range reduction
  • Product Sourcing
  • Expansion to other international markets where Amazon has a significant presence such as the UK, Germany, and Japan

The results are there and Thrasio already has a total annual revenue of more than 500 Million USD doubling every 73 days its turnover. Still far from the size of large consumer product conglomerates such as Procter & Gamble and Unilever that through acquisitions of individual brands and supported by strong traditional advertising investments managed to occupy end caps in large retail chains.

Omnichannel Retail >>

Replica effect. Clones in action

Thrasio currently has 700 employees and its high growth rate generates a wide range of vacancies (+240 positions in February 2021). The type of functions and profiles required are revealing the company’s priorities and contrast with the current structure of many retail chains. We recommend visiting their WEB Thrasio Jobs.
Thrasio’s acceptance among investors has been very good (including Advent as the main player), achieving a total of USD 900 Million in 6 rounds of funding.
The replica effect is fast and there are already clones of this type of business in both the USA and Europe. Among them are: Perch, Heroes, 101 Commerce, Razor, Seller X, Brands United….a whole new generation.

 

Selling on Amazon is “easy”. Growing and doing it profitably is difficult. Looks like Thrasio is in a good position to achieve it. Like any challenge, it is not without difficulties ahead including the heavy dependence of an innovative giant like Amazon.

 

Más info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Customer Ratings & Reviews

It’s been two decades since Amazon included the stars and customer feedback at the product level. They have had great development and their future is promising.

Marketing Circular

They have a clear impact on conversion

  • More than 80% of consumers read reviews and ratings online before purchasing a product (store/online). Especially for high-cost, risky products. It oscillates on a large average depending on the product category. There is a clear upward trend of its impact on conversion.
  • Still 30% of retail chains do not communicate any kind of assessments (stars) or comments.
  • At the individual product level, conversion greatly increases after the first 5 reviews and comments become visible.
  • The impact of negative valuations is increasing on chains. 2 out of 3 customers are predisposed to express their negative rating against a bad shopping experience.
  • In 3 out of 4 of these negative cases, the main reason originates from operational elements and is generated after the transaction.

 

There are already consolidated best practices for its content, communication and implementation

  • Help keep comments from being too brief. A revision with 400 characters has 2.3 timesmoreimpact than another with only 20 characters.
  • Make it easier forother client s to highlight the usefulness or not of that comment. No opinions have the same value.
  • Some negative comments provide credibility and authenticity to opinions. “Too good to beauthentic.” An average product rating of 4.2 – 4.7 (out of 5) is the range with the highest impact in conversion.
  • Set email reminders to encourage post-purchase product evaluations. 80% of ratings are generated by email. Take advantage of optimal periods by product type, from 7 days (for campaign items) to 21 days (e.g. appliances, giving opportunity for use) from the time of the transaction.

 

LULEMON

 

lULEMON2

 

 

Q & A.  Section and User Generated Content

  • Feedback structured and fostered by the chain itself. Segmented based on demographic profile and usage. With an emphasis on those attributes that are key to conversion according to each product category.
  • The latest reviews are always best rated by other consumers and further facilitate an improvement in the SEO positioning of the product.
  • Verified opinions always provide greater credibility than anonymous opinions.
  • Syndicated actions with External Marks and other Partners that make it easier to obtain ratings in less time.
  • The use of content generated by the users themselves (UGC). Use and use of feedback and visuals in the various channels of customer interaction including social networks and conventional media.
  • Accompanying assessments with visuals or videos increases their impact by 4.
  • The customer wants a response to their feedback. Depending on the nature of the incident, quickly within 24-48 hours.
  • Presentation of evaluations not only on individual product pages. Optimize your impact with your selective presence also on home page and product category pages.
  • A Q&A section (detailed questions and answers) on the product page is clearly appreciated by customers and positively impacts conversion

 

Customer Experience >>

 

 

IKEA1

 

John Lewis

 

In the future, they will increasingly have an impact on operational improvements, product and customer experience.

Advanced and personalized analysis of all customer-produced content allows you to:

 

H&M Fitting & Size

 

  • Decentralization of customer service. Local power with technological support from software tools like  Critizr.
  • Optimal tool to motivate and incentivize the internal teams of the chains. Not always with negative content.
  • Integration within the process to test new products and services.
  • Q&A system that provides interactive conversations  between  the customers  themselves.
  • Close linking for improved client experience  (CX).
  • Greater focus on reviews on fitting and clothing sizes, where there  is a large rotation of models with very short lifespans.
  • Use and communication to engage customers with those improvements/changes already made thanks to their comments.
  • Launch of programs aimed at highlighting the opinions of those customers whose opinion is most relevant to other consumers. Example Amazon VINE program.

 

Decathlon

Your customers’ feedback provides credibility and trust. The resources used in this area will have a high return.

  • It is not enough to have it… they need to be optimized by incorporating the already proven best practices that are appropriate for each sector. Its coste is relatively low and have clear operational implications.
  • Your development will go hand in hand with improving the customer experience (CX).
  • This positive spiral of confidence materializes into greater conversion.
  • The planned reduction in conventional marketing budgets entails the opportunity for a greater emphasis on digital and social marketing that will facilitate the use of user-generated content (UGC).

 

Circular and prescriptive marketing: do we take the most of it?

 

Wayfair

 

 

Amazon Q&A

 

Amazon Q&A2

 

Más info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Sources: American Marketing Association. CMO Survey, BazaarVoice, Brightpearl, Critizr, NorthWestern University, Olapic Monotype, Power Review, Salesforce Research, Trustpilot

 

ROBLOX. Creativity that hooks

Listening to the customer is no longer enough


roblox target customer

Innovative content platform that makes it easy to develop and enjoy video games to more than 160 million active users for almost 3 hours a day. More than half are niñ@s under the age of 12.
Coding is no longer a barrier. 1 million users develop their video games, earning a total payment of $250 million. This remuneration is quantified based on the acceptance of each game.

 

ROBLOX Users Evolutions

Roblox Time spent minutes

Age segments ROBLOX users

It effectively disperses that creative power by integrating its own users into the business model. It is the natural quarry of the developers of the apps of the future

ROBLOX developers remuneration

Quadrilling your sales over the past 3 years, up to $1 billion by 2020, is never easy. It still doesn’t give a profit. ROBLOX imminent IPO will be a good opportunity to validate the expectations your investors have had in the business.

Retail Strategy >>

The competition is strong, Epic Games, Minecraft, Unity… ROBLOX has achieved some important differentiating elements at the base of its model:

  • Facilitador del “NO CODIGO” poniendo a mano de cualquiera la elaboración de nuevos videojuegos
  • Facilitator of the “NO CODE” by putting at the hand of anyone the elaboration of new video games
  • Freemium with subscriptions of $5 to $20/month
  • Market place specific among its users
  • Making “Content” the true king of business
  • With a focus very focus on a particular age segment
  • Lightweight structure. Total of 800 employees across the company

 

ROBLOX Business Model

 

 

Retail is not immune to this phenomenon. Implications

In a sector such as Retail, where there are still chains with difficulties in proactively listening to their customers, opportunities will arise to implement practices related to those of ROBLOX where customers themselves “replace” their centralized product teams feeling part of a related social network, creating, enjoying and even being remunerated for it.

 

Fasten your seat belts!

 

Más info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

 

Sources: Roblox Accounts, Material IPO Roblox Nov 2020, Rex WoodburyScott Galloway

 

Restoration Hardware (RH). Nobody invites you to enter the luxury home decoration retail segment.
Incorporation on its own merits


Restoration Hardware NYC

No invitations are received to enter the Luxury segment. Restoration Hardware (RH) has achieved that difficult “Upgrade” journey through a clear strategy and firm execution in the last 8 years.
With the opening of its 6-storey flagship-store with 9,000 sqm. in NYC (Meatpacking District) at the end of 2018, a successful transformation phase culminates to become a chain with 86 Luxury Decoration stores (USA), sales of 2,690 million USD, productivity in store above € 10,000 / sqm. and what is even stranger today, profitably.
We are very used to seeing Flagships generating heavy losses. This is not the case for RH.

In its first year open, this store in NYC has generated sales of over USD 100 million and a positive contribution of USD 30 million.
Mission accomplished!

RH Sales Evolution-min

Gary Friedman, CEO of the chain, summed up in a certain way the situation of Retail and the trajectory undertaken by Restoration Hardware with determination.

“We believe that in the most recent period growth without profitability has been unfairly rewarded and valuations have been based, erroneously, on the belief that an online business is more profitable than a retail with physical stores”

“It is becoming increasingly clear that brands born online desperately need integration with stores to survive, as they are facing very high variable costs and difficult to bear in the medium term”

“Traditional networks, in some cases fueled by fears that millennials may not perceive them as fashionable, have invested to grow their digital business in an unnatural way. Without obtaining higher total sales, the results are a lower business margin and somewhat abandoned physical stores ”

“At RH, we have chosen to take a different path. Elevate the RH brand by building architecturally inspiring spaces that blur the boundaries between residential and retail, interior and exterior, home and hospitality with seamlessly integrated restaurants and services. ”

“Our brand is more valuable in creating a customer experience that cannot be replicated online”

“This dominant physical presence combined with an omnichannel and direct platform that already generates more than a billion dollars online will continue to allow the RH brand to stand out in the fragmented luxury segment of home retail”

 

2/3/2020 RH Reports Record Third Quarter Fiscal 2019 Results | Restoration Hardware

 

 

 RH Results Evolution-min

Retail Strategy >>

Main characteristics of the HR business

  • Reasonable, non-exorbitant sales growth, with profitability on the rise and supported by operational improvements and sourcing such as reducing the stock by 20%, increasing sales by 7%
  • Atypical customer program (400,000 members) with an annual fee of 100 Usd with great advantages and which already accounts for 95% of its sales
  • Its physical stores are gaining participation, contrary to the general trend, supported by an integration of its new online restaurant activity with its customers.
  • Harmony carefully applied to make its shops exquisitely renovated and recovering unique buildings that were once Museums, Post Offices …
  • The direct channel made up of ecommerce, telephone, catalogs and professionals accounts for 44% of total sales. Their catalogs, called Source Books, constitute one of the best experiences in how to transform and enhance the strength of printed material and digital effectiveness.

 

Restoration Hardware NYC

Restoration Hardware Design Atelier

Restoration Hardware NYC Meatpacking

Restoration Hardware Living Room

Hard Restoration development
Future development is still based on inspiration through its stores. Two new segments such as Home / Ski and Home / Beach emerge in an incipient way, but with a permanent character.
In addition, the medium-term expansion to the European market (6 new stores) is decided.
RH’s commitment is to continue navigating with skill between two waters, increasingly difficult to separate:
• Retail vs Residential
• Home vs Hospitality
• Indoors vs Outdoors

Who said that Luxury is always traditional and conservative?

More Info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Nordstrom NYC opened. Department Store Evolution.
Is the Shoe Bar the future?


Nordstrom Shoe Bar

More than 120 years in business. Continuous transformation

Nordstrom, since its start more than 120 years ago selling high segment footwear, has been evolving in line with its customers to become the best service exponent in the segment of Department Stores specialized in fashion, footwear and accessories.
Last October, it opened its first full size store in the heart of NYC, 35,000 sqm. and 7 floors dedicated to the woman to complete the previous opening of an adjoining building dedicated to the man. It has taken eight years to execute it since the building was completed.
Nordstrom is a retail business with sales exceeding USD 15 billion, 75.000 employees but without substantial growth or adequate end profitability in the recent years.

Results Evolution Nordstrom V english

More than 30% of its sales are already digital

No one could have imagined a decade ago that more than 30% of their total sales became digital. The transformation of the business into omnichannel has been a priority and focus of the bulk of its major investments in the last 5 years.
The impact has materialized in a transfer from sales to digital activity, without the total having increased substantially and experiencing an increase in costs in the business. The same story is repeated in the different retail sectors. Omnichannel is necessary but not sufficient to ensure survival and success in profitability.
Its Off-Price Nordstrom Rack stores already account for 1/3 of its total sales and with higher relative growth than the Full-Price Traditional Department Store.

Nordstrom Digital sales Venglish

 

Mhe Services

Retail Strategy and Operations >>

Innovations in the recent NYC store

Among the omnichannel initiatives Nordstrom has implemented include:

  • Priority and emphasis on areas to collect goods purchased online (click & collect)
  • Ease of returns with an express “self-service” system kiosk
  • Collection and processing of returns of goods purchased online from other competitors
  • Diversity of alternatives for the customization of the goods; from sports shoes to jewellery
  • Background stage and optimal brand pop up space for Instagram…

 

Nordstrom NYC popup
Nordstrom Express Services
Nordstrom Shoe Personalisation

They also include:

  • Single common treatment of environment and space for different brands
  • High efficient fitting room areas
  • Buying and selling second hand items
  • Joint development of the Nike store for women adapted for Nordstrom format

Food & Drink and Retail Customer Experience

But, without any doubt, the biggest change lies in the treatment of Food & Drink operations across all floors and departments, adapting and integrating Food & Drink to each customer segment and in line with its shopping  itinerary.

Its maximum exponent is the Shoe Bar, where the purchase of footwear lives together with the consumption of drinks. Between pair and pair, cocktails to the customer’s taste. Who was going to tell us that Drinks and Shoes worked so well together!

Nordstrom Shoe Bar

Department Store format. Dynamo or Dinosaur

Department Store format, across its different typologies, has some common elements of the business such as:

  • Need for a higher specialization towards personal products and services. Exceptions such as John Lewis (UK) in the home sector are rare
  • Strong commitment to improve customer experience and integration with highly developped Food & Drink  operations
  • Strength in the area of financial services as an additional income
  • The role of International Brands shop windows now has to live together with the direct presence to the consumer DTC (digital and own stores)
  • Strong investments and digital transformation that transfers your sales (like liquids) from your stores to omnichannel without adding real growth and increasing costs
  • Unique real estate assets that have been authentic “oxygen ” for these businesses
  • Non-optimal performance in shopping malls vs high street locations
  • Rationalization of the number of current stores
  • It is  not easy to replicate the model on a large scale and internationally. Singularity

Nordstrom Branding

Nordstrom NYC

Nordstrom keeps on innovating in search of its profitability.
Who was going to tell us that Drinks and Shoes worked so well together!

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Large-scale personal styling. With sales over 1.500 million € it is not a niche market

Product customized by stylists with the support of data that matters. Artificial intelligence and personal touchStitch Fix Home Personalizacion

Growth and large size. It is not a niche market

  • Stitch Fix individually personalizes the looks (5 pieces) of clothing and accessories that it sends to its clients thanks to a large number of stylists (5,100) and with the support of the detailed information that its clients provide. It is not a subscription service and the customer returns, without obligation, everything that is not to your liking. It has no physical store.
  • The business started its activity in San Francisco (USA) in 2011 and has been publicly traded since November 2017.
  • With annual growth of over 25%, it has achieved sales of USD 1,577 million in the last fiscal year of 2019. Unlike other companies in its segment, it obtains operating benefits.

Stitch-Fix-Evolución-Ventas-English-

  • The gross margin with which he works is 45% and he obtains an excellent inventory turnover greater than x6 per year. The investment in communication is high (10% of sales).
  • The assortment is aimed at women, men and children with an extensive portfolio of external brands, exclusive (medium / high level) and a small number of private brands.
  • It has 3.4 million active clients distributed in a wide range of ages, being the most important segment of 30-50 years.
  • He is focused on USA and has recently started his activity in the UK (2019).

Grafico-ventas-Stitch-Fix-English-

Customer experience differentiation. Data that matters

The great differentiation of Stitch Fix is the detailed information available:

Customer (initial set of 90 detailed attributes)

  • Socioeconomic profile and context
  • Size and fit
  • Product types and categories
  • Styles Colors. Prints
  • Prices. Marks Purchase Guidelines

Relevant detailed product attributes
Specific customer feedback at the individual product level received and planned (85% of customers participate)

 

Set-de-Data-Stitc-h Fix

  • The stylists have the support of this model that facilitates the selection of the looks for each client that receives in 3 days.
  • These proposals have a 63% probability of success that is gradually increasing by incorporating the real feedback from the client (+ 21% to the sixth look the client receives).
  • It began with Women, later joining man and child.
    Direct actions with good acceptance are being incorporated, such as the proposal of an additional color for a garment that the customer has previously acquired and extra accessories to the look already sent.

 

Competitors with different origins and channels

The list of competitors is increasing with different origins and approaches among which are:

  • Trunk Club Belonging to the Nordstrom chain of department stores
  • Personal shopper. Amazon Ward Wardrobe subscription service extension
  • Le Tote. With an alternative rental component. On-line
  • MM Lafleur. Showrooms and online

 

Trunk Nordstrom

Mhe Services

Retail Strategy and Operations >>

rganization and structure adapted to the business

  • Stitch Fix has 8,000 employees, among which the 5,100 stylists who work part-time and remotely stand out.
  • These stylists are supported by a strong Artificial Intelligence department that has more than 125 analysts and a team of 280 people managing the client experience.
  • They have a total of 7 distribution centers (Usa and Uk).

Stitch-Fix-Staff-English-

 

Retail Impact

Stitch Fix is pointing the way to customize, on a large scale, a fashion business based on the advice of stylists with the support of artificial intelligence fueled by continuous feedback from its customers.
Retail chains have before them the challenge of incorporating in a relevant way for each business and sector, this approach that flees from a mass and indiscriminate volume of product that the client considers less and less attractive.

Artificial intelligence and personal touch (large scale)

More Info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

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