Marketing Tips

How Nancy Boy Runs A Successful Brick And Mortar Store In The Amazon Era.

Untitled Design.jpg

Is brick and mortar dead?

Earlier this year, we were shocked to read the Atlantic's "What in the World Is Causing the Retail Meltdown of 2017?" which reported on the steep decline of physical retail stores.  Eric Roos, the co-founder of Nancy Boy is successfully maintaining a physical retail store in the midst of this "meltdown", so we thought we do some investigative reporting and learn what he's doing right and explore Eric's unique approach to combining a flagship brick-and-mortar store with an online eCommerce store.  We also take a look at Nancy Boys’ “No-Advertising” approach and how it compliments his theories on the direction of what it takes to have a successful physical store.

Nancy Boy – A Brand Unlike Any Other!

Founded in 2001, a lifetime ago in the world of eCommerce, Eric Roos and Jack Richards created Nancy Boy, an all natural personal care brand, as an e-Commerce store.  And opened up their boutique flagship store in San Francisco a year later.  

Eric has a background in advertising and worked on branding for a variety of beauty, lifestyle, and consumer brands.  One of the things he noticed was that 90% of the personal care industry was owned by just a few large consumer brands.  Eric also noticed that these larger companies tended to focus less on quality and focus more on their bottom line, cutting corners with their ingredients.  

From the beginning, Eric wanted to create a company that focused on high quality ingredients first.  One way to stay profitable was to cut advertising out the budget and instead focus on a strategy built on customer relationships.  One by one, he won over his customers with personalized customer service and product performance instead of hype. The result was a cult following of customers that are now brand evangelists.  

 

Nancy Boy  Flagship Store Located In The Hayes Valley Of San Fransisco

Nancy Boy Flagship Store Located In The Hayes Valley Of San Fransisco

 

Traditional Brick And Mortar Stores Don’t Focus On Experiences

Throughout our conversation, Eric Roos made it clear that, while he appreciates the benefits of traditional brick-and-mortar stores, he doesn’t see the traditional model of retail lasting much longer.

The reason for this? Most retail stores don’t offer customers anything that’s interesting, special, or attention-grabbing. Eric used The GAP as the perfect example of this. You can walk into a GAP anywhere in the world, and you’ll see the same thing. The same 100 T-shirts, pants, sweaters, folded and presented in the exact same way.

As it becomes more convenient to buy online, Eric sees the future of brick and mortar stores being more of an experience to connect personally with the brands that customers love.

Because these stores don’t offer anything experiential to customers, they’re losing the younger generation. Compared to older generations, Millennials are much more focused on engaging interactions and the experience of a traditional, chain-based retail environment are not holding their attention or offering anything meaningful beyond the purchase.  What benefit is there to go the physical store when the same purchase can be made from the comfort of their own home?

Millennials are going to be the largest generation of consumers ever and their buying habits are already having a tremendous impact on the future of brick and mortar stores. This new generation of consumers aren’t interested in shopping as a hobby and they don’t spend hours wandering around malls like generations before them. They’re interested in convenience, so ordering a shirt or a beauty product directly from a smartphone is much more appealing than wandering around a boring chain store.

 

This Doesn’t Mean Brick And Mortar Stores Will Disappear Entirely

 

Eric does thinks that brick and mortar stores have a place in the modern retail world if they can provide a unique experience to their customers that they can’t find online.  

Nancy Boy  Flagship Location

Nancy Boy Flagship Location

Nancy Boy only has one flagship retail store and  it has become a destination both for locals and tourists who visit San Francisco. They have loyal customers from all over the world that make a “pilgrimage” to see one of their favorite brands in person.

One of the ways they do this is by diversifying their brick and mortar stock list. Nancy Boy doesn't carry the exact same products in their retail store as they do online. One of Nancy Boy's top sellers is their Scented Linen Spray. To compliment this product they also carry luxury linens and pillows sourced from around the world.  These products can only be found in their retail store, and they’re totally unique. At their retail store, Nancy Boy carries over 1000 product SKUs while online they have around 100.

As it becomes more convenient to buy online, Eric sees the future of brick and mortar stores being  more of an experience to connect personally with the brands that customers love.  

 

Today’s Startups Should Focus On e-Commerce First And Brick & Mortar Second

Eric explained that they opened up their retail store in 2001 originally because at the time people were still uncomfortable entering their credit card information online and they needed a way to prove they were legitimate.  Eric believes in their case this worked out for the best for them, but said that new startups would do best to focus on eCommerce.  The reason? Margins. Selling products online means avoiding costs like building rent, staffing, insurance, utilities and the list could go on.

Customers are now totally comfortable buying products exclusively online so there’s no reason that new companies can’t start out online, and move into brick & mortar spaces once they feel that they’re able to.  Starting out with an ecommerce store is a great way to develop a brand, experiment with new products and figure out the market place without a lot of overhead.

 

Wholesaling Your Products Is A Double-Edged Sword

There are many unique aspects of the Nancy Boy business model. One of these aspects is that they do not wholesale their products. You can only buy Nancy Boy products either on their website or in-person in San Francisco.

According to Eric, wholesaling your products is truly a double-edged sword. While you may enjoy increased sales and profits, you lose some control of your brand image and you’re at the mercy of your distributors.  In an interview with another POW customer Modern Sprout, we learned that some larger retailers demand unique product lines and special packaging from their wholesalers.  This can lead to a tangent from the company’s primary branding.

If you partner with poor quality distributors who don’t market your products well, or misrepresent your brand, you’re at serious risk of brand dilution and all the hard work you’ve done to create a unique brand that customers can connect to may go up in smoke.

Because of the risk of losing brand control and suffering from inferior product quality, Nancy Boy decided from the start to avoid wholesaling and focus exclusively on first-party sales, both online and in-person.

Final Tips For Today’s Businesses  

As mentioned in the intro, Nancy Boy doesn’t spend any money on advertising at all. Instead, they focus on creating better products and gaining more customers through word-of-mouth marketing.  This will lead to slower growth but a stronger base of loyal customers. Eric has these tips for companies who wish to employ the same business model.

Grow your email list

First and foremost, Eric mentioned the newsletters that Nancy Boy sends out as their most effective marketing tool. Nancy Boy sends out a monthly newsletter and instead of just focusing on promoting products or sales, the newsletter offers funny, touching, and interesting anecdotes and stories.  Eric emphasized that keeping it monthly is important. “Customers get hundreds of newsletters a month. You have to earn your way in.”

“Customers get hundreds of newsletters a month. You have to earn your way in.”

This approach has worked well for Nancy Boy. According to Eric, they have an open rate of around 40% for their emails – which is well above the average of 18%. His advice is to find a formula that works for your brand and stick to it.

Always put your customers first

If you are not advertising actively, each customer you have is absolutely precious. This is one of the reasons that, as outlined in the above section, Nancy Boy doesn’t wholesale their products.  By maintaining total control of their customer service, Nancy Boy can offer superior service, and solve problems that larger retailers may ignore. For this reason, Nancy Boy is renowned for their incredible customer service.

Eric’s advice to new retailers is simple. Each one of your customers is valuable and they need to be respected and loved. If you truly care about your customers, you can offer better service and you’ll win them over for life.

Understand that you will grow slowly

Nancy Boy did not explode in popularity overnight and their focus on not using advertising is certainly part of the reason.  Instead, Nancy Boy grew slowly and steadily over the years. They gained and retained customers due to their high-quality products, and kept on growing over they years. According to Eric, a few weeks after launching Nancy Boy, he thought to himself “Oh my God, I’m going to have to build this company one customer at a time”.

And that’s exactly what he did. If you plan to avoid advertising or wholesaling you should expect this. Your business will grow slowly, especially if you already have stiff competition. But if you dedicate yourself to great customer service and create great products, you can succeed.

 

Brick & Mortar Isn’t Dead, It’s Just Changing

Is Brick & Mortar dead?  According to a Eric who maintains both a successful ecommerce store & a physical store, it's not dead it's just evolving into something more meaningful.  When you do open a store remember, today’s consumers are starting to expect an experience when they shop in person.

So if you decide to open up a physical location ask yourself what you can do to make your customer’s visit special?

 

We'd love to hear your thoughts on the future of Brick & Mortar.  Add your comments below.

From Kickstarter to Successful Business

modern-sprout-kickstarter-to-successful-business.jpg

Starting a new business can be both an exhilarating challenge and a soul destroying enterprise. It can bring you to the breaking point of stress or to the height of success, and sometimes both at the same time. For fledgling entrepreneurs, it can seem like a long and tumultuous road, though the journey is often easier with some simple guidance from those who have gone before.

Sarah Burrows, one-half of the Modern Sprout team, sat down recently to discuss how to create a business from the ground up. Over the course of the last four years, Burrows and her husband have built up their company to provide apartment and small space dwellers with beautiful tools and solutions to grow their own herbs, plants, and flowers, all packaged up in gift worthy branding. The company challenges the notion of where and when you can indulge in your green thumb. The duo was able to leverage Modern Sprout's disruptive place in the gardening market into a thriving wholesale and e-commerce business.

Looking for a solution within the problem 

“My key piece of advice in setting up a business is that if you’re going to fail, fail fast,”
— Sarah Burrows

Modern Sprout began in 2013 from the Burrows' love of growing and cooking with their own fresh ingredients. They were living at the time in a small city apartment with hectic travel and work schedules, and they struggled to grow and maintain a garden that would supply their kitchen with fresh ingredients. Finding only large and cumbersome gardening products on the market that didn't cater to them as metropolitan growers, a spark of inspiration and several science like experiments in their living room led to them creating a prototype hydroponic planter that could be refashioned for the home to create a successful indoor container garden for those with limited space and skill.

Much like many modern entrepreneurs, in an effort to bring their idea to life, the Burrows then took their project to the digital market through a Kickstarter campaign, which they used to raise the initial capital they needed to fully launch their product. The Burrows then used the $80,000 in pre-sale capital from their Kickstarter campaign to expand into an e-commerce site, build their product offering, and attend trade shows to bring their concept to a wholesale market.

Though the Burrows have been aided by the ease of use and exposure that these digital tools afford, it still wasn't an easy road at the beginning.

"My key piece of advice in setting up a business is that if you're going to fail, fail fast," says Burrows. "We had a lot of bumps on the road and had to rely a lot on partners because we were so clueless about the whole process some of the time."

Luckily for the Burrows they didn't spend too much time trying to reinvent the veritable wheel. Modern Sprout is based on a model of creating smaller sized gardening containers for urban growers. To achieve this the couple sourced custom components for their smaller packages and simplified a timer system that is easier for non-professional gardeners to use. In their endeavors, the Burrows' learned the value of working with local manufacturers to deliver the best possible models through their initially limited run of 800 units.

 

"Because we worked with all local manufacturers our costs were really high and to this day we don't sell some of the particular products wholesale because we simply can't make our margins," says Burrows. "It took some time to go back to the product to re-engineer it to make it cheaper and better, but we started with a solid model."

The Burrows tapped every available resource they could to fill positions and make fulfillment. They utilized Google to search for potential partners at the best possible price and found an engineer off Craigslist to give advice on the logistics and design side of the business. They also begged and leveraged with other suppliers and tapped into their friend group for the better deals to meet their small run requirements. They took full opportunity to network with other entrepreneurs who had experience starting their own companies and could sympathize with the process and offer them lower production costs. After time and trial and error, it became easier for the Burrows to find appropriate vendors and seek out opportunities from across the country and around the globe.

"We learned the value of working locally," says Burrows. "It's important to work with people that you can have face time with. It's very tempting to go offshore to cut down costs, but you have so much less control. You may spend more money using suppliers in your area, but you actually get to go and meet the people and they become more personally invested in the project."

Burrows recommends bearing the burden of refining the perfect product first locally before thinking about sending it to a broker overseas for cheaper manufacturing. As part of their growth strategy the couple relied upon Kickstarter to both raise the capital they needed and validate that they had a product that people desired.

"It's important to network with as many people as you can who will listen to you and give you advice," says Burrows. "If people aren't really willing to listen you may need to pivot your idea or approach. You also shouldn't worry about having it totally defined and completely perfect before launching on Kickstarter. You idea will evolve and change and your market insight will shift given input from Kickstarter."

A major shift for Modern Sprout came when one of their planters was picked up by O - Oprah magazine as one of Oprah's favorite things early on in their business. The endorsement was both a blessing and a curse for the Burrows as they experienced extremely high demand for their product and exposure to new buyers, but struggled under the weight of being able to fulfill their multiplying orders.

"Our capacity at the time was maxed out at shipping around 250 units a day, but we needed to ship around 700 units to keep up," says Burrows. "We were air freighting all over the world and were pulling 17 hour days stressed out to meet the demand."

While the spike in orders stretched Modern Sprout to their limits, it also gave them a lot of extra cashflow which they used to expand their assembly, build, and fulfillment capabilities and allowed them to bring on consultants who advised on how to refine and improve their processes for efficiency.

This exposure also opened them up to large retail owners who might want to carry their product. When coupled with the brand's participation at trade shows it allowed them to scale up to new markets.

"The more you exhibit at trade shows, the more you build better relationships and legitimacy and credibility with retailers when you keep showing up time after time."

The Burrows have also been lucky that they don't have a huge amount of other competitors in their space. The majority of gardening companies cater to big suburban backyards with huge products, while Modern Sprout is repositioning gardening tools into the gift sector with beautiful packaging, so they aren't as saturated.

"Another piece of advice is to know you competition and don't enter a super saturated market," says Burrows. "We've been lucky to have retailers coming to us rather than having to do a hard sell. We've enjoyed good media and press coverage because there aren't a lot of other companies that have gardening products that look as good. Find a market that hasn't been disrupted or reinvented in a very long time and you'll stand out."

Though they have been savvy in their product offering and market approach, the Burrows have experienced some bumps in the road in terms of expanding the e-commerce side of their business. While the fast moving digital space is beneficial for entrepreneurs and small businesses to enter with little investment and no bricks and mortar space, it also makes it harder for them to stand out. E-commerce also involves investment in optimizing web sites, content creation, and social components. For Modern Sprout, wholesale represents about 70 to 80 percent of their business while e-commerce is concentrated on a smaller 20 to 30 percent. Yet the margins on e-commerce deliver much greater reward than wholesale, so it's a critical area of focus for Modern Sprout and other fledgling companies.

While these methods deserve attention, Modern Sprout's successful business journey, as well as that of any business, is underscored by phenomenal ideas and the tenacity to follow through with them.

"When launching a new business it can't just be about a one hit wonder product," says Burrows. "You have to think of the brand, you can't just think of the one product that you have in mind. If you really want to be successful and establish a company you have to have good ideas."