This week in the world of eCommerce, Wal-Mart is cutting 200 eCommerce jobs in California, but it has nothing to do with downsizing. "Fast fashion" has many traditional retailers both with physical and digital stores continuously playing catch up. eCommerce stores that were once strictly online-only are opening up physical locations and seeing overwhelming sales results. Article, a Vancouver based online furniture retailer has only been around for 3 years and is already profitable. They're being compared to the likes of other Canadian tech success stories: Hootsuite and Vision Critical.
Wal-Mart to Cut 200 e-Commerce Jobs In California
Wal-Mart Stores Inc. plans to let go of around 200 eCommerce employees in their California offices Tuesday, at the massive retailer's corporate office. It’s all part of a strategic shift according to Marc Lore, the company’s new eCommerce chief. Lore stated in a memo reviewed by The Wall Street Journal that Wal Mart is "focused on adding the right talent to our team and making sure we're investing in ways that directly improve our customer experience," Spokesperson Dan Toporek further added that Tuesday’s cuts are part of the retailers plan to shift staff toward more shopper-facing roles. Since Wal-Mart.com sells millions more products now than they did a year ago, they require more employees to manage those online items, and less senior people. The omnichannel retailer plans to continue investing billions into their eCommerce strategy that will see them making even more acquisitions like last years Jet.com Inc. purchase.
Fast Fashion Has Many Retailers Lagging Behind
Source: Internet Retailer
Fast fashion is quickly making its way into the vocabulary of consumers and online retailers everywhere. Fast fashion retailers such as Zara, are able to replicate designs seen on runways and get that clothing into stores and online very quick. This business model is being eaten up by consumers shifting shopping habits. “Today’s customers think differently,” says S&P Global Ratings analyst Helena Song. “It’s so easy to lose your customers, and they never look back.” Fast fashion is especially attracting younger consumers as the clothing is affordable and they can get their hands on trendy looks now. But fast fashion is having quite a negative impact on traditional apparel retailers. One in particular is the J. Crew Group Inc. Earlier this month, J. Crew added two directors with expertise in restructuring due to the fact their $1.5 billion term loan was sinking towards 55 cents on the dollar. According to analysts at S&P, fast fashion is an expensive proposition for traditional merchants such as J. Crew because they lag behind on replacing stale inventory.
Online-Only Stores Opening Physical Locations
Source: Retail Insider
While so many long time brick-and-mortar retailers seem to be closing shop–Mexx, BCBG–thriving online only retailers are starting to open physical locations and haven’t been deterred by the recent downsizing. Even Amazon, the kings of eCommerce, have recently opened an experimental grocery store and 3 bookstores. The opportunity to test a physical location is too great for many strictly online retailers to pass up. Vancouver based Indochino, a men’s made-to-fit suit maker is one of those retailers. "Not every customer wants to do something one way," says Drew Green, CEO "We know that our customers like to buy online, but we know that there's a whole other set of customers that prefer to have someone walk them through the process." And then of course there’s Warby Parker, the innovative eyewear company based out of New York. Founder Neil Blumenthal has experienced the same thing stating "People were telling us 'I want to touch and feel the glasses before buying them,” In recent years, Warby Parker has opened 2 Canadian stores. Blumenthal adds that "A website in the middle of the internet doesn't exist to somebody if they don't know it's there," so having a physical location enables Warby Parker to direct foot traffic to their online store. The same can be said for Indochino. Drew Green says that since Indochino has opened physical locations, their online sales have grown twice as fast.
An Online Canadian Furniture to Join Ranks of Hootsuite and Vision Critical
Source: Internet Retailer
Article, a Vancouver-based online furniture seller, has a delivery fee of $49 no matter how large a product is or the cost of the order. The company is expected to make more than $90 million in revenue this year. The startup is only 3 years old and already profitable. It made around $50 million in revenue in 2016, and is expected to be making over $50 million per quarter going into 2018. This kind of growth puts Article into the same category as other fast-growing Canadian tech companies such as Hootsuite and Vision Critical. The catch, in addition to the $49 flat rate shipping, is that Article designs and builds a limited amount of furniture and only has about 450 items available. They work with in-house and contract designers who come up with product designs, they test to see if those designs will sell on the website and if they do, only then do they place large orders. While it’s not a new business model, the $49 shipping fee is something that online shoppers seem to love.