How did retail service platform b8ta unexpectedly become globally known for its stores?
When we talk about discovery and experience in retail, we talk about b8ta. The company’s stores let shoppers discover, experience and buy all of the most innovative new products from creators all over the world. It’s like being plugged into all of the best start-ups, Kickstarters and innovators and getting to play with all their ideas.
Despite this success, this isn’t actually what b8ta was set up to do. The company doesn’t see itself as a store brand, but a retail service platform to help its partners create amazing physical retail experiences.
As the company’s first employee, general manager John Kennelly Jr has been with b8ta from pretty much the beginning. We find out how the b8ta brand has accumulated so much star power, how it is helping its partner brands succeed and the company’s exciting future plans:
Could you describe b8ta in a nutshell?
B8ta is a retail service platform that enables brands to deploy a variety of physical retail experiences as quickly and efficiently as possible. We do that primarily through software.
Most people would probably describe us as a gadget store or something along those lines. I think that’s how we’ve made our name with the consumer facing portion of our brand. But that’s definitely not how we view ourselves.
What kind of information are you capturing for brands?
We share both quantitative and qualitative data. On the quantitative side it’s really traffic data specific to their product. The report is not dissimilar to a Google Analytics report you might see on a website. Brands are seeing the number of impressions their product has gotten – impressions mean someone has walked past their product. The next step is discovery. Discovery is someone who stops and spends five seconds or more looking at the product. Then we capture any one-on-one demonstrations by staff of the product for a customer, so brands can see how many demos are being done of the products. And then of course we have real-time up-to-the-minute information on how their products are selling in the store.
On the qualitative side we have a chat feature built directly into the software. If there’s anything about the quantitative data that the brand sees and wants more information about they can actually just send a message to the store staff directly and get real-time feedback on how their product is doing and what customers are saying about it. Maybe they’ve released a new colour and they want to know how it’s resonating with consumers. They can message our store directly and we’ll tell them what people think of it.
Do you advise brands on how to make their products more successful?
Absolutely. We don’t have formalised professional services, however we have our partner success team who are responsible for the day-to-day wellness of our partners and provide feedback like that. They have regular check-in calls with partners letting them know what they can be doing better whether that’s how they can use the software better or feedback on the price of their product.
Are there any particular brands who have had a considerable amount of success selling through your platform?
The one that comes to mind is a product called Quip. It’s an electric toothbrush with a beautiful sleek design. The device itself costs $40 and then they put you on a quarterly subscription where they send you new bristles. It’s a pretty simple idea but a really beautiful and well executed product.
We’ve been selling their brush for about a year and a half in b8ta stores and they just this week launched in Target. They really learned about physical retail through b8ta and then they used that learning to get into one of the largest retailers in the US. I think that’s a big success story.
Can you tell us about the specific things they might have learnt by working with you first?
Number one I think they’ve learnt about price point. I think they’re actually selling for a bit less at Target than they have at b8ta so I think they got a good sense for price sensitivity. Because they have a subscription component to the product I think they learnt a lot about things they can do to increase the attachment rates and make sure that people are signing up for the subscription so that they don’t just buy the brush and then drop off.
In general, they learnt about marketing and the store collateral that they use because our software allows brands to quickly and easily change their messaging and their collateral in real-time. They did quite a bit of experimenting with what content was working for them, so I imagine that they got some learnings from that that they’re applying to their in-store presence at Target.
Is Quip staying in b8ta stores even though they’re being stocked by Target?
Absolutely. They continue to do more with b8ta. We’ve seen that several times. It’s not this thing where you’re graduating out of b8ta. I think we will always provide an experience that’s different than what’s available at Target or Best Buy or any big box retailer.
Those retailers obviously provide scale that we’ll never be able to rival. We don’t want to be that big. I think what we continue to be able to provide, which the big box retailers just aren’t in a position to do, is the experience. Our staff are highly trained. The product is going to be out of its packaging and available for you to actually put your hands on. You can actually understand how it works in a way that you really just can’t in a big box retailer. I think that’s why Quip continues to work with us and actually expand even though they’ve just gotten this big deal with Target.
What would you say have been the major learnings for b8ta since it launched?
I think what’s interesting for us is that from the beginning we always saw ourselves as a retail platform and that we were going to really live behind the scenes. We were going to build a few stores and then start to roll out our software and not necessarily be consumer facing. But what we’ve seen over the last couple of years is that our brand has started carrying a fair amount of weight especially in the world of retail.
I think the b8ta store brand has grown a lot more quickly than we expected. By the end of this year we’ll be at 15 b8ta stores and we have several more coming next year. I don’t think we necessarily planned on opening this many stores this fast but it seems like the demand continues to be there for brands to place their product in our stores.
I think the reason why people talk about us a lot is that we’ve done a good job of putting really amazing products into our stores. We provide the platform for them but because people come into our stores and see some of the most amazing product on the planet that’s what sticks in their memory. They associate b8ta with those products, even though we don’t make them.
How are you planning on developing the main b8ta concept going forward?
The main ways that we’re going to be developing and adapting our concepts is placing b8ta in new types of environment. That could mean putting a b8ta store inside an airport lounge. It could mean putting a b8ta store inside a busy apartment building to create some interesting space. It also means expanding internationally. We definitely will be making our way over to Europe in 2019. Asia is a little bit more complicated than Europe, but it’s definitely on our radar.
Do you turn a lot of products down?
That’s something that’s been a big point of focus for us since the beginning. Our business model is different than a traditional retailer. We don’t have a wholesale model. Our business model is a subscription fee that brands pay to be in the store and then they keep 100 percent of their proceeds.
As a result, we’re not really taking a risk when we bring a product into the store. If the product doesn’t sell that’s a challenge for the brand but it’s not a challenge for us. We can really let the market bear out which products are successful and we don’t have to curate.
The only time we turn a product away is if it just isn’t ready for consumers. If we feel like there are quality issues we may postpone the launch or something like that. But in general, we really don’t curate or turn folks away.
A big part of the reason why consumers enjoy coming to b8ta stores is they know they’re going to see new things on a regular basis. There’s this notion of this healthy cycling through of products. Although we don’t curate on the front-end, if a product has been in a b8ta store for a few months and it doesn’t seem to be resonating with customers that’s a product we would look to move into some different stores or pause their presence at b8ta until the product is a better fit.
The fact that every month we launch new products requires us to be selective about who gets to stay in the store. We feel like every maker should have a chance to get in touch with consumers and get feedback on their product.
Do you sell a lot online?
We do sell products on our website. However, what we’ve seen as the biggest value of b8ta.com is it’s a way for people to transact who have visited our stores or are actually currently standing in the store and they want the product shipped to a loved one or just shipped to them because they’re travelling or whatever it might be. They’ll use our website as fulfillment.
But most of the discovery of new products is happening in stores. It’s very rare that somebody will visit the b8ta website who’s never been to a b8ta store. We’re really focused on brick-and-mortar and I think our ecommerce site is a nice value add but it’s not really a huge part of our business and it probably won’t ever be.
Do you have any best practice advice for a brand who wants to promote their product through you?
This may be very simple but it’s something that a lot of brands forget it, and it definitely causes problems – it’s really important to just drive traffic. Something as simple as putting a store locator on your website to let people know if they want to come and try the product that they can come to a b8ta store near them and experience it.
That’s a really big part of the success of a lot of our brands. They’re using us for what we’re really good at which is creating that great experience and taking a customer who’s maybe looked at the product online and gone ‘I really like this but I’m not sure about’, giving them that world-class demonstration of the product and getting them over the edge. I think the most successful brands have done a really good job of using us for that.
We obviously get a lot of organic traffic in stores. But we’re still at the point where a lot of people who come into our stores are there for the first time so they’re not necessarily there for a particular product. When we get traffic of people who are coming in for something in particular we tend to do a great job with that.
How did the learnings from b8ta fed into Built by b8ta?
For the first couple of years we had a lot of success with our multi-brand b8ta locations that we have around the US. We then started to see a lot of brands opening their own flagship stores. Allbirds, Casper, Sonos, brands of that nature who are traditionally online focused are starting to really get into brick-and-mortar in a big way.
We had a couple of conversations with some of the brands that have tried to do it themselves. Quite honestly, we heard horror stories of terrible lease negotiations and expensive buildouts and all of the things that are really challenging about building a store. They also happen to be the things that b8ta has become pretty good at.
So, we thought why couldn’t we create a concept where we take a lot of these challenges that go into opening your own store and remove them for brands and handle them ourselves. We provide a white-label solution effectively. We go in and do what we do best and build the store and the brands get their own flagship store out of it.
How do you envisage Built by b8ta developing going forward?
I think we learnt a lot this year. I think the business is going to look a lot different in 2019 than it looked in 2018. A big reason for that is we really learnt how important the specific design and branding elements of a store are for an online brand that’s looking to go offline.
We’re living in this Instagram era where everyone is very fanatical about the exact specifics of their brands and their colour palette and the style of the imagery that they use in design. That’s what brands are looking for when they build a physical space. When we initially rolled out built by b8ta it was a little more cookie cutter than that.
One big change that we will be making in 2019 is allowing deeper customisation. If a brand is looking to build a flagship store, then we’ll be able to really make it custom to the look and feel of their brand.
I think something that we’re also going to do more of in 2019, and we’re going to try it a couple of times during the holidays this year, is to start doing pop-ups. Whether it’s around a product launch or some sort of holiday or event, there’s a ton of demand for short one to three-month pop-up type of experiences and brands are really willing to pay a premium for that.
Do you think it’s going to eventually become the main source of revenue for b8ta?
I think only time will tell. One thing that I feel pretty confident about is that as we scale I think eventually over the next several years the revenue from the b8ta’s own stores will become a smaller and smaller piece of the pie. We’ll continue to open stores but we’re just going to continue to invest in retail partnerships like what we’re doing with Macy’s and things like build by b8ta, international expansion. We’re going to add a lot of things on top of the original core business and those things will probably grow a bit faster than b8ta flagship stores. Every year that part of the business will grow, but so will our overall business.
Can you tell us about some of the most interesting brands who have opened spaces using Built by b8ta?
We’ve done a really big installation with Google inside of b8ta stores around the country. It’s a shop-in-a-shop set-up – we’ve built them these really Google focused and custom designed experiences inside of our stores. It’s all focused around the Google Home and works with the Google suite of products.
We’ve created a living room for example where you can ask Chromecast to place something on YouTube and you have a Google Max speaker you can ask to play music. You have a kitchen environment where you can ask Google to help you with the recipe. You have your office environment where you have your Pixel Book and you can ask Google to turn on your desk lamp. And an outdoor environment where you can use Nest cameras to check on your yard and things like that.
That’s something unique that we’re really proud of. Although it’s within b8ta stores they’re taking about 30 to 50 percent of our stores for these Google shops. This is the first time that we’ve really custom designed something like this.
How many of your stores are these in?
They’re currently in five and we have three more stores opening this year. Google will be in two of them as well, so by December this will be in seven b8ta stores.
Was part of the appeal that they could very quickly open up multiple spaces with you?
Absolutely. This is a good example of how we underestimated the clout of our brand. It was really important for Google to be seen as doing innovative projects and partnering with innovative brands.
For them to place their products inside of b8ta stores surrounded by the most innovative products on the planet was really important. They had budget where we could have built them a few standalone Google stores but what they actually wanted to do was create these robust Google experiences inside of our stores.
When thinking about your other Built by b8ta projects, when brands come to you have you found that there are any issues that they typically need help with?
The two things that really come to mind are the technology and the staffing. Our software inherently allows brands to basically manage the merchandising and the display of an entire store directly.
I think that’s something that doesn’t really exist outside of b8ta and would be really challenging for someone not working with us. The dashboard is basically the same as the one we use to share data and analytics with brands in the b8ta stores but applied to an entire location. That’s why it’s a natural extension of our business in that the same things that work for a small space within one of our stores generally can scale pretty nicely to a full store.
Staffing is something that we take a lot of pride in. We staff stores with world-class highly trained individuals. That’s something that is just a headache for brands if they’re trying to open their own store. They may not want to actually have more people on their payroll, so they don’t want to even staff the store themselves and have to hire more employees. But also, if they have not built their own store before they don’t know what they’re looking for in terms of hiring.
We know the types of retail employees that succeed. That’s where we recruit. We offer opportunity that a lot of retailers can’t. First of all, we pay fairly competitively which is obviously really important. All of our retail staff are actually equity shareholders in b8ta, so every retail employee receives some b8ta shares and so they really feel directly invested in the success of the company.
Can you tell us about your three favourite products or brands that you have helped launch?
Any top three would absolutely include Quip. Anytime we can be the first retail partner for somebody else and then they launch somewhere like Target, at least as somewhat of a result from working with us, that’s a huge success for us. We really love that.
I think the Google partnership is just something that we’re really proud of. It’s obviously one of the most iconic brands in the world and the fact that they really wanted to make this investment with us and create this experience in our stores I think says a lot about where b8ta is.
A really fun product that I think is a great articulation of what b8ta is all about is a product called the Lyric speaker which is made by a company called Onkyo out of Japan. It’s the kind of product that has basically never been seen before outside of Japan and the only place that you can try it and see it is a b8ta store.
It’s a beautifully designed product that visualises the lyrics to any song while you play it. It’s something that people come into b8ta stores and see and they’re blown away by, which I think is why we started the company to begin with, to create experiences like that for people.
Is there anything else in the pipeline?
Another thing that’s going to be really important for us in 2019 is expanding into new categories. I think we’ve gained our reputation really as this technology and electronics retailer but we’re going to get in to a variety of new verticals.
We’re having conversations in the health and beauty space and we’re thinking about fashion and apparel. We really believe that the general ethos of b8ta, of creating a great place for people to experience new products, really applies to any type of vertical.