When you imagine a start-up, you probably think of a new, fast-growing company disrupting an industry with digital technology, similar to Uber in transportation, Airbnb in hospitality and Amazon in retail.
The key word here isn’t ‘new’, or ‘fast-growing’ – successful companies are founded every day. But if a company manages to change the way someone hails a cab, books a hotel or buys a book, that’s when there is a potential to disrupt an entire industry.
In fact, a report from KPMG stated 72% of CEOs are worried about keeping pace with new technologies, while 74% are worried about start-ups entering their market. Retailers must modernise their strategies in order to compete with the influx of new-age companies, because it’s not just Amazon they need to worry about any more.
Just look at how Buzzfeed disrupted the media industry – newspapers and magazines have been replicating ‘listicles’ in a desperate attempt to stay relevant. But copying a start-up’s USP is pointless – it is crucial to stay true to your brand. Retailers must look deeper at how start-ups operate because there are a few tricks and tips which can be adopted to improve your business.
Retailers firstly need to begin thinking like a start-up. Start-ups, with big ideas and minimal capital, have to be agile in everything they do: they test, deploy and iterate. This start-up mentality is crucial for retailers who want to compete in a digital world, because customers won’t wait six months for an app update. And the best way to change your attitude is by inviting technologists and creatives to sit on the board to encourage the company to take risks.
2. Seamless experience
While Uber is famous for its payment mechanism, so slick that customers can forget about physically paying their driver, the revolutionary car service is also a great example of start-ups getting the simple things right.
Uber understands entering card details can be fiddly on a small smartphone screen, so it offers to scan customers’ cards for the relevant digits which auto-fills the form. Other obvious keyboard functionalities include auto-locking capitals when entering postcodes and the same goes for digit-only field entries, presenting customers only with the number pad – because you clearly don’t need letters when typing in your card’s CVV number.
And flower delivery start-up, Bloom & Wild, even goes as far as removing the shopping basket to improve its seamless online experience, because it knows the majority of customers order bouquets for a one-off occasion, making the check-out step redundant.
3. Data science
If there’s one thing start-ups have in common, it’s understanding the power of data. From Facebook advertising, to the recommendation algorithms of Amazon and Netflix.
Snacking start-up, Graze, has a team of data scientists crunching statistics about the snacks customers like and dislike and thousands of hourly data points are used to improve recipes and recommend other products.
Meanwhile, male clothing service, Enclothed, sends out its fashion boxes based on a short questionnaire, with customers only paying for what they keep. All items returned are then fed into a database to sharpen information on size, fit and taste, which improves the next box customers receive. The more information Enclothed gathers, the more clothes customers keep, the more revenue generated.
It’s clear the US sports clothing giant, Under Armour, recognised this trend when it acquired three fitness trackers, including MyFitnessPal, for over $700m. And with 165m users across the three platforms generating countless data points, the retailer is using this information to improve marketing strategy, because the more customers work out, the more clothing they are going to buy.
Amazon may seem to have the monopoly on fulfilment, with next day and one-hour deliveries. But retailers don’t need an R&D budget the size of Amazon’s to offer interesting fulfilment models.
Do you remember the days of popping down to Blockbuster to rent a film? Well before the company fell victim to the trend of digital streaming, the brand was first threatened by LoveFilm which began life as a postal rental subscription service (before it was snapped up by Amazon and morphed into Amazon Video). This led to a trend in subscription start-ups, including Graze (not a coincidence the founders came from LoveFilm), Simply Cook, Pact Coffee, Glossybox and Bloom & Wild.
But the USP of these subscription services is the size of the parcels – they fit through the letterbox (yes, even a bunch of flowers!), making it much more convenient for customers.