Brick-and-mortar stores can be a fatal endeavor for fledgling online brands. A physical space to display and sell products comes with high costs. But one company is taking a lesson from today’s sharing economy and bringing it to retail.
Co-working allows a number of companies to share a single office, staff, and utility bill, lifting the burden of rent and operational costs. New York City-based startup ShopFulfill plans to offer that model to online retailers with its new Anchor Shops, the company plans to announce Monday.
“We are providing brands the ability to expand into brick and mortar without the upfront expense,” said Shlomo Chopp, founder and CEO of ShopFulfill. “It lets brands expand and finally answers the question, ‘Why are the cool brands all online and cannot be found in stores?’”
Starting at $600 a month, online brands can lease space in brick-and-mortar Anchor Shops, sharing retail staff, warehousing and transportation for stocking its merchandise. The commitment is month-by-month, with a contract tailored to the amount of space the brand needs. And ShopFulfill offers design and merchandising expertise to help brands maximize their impact in the space.
Amazon may have driven sales away from brick-and-mortar stores but selling on the e-commerce giant’s site or establishing an online-only presence isn’t necessarily a brand’s path to success.
“For some reason we think brick-and-mortar stores don’t work, but it’s a reaction. It’s not proved out,” said Chopp. “The whole concept that brick-and-mortar is dying and online is doing great—the whole bifurcation that people have brought up is just—I don’t want to be strong, but it’s wrong.”
Foot traffic boosts brand awareness and sales. Customers can discover and become loyal to an online store while already out shopping. Plus, offering both e-commerce and brick-and-mortar stores reaches customers who want to order from the couch and those who want a product they can see in person, or who want it now, said Chopp.
“With Amazon, the reality is you don’t retain your brand identity. Amazon imitates your products, and your brand is watered down,” said Chopp. At the same time, “The cost of getting e-commerce customers is unsustainable. If something is great but not sustainable, it won’t be around for long.”
ShopFulfill’s first Anchor Shop will open in the second quarter of 2020 in downtown Philadelphia, where foot traffic is high. ShopFulfill plans to open eight to 12 locations in the Philadelphia-South Jersey market to build retail presence, brand identity and awareness. Then, the company will expand to other regions.
“We’re focused on delivering a democratized retail experience,” he said. “We will grow, no question, but laser focus is delivering value to the brands.”
Unlike pop-up shops or “As Seen on TV” stores which boost brand awareness with physical presence and function only as a marketing tool, ShopFulfill is designed to help retailers make money, said Chopp.
“We are providing a place where brands can come in, stay, and live,” he said. “E-commerce is convenience, but the ultimate convenience is providing both… The key is that brick and mortar is not an either or proposition. You need one to enable the other, and we have the infrastructure to make that happen.”
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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