Amid an increasingly competitive environment, the retailers that will succeed are often those with innovative business models or that have been willing to shake up existing models to adapt to consumers’ evolving expectations.
E-commerce is evolving
Take Kroger Co., the nation’s second-largest grocer. Founded in 1883, the retailer is hardly a startup, however, it’s in the midst of an ambitious, multiyear plan aimed at remaking itself into an omnichannel merchant that can compete with Amazon.com Inc. and Walmart Inc. And it is taking a multilayered approach to doing so via acquisitions, partnerships and changes to the way it operates.
For example, the retailer in August took its first steps into China by announcing it is running a test with e-commerce giant Alibaba Group Holding Ltd. Kroger wants to see whether shoppers in China will buy products from Kroger’s natural and organic private label, Simple Truth, through Alibaba’s Tmall Global platform.
Meanwhile, back in the United States, it is examining a broad range of options to make it convenient for online shoppers to get their groceries. For example, Kroger is working with autonomous vehicle startup Nuro to test the delivery of groceries in unmanned road vehicles that can steer from one of its grocery stores to a shopper’s home. It’s also testing a new format and concept that allows a customer to order Kroger grocery items online and pick them up at a Walgreens drugstore. Then there’s its offering of home delivery ordered online via Instacart; as of late-October, it offered the service from nearly 45% of its roughly 2,800 stores.
Plenty of startups are also introducing fresh ideas to selling online. For instance, there’s NomNomNow which makes and sells personalized refrigerated meals for pets. At NomNomNow’s website, shoppers fill out a questionnaire about their pets, providing details like weight, target weight, birthday and food preferences. It then uses that information to tailor its food to the individual pet. Each meal is cooked fresh in a commercial kitchen, portion controlled and approved by a veterinary nutritionist.
And then there’s sports apparel retailer Fanatics, which is on a relentless quest to ensure that it is the go-to place consumers turn to for sports apparel. The retailer this year signed a 10-year deal to make it one of two (along with Nike Inc.) primary suppliers of apparel to the NFL’s teams and fans.
To reassure consumers considering making a pricey purchase, Fanatics also recently launched its Jersey Assurance program, which allows a shopper to exchange her player jersey within 90 days if the professional athlete switches teams.
There are many paths to innovation as demonstrated by the retailers featured in this year’s business model section.
NomNomNow is taking a fresh approach to dog food by using the web to sell fresh, ready-to-eat meals for pets.
NomNomNow.com launched in May 2015 as a site where a shopper can buy a week’s worth of freshly prepared meals that she stores in her refrigerator for her cat or dog. The meals are tailored to the pet based on its weight, target weight, birthday and food preferences. NomNomNow positions itself as a healthy choice consumers should make for their dog. Each meal is cooked fresh in a commercial kitchen, portion controlled and approved by a veterinary nutritionist.
“This is not something that is meant to be a treat, not something you buy occasionally, not something you should be mixing in with other food,” says CEO and co-founder Nate Phillips.
The fresh twist seems to be working, as NomNomNow has thousands of customers and generated “millions” in revenue in 2017, which was a 600% sales increase over 2016, Phillips says. For 2018, the retailer projects 400-600% sales growth, Phillips says.
After years of high growth, NomNomNow has moved through a series of commercial kitchens to keep pace with its orders. It owns and operates a kitchen in California and opened a second kitchen in Tennessee in October.
In addition to its human-grade, veterinary nutritionist-approved food, the retailer has more ingredients to its business model that has made it a success, such as its custom built e-commerce site and back-end system. The retailer’s back-end technology sums all of the orders and translates it so NomNomNow knows how many ingredients it needs to buy to cook all of the meals and the number of box labels it needs.
The retailer also pre-portions every meal to ensure that consumers don’t overfeed their pets.
“Everyone fills a scoop differently, and this can led to over feeding,” Phillips says. “This level of granular personalization though, had never been done in this space, and we didn’t see any kind of solution that would serve our needs. That’s why we knew we needed to create a completely customized system.”
The retailer’s co-founder and chief technology officer, Wenzhe Gao, engineered the system, which is “incredibly critical to our offering, and is the reason that we’re able to offer customization at the level that we do, fully scale,” Phillips says.
Tuft & Needle no longer looks like a fledgling startup. The retailer in August announced a merger with the much larger mattress maker Serta Simmons Bedding LLC.
The combined company plans to maintain its distinct brands, which include Serta, Beautyrest, Simmons and Tomorrow. But, by joining forces, Tuft & Needle and Serta hope to benefit from economies of scale, reducing the operating costs for each company.
Tuft & Needle, a digitally native, vertically integrated brand founded just over six year ago, sells products on its own website, but also is among the top brands sold on Amazon.
When Tictail launched in 2012, it wasn’t the online marketplace it is today. It launched as a technology platform provider for entrepreneurs and small businesses that wanted to sell online. It offered merchants tools for marketing and setting up their own shops online.
But soon after, the company saw demand from its customers wanting more guidance on how to grow sales and customers, says Carl Walderkranz Rivera, co-founder and CEO of Tictail.
The company two years ago launched an online marketplace for apparel and home goods, charging sellers a 10% commission for the sale of each of their products. Uniquely, the marketplace has a retail store in New York City, in which it showcases products from its marketplace.
The 2019 Hot 100 features trend-setting retailers categorized for their innovation in marketing, content, omnichannel, business model, technology, design and growth. Download and explore the complete 2019 Hot 100 list from Internet Retailer.
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