Daily Dose of iQ: Zappos Opens First Physical Store

Nov 24, 2014 — Allan Pulga

Just in time for the holidays, online shoe retail giant Zappos.com just opened a 20,000-foot physical store in its hometown of Las Vegas.

"The experimental space is run in partnership with retail logistics startup OrderWithMe, which just raised $28 million for an ambitious project to change the nature of mom-and-pop retail," wrote VentureBeat's Gregory Ferenstein (Nov. 19).

Zappos and OrderWithMe hope to install 'ShopWithMe' kiosks in boutiques across the country.

Ferenstein explains the new store's concept, which works as a sort of partnership between "big online retailers" and "smaller physical retailers": Essentially, partner physical retailers will place one of OrderWithMe's new 'ShopWithMe' kiosks in their stores (pictured above), which lets retailers get product to shoppers with same-day shipping. Retailers often call this "drop shipping" a product for a customer.

"If a style, color, or size isn’t in stock, customers can simply scan a barcode on the ShopWithMe kiosk and have the product shipped to them, ideally the same day," Ferenstein wrote.

“The convergence of online and offline seems to be an unstoppable force that I believe will ultimately change the face of retail,” wrote Zappos CEO Tony Hsieh in an email to VentureBeat. “We are currently in a really interesting time for retail where on one hand many online stores are looking to have more of a brick-and-mortar presence for branding purposes (which is a big part of why we are launching a 20,000-square-foot Zappos pop-up shop in downtown Las Vegas for the holidays) and on the other hand many brick-and-mortar stores are looking to enhance their experience with more access to inventory in the cloud.”

ShopWithMe kiosks grant a small retailer access to a broad, online inventory base. In return, the big, online retailer gets local reach and order fulfillment.

What Zappos is hoping to create is a symbiotic network of small retailers that act as "shipping nodes" to the big online retailer (i.e. supplier). The online retailer gets local "reach" in terms of personalized service, product curation and order fulfillment. In return, the small retailer gets access to a broader inventory base and is able to close more sales as a result.

"Additionally, pop-up shops may provide Zappos with all kinds of shopping behavior data that they could never learn from the website alone," added Ferenstein.

Topics: Retail Operations, Mobile Industry, Customer Experience, e-Commerce

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