Retail Reborn: The Future Is Sell Earlier
The Future of Sell Earlier
Although eCommerce seems like a relatively recent trend within our tech-enabled world, online shopping was invented way back in 1979 by British entrepreneur Michael Aldrich.
Since its inception over 40 years ago, eCommerce has largely been modeled after the physical retail world. With humankind having 1000s of years of experience in physical commerce, it’s no surprise that many of our online selling concepts were begged, borrowed and stolen from its physical predecessors.
But the ways of working in the past aren't always the key to optimize for the future. Our favorite example of this? When eCommerce starts to sell.
👩💻 The Transition from Offline to Online Commerce
Let’s start with a throwback: Imagine that you went to a physical retail store for a pair of new sneakers. You’d expect a selection of sneakers to physically be in the store before you buy them. You might touch & feel them, and try them on. Found ones you like? Bring them up to register, pay, and walk out with your new kicks in-hand. TLDR: Sneakers physically in store = sneakers available to buy.
To date, eCommerce has done a great job at re-creating this physical experience to build confidence in a digital-based purchase. Through eye-popping high-res photos to engaging descriptions, products are brought to life without you needing to physically experience them before purchasing. This high-quality digital experience has been a huge driver for success and trust in eCommerce.
Unlike this compelling recreation of an offline to online shopping experience, there are other ways that eCommerce mirrors physical retail that create constraints instead.
In our sneaker store example, that retailer waits until stock arrives on the store floor to start selling it – because your expectation as a shopper is to physically experience it before buying. Similarly, eCommerce waits until stock arrives at the warehouse to start selling it.
The difference? It doesn’t really matter if the stock is physically in a warehouse 1000s or 10000s miles away from you. Afterall, you aren’t going to be touching, feeling, or trying it on at the warehouse before deciding whether to buy.
At Purple Dot, we call this time period after stock arrives at the warehouse as T+1. This is the point in time when eCommerce traditionally begins to sell. But selling in T+1 isn’t going that well: 25% of inventory produced for online selling goes unsold, and there’s over $210 billion of dead inventory in fashion alone sitting in warehouses across the world at any given point in time.
And after years of optimizing for sell-through in T+1, the strategies and tactics to tackle this unsold inventory problem are completely maxed out. There is only so much more we can do as an industry to increase sales by making a checkout slicker, or optimizing the timing of an abandoned cart, or personalizing a discount on a Cyber Monday (or is it now Cyber Week?)
Something else – something big – has to give to drive the next wave of radical growth in eCommerce.
📆 T-1 Selling
This is why we firmly believe the next 10 years of true innovation in eCommerce will come upstream, in what we call the T-1 time period: the time before stock arrives at the warehouse. This is the frontier that has not yet been optimized for an online world.
And at Purple Dot, we’re dedicated specifically to T-1 selling. We see the fixed point of time of when stock arrives as independent, not dependent, of when a merchant can start selling. Why wait to start selling?
Instead, eCommerce can lean into the unique strengths of selling in an online vs physical world. They can sell when stock is on its way to the warehouse, while it’s still getting made, or even when figuring out how much to make. There’s a whole window of time where eCommerce could be selling – in addition to when stock arrives at the warehouse.
It’s this ‘aha moment’, this realization that stock is needed to ship it but not to sell it, that drives our customers towards a pre-order strategy. It’s not about the use case per say – as the use cases for pre-orders vary wildly – but about the power and flexibility.
Brands simply want the ability to sell earlier. At Purple Dot, we see brands selling in this T-1 time period anywhere from T-minus 1 day away from the warehouse to T-minus 6 months away. And by selling earlier, brands increase sell-through by up to 97%.
That’s why regardless of the use case, the core driver for brands is always the same: I want to sell earlier to sell more.
🟣 Our Purple Dot Prediction with Conviction
In 2022, we transacted on average 9% of our customers’ GMV on pre-order. This is game-changing results for our customers. And as we lead outfront in rapidly creating the systems for T-1 selling, it becomes clear the level of opportunities and challenges ahead of us to get sell earlier right as an industry.
First, we believe the term “pre-order” will become a short-lived word in the sell earlier world – except when used purposefully for brand merchandising strategies, like exclusive drops. Instead, brands will simply communicate when a product is expected to ship: immediately if in T+1, or a target window if in T-1. Afterall, shoppers care more about when their purchase will arrive vs the terminology of a pre-order vs an order.
Next, we imagine a world where every merchant will have systems in place that can sell stock in T-1 while it’s in motion AND can continue selling it in T+1 once it arrives at the warehouse. With this exciting new dynamic, the warehouse becomes less about storage and more of a staging environment to get products out the door quickly – because much of it has already been sold. We deliberately see a world where brands are both selling earlier and selling while in-stock as a mission-critical, evidenced way to maximize sell-through across all of their products.
As such, we believe the eCommerce industry will look back on the legacy systems of today, where they lacked the flexibility of when to start selling, with the same outdatedness as how we look back on TV before streaming – where we lacked the flexibility of when to watch a favorite show. Selling earlier will become an obvious operational best practice for modern eCommerce.
Finally, the sell earlier ecosystem will need to put shopper trust first in order to truly scale and become a disruptive mainstay of eCommerce. Without placing trust at the forefront, a sell earlier world could quickly become the wild wild west for shoppers. Almost everyone knows of a horror story a-la Kickstarter-style – and sell earlier could rapidly follow a similar path, ripe for fraud with funds taken upfront for products not ready to ship. These types of bad actors are already on the FTC’s radar, which is why consumer protection regulations for pre-orders exist. We believe that the sell earlier world needs an independent, trusted and recognizable third party to facilitate these sell earlier transactions at scale.
At Purple Dot, we take our role in creating this sell earlier world seriously. It’s the industry’s path away from the massive unsold inventory problem, and it’s why we’ve taken the care and thought to get it right. The eCommerce tech stack that will power and automate this fluid, optimized, and trusted T-1 selling will be a new and radically different system than what is used today.
And the deeper we get, the more convinced we are that the future of eCommerce looks more like what we’re building alongside our customers, and less like what they’ve used to date. Onwards.