Try-before-you buy is having a moment, with more shoppers spending their days in front of a computer and online shopping.
As retail stores remain closed, companies with a try-at-home service are seeing an uptick in new customers taking advantage of it. However, with operations down across the industry, brands like Adore Me and jewelry brand Gemist are cautiously looking to scale these services without overextending their resources. Both are also being careful about how they market the service, to avoid coming off as capitalizing on a global pandemic.
Adore Me launched its curated try-at-home box called Elite in 2018, modeled in part after Stitch Fix’s model, according to Ranjan Roy, head of content at Adore Me. Customers can order four, six or eight items at a time, try them on at home, keep what they like and send back what they don’t. The goal is, over time, to learn what the customer likes and deliver boxes filled with items they end up buying.
Some companies in the space with similar models, like Stitch Fix, are still seeing growth but are still facing hurdles. In Stitch Fix’s recent second-quarter earnings, the company reported net revenue was up 22% year-over-year to $452 million. While active client count was up 17% year-over-year to 3.5 million, average order value was lower than expected. The company attributed that dip to “heightened promotional activity across retail,” according to a spokesperson.
In recent weeks, Roy said the brand has seen an uptick in new customers opting into the try-at-home model. Typically, 30% of new customers use the feature, but in the last four weeks, that has jumped to 50% on some days. The average was 40% over the last month. In the last two years, Elite has been the fastest growing segment of Adore Me’s business, Roy said. Elite is something the company has been building slowly; it has not being super aggressive about promoting or marketing it. The company did not share how many customers are actually purchasing after trying at home.
“It’s not the first thing that jumps out at you on the website, because we are trying to grow this in a scalable manner. There are so many complexities to this, in terms of how you on-board customers, and how you position the service and the logistics capabilities to handle returns,” said Roy.
Adore Me’s own New Jersey warehouse is still open during this time, and all employees there are working full-time with benefits and paid sick leave. They are, however, practicing social distancing and conducting regular temperature screenings in the warehouse. The company has extended its return window from 30 to 90 days to help lower return volume in the coming weeks.
“There is a potential for an increase in returns volume from these services, which can decrease margins and put a strain on fulfillment. As brands implement these services, there is an opportunity to limit returns by staying engaged with the customers that are trying products,” said Nicole Amsler, vp of marketing at AI-powered offers platform Formation.
Newly launched businesses are also seeing an uptick in existing try-before-you-buy offerings.
Gemist, a jewelry company that gives customers the ability to design their own rings, launched to the public in Nov. 2019 after several months of beta testing. In December, the company launched its try-on service, specifically for engagement rings: Customers can order three styles at a time, to keep for two weeks for a $45 refundable deposit. Now the service includes all types of rings, but most are focused on engagement rings. When the customer sends the product back, they can request specific design changes, including adjustments to the setting, stone or band. Or, they can keep the ring as is.
Madeline Fraser, CEO of Gemist, said the company has seen more customers opting to try rings at home before making a purchase and only started doing digital marketing around the service in February. Sales have also been up over the last three weeks. However, she is being cautious about how she markets this to customers during such a sensitive time.
“I don’t want to focus on coronavirus as a reason why this is working. I’m just sticking with our usual messaging, that you can bring the retail store to you. This is something that works for our generation and community as a whole,” said Fraser.
In the coming weeks, Fraser said she plans to extend the service to earrings and other products down the line. For now, she is handling most of the orders herself, from her family home in Los Angeles, since her distributor is closed. Fraser said she is opening all returns with gloves on and is cleaning and disinfecting all the products before sending anything back out to a customer. She is also including a hand-written note inside each order to let customers know all products inside have been cleaned properly and that all orders are packaged by someone wearing protective gear, including blue gloves.