The next several years are expected to bring explosive growth for the “Internet of Things” — items such as smart thermostats, sleep trackers and interactive kids’ toys that are connected to the Web.
Plenty of retailers are hoping to cash in on that, with big-box chains such as Home Depot, Target and Best Buy expanding their merchandise assortments and jockeying to be shoppers’ primary destination for this new category of goods.
A new retailer, B8ta, is also hoping to ride that wave, but with an unconventional business model.
B8ta flung open the doors last week in Palo Alto, Calif., on a 1,400 square-foot outpost that showcases items such as the Gi Flybike, a foldable electric bike whose lights are controlled by a smartphone app; and Stack Lighting, bulbs that adjust their color and brightness based on time of day and other factors. Nothing in B8ta is encased in packaging so as to allow customers to try out virtually everything in the store. And while shoppers can buy many of the products on display, manufacturers can opt to use B8ta as a showroom to show off how their gizmos work.
B8ta is gambling that newfangled Internet of Things gadgets don’t lend themselves well to online shopping: People, they reason, want to try these things out before spending big money on them, and they are the kinds of purchases that benefit from the assistance of a highly-trained staffer. In other words, B8ta is a bet — perhaps unexpected from a Silicon Valley company — that brick-and-mortar retailing is going to continue to be durable, even preferable, in the digital era.
That said, B8ta’s co-founders say there is much they’d like to change about how brick-and-mortar retailing is done. All four of them used to work together at Nest, the Google-owned company best known for its Internet-connected thermostats. And it was during that time that Vibhu Norby, B8ta’s chief executive, started thinking about how to reinvent the behind-the-scenes processes that shape what products shoppers ultimately see in store aisles.
Norby says he observed that it is often a long process for small, upstart manufacturers to muscle their way onto shelves at big-box retailers.
“You walk into stores, you are seeing products that are several years behind what you’re seeing online,” Norby said.
And then online, customers can’t be very hands-on with the product, and it’s harder to convince them of its value.
B8ta is aiming to make it a days-long, not months- or years-long process for manufacturers to start selling their gadgets. Norby said a manufacturer can apply for a product to be displayed at B8ta and that item could end up on store shelves days later. While right now the store’s lineup is curated with a human touch, Norby said he hopes his team can eventually write an algorithm that decides which products make sense to carry.
The company is also aiming to provide manufacturers with real-time data on sales and foot traffic so they can tweak their inventory or pricing on the fly.
B8ta has also been focused heavily on creating a shopping environment that is conducive to testing gadgets. Its first location has some of the minimalist, futuristic flavor of an Apple store with some homier touches that wouldn’t look out of place at West Elm.
But it also notably does not feature any products that are inside their packaging, which is meant to make it easier to give gadgets a whirl.
“There’s that old saying: ‘If you touch it, you buy it,'” said Patti Purcell, a strategist at consultancy ThoughtWorks Retail. After a customer is hands-on with a product, she added, the mentality is “I don’t really need it, but know I want it. It also demystifies the product.”
Each item at B8ta is displayed alongside a tiny digital screen that explains how it works and what its price is at other retailers.
Store staffers at B8ta are available to demonstrate how to use the product, having been trained directly by the manufacturer. The retailer hopes that touch will mean manufacturers feel like they have more control over the sales pitch and that customers get more expert, up-to-date information.
While “Internet of Things” gadgets are expected to be a fast-growing category, B8ta might be challenged by the fact these kinds of devices feel mysterious or perhaps even fanciful to many consumers.
“I do think it’ll be a little bit of a challenge for them to communicate what they do to the everyday consumer,” said Alexa Fox, an assistant professor of marketing at Ohio University who studies consumer behavior. “It might be hard for the everyday person to understand what differentiates this company from Best Buy.”
So far, Norby said he’s been pleasantly surprised to see many visitors linger for around 30 minutes — a long time for a store with a relatively tiny footprint. And while he declined to share what specific products were selling well, he said executives have been surprised to find that some of the most popular ones are the items that are not sold at other physical stores.
Norby would not reveal exactly what B8ta’s expansion plans are beyond the Palo Alto store, saying only that they’re “very ambitious people.”