How the US start-up b8ta is rethinking brick and mortar retail

Narrators instead of salespeople

Back in February, the 22 brick and mortar stores especially attracted customers interested in new technologies. They could try out new products directly in the store that thus far were barely even available on the market. All products are out of their packaging and ready for action. VR gadgets can be put on, games can be played, even smart clothes can be tried on. If any questions arise, the trained narrators – the start-up does not want to call its store staff salespeople – are ready to answer them anytime. The customers do not even have to buy anything in the stores – because at b8ta it is not about sales per area.

Store with advertising space and live usability lab

Instead of that, the start-up sees itself as a walk-in advertising space: companies that mainly sell their products online can use the space to offer their customers a haptic experience. If a product wins a customer over, it can be ordered and paid for online, and is then home-delivered. For the operators of b8ta, it does not even matter if the customer buys the product at, the manufacturer‘s own website or at a marketplace, as there is no commission per sale. Instead, the product manufacturers pay a base fee for the presence of their products in the b8ta stores – and for the information on how the customers handle the products, which the start-up collects in its stores. Because every b8ta store also functions as a live usability lab. That way, manufacturers can test how different prices or other marketing messages work in comparison with each other. “Retail as a service” is what b8ta calls its business model.

13 new stores in two years

So far, the concept seems to be working. In the last two years, b8ta has opened 13 new stores, the last one opened its gates in Dubai in January 2020 – and with that store, the company expanded its concept over the US-border for the first time. Last year, the business also ventured forward towards new product ranges, as the company wants to slowly get rid of its reputation of being a platform for crazy Kickstarter gadgets only: together with the company Tru Kids Brands, the legal successor of the bankrupt toy giant Toys’R’Us, b8ta opened several retail spaces just in time for last Christmas in which toy retailers could present their products to be looked at and tried out. In November, the start-up had already done that with several fashion brands.

Macy’s as convinced main investor

Already in 2018, b8ta expanded its “retail as a service” model with the technology platform Ark Marketplace, with the help of which participating retailers could offer optimized products and measure customer interaction with them in their stores on their own. The start-up’s overall concept has long since caused an outrage among the brick and mortar giants. In 2018, the US department store Macy’s acquired a minority of b8ta and has been the leader in all fundraising rounds ever since. Even last March, the start-up collected another 50 million US dollars.

But even b8ta’s future will be decided by corona

But then, Covid-19 happened. And innovative concept or not, the coronavirus has also hit b8ta hard. Since the middle of March, all stores have been closed, 250 employees have been let go. The remaining personnel, such as b8ta tester Anthony, have been working with reduced pay from home and presenting the products in closed stores via YouTube, Facebook, Instagram or one-on-one video conferences via Zoom. Their efforts will show if the business model “retail as a service” is actually more crisis-resistant and future-proof than the classic brick and mortar retail.

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