Growing up in Denmark, Henrik Werdelin often visited the toy store around the corner run by two brothers. Sometimes he’d just “come out and play with stuff,” he said; the brothers built a relationship with him that went beyond buying and selling.
Today, Werdelin attempts to replicate that sense of old-school connection in a more modern way. As co-founder of BARK — makers of the BarkBox toy and treat monthly subscription service for dogs and their people — his company seeks not only to understand those who buy its products. BARK also uses empathy to create a good relationship with them.
That means, for example, identifying with the fact that a growing number of consumers think of their dogs like children.
“In many ways, we were lucky in that we stumbled onto this changing behavior,” he said. “If you look 50 years ago, dogs were pets. They were probably living outside, and definitely not somebody that you would feed at the same time that you were feeding your family. We did a survey recently, and of the dog families in the U.S. — there’s 56 million households with a dog and 70-odd million dogs — half of the people who have a dog, they let the dog sleep in their bed. A third of the dog owners, they’ll sleep in an uncomfortable position to let the dog sleep in a more comfortable position. That’s something that has changed … and the industry wasn’t catering to that new relationship.”
Werdelin spoke during “The Direct-to-Consumer Uprising,” a Sunday morning session moderated by Sarah Halzack, retail columnist for Bloomberg Gadfly. Also on the ticket: Chieh Huang, CEO and co-founder of Boxed Wholesale, an ecommerce provider of bulk goods for individuals and businesses. Both BARK and Boxed are young companies; BARK was founded in 2012 and Boxed in 2013, and each already has surpassed $100 million in annual revenue. In addition, both are digital native brands that think first, according to Halzack, about a customer whose front door for shipping is digital and their smartphone.
Werdelin credits the BARK customer service team for making the connection with consumers; known as the Happy Team, it is the organization’s largest team as well as its “heart.” In addition to dealing with orders and issues, they start conversations and ask questions about, say, how a customer’s dog sleeps. “I really see them as a relationship engine, as far as building that relationship, but also for extracting more information about the individual customer and about what kind of products we should make as a business.”
Offering its own products has been key to company growth; customers are increasingly good at sniffing out authenticity, he said, and that’s built from the inside out. Employees test toys and treats on their own dogs, for a start, and customers “understand that they’re talking to their peers.”
Boxed, too, offers its own products, discovering early on it would be essential to the company’s success. It first set out to provide wholesale savings to those who didn’t have access to a physical warehouse club; it didn’t take long to learn that even when people do have physical access, they don’t necessarily have the time or patience to actually go.
“From there on out, we started with a very simple premise: mobile-first, large-format items only, limited SKU — about 1,600 items — and building and operating our own fulfillment centers and writing the whole technology stack ourselves,” Huang said. “It was not so much a luxury, a margin builder, as it was a necessity.”
The company, he said, had two challenges: “If you’re a general retailer, you usually cannot carry the large-format items. It’s the club pack. A lot of manufacturers wouldn’t give them to us, and it was really hard to differentiate ourselves. I was in all these meetings where the buyers were saying that we didn’t have access to X product. And I’m just sitting there, reading about how Elon Musk is sending humans to Mars, and as a technology company we’re debating whether we can make a plastic bag or a cookie.”
Further, because Boxed was a smaller retailer, trucks would sometimes appear late or without full orders intact. Having its own brand eliminated those problems.
As for who the online bulk shopper is today, it’s decidedly not the single man or woman in a small downtown apartment working their first job.
“We are not the ‘everything’ store and we cannot service everyone,” Huang said.Fully understanding that, however, helps the company better service those it does. The company continues to develop ways it can more effectively own the customer experience.
Boxed has its own robotics team and builds some of its own hardware, including an autonomous guided vehicle. It also built its own express stack; in some ZIP codes, customers can get two-hour express deliveries.
“If we are a retailer — even if we are a technology-first retailer — we need to own that customer experience ourselves,” Huang said. “When it comes to retail, the store is where you live and die. When it comes to online retail, the back end is where you live and die. I couldn’t imagine, if you’re a large supermarket chain, saying, ‘Hey, you know what? Let’s outsource our store management to this outside management firm who’s going to interact with our customers.’”
But that’s essentially what’s happening online, he said. “For us, we needed to control that experience: How you receive the box, how the box is packed. All that experience is really our store.”