We’re excited to announce one of our newest investments from Fund III, called the Leap platform. Leap provides “Retail-as-a-Service,” at least partially targeted at many brands that start online. Leap brings these brands from a purely online marketing world into off-line brick and mortar stores.
A not-so-hidden secret is the immensely positive impact that a few physical stores can have on young online brands. If an online store launches just one physical location in a geography, their sales will noticeably increase in the region around that store. What’s the reason behind the sales lift? Not only will the company rank higher in localized searches like Google, but consumers inherently trust brands more if they have a physical store.
This is something that Leap co-founders Jared Golden and Amish Tolia experienced for themselves. The co-founders previously launched a handful of startups together, including Pear (formerly known as Apparel Media Group) which was acquired by CustomInk. At CustomInk, they saw significant sales increases when the brand launched brick and mortar stores.
However — as Jared and Amish know well — for an online company, opening physical stores is extremely painful. These online-first brands have grown up leveraging external platforms to build up their marketing and commercial capabilities using tools like Shopify for their online store, Shipbob (another HPVP portfolio company) to manage fulfillment, and Stripe to collect payments.
Asking an online brand to launch physical locations can be considered crazy-painful, and would significantly increase their workload. What does an online brand have to do in order to launch physical stores?
- Find good locations
- Negotiate and sign leases
- Hire employees for each store
- Launch and manage those store
- Leverage or build new technologies
...and they have to do all these things all across the country, subject to different rules and laws in every state. Sounds like a nightmare.
That’s where Leap comes in.
With Leap, online brands can outsource their physical stores the same way they outsource their online ones. Leap takes care of all five steps — the company provides premium locations as well as store operations and management, making the experience for brands just as easy as hosting their online store.
After the tumultuous last year and a half, some people may question an investment in retail and particularly physical retail spaces, wondering whether it's a dying industry. But retail isn’t going away. Consumers enjoy shopping and discovering brands in the real world in addition to doing so online.
However, one of the biggest shifts is that more sales are happening online, so for online stores who need physical locations to increase their customer acquisition and provide that in-person brand experience, it’s not worth it to take on store management themselves.
The fact is, I’m very familiar with the challenges in retail because I grew up in the industry. My father owned a small chain of women's shoe stores in Chicago called Tico Footwear. I worked there as a 6-year-old helping to sell hot dogs for 10 cents when Tico had sidewalk sales. I also sold shoes through high-school and college at a Chicago chain called Cherin’s shoes.
What did growing up in retail teach me? Retail is hard…. There are lots of moving pieces. And there is always the need for tools to help make managing those pieces smoother.
The Leap platform is one of those tools.
Our investment in Leap, like our investment in ShipBob, is an investment in infrastructure for commerce. We are hopeful that Leap will become the place that all brands that begin online will want to turn to for launching and managing physical stores across the country.
If iconic brands like Warby Parker, Sony, Coach, and even Apple were first launching physical stores today, I wonder if they would consider using Leap to launch and manage their stores?