Photos: Cara Cara
Can a new off-price retailer find treasure without opening stores?
T.J.Maxx and other off-price apparel retailers defined by their treasure hunt shopping experiences have mostly shied away from the e-commerce world. Questions remain if their business model, based on the thrill of seeing the unexpected on store racks, can be replicated profitably online. A new discounter, however, is trying to make an online-only indie brand treasure hunt a reality.
Los Angeles-based online discounter Cara Cara, which launched last fall, sells products at a 20 percent to 60 percent discount, according to Business Insider. The website focuses on designer and indie brands. The company founder, Rachel Gannon, stages and takes pictures of products for the website, and fulfills orders by hand. Cara Cara has seen approximately 15,000 site visitors and 500 sales thus far.
Ms. Gannon has experience both with startups and mainstream retail buying, as discussed in an article on Refinery 29. She held the role of buying and merchandising director at lifestyle startup ban.do and had earlier experience at RueLaLa and Macy’s. Refinery characterizes the presence of discounted indie brands like Dusen Dusen and Rachel Antonoff as unique to Cara Cara in the off-price space.
Cara Cara’s site currently stocks somewhere around 15 brands, with the number of available products varying within each. Copy on the site describes Cara Cara as being a “marketplace of discovery” distinguishing itself from what it calls the “tedious ‘treasure hunt’ of conventional off-price stores.”
While T.J.Maxx has an online store, it accounts for a small percentage of the chain’s sales. Others in the space, including Macy’s Backstage and Ross Stores, have thus far avoided e-commerce entirely, according to Business Insider.
- Cara Cara – Cara Cara
- How It Works – Cara Cara
- The founder of a trendy new retail startup explains how she’s creating a business for the TJ Maxx shopper of the future – Business Insider
- Hide Your Wallets! There’s A New Off-Price Destination For Your Favorite Indie Brands – Refinery 29
- How One Huge American Retailer Ignored the Internet and Won – Bloomberg
- Are off-pricers discounting their online opportunity? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you think that an off-price apparel retailer can thrive online? Do you agree with the distinction between “discovery” and “treasure hunt” that the Cara Cara website draws?
Poll
BrainTrust
Georganne Bender
Principal, KIZER & BENDER Speaking
Ken Morris
Managing Partner Cambridge Retail Advisors
Can Cara Cara be successful as an off-price online retailer? Maybe. If it were that simple, it would have been done years ago. The off-price retailers bring in merchandise at a rapid rate and buy those goods from many different sources. For the customer, part of the thrill is the hunt allowing them to see, touch, try on, and truly feel like they’re getting a bargain. When you shop at an off-price store, you can see two items on the rack that are almost identical, but one may have a very known name while the other might not. One might fit so much better than the other. So a big part of the sale is the hands-on experience. That is very hard to duplicate online. That said, many online-only shoppers will most likely give Cara Cara a try. How many will shop, how much they might buy and what they will return often is entirely unknown, and only time will tell. But if successful, I would expect Cara Cara to find tremendous competition very quickly.
I’m sorry, I find the “treasure hunt for bargains” a trend that is leading to sloppy merchandising and shoppers trying in vain to find something among disconnected products. I find such stores and websites looking like little more than a Sunday circular threw up on the fixtures or the page. Department stores still have their place for most people, time to step up what made them successful – carefully curated items. A shopper doesn’t have to settle for whatever leftovers another store had leftover.
I believe there is space for an off-price e-commerce brand but whether it will be Cara Cara remains to be seen. The challenge here has always been inventory accuracy. Off-price doesn’t have complete size runs and styles but a mix that is tracked at a department/vendor vs. stock keeping unit (SKU). That makes for an inventory accuracy nightmare in an online world that demands accuracy. Another challenge is returns, which can run at 25 percent to 35 percent in online fashion sales. You need to maintain a healthy margin to sustain a business with these metrics.
I think discovery and treasure hunt are synonymous, just ask the conquistadors.
I am going to link this back to the Macy’s discussion today. These type of retailers (we know there are lots of these) are nipping at the heels of the established brick-and-mortar department stores slowly. They offer unique, on-trend apparel that appeals to the consumer. If I can get this from them, what is the compelling reason for me to drive to Macy’s when I can do it from the comfort of my sofa?
When looking at the Cara Cara website, the merchandise is for a very specific target audience – not for the masses. So if she is targeting the correct audience through social media, PR and performance marketing, she could have a nice niche business – however I would challenge that it would ever scale. I remain a little skeptical of off-price online retail in general because of the costs of doing business online versus in a store that is just racks of clothes.
Done right, off-price retailers could thrive online. While some shoppers enjoy picking through racks of clothes (which are often in disarray) to find something that appeals to them, fits and is a bargain, many customers don’t have the time or patience for this and would rather enter their search criteria on a website to see what is available within their parameters.
The CaraCara.la website looks great and has potential. With more merchandise and if they add a filter function (gender, size, style, etc.), they will certainly drive more sales. Cara Cara offers reasonable shipping and returns with free shipping on orders over $30 and free returns, which is smart. The boutique Cara Cara off-price concept has potential and it might spur other new off-price online concepts.
To me, “discovery” and “treasure hunt” are the same thing. There is a definite thrill of the hunt when you shop an off-price store; what will you find today? I don’t get that feeling scrolling through a website. Off-price happens in person, deals online are just a sale.
Cara Cara feels like the Etsy of off-price retail. Asking if they will succeed is a bit like asking, “Will Etsy survive and thrive against eBay?” If Cara Cara is trying to focus on indie brands and curate a quirky feel for their online store, then there is likely an audience for this merchandise that is not the same audience that shops at T.J.Maxx or Ross. That said, can those shoppers really get a feel for the merchandise without visiting a store and touching and feeling it for themselves? It still seems counterintuitive to the off-price treasure hunt culture that this target audience desires. Interestingly, a quick visit to their website shows they are also carrying Levi’s vintage shorts, so how long will they stick to the quirky attitude?
Echoing what Stephen said, when created for a specific audience and utilizing social media and other top-of-mind/habitual tactics Cara Cara and other online off-price apparel retailers can certainly find success.
Steep&Cheap has been doing it for years in the outdoor apparel space, granted they are working with inventory from Backcountry, so that is an infrastructure advantage. The creation of a separate “discovery/treasure hunt” brand under the larger company umbrella is something that seems to have legs.
If you create a compelling, differentiated offer online, the shoppers will come — if you also create awareness for your brand. Simple. Just not always easy.
I use Macy’s and Kohl’s when I get my big 30% or more off anything, and order some golf shirts that I know will fit, and slacks as well. Even New Balance wide shoes are a piece of cake, with free shipping over $75. If I don’t know the brand, I’m not buying it online, and I’m sure others feel the same way.
To dissent, given the total variability of fit, finish, “hand” and true color representation that can’t be properly ascertained online, I only see this online treasure hunt working for known brands, and repeat purchases. Otherwise I see two universes. You have to find it, touch it, try it on in store, or you have a financially challenging online model that needs to account for huge return rates.
I appreciate Cara Cara positioning itself as a “treasure hunt” but that’s all it is, positioning. It’s not a business plan, nor is it unique. Moreover, the site’s current offerings are rather anemic, not a good option for off-price retailer customers and an immediate disconnect and failure to live up to the positioning.