A new front in virtual retailing has emerged on a wall at a busy subway station in downtown Toronto.
An online health and beauty retailer on Monday launched a pop-up store at a key commuter hub that features images of Pampers diapers and Tide detergent, rather than the products themselves. Using a smartphone app, shoppers place their orders by scanning quick response codes – QR codes, for short – on pictures of products, which are then shipped, often as quickly as the next day, to customers free of charge.
Ali Asaria, founder of Well.ca and a former software engineer at BlackBerry maker Research In Motion Ltd., got the inspiration for his digital store from global grocery giant Tesco, which has tested the concept for rushed commuters in a Seoul, South Korea subway station.
"The whole story for us is bringing the store to you," he said. "You no longer have to drive to, or walk to, the store … It tells the story of the future of retail – the store can come with you anywhere you want."
Well.ca's store of the future is the latest iteration of high-tech retail, aimed at reinventing shopping through the use of mobile devices and e-commerce to shave costs and draw customers. Earlier this year, the Bay launched a virtual store greeter named Anna, welcoming passers-by to shop in its new virtual gift store where they can purchase a product by touching the shelf it's sitting on with a QR code-embedded card.
Retailers such as clothier Gap Inc. and office supplies specialist Staples Inc. staff their warehouses with thousands of robots, while chains move their customers through self-checkouts, sometimes handing them a scanner to do the work themselves, cutting labour expenses. Retailers are betting that investing in technology such as this can help them operate more efficiently and bolster business.
Commerce through smartphones and tablets is expected to exceed $100-million globally within a couple of years from virtually nothing just a couple of years ago – transforming the retail landscape, said Cliff Grevler, partner in the Boston Consulting Group in Toronto. The adoption of technology in retail worldwide is rapidly picking up, he said.
Mobile connectivity is making Internet access ubiquitous. In 2010, 43 per cent of mobiles sold were smartphones and, in 2015, the number is expected to jump to 71 per cent, according to his figures. By then, companies such as Dominos Pizza in Australia are forecasting that mobile sales will make up 25 per cent of all revenue.
Still, while mobile retail is about to boom, the jury is still out on the use of QR codes, said Kaan Yigit, president of Solutions Research Group. Only 20 per cent of Canadian smartphone owners use them; those people are generally male and over half the users are under 30, he said.
For the virtual-store idea to work, shoppers first need to install the app and then use a QR code. "Unless what they are selling is highly exclusive or unique, there are just easier ways to buy the same thing – either at brick and mortar stores or online."
Even so, he gave Well.ca high marks for grabbing attention. "Definitely they will have some curious consumer sampling."
It was gaining attention on Twitter, where proponents old and new were talking about the new virtual drugstore, which will run for a month.
Jordan Banks, boss of Facebook Canada, was among the high-profile business figures to weigh in.
"Well.ca disrupts retail landscape with Canada's first-ever virtual store," tweeted Mr. Banks, who is also an early investor in Well.ca and sits on its board of directors. The former head of eBay Canada and Jump TV said he is proud to be tied to the online shopping site as it sets its sights on re-shaping retailing in Canada. In 2009, he led an investment group that poured $1.1-million into Well.ca.
Today, with 15 per cent of its sales emanating from mobile devices, the privately held e-commerce business is finding a new path in virtual retailing, Mr. Asaria said. "Through e-commerce and technology and mobile devices, there's room for real disruption in the way shopping happens in Canada. There's a bunch of big retailers that are going to have to react to it."
Well.ca got more than 100 app downloads in the first three hours after it rolled out the virtual store, he said, adding that hundreds of items were scanned using the app. He did not have a final tally on sales.
As a result of the initiative, Well.ca was on its way to selling more Tide detergent on Monday than it sold in the entire month of March, he said.
With overall sales growing in the double digits monthly, Well.ca would like to set up the virtual store in other cities across Canada. With more than 50,000 products – 150 of them at the mobile store – the e-commerce site is now branching out into food and pet products.