B8ta Tested: A Check-in with Palo Alto's Connected Home Shop, b8ta
Don’t call them a retailer.
That’s not what Vibhu Norby (pictured below right), Phillip Raub, William Mintun, and Nick Mann had in mind when they left their posts at connected-home manufacturer Nest to found b8ta—the technology company that has completely revolutionized the retail experience.
To them, b8ta is first and foremost a tech company. Sure, they have a physical store, but they and their sales personnel make zero dollars from selling product. Rather, they focus on providing customers the chance to experience connected-home devices in person, and manufacturers with the opportunity to get their name—and their products—out in front of the consumer.
“I really think everyone in this industry on the manufacturing side agrees that the way that we sell and merchandise consumer electronics isn’t ideal, and the process for getting into retail is completely broken,” said Norby, b8ta’s CEO. “As a customer of retail shops and particularly electronics shops, we started noticing that the product selection was starting to feel old and stale, versus what we were seeing online. So, we started talking about, what if you created retail stores that were driven by the manufacturers, and were powered by software? What would that look like?”
What they—the founders of b8ta—came up with is a concept where they act as a software developer, renting out their product to manufacturers for a monthly fee. What that fee gets “subscribers” is access to space in b8ta’s physical retail location, and a whole lot more.
“We’re treating the store like they’d treat their online store,” Norby said. “Every product is next to an iPad, and companies can control the marketing materials, the messaging, even the price points from their online dashboard, and those changes get reflected onto the in-store display in real time.”
Manufacturers also train all of b8ta’s staff on their products, either directly or through webinars. This gives the manufacturer some assurance that the employees of b8ta, who interact directly with the customer, are knowledgeable of and can effectively “sell” their products.
What truly separates b8ta from the typical retailer, though, is their ability to provide manufacturers with analytics – hard data on how their products and in-store displays are performing.
“We couldn’t believe that so many stores didn’t track analytics and how things were performing in the first place, let alone share that with the product manufacturers who are placing their products in the store,” Norby said. “We designed our system to deliver per-product data on how that product is performing, including how long people are standing in front of their display on average, how that’s changed over time, and how many people are actually stopping by their product display versus the total traffic in the store. The result is, there’s this store that feels unlike any other store in the world for both the customer and the manufacturer.”
That’s a great story and all. But on to the real question: How has business been?
“Business is booming. Traffic in the store has been really incredible, it hasn’t slowed down at all, for whatever reason,” according to Norby. “We get interest from manufacturers all over the world every single day to be a part of the store. About 20 percent of the companies that have reached out to us we’ve actually had space for and can fit them on the floor.”
With interest from manufacturers rising the way it has, b8ta has found itself in a situation where, with only one physical location at this point, it can be (and in some senses, has to be) selective in the types of products it places. The founders do vet the applicants, they demo their products, talk to the manufacturers on the phone, and ask for company profiles as they look to fill any empty space in the store.
Beyond that, the products have to fit into one of four product categories: Sense, which are products that augment the user’s sensory attributes and produce an output – things like VR/AR and wearables will fit in that category; Connected Home; Play, which is drones, robots for kids, and other smart toys that teach you things; and then Move – electric transportation, things like electric skateboards, connected-car technology, and any products that help you go somewhere.
And even though the store has only been open since December, Norby said he’s noticed the impact—rather, the lack thereof—of seasonality on business. “Because of our business model, the effects of seasonality are pretty minimal—we make as much money in December as we do in January or February, which is probably unusual for people who sell products anywhere, not just in brick and mortar,” he said. “Our team is growing—we’re a really healthy company and I couldn’t be more proud of what we’ve done so far.”
He and the founders attribute their early success to the novelty of the approach that they’ve taken to “retail.”
No Pressure to Buy
“I think that when people are walking into the store, the environment in b8ta doesn’t feel like a normal store in that you don’t feel like there’s any pressure to buy,” he said. “There aren’t any sales guys trying to get you to spend $1,000 on an audio system when you came in to spend half that. I think people feel comfortable coming in and they bring their family and they bring their friends who are in town, they tell everybody else about it. B8ta is an experience more than anything else.”
So with things going as smoothly as they are, the folks at b8ta have to have their eye on the future and expansion, right?
Not so fast.
“We would be remiss not to think about what we’re going to do next, but the way that we think about our business isn’t about how many stores we think we can open,” Norby said. “The way we think about it is, how quickly can we give our products away to get in front of people wherever they are, and where the business model works like ours does and it’s software-powered; not necessarily, can we just expand our footprint of our own brand.”
For now, Norby and the team at b8ta will continue doing what they do well. And from the looks of things, what they do well is find ways to revolutionize the retail industry and offer brick and mortar a lifeline.
But hey, don’t call them a retailer.