Innovation in Retail with Andi Felsl
Andi Felsl, a serial entrepreneur talks about how him brings innovation into retail. Through Brand Cloud, he merges the online and offline commerce and propose a new way of selling and distributing products for all brands. Hear him on what motivated him to create this solution, how he built it and what benefits brings to brands, stores and consumers.
Tilo: I’m here today talking with Andi Felsl. Andi you’ve been an entrepreneur many times over. What kind of business have you had?
Andi: First, thank you for inviting me here with you.
We’ve been doing business in software. I have been into bicycles and into watches.
You may wonder why? Well all together because somehow it happens, through accidentally family reasons
Tilo: So the accidental entrepreneur, right?
Andi: Kind’ve, yeah! I mean most of the time you do things because you think you wanted for yourself.
You do mountain biking, then you end up into mountain bikes. And watches is because my wife is into watches and there’s lot of things going on in the past ten years.
That’s how we end up in all of these fields.
Tilo: How did you get into the retail and e-commerce industry?
Andi: This was one of the things which drove me.
With bicycles for example, we have been fighting fifteen years in a row for a really innovative product which you could not just buy it off the shelf. We had to do it ourselves and I think you we’ve done okay. But at the end of the day, you need to solve a sales problem.
Currently most of the start-up I would say fail not because they can’t make a brand or because they cannot make good marketing, or they cannot make a good product. You get this done somehow, by the way of selling can break you. One of my company we just ran out of cash, simply as that. We’ve accumulated too much products in the wrong spot.
When you have a good year, than you anticipate the next year is also good so we can plan more. All of a sudden it’s raining and you are ending up in a very tight situation. Then it’s getting even worse because you’re trying
to do the great market stuff and all this kind of things.
This is not healthy. Retailing is not really healthy at the moment. it’s because systems compete against each other.
These small brands, they have so much to do in the early days that over coming this obstacle of highly risky retail infrastructure, it’s just too much. And that’s why most of them failed.
You’re not selling a product, you’re selling the risk of not finding a customer.
Tilo: How did you approach this challenge?
Andi: Five or seven years ago, we were in an Apple factory. I saw a hundred fifty thousand iPhones shipped everyday. That was a cool product: it is a computer. it is connected, it has a screen, it has a camera.
I thought: “Everybody will have such a thing in the pocket! It is a cash desk, I think we’ll pay with it.” It was my bet.
Then I thought back again about my bicycle business: what I really don’t know? I don’t know when a retailer sells my bike to someone. That’s the only thing I don’t know. Because I don’t know it, I produce too much and I put them in the wrong store. This means I need a lot of cash.
From this reasoning we came up to the idea of shipping every product a virtual cash desk: letting a sales person pull out or add information when it is sold from the Cloud, by identifying something on the product. The Cloud was not really there at that time. But now it is.
So we came up with a business model which is radically different from everything people I’ve ever know in retail. We thought about applying the sharing model to retail. Some people are sharing cars and some others are sharing flats.
At the end of the day when a retailer buys something it’s buying a product, so he’s using money to sell it to someone else. Then he wants to participate in the value of the sell. Traditionally it was always like this. With the difference that now there was no transparency: you don’t know when the product was sold, to whom it was sold, etc. So you can’t do a fare share when you have no transparency.
Finally we came to the conclusion: it is not good to have our own stores as a small brand, it is not good to make ERP integration because it’s expensive and it’s not really works. Running just an online store is not enough to survive a bike company. Selling just everywhere is not a good thing either because we run into the show-rooming problems. So why not doing it like stimulating check out processes, for any kind of source?
Tilo: What is Brand Cloud ?
Andi: We wanted to build a retailing infrastructure which is less risky for all.
Brand Cloud makes all your goods transparent at any time so you can also think very different. The chance that you can find someone somewhere is very high. We allow parties to avoid a loss sell, due whatever reasons: very often is a price thing.
People feel good when they get a discount. It’s a mental feeling. Brand Cloud allows the brand and the retailer to adjust the pricing, call it dynamic pricing.
Tilo: How do brands manage their inventory?
Andi: There’s zero connection between the point of sales, an independent retailer, a distributer which is probably in between and the brand. It doesn’t exists because when you have let’s say five thousand retailers, potentially you end up with five thousand different cashier systems and five thousand different interfaces on the software side.
At the end of the day you cannot integrate this amount of interfaces and especially not a small company.
So we thought why do you need to integrate something why not perhaps to stimulating a shopping process in a store.
What people also do not really understand is that most brands don’t know their inventories: they don’t know what’s outside of their four walls of the company. When you know your global inventory at every second of the day, what kind of business would you do?
Tilo: What kind of benefits can brands and retailers enjoy with Brand Cloud?
Andi: We increased the efficiency of the transaction in a store. Which means we are sharing with all retailers store infrastructure in form of virtual infrastructure. So the cost for running your store must come down and then also the visibility of store and what is in the store must come up so people can go there. Because these two things come together, you can have more stores filled with your product and then because all these products are visible, the chance that someone is going to a brand’s website is very high.
Tilo: How does Brand Cloud work?
Andi: By using physical objects. A product in the real world has a number. Everything is connected to a number and this number allows anybody to actually pull out information from the Cloud about this product: where is it, what is it, how much should it cost and also to add information to it: I have sold it to person x for price epsilon. And then we all know what’s going on. Based on this transparency, we allow parties to share revenues on a sale.
Tilo: How is the customer experience affected by Brand Cloud?
Andi: You go into a store in Milano and you buy your shoes. In the Brand Cloud world, you’ll put your phone, scan the box, then the retailer also scan the box with his phone. We don’t have any cash involved, nothing else. Then he says: “I will send it from the Swiss warehouse”. But you brought it in Milano. So, you can reduce friction on a level which was unheard of when you know where the stuff is and when there is a connection between these worlds.
Tilo: What does the future of retail look like for you?
Andi: I have my personal bet. I bet that: predictive instant pick up by a customer is always more efficient and cheaper than “same day delivery” by any online retailer. On the long run, in business as we know inefficient things usually tend not to be around forever.
How do you allow predictive instant pick up by a consumer? First of all, you need to know what’s in the store.
Tilo: It sounds like it’s a tremendous interesting venture. I’ll be interested to see how it comes along. Andi, thank you very much.
Andi: Thank you!