B8ta remains bullish on IRL shopping with new acquisition – ProWellTech
Coronavirus cases in the United States are reaching new highs. E-commerce continues to grow. And b8ta, a San Francisco-based startup betting on the future of brick-and-mortar retailers, is doubling its footprint in person.
B8ta offers shelf space for unique digital products, such as electric skateboards or a coffee alarm clock, on behalf of brands that want a physical presence. Today, the company acquired a 1-year-old company that does the same for consumer-facing businesses, Re: store.
Backed by Sequoia and SPC, Re: store has a three-story physical location on Maiden Lane in San Francisco and houses products ranging from beauty to consumer electronics to lifestyle products. It also has a community co-working space.
“The pandemic has emphasized the need for brands to be flexible with their product mix and distribution,” says Selene Cruz, CEO of Re: store. “Some products are doing well these days, and brands in a retail-as-a-service model can adapt their offering much faster than those in a traditional wholesaling model based on buying cycles.”
It’s the high-touch startups that are expected to struggle during this time, as rising virus rates threaten the global economy. But as today’s deal shows, both b8ta and Re: store are optimistic when it comes to long-term in-person purchases.
In fact, in March, CEO and co-founder of b8ta Vibhu Norby wrote a broad Twitter discussion in favor of keeping the stores of its startups open, pointing out that closures would require the company to lose millions and send home tens of thousands of employees. B8ta’s entire value proposition is based on high-touch interactions and a world where consumers want to try and experience their products before they buy them.
“I feel like we’ve lived three lives since I wrote that thread in March,” Norby said, noting that it’s been an “extremely difficult year” for the company. However, the acquisition of Re: store stems from the new momentum it has seen since b8ta was able to safely reopen its stores in May.
“We launched more brands last quarter than any other in our history,” Norby said. “The traditional retail model and the traditional real estate model have completely collapsed and brands are looking for something better.” Of note, Macy’s, which backed b8ta, narrowly avoided bankruptcy by securing a $ 4.5 billion lifeline in funding to curb sales.
The Re: store acquisition of B8ta is a response to a rebound among physical retailers, which favors an experience rather than a catalog of aisles. Focusing on creative in-person experiences versus department stores is an acceleration of a pre-pandemic trend. As direct-to-consumer investors told us in late March, companies can’t depend on a few channels for customer acquisition. As the field gets crowded, brands try to stand out and stores like b8ta and Re: store could help them do that.
To offset some of b8ta’s uptrend, Norby noted that “on the shopping side, visits are down but sales are almost back to pre-pandemic levels.” In other words, people buy b8ta products online with no physical presence, which means that online platforms are still a preference for consumers.