Zappos' pop-up blurs virtual lines with new tech and endless-aisle

When Zappos opened a pop-up shop in Las Vegas during the holiday season, it did so in a way that was uniquely its own, inside a former casino and motel complete with live music venue, bar, dining area, virtual merchandise and endless aisle digital displays. And it was open 24 hours, just like the online store.

Zappos (NASDAQ:AMZN) developed and operated the store in partnership with ShopWithMe software, developed by OrderWithMe's founder Jonathan Jenkins. OrderWithMe allows small retailers to band together and increase their collective buying power to better compete with large retailers. OrderWithMe then launched ShopWithMe, which lets these retailers in turn sell online, managing logistics and inventory, and providing an in-store solution for retailers with limited inventory.

Jenkins sees solutions and opportunities for retailers operating primarily in either channel. "The online retailers are interested in pop-up stores, but brick-and-mortar [retailers] want this experience to offer extended inventory," said Jenkins, during a tour of the location. "We're just starting to connect online with in-store, creating that 'endless aisle.'"

The 20,000 sq. ft. space features a series of departments, each set up like a traditional store. Men and women's apparel, kids, active wear, accessories and of course Zappos' signature product: shoes. The shoe department is located at the rear of the store, forcing the shopper through the other sections of the store, similar to a supermarket's placement of milk in the back.

Although the store was open 24 hours a day through December 31 (and kept more regular hours in the final two weeks of operation through Jan. 9), the staff needed was minimal thanks to in-store technology. Shoppers can signal for help and store associates are summoned by using beacons. Mobile POS systems let shoppers check out physical merchandise.

Kiosks scan an item's tag and take the shopper to that item on Zappos' website. With limited inventory in the store, shoppers can select additional colors and sizes, pay and have everything shipped to their home the next day, for free. Since many shoppers are visiting Las Vegas, next day delivery means the purchases will be waiting when they return home.

Virtual reality technology adds a new element to the experience. The technology, developed by OrderWithMe, lets shoppers virtually select a shoe by scanning a single running shoe on display next to a kiosk. Once scanned the three walls shift and transform as shoes appear. Customers can then browse inventory by swiping each item as it appears, similar to scrolling through products on a mobile device. To select a product, the shopper reaches out and grabs the shoe, depositing it in their virtual shopping basket visible on the kiosk.

There's a small selection of gift items available for purchase immediately, but since Zappos has never accepted cash before, OrderWithMe created a self-checkout that requires shoppers to feed cash into the machine, or swipe a credit card, similar to units found in supermarkets.  

Merchandise was selected by Zappos buyers and top sellers tended to trend along the same lines as those online, Jenkins said.

Zappos' pop-up shop is now closed, but expect the retailer to pop-up elsewhere with tweaks. The retailer considers the shop a learning lab, so future formats will likely feature expanded denim departments with fitting rooms. High-end apparel and luxury goods won't be carried alongside more mass market and lifestyle brands, but could be featured in dedicated shops in high-income locations.

The effort is just one more example of how online retailers are making forays into brick-and-mortar. From Warby Parker to Bonobos and Birch Box, the most successful of the pure plays are blurring channels of their own. Pop-ups are expected to bring in roughly $2 billion in retail sales during the recent holiday season.

Temporary and experimental formats are popping up everywhere, and are among the most innovative in retail. In truth, these bring to life the very real divide between online and brick and mortar. "All the brick and mortar guys are trying to create code," said Jenkins. "And all the code guys are trying to build bricks." Somewhere, sometime, the two areas of expertise will mesh to reveal a new form of retail.

(Jonathan Jenkins of OrderWithMe will be speaking at NRF's BIG Show on Wednesday, Jan. 14)

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