No matter how amazing your hardware product may be, you still have to sell it. Retail is a major pain point for companies who have been entrenched in the process of product development. You need to understand your market and you need to be able to reach consumers. Nearly all companies working on IoT devices want to break into the US market, but cultural barriers and logistics often make this a difficult task for overseas innovators to overcome.
b8ta is one of our key retail partners on the HWTrek platform. They offer a completely different retail experience that is a great match for creators of hardware devices. b8ta stores are set in premium locations with a mix of innovative products on display, they don’t just attract savvy shoppers, they encourage discovery, demos, and sales. All products are in the store on commission and creators pay a monthly subscription to b8ta. This is the pioneering service that they describe as being Retail as a Service.We had a good old chinwag with Kyle Schutter of b8ta and he gave us both the lowdown on b8ta and some stellar tips on how overseas IoT companies can make their IoT American dream come true.
Could you be as kind to introduce b8ta to the members of the HWTrek community? What exactly is your ‘retail-as-a-service’ model?
Retail as we know it is broken. It takes 12-18 months for a new hardware company to get their product in front of customers in brick and mortar stores. This is madness in a world where the computing power has literally doubled in the same time frame, rendering the product obsolete. Many hardware companies go out of business waiting to get into retail. Our founders came from Nest so we know this first hand. Luckily Nest had a little bit more capital than most startups, but most start-ups aren’t so lucky. We are tired of old white guys in a suit deciding what is going to be chosen to be successful. We want to bring as many products to consumers as possible so that the people can decide what products are going to be successful.Retail as a Service is a natural extension of Software as a Service. Companies pay a monthly fee to be in b8ta stores so our success is your success and it aligns interests really well.
At this stage of the game, how interested would you say US consumers are in IoT products?
IoT is at its very early stages. Probably less than 1% market penetration (finger in the air estimate). The fact that we talk about connected products is proof. They are really just products and when there is wide penetration we will drop the connected/smart/IoT prefix. For example 100 years ago we had horseless carriages and motorcars. Because the horseless- and motor- part were difficult we highlighted them in our language. Now we just have cars (or self-driving cars, which will soon be known by another name once self-driving cars are ubiquitous).I would really say that we are just in the early stages. There is always an initial period of excitement with a new product, which is then followed by a valley of disappointment. Finally, the whole thing kinda levels out. A good example would be connected refrigerators, people we excited at first, but then found out that they had to put their eggs in a specific place and the whole thing was just viewed as more hassle than its worth.
At a more practical level, because IoT is so new a lot of it doesn’t work as advertised. That’s why customers need to try before they buy a $200 door knob. At b8ta we curate products that work, for companies that will be around for the long haul and weed out companies trying to make a quick buck. This makes consumers confident in the products they see in our stores.
Customers need education, they need to be taught how to use the product. What is interesting, we are now in Lowes stores and have found that we are doing 5 to 7 times better when we have staff who can actually explain a device to them. Basically, with IoT, you need a ton of education for the customers. Companies need to learn how to design a retail experience in the same way that they design a product. You need to put a lot of thought into it, followed by A/B testing. Nobody goes into a Lowes store not looking to buy, you just need to teach the customers and show them how the device is actually useful to their lives.
What types of hardware devices are particularly popular with consumers on b8ta?
Predicting good products is very hard. That’s why we like to let consumers decide. But at a high level there are three things in common with successful products: wow factor, works the way it is advertised, provides value for money (it may be expensive but still provides value)
What advice would you give to an overseas creator that wanted to market a device to US consumers?
There is a long checklist of things you need in place (local company/partner, certifications, etc) so make sure you have those basics covered. A lot of companies do not understand that you need reverse logistics and you actually need to be able to handle returns and complaints.But there is a design side to retail that most companies miss. Successful brands design their retail and marketing experience with just as much care as they designed their products. Here are some tests we ran on products in our store: does a display with your notebook open increase sales (it did), can we increase the price without decreasing sales (we could).
What are some of the common marketing mistakes that you have seen from overseas hardware creators looking to succeed in the US?
Designing your marketing channel requires the same kind of care. Signing up a retail rep and a PR firm just because you have no idea how to deal with retail and it is confusing is definitely the wrong reason to do that. Some companies we work with have had their best marketing by sending free products to Unbox review channels on YouTube. Maybe it doesn’t, but try lots of things and keep iterating. Blindly putting up Facebook ads and getting a TechCrunch article might not actually move the needle on sales. You have to be creative and have someone on your team on this who really cares about it. You probably can’t outsource this.Anecdotally, we know that companies we work with have doubled their Amazon sales just by being in Best Buy. Best Buy is really a marketing channel. BestBuy probably won’t make a profit for you and might make a loss, but it might still be a good invest of your time. That is until b8ta has 1000 stores like big box does in which case you should obviously choose us 😉 If you don’t have a company in the US you can’t sell your device at Bestbuy. A lot of companies think they can rely completely on Amazon, but don’t understand that by having their product physically in Bestbuy, they can double their Amazon sales.
One example of a company needing localization was with Divoom. Their product had too many features and was too complicated for American consumers. Now when cases like this come to us, we are helping them to find distributors locally. We do this on an adhoc basis. It just makes us feel good to be helping. We sit at a weird place in the market. Apple wants exclusive market as do Bestbuy, but b8ta doesn’t. We are successful when products are successful. We want them to be in as many places as possible.
A portion of the creators on the HWTrek platform come from Asia. In such turbulent political times, how would you describe American consumers attitudes to products from Asia?
If I talk about China, I would say the perception is changing. Traditionally, Americans though that Chinese products were lower quality and cheap. But what we are finding is that that the products now coming from China are really technologically advanced, well-designed and competitively priced. Actually one of our best selling products is an electronic skateboard from China. Still, as things stand now….. I would say that there is at least a perception that Chinese products are lower quality for the time being. Some companies brand as American, but I see that changing over a period of time.
What do you think is the largest barrier for mass adoption of smart devices in the US?
Ooooh, good question… There’s so many. From design to price to reliability to customer education to the existing dinosaur retail powers that be. Many founders scratch their own itch in a very niche market and then have to price their niche product at a price no one gets value from. And because it is so niche it costs a lot of money to educate the customer enough to choose to buy. Once the customer buys, the plethora of features inevitably causes something to break. Therefore, retail stores are afraid to carry your product and once they do they are not interested in helping you build your brand or providing a great customer experience.
Thanks so much for your time Kyle. Anything else you would like to add for members of HWTrek community?
Just want to say that we love your platform. You guys are breaking down the barriers. We are also trying to break down barriers. So I guess we are fighting the same battle.