In recent weeks major event promoter Informa has postponed two major trade shows: Expo West and SupplySide East. The American Herbal Products Association will reschedule a CBD event that had been planned in April for Portland, OR, and the NoCo Hemp Expo, which attracted 10,000 attendees to a hotel in Denver, CO last year, has been rescheduled for August.
Seeking alternatives to face-to-face events
These reshuffles have given rise to a wave of workarounds where brands are seeking to recoup some of their investment in show participation. The Expo West cancellation came too late for many participants to avoid having to eat some dollars spent on flights, meals and hotel rooms.
Among the workarounds are the rise of online ‘virtual trade shows.’ These have always been a small facet of the trade meetings market but have gained significant impetus during the pandemic crisis. Will brands discover that the experience has been so cost effective that future trade show participation will be unnecessary?
Don’t bet on it, said Paul Jarrett, CEO and co founder of BuluBox, a subscription box service that helps brands test market their products in front of an engaged audience. Jarrett has called the service, which has seen meteoric growth since its inception in 2012, as the next generation of product sampling.
Through BuluBox Jarrett and his co founder and spouse, Stephanie Jarrett, have come in contact with numerous startup brands whose business model was to go straight online and stay there. Done correctly, the strategy can make for a low cost entry to the industry and rapid sales growth with good margins.
Online sales not the be-all and end-all they're made out to be
The new push toward videoconferencing and virtual trade shows would seem to be tailor made for that world. But Jarrett cautioned that, for all its allure, the ecommerce realm is not the pot of gold that many make it out to be.
“I get annoyed with the way people think about it. People talk about how Netflix killed Blockbuster. That’s one edge study. Brick and mortar is not going away. There is going to be an evolution. Right now 80% of sales are happening in brick and mortar,” Jarrett said.
Jarrett said he has worked with a number of brands that started online and had success. But after settling into a market niche there, they discover that future sales growth requires a shift in strategy.
“You have these brands that started online. They might have started selling something on Amazon, and then expanded that to their own website. Then they find that if they want to grow further, they’re going to have to go to brick and mortar. So they start googling about what’s involved, and they think, ‘That’s crazy!’,” Jarrett said.
The costs can be steep, Jarrett said. Brands selling online can determine their own inventory scheduling and the size of that inventory. A number of contract manufactures cater to that market, and will schedule product runs of a few thousand bottles. Brick and mortar entry requires a brand to commit to a much larger inventory up front, and to agree to be on the hook for that inventory if it doesn’t sell well.
Trade shows still best bet to access huge market
But the long term rewards are significant, too, he said.
“If you are selling on Amazon right now that’s about a $200 billion market. But brick and mortar is $6 trillion,” he said.
Jarrett said that boots on the trade show floors is still the best way to gain access to the brick and mortar world. Brands and buyers can size each other up, and decide in a much more immediate and visceral way if the relationship would be a good fit.
“Understanding that store, developing a relationship with a buyer—I don’t think there’s a substitute for a trade show for that,” he said.
“There are the rare cases where Whole Foods will discover you in your online store. But very, very rarely do the bricks and mortar retail gods come down from the heavens and select you. You have got to put yourself out in front of them,” he said.
Online sales will capture bigger share
Jarrett admitted that ecommerce is growing faster than is brick and mortar, so the future will look different than the landscape does today. A brick and mortar store will have to offer something special to survive—special service or products, low prices, or geographical convenience.
“I think in the future you might see 40% of sales online, with 60% in brick and mortar. In the future a brick and mortar store will have to decide things like, am I going to be the cheapest? Or the closest? I do think the days of the destination retail store are numbered. I don’t think people will be saying, ‘Let’s go to Bed Bath and Beyond to check out vacuums,’ ” he said.