As e-commerce continues to show double-digit year-over-year growth in the multitrillion-dollar U.S. retail market, two notable figures in the space–Jet.com cofounder and Walmart e-commerce CEO Marc Lore and Fabletics cofounder Kate Hudson–share with Fast Company‘s Robert Safian why being a digitally native company offers a leg up.
Fast Company: It’s a challenging time for retailers. Do digitally native brands have an advantage?
Marc Lore: I think that digitally native brands are the future. Having that direct connection to the customer is very important. Millennial shoppers want to not only buy the product but know where the product’s made, the environmental position of the company, the social impact that the company’s making. And then when you look at the margin structure where you can sell to the entire country from one location, it becomes really powerful financially. You need to do two, three, four hundred million-ish [in revenue], and then you start to generate an incredible profit margin. The problem is it takes a lot of capital to get [there] as a single branded retailer. Once the venture community starts to appreciate that it’s a lot of capital up front but then huge upside, you’re going to see a lot more money being pumped into that area.
Kate Hudson: Connection is everything. If you have both the online and the physical retail, [it creates] a two to three times more valuable customer.
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