Pop-Up Shops Boost Profits for PulseTV During the Pandemic
Without a doubt, the COVID-19 pandemic created many challenges for e-commerce and retail stores globally. Faced with unfavorable debt burden and a customer base hunkering down from government orders, retailers felt the pain as consumers stopped spending money.
E-commerce companies were faced with vendors going out of business and supply chains disrupted. Yet the pandemic crisis revealed something fundamental not just for each person, but every organization. How would we personally and professionally react to adversity? We at PulseTV didn't just plan to survive, we asked how could rearrange resources to thrive.
New Product Categories
In early March, there was a national shortage of hand sanitizer. PulseTV tried purchasing it from every vendor we could find but came up empty. So we contacted a local industrial cleaning supply company to ask if it could make sanitizer for us. We then developed Purifize and were off to the races. We sold millions of dollars worth of sanitizer within weeks.
We also created a department on PulseTV’s website for “Flu and Virus Protection” that included masks, gloves, disinfectant wipes, and other personal protective equipment (PPE). When the lockdown hit the nation, we created a “Stay at Home” department with retro video games, puzzles, coloring books and exercise items.
These new product categories led to tripling year-over-year (YoY) sales for PulseTV’s e-commerce business. Our office and warehouse stayed open during the Governor’s executive lockdown orders because PulseTV was deemed an essential business. We supplied local police and fire departments with free sanitizer and masks just to ensure our staff wouldn't be hassled en route to and from work. We even got a letter designating PulseTV as an essential business that every employee carried with them in their car.
The crisis created huge supply gaps to fill. PulseTV’s usual way of marketing is creating demand for impulse items, largely from pushing daily deals via email to over 6 million subscribers. We don’t wait to satisfy existing demand in consumers' minds. Waiting for people to search for something they want is too passive for our instincts. Creating demand is more difficult, but fits our style.
However, the pandemic temporarily changed our approach. We didn't create demand for masks or sanitizer. That already existed. We just let people know that we had these products available. In fact, we tested three different banners in our web campaign. The winning creative just said, “We Have Masks & Shipping Today.” Our ad budget increased 10X. Oh, media rates had also plunged as local advertising, travel, and restaurant chains stopped advertising. Rates declined over 70 percent.
PulseTV Opens Pop-Up Shop, Masks and More Outlet
PulseTV doesn’t market products that are ready to ship. Many people were fooled by an “Amazon trick” where sellers proclaim “In Stock and Shipping by XX” where XX could be 60 days down the road. People ordered on Amazon.com without reading shipping details and were often tricked by the “In Stock” status.
We noticed that people within 10 miles of our office were calling up asking if they could pick up orders for masks or sanitizer at our office. They universally were worried orders would be delayed as they were from Amazon. We set up a table with sanitizer at the door and allowed masked people to pick up their orders. This was becoming common.
The above behavior wasn't enough however to move PulseTV into opening its first brick-and-mortar outlet. The retail sector in the south suburbs of Chicago, where PulseTV is headquartered, was hemorrhaging even before the pandemic. However, now every mall and shopping center has stores disappearing for good. Over 30 percent of retail locations in our area are now empty with signage removed. It's actually quite alarming and depressing. Commercial real estate is in a deep depression.
This buyer's market, however, was the key to PulseTV opening its first pop-up shop, Masks and More Outlet. There was plenty of space available and our store was a response to the pandemic. We negotiated a month-to-month lease as a “pop up” store like those during the Halloween season. Space that was formerly $8000/month was now $1000/month, and this included utilities.
We received the keys on July 17 and opened August 1, just 13 days later. We sent out a press release to local papers and local television stations about Masks and More Outlet opening in Orland Park, just four miles from our warehouse. The local CBS affiliate came out to interview us (view here) and local papers picked up the story.
We currently staff the store with PulseTV customer service personnel. Sales for the first month of operation more than doubled our expectations — so much so that we opened two more locations in September, also in local towns surrounding our warehouse. The first month’s sales will exceed $40,000, with a 55 percent gross product margin. Obviously the success of Masks and More Outlet depends on advantageous lease rates. We have 2,000-plus square feet, but only use 500 square feet for 110 SKUs.
Masks and More Outlet also sells As Seen On TV products at deep discounts. PulseTV’s buying power allows for deep discounts while still maintaining margins. We presently can fill in shifts for the first and second stores with customer service, but we needed to hire full-time managers for the additional pop-ups we've opened.
Opening “owned and operated” Masks and More Outlets is just one way to grow PulseTV's retail footprint. Plans include partnering with people and organizations that want to benefit from the current converging economic conditions. The build out for a pop-up shop is minimal. Peg boards, some shelves, and you're ready for business. We spent less than $7,500 to build out a location, and this included signage. For partnerships, PulseTV puts up opening inventory on consignment. For those wanting to open their own Masks and More Outlet without partnering, we have a license and distribution agreement.
Every crisis doesn't have to be a death sentence. For those that are flexible with their business model and resources, you can come out on the other side.
Jaffer Ali is the CEO of PulseTV and is a serial entrepreneur. PulseTV started as an infomercial marketer 25 years ago and has been marketing exclusively online for the past 20 years … until opening its first brick-and-mortar store.
Related story: Brick-and-Mortar Rethink: 5 Areas to Reconsider