Warby Parker's first-ever showroom was Neil Blumenthal's dining room. Bonobos' first men's store was in the downstairs lobby of what eventually became its headquarters on 25th street in Manhattan. Neither foray into retail was glamorous, but those initial tests helped their founders discover what customers want.

Going from clicks to bricks and building a brand online and off were the subject of a recent panel presented by the American Express U.S. Small Merchant Group. There, in the Chelsea neighborhood of Manhattan, the founders of Bonobos, Rent the Runway, and Birchbox discussed why they started online, ventured offline, and are happy with both results. Read on for what they learned in the process.

Why It Pays to Start Online 

A Bigger Platform  

For a brand that strives to make runway fashions accessible, starting online was key, said Jennifer Fleiss, Rent the Runway's co-founder and head of business development. Reaching women across the U.S. was much easier on the Web and therefore put scale within reach, plus consumers were comfortable with shopping online. 

Easy Fixes  

The ability to spot and fix problems quickly is another virtue of being online, Fleiss explained. "Being able to iterate is the biggest benefit, with retail you just can't do that." Offline you risk blowing capital, putting off customers, and taking too long to make changes. 

Social Buzz 

Any business launched online also has more social potential. In Rent the Runway's case, customers were already sharing online, so word of mouth spread quickly. "Being social is the most viral form of marketing," said Fleiss, who saw firsthand how excited customers were to share what they wore to events. "The impact of telling the whole world about it is exponential."  

Big Data 

Beyond being social, e-commerce businesses also thrive on quick access to data. "User-generated data leads to scale," said Fleiss, who found customers' insights helpful for tweaking her retail experience. At Rent the Runway, in fact, customer service reps are actually called customer insight reps, because they not only assist shoppers, but provide real-time feedback to business development.  

Why Go Offline 

Customer Insights 

The opportunity to sync online data with offline experiences was just too good to pass up, recalled Fleiss. "It's rare to [personalize data]," but knowing a customers' size, style, and habits really soups up the in-store experience. "We can pre-curate dresses, suggest items to take home or purchase later, and send them links to their updated profile," Fleiss said. "We really realized all channels raise boats together." Today Rent the Runway has three stores: two in Manhattan and one in Las Vegas' Cosmopolitan Hotel.  

Customers Want it 

For Bonobos' founder Andy Dunn, opening a store in Manhattan provided an opportunity to help guide his shoppers. "Men hate stores," he joked with the mostly female audience, which is why he initially launched on the Web. But after receiving several emails asking where their store was located, Dunn decided to give it a shot and opened a changing booth in the lobby of his office building. In only nine days he made $1 million in revenue without any marketing.

Opportunities to Educate 

Katia Beauchamp, Birchbox's founder, was inclined to open a store because "it really sucked to purchase beauty products on the Internet." Customers need to touch the products and put it in the context of their lives. "That's the path to purchasing because they're lazy," she said. Also, "brands want to know their return on investment on samples because trials drive sales." Today her Soho store puts an emphasis on sampling, allowing customers to learn about the products before they buy. 

Check out the full video of the panel below: 

Published on: Sep 19, 2014