VP OF DIGITAL & ECOMMERCE, RAINBOW SHOPS
David Cost discusses why Rainbow Shops decided to replatform to Shopify and how SoundCommerce helps unify over eight years of commerce data to drive shopper experience.
In this episode you will learn from David:
- What it takes to replatform an enterprise brand
- The importance of 3PL’s in the retail space
- How the SoundCommerce data platform supported their initiative providing data continuity, order history and engagement data, and sale comps
- The growth Rainbow Shops has seen since switching to Shopify from DemandWare
- How Rainbow Shops’ current stack enables them to meet the customer where they are and realize continued growth throughout the pandemic
- Why Rainbow Shops moved away from headless commerce
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[00:00] Eric Best: SoundCommerce is a real time and predictive data platform for retailers and consumer brands. Our thesis at Sound Commerce is simple. We believe that consumer brands have the power to make the world a better place and direct to consumer is the model to make it happen. This podcast is about the people behind the brands we love and the moves they made to turn those great brands into great customer centric businesses.
I’m your host Eric Best, founder and CEO at SoundCommerce.
I’m excited to welcome David Cost to this episode of SoundCommerce. David is the VP of digital and e-commerce at Rainbow Apparel. They’re an omni-channel fast fashion retailer operating more than a thousand stores across the United states. And David’s background includes almost seven years leading their digital and online commerce. And prior to this at other apparel brands. And prior to that technology providers to the retail industry, David is a regular speaker and thought leader at industry events like CommerceNext and Retail X, and more recently became a SoundCommerce customer. So, Hey David. Welcome.
[01:06] David Cost: Hey Eric.
[00:01:08] Eric Best: So we have a lot to talk about today, focusing on your recent e-commerce re-platforming project at Rainbow, which I’m excited to dig into.
But first I want to give listeners a little back story on you. The new site looks amazing by the way, what’s the url?
[01:23] David Cost: It’s rainbowshops.com.
[01:26] Eric Best: cool. I know that before you transitioned into running e-commerce programs for brands you built and ra your own industry data platform, do you want to tell us about Price Scan and maybe some of your early career work and how that transitioned into a role running e-commerce businesses?
[01:44] David Cost: Yeah, sure. I spent really the first third of my career doing consulting. I spent the middle third. I was a co-founder of an internet property called Price Scan. We were in the price comparison space. We launched that in early 1997. And ran that for, I don’t know, 12, 13 years. So, you know, at the time, if you were buying a digital camera or a flat panel TV, you would come to Price Scan to find out you know, where to buy it at the lowest price.
Think what Google shopping is today, that’s what we were before, before Google existed.
[02:18] Eric Best: This is a market space, very near and dear to my heart, of course,
very cool. So how did you end up transitioning into the brands side?
[02:25] David Cost: Well, I mean, what was interesting is you know really Price Scan, watched the birth of e-commerce. And so we had kind of a unique vantage point to see how retail evolved on the internet over time. The retailers were our customers. You know, we originally sold display ads and ultimately sold clicks to retailers. So we had a unique kind of vantage point to see, you know, what worked, what didn’t work and how that changed over time.
Hmm. So by the time in 2011, you know, I was ready to try something new. Switching to the retail side seemed to be kind of a logical step to take everything that I had learned from all that time, watching the price comparison space and now apply that to the retail side.
[03:11] Eric Best: Yeah. It makes a lot of sense. Just to introduce us to rainbow shops, can you us a little bit about the origin story of the retailer? What’s the core value proposition. Who’s your target customer? What’s the footprint of the company?
So at Rainbow. We sell shoes, apparel, accessories for women in both juniors and plus sizes as well as kids really from infants up through high school. We operate about 1100 brick and mortar stores. All us we’ve got about 120 stores in Puerto Rico and we also have a couple stores in the US Virgin islands, all US territories. The chain, so that if a company is privately held the current owners bought it when it was a 20 store, local chain in Brooklyn, New York. And they’ve grown it to, again, this almost 1100 store footprint. You know, I often say we’re the billion dollar retailer that nobody knows exists.
So you know how to describe a rainbow for someone that hasn’t been, or hasn’t seen one, I kind of describe us as we’ve got forever 21 type clothing and a TJ Maxx kind of format.
Okay. Yeah. That makes sense.
[04:21] David Cost: It’s no frills everyday low price. We are discounting every day and when merchandise doesn’t move, prices are being cut until it eventually clears. And we constantly, you know, we launch about a hundred new styles a day and a hundred styles are selling out. So it’s just a constant flow of, of newness and, you know, women essentially come on a treasure hunt when they come to Rainbow
[04:48] Eric Best: Yeah. So when we say fast fashion, we mean fast.
[04:52] David Cost: Yes.
[04:54] Eric Best: How does the e-commerce business play into kind of that overall omni-channel footprint?
[05:00] David Cost: Clearly growing and clearly COVID accelerated that even more. So we are truly, we’re channel agnostic. We don’t really have a preference for where the customer buys as long as they’re buying Rainbow.
And again, because of the ownership structure, we don’t do anything to incentivize the customer to buy brick and mortar or online, wherever she wants to buy we want to be there and we want to try to make that purchase as easy as possible.
[05:30] Eric Best: Yeah, that makes sense. So I mentioned at the onset that you guys have been going through this pretty major e-commerce re-platforming initiative this year, can you talk a little bit about the lead up to this project? What were the motivations to reconsider your e-comm platform? Was COVID part of the motivation or inspiration to revisit your technology platform at this time? And then we’ll get into some of the lessons learned and experiences you had along the way.
[05:57] David Cost: We are retailers first and we don’t have a big tech development shop. We don’t have a big it shop that’s got experience with internet technology. So that forces us to go to a platform of one sort or another. We’ve been running on DemandWare or Salesforce Commerce Cloud since we went live on the internet.
And at the time we initially made that decision. DemandWare was really, you know, best-in-class. When third parties were developing technology, it always came out on DemandWare first, when partners, whether it was Pinterest or Google or whatever, wanted to do something in the e-commerce space, they did it with DemandWare first we started to see two or three years ago that started to shift. And things, you know, as Shopify kind of ascended those same technology vendors that we saw do things on DemandWare first really shifted to do them on Shopify first. And we think that trend is continuing.
[07:00] Eric Best: This almost feels counterintuitive, right? For someone who’s been in the industry for awhile you could characterize this move as moving from kind of an established enterprise platform to what might’ve been considered more of a mid-market solution until the last few years. I mean for our part at Sound, we’re seeing brands migrate to Shopify from all sorts of major enterprise platforms. So this is not a big surprise to me, but it might, it might seem counterintuitive to some folks that have been in the industry for awhile.
[07:31] David Cost: And I think that trend’s only going to accelerate. I mean, having watched it happen you know, when we went live on DemandWare most people had homegrown systems or, or something that they built in house ATG and WebSphere and people like that were the dominant players. DemandWare was the upstart in the saas space. I think clearly time proved that the saas solution was a superior solution and one that a lot of retailers were going to find attractive. But this business doesn’t stop. Technology continues to move, so you have to continue to invest and you have to continue to innovate.
And I think after DemandWare was acquired by Salesforce they lost some of that mojo and never seemed to really pick it back up. Where that’s all Shopify does is e-commerce. And the pace of innovation that we’re observing is just breathtaking.
And so that’s why you see every other week, you’re seeing a major announcement from a major player and it’s always Shopify first.
[08:35] Eric Best: What were some of the key considerations that came into play as you were evaluating Shopify? I was going to ask you if you had looked at other platforms, the big space that comes to mind of course, are the, the folks in this headless commerce category. So they sell Fabric here in Commercetools. Did you look at those other alternatives and kind of, how did you end up settling on Shopify?
[09:01] David Cost: So we implemented headless on top of DemandWare on top of Salesforce so we have headless experience. Here’s kind of what I, what I had to say about that. Okay. Headless seems, you know, it sounds nice on paper and the marketing pitch is clean and attractive.
Here’s the downside or the gotcha. As we all know, right? The real down and dirty e-commerce happens in the dev ops happens in the side that has to keep the site up and running, you know, every minute of every day, there’s no off switch on e-commerce. It takes a lot of resources to do dev ops around the clock.
And when you go headless, you’ve now gone from someone like. You know, Salesforce that has the resources to keep your website up and running or Shopify in that case.
And none of the headless players are big enough to have enough of that infrastructure to make that process smooth. And we had experienced multiple times where we had issues and it was really because lack of resources on the headless vendor side to really handle the demands of a, you know, a large retailer that runs 24/7.
So when we went to Shopify we were sensitive to that. We worked with an integrator that kind of came up with a concept to give us the best of both worlds. So we didn’t do straight liquid Shopify theme. Our site is coded in a way that kind of feels and has the speed of a headless website. Yet all of it runs on Shopify’s backend.
[10:37] Eric Best: Yeah. It’s interesting.
[10:38] David Cost: We can rely on Shopify to make sure that things stay running. We got the benefits, the performance benefits from the headless side, without having to have the dev ops risk spread across multiple players.
[10:51] Eric Best: That makes sense. Were the criteria I’m sure there was mix right of considerations here. Page load latency, you know, the speed of the site. how big of was the flexibility of the site presentation itself, kind of the merchandising capabilities of Shopify?
[11:10] David Cost: I mean, look, it’s been, my, it’s been my experience in e-commerce. Everything can be done with enough time and money, right. That no platform is so so rigid that you can’t do what you want to do. Right. So I’ve always listened to people say whatever the platform is it can only handle up to X or there’s some feature that it can’t do. I have not yet experienced that.
So it’s kind of the same thing on Shopify. We literally did what people call a lift and shift. We just took the same website we had on Salesforce and built that same website on top of Shopify. We didn’t change anything with the UI or anything with the user experience. The only thing that did change was checkout.
And again, if I had things in the plus column for Shopify. The Shopify checkout is truly, I think state-of-the-art today. Nobody has a checkout better than Shopify, other than Amazon. So the combination of their checkout and their Shop Pay product we just thought was a killer combination.
And Shop Pay only works when you have scales. So when you have, you know, 1.7 million retailers to use the platform and as they’re signing more and more of those people up for Shop Pay, It increases the percentage of when somebody comes to your website, they’re already going to have a Shop Pay account, which is a one-click checkout.
[12:40] Eric Best: Yeah. Reducing that friction. Right. Or you can, I I’m always surprised at the places, I shouldn’t be surprised at the places where I can use that as part of the tender, you know, the check-in process.
[12:51] David Cost: It is, It is, surprising.
[12:52] Eric Best: Yeah. So let’s talk a little bit about the project, like timeline, critical milestones, and then what were the biggest surprises, either pleasant or unpleasant that you discovered along the way? Cause this was a, how long was the project?
[13:07] David Cost: Well, the project was supposed to be six months and it probably took us closer to a year. Look, so, so where are the gotchas? Right? We have a big product catalog, right. And a product catalog that changes as we’ve talked about before. Right. That’s a hundred new styles a day. And you know, a style is kind of at the top level, there are colors underneath styles and their sizes underneath that. So in terms of skus, we could be launching close to a thousand skus a day. Shopify doesn’t have anything they’re built in kind of product catalog can’t handle a catalog of our size, really, you know, very easily. Right? So forces you to go to a PIM. Our experience after the fact is that relationship between Shopify and the PIM’s is too immature Shopify is going to ultimately have to either build a PIM or they’re going to have to more tightly partner with one or two of the big PIM players that are out there.
[14:07] Eric Best: Are you mentioning who you work with on the PIM side?
[14:11] David Cost: So we work with Akeneo. Okay. Yeah. But it forced us to write the integration between Akeneo on Shopify. We had to write from scratch.
[14:21] Eric Best: Okay. Wow. Yeah.
[14:22] David Cost: Right. And I don’t think a lot of retailers are going to have the resources or kind of have the tech mojo to want to go through that kind of an effort. So I think Shopify is going to have to solve some of those problems. And again, not dissimilar to what we observed with DemandWare over time. I mean, DemandWare was much less mature in 2011 than they are in, in 2021. Right. A lot happened over that 10 years. I think the same thing’s happening to Shopify except Shopify is maturing at a much faster pace.
[14:56] Eric Best: Yeah. Yeah. The acceleration that’s happening in the, industry overall. Well, we’re excited to partner with you at Rainbow. We’ve now deployed this cloud data warehouse at Rainbow Shops. It holds more than eight years of your customer order history and engagement data. You know, we didn’t intend to start on this problem with you, but it turned out to be a very convenient place to test the partnership and this is the whole data continuity issue of migrating from one system to another and ensuring that all of that customer context and history is preserved right and remains actionable. So I guess it raises my next question, which is when you compare the performance of the old site to the new, pre and post migration, now that it’s complete what are you seeing and how did you even benchmark the before and after? How did you know that this migration was a success?
[15:51] David Cost: So that’s a loaded question. So we’ve got an additional complication because we have native apps for both iOS and Android. Those native apps are about 20% of our online business. So they’re a significant part of the business.
[16:07] Eric Best: These are transactional. I can buy through your app?
[16:10] David Cost: Correct. Yep. We’ve kind of had, we’ve tested this theory over the years that there are app people, web people. Some people prefer to interact with retailers via apps. And some people prefer web. Hard to force people from one bucket into the other. And so we have found over time, like, you know, we’ve had native apps for, I don’t know, four or five years now.
Never offered any incentive and it has grown every year as a percentage of the overall business. we’ve kind of gone the spectrum with native apps. We’ve had true native apps. We’ve had apps that are essentially hybrid or essentially like a browser that is wrapped in an app. And now we’re kind of back to something that’s more like a a native one.
It screws up your analytics. So when it’s browser based, all the traffic’s kind of coming in through your website. When it’s truly native code, it’s now separate. And you have separate whether it’s Google Analytics or Firebase properties that track each of those apps separate from the web. So we’re kind of in this transition where it’s kind of you know, we’re still learning our way to try to understand the numbers between there.
I mean, the nice thing is SoundCommerce from a sale or from a sale comp standpoint that problem was taken off our plates. So being able to come where we were last year with where we are this year, you guys have made that very easy because you have all of the, you know, the commerce cloud history in there. And we’re able to compare on real time with where we are with, with Shopify. So that part’s been easy, how we will ultimately measure the success of all this is that we’re going to look at conversion. In essentially the commercial rates gotta be the same if not higher with Shopify than it was with Salesforce.
[18:07] Eric Best: Yeah. That makes sense. You and I have discussed some of the operational concerns that might be less obvious when you know, e-commerce marketers approach a project like this. Do you want to touch on a couple of those? I know one in particular that you mentioned in the past is this awareness of how orders flow and order state. Seems like it’s key to ensuring good customer experience for instance, were there other things that kind of came out of this project that were more operational in nature?
[18:37] David Cost: You know, I think as we thought about the re-platforming we were so focused on kind of the customer side of the experience. I think we probably underplayed the effort with the e-commerce platform to OMS integration,
[00:18:55] Eric Best: Hmm.
[18:56] David Cost: right? So that’s kind of something, once it works, you don’t touch it a lot. We haven’t touched it much in DemandWare for years, right? This thing just worked. Now you go to a new platform, your interfaces between Shopify and the OMS are all brand new and things that you took for granted that worked in ways that you had to kind of monitor that orders were flowing correctly now all of a sudden are not there or don’t work the way they used to. So I know you and I over time have talked about kind of the importance of saying, you know, geez, we spent all this time, money and effort to get a customer to place an order the last thing we want to do is disappoint that customer in the fulfillment process.
Right? Once we have that order. We really need to make sure that we’re fulfilling that order as fast as possible, getting all the right communications back to the customer to make sure that they’re ultimately seeing their package on their end. We clearly underestimated that part of the effort and would have been better served to you know, had Sound pick up some more of that work in terms of making sure that under the new setup, every order was flowing and that there was nothing getting missed or dropped for every order we took, it was hitting the fulfillment process in a timely matter and ultimately being shipped and payments captured. You know, when they’re supposed to be.
[20:24] Eric Best: Yeah. Hey, it’s never too late. David.
[20:27] David Cost: I hear you.
[20:28] Eric Best: You know that it’s interesting. Cause as we this was a our thesis, right? That what amazon has proven, I think to the industry is that if you focus on customer experience, if you focus on data capability, in some ways it makes your marketing job easier, right? Because you’re serving customers well. You know that they’re going to come back because of the experience that they’re having not necessarily because they’ve been. You know, better targeted through a Facebook ad or an Instagram ad or an email. But it’s interesting to think about like how we bring our platform to market because the industry is, I think traditionally aligned around front office and back. And when you start talking about data interplay in ways that kind of combines those two things, it doesn’t always align perfectly. With the way that organizations are structured. And so it creates an interesting go to market challenge for us at Sound.
[21:22] David Cost: I mean, look, I’ve had the luxury of having the experience of having 3PLS and doing fulfillment ourselves. If I were in a 3PL situation, I absolutely would have every safeguard in place that you provide to be able to make sure that every order is being fulfilled. You know, we do fulfillment ourselves at our own fulfillment center. So we’ve got a little more control. I mean, I think we’re where we underestimated things was that because every interface between Shopify and the LMS was going to be new, it would have been helpful to have had someone there just checking to make sure that everything was moving the way it should.
[22:04] Eric Best: Yeah.
[22:04] David Cost: I, wear the roles of, of e-commerce or running to fulfillment center and doing the digital marketing side and nothing will kill your digital marketing performance faster than spending money to acquire new customers and then doing a lousy job on the fulfillment process.
[22:23] Eric Best: Totally
[22:24] David Cost: If that fulfillment process isn’t flawless, the likelihood that you get a second or a third purchase just disappears, right. And very hard to make marketing work on the first purchase. You need true lifetime value and you’re not going to get lifetime value if you’re not providing flawless fulfillment.
And Amazon has set that standard that we now all have to live up to. So I think this game is getting more and more important and the hurdle and the customer’s expectation for how we have to perform and how we have to keep them kind of informed during the process. That bar is getting raised every day.
[23:08] Eric Best: Yeah. We’re no, we’re totally aligned with you there. Well that brings us to kind of what’s next with Rainbow. And as you head into the holiday in the kinda, this crazy uncertain world, Covid, Delta and so on. How are you thinking about the next three months? And then how are you thinking about the next 15 months in terms of what’s next for the for the company?
[23:31] David Cost: I’ll say probably the biggest project for us coming up and something that I think that, that we’ll want to get you involved in is so today we have really no visibility on the overlap between what happens digitally and what happens in brick and mortar.
We are going to be launching e-receipts and he receipts we’ll have two benefits. One for the customer. Right. You know, we do returns in stores, but we don’t do returns in stores without a receipt. People lose or throw out their paper receipts all the time. Nobody leaves the house without their phone. So the benefit of having any receipt so that you always have a copy of your receipt with you, it’s clearly a benefit to the customer.
[24:16] Eric Best: Okay.
[24:17] David Cost: What it will help us do from a marketing or an attribution side, though. Now we’re going to have an email address and, or a mobile phone number on every store transaction. So being able to see what’s the overlap between somebody that buys online, someone who’s on our email list, somebody who’s on our SMS list and somebody who transacts in store, especially during Covid right.
Your business takes off during COVID. Are these net new customers to the, to the company or the brand or these people just moving from one channel to another, just moving from brick and mortar to online. As we see this year, right, is brick and mortar is back in all its glory. Some of that business is shifting back, right. It would be very helpful to be able to see that. So I think, you we are fascinated to see what happens when we can do the same kind of tracking with brick and mortar transactions as we can with, with the online side of it.
[25:16] Eric Best: Yeah. A very common it’s funny to say that he receipts are right. But what’s exciting is actually being able to know your customer regardless of where they’re engaging with the company. And this, this use case is very commonplace among some of our omni-channel customers, PacSun where Eddie Bauer, FTD/Pro Flowers and so on. So yeah, that’ll be a fun conversation. And it makes a lot of sense. You guys have a massive store footprint. And so that’s a big opportunity to know the customer better.
So, David, if we were to summarize, like what we’ve talked about here, are there or three key lessons learned or two or three takeaways that you can summarize for the audience here? For folks that are contemplating an e-commerce platform, migration or re-platforming, what would you tell them?
[26:08] David Cost: I guess what I’d say is you want to make sure you’ve got multiple mechanisms in place to make sure that things work as well after you move, as they did before. Which means you’ve got to get some of these things in place well before the move so that you see you’ve got data and you see how they operate on your original platform and how things happen on the new platform. I think that’s one. In the Shopify world, Clearly, I think, you know, paying attention to the PIM and the PIM to Shopify integration depending upon what kind of retail you are, is going to be, it’s going to be a big piece of that.
You know, other benefits, I mean, I think you’re going to be shocked at what happens when you turn shop pay on you know, the day we turned it on, it was almost 20% of our tender.
[27:04] Eric Best: Wow.
[27:05] David Cost: No advertising, no anything. It’s not there one day, it’s there the next you know, people want accelerated checkouts and they’re very hard to kind of build on your own.
[27:18] Eric Best: So, yeah, well, that’s great, David, thank you so It’s been super exciting to dig into this project.
Obviously leading up to this conversation, but also to kind of capture this for the benefit of others. Thank you so much for being a guest today. Really appreciate it. Excited to share this with the industry. Thanks for coming out.
[27:38] David Cost: YOu’re welcome. And thanks for all your help during the process we appreciate it.
Thanks for listening to SoundCommerce with Eric Best. If you like our show and want to know more, check out www.soundcommerce.com or call 1-888-41-SOUND