Report from the Frontlines of the eCommerce Sector amid COVID-19: Why Proozy is Thriving, While Other eCommerce Retailers are Struggling

Many of you probably saw the news this past week that Proozy is looking to hire over 50 people right away at our Minnesota-based fulfillment and distribution center in response to ‘unprecedented demand amid consumers’ shift to online purchasing, driven by COVID-19.

Yes, despite a number of ‘gloom and doom’ prognostications – you may have seen some recent articles that posit that online sellers of nonessential goods have seen their sales drop by 40% to 60% in recent weeks – we believe that Proozy is relatively insulated from any consumer retrenchment among shoppers cutting back on discretionary spending during the coronavirus outbreak, and here’s why:

Some of you may be familiar with Maslow's Hierarchy of Needs. It’s a psychological framework that outline a hierarchy of consumer needs, such that needs lower down in the pyramid must be satisfied before individuals can attend to needs higher up:

In an economic downturn, or a period of protracted uncertainty, rational consumers will naturally look to reduce higher-level needs and ensure their lower-level needs are being met.

Applied to the fashion and apparel industry, this is how this typically plays out:

We sell products that represent the world’s most famous brands at far-below market prices. At Proozy, our ‘special sauce’ – canvassing the globe for deals on name brand-name, quality merchandise that we can pass along to our customers – more or less upends the Maslow hierarchy. Our business model enables us to fulfill consumer’s higher-level needs for premium and accessible luxury labels across activewear, outdoor gear, athletic apparel and more – including even some aspirational brands – while offering them at mass-market, affordable prices.

Some economists have attempted to argue that apparel and fashion retail is somewhat non-essential, but our data and research suggests that almost all shoppers view clothing and footwear products as essential for people to live, work, and get outdoors. Proozy is about supporting families, keeping them active, and saving them money, especially at a time like this - when keeping families healthy both physically and emotionally while being smart about spending is of utmost importance.

Another major issue confronting online retailers of all sizes and stripes is their supply chain. Many online retailers have found difficulty keeping their warehouse shelves stocked as supply chains have been disrupted over the past month. But here again, Proozy is upending that traditional narrative.

Because our expert shoppers source deals from across the globe, our inventory mix is always in flux; once a product lot is sold out, it’s gone. Proozy has never made guarantees of continuous supply of the same product to our customers; predictable inventory is not part of our promise to our customers.

Said another way, you will never see an “out-of-stock” notification on Proozy. Either we have a given product or we don’t. And that’s what keeps customers coming back – sometimes several times a week – just to see what’s new. Here at Proozy we refer to this aspect of our business as the “Deal Perishability Factor.” Here today, gone tomorrow. You snooze, you lose. You get the idea.

After COVID-19 subsides and business begins to reopen, we believe that retail and eCommerce will have fundamentally changed, and there will be no ‘back to normal.’

On the supply side, we are seeing what could potentially emerge as the biggest shift in retail since the advent of the modern shopping mall in the 1950s. Those of us in the industry have been hearing about a looming “retail apocalypse” for several years, but now it’s finally happening – and quickly. COVID-19 is forcing big retail to close for weeks on end, which is accelerating an already struggling industry of department stores and other mall-based retailers that will result in a slew of bankruptcies and permanent store closings.

Already 75% of the US traditional retail footprint is closed, and icons like Macy’s, Nordstrom’s, Kohls, TJ Maxx, JC Penney, Sears – even Neimen Marcus and other legendary stores – are teetering on the verge of total collapse. Some might claw their way back after this crisis is over, but many will not. In the meantime, Proozy is forging ahead, working with top fashion and apparel brands to offload cancelled orders that were headed to these now shuttered mega retailers. 

On the demand side, the changes are equally dramatic. Foot traffic at all US retailers dropped as much as 98% in the final week of March, according to one industry analysis. Even American Dream, the New Jersey-based mega mall slated to be the largest in the world, is rethinking its future as more entertainment-centered, as retail shopping becomes an afterthought.

Even if this period of Shelter-in-Place last only a few more weeks, consumers will have fundamentally changed their shopping habits and indeed their expectations of retailers. There will certainly always be a place for high-end luxury retailers and a small but dependable supply of consumers willing to pay full price; but for the masses – families who want top quality merchandise without paying top dollar – businesses like ours will thrive.

Where we are finding a bottleneck is in keeping up with demand, which is why we are aggressively staffing up. The sudden closure of traditional brick-and-mortar retail establishments has forced many shoppers online, looking to purchase their favorite brands, but weary of paying full retail prices. Eventually, and somewhat inevitably, many of these shoppers find their way to Proozy. Added features such as being able to pay for items in installments via our partnership with Sezzle only makes it that much easier for shoppers to make purchasing decisions.

And the best part? It’s all growing by word-of-mouth. (A month ago, I would have said we are true beneficiaries of ‘viral marketing’… but I digress...) We keep our COGs low because we spend very little on marketing and advertising; we don’t need to deploy massive amounts of cash to tout our deals – our prices and brand selection speak for themselves.

Feel free to post your comments below – we’d love to hear from you. And if you know of qualified individuals for our open positions, please share this post.

Credit: Jeremy Segal