Shifting consumer buying behaviors means brands can’t only rely on selling via one channel anymore.
For e-commerce and traditional retailers looking at new ways to connect and engage with consumers, Lucky believes its approach enables them to work together to not only achieve that goal, but give consumers a better shopping experience.
The 1-year-old company was founded by Sneh Parmar, who has a background in consumer purchasing behavior, and Nafis Azad, whose background is in software UX and product development.
Parmar was buying a certain brand of charcoal toothpaste online and waiting a week to receive the package. While telling friends about it, they told him he could actually find it at Target.
“That’s when the lightbulb went off — why am I buying online and paying for shipping when I can walk two blocks to Target?” he added. “Nafis and I began trying to understand the relationship between retailers and brands, who are still competing against each other.”
They aimed to create something on top of retailers’ infrastructure so there is full transparency of inventory at a retail store, essentially optimizing the concept of “big box” for everyone, “to be wherever the customer is and providing a hybrid shopping experience,” Parmar said.
Now a team of six, Lucky’s first product is a plug-and-play API, also available on the Shopify App store, that integrates in minutes with major retailers — it is already working with Nordstrom and Sephora — so that e-commerce companies can gain inventory visibility of store shelves and offer local fulfillment options. For example, when someone orders a product online, Lucky will see if it is available from a local retailer and give the customer an option to either ship it or pick it up at the store.
As noted, Lucky is also using data to bridge the gap between brands and retailers, providing data-driven insights into real-time inventory distribution, discovery and how to merchandise brands in-store.
The company is already working with 10 brands, including men’s cosmetic/skincare company Stryx, where Lucky is integrated into over 10 of its SKUs.
After Parmar and Azad launched a beta pilot in the fourth quarter of last year, they saw a 10% engagement rate from consumers using Lucky. They wanted to scale via national distribution, and after securing partnerships with Nordstrom and Sephora, now have access to thousands of brands to be Lucky’s customers, but to get that scale would need to raise capital.
Lucky recently closed on $3 million in a seed round led by Unusual Ventures, with participation from Plug and Play Ventures and a group of angel investors like Alloy’s Sara Du, Pixlee’s Kyle Wong, Cremo’s Kyle Schroeder and NBA player Wesley Matthews.
The new funding will enable Lucky to build up its team on the engineering, product and sales sides, Azad said. The company is looking to boost headcount to 10 in the next two quarters and to bring on around seven new retailers by the end of the year. It’s also planning for some new features, including a better store locator and inventory tools and expanding fulfillment options.
Meanwhile, Rachel Star, principal at Unusual Ventures, understood what Lucky was aiming to do, having herself worked for Nordstrom on the corporate side. She noted that retail traffic has been down for about five years now, and the opportunity to bring people into a store, whether they ordered an item online, or wandered in, provides a meaningful brand touch.
“When you think about eight years ago, when direct-to-consumer brands really got started, it was a one-to-one relationship with consumers, but scaling became a challenge, so many opened retail stores,” Star added. “Stores like Nordstrom and Sephora act as aggregation points already, so when brands partner with retailers to get network density, it gives those retailers traffic. Even when returning something, people often buy something new. It’s a very cool combination where needs from both sides can be met.”
Azad mentioned Ulta placing products into Target as a way of gaining density, and when I saw that men’s skincare brand Lumin, which was exclusively DTC, launched last month in Target and Walmart, I asked general manager Kevin O’Connell why Lumin felt having a physical presence in stores was also warranted.
He explained that having items in a brick-and-mortar store “made a lot of sense” for the company’s growth strategy, though he said the company was not slowing down its online business. Lumin surveyed customers and found that it was convenient for them to buy products while they were already out shopping.
“We’ve been tracking our steady year over year growth over the past two years and have spent a lot of time analyzing data that showed customers in the market for men’s skincare products are most frequently making these purchases at larger retailers, specifically Target and Walmart,” O’Connell added. “And of course, partnering with well-known names like Target and Walmart provides a valuable opportunity for us to further build our brand and expand its reach to new customers that are active in-store shoppers who may have previously been unaware of your online presence.”