After approximately two years in operation, the Shopify aggregator, OpenStore, has recently divulged some insights into its successful brand-scaling strategies for the startups it has acquired.

Since its inception, OpenStore has successfully acquired over 40 e-commerce startups spanning various industries, including apparel, skincare, and electronics. One notable brand in its portfolio is Jack Archer, a men's athleisure brand that OpenStore acquired in March 2022. At the time of acquisition, Jack Archer was generating approximately $1 million in sales, but today, under the stewardship of OpenStore, the brand's sales have surged to around $10 million.

Andrew Silard, OpenStore's head of consumer growth, highlighted some of the key steps taken to scale Jack Archer. Among these measures were optimizing the brand's paid social strategy, experimenting with video creative, enhancing website messaging on finding the best fit, and launching new products.

OpenStore's efforts to provide a transparent view of its aggregator model come amid challenges faced by direct-to-consumer brands due to factors such as inflation and rising customer acquisition costs. The company aims to persuade more founders to entrust their businesses to OpenStore, emphasizing its resources to support young startups' growth. However, the success of OpenStore's scaling efforts for numerous startups remains uncertain.

Launched in 2021, OpenStore boasts notable co-founders, including serial investors and executives such as Keith Rabois and Jack Abraham. It achieved a valuation of $970 million in September and secured over $150 million in equity funding.

Initially, OpenStore differentiated itself by leveraging technology, developing algorithms that claimed to generate and finalize offers for e-commerce startups in just a matter of days. This swift process aimed to entice founders to choose OpenStore over other aggregators.

Over time, OpenStore's offerings have evolved. In March, the company introduced "OpenStore Drive," enabling founders to delegate day-to-day brand operations to OpenStore without relinquishing ownership. This move recognized that many founders may not be ready to sell their businesses to aggregators, particularly one like OpenStore with a relatively untested track record.

Silard, who joined OpenStore in March from Grove Collaborative, is focused on expanding the company's brand portfolio and working with data teams to develop products and strategies to bolster both established and up-and-coming brands like Jack Archer.

Jack Archer's acquisition by OpenStore was initiated by founder Miguel Facussé, who reached out to the company after learning about it on Instagram. OpenStore's proprietary algorithms assessed and facilitated the acquisition process. Facussé launched Jack Archer in 2021, featuring the popular "Jetsetter" pants, aiming to create a versatile, high-end athleisure brand.

To enhance Jack Archer's performance, OpenStore experimented with ad messaging, relying on customer reviews to shape optimal messaging. Additionally, the implementation of a sizing guide on the website improved conversion rates and reduced returns, a common challenge for apparel brands. The introduction of an app and new product lines, including different colors of the Jetsetter pants and a t-shirt, also contributed to the brand's growth.

Despite the successful changes, OpenStore faced challenges in maintaining inventory levels, with the Jetsetter pants being out of stock in 25% of sizes during the last 90 days. Some customers expressed dissatisfaction on Instagram due to delays in receiving their products.

In response, OpenStore has invested in AI to address customer complaints, leading to a 35% reduction in customer service volume across its portfolio while maintaining high customer satisfaction rates.

The primary challenge for aggregators like OpenStore is to prove their ability to scale multiple brands successfully. Analysts suggest that the key lies in identifying and capitalizing on arbitrage opportunities. While OpenStore's playbook has similarities with other successful Amazon aggregators, it's essential for the company to discover its unique strategies to ensure sustained growth and success.

Silard acknowledges that, given the relatively short time the company has operated these brands, OpenStore is still developing its playbook. Efforts to encourage cross-shopping between its brands have begun with the launch of a storefront, aiming to improve customer retention and uncover new avenues for growth.

In conclusion, OpenStore's success in scaling Jack Archer and other brands has been an intriguing journey, showcasing its potential to support young startups while facing the challenges inherent in the ever-evolving e-commerce landscape.

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Sources: https://www.modernretail.co/operations/how-dtc-aggregator-openstore-scaled-one-of-its-brands-from-1m-to-10m-in-sales/