Tesla's Marketing Machine: The Pop-Up Store
First things first, is it the secret weapon for demand and against dealers?I know it looks rather lame on the surface, but it is almost surely the secret weapon for both demand and against dealers, and it can be very effective. If it turns out that it is not THE secret weapon, it is at least A secret weapon.
Better Than A StoreIn many ways, a Tesla pop up store is better than the brick and mortar counterpart. The Pop-Up store costs significantly less in rent, as the only cost is the asphalt on which it stands, and does not include the building. Since most of Tesla's stores are located in malls and shopping centers, where rent is the one of the largest ongoing costs, this is a huge advantage. Labor is also a high ongoing cost, and if Tesla decides to make a mobile team that moves with a service center, the cost of labor will be somewhat higher. Overall, the costs seem to balance out or even be below that of a store. The Pop-Up store, then, is much like an ice cream truck, while the brick and mortar store is more like an ice cream parlor/shop in terms of costs (since an ice cream truck driver is paid about twice as much as a clerk at a shop, yet the truck is much cheaper than the shop).
The next advantage is maneuverability. The Tesla Pop-Up store has a set goal (which I will discuss later on), and once it completes its goal in a certain location, it can simply move to a new location to pursue the goal there. This is a huge advantage over a brick and mortar store, where the options are to end the store lease and set up in a new location at a very high cost, or open a new store at an also high cost. So again, the Pop-Up store is like an ice-cream truck and a brick and mortar store is like a ice cream shop/parlor, but this time in the sense that the ice cream truck and the Pop-Up store are both maneuverable alternatives to the brick and mortar store.
The main purpose of the Pop-Up store and a brick and mortar store differ dramatically. A brick and mortar store has two functions: to attract the public at malls and inform them about the existence of Tesla's products, and answer more nuanced questions from already informed and willing to buy people about their products. Some of you may point out that the Pop-Up store really does only one of these tasks well: it can answer questions from the already "hooked" people, but it doesn't really attract the large crowds that can be found in malls. I would argue that the Pop-Up store can do just that. The fact that a Pop-Up store can stand alone and shine Tesla's logo on a brilliant red background is one way, but there is another way. Placing the stores at Superchargers. Just imagine for a second that you are at the Delaware travel plaza that contains a Tesla supercharger, and it looks something like this:
The canopy in the picture leads to the main entrance and exit, where thousands of people pass through. The people walking in and out of that entrance already stare at the handful of beautiful cars that are plugged in right across from them, and are genuinely intrigued. Putting a Pop-Up store there, along with solar panels, would create huge interest and inquiry from people who have yet to learn about Tesla. Also, while a mall usually has the same people going to it, travel plazas attract a much more diversified crowd, which could result in higher overall interest. It is at superchargers like this one that Tesla can really fling itself at the public. This brings me to my next topic.
Yeah, that's right. The Pop-Up store is a Trojan Horse shaped Ice Cream truck. Just take a look at this quote from Tesla's Press release (which I still haven't got my hands on):
The mobility and convenience of the design allows Tesla to bring our unique retail approach to customers in new locations where we do not **yet** have a brick-and-mortar location.
The key word is pretty clear here. Obviously, there is a process to drumming up orders from a region that involves a visit from the Pop-Up store first, and then a brick and mortar store is built. To understand why this process exists, you must know how Tesla sells cars: Word of mouth and conversations with product specialists in a Tesla store. There are plenty of places in the world where there are a few adoring Tesla fans who know about everything or want to know everything Tesla does and are huge fanboys, but hundreds of miles around them, 99% of people don't even know about Tesla at all. Investing into a Tesla store in such an area doesn't make too much sense yet, because not too many people would know about it, and thus it would reach a limited amount of people. However, a Tesla Pop-Up store can serve as a catalyst for rising interest by catering to the fanboys of the area and giving them something to talk about. Then through word of mouth, the regional interest grows to a point that it justifies the investment into a brick and mortar store and also a service center.
Also, in some states where auto dealers wailed loudly enough, Tesla is only allowed to have a certain number of brick and mortar stores. Tesla can bypass these silly rules by having mobile stores that don't count as an actual store because they aren't brick and mortar. This is how Tesla's Pop-Up stores are really Trojan Horses. The Pop-Up store (Trojan Horse) doesn't look like a (invasion device) brick and mortar store, and is therefore allowed into an area where brick and mortar stores are limited. The Pop-Up store then can help with invasion by inciting word of mouth from Tesla fanboys and creating a reason to build a brick and mortar stores. Moreover, the Pop-Up store (Trojan Horse) avoids the "city gates" (laws limiting the amount of stores allowed in a state) that the dealers have put into place. The Pop-Up store, then, is a perfect invasion and expansion apparatus that eats local auto dealers lunches as it takes sales and bypasses the restrictions they put into place.
A Tesla Pop-Up store fleet is coming (already 4 of them), and as Tesla ramps up production, Tesla will need to ramp sales accordingly with infrastructure, and the returns on investment into this infrastructure can be maximized through the use of Pop-Up stores. So, through 4Q15 to 4Q16, when Tesla is drowning in cash, Tesla can use its excess money to invest into more service centers rather than more brick and mortar stores, while still promoting sales growth. So look for a huge expansion in Pop-Up stores and Service Centers.
ConclusionThe Pop-Up store is an effective apparatus designed to help Tesla accomplish its end goal of bringing sustainable transport to the masses because of its favorable cost structure, mobility, effectiveness in attracting the public, effectiveness catalyzing a word of mouth chain reaction, and bypassing some state laws. Here are some pictures for those who are visual learners :tongue::
