Navigating the Ecommerce Evolution

Speaker A: Foreign.

Speaker B: Hello and welcome to the Make It Big podcast by bigcommerce where we talk about all things, you guessed it, commerce. I'm your host, Melissa Dixon and today I am joined by Al Williams. Al is a retail expert in and also our vice president and General Manager of B2C here at BigCommerce. Welcome Al.

Speaker A: Thanks.

Speaker B: So happy to have you here because today we are going to take a deep dive into one of our most recent industry reports that's all about navigating the E commerce evolution. And this piece is so interesting because it dissects all the things brands and retailers are doing to adapt and stay competitive. And I know you have a lot of thoughts on this.

Speaker A: Yes, absolutely. This is something that I love. The report was so fantastic to go through. So many insights to comb through and being, uh, an E commerce self proclaimed E commerce nerd, I, um, love and I'm super excited to get into this today.

Speaker B: Yeah, there are so many good data insights in here. Um, and I'll set the stage a little bit for the benefit of our audience. So we surveyed 155 retail E commerce executives across all a wide range of companies and industries manufacturing, fashion, apparel, electronics and it. So there's really diverse perspectives and just some really interesting retail insights here. So what I noticed when I was reading the report, I feel like there were two key takeaways really. Uh, when you hone in on these strategic priorities, it seemed like the big priorities for retailers were really adoption of new technologies and also cost reduction.

Speaker A: Yes.

Speaker B: And both, you know, very of the moment focus areas, of course, with macroeconomics and so much innovation happening right now. Um, one thing that was really interesting, 71% of E commerce executives plan to implement new technologies within the next year to stay competitive. So we'll talk a little bit about that. Uh, but even more intriguing I think is just the huge emphasis on cost reduction and reducing customer acquisition costs specifically. And I know you have a lot of thoughts on that. So that was even more important to these, uh, retail execs than increasing revenue or customer lifetime value. So really interesting. I think when we think about these focus areas, tell me how you feel like they can influence one another, particularly when it comes to those customer acquisition costs. Um, you know, what are some of the new technologies or innovations that can help reduce customer acquisition costs? How do these things work together?

Speaker A: Yeah, I think that's really interesting with the specific focus on customer acquisition costs. I know we'll talk about this I think a little bit later as well. But um, it's really Becoming less about the brand specifically in the channel and more about distribution across products of multiple channels. Um, and in doing that, one of the things or one of the key areas is focusing on channel optimization. Yeah, I know that sounds very buzzworthy and very buzzy, but really simply put, making your products stand out where customers are already shopping. So with things like Google, Amazon and Now even with AI and ChatGPT and apps like Perplexity, you really want to make sure that your product stays stands out specifically for your customer. So in the old days or even, you know, back two, three years ago, somebody would go to a Nike site and they would want to purchase maybe a trainer or a running shoe. So you'd go to Nike, you would maybe search for the shoe, you would um, add in your filters and you'd find that specific product. Today, somebody's going to chat GPT and saying, hey, give me a list of running shoes that work for me. Which means that your, your kind of Nike Pegasus isn't really going to work anymore. You're going to need to surface something like Nike Pegasus women's size 7 running shoe, great for pavement. That is a huge differentiation and you're going to need to do that across a number of different uh, verticals and channels or a number of different channels, I should say.

Speaker B: Yeah, the stakes are just so much higher.

Speaker A: Yeah, absolutely. I think that's one key area from a customer acquisition cost. And secondarily when you have a customer that is brand loyal or that makes it to your website, you really need to make it as easy as possible for customers to convert. So I know in this particular report we saw that 48% of retail executives are prioritizing implementation of one click or express checkout options. Yes, that's right. This is something that was I think uh, initiated with the Amazon one click. We see it with some of our other competitors in the industry. Um, and optionality here is really key for buyers and, and I think that we're seeing that with regards to the numbers in this report right now buyers span across five generations and are actually moving into six. With Gen Alpha wild, it is crazy. And so the days of just having a traditional checkout or even one buy now and pay later isn't necessarily going to cut it. Right. You're going to need to have optionality in things like uh, digital wallets. Again, buy now, pay later, um, installments payment installments and just really having a place plethora of options. So with regards to customer acquisition cost, back to your original sentiment. I think it is optimizing your product information to make sure that it is, uh, as specific as possible to your brand, to allow customers to convert easily and quickly. And then when they do reach your site, giving them the options to make sure that checkout fits for them.

Speaker B: Great advice. And we can't talk about new technologies and convenience without talking about artificial intelligence. Um, it was interesting to see all this fresh data in this report. And of course we're talking about an area AI that's constantly evolving. So it's just interesting to see the evolution and how people are embracing it. So according to this report, 95% of those executives said that their companies have already invested or are somewhat invested in AI. And then more than half said they're planning to lean in in the next 12 months. And I mean, you have to. Right. And there's myriad ways that companies can do that, whether it's more on the back end optimizing internal infrastructure, or, you know, on the customer side to enhance the experience. So I really want to touch on the latter. First, because you're such an expert with customer experience. Uh, so from your perspective, what do you feel like some of the most effective ways to leverage AI to offset those acquisition costs?

Speaker A: Again, yeah, everyone's looking for AI as a quick fix, right? And, uh, everyone's investing in tools that have AI. But how do you actually leverage AI to your benefit? I think there's a couple of different ways if you are thinking about it. By lowering customer acquisition cost, looking to invest in AI tools with data insights. So either delivering insights to result in business actions that make something like adjusting inventory levels, dynamic pricing based on channels, um, or understanding your target demographic for your ad spend. But if you want to increase AI or leverage AI to increase conversion from your existing loyal base, this one sounds a bit counterintuitive. My suggestion, um, or perspective and opinion here is to invest in areas that drive value for your customer and consumer, not necessarily surface products to them. And what I mean by that is investing in an AI service or a reviews platform that surfaces a collection of reviews on the product page. So giving your customers as they're shopping, convenience, ah, as they're moving through their experience. Right. That could also look something like, um, AI image detection in search. So rather than having to type search, we see this in social commerce with brands like Pinterest and even Google Image shopping. Um, and so I think those are the two kind of two key areas. If we focus on AI specifically, if we take it back a step kind of to what we had talked about in the first question, making sure. That you can deliver those is also really important. Meaning that you can deliver your product and information across and with AI.

Speaker B: Right.

Speaker A: So making sure that your products are serviceable via API or all of your data is distributed across channels where AI can be consumed off and on. So kind of two key takeaways really is if you want to optimize your bottom line, leverage AI tools to deliver the right products to the right customers across channel. And if you want to maximize your top line, focusing on your highest value customers, implement AI that adds value to the customer as well as services your product.

Speaker B: Yeah, and I think what I hear too, and we get this question a lot from brands and retailers is sort of where to start with AI. But it depends on what you're trying to solve for.

Speaker A: Absolutely.

Speaker B: You know this is not a blanket solution. You should be tailoring your AI solutions to meet your business specific goals. So. And those were some really good examples. Um, let's talk a little bit about that internal optimization though. What have you seen? Um, how is AI adding value internally for teams?

Speaker A: I see it in three key areas typically when we talk to brands and retailers. One is in tasking content automation. This I think is where it's most heavily and prevalently used and also is supported across brands of all sizes. It doesn't matter if you're a one person or, or a thousand person brand leveraging AI to create um, content or copy um, or variations of images or even just background images that you're using across your promotional imagery. I think that's the key area that we're seeing most adopted. Yes, um, another key area where I'm seeing businesses leverage AI is with regards to analytics or analysis and insights. And there's two areas where I see these being used. It can be all offline in the back end about leveraging what products are converting which have higher or lower margins. This maybe drives how you deliver promotions or where you surface your products. Um, and also I can see this online so with things like predictive search results or learning as a customer is moving through the experience and being able to surface products or content real time to those, those could also look like M chatbots online or uh, predictive FAQs as well. Just, just using those insights to predict what content or what uh, product to show next on the site. And lastly is an innovation and I think this one's really interesting too which is the creation of new products and services or also the creation and the curation of what a service could look like.

Speaker B: I love that.

Speaker A: So moving into less away from Maybe merchandise and more towards experiential or more towards a collection of pieces, uh, of merchandise in a bundle. So I think that's a really interesting area as well. So that we're seeing AI specifically in retail.

Speaker B: Those are such great examples and it's fascinating to see how rapidly it's evolving in the direction that we're moving in. I can't help but think of Piers Linney, our keynote at Big Summit in London, who spoke all about AI. Really fascinating guy. He was on Dragon's Den, uh, which is the UK version of Shark Tank for those who are interested. Um, but he compared where we are now with AI to, to being at the dial up stage of Internet and that is mind blowing. That really puts it in perspective like so much more is coming. Any thoughts on that?

Speaker A: Yeah, I uh, think absolutely, you're right on. And I know that we talked about this the other day around this phrase of don't boil the ocean, but uh, it's kind of one of those of like you can't do everything at once. There's no shortage of ideas and there's no shortage of ways in which brands, new technologies are using AI. And don't get caught up in kind of the AI hype that may not for your business.

Speaker B: Exactly.

Speaker A: There are so many ways that can work for your business, either internally with your business processes or with your customers and consumers. But choose one based on kind of key goals and values. Do you want to speed up, go to market? Do you want to increase conversion? Do you want to increase efficiency? Ah, in your team, what is the core area that is most important that'll help move the needle to grow your business? That could be an internal process or it could be leveraging an external tool. But start, start small, learn and expand into those other areas.

Speaker B: Yeah, that's such great advice. I mean our minds immediately go to these image generation and like voiceover and all of that. And it's so much more than that. You know, the, the operational efficiency and increasing productivity piece cannot be I think overstated. So.

Speaker A: Yeah, absolutely. If we take that example that I mentioned before about just adding a simple um, GPT onto reviews that summarize reviews. I love that that might be a super simple implementation, but that can actually save not only your customers. Um, so it may increase average order value, it may increase conversion rate and it may also decrease return rate. So that one small kind of capability or that one small feature by leveraging AI can have a massive impact.

Speaker B: Yeah, great example. Okay, well and also, you know, we're focusing on AI but all this report, um, highlights all of the different areas of investment that retail execs are prioritizing. And there's some really interesting info there. So AI is just one lever to pull. Some of the other key areas that we saw were 66% of these respondents were focused on expanding their product lines. That's really interesting. I want to get into that. 41% on expanding into new regions and geographies, 37% on opening more physical stores. So those were kind of the big ones. Um, and really want to get into a little bit about what's driving this focus on product diversification. Because I think what we're seeing when you think about, uh, expanding product lines, it makes sense with the current state of things because you can capture new market segments, ah, without all this substantial overhead cost.

Speaker A: Right.

Speaker B: That might be associated with brick and mortar or physical retail expansion. So that really lets these, these brands and retailers sort of make the leap and target new segments, appeal to new segments without all the overhead costs. But then again, there's also things that companies have to keep in mind too, because those new product lines might have, you know, certain shipping requirements or promotional components. So that's where. And I know you have thoughts on this, it becomes so important to have the right tech stack, um, and just be able to facilitate all of that. That is where I want to go back to. You were talking about channel diversification and I see marketplaces and social commerce as central here. So when it comes to those online marketplaces and social commerce, what are some of these strategies, tactics that can really help retailers increase ROI?

Speaker A: Yeah. And thinking about ROI, it's no wonder that the report as looking through IT executives are also prioritizing paid advertising with 57% of respondents and kind of exploring new platforms, which is wild to think that. Yeah. The. It's seeming that the cost of moving to a new platform, whether that be an E commerce platform or whether that be an omnichannel distribution platform, um, is, is really enlightening. Uh, and it's not surprising, it's not anything that we shouldn't already know. But in specifically when thinking about boosting ROI with online marketplaces and social commerce, I say to focus on three key strategies. We talked about this already. I'm gonna say it again, I'll probably say it again and again. Is optimizing your product feeds.

Speaker B: Yeah.

Speaker A: So at this point in time, there's less and less control over how you can deliver and illustrate your brand across these marketplaces or across these different channels. And so making sure that the product and the information about your product is as optimized and specific as possible. You're providing highly detailed, updated information around your product descriptions, your product, um, name your sizing, your dimensions, all of the things that are very important for consumers to know, um, and to consume. So I think that's one area.

Speaker B: Yeah. And I would just add to that. You know we can't forget social commerce, especially social, um, media channels are top of the list for product discovery with multiple generations now but also, but especially the younger generations that are getting more and more buying power. So that product discovery and having everything synced properly is absolutely critical.

Speaker A: Yeah, absolutely. And I think that. Right. That goes back to that 57% of respondents with regards to paid ads.

Speaker B: Yes.

Speaker A: So one of the key areas that brands are still heavily investing in and I think this has been an area that's been a little bit um, not unknown but it hasn't been optimized as well in the fact that brands are thinking or making their best recommendation to say hey, I'm going to put this product category in this area across this social media platform. So maybe I think that my dresses are going to do really well on this one segment of Facebook. Um, but really being able to use a uh, feed optimization platform with like Feedonomics in our example I think is um, a really great use of a new tool to adopt that'll provide insights that have that cyclical sync back to say I'm delivering an ad into this channel and here is my return on that ad spend. So you can continually optimize to make sure that you actually are targeting and spending the right money in for the right customer segment to buy or the right product itself. I think that's one.

Speaker B: And do it so quickly and that's like an expedited test and learn strategy that these channels allow for as well.

Speaker A: Absolutely. We've seen with feed anonymous customers they've seen up to a 95% increase in return on ad spend just by optimizing their product data for digital ads. Um, it's a no wild.

Speaker B: It is.

Speaker A: It sounds like something that it should already be done but it's because it's not on the owned site that sometimes it's hard to evaluate against other priorities. Yeah. But I think the last is dynamic pricing. This is an easy thing to say and a hard thing to do. Um, but being able to ensure that your prices are updated real time against competitors that might be selling your same product in other areas or in other channels, making sure that you specifically as your direct to consumer brand can stay competitive is huge. So I think the key takeaways is streaming, lining your data target smarter with ads and adapting with real time pricing and inventory.

Speaker B: Yeah, those are definitely the ones to keep top of mind. Okay, I want to switch gears a little bit, um, to talk about some of the challenges that retailers are anticipating. So we did see some really interesting data in this report. Um, and a few things that we saw regarding the challenges were that 40% of the respondents were concerned about attracting and retaining customers. Of course, as you would be 39% about implementing new online tools. And we've talked a little bit about that. But here's what I found so interesting. 42% said their greatest concern is ensuring data privacy and cybersecurity. Um, and this is just an ongoing concern for retailers that we can't really lose sight of. So I think given that cybersecurity is the most common concern, what should these retailers be keeping top of mind? And also uh, from your expertise and perspective, how do they balance security with innovation and still having that elevated customer experience? What's your take on that?

Speaker A: Yeah, absolutely. I think security or cybersecurity is a non negotiable and it's one of those things like an insurance policy. You hate to spend your time and money on it, but when something goes wrong you're really glad that you have it. And so balancing that with innovation is when investing in those new tools, understanding that particular platform stance on security, so understanding um, where and how they store their information and their data, what compliance they have, um, and also leveraging, um, making sure that you're using the best technologies when innovating. A good example of this would be things like secure checkout options, digital wallets, or using two factor authentication or biometrics. So when pushing in or thinking about innovation in your checkout areas, leveraging technologies that already have uh, privacy and security and cybersecurity kind of baked in to their technology type. Others is, um, leveraging payment providers in this case like Stripe and PayPal, that have built in encryption and fraud protection that are already included. So that's just another example of when evaluating new technologies for, for different areas of innovation, making sure that a uh, platform's security is kind of core. That's one.

Speaker B: Yeah. And some of those, there's also the added benefit of some of those providers already have, they have their strong recognition and trust.

Speaker A: Absolutely.

Speaker B: Uh, so that helps too.

Speaker A: Yes, 1000% completely agree. I think another area that gets really tricky is as we're starting to move towards this kind of New composable, headless, distributed omnichannel, whatever buzzword you want to, just means that your information is now in the hands of a lot of additional or other channels. And so how do you protect those? One thing is you can really protect uh, owned or first party data by leveraging maybe something like OneTrust with GDPR compliance, um, and just being visible with how you're managing uh, your customers data as well. So I think that investing, as I said before in platforms and technology is where security uh, and data protection is a core competency of theirs.

Speaker B: Well, let's talk a little bit more about that customer loyalty and trust component because it's so crucial and it becomes even more difficult to manage this with more sales, more transactions, more channels like you're saying. So what are some of the ways that brands can be more proactive about this to build trust and sort of even use this topic as maybe even a competitive advantage?

Speaker A: Yeah, there is a fine line between uh, having personalization and being creepy.

Speaker B: Right.

Speaker A: And making sure that you are uh, protecting PCI compliance and specific payment and card information. Um, but you also are relevant and targeted to what a consumer wants and that is a fine line to balance. Absolutely. Uh, three key areas I would say are actually two I think in this uh, scenario would be just being transparent. So you know, trust is earned through transparency across the board. Whether you're a retailer, whether you're a parent, whether you're a partner, it doesn't really matter being open and honest about that.

Speaker B: And I mean, yeah, and I would say too we've seen with some of our own proprietary data in previous reports and industry wide that the emphasis on transparency is increasingly important to your customers and to the end consumer, especially with that generational component. I always go back to that because uh, it's an area of interest. But it's so true.

Speaker A: Absolutely. And it could be as simple as providing FAQs on the site. It could be um, making sure that when you have that email, ah, checkbox at the bottom of your guest checkout or create an account, there's a link to the privacy policy. There also is the ability to download your data or delete your data from your account. Just being able to see those visible. I think that's one key area. Um, and the other, we talked about it before with regards to payments, but being able to offer secure and seamless payments um, with those biometrics and two factor authentication without creating a ton of additional friction. Um, right. Security should be seamless, it shouldn't be a roadblock, um, but it should be visible. So I think those are the kind of two areas is just being transparent and up front and making sure that you are leveraging security best practices across your um, customer experience.

Speaker B: Yeah. And I think it sounds, it can sound daunting but truly it's the small things like you're saying, just making sure that those elements are visible and that your customers can access them um, if they choose to.

Speaker A: Exactly, yeah.

Speaker B: So I'm curious because there were so many rich insights in this report. Uh, was there anything that surprised you? Maybe. And, and or uh, what did you find most exciting in terms of opportunities for retailers?

Speaker A: There was a ton of insights in this and it was so interesting and I love that there was such a wide array of executives that were uh, interviewed in this because it gave us a really great perspective on a global trend in D2C. Not just in a specific industry or vertical. But one of the things that I wasn't necessarily surprising but I was um, it was a strong validation in that there's a shift to spending time and attention on, on site UX to customer acquisition. Yes, that one is, I know that we talked about but the trend itself as I said isn't really surprising. But I was uh, doing a little research and I found um, a report from Harvard Business review found that 72% of respondents that they interviewed use six or more channels to make a purchase.

Speaker B: Oh wow.

Speaker A: Where only 2% of the respondents were web only. So it's really just ah, a collective validation to understand that consumers aren't going to the dot com anymore. Consumers are going to search, they're going to AI, they're going to the channel that is the Internet in which to find their goods and services. And what it shows to me is that brands are diversifying their digital spend to focus in other areas. And how do you support that? You support that with making sure that your data is unified, making sure that your product information is optimized and making sure that you're investing in tools not just that are beneficial for your web and your.com experience, but for your product in the and across the channel. That was one really thing that was interesting to me.

Speaker B: What else?

Speaker A: Um, I think the other is the

Speaker B: interest in new product development that was mine as well.

Speaker A: Yeah. One of the most surprising insights was that 49% of execs, when asked about how they plan to leverage AI internally, they said assist with new product development. For me that's kind of said two things. One, that the product distribution is getting easier. So things like with technology or with dropship or Amazon one p that it's getting easier to actually get products in the hands of consumers and create them and manufacture them. That is really interesting to me in just a global creation of merchandise. And you know, that's one and I think the other is that consumer behavior is starting to place value on innovation over brand loyalty in some cases that is So I know that we see this on kind of TikTok with the hauls and making sure that you have either cost effective products or unique products. But I think that one is a really interesting insight for me too. It's just the change in consumer behavior as well as the change in technology and just global distribution.

Speaker B: Yeah. And these things converging the technology with the behavior. And it's fascinating to explore and I would urge our audience uh, to check this report out and I'll give you the URL at the end and you can look in the description but there is just a ton of data and I think you know, for our audience it's, it can be so helpful to see what other retailers are doing. So lots to check out there. Okay. And we are pretty much almost at time so thank you so much Al for sharing your perspective. I think that if we can narrow it down to a few key takeaways from your expect uh, from your perspective that would be great. So what say you to our audience? What do you think they should walk away from this episode with?

Speaker A: Sure. I think I'm always in the rule of three. Three things to take away from. Make it easy to find your products anywhere and make it easy to buy where you have the control of uh, customers. So prioritizing tools like one click checkout, channel optimization and making sure that your products are tailored and relevant to the channels that your customers are buying in. First and foremost, leveraging AI to deliver the bright products to the right customers where they shop and also focusing on AI that works for your business and your business growth. And last, security is trust and trust is loyalty. Making sure that you have transparency and visibility. And when you are investing in new technologies using the same value of trust when um, working and partnering in partnership with them. So those are my three key areas.

Speaker B: That's great advice. Yeah. And I always think it goes back to keeping your customer at the heart of everything you do. Uh, again don't try to boil the ocean with all of these tools and solutions. Uh, it's really about what works best with your business strategy and with your customer wants to meet. So that's the best way to start. Al, thank you so much for joining the show today. Such great insights and actionable advice from you. Thank you so much for taking the time to join the show and share your perspective. And to our listeners, thanks for tuning in to another episode of the Make It Big podcast. You can find this report on our BigCommerce website at, uh, bigcommerce.com resources. It's also linked in the episode description. Thank you so much.

Speaker A: Al yeah, thank you, Melissa. Thanks for having me on. Thanks for this wonderful discussion. And the report is such a fun, easy read and it really is rich. You can take it in any direction. So I was really glad to be able to talk about these with you today.

Speaker B: Awesome. Thank you again, and thanks for joining us. We'll see you next time.

Speaker A: Bye.