Where is Retail Going?
A Deep Dive into Modern Brands & Marketplaces for the New Consumer
At the heart of the word social is simply…the hearts of people. You don’t need me to tell you that retail is social.
Social commerce began a century ago inside the General Store, where everyone knew your name — sort of like Cheers but without the alcohol (although if we lifted a few floorboards up, you’d probably find that, too). People in town were concentrated because you could only travel so far for sugar, beans, and soap.
But then we started to move. Thanks to Henry Ford and a little something called the Model T, people moved out of that small town and the general store was replaced by suburban strip malls. Consumer packaged goods became the norm, and CPG companies learned to build for pallets, scale, and shelving in order to be noticed by people.
When the internet changed the game and e-commerce was born, direct to consumer brands realized…maybe we don’t need to fight to get on those shelves. Maybe we can just go directly and build our own communities of foot traffic by finding and nurturing our people.
But then DTC brands realized the only way to get true scale — to find all the people — requires going omnichannel. That’s the evolution of how we got here, but let’s look at where we’re at. According to IAB’s 5th Annual Brand Economy Study:
The storeless economy has accelerated 200–300% and represents nearly a quarter of all shopping in the next few years.
Delivery times are shrinking, in some cases down to 15 minutes.
Buy online and pick it up in-store has grown 125%
Clearly, retail has moved from footfall to clickfall. But it’s only ever been about three words, which is actually one word: location, location, location.
And right now the location is wherever the people are. Prioritizing where they are and what they need right now will tell you everything about where your business should be going. Right now, people are spending their time on marketplaces. This is where the traffic, the engagement, the discovery, and social commerce are sitting. 60% of E-commerce transactions are happening on digital marketplaces — places like Amazon, whose profit nearly doubled in Q4 of 2021.
(L) Tina Sharkey, (M) Jenny Gyllander, (R) Reema Batta
Recently, I was invited to speak at the 2022 IAB Annual Leadership Meeting and provide fresh thinking about what is happening at the intersection of retail and media. Here are a few highlights from my discussion with Jenny Gyllander, the founder and CEO of Thingtesting*, which is one of the largest directories of DTC brands, and Reema Batta, the CMO of Heyday*, a company building a house of marketplace-first brands.
Marketplaces are the new launchpad.
When Steve Jobs came onto the stage with an iPhone, he said, “It’s a phone. It’s a music player.” Perhaps he imagined someone would later say, “It’s a Taxi,” but most of us watching sure didn’t expect Uber and Lyft. Incredible entrepreneurs who are coming up with disruptive products are using these marketplaces as a platform just like developers were using iOS to launch.
Reema explained why Amazon is the launch pad of choice for their portfolio of companies. “We’re using marketplaces as the launchpad for our products and brands because we’re able to garner feedback from actual customers very quickly. It’s not a survey-based approach. People are buying the products,” she said. Because real people can be buying and using your products, marketplaces are the perfect place for the first stage of launch, before brands go DTC or Omnichannel. It’s where the people are, so why not start there.
Build for ship not shelf.
If it’s all about marketplaces then brands need to rethink their entire business strategy. Gone are the days of only worrying about racking, stacking, and standing out on shelves. Companies need to be shipping to exactly where the people are — in their homes — and not exclusively focused on getting on shelves. With the storeless economy exploding and delivery times minimizing (take a look back up at those staggering IAB report numbers above), to be competitive brands need to architect their operations with the consumer in mind. She’s expecting minimal delivery time, next-day shipments, and free shipping.
Building for ship also means that wholesalers in essence need to be retailers by thinking about new kinds of packaging that not only keeps up with people’s concern with sustainability and less waste, but it needs to be optimized to show up in the same boxes as socks and lightbulbs. It has to work in a warehouse setting. During my time as the co-founder and CEO of Brandless, we realized that 90% of what’s being shipped is water. So, when someone ordered house-cleaning products, for example, we sent empty bottles with the formula separated into capsules. People added the water themselves and had easy refills every time they needed it. Companies must start thinking like this and building for these new realities of the storeless economy. Otherwise, you’ll lose a competitive edge by focusing your efforts on the shelves that hardly exist anymore, comparatively.
Community is the new omnichannel.
Direct to consumer (DTC) is not only a channel it is a relationship. One between a brand and a human, aka your customer. The same could be true of any channel your product is sold through. A brand is not what you say about yourself, but what a friend tells a friend. So what are they saying about the relationship they have with you?
That relationship matters immensely. In the paradoxes of choice, marketplaces can be overwhelming, a proliferation of SKUs. In order for someone to find your brands and your product, they depend on what people are saying about your brand on social media, in reviews, on blogs, and to each other. Gone are the days of mastheads, where editors told consumers what they needed in their purses or kitchen cabinets. Breaking out requires a relationship between your brand and your consumers, one that leaves them feeling inspired to not only purchase, but to rate review, and share. Retail has always been social.
Wisdom is in the (verified) crowds.
People are smart. They know that it’s hard to find unbiased and clean reviews, even on the most well-moderated marketplaces. So, they’re looking for brand reviews that are verified, rather than ones spun up by an intelligently-engineered bot. That’s why building a loyal community is like building a moat around your business. Your loyal customers want to help other people looking for your product find and buy from you. If you’ve built trust with your consumers, they’ll help you build trust with future ones, through reviews, ratings, and testimonials.
This is where Thingtesting comes in. They’re a modern take on Consumer Reports, where brands are reviewed by editors as well as verified by real people. That verification makes a huge difference. Jenny Gyllander, founder and CEO of Thingtesting, explained why real people are verified brand hunters. “They want to buy better, but they also want to help others buy better, which is the key part. Because that means they want to share their experiences with others.”
The next wave of retail is everywhere. From in-store, to marketplaces, to the metaverse, there will be no shortage of places where consumers can find and purchase products. As we look to the next phase of retail, which will be happening on web3, it will require building relationships and going where the people are. That might be Discord, which is where you should spend your time listening, anointing people there into your brand, and bringing them into the conversation. Trust of government has eroded globally and businesses have emerged as the only institution seen as competent and ethical. Individuals expect a seat at the table to shape the businesses they buy from, so you might as well welcome them in.
So how will you solve this paradox of choice and build trust? People. People. People.
Commerce has always followed the people and requires your business to do the same. Where people are and what they need should be your filter for everything, for every decision. Focus on solving their problems and you’ll solve your business.
Follow the people, always.
Watch our entire conversation, courtesy of IAB ALM 2022
*I am an investor in both Thingtesting and Heyday where I also sit on the Board of Directors.
