“Ecom Now Means Electronic Commodity”

Phillip: [00:00:08] Welcome [00:01:20] to Future Commerce, the podcast about the next generation of commerce. I'm Phillip.

Brian: [00:01:35] I'm Brian.

Phillip: [00:01:36] And all experiences are homogenous and [00:01:40] nonremarkable.

Brian: [00:01:42] Yeah, that's the way to kick this off.

Phillip: [00:01:44] Yeah.

Brian: [00:01:44] It's true.

Phillip: [00:01:45] It's so true.

Brian: [00:01:46] Shopify is down 75% right now.

Phillip: [00:01:49] I think. I think that's the number. It might be worse by the time you listen to this, but it's not just Shopify.

Brian: [00:01:55] Okay. Okay.

Phillip: [00:01:56] It's a lot of things.

Brian: [00:01:57] That was picking on them.

Phillip: [00:01:58] Yeah. Well, I mean, [00:02:00] if you're going to come for the king you better not miss.

Brian: [00:02:04] That was a lot of correlation right there.

Phillip: [00:02:06] Shopify actually this week has a number of announcements and we'll get to it. If you look over the past month, maybe Shopify is future-proofing its business in a bunch of different ways. So we'll actually kind of break down some of the news. But one thing [00:02:20] I really wanted us to cover because I'm feeling very passionate about it right now is that there is just a homogenization of eCommerce experience today. Everything looks the same, it behaves the same. It's not just the aesthetic, it's the functionality. The web used to be fun and the web [00:02:40] used to be off-kilter, and that's because you couldn't just click and start something up from scratch.

Brian: [00:02:47] It got too efficient to do anything differentiated.

Phillip: [00:02:51] And that's a problem, right?

Brian: [00:02:55] It is.

Phillip: [00:02:55] I say this all the time.

Brian: [00:02:57] People don't invest what they don't have to. You know what I mean?

Phillip: [00:02:59] Oh, [00:03:00] gosh. Ooh, yeah. Say more.

Brian: [00:03:02] Yeah. No, but I mean, in the past, we had to spend a lot of money on eCommerce experiences because you literally had to. So you build something that was really cool because you had to build something that was from scratch. Not from scratch. But it was...

Phillip: [00:03:18] I mean, effectively from scratch.

Brian: [00:03:18] Effectively from scratch. [00:03:20]

Phillip: [00:03:20] Effectively from scratch.

Brian: [00:03:21] So now like marketers and IT people and whatever buying center are like, "Oh, we don't have to spend money on this?"

Phillip: [00:03:30] "We don't have to do that?"

Brian: [00:03:31] "And we can still sell things online? Why would we try to go do something custom? I don't have to spend money on it."

Phillip: [00:03:39] And [00:03:40] if you're listening to this podcast, you already know all of these things. But I think that in particular when you're putting it in the context of the markets are not just timid on the future of eCommerce experiences and the platforms that power them. I mean, BigCommerce itself is trading at something like $15 [00:04:00] a share or something right now. It's not just that the market has cooled on it or that there are headwinds. The market is active and investors are actively saying there are warning signals ahead that, in fact, we've become too efficient. And the consumer, if [00:04:20] they want bland, homogenous experiences, why not just use Amazon? Because it works. You know you're going to get fast, cheap, and free.

Brian: [00:04:28] To be fair, even Amazon's taken its share of beating right now.

Phillip: [00:04:32] Oh, for sure.

Brian: [00:04:33] But I think you're right.

Phillip: [00:04:36] But Amazon's business is so diversified, it's so much further [00:04:40] beyond just marketplace.

Brian: [00:04:41] Right.

Phillip: [00:04:42] And I think we had covered this some time ago. If you're not listening to every episode of Future Commerce, super easy to miss, but the Buy With Prime One-Click button.

Brian: [00:04:56] We talked about this with Kris Gösser significantly.

Phillip: [00:04:59] Exactly. And [00:05:00] they are future-proofing their business to some degree as well. Who does the Buy with Prime feature, this idea that you can have a one-click checkout on any website, but it's fulfilled with the logistics of Amazon. Who does that target? Who is the buyer of Buy with [00:05:20] Prime? The non-Shopify set.

Brian: [00:05:22] Yeah, exactly.

Phillip: [00:05:23] And that's why I believe...

Brian: [00:05:25] Well, currently I think does it include the Shopify set? I think currently you can use Buy with Prime on Shopify as of now. I don't know actually.

Phillip: [00:05:37] This is the question. Well, I'm [00:05:40] going to... I would surmise that Buy With Prime would be against Shopify's terms of service because you are implementing a payment method that doesn't go through Shopify checkout. That's what I assume, and there are probably people here...

Brian: [00:05:54] But you can use Apple Pay.

Phillip: [00:05:56] That is through Shopify checkout. You have to get to the Shopify [00:06:00] checkout before you can use Apple Pay. Shopify is going to get its cut. Buy With Prime is not a Shopify certified checkout method.

Brian: [00:06:06] But you can use another payment platform on top of Shopify. You just have to pay a fee.

Phillip: [00:06:14] That's very hand-waving. Basically, nobody does it.

Brian: [00:06:17] Right.

Phillip: [00:06:18] So [00:06:20] let's get back to the hypothesis.

Brian: [00:06:25] Yes.

Phillip: [00:06:26] I want to future cast just a little bit.

Brian: [00:06:29] I love to future cast.

Phillip: [00:06:30] So we're in... Right now, actually, we're sitting in a room that we're not supposed to be in at RICE 2022. We're at the Retail [00:06:40] Innovation Conference and Expo.

Brian: [00:06:42] Live from RICE.

Phillip: [00:06:43] If it's a little echoey, that's why. But we don't have a full recap of the show this week. This is our first day on the show floor. We have a whole team from Future Commerce here at the show this week. So we're going to have a very comprehensive show recap likely on next week's [00:07:00] show. But this is happening right now. And I think that as we're sort of in this moment where I think  [00:07:11]we've seen the bottom sort of fall out of the direct to consumer era. We're now in the indirect to consumer era [00:07:17] and now we're watching... [00:07:20]

Brian: [00:07:20] Dude.

Phillip: [00:07:20] Yeah. And indirect to consumer means. It's not direct to consumer at all. It's going through all the traditional channels. It's in Walmart and Target, it's on Amazon.

Brian: [00:07:32] This is what I was talking about. We talked about this when we talked to Ingrid at Shoptalk. We talked about this with Kris Gösser.

Phillip: [00:07:37] Yes. We continue to talk about it.

Brian: [00:07:39] The expansion [00:07:40] path is unique distribution.

Phillip: [00:07:41] Beyond eCommerce.

Brian: [00:07:42] Yeah. {laughter}

Phillip: [00:07:43] And why? And we say this a lot and you've probably heard me say it before, but I'm going to say it again. It's that eCommerce, [00:07:53] the original value proposition of eCommerce is you don't need a brick and mortar store. You don't need [00:08:00] to staff a brick and mortar store. Your store can be online 24 hours a day. You don't need to heat or cool or have insurance or hold inventory in the same traditional manner. You don't have to have product merchandising on the show floor, in the store. You don't have to have a front window display. You have digital [00:08:20] equivalents of all of those things. But what you are reducing is the middleman, right? You are reducing the layers between the product and the consumer. And what we have found, that was the promise. That is not where we are today. And in fact, it's not the removal of middlemen. eCommerce is nothing [00:08:40] but middlemen now. And there's an entire show on the other side of this wall right now with 600 vendors that are all middlemen of some sort, that will do something in your value chain to get a product to your customer from your digital storefront. It is actually the most expensive. [00:08:56]

Brian: [00:08:56] 70% of your  [00:09:00]eCommerce experience is powered by other vendors.

Phillip: [00:09:03] So actually I don't know that we've quantified it that way.

Brian: [00:09:07] Okay, fine.

Phillip: [00:09:08] What we have quantified...

Brian: [00:09:11] That was a vast generalization. It's probably likely. It's possible.

Phillip: [00:09:14] On some sites.

Brian: [00:09:15] Yes. {laughter}

Phillip: [00:09:18] I'm feeling very punchy right now. [00:09:20] What I have said is that up to 30% of a product detail page can be real estate that is owned by other eCommerce experiences that are not from the brand itself. Its UGC. Its product catalog. It's product recommendations [00:09:40]. It's even your buy button. It's your one-click checkout.

Brian: [00:09:43] This isn't necessarily a bad thing.

Phillip: [00:09:44] No, but it's I think [00:09:46] it's an important distinction to say that there are so many layers of technology in the unbundling of Amazon and whatever else has occurred that have taken us away from [00:10:00] the original premise of the value of eCommerce. So the market understands this now. So it's no longer eCommerce. It's not eCom anymore. It's not electronic commerce. eCom now means electronic commodity [00:10:14] because you can stand up... I'm very proud of myself [00:10:20] for that.

Brian: [00:10:20] I know. I love it.

Phillip: [00:10:20] You can stand up a site in mere minutes and merchandise products in mere minutes. And where is the value in something that requires no thought, no intention, and no hard work to actually bring it into being? That is a commodity. Anyone can produce it.

Brian: [00:10:39] Yeah. [00:10:40]

Phillip: [00:10:40] I know that we came through an era of a decade of the differentiator is brand. But look at what's happened to all the direct to consumer brands that were differentiating the brand.

Brian: [00:10:51] They all feel the same.

Phillip: [00:10:52] They all feel the same. They all have a similar aesthetic. There are some standouts. I think we argued about this on the last show. There are some standouts. [00:11:00]

Brian: [00:11:00] No, but here's the thing. No one is implementing dork mode.

Phillip: [00:11:06] Define Dork Mode.

Brian: [00:11:07] Dork Mode. [00:11:08] Dork Mode was an article written by Alex Greifeld, published on Future Commerce Insiders, and it talked about how Dork Mode was the antidote to the Sea of Sameness. We have [00:11:20] a ton of brands out there that have all built these broad market experiences, and they could be identifying customers that have made four or five or six purchases with them and build a unique experience for their most nerded out customers or different customer segments [00:11:40] and have not just one broad market eCommerce experience, but maybe two, three, four, five, depending on how many different buyers they have that meet and address those buyers' unique aesthetics or needs, or just gives them something different other than the blandification [00:12:00] that we have at this moment. [00:12:02]

Phillip: [00:12:02] Blandification. And it's not just the products themselves that, you know, I think Ben Schott.

Brian: [00:12:10] Yeah, Ben Schott. The blanding article.

Phillip: [00:12:12] Ben Schott had said that our bland, it's that the experiences by which we deliver them to the customer...

Brian: [00:12:18] Right, it's not just the brands it's the experiences [00:12:20] that are built on these out of the box platforms.

Phillip: [00:12:23] And that's the challenge is that what Shopify has done is so remarkable in that it has "democratized eCommerce" in that anyone can be an eCommerce merchant.

Brian: [00:12:36] Which is amazing. That is amazing.

Phillip: [00:12:38] Objectively incredible.

Brian: [00:12:39] Wonderful. And [00:12:40] Amazon too. Same thing.

Phillip: [00:12:42] But it's a double-edged sword because what they have done is they've made it so easy and so thoughtless, I would say in aggregate, there are many brands that are not thoughtless, but I would say that it's so easy to stand up a theme and stand up a site that looks [00:13:00] very similar to another. They've actually turned the business buyer, the operator, or the founder into a consumer in their own right.

Brian: [00:13:10] Right. Yes.

Phillip: [00:13:10] They made the business buyer of eCommerce software care about fast, cheap, and free in the same way that Amazon made an eCommerce shopper [00:13:20] care about fast, cheap, and free. In fact, Shopify basically Primeified eCommerce software acquisition. One-click. Think about this.

Brian: [00:13:31] Totally. Absolutely agree.

Phillip: [00:13:32] You can one-click install with no commitment at all for a whole array of software, not just Shopify [00:13:40] but an entire marketplace ecosystem.

Brian: [00:13:41] Yeah. It's almost always try before you buy. It's always almost always one-click install unless it's a real hefty tool and then there's a little bit of integration involved, but it's pretty minimal.

Phillip: [00:13:50] I don't know if you had read my Insider's piece from this past week.

Brian: [00:13:55] Yes, I did.

Phillip: [00:13:56] So it was a little bit of a hot one.

Brian: [00:14:00] Hot [00:14:00] one is right.

Phillip: [00:14:01] It's called "Wellness Brands, The New Pornographers," which is a whole take unto itself. We'll link it up in the show notes. I make I think, a pretty decent case that the thesis here is that we [00:14:20] have often referred to porn as being early entrance into new technology platforms and finding novel uses for it. And that actually easing the consumer application or the consumer adoption curve. This is something that's been written about for decades. It's not a novel thought. Wellness brands do the same for e [00:14:40]Commerce Software. They're highly experimental. They're very quick to adopt. They like to trial the exhibit sampling behavior. And we actually give a lot of data-driven, supportive evidence of that hypothesis. It's a great piece. 2000 words. Carve out some time and make a cup of coffee to read it. But in [00:15:00] that piece, I basically hypothesized that the smaller, more nascent software as a service vendors are the ones that are low cost and easy to implement through one click on Shopify. They are also, by our own primary [00:15:20] research, way more likely, up to 50% more likely, to include a wellness brand on their home page as a case study.

Brian: [00:15:29] Right.

Phillip: [00:15:29] And this is a really interesting behavior because most of these products are month to month and require no long term commitment or a contract. And so this like fleeting [00:15:40] tryst that a brand that's highly experimental might have with their software vendor also I think is devaluing to the brand. It doesn't require them to commit to anything for a long period of time, which is great as a value prop, but not great for requiring someone to have to really think and work hard [00:16:00] to implement something.

Brian: [00:16:02] It's more like just put it on your site, see if it starts performing and if it doesn't perform, you get rid of it. And that's like not strategy.

Phillip: [00:16:10] No. And I would say like 9o, I shouldn't say 90%. A lot of my Twitter feed...

Brian: [00:16:17] We're throwing out a lot of stats today.

Phillip: [00:16:17] We're throwing out so many stats. You guys, I'm so sorry, but [00:16:20] we're all fired up because RICE is actually quite a good conference and we'll break it all down.

Brian: [00:16:24] This is a great conference.

Phillip: [00:16:26] Yeah, we'll break it all down. But what I am what I'm witnessing is that a lot of my Twitter feed are people of the Shopify variety who are constantly asking... [00:16:40] There are two conversations being had. One, what Shopify plugins do you use? And two, here are the top ten Shopify plugins you should use.

Brian: [00:16:49] Oh my gosh. That's 90% of the content on your Twitter feed.

Phillip: [00:16:53] And that's again so unbelievably reductive and I'm sure that  [00:17:00]someone could probably say that first of all, that is one subjective experience of a conversation.

Brian: [00:17:06] They also might say, "Phillip, you need to re curate your Twitter feed." {laughter}

Phillip: [00:17:11] I do. I probably do need to do that. I actually like the mix that I have at the moment. My concern, though, is when [00:17:20] that is an engagement strategy because that gets a lot of engagement, what does that say about the consumerization? The consumerization of eCommerce software.

Brian: [00:17:37] Well, here's an interesting point. I think you nailed it. Shopify [00:17:40] did this and they did it because they actually really, especially early on, and obviously, they've gone upmarket, but they've really initially went after the single owner operator, which has to think about things more like a consumer actually [00:18:00].

Phillip: [00:18:01] Yeah, they exhibit consumer behavior because they are solo consumer/founders.

Brian: [00:18:06] Right. Correct. They are the judge, jury, and executioner of their entire business strategy. So naturally, it made sense to build something that catered to [00:18:20] effectively what was a consumer.

Phillip: [00:18:23] And there's so much demand there. And they built really an incredible business. Again, my concern is, and this is going to be a topic of a report, our forthcoming Visions Report, which should be out in about 2 to 3 weeks. This homogenization [00:18:40] of experiences has really kind of made online shopping just more boring over time.

Brian: [00:18:47] I mean, I wrote about this extensively.

Phillip: [00:18:51] During Black Friday a couple of years ago.

Brian: [00:18:53] Yeah, two Black Fridays ago. Black Friday Aubade. I believe [00:19:00] that eCommerce shopping is one of the most depressing forms of shopping. It is.

Phillip: [00:19:11] No, this is like our whole job thing. Thank you, Brian.

Brian: [00:19:13] Dead serious. I think we watched that movie Jasper Mall, which [00:19:20] was supposed to be this look at...

Phillip: [00:19:23] A daying mall. "Mt's a documentary about a dying mall in Jasper, Alabama.

Brian: [00:19:28] Right. And it's this sad look at this mall. It was really depressing. And I look at that and I'm like, man, I kind of hope that I'm an old person walking around a dying mall and not [00:19:40] an old person sort of half looking at Netflix, half looking at my shopping feed by myself, not paying attention to anyone else when I shop."

Phillip: [00:19:48] Right. Part [00:22:20] of our primary research for our [00:22:40] Visions report is that we're seeing that if you remove the navigation from a website... So we actually created in the survey one of the questions in the survey is visual treatment that [00:23:00] shows multiple bedding brands next to each other at varying levels of basically a low-end consumer commodity or a store brand and a marketplace offering and then a luxury brand. And if you remove [00:23:20] the top navigation, which contains branding, most consumers can't tell the difference of which one is the more premium brand. And that's because the visual language of eCommerce is so standardized that there is no character and no, effectively, brand or [00:23:40] experience that can shine through.

Brian: [00:23:43] Right. Exactly.

Phillip: [00:23:45] And just to make it like really specific. Left-hand navigation, grid layout. White background. We have both closeup texture shots and [00:24:00] a lifestyle shot and...

Brian: [00:24:01] The prestige theme.

Phillip: [00:24:02] Exactly. It's the prestige theme.

Brian: [00:24:05] Yeah.

Phillip: [00:24:05] This is not a teardown of Shopify or a justification as to why Shopify's stock price might have taken a tumble. And by the way, the whole of the tech [00:24:20] sector is suffering in that regard. The challenge is that we're now starting to notice that maybe things like headless really aren't the bastion or the savior of eCommerce for the reason that [00:24:40] we initially thought they would be.

Brian: [00:24:43] Totally.

Phillip: [00:24:43] It's not because of the technology or how fast the experience and the browser experience could be. It's not because you have this total control. It's because it enforces upon you intentionality to have to think about every design decision [00:25:00] because you are forced to build it from scratch. That is a thing that we don't enforce on our brands or as operators enforce upon our companies when you can just apply the prestige theme and end modifying.

Brian: [00:25:13] Right. Effectively headless is our savior because it forces [00:25:20] us to think and be intentional and think about what actually matters to our customers.

Phillip: [00:25:27] Call every decision into question and take nothing for granted.

Brian: [00:25:32] Right, which by the way is probably why there are some horror stories out there if implementing headless. I mean, let alone the technological issues.

Phillip: [00:25:39] The [00:25:40] business is not prepared for that.

Brian: [00:25:42] Correct. It's a cultural issue.

Phillip: [00:25:44] Right.

Brian: [00:25:44] Because if you don't know how to make good, decisive decisions and you don't have the data that you need to make those decisions, yeah, you're going to fail at headless.

Phillip: [00:25:54] Yeah.

Brian: [00:25:55] Because if you get stuck in analysis paralysis, headless is going [00:26:00] to cost you a crap ton of money.

Phillip: [00:26:03] Yeah, and time. I mean, that's the most expensive thing. And listen, I'm I have been sort of jury's out on headless for a long time, but I do believe...

Brian: [00:26:16] The jury's in. {laughter}

Phillip: [00:26:17] And no, [00:26:18] I would never say [00:26:20] that headless is our savior in any way. I think having a financial and a technological boundary that requires you to have to become intentional is the thing that I believe could be the differentiator for many brands that adopt headless. That's the thing that we're missing is it's [00:26:40] taking time out to rethink the way that your site exhibits your brand and how consumers really might be pleasantly surprised, and how you can introduce good friction into making people stop and think about the purchase that they're making and not just go on autopilot when they start seeing the grid. [00:27:00] [00:27:00]

Brian: [00:27:00] Which by the way, [00:27:02] you could do this with any one of the eCommerce platforms we just mentioned without going headless. But you won't. [00:27:09]

Phillip: [00:27:09]  [00:27:10]No, you won't. [00:27:10]

Brian: [00:27:10]  [00:27:10]No one will. Because they don't have to. [00:27:12]

Phillip: [00:27:12] Because you don't have to. And you listen, we're all the same in that regard. I [00:27:20] think we do things that we have to do when we have to do them and not necessarily before. And this is that consumer behavior that I think we're witnessing and is at play. Now, I haven't dug into and this is the thing that sort of speaking out of ignorance now and just sort [00:27:40] of examining the moment and Shopify, just looking at a stock price number, it tells absolutely no story. There are some really interesting developments. So Shopify in the last month alone has acquired an influencer management platform called Dovetail. They have announced [00:28:00] that they're building way more capabilities for NFT and their NFT working group. I believe they have a giant Web3 roadmap that they're implementing at the moment. They have acquired, or there are rumblings of an acquisition in progress for Deliverr, which would give them [00:28:20] extensive 3PL capabilities.

Brian: [00:28:23] That happened. Right?

Phillip: [00:28:24] I'm not sure if it actually happened.

Brian: [00:28:25] I think it actually happened.

Phillip: [00:28:26] Did it?

Brian: [00:28:26] Yeah.

Phillip: [00:28:28] Double-check me on that. I'm pretty sure that I saw the leak and not necessarily the press release. And then just today, I believe, they announced [00:28:40] a new product called Shopify Audiences. I don't think that we have covered this in The Senses just yet.

Brian: [00:28:49] Nope.

Phillip: [00:28:49] What?

Brian: [00:28:51] Oh, no. Shopify to acquire D for 2.1 billion. That's on their website.

Phillip: [00:28:57] Okay. All right. So it has been announced. [00:29:00] Well, that's a lot of K.

Brian: [00:29:03] That's a lot of K.

Phillip: [00:29:03] And then yesterday, and we haven't covered this just yet. So this is our first blush opinions here. But if Shopify were to implement this Audiences feature, it firmly positions them in the realm of customer acquisition. So [00:29:20] have you heard of Audiences, Brian?

Brian: [00:29:23] Briefly. I just heard that it was announced. So it's basically a search to improve brand rediscovery.

Phillip: [00:29:29] Yeah. So what they're doing is creating effectively, you know, how Facebook advertising relied very heavily on lookalike audiences. Shopify [00:29:40] is really looking to create, I think, the beginnings of what will become an advertising platform that will allow Shopify to broker the introduction of new brands to consumers that might fit into similar consumer segments.

Brian: [00:29:54] I see. So basically Shopify merchants will be able to advertise through other Shopify merchants.

Phillip: [00:29:59] That's [00:30:00] correct.

Brian: [00:30:00] Yeah. So that's absolutely genius.

Phillip: [00:30:03] Yeah. And these are things that...

Brian: [00:30:05] That's even better than a marketplace in some ways.

Phillip: [00:30:07] I mean, that was the thing for years. People were like, "Why doesn't Shopify launch a marketplace? Why isn't the Shop app a shoppable marketplace for people?" Well, it kind of is to some degree. But, you know, "Why isn't it a place like just [00:30:20] Amazon? Like I should be able to shop every brand." Well, because then Shopify becomes the arbiter of merchandising the millions of stores on its platform and understanding the value prop of all of these products. That is a fundamentally [00:30:40] different business to their software platform business that they're on today. So an advertising model makes so much more sense.

Brian: [00:30:46] It does. It does make more sense to start. I mean, I don't think I would rule out them growing out a marketplace at some point.

Phillip: [00:30:51] Oh, I'm sure ten years from now, there's likely something on the roadmap.

Brian: [00:30:55] Yeah.

Phillip: [00:30:56] I find the [00:31:00] roadmap that they're laying out and this last month of activity to be something, it's like, okay, well, it's not all doom and gloom for Shopify for the next five years. I feel like if anyone is poised to defend the crown, Shopify is going to be hard to beat. [00:31:20]

Brian: [00:31:20] Yeah. And again, I think you said this earlier, we're not actually dumping on Shopify. What Shopify has created is incredible and worthwhile and was necessary.

Phillip: [00:31:30] Yeah.

Brian: [00:31:32] So needed and appreciated.

Phillip: [00:31:33] And the door was left wide open by basically entrenched players who abdicated the throne.

Brian: [00:31:38] Right. Totally. [00:31:40]

Phillip: [00:31:40] I mean, there are a number of eCommerce platforms that held the crown for so many years.

Brian: [00:31:44] They did and maybe they didn't... They held the crown. The crown though that they held wasn't actually the crown that they thought it was. It was a different crown. I know that was complicated.

Phillip: [00:31:57] Don't say crown anymore.

Brian: [00:31:59] My  [00:32:00]point in saying that is that they were platforms built for a different kind of merchant, one that was more upmarket.

Phillip: [00:32:06] More sophisticated.

Brian: [00:32:07] More sophisticated. Exactly. And so they held the crown with the smaller merchants because there were literally no other options that made sense for them.

Phillip: [00:32:17] Yeah. [00:32:20] So this is in no way like a lament for Shopify. I think know they have a really tough few years ahead of them. I think we all do to some degree.

Brian: [00:32:33] Shopify Aubade. Is that where we're at already? No.

Phillip: [00:32:34] The tech sector, in particular, I think has taken some  [00:32:40]beatings. And we'll see what happens here in the second half of 2022. But [00:32:46] I don't think that Shopify as a concept and what it enables with a consumer is something that can be fixed in the short term or even in the medium term. The thing that it enables with the  [00:33:00]merchant consumer is fast, cheap, and free. And the fast, cheap, and freeness of eCommerce has gotten us to where we are, where the eCommerce world is effectively very boring and there are brands that have to work really, really hard and spend a lot of money and put a lot of resource into [00:33:20] design to break out of that mold. But they are by far the very, very small minority among the larger footprint of what Shopify is. [00:33:31]

Brian: [00:33:32] Right. Yeah, I think it's interesting. We talked about Dork Mode. Dork Mode requires an incredible [00:33:40] level of sophistication to implement. If you did it on Shopify and you wanted to run things from a single back end, you'd have to do all kinds of back end integrations and magic to make it happen, you know what I mean? So yeah, we talk about these next-level strategies to differentiate. [00:34:00] They cost money.

Phillip: [00:34:01] Yeah.

Brian: [00:34:02] Doing headless is something that's going to be an investment that your brand has to make. And I think that's what we've stepped away from. That's what this is enabled is eCom isn't actually getting investment [00:34:20] or maybe that investment is going towards all these additional middle tools.

Phillip: [00:34:26] I think that well, I think that's what it is. Each one of these middlemen are margin erosive. So the margins wither away. And really the challenge here, the bigger challenge, the big elephant in the room that I think Shopify [00:34:40] is trying to fix or plan for is well, how do you get people on your website anyway? Experiential websites aren't really going to differentiate themselves through like massive amounts of SEO.

Brian: [00:34:57] Right. So traffic.

Phillip: [00:34:59] The traffic problem [00:35:00] is the universal problem to have to solve. It's not just about standing out in a sea of sameness, because I think that that's important. But how do you stand out if no one ever gets to your site in the first place?

Brian: [00:35:11] Right.

Phillip: [00:35:12] So you know where the investment has been going...

Brian: [00:35:14] That's a separate problem.

Phillip: [00:35:15] Yeah, it is a separate problem.

Brian: [00:35:15] And CAC is so high.

Phillip: [00:35:17] But this is the issue. If you have a brand and [00:35:20] what did the venture era of direct to consumer do?

Brian: [00:35:28] Pushed out the budgets to CAC. {laughter}

Phillip: [00:35:29] Yeah, it pushed, really a lot of venture went to lining Facebook's coffers. So the [00:35:40] next era here is going to be about really just acquisition arbitrage. I heard an interesting one today. So I hosted a panel with Couplet Coffee's Founder Gefen who is an amazing Twitterer. [00:36:00] I know her from Twitter, but never met her in person until today. But I hosted this panel and then I'll talk about the panel some other time. But one thing she had said about unusual acquisition methods is, well, coffee, especially specialty coffee, people are really experimental and [00:36:20] they want to try a bunch of different things and they don't necessarily want to have one thing on autopilot all the time. And so being top of mind for when they do want to reorder is really important. How do you do that without spending a lot of money on paid search or on retargeting? For Gefen, it was what we just need a really freaking [00:36:40] cool fridge magnet. Occupying some space. I had another person that I was having a conversation with and a light bulb went off for me. And basically, the context of the conversation is your package is really important. If you can design your package in a way that inspires someone to take a photo, [00:37:00] then all of the machine learning algorithms will bring them back to the product on your behalf without you ever having to spend any money. Because we all have memories that pop up. We have Time Hop. We have these things that will bring your brand back to them.

Brian: [00:37:13] Totally.

Phillip: [00:37:14] If you're in the camera roll, then you're going to be in their memories [00:37:20] forever. It's figuring out how to differentiate yourself enough so that you're worthy of having a picture taken. And I think that these are new ways of thinking of customer acquisition that aren't just "How do we create new creative? How do we create 40 ad targeting strategies? How do we launch them and weed out the poor [00:37:40] performers?" Do you know what I'm saying?

Brian: [00:37:41] Yeah.

Phillip: [00:37:42] Not that those things aren't important.

Brian: [00:37:43] Yeah. I mean, I don't know if being in someone's photos is acquisition so much as it is...

Phillip: [00:37:48] It's retention. Yeah.

Brian: [00:37:49] Yeah, but I agree with you. Acquisitions continue to be something that, you know, this is everything we just talked about in the last few episodes. How [00:38:00] are people coming into the funnel without having to drop a boatload on Facebook? Maybe it's local commerce. This is something that is coming up that we're going to be talking about more in the coming year and how to navigate local commerce. I was [00:38:20] just talking to a friend of ours who has a coffee brand, and he's about to get his first physical cafe.

Phillip: [00:38:31] Oh, is this Joe?

Brian: [00:38:32] It's Joe.

Phillip: [00:38:33] We should give him some love. Joe from Klaviyo. He has a direct to consumer brand. Spring Line coffee. [00:38:40] Spring Line is great. I love Spring Line.

Brian: [00:38:44] Yeah, Spring Line is delicious. But he was just talking about how he went through the process of joining his local Chamber of Commerce and talking to the city council and like going through this process of engaging [00:39:00] in actual relationships in his community. And maybe that's the next step is we've seen so much talk about how to go do things in the digital world.

Phillip: [00:39:15] Global digital reach.

Brian: [00:39:17] Stuff that just scales naturally. [00:39:20] But [00:39:20] what if maybe scale is actually better accomplished and more sticky if it's done at the local level through normal relationships with people that care about each other in their communities? [00:39:34]

Phillip: [00:39:34] We on that point, actually, we have a series coming up that [00:39:40] we'll be working on over the next five or six months that really examines this phenomenon. We don't have analogs in the digital world for the things that actually power a lot of local business in the real world. And I find that to be really interesting. You deal with  [00:40:00]the local downtown development agency. You have to deal with the Chamber of Commerce like you mentioned, and you have to deal with the city redevelopment agency. And you have to deal with each of these small governmental organizations and para governmental organizations [00:40:20] that actually gatekeep, whether you can even be in your town and in your local city. And I think demystifying each of the roles that these things play in your life and how really just kind of educating people on how business [00:40:40] is really done in real life, I think, will help us to understand where the deficiencies are right now in eCommerce.

Brian: [00:40:50] Oh, my gosh. I was just thinking about something as you were talking. I started thinking about digital equivalents of some of the stuff that we have [00:41:00] in our local towns. How cool would it be if digital communities, which are obviously not physically location bound, but come together around specific, whatever actually, could be anything? What if there were standards [00:41:20] for the types of experiences that those communities would allow into their bubbles? So like you had to adhere to a specific design aesthetic in order to [00:41:40] be posted as an option for that community to go buy things in town?

Phillip: [00:41:45] Oh I see.

Brian: [00:41:45] So like there are certain towns that will require you to build your building in a specific style.

Phillip: [00:41:52] Yes. I understand. Yes, that's actually the fundamental role that a city planner and [00:42:00] a town planner might exercise. This is really interesting. It reminds me, actually of the old WebRing days where there were affiliations of websites that all work together in a loosely coupled way for them to partner to help grow. And a lot of those were [00:42:20] like informational sites or Geocities type sites.

Brian: [00:42:23] Yeah, I was thinking Geocities. Yeah, exactly.

Phillip: [00:42:25] Yeah. StumbleUpon had a really interesting mechanism for this too a decade ago where you wanted to find a site just like this one that is very closely aligned or has a similar visual aesthetic, oh well [00:42:40] StumbleUpon would aggregate similar sites into digital neighborhoods. We lack a lot of that and I think just awareness of what the mechanisms are that make business happen in real life would help us all rethink the way that we're building the web today and maybe make us feel a little less disconnected [00:43:00] and more interconnected.

Brian: [00:43:03] Yeah, yeah. You know, now I'm like vision casting here. But wouldn't it be cool if Reddit allowed for communities to build experiences that were a part of that specific Reddit community? And then that could be stores [00:43:20] or it could be additional sites that were information about a specific community. And instead of things being defined around specific platform features, it would actually be more open and allow for building as long as it met the guidelines of that community. [00:43:40]

Phillip: [00:43:40] I think that's a brilliant last word. I will say this. The founder of Visa, I think it was Dan Hawk. This is off the cuff. I should probably have referenced it. Said that basically any community that exists solely for [00:44:00] capital purposes... Meaning any community that exists solely for financial gain is not a community.

Brian: [00:44:09] Will not be successful. Right. I agree.

Phillip: [00:44:10] Because you have to be... What we might have said in a prior time was you have to be about something. We need to be about something more. Now, actually, I think that being able to engage [00:44:20] in a community that has no tangible benefit other than to be is something that we're desperately needing and lacking in our modern world. We're like, closer than ever, but we've never been further apart.

Brian: [00:44:36] Yeah, that's why I don't want to be old and scrolling [00:44:40] through my phone while I passively watch Emily in Paris as a rerun.

Phillip: [00:44:47] {laughter} On that note, if you want more episodes of this podcast, you can get them at FutureCommerce.fm. We would really appreciate it, it takes you no time at all, but if you want to support the podcast, we would really appreciate it if you could drop [00:45:00] us a rating on Apple Podcasts and Spotify actually requires you to listen to an episode or two before you drop a rating. Or three. You have to listen to a lot.

Brian: [00:45:08] I don't even know how many it is. {laughter}

Phillip: [00:45:09] Quite a bit before you can leave a rating, but we would really appreciate it if you did. So we are coming up quickly on our newest report. If you want to know and be [00:45:20] among the first to know when it lands, it's an impressive assemblage of amazing minds and incredible experts, and empathetic thinkers who are coming together to help us to build it. And I can't wait to show it to you. You can get that by subscribing actually [00:45:40] to Future Commerce at FutureCommerce.fm/Subscribe and you'll be the first to know when the report becomes available in the next few weeks. It's called Visions and we are very, very excited about that.

Brian: [00:45:53] You caught that, right? It used to be called Vision, now it's called Visions.

Phillip: [00:45:56] Vision was an annual trends report. [00:46:00]

Brian: [00:46:00] Yes.

Phillip: [00:46:01] Visions is a home for our biggest ideas. And I'm really excited about the future of all of that. Anyway, thank you so much for listening to Future Commerce.

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