Decoded: Social Commerce

Phillip: [00:00:02] Welcome to Decoded, a podcast by Future Commerce, brought to you by Spryker. Developers used to be the key focus of marketing and sales initiatives for enterprise software. But today it's marketers and vendor procurement that often make decisions for eCommerce that [00:00:20] are based on what competitors are doing. Decoded is a podcast that will address this chasm between the developer and the marketer while speaking through current events, tectonic changes, ecosystem threats, technology trends, and platform wars and how we build a bridge between the two. I'm [00:00:40] Phillip.

Boris: [00:00:41] I'm Boris, Co-Founder and CEO of Spryker.

Phillip: [00:00:45] And this is Decoded. Digital commerce is changing. Our entire industry is in constant evolution. And [00:01:00] that's forcing organizations to change how they sell to a customer. Also evolving are Facebook and Instagram. Social media businesses are changing so much so that in recent years they have become platforms for persuasion. The rise of Influencers has brought forth an array of [00:01:20] new and creative brands. For years, marketers used social media platforms to drive demand to their websites. But today, the likes of Instagram and TikTok are allowing users to make purchases from companies directly from within their app. The job of the marketer just got a lot more [00:01:40] difficult. Marketers need to push for an evolution in how their organizations target customers. But what can a developer do to meet these needs and how can they adapt their approach and leverage new technology to meet new customer expectations? On today's episode of Decoded, [00:02:00] we'll discuss the role of the marketer and the developer and how we can build a bridge between the two in this new era of social commerce. It [00:02:20] used to be that we had one marketplace to have to worry about, namely Amazon. But even social media apps are becoming their own ecosystems and marketplaces unto themselves. I'm curious if you have any thoughts on what that does to the roles that typically make eCommerce happen [00:02:40] in an organization and whether those roles need to change or adapt to accommodate this change in consumer behavior.

Boris: [00:02:46] Instagram, TikTok or Facebook, Twitter, they would all have their own roles. For the developer, for the people who are enabling this change, it's basically just enabling a headless shopping [00:03:00] experience if you want. So right at the end of the day, it's just the same business capabilities, the same APIs, the same products and prices and stock and the same orders so that the same main entities in a way that that you broadcast [00:03:20] to new facilities. So I think technically as we are standardizing APIs more and more and as everyone goes headless nowadays and as we try to encapsulate business capabilities in the cloud world, I think the good news is that for the developers, it's not changing that much. [00:03:40] It's just another property. I think for the business guys, for product, for sales, marketing, it's much more of a change because they have to figure out all these different rules, all these different regulations, all these... They have to figure out what to do where in what context, because this is what I personally struggle with social commerce, as you call it. I'm not sure that social [00:04:00] is the right context for shopping. Maybe that's the reason why it took so long.

Phillip: [00:04:04] For online shopping.

Boris: [00:04:05] For online shopping to pick up. And I'm not sure that a buy button in my Twitter timeline or my Instagram feed is... But I have to admit, you know, I also bought a couple of [00:04:20] things on Instagram, so apparently it works. {laughter} Yeah.

Phillip: [00:04:24] {laughter} Are you on Snapchat or TikTok at all?

Boris: [00:04:26] No.

Phillip: [00:04:27] No.

Boris: [00:04:28] No.

Phillip: [00:04:28] It's interesting because those seem to be creating, at least in a new kind of consumer, the younger generation in particular, which seems to be much more desiring [00:04:40] to participate in these social trends and those create commerce opportunities. You can actually see we did a piece of research called The New DIY back in October of last year. And you can watch search traffic on [00:05:00] Amazon directly correlate to things that are viral on Instagram and TikTok. I guess the challenge that I guess we're really faced with is if we have more and more and more of these channels that we have to transact in, does that change [00:05:20] the nature of the technology that we implement to make it happen? It's not really eCommerce because the way we think of eCommerce is not an order management platform. It's actually like a catalog inventory payments and logistics platform.

Boris: [00:05:33] Ideally it wouldn't, right? Again, if the world if everyone would use a modern cloud [00:05:40] native, composable, commerce, headless, you know, API first platform, then it would not matter or not matter that much because again, then what is being broadcast to these properties is basically product information, is price information, is some sort of content maybe.

Phillip: [00:05:59] Right.

Boris: [00:05:59] Which [00:06:00] sits in one of these systems. But unfortunately, since the world is not yet fully composable and there are still way too many companies on monolithic and legacy stacks with no proper API coverage, there is no notion of being headless. For them, it's very costly and very complicated [00:06:20] to do this because they have to set up dedicated teams. They have to replicate content and build all these integrations APIs. There is also no such thing as standardization in terms of ecosystem, right? I mean, nowadays you would most likely as a customer, you would expect that there is a native integration with at least the main [00:06:40] kind of Twitters and Facebook, and Instagram. If your vendor would tell you or DSI would tell you that it's 100 days or 200 days to build this integration, you would be surprised, most likely, right? Because you would expect that this is kind of a standard thing to integrate with one of the largest or two of the largest social networks in the world.

Phillip: [00:07:06] There [00:07:00] was an era that we lived in where eCommerce, especially marketplace-centered purchases like an Amazon, we called spear fishing. It was like you knew what you wanted. You went there to go [00:07:20] get it. And basket sizes very infrequently raised your average order value. Optimization was highly under leveraged. It's why Prime exists is because we spearfish, we spearfish, we're just getting the thing we want that we know we want. [00:07:36] Very little window shopping happens in [00:07:40] eCommerce context, even on marketplaces. One thing that you couldn't really well do is this impulse purchase. Driving the impulse to purchase something that you didn't know you even wanted, and making that so frictionless that it's akin to being at the grocery checkout. I'm going to grab something on the way [00:08:00] out. This is something that social commerce can provide to people. [00:08:04] But I have to wonder, does that create other opportunities for the business to experience challenges down the line? I have to believe that those types of purchases don't lead to long lasting [00:08:20] loyalty within the business. So now you have to optimize other kinds of behaviors so that you can have a durable business as opposed to just a transaction within a platform that you paid to market to a customer.

Boris: [00:08:35] Exactly. I think we saw it, for example, with the rise and also the fall of Wish as [00:08:40] a platform. I think it's a good analogy. Which was very good in advertising and selling you every, sorry, piece of shit that I don't know, like how much money I spent on like drones and like all these things that pop out "What? A drone is $4." Okay, so I get it. And all the gadgets, right? And then as you can see [00:09:00] now in the data they published.  Not sustainable. Conversion rates over time went down. Customer acquisition costs went up significantly. So they could not retain customers. They could not build up a loyal membership of customers over time. They were very good in this  [00:09:20]push sales. And, you know, they figured it out, but they were not good in making something sustainable out of it. But I will disclose something to you about this impulse shopping. It actually does not really work. [00:09:38] So tech [00:09:40] companies have become very good in creating the illusion that this is an impulse purchase. It actually is hyper-personalization and targeting. So it feels to you like, oh, that you just came up with this idea of demand that you want to book a trip or buy this. But what they are very good at is targeting [00:10:00] and personalization and figuring out your need before you know it very, very well  [00:10:07]by listening. I'll give you a funny example. I was yesterday at a show here in Las Vegas, and we were standing in line before the show. And we are discussing about the artists who would perform. [00:10:20] And then someone had a question about how old the artist is. And we're just, you know, discussing. So I took the name of this artist is not kind of super easy. So I took out my phone and I started typing the first two letters, not even three, which is C H. And the first recommended search result was [00:10:40] already the name of this artist. So don't tell me that Siri or whatever is not listening to me. And this happens so many times and, you know, being through listening in or through other intend data, I think, it feels very much like, "Hey, this is an impulse. I never thought about it." You never saw it. But the machine learning algorithm, they have [00:11:00] thought about it that you will think about these tickets along the way, about this ticket or about these shoes. And time has come for you to book your next trip or your next whatever, right?

Phillip: [00:11:08] Sure.

Boris: [00:11:08] So this is kind of... But yeah, the illusion is created, so it feels like, hey, it's an impulse.

Phillip: [00:11:12] It's a latent desire. It's something that you already had.

Boris: [00:11:16] Correct. Yeah.

Phillip: [00:11:17] They just happen to be at the right place at the right time.

Boris: [00:11:18] They had to be very good [00:11:20] at figuring out way before the action was created to type it in or to search for it or to buy the tickets.

Phillip: [00:11:27] So you had said something about time just a moment ago, and we've had conversations in the past where you have sort of a mantra at Spryker around [00:11:40] time being the most important KPI for the business. I'm sure that a lot of businesses are trying to capitalize on social commerce, but maybe they're taking a wait-and-see approach, social commerce notwithstanding. What is your perspective on whether you should wait [00:12:00] to see if something is viable before investing in it, or if you should wait around for a market to mature before having to build a solution?

Boris: [00:12:10] I'm not a big fan of waiting because technology evolves so fast and trends come up and pop up and go away. I think it was never [00:12:20] easier and cheaper to try things out nowadays. Again, APIs, centralization, ecosystems, composable, cloud, all these things led to more commoditization in a way of infrastructure which makes it easy and cheap. And there is no... The funny thing is, sometimes when  [00:12:40]I'm invited to customer meetings and customers go, "Okay, we need to hire," I don't know, "this large global consultancy." So they will create this report and say, "Okay, so who exactly was in this consultancy will create the report on Snapchat." So think about it [00:13:00] like just for a second. So who exactly will it be the same financial management consultants who are, you know, doing all the other work for you? Very likely they don't have these users. They don't have these cohorts. So there is no experience. Right? It's pretty much like when companies try to hire certain roles and they say, "I [00:13:20] want to hire a social marketing manager with ten years of experience, 15 years of service." Okay. So who is supposed this one to be, right? There is no such person. Or "I want to have a like someone with BI expertise with 15 years," or sometimes even like technology stacks are requested that do not exist for...  [00:13:40]

Phillip: [00:13:40] Five years of Metaverse experience.

Boris: [00:13:42] Exactly right. So I think there is a lot of upside to rather try it out both ways. So either you find the right spot in the right use case. I think this is the important piece. Think about the use case first and the context. So it's not maybe social again is a good [00:14:00] context for staying in touch with the users, communicating, talking to them, you know, informing them. Maybe it's not the right transactional touch case or the right support use case. So find what makes sense in what channel and then try it out. I mean, the costs are very, very... The worst thing that [00:14:20] can happen is you will know for sure that it doesn't work. The best thing is you will have some first-mover advantage. I remember when customer support when the companies started moving customer support into WhatsApp Channel etc. It felt very logical. Then we were like, "I [00:14:40] don't know about WhatsApp for customer support. This is more for private conversations with your kids and your parents and with your friends." Now it makes total sense, right? So someone, you know, tried it out, but the costs nowadays are very, very small.

Phillip: [00:14:58] Something that has been covered [00:15:00] in the series, again and again, is the notion that a purchase is a manifestation of a customer's intent. That intent or their desire for them to make a purchase is a directive, an order, if you will, that they give us as business operators in most cases, [00:15:20] that demand, that order was enabled by a piece of technology, and that technology is often implemented by a developer. The customer expects that that demand is fulfilled, but it's the marketer who created the demand in the first place by placing the right creative [00:15:40] at the right time in front of the customer. Right? Or perhaps the marketer just unlocked a latent desire in the customer that already existed. Rather than creating desire, maybe the marketer created the intent to fulfill that desire. And round and round we go wherever [00:16:00] the purchase happens, be it in TikTok or Instagram or WhatsApp or on your website, both the developer and the marketer are intrinsically linked in a dance. Something that I have written a number of pieces [00:16:20] about, which is exactly what you're talking about, something I call the generational commerce effect that happens in the way that you learn to transact based on the time that you grew up. We had an era [00:16:40] where millennials were called digital natives. We have an era now where Gen Z is called social natives. Are we creating a metaverse native generation? You know, our children, they are transacting every day and they're not buying real [00:17:00] goods, but they're transacting in Roblox. And I see the way that they engage in commerce. And it reminds me of my first commerce experiences, which happened in Diablo or Final Fantasy. You bought and sold goods and you did it to fulfill an objective. They're [00:17:20] learning that today. And the interfaces that they interact with today actually look a lot like the eCommerce experiences that we build all day, every day. We're training them to expect a type of a consumer purchase behavior outside of just the fulfillment of "I need a product."

Boris: [00:17:38] What I mean by context, is it's much more [00:17:40] integrated. That's why storytelling, all these things matter so much because, in the mail order world, there was a delay in the time lag and the separation between everything. You would order something, it would take like two weeks. So you would pre-order things in advance. You would a couple of weeks or months before the winter season come, you would already order your winter [00:18:00] dresses because you knew it will take time before it arrives. So it was a completely different type of thinking. Well, now you're doing it instantly. And by the way, not just for buying or shopping on Instagram or TikTok, this is giving rise to the food delivery, the instant food delivery category. So people don't want to go out like maybe [00:18:20] our parents did it and once per week at the grocery store and have these huge transactional costs by going driving out in your car, going to the store, putting all the goods into your basket, going with the basket to the cash register, putting them all out again, paying, putting it back in the second time, [00:18:40] then going to your car, unloading them. So the transactional costs of this transaction were so high that you wanted to limit it down to just one transaction per week. That's why you did it like every Saturday maybe, or Sunday, in bulk. You did it in advance or you pre-bought food. You pre-ordered fashion and now this is all gone, right? So nowadays you have instant delivery, everything. [00:19:00] Even fresh goods can be delivered within a couple of minutes to you. You don't plan in advance. You're just, "Hey, I'm up for bananas" or "I'm up for this. I'm up for that." "Hey, this is the right context for this fashion. I want to buy it." "Hey, I got a cool advertisement about a new series on Netflix, so, hey, why don't I watch it?" "Why don't I try out this app? My friends seem like playing [00:19:20] poker here." So it's much more instant, much integrated into their life. And it's not like this preplanning, pre-buying, pre-purchasing, pre-everything anymore, which I think...

Phillip: [00:19:33] Is more reactive.

Boris: [00:19:34] It's more reactive, yeah. And yeah. So this is what I call fluent. It's much [00:19:40] more part of... It's not I need to do the transaction which kind of breaks everything. I need to drive to the department store to supply myself. I need to go to a store to buy myself shoes, which again is not integrated into my day. Right, because my day is maybe working, spending time with family. And now I need to break it up to drive to the store to [00:20:00] spend 2 hours and buy myself shoes. Now, this shoe purchase is one click away.

Phillip: [00:20:05] Let's say they do want to take advantage of this and they want to transact on Tik Tok, for instance, or Instagram. Is the mindset really like "I can use the software I already have," or does the mindset have to shift to "I need [00:20:20] something that specifically allows me to unlock this channel?"

Boris: [00:20:23] Yeah, I think you need something that specific unlock helps to unlock the channel both from a business point of view. So first of all, you need to understand the context because the context is very different, as we just discussed. So context, timing, and the way how this content is presented on TikTok [00:20:40] might be absolutely different from how you put it in your print catalog, how you display it on a website and even the audience or the cohorts that you, the user cohorts, that you would entertain on one platform might be very different. And also the use case. You see these instant buying [00:21:00] and shopping behaviors on these social platforms where it's increasingly about buying within a context. And it was in a real context. Not an artificial one. I will explain what I mean by that. You know, essentially if you see a video on TikTok or Instagram with a buy button, [00:21:20] it's kind of it's the old shopping TV on steroids. The difference is that the shopping TVs that maybe like our moms or our grandmothers were watching the context was artificial.

Phillip: [00:21:33] Yes.

Boris: [00:21:34] Right? So this was an artificial context, where someone was using the product and an artificial way. T [00:21:40]here was nothing instant to it. Or the instant thing was maybe that they would pick up the phone. But it wasn't artificial context. Nowadays, if our kids watch something on Instagram or LinkedIn, it's a real video of someone really driving this bike or skating on the skateboards or throwing this ball. So it's not an artificial context. It's a real context. [00:22:00] And this is what gives this feeling of, "Hey, I want to do it as well because this is real. This guy is as old as I am." "She can do this trick on this skateboard. So I also need this skateboard." So it's not artificial. It's not designed for you. And I think this is the main thinking that businesses need to understand, which goes hand in hand with you need the people, [00:22:20] let's call them a native to this channel, and there's a big difference. I can tell from my personal experience again, you know, I'm 36 and there is a difference between do you get something from a logical point of view? So do you understand how or do you feel it? So I understand, [00:22:40] I think the same for you, right? We would understand and feel Twitter and understand and feel Facebook. I understand logically, from an intellectual point of view, I understand what is going on on TikTok, but I don't have this feeling anymore for this which would make it hard for me if I would be on the brand side and I would [00:23:00] have to entertain this channel and work with my development team on figuring out what's the best thing to do there, and I don't feel it. This is hard. So that's why you need to bring these people who understand context, and understand how it's going on. And then you can ask for technology and enable it.

Phillip: [00:23:24]  [00:23:24]If [00:23:20] more businesses had a culture of experimentation, I think fewer businesses would look identical to each other because not everything works for everybody. But the way that people tend to buy software today is based on what your closest [00:23:40] competitors are doing. [00:23:41]

Boris: [00:23:41] What I always say is like, Go MVP, not RFP.

Phillip: [00:23:44] {laughter} I love that.

Boris: [00:23:44] It's easy. It's very easy to accept because RFP is basically a way of buying software from the nineties. And if you're using a framework from the nineties to buy software and you will buy software from the nineties. [00:24:00] It is no way that you're using a methodology that was designed... It was not designed... It's like using prints to project management principles to run a hyper agile project. So it will not work. And RFP is essentially a methodology that is [00:24:20] good for buying standard software, but in a customer-centric world where technology changes so fast, customer expectations change so fast.

Phillip: [00:24:30] Right.

Boris: [00:24:30] There is no standardization. So, you use an RFP framework, you buy software which will score well in this framework, which will by definition [00:24:40] not be the future-oriented solution that you are seeking.

Phillip: [00:24:43] Right. Woo, I love that. Culture of experimentation, MVP over RFP. That is amazing. When you're thinking about the way that technology [00:25:00] continues to change and shift and channels continue to change and shift, is it possible... I don't want to say to have a defeatist attitude, but it feels like anything that you build today is not necessarily durable for the next couple of years.

Boris: [00:25:16] Correct.

Phillip: [00:25:16] What's the composable argument for being able to [00:25:20] stay current and evolve?

Boris: [00:25:21] Yeah, I think the argument is that you can exchange so that the... Let's use the physics analogy the half time, so to say of every piece is different. And the half time of your integration with social network might be super short because every [00:25:40] now and then something new would pop up, right? While maybe your PIM, right where your product data sets and the way how you manage and create new content and attributes is maybe much more durable and there is not much differentiation innovation for your business. For someone else, maybe it is, but for your business, you're just fine [00:26:00] with the way how content product data are managed and created. This is not where your differentiation is. It is maybe in the pricing or in the way how customers can pay or in the speed of your app or in whatever. So the halftime might be different and you can leverage this to your advantage.

Phillip: [00:26:19] Can you explain [00:26:20] halftime for me?

Boris: [00:26:20] In physics, if you have radioactive...

Phillip: [00:26:24] Oh. Half-life.

Boris: [00:26:25] Half-life. Yeah, yeah. Sorry.

Phillip: [00:26:26] Yeah. No, that's okay. Yeah. The rate of decay.

Boris: [00:26:29] Exactly. Right.

Phillip: [00:26:30] So things actually die at a predictable rate.

Boris: [00:26:35] Exactly.

Phillip: [00:26:36] So I understand. So this idea of halftime or  [00:26:40]half-life is everything has an expiration date. And the more pieces that you rely on for a singular point solution, the more risk that an organization faces because all of these [00:27:00] other parts that are somewhat durable, that don't change very often, are now at risk of the software having an expiration date.

Boris: [00:27:06] Correct.

Phillip: [00:27:07] Just because it's customer-facing.

Boris: [00:27:08] Yeah. And you should always remember that whatever is sophisticated in and of today will become commodity. This is why over time, if you also look at, for example, commerce platforms like all [00:27:20] of them started in B2C retail use cases. So over time, both the end customers and the vendors learned, and by the way, B2C retail online also started super sophisticated. Nobody was knowing how to do it. Now to serve a B2C retail use case, the vendors have figured out what functionality to provide. So, you know, functionality is commoditized [00:27:40] over time. The end users have learned what to expect from a fashion eCommerce B2C experience. Now we look into B2B or we look into marketplaces or we look into IoT commerce, super sophisticated, right? So the platforms have to figure out yet again, that there is no standard on how to do, you know, billions of dollars in a sophisticated B2B category, [00:28:00] which is not yet commoditized. So this is why half-life matters, right? So it is at some point it will be commoditized. And commoditized means it will not be differentiated anymore. It means that everyone will have payment methods. So you will not be the first one. Everyone will have a nice looking... So [00:28:20] you will have to come up with something new to differentiate yourself apart. And you will have to look into the technology as well.

Phillip: [00:28:33] Five or ten years ago, if you were doing a lot of business on eBay, Amazon, what have you [00:28:40], you probably had a platform that aggregated orders from all of those marketplaces into one place. Channel Advisor is a good example of a legacy software vendor in that ecosystem. That was decidedly not necessarily an eCommerce platform that had a UI that you transacted in. But we understood [00:29:00] that that was a fundamental portion to managing a plentitude of channels. Is it maybe that people are trying to use eCommerce platforms in ways that they weren't purpose built to be used because the way that they were built was to be a content management platform [00:29:20] that had a transaction layer.

Boris: [00:29:22] Yeah, they were built to own the entire experience from creating content, creating product information management, product data, or importing and enriching product data to the actual transaction. This is why these suites grew [00:29:40] so big. Why they had so much functionality so that, you know, companies would be locked in. And nowadays it's changing. Nowadays, you would naturally assume that not everything happens in this one place. [00:30:00] And maybe even more importantly, I think the risk is that these channels are also executing on their agenda. So what you need to watch out for as a business now is how you balance between obviously them also wanting to own your customer.

Phillip: [00:30:19] This is the most important point actually. [00:30:20]

Boris: [00:30:20] Or maybe be in between you and your customer. Because we just painted the ideal picture of you as a customer you would have a composable platform API, everything good. Right? And then you kind of own the product data, you also own the orders and you just push them out on Twitter [00:30:40] and the order comes back to you. So you still remain in charge and in control. But this is obviously not what they want. So they would want to, you know, the order is processed on their end and they would just pass you the relevant piece of information that you need.

Phillip: [00:30:57] There's a spreadsheet. {laughter}

Boris: [00:30:59] They want to downgrade [00:31:00] you to being a supplier, basically. So this is their interest.

Phillip: [00:31:04] That's an interesting take.

Boris: [00:31:06] Yeah. They want to downgrade you to be the supplier, to be the gatekeeper between you and the customer. Again, they can't do it right away. They can't do it that explicitly. But this is ultimately what a platform game is, right? Platform wars is exactly  [00:31:20]about that. So they want to... Amazon does it in the commerce category, others are doing it in other categories. So I think this is...

Phillip: [00:31:30] So that's interesting. That's a redefinition of platform wars that I hadn't heard before. And you consistently change the way I'm thinking about things in [00:31:40] this series. But platform wars is not a Shopify v something. It's not PHP versus Java versus Rails. Platform wars really in the modern context is the number of channels that you're [00:32:00] acquiring customers that are effectively someone else's customer that you have temporary access to and not necessarily your customer. Thanks so much for listening to Decoded. You can find more episodes of this podcast [00:32:20] and all Future Commerce podcast properties at FutureCommerce.fm. You can also subscribe to our newsletter, which comes out three times a week at FutureCommerce.fm/Subscribe. This special series of Future Commerce is brought to you by Spryker, [00:32:40] the Commerce Platform to futureproof your business. Hey, it's a challenge right now. In 2022, you have to be about more than just selling online. The market is shifting and new technologies are changing the game every day. And that's why innovation and agility should be at the top of your list to be able to [00:33:00] stay competitive. And that's why the Spryker Excite Conference is so exciting. At the Spryker Excite conference, you'll gain pioneering insight from industry leaders. You're going to learn about how to win new and future commerce projects, and you'll be inspired by the amazing speaker lineup and fellow attendees. If you want to learn [00:33:20] more and register for the event, go to Spryker.com/FutureCommerce to learn more and register. That's Spryker.com/FutureCommerce. And we'll see you in June in Nashville at Spryker Excite.

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