Emerging Technology Trends To Watch As Brands Face Headwinds
I recently attended CommerceNext, an annual conference focused on digital and commerce enablement in the retail and eCommerce industry.
My key takeaway is we’ve lived through a “back to the future” moment; we’ve time traveled and digital commerce has matured.
As someone who has worked in the eCommerce industry for more than a decade as a DTC founder, B2B SaaS operator, and commerce enablement investor, I wish it wouldn’t have taken a global pandemic to get here, but the silver lining is how fantastic it is to see an industry truly progress to new levels of profitability and customer-centricity.
While 2020 and 2021 were breakout years for eCommerce, there are unfortunately new and dire headwinds challenging brands again, in addition to external factors like inflation, a looming recession and ongoing supply chain disruptions.
These negative headwinds impacting retailers, however, present massive opportunities for emerging technology companies to thrive. As an investor, here are some of the critical technology trends I’m exploring as the next-billion dollar opportunities in commerce enablement:
Tools to fight rising acquisition costs
In a benchmark survey by CommerceNext, 66% of digital-first retailers and 54% of incumbents listed rising acquisition costs as their greatest challenge. Digital-first retailers, especially, have historically relied on paid social and paid search for acquisition, and, 74% of respondents in the CommerceNext survey reported disappointment with their paid KPIs.
Brands have become too reliant on Meta and Google for new customer acquisitions. To solve this problem, I believe brands will diversify marketing tactics and channels to revitalize performance.
One way to fight rising costs is by making it easier for brands to create more-performant content. Copy.ai is an incredible tool that feels like magic. It uses GPT3 to help brands create ad copy variants, Google headlines, Facebook primary text, and more. I wrote the headline of this post with Copy.ai. Omneky, another company using GPT3, helps brands launch hundreds of thousands of data-driven ads, tailors each ad content to each platform and localizes content in multiple languages.
Another way to combat costs is utilizing creators. GRIN is an all-in-one creator management platform helping brands build more valuable brands through the power of creator partnerships. Brands can choose from over 32,000 creators, connect with them, get creator-generated content, provide affiliate codes, track sales and analyze individual-level metrics. Similarly, another creator marketplace platform I’m keeping my eye on is #paid.
Social commerce is another technology being used to fight costs. Social commerce thrives on platforms like TikTok, whose GM calls social commerce “word of mouth on steroids.” There are standalone social commerce platforms, like Pop Shop Live where creators and brands create their own pop-ups. Another social commerce platform is TalkshopLive, which brands like Walmart, can embed on their own sites.
With more people at home, direct mail is primed to experience its own renaissance. Lob.com is an automated direct mail platform that is scalable, personalized, and measurable.
Finally, brands will allocate attention and dollars to organic search. Retailers have constantly changing inventory and unique on-site elements like product reviews. A platform like Botify helps search engines focus on product pages, improve site speed, manage out-of-stock pages and more.
Tools to leverage first-party data to combat a privacy-focused climate
Since the iOS 14/15 privacy updates, retailers & DTCs have had to adopt new tools to collect first-party data and use it correctly.
There are many ways for brands to collect first-party data, like engaging with customers directly. SMS marketing platforms like Postscript (an Expanding Capital portfolio company) facilitate 1:1 conversations through SMS. Surveys and review tools are also a powerful way to get first-party data.
Once brands have first-party data, they can enhance it to unlock new insights. Platforms like Faraday.ai help with this by enriching first-party data with more profiles on all 300M us adults.
Finally, brands need a central place to centralize this data. Daasity enables brands to centralize, analyze, and push their data.
Tools to “reacquire” existing customers
While 2020 and 2021 brought in new customers, a challenge brands need to solve is retention. Acquiring a new customer has always been more expensive than retaining an existing one so I believe brands will lean into retention technologies. Most companies still don't know who their best customers are.
Smart segmentation helps scale new channels or re-engage lapsed customers. CDPs can relearn and track consumer needs, tastes, and behaviors. They can take first-party transaction & browsing data and then trigger the right message at the right time using predictive analysis. mParticle is a best-in-class CDP ( an Expanding Capital portfolio company).
CLV intelligence platforms help brands improve retention. Retina is an AI customer intelligence and insights platform that helps brands maximize customer-level profitability by forecasting metrics like expected churn date. They create a proprietary CLV score and churn prediction dates to retarget customers who have the most value and are the most at risk of churn. I asked the CEO of Retina why this is a billion dollar opportunity and he said, “Actionable customer intelligence platforms are the way of the future because it will bring down the cost of personalization while maximizing the value of personalization.”
Brands will also focus more on warranty, referral and VIP programs to drive loyalty. For example, Clyde is an ownership enrichment platform helps brands deepen customer relationships and drive customer lifetime value with extended warranties. Cultos is a new platform that enables any brand to bring their rewards, loyalty programs and influencer marketing to Web3. They’re helping brands launch a branded token to convert customers into loyal evangelists.
Tools to help brands measure what matters, accurately
Last touch ROAS (return on ad spend) has been an accepted KPI. However, because of a growing diversity of channels as mentioned above, brands will continue to learn into other metrics like CLV (for retention) and also media mix modeling (MMM) and incrementality measurement. That’s because measuring user events like new visits, and impressions, then correlating that with conversion is incredibly hard to do.
Companies like Measured to track attribution. Their tech delivers a cross-channel source of truth reporting, powered by expertly designed incrementality experiments for every marketing channel.
Adverity is an analytics platform intended to manage campaigns across all channels. The company transforms siloed data into actionable insights, reduces the complexity in demonstrating the return on investment of multichannel campaigns, and enables data-driven marketing teams to better decisions while improving performance and accuracy.