Henry Davis (Glossier) on How technology can create a new paradigm for brands | TNW Conference 2018

hello hi everybody I am obsessed with e-commerce and I am obsessed with customer experience and I'm here to tell you that ecommerce today is very boring it's very boring what is not boring is the environment that we're in today this music festival like set up so the fact that you're inside this dark room when the sun is shining it's warm and the beer is cold suggest to me that you're all so obsessed with e-commerce and customer experience and I'd love to talk through why I think it's so boring and the way I'm gonna do that is ask you to think who is gonna get home in this room who said there's about 400 people how many of you are going to get home tonight and find a brown box on your doorstep and if you do find a brown box in your doorstep are you gonna remember what's inside it because I'm pretty sure that I'm gonna get home tonight and find a brown box and have no idea what I bought because that's what e-commerce is today it's the same mundane brown box full of stuff you don't remember it's the same checkout experience the same boring UX and that sounds weird coming from me someone who is admittedly an e-commerce guy and currently making my living as one of the leaders of glossier which is is hoping to be one of the future companies to define e-commerce but I do think ecommerce today is dull as anything but I think the future is not dull the future is very exciting and that's what we're hopefully gonna leave you with the impression of when we finished today the future of e-commerce is very exciting but let's start with the past of e-commerce so the first ecommerce transaction happened in 1994 Amazon and eBay launched in 1995 which means Amazon eBay launched on devices that look like that many of you probably weren't even born when computers look like that and a lot of you might not remember using them and Windows 95 was probably the operating system if you don't watch the windows 95 launch party at least twice a year you missing out it is the most entertaining video if you take one thing away from the next web this year it's to go home and watch the windows 95 launch party and watch Paul Allen just do his thing it's incredible but this is what ecommerce was in 1995 it was it was really not that exciting you accident look great but but it was all about telling people they could have what they want delivered to them no more messing around like trying to find a parking space no more bad checkout line experience no more fighting with other people whatever you want it's online and you can have it delivered to your doorstep what a luxury that was and to be honest ecommerce today everything is pretty much still the same the screens a lot smaller and it fits in your pocket and you have these amazing you know sort of slightly better more colorful you X's but it's still the same thing ecommerce is still everything you want deliver to your doorstep kind of sold in the same way it hasn't evolved that much it has grown it's grown fairly considerably so this is one of those great charts you know with my VC hat on going from from the bottom left to the top right I think it's gonna do that for the rest of most of our careers ecommerce is is definitely going to continue to grow and continue to take share from non e-commerce sales so it is exciting and e-commerce has definitely captured share and one of the main reasons is that Amazon has driven that so this is in the US Amazon is 44% last year in 2017 Amazon was 44% of all the ecommerce transactions in 2017 that's true in most markets the Amazon plays so most of most of the Western world Amazon dominates e-commerce and what that means is that Amazon's paradigm for what a good e-commerce transaction is is the world's paradigm Amazon has defined what goodie Commerce's and they have defined it as fewer clicks fewer dollars and fewer delivery days fewer clicks fewer dollars and fewer delivery days and as a result of them defining what ecommerce should be they are the victors because they can set themselves up with an unassailable lead and so as so often happens in history the victors get to write the script and Amazon is writing the script they've defined it as fewer clicks fewer dollars and fewer delivery days and as a result they've built a total competitive advantage around that the infinite shelf you can buy anything on Amazon right now on your phone we could all buy 500 different things with one click because there's so many things they pioneered the algorithm recommendation which is actually pretty good technology and it works very well they realized that once you've found the thing they want to reduce the friction to you buying it so the one-click checkout also works really well and then underneath all of this they've built some of the most incredible logistics the world's ever seen perhaps since the Second World War frankly it's really incredible and they've done this in service of the fewer clips fewer dollars and fewer delivery days for everything that you buy and I mean everything because four of the top five retailers in the US are Amazon Macy's Walmart and Costco now I know you're not all American you might not know all these companies but basically they're all eeprom are Shay's Bay they sell everything and they continue to sell everything online as well as some of them offline and what they are doing is the same as Amazon offering you everything and trying to compete on that service promise to put it in context I was in Walmart which is the biggest sort of retailer other than Amazon in the world and I was in Walmart with a young colleague of mine and we walked around and we were trying to find something and it's huge like warehouse type shopping experience and she turns to me and she's like this is so funny it's like offline Amazon and she's right it is because offline is also doing the same thing if you look down the left hand side of this page you'll see a bunch of headlines that I'm sure you've seen in real life you don't have to open too many newspapers or magazines to understand that retail is really struggling at the moment retail is in a tough spot you don't need to walk too far outside of your house to see stores that look like the one on the right everything's on sale everything has got to go everything's on discount and what's happening is retail is having to compete on the same premise that Amazon setting online so it's competing on price and competing on convenience and what that means for brands who make the products is that these products are becoming the collateral in a battle royale for share of wallet and survival because convenience and price is being prioritized over experience and brand and so as a result shopping is boring everyone's selling the same thing everyone's trying to get it she really conveniently and really cheaply there's no more joy in shopping products are being commoditized into things we have more things today but we cover and we want them less this is what Commerce has become to us it's not something we look forward to it's something that we have to deal with when we get home it's that lonely brown box on your doorstep full of stuff that you don't remember buying and maybe don't even want anymore so where's the innovation in experience ecommerce innovation has been almost exclusively focused on speed and on convenience it's been focused on the fewer clicks the fewer dollars and the fewer delivery days it's been rushing you through a purchase transaction to get something to you but there are no experiences to be excited about if you think back to the early ish days of e-commerce the luxury brands they refuse to go online for the longest time some of the biggest luxury brands in the world would not sell on Commerce and they were called commonly old-fashioned out of touch all these things but actually were they prescient did they understand the future of e-commerce did they see that it was going to be about convenience and price and that the e-commerce experience would ultimately commoditize products because these are the people who see their product in such a beautiful and special light with a right that e-commerce would do that because that is exactly what's happening today to luxury products and every other product as well people who have seen this and tried to capitalize that on this are the direct consumer companies of which glossier is one we want to take advantage of the blandness in the retail landscape and we're trying to build differentiated relationships with customers online to give them a different kind of experience and we're doing this primarily in two ways number one we're trying to own the transaction so own the relationship with the customer at the point of transaction and number two by connecting with the customer on social media between those two things we've been able to offer customers something different to what's been out there in the landscape those four thus far and social media I don't want to underplay the importance of it in this business model what we've been able to do is direct consumers because social is all about connection and what's ecommerce innovation is essentially stagnated to optimization of funnel social media has exploded and and the investment in engaging people and entertaining people has been immense initially social was about connection connecting you with your friends finding long-lost connections that you had once in the past taking photographs of your food but it's actually all about building more and more and more connections and engagement and shared views and shared beliefs and that has been much more revolutionary than anything that you Commerce has done so brands realize this and they started inserting themselves into your social feeds first it was organic it was people sharing things that they liked or experiences that they'd had though excellent just talking about things but brands realize that that drove sales and they could sell their products directly through social because customers trust other customers that's really important to to remember customers trust other customers 84% of Millennials are likely to buy a product based off content put online by a stranger that they don't know but because the contents online and someone is talking about products in a way that customer understands they're more likely to buy stuff put it another way over half of all customers would rather pull out their phone and research a product online than talk to a paid salesperson so let's just think about that for a second you're in a store you're looking at a product that you quite like someone wanders over is like hi how can I help you and you're like no no no no I'd rather pull out my phone and find out what someone on YouTube is saying about this product then get your advice and that's because people have lost trust in brands and simultaneously social has put power into the hands of communities to give advice a glossier we're trying to capitalize on this and we're building direct connections with customers we're giving our customers tools to share their opinions about glossier because ultimately it doesn't matter what glossier says about glossier it matters what customers say about glossier because as I said there's no trust in commerce there's no trust for brands ecommerce has focused so much on speeding you through the funnel and making you buy things that you might not even want or remember but social media has focused on entertainment and connection and the education of discovery and so social has captured all that engagement and Trust and they felt really big businesses doing it and e-commerce has let them do that but the director consumer companies are the companies that are challenging this model they understand the value of the one-to-one interactions with our customers that's why we don't sell through third-party retailers we want to have that relationship directly with our customer but if we believe that about the point-of-sale and everything I just said about e-commerce focusing only on the point-of-sale and not on the engagement why shouldn't we as direct consumer brands want to own the entire conversation why are we okay wholesaling the conversation to social media platforms if the value is in the customer engagement shouldn't we own the most valuable part of the customer relationship which is that engagement glossary receives a DM on Instagram every 20 seconds in 2017 half a billion people saw last year related content on Instagram this year will be significantly more than that that's great but that's all on a platform that is not ours we don't own it we don't control it we are completely beholden to them social media platforms love this engagement because they make lots of money out of it they're all they're in in the business of keeping you engaged in keeping those conversations going because they need your time that's what they're selling but is their benefit from engagement around our products symbiotic to us social media has been the strategy of brands for so long but are we now to beholdin to them they control the terms of engagement with our own customers Facebook Instagram YouTube they tell us how we can engage with our own customers some of you might remember the great Facebook bait-and-switch of a few years ago where Facebook encouraged brands to build these huge followings on Facebook and you remember for a period of time you couldn't buy any product without it saying like come follow us on Facebook and there were these huge giveaways trying to encourage people to go on Facebook and follow brands and then all of a sudden Facebook changed its algorithm and said oh if you want to access your own customers you're gonna have to pay us because they're a business and their business needs may be in conflict with the Brad's on the platform so if they can do that with Facebook when's the great Instagram bait and switch going to happen because it will eventually and that means we as brands are in the same Faustian bargain that the brands have old used to make with the wholesale partners you're trading your end-to-end relationship with customer for reach provided by a platform you don't control and that as I said is a Faustian bargain there are significant downsides to that and is very hard to back out of that relationship you get addicted to it and someone else continues to own the relationship with your customer instead of you the brand and that is ultimately not good for the brand but especially not good for customer experience so what should brands do what can we do about this we're in this bind how do we make things better most brands are still focused on the transaction they're investing in helping conversion speeding people through the funnel again they're trying to get the purchased path of least resistance get the product in your hands as easily and quickly as possible but does this inspire does this build relationships does this bring joy to anyone no it's adequate that's it but why are we so focused on this transactional user journey why aren't we creating a whole new experience to engage customers long before the purchase decision happens why aren't brands using technology to engage customers in new and deeper ways why aren't they changing their business models to fostered much deeper connections than exists right now because customers deserve conversation they deserve emotional connection they deserve context and they deserve feelings and we can't do that as brands and that's we are directly involved in that shopping should be social and people should no longer be seen as customers they should be seen as stakeholders in the brands from which they buy and the brands which they then promote and to do this brands have to leverage technology to engage customers directly and understand what those customers want so they can give it to them customers should drive product development customers should drive brand strategy and ultimately customers should drive sales that's the future customers become stakeholders and cease to just be customers they are stakeholders of the brand we are just stewards of it and therefore Brad's have to take control of the entire customer relationship no more wholesaling the top of funnel no more wholesaling the relationship part and just owning the transaction part we cannot engage engagement in connection with sorry we cannot outsource engagement in connection to social media brands must enable relationships conversations emotions to happen directly with customers and build a truly vertically integrated customer experience I find it funny what direct-to-consumer brands are called vertically integrated brands but most of us actually aren't we don't have vertically integrated supply chains most of us we don't own our own factories but we must become vertically integrated when it comes to the customer relationship we must own all of the customer relationship and vertically integrate that so in the future the customers we have will come to glossier calm the stakeholders will come to glasier calm for two reasons one to buy products we're still in the business of making and selling great products and we want people to have them but two to meet someone interesting to engage to share content to share opinions to bond and whether that person buys or does not buy they should still have a great brand experience and from that glossier can learn glasha can use that engagement to learn and respond and give people what they want and in so doing we can stop helping customers make better decisions about what to buy and we can start speaking with customers and have them help us make better decisions about what to make we're not selling to them we're co-creating with them and then they are becoming stakeholders if they help create something they're going to want to talk about it and tell their friends and their relationship with those products and the brand itself will be so much better and deeper the brands of the future will not be delivered through fewer clicks fewer dollars and fewer delivery days they won't that's the last 23 years that's over brands are the future will use technology to be stakeholder brands for the co created by their customers this requires a significant technological investment from direct consumer brands it's going to require huge engineering teams glossies technology team is well over a third of our company we are a technology company we're a beauty business but a technology company and the brands of the future are going to have to be that they're gonna have to be technology companies because otherwise we're forever going to be beholden to those tech companies that are already sitting on top of the fortune 500 and will be for a long time to come unless we build the tools to displace them and earn our own customer relationships thank you [Applause] [Music] [Applause]

Channel: TNW

Views: 6,040

Keywords: tnw, tnw2018, the next web, thenextweb, tnw conference, tnw conference 2018, Henry Davis, Glossier, How technology can create a new paradigm for brands, technology, building brands, how to build brand identity, startups, startup amsterdam, amsterdam, startup, tech startups, tech conference, digital tech, valencia, TNW València, TNW talks, tech conference valencia, tech, startup company, future tech, TNW 2023, TNW CONFERENCE 2023, investors, worldwide tech event

Id: ZnARrozv-SY

Length: 20min 23sec (1223 seconds)

Published: Tue May 29 2018