Guillaume: Hello everyone, Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature leaders in ecommerce and business. Today’s guest is Derric Haynie, CEO of Ecommerce Tech.io. What they do, is they help merchants to research, discover and buy the right tools to grow their ecommerce stores. And today we’re going to be talking about the future of ecommerce. It’s always a very challenging topic, to try to predict the future and we’re going to give it a shot today.
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All right Derric, welcome back for the second time, having you here as a guest. It was a blast first time, debating Shopify vs Magento. It was a very thorough coverage of the topic and I’m happy to welcome you again.
Derric: Yeah, I think we both won in that one.
Guillaume: Yeah, it’s totally possible, it’s a win-win scenario. Because the way we discussed it, you’re a Shopify expert, I’m a Magento expert. There’s always an objective truth to some degree, as to what are the strengths and weaknesses and what’s the right technology to use for each of those scenarios. So, as the guest, I’m going to give you the first shot of this. What’s your vision for future of ecommerce and talk about the timeline as well, because forecasting in two years, three years, it’s probably somewhat realistic you’ll have 80% of accuracy, not necessary 100%. But the further you go away, the five-year to ten-year period, then it starts to be pure science fiction and crystal ball forecasts. So, go at it.
Derric: It doesn’t have to be a crystal ball, so much as vaguer. The predictions have to be a lot vaguer in 5 to 10 years. But it’s becoming really fascinating what’s going on. I just looked at the news today and Push out, which has been a leading push marketing tool for the Shopify app ecosystem, just got acquired by Sendinblue, which is more of an omni channel marketing platform. The first prediction or trend that we can absolutely see, we saw Yachtco acquire SMS Bump, there’s a company called Assembly, which is kind of gobbling up a whole bunch of tools in this space to create another all in one platform, Klaviyo becoming a platform. All these tools are actually all in one so the kind of proliferation of the last 10 to 20 years in ecommerce technology is leading to strong roll up consolidation. And when I say strong, I mean, in the past, if you tried to do all in one, and some of the tools that launched in the past as all in one, they were kind of weak at everything. They couldn’t spin all the plates at the same time. But now through acquisition, you actually have a really strong tool, really strong tool, really strong tool, they come together under one platform, and you’ve got a set of really strong tools that are truly all in one, all the datas in a centralized location and can be viewed, you can modify campaigns and activities within that one centralized location. The are no longer like integrations between them, and that you might lose data on or create silos.
The first and perhaps most obvious prediction is that Push out was absolutely right to get acquired, because I believe in five years time, there won’t be a standalone push notification tool, there won’t be a standalone SMS marketing tool. The tools will have to have all of the things in one place.
Guillaume: Then that becomes a discussion of being a company versus being a feature like Steve Job was said to be frustrated by not acquiring Dropbox by Rick Barker, if I recall correctly, with his bid on it, but he said well, that’s not a company, that’s a feature. Of course, sometimes you can make a whole company out of a feature. That’s possible too, what you’re saying like in an SMS. You probably still have stuff [inaudible 04:32] very big SMS independent carriers like this if you want to build something custom, but that’s different. Most tools like Klaviyo doing this, adding SMS as their core offering so it will keep happening. It is a big debate, having one tool that does everything versus specialized tools. Especially if it was your startup, it is better to create a new company that would be specialized in one specific area and not necessarily go for the one tool that does it all. But of course, if you have millions and VC backing, you can acquire those.
But then there’s the question of how long will they be able to stay as the best tool, they will typically end up sort of sucking in one of those areas. If they tried to be the best at everything, it’s just not going to happen as a tool.
Derric: Are you talking about Adobe Creative Cloud? I got you.
Guillaume: One of those! Just kidding, we have to roll with the punches here. That’s not the only thing, any of them out there. Look at Zoho, you’re talking about integration of those software together. It’s not that integrated, some of the Zoho software, don’t speak to the other Zoho software, and they’re all made by the same company. And then if you look at Salesforce, they have a B2B platform because of the requisition and then you have a B2C platform and you need to have two e commerce stores. And that’s the number one way to…
Derric: They have a separate app marketplace, which is more plug n play and of course, those are integrations into the platform, as opposed to actually owned and operated by Salesforce.
Guillaume: Yeah, because Salesforce is becoming very aggressive in the market as an ecommerce platform. But because they grew by acquisition like this, and that you need to duplicate all your work into two platforms. As soon as you’re a merchant, who does both B2C and B2B, Salesforce just dies in the pitch and somebody else wins. It’s either Magento will win, Adobe Commerce or it will be Shopify Plus or Big Commerce, or some of the other interesting players as soon as you have a mix of B2B and B2C.
Derric: The second point on that is because of the all in one creation, there’s so many ways that that can go wrong through acquisition, through how the companies merge and integrate with each other. It will be interesting to keep an eye on how well they do and how well they stay on top of the all in one. Every company that gets larger and larger, has more convoluted processes, more red tape, more interdepartmental lack of connectivity. And you see this at Shopify, I think it happens at Adobe, it happens at Intuit, it happens at Salesforce. So that’ll be a challenge because the needs of us as merchants buying these tools are very strong, and we need them to be collaborative, and truly all in one. So, whoever pulls it off the best, there is market share to be gained there. And everybody else will just claim to have a good all in one solution but then when you use it, it’s like actually got five solutions, like duct taped together.
Guillaume: Yeah, pretty much and it doesn’t necessarily go well together. Anyway, that’s the challenge in reality that you see with those system integration, that what is sold by marketing and sales team, and what you get in reality, not as bad as your duct tape image but that is certainly a colorful image that conveys the point across really well. Same thing again, on Salesforce, they have that kind of sales pitch of unified cloud offering like this, but it’s also acquisition and doesn’t speak together that well, at this point, maybe it will one day, but that’s the risk when it’s acquisition. That’s one specific point. Also, we can clarify that for the future of ecommerce, it depends in which step that you are at in the pyramid of sophistication of ecommerce. In five years, some people will still not have their product description and product images straightened out. Then there are more advanced levels after that like, do you even apply what’s currently available, such as AB testing? 50% of Traffic for version A, 50% version B that run for a while and then maybe a month, depending on your traffic. And then you see either version A or version B is winning and you just keep the winning store and trash the losing store. For sure I can see in a very short time, that just people moving up the pyramid of already existing tech and to actually start applying those things. It’s surprising the number of merchants who do not even run AB testing.
Derric: Yeah, I’ll bring up a second concept of where everything is heading. And this is down the road, high in the sky, for sure. But we’re moving there faster than people think and it’s becoming a bigger opportunity every day. AI is going to decide to run the AB test, it’s going to create the alternative test, and it’s going to increase conversion rate all by itself and it’ll do this with AI copywriting tools. It’ll be able to test the copy of two, there’s AI testing for product imagery, to actually say, hey, which image should be the first image, how many images should we have? There’s also AB testing tools that are using AI for video, how to incorporate video on the landing page and so on. I believe that we’re moving towards a place where AI will run the split tests and increase conversion rate over time. And that also leads to personalization, because it’s not just about split testing over the masses, but also understanding how this user might want this page to be displayed based on their browsing behavior and purchase behavior and all that stuff.
Guillaume: Totally agreed with this, because there’s no way that human labor can keep up with automated AI based optimization like this. You have it, for example, on Magento in just one specific area, not for landing pages and layout, or copywriting. But you have it for product recommendation, for cross selling, and upselling. You have Adobe Sensei, the artificial intelligence platform of Adobe there that will do recommendations then it will self-correct if the recommendation is not good. Let’s say you have a huge catalog of products and merchants have 150,000 skews, which is huge to have a smaller one if it makes commercial sense. There’s no way you can upkeep all of this, but the AI can do it for you, just the software, it updates all the data everywhere. Automatic AI improvements of conversion rates, for sure is going to be more and more important. Right now, we’re at the stage where products recommendation get this and I agree that we’ll get eventually to a landing page design changes to increase conversion.
Derric: Yeah, and a completely personalized experience for every user every time they log in to every ecommerce store on the internet. Right now, it’s like Amazon maybe is the most personalized experience you could have. So that does lead us to maybe another takeaway point, which is; being logged in to your ecommerce store is going to become a little bit more important. Since we have cookie problems and tracking problems. And so having your users actually logged in as they browse your store can be a lot more beneficial to you than prior as you implement these AI and personalization tools.
Guillaume: I will play for sure a bigger and bigger role. In terms of copywriting, it still needs supervision for now but I believe it will get there that’s for sure.
Derric: AI could make recommendations of copy and then you can kind of approve or not approve. The interesting thing is that you could reject things because maybe it isn’t well written. But if you’re rejecting it because you don’t feel it’s good, the AI couldn’t say well test it and then it could actually prove you wrong, because most of the time we’re doing things off of what we think is right, but we haven’t tested it in market.
Guillaume: Which is the whole point of AB testing, to remove that rank pulling or that “my opinion, your opinion” and say let’s figure it out. Let’s run the test on it and see which of the two converts better. For sure, AI is a big topic. Another fun thing that will be released, it’s already in the present tense now, is the visually similar shopping. Let’s say you’re shopping for whatever it is, tile or carpet or something and then you will be shown a visually similar product, that’s true AI recognition of the images of the product in the catalog. So there’s zero manual work. The developer just sets an area to just visually similar products and the AI does everything for you. It’s probably going to keep increasing that aspect.
Derric: Merchandising is what you’re kind of talking about, in some ways. A lot of these personalization platforms are becoming what they call merchandising platforms, so they’re changing their name. Because you get to choose do I want to make more revenue? Do I want more customers? Do I want more profit, do I want to clear out old inventory? And you can teach the personalization engine to optimize for each of those things and then you become a merchandiser, controlling the AI just based on the goals of the business. And then the long term, I believe that’ll even extend into Supply Chain Management, the AI might suggest products to add to the site. If you give it full control, it could even buy a purchase order of 1000 of those products, put it on the site, it gets shipped to the warehouse, which is fully automated and sells the product.
If you think about it, AI could take over the marketer’s job on conversion rate optimization and media buying can also be done almost completely with AI. The merchandise in the operations department is now being done. The Product Information Management, the PIMs are going to come in, be optimized from AI and put onto the site that’s like what whose job is left? Who’s safe? Customer service is going to be AI.
Guillaume: More and more, it’s going to replace a lot, but it’s going to be great because it’s going to give us even more free time. There’s just so much work to do in a business. There’s a reason why you have stuff like executive packages that are not paid hourly, and then people are just expected to devote their life to that company. If you’re an entrepreneur, that’s probably what you’ve done to create a successful company. We need the extra help without having to work 80 hours a week to run those companies, so that help will be welcomed.
Derric: Absolutely, it’s another part of the larger conversation of changing workforce and what to do as jobs get displaced, and where people’s time go. But at the end of the day for consumers, it will be huge. And I think for merchants at the top; owners, technical facilitators, those controlling the AI, and managing those systems and processes and implementing them well, they will see insane amounts of growth and profit, because it’s more powerful than a team of five or 10 people doing manual product placement and manual optimizations of pages and all that stuff.
Guillaume: That’s for sure. And I don’t believe we have to be scared of that, like many people losing their jobs or whatever it’s just normal evolution, just like the car replaces the horse, don’t be don’t be afraid. Yes, the blacksmith run out of work, it’s evolution. I believe that’s just the way it is and then we’ll be able to move to higher levels, higher value activities, more thinking. If you go really deep down that path, there are various talks about universal income worldwide, once you’ll have a self-driving vehicle that are actually mainstream, because you have such a large percentage of the world’s population, they are some form of transport. But that’s a bit of a different discussion.
Derric: It’s kind of related because the future of ecommerce is the future of business and the future of life. Ecommerce is most of what we do; buy things, use them, eat them, buy more things, we’re all consumers at heart.
Guillaume: I can see the delivery section of things that Amazon is putting a huge pressure on everybody else to be more competitive on shipping. I can tell you a very unpleasant experience, I’m not going to say the name of the shipping carrier, but they just attempt to come once here to your office to deliver, then you have to go and pick it up at their delivery center and it’s 30 minutes away, and say “Hey, man, I paid for shipping, not for me to drive 30 minutes to go, 30 minutes to come back for an hour to pick up the damn thing, I would have just gone to the local store it would have been even closer, 10 minutes away”. So, there are experiences like this that you’ll need to think about, because Amazon is moving those large distribution centers into each of the major cities. And then eventually we’ll have more and more robot delivery, especially for the last mile of the delivery, which is the most expensive.
This will be progressive, depending on how fast the laws of each countries and states, provinces will adopt these things. You will probably have the rolling robot that will come and deliver something to your door. Drone delivery is not science fiction at all. It’s perfectly doable with today’s technology with air flight control and so on. It’s just a question of regulations and risk, you don’t want to have a drone falling on your head.
Derric: Creating delivery zones needs to be kind of common practice, especially for apartment buildings, then you’ll have the apartment drone that takes it down to the room, drops it off at the door.
Guillaume: Yeah, I do see that as becoming a reality. It’s not science fiction, it’s just a number of years away. It’s just so logical, you’ll have drone delivery.
Derric: Now, what I would argue here is that Amazon isn’t necessarily the one pushing this, Amazon’s just the largest player in the space. They have the most technological innovation. It’s the consumer that’s pushing this as we look to buy more and more products online. Many of these products are consumable, including grocery shopping, which many of us, including me, probably did, especially at the beginning of the pandemic. And we still do every once in a while, buy our groceries and have them delivered. We need these things done and we need them done fast and we need to know when they’re going to arrive, things are going to spoil if we don’t get them in the fridge.
And so, I think that the consumer largely dry drives the demand for quicker shipping, which actually brings up a counter point, maybe it’s the kind of problem of a barrier to entry. Which means you’re a small merchant, you can’t distribute your product across the nation or the globe and expect it to reach people’s homes in 24 or 48 hours. So, you’re going to have slower delivery windows, which means people are going to kind of not like you as much, which means you have to have a stronger brand connection and you have to reach points of scale faster, which means being small as a merchant could actually be a lot harder in the future. Now we have all sorts of lowering barriers of entry on the entrepreneurial side. But this is one that I see actually increasing the barrier to entry on the shipping and logistics side because it just helps to have 10,000 orders a month instead of 100.
Guillaume: Yeah, totally and that is true from my point of view, and there are ways to counter this though. And the way to counter this is to have more specialized expertise into what you’re selling, so that you have also that service and human guidance counselor type of service here, and not just a commodity or more specialized offerings instead of another me too product but for the me too product for sure it will be more challenging.
Derric: That’s another great prediction because we talked about the proliferation of ecommerce technology and consolidation there. The proliferation of ecommerce itself brought this whole wave of drop shipping from China, Alibaba, Oberlo and a lot of entrepreneurs entered the space on that premise of like selling a me too kind of product and just hoping to take market share, typically, with Facebook ads back before ad inventory had kind of run out, and prices started to increase. And so that was a big thing that people made hundreds of millions, if not billions of dollars off of, but each person may be made their 1 million each in sales or something like that. They might only even take home 100,000 at the end of the year, on top of those profits.
They’re companies, but they were built on kind of selling product instead of building brand relationship. And so, the prediction that I would make over the next 10 years, is that I call it the rise of the digitally native vertical brand, as you talked about the niches and is where the riches are, those kinds of drop shippers of the past with pass through business models are really going to struggle, because cost of acquisition is going up. So, the companies that are going to win are the ones that can retain customers and have higher lifetime value, and can invest in the future and the growth of that customer. Therefore, we’re going to see more direct to consumer digitally native vertical brands and all sorts of interesting niches. We’ve seen like hush blankets that sells a weighted blanket, which was a thing in the past but now it’s like, you get behind a movement when you buy this blanket. You get to think about I’ve got blend jet on my wall, the world’s first portable blender, there’s a whole movement of fitness behind it, I’ve got these shakes over there, organic drinks. So, you could buy a really nice health drink at a store or a fitness studio. But now you’re building a relationship with the brand by selling them direct to consumer. So yeah, that’s the next, perhaps prediction of the future.
Guillaume: Well, this is just going deeper into what’s already there because and owning the relationship with the customer is extremely valuable. It’s already in place and it’s already something you can do right now today. If you’re selling on Amazon, that is typically the problem that you have, you have no relationship with the customer, Amazon owns a customer. And that’s why some people try to diversify and open also a store after their success on Amazon, try to own some customer relationship and build their own lists, email lists, SMS lists, and so on. And then increasing the lifetime value of your customer, either increasing the average cart order, increasing the frequency of order, and just keeping them for the long run. For sure that this is already valid and I can see it becoming even more valid that, the table stakes are just raising all the time, basically.
Derric: Okay, that’s not much of a prediction, since it’s already happening, I guess.
Guillaume: It’s a prediction that the table stakes will rise and that it will become even more the case. You’re predicting an increase in something that’s there.
Derric: Yeah. Which could lead me to another massive prediction. So Amazon is kind of like that dropshipper model, if you think about it. They really grew on the backbone of a lot of people dropshipping from China and doing really good Amazon SEO for a lot of products that are kind of broad categories in generic and there’s not a lot of brand relationships. And of course, you have Samsung, and all these big companies selling on Amazon as a channel partner, but their catalog is massive and they sell this wide array of products. And also Amazon doesn’t let the seller really communicate much with the customer, so they keep that separated marketplace. That’s what makes Amazon kind of that evil conglomerate, they own the customer, but they make money off you and of course they’re making money.
So there’s a flip side to that, which of course would be Shopify is now perfectly positioned to open up basically an Amazon competitor. But if you look at the brands on Shopify, they’re all a lot of these digitally native vertical brands. So they are actually more in tune with customer relationships. And this could become a way to kind of bring a closer together marketplace for millions of people and have relationships with each of my individual brands, but all in one place. And so that’d be my big prediction, perhaps and I’ve said it publicly a few times. Shopify is going to open up, I don’t know if it’s shopcom or something like that. It’s going to be an Amazon competitor, they already have the fulfillment networks and they can onboard millions of brands in there and they will have a strong differentiation factor. They’re going to come at it from a different angle.
Guillaume: I had not thought of it but now that you say it, it’s obvious it will happen. Yeah, if they decided to go in that direction. They’re the best positioned company for this because they are the biggest SaaS Software as a Service, ecommerce platform out there. They’re way bigger than the big commerce and so on. The other one is the open source like Magento, and so on, all the stores are disconnected in different servers all across the world. So Shopify owns all the hosting and they have access to those thousands and thousands of brands, all already connected on their own infrastructure. Almost all of them use their own payment gateway, their own fulfillment system, and so on. So they’re already positioned to open the world’s biggest marketplace.
Derric: Yeah, it gave us a hint too in one of their last financial quarterly reports, instead of showing Shopify versus their competitors, Magento, Bigcommerce, WooCommerce and the leading e-commerce platforms, they actually showed Shopify against Amazon, Walmart, eBay, Etsy, and other seller platform. So I’m like, wait a second, they don’t compete against Amazon, they compete against Magento. Like, they think of themselves as an e-commerce player, not a platform.
Guillaume: I always thought that they were brilliant, the guys who started that are smart and their current market capitalization has a mean of $230 billion. They are the best positioned player by far to do this.
Derric: That’s a fun little prediction. And for merchants listening, if you’re on Shopify now, I think you’ll have the option to opt in on their platform or opt out, you’ll still have your direct access to consumer site, but there’ll be a channel partner of yours the same way that you used to have Amazon as a channel partner. By the way, another hint is that Shopify pulled out of their direct Amazon integration a few weeks ago. So they’re saying like, we’re not going to let you sell on Amazon anymore.
Guillaume: Wow! That’s a huge move. So they’re trying to disconnect Shopify from Amazon, that’s what you’re saying?
Derric: Yeah. So that they can be Amazon.
Guillaume: I think that’s a fairly not so subtle declaration of war.
Derric: Yeah. That’s the same with Shopify and MailChimp, they had a little bit of a war problem in the past and MailChimp ended up having to pull out of the Shopify app store. And so similarly, this is a big deal.
Guillaume: And it’s huge, because then it created other companies like Klaviyo, I mean, if you get MailChimp out of the way, it opens room for another to grab the powers like Klaviyo.
Derric: I’ve seen the users from MailChimp migrate into Klaviyo in flocks, thousands at a time, they raised $320 million and launched SMS in the last year or so. So that’s probably how they got that insane valuation.
Guillaume: Yeah, indeed. Those are really interesting predictions. And there are different points of views again, there is, ‘What’s new for a merchant or manufacturer, distributors retailer’, and there’s ‘What’s new for the consumer’. So the consumer, okays the delivery, that’s a robotized delivery, or maybe the opening of another marketplace, that is an alternative to Amazon that is interesting for merchants. Regardless of if you have a Shopify store or not, just to be able to connect to one more platform. They’ll probably start as a closed system and eventually open up. Well, who knows what they’ll do. But a lot of systems start like this, like the iPod started as something just music just for the Mac users. And then it opened up the world.
So it’s probably something like that approach and then maybe they’ll do a bit like everybody else like Walmart. In those other marketplaces, they are open to everybody doesn’t matter what you sell on it, especially if Shopify stops seeing itself as a competitor of say, Magento, Bigcommerce, and the other platforms, they might even welcome those other platforms to sell on the marketplace with an API connection. If their number one fight is against Amazon, they might take all their life against it, who knows?
Derric: Yeah, that’s interesting to think about. You mentioned the consumer side, we’ll be using more centralized platforms, and this has already happened with Shop Pay and a few others, but there will be less having to input your credit card and shipping information, which I absolutely hate by the way, you should know who I am. Even if it’s a new e-commerce site like my information stored in Samsung, can’t you just pre-populate on my phone or whatever it is, like pre-populate this information. I think having the checkout process shouldn’t be, what is your credit card? What is your address? It should be this is your credit card and address, right? You should know who I am a little bit more at checkout.
Guillaume: That’s true. For now, there are third party systems like Dashlane or LastPass. Dashlane is way better for team sharing and if it’s for personal use, they’re both really good. LastPass is great for personal use, but not so great for company use. That can change at the time of this recording, we switch from one to the other. But I agree with you, we always have to re-enter our information everywhere. Single Sign On is getting some headways here and there, but again, it seems sometimes unclear or obscure. A single sign on to what exactly, or just to one other website that does not save you much time? So it’s true that the digital rights management and access rights could be managed even better. But it’s fun that you have that now on your phone and you can unlock your phone just with your face like that. No more pins, no more passwords, just face recognition. That’s super convenient for you.
Derric: Yeah, unless I have a picture of you, but that’s okay.
Guillaume: Which doesn’t work, it doesn’t detect 3D.
Derric: Okay, I didn’t even know that. But I’m with you. I just think that the end level of this is that we never have to enter our credit card information. It’s almost like stored to our face or stored to our being, however you want to say it, and it just recognizes who we are, and the fraud can be protected a little bit better through this and the process becomes seamless. People are optimizing their checkout pages all the time trying to increase conversion rate, hopefully, it just kind of goes away is what I’m saying. There always will be a time where you need to update some information, you change address, you change credit cards, but it should be like just 95%, removed from the process.
Guillaume: I’m not too sure what else I’m not an expert in everything that is product sourcing, my expertise is more about building websites, making them perform, convert, and so on and technologies and integration. But I do hear a pain point from merchants about everything, let’s say, sending to China, the production and the payment terms for that and all the risk associated with this and the turnover time, from cash flow management and all that. So there could be perhaps some kind of improvement there, again, with some consultation, maybe some bigger players taking over that you can trust better, and that they will guarantee the quality of the work that is being shipped to you. Because if you have a $100,000 shipment, you want to be sure that it is the right product and the sample product they send you is something better than what they will send as a less quality product.
Derric: Sometimes always.
Guillaume: Sometimes always. So then you need to have a separate company directly already in China who will do the inspection for you. There are lots of complex steps that could be simplified by a player who understands customer service, and understands correctly the needs of the businesses here and how to simplify all this, instead of having almost every business pulling on their end to have the best cash flow that they can and always wanting to get paid as fast as possible and then pay the other as slow as possible.
This often means that the merchant here gives a 50% deposit as soon as he places the order in China and then as soon as the order is ready to be shipped from China he has to pay the other 50% of the whole order. That’s $100,000 and you still have not seen anything like containers from China at that point. Now it crosses the sea, comes over here, it goes through customs, it gets through repackaging and takes a while before it gets back in. So they’re optimizations and improvements that can be done in that pipeline, but I’m not sure exactly which shape or form it would take. But if somebody nails that right, it could be another massive company a bit like Alibaba to make that whole thing easy. You would want to buy from China, Alibaba style. There would be other ways to do this.
Derric: There’s something there if you think about manufacturing, it tends to be an economies of scale system. You need a large warehouse and a lot of expensive machinery to build a widget. And that’s why large warehouses in China with a large labor force behind them and typically lower cost of labor and regulation. That has been at the forefront of production. However, when we think about the future of e-commerce, we can think about localization of product development, you know, more warehouses in the United States or Mexico, or other places. We can also think about 3D printing and how that might impact the ability to lower the cost of the need for a large manufacturing plant, warehouse and people.
And so as those things come into play more and more, we could expect the democratization of our supply chain meaning there should be millions of local manufacturers that have very competitive pricing and are doing this in a neuro autonomous way. Again, the product will be 3D printed, the materials for 3D printing will be shipped in and automatically be plugged in from an AI truck with no driver, and it just offloads automatically into the system. The AI, like a robot, loads it into the system. It then loads this onto a conveyor belt, it goes into the box, the other robot drives it away in a truck, and it gets delivered to the house. So it’s a completely autonomous process.
Guillaume: What you’re talking about is one step before The Star Trek replicator.
Derric: Yeah, it’s a lot slower and not nearly as cool.
Guillaume: But it is logical because 3D printing is still kind of a hobbyist thing right now, or a highly specialized thing. They’re starting to print buildings and houses now. So there’ll be that huge concrete machine like a huge printer that just pours concrete. So instead of having those usual mold where you pour the concrete in, you’ll have a 3D printing of the whole house in concrete. Then you’ll just have to slap some nice finishing materials on it, or insulation, or whatever you need. And you can finish a house way cheaper and faster. The 3D printer will keep improving, I think it will print the whole house in like three days or something like that, then you just do the finishing. Which is insane when you think about it.
Derric: You can also 3D print burgers now, you can 3D print food, real food.
Guillaume: The bread?
Derric: Meat at least has been done, people say it tastes like a burger. I can’t wait to have my first and I think you can do no meat burgers and all that stuff. The food could even be 3D printed. But certainly, a lot of e-commerce can already be made in 3D printed or in a composite kind of way that doesn’t require too much human intervention. And you can think about how that massive autonomy annuity is going to only increase over time. So all these things converge to make a very interesting future.
Guillaume: Where you can 3D print the bread dough and then you just bake it. You just cook it. So we’ll get towards that. Now we’re starting to have real fun once you’ll have a robot doing the cooking in your kitchen and cleaning. More than just a little robot that runs around your house right now vacuum cleaning.
Derric: Under my counters and over my mirrors. Now the Roomba can now detect dog poop by the way. That’s an interesting innovation.
Guillaume:It doesn’t smear it all over the place?
Derric: Yeah. Which was the biggest complaint. I actually was a consultant for a competitor of Roomba. Right now that’s the number one complaint.
Guillaume: That’s interesting. You might not think about that in a business plan.So now we’re having fun.
Derric: What else here? Ecommerce is big.
Guillaume: Yeah, when you can 3D print in a more reliable way that it’s not a hobbyist thing, because 3D printers are at the stage that’s a bit like the early computers, it was more of a hobby and you would tinker around and create your own machine. And you know that that’s a kind of culture and that’s where 3D printing is right now. That you sort of 3D print the other part that you need to enhance your 3D printer, that’s where we’re at. So eventually, when it becomes more convenient, I can definitely see one day every house having a 3D printer, and you download printing specs and then you have materials to print that stuff.
Derric: To print it at your house you don’t even need shipping and logistics.
Guillaume: Exactly. For a lot of stuff then you’ll just ship whatever it is, the plastic, the metal, so that the printer can use it.
Derric: I still see it being localized first and then at home second. That is how I would imagine it simply because not everyone’s going to buy a 3D printer. It’s one of those technology adoption things, you know, some people still don’t use iPhones or are like I don’t even know how to send a text message. That’ll be you and me in 20 years. I don’t know how to 3D print just send me this stuff.
Guillaume: Just ship it to me. It takes time, you know, just like the Microsoft vision. You have one computer in every house, I don’t remember how many years exactly it took them for this to happen. But it could be fair enough to say it could happen with the 3D printer but that’s far away and it’s hard to estimate the time but that’s many years away. You need to first get out of that phase of just tinkering around with a product. Then localized products make sense. And of course, with COVID, everybody’s now more concerned about local production of goods and over reliance on supply chains that are far away. I do agree that there will be a movement for local production, it’s already there and various governments have already put it in place. Now how much of it will actually follow through? That’s the big question. Because you can still see almost every seller that the first thing they think about is that’s good, let’s get it produced cheap in China. So bring back the jobs here, as much as possible. Getting production here is absolutely incredible when you think about what Elon Musk is doing, creating jobs here for large manufacturing, is quite impressive. We’ll see how big of a movement that will be but the more the better.
Derric: I think diversification of the supply chain de-risks e-commerce business. And COVID just brought it to our attention that we were people who were highly, highly leveraged. And they didn’t really understand that they were leveraged because the supply chain just worked so consistently. And the same thing is true for diversification of channels. A lot of companies, we’ve talked about those dropshippers, in the past, they made millions off of running Facebook ads, and Facebook of course profited nicely off of that. But if you just run Facebook ads, when you go to sell your company, your valuation is always significantly lower. Whereas, if you have Facebook, Tick Tock, Snapchat, organic search, direct word of mouth, referral programs, loyalty programs, etc, you get a much higher valuation, because you’ve diversification of channels, and also they evaluate diversification of supply chain.
Guillaume: Well, I agree it’s not just about the valuation of the company, it is for your own risk management as well. We’ve seen it happen just too often with Google, especially with the natural search result in SEO, search engine optimization, that, when Google changes the algorithm you lose a lot of ranking. And we’ve heard some horror stories like of people staying stuck with inventory, that they were not able to sell anymore because they lost their organic ranking. So you just want to diversify the sources of traffic so that you can still sell that inventory even if it’s a bit slower, or one of those channels changes the rule, and ceases to be a good source of new customers.
Derric: And while we talked about the rise of the digitally native vertical brand, diversification of product is also very important. Early on in the pandemic, I met with a bikini company based out of Brazil, they had been doing really well selling to retail and selling bikinis. It turns out they’re in a pandemic. It doesn’t matter if it’s summer or not, nobody’s buying a bikini. So they lost a lot in sales and so they transitioned to selling masks based basically on the same material. They were very trendy masks and they ended up selling the bikinis with matching masks and they kind of brought back their business in that way. And so while that’s a COVID specific situation, market dynamics change all the time. Trending hair products, skincare, and all that stuff aren’t going to stay around forever and so we need different diversification of our product lines, in order to make sure that we’re still relevant in the next cycle or season.
Guillaume: Yeah, it has been pretty good coverage. We’ve covered lots of topics and improvements in shipping but there’s a little bit more there that needs to be covered as well. And I agree with your point that Amazon’s like the bad guy here in the sense of putting pressure on the smaller stores that are just raising the bar as to what people are expecting. They’re just trying themselves to be better all the time to deliver faster to everybody and that eventually ordering on Amazon for the core AI best seller product will be almost like ordering a pizza and two hours later you have it at home, you know, the slow pizza of two hours, not the 20 minute delivery. But still it ‘s where it’s going for the more popular excuse not for the whole inventory in a long time and the smaller merchants will need to to adapt with this. But if the drone industry gets in place enough information and all this, you could have competing systems that will allow the smaller players to be able to match the offering.
Guillaume: Okay, well, that was a fun discussion. It’s always fun to try to imagine the future. I’m sure there’s a lot that we’ve left out but that was a good discussion.
Derric: Yeah, it’s a good starting point for people to think about as they think about what they should be doing differently in their business and what they should be prepared for. A lot of people weren’t prepared for COVID changing their business. It’s better to have plans and be proactive than wait until you know things happen to you and then have to figure it out from there.
Guillaume: I fully agree. All right, Derric. Well, if people want to find you, where do they go?
Derric: You can go to EcommerceTech.io to browse our massive product catalog of over 130 hand reviewed products that I think I demoed all of them personally. Or you can email me, [email protected] I am always happy to chat.
Guillaume: All right. Thank you Derric.