MarTalks Episode 30- Generative AI with Nat Pavic and Liesel Walsh

Nat Pavic from Salesforce Commerce and Liesel Walsh who led marketing teams at  Boston, Proper, Party City, Petco and Restoration Hardware shared their extensive backgrounds in the industry and their evolving relationship with customer data as new technologies have come online to address and service their customers. The emergence of digital twin technology, which modernizes product management by providing dynamic data aggregation, thereby enhancing the understanding of product lifecycles and customer experiences was explored.

We discussed the role of generative AI in e-commerce and its ability to save labor and create new opportunities. Generative AI can generate product images and improve presentation based on a customer’s browsing behavior, while also crafting product descriptions that align with customer search terms making them both easier to publish and be located by shoppers. Gen Ai further aims to improve shopping experience by bridging the gap between brand language and customer understanding. 

We then turned to sustainability, and the practical impact of recommerce. luxury brands have been the first real beneficiaries of recommerce with popular sites The Real Real and Poshmark paving the way. Recommerce can also help brands increase profitability and inventory management, engage customers and enhance brand storytelling through those long tail relationships.

Challenges remain in authenticating low-value items, vs. luxury brands.  The potential for brands to utilize NFTs, to enhance customer engagement, upsell, service and repair are unprecedented and available today.  Gen AI will take those legacy brand recommerce customers engaged through the creation of ever more personalized customer experiences in a market with increasing product scarcity.

Our moonshot of the segment was the discussion of how retailers and brands could adopt a green score to inform consumers about product recyclability and carbon footprints. Consumers have shown that they willing to pay a premium for quality sustainable products, and that will help retailers maintain their margins with those offerings. 

Rosenstein Group: martech & ecommerce executive search

Rosenstein Group is the only martech-specialist exectutive search firm. For over 20 years, we've been matching leadership talent in sales, marketing and customer success to pioneering startups in ecommerce, supply chain and sales enablement, and for digital agencies.

Our experience with recruiting e-commerce technology leaders for companies like SAP Hybris and Demandware has established us as an authoritative and trusted liaison for startups seeking their first sales leader, and scale-ups on their way to IPO.

Visit RosensteinGroup.com to find out more.

Rosenstein Group: martech & ecommerce executive search

Rosenstein Group is the only martech-specialist exectutive search firm. For over 20 years, we've been matching leadership talent in sales, marketing and customer success to pioneering startups in ecommerce, supply chain and sales enablement, and for digital agencies.

Our experience with recruiting e-commerce technology leaders for companies like SAP Hybris and Demandware has established us as an authoritative and trusted liaison for startups seeking their first sales leader, and scale-ups on their way to IPO.

Visit RosensteinGroup.com to find out more.

Transcript

SPEAKER_00 0:00

Welcome to Mar Talks, the number one podcast for e-commerce and marketing applications. Mar Talks is devoted to covering the latest technology developments that drive the global commerce ecosystem from advertising to last mile. Enjoy all of our content at Rosenstein Group.com slash Mar Talks-Podcast.

SPEAKER_01 0:24

Welcome to Mar Talks. I'm your host, Daryl Rosenstein. Mar Talks is where we discuss contemporary issues in the internet commerce economy. And today we're going to be talking about generative AI and its utilization within e-commerce as well as sustainability. Two very topical topics. And joining me are Nat Pavick of Salesforce and Liesel Walsh. Good day. Welcome. Thank you so much for making time yet again to speak with me. You're very generous. If I can ask you to tell the audience a little bit about yourselves to begin things, it would be wonderful. Nat, why don't you lead off?

SPEAKER_05 1:07

Yeah, thank you. And um, I'm happy to have this conversation as many times as it takes. So thanks for having me back. So hi, I'm Natalia Pavich. You can call me Nat. I work for Salesforce. I'm a product marketing manager here.

SPEAKER_06 1:18

I'm also the host of the Salesforce Commerce Cloud Innovations podcast, where frankly, I steal ideas and I come on pods like this to tell you about what my guests said.

SPEAKER_05 1:27

So basically, I've done, you know, over 80 episodes. I've learned a ton.

SPEAKER_06 1:30

And just the people that come on my pod teach me all kinds of things about e-commerce. I've been in the business for you know over 17 years at Salesforce for almost nine. Um always work in tech in a variety of functions, but I've loved the e-commerce space. I think it's fascinating, it's dynamic, it's exciting, and I the future is within the e-commerce industry. So I'm really looking forward to this conversation.

SPEAKER_02 1:52

Liza, I'll pass it over to you. Thank you. Yeah, so I come to you from starting in catalog business and always on the business side, but always riding the edge of the ragged edge of technology, starting with mailing lists way back in the day. And I came into e-commerce, into the dot-com boom in San Francisco, starting at LeVice and then working at Gap Inc. Um, I built out the CRM and customer-focused platform and systems at Gap Inc. for all the brands and channels. And then I went on to apply e-commerce in startup environments at restoration hardware and um omnichannel environments, as we came up with every buzzword there was to integrate, you know, Party City, Petco, lots of customer-focused work using CRM and other systems to do personalization. And um, most recently, I've been supporting a company that's doing re-commerce through e-commerce. So yeah.

SPEAKER_01 2:53

I love a good term, omnichannel, multi-channel. That's my favorite. That's why I've been in e-commerce, is because of all the terminology. You know, you can sound smart and be me, which is great. But, you know, the reason that we're having this podcast today is because there has been a tremendous amount of interest, as noted by an article actually in the New York Times this weekend, in the resale of goods. And all of the technology that underpins that is also nascent and on the upswing. And Matt and I actually had a bit of a chat about that, which fascinated me, which is created the the idea to have you guys here talk about this from both the uh the evil vendor and the noble retailer side. And uh, I put myself in the evil vendor category, Dad. So don't feel bad at all. You know, we're we're actually heroic.

SPEAKER_07 3:52

My opinions are my own. This is where I say this. Yeah.

SPEAKER_01 3:58

Yeah. There we go. All right. I'm not wearing a hat. I should probably be wearing a black hat, but that's okay. So now let's start off with you. You brought up the subject of digital twins, the concept of digital twins. Can you please explain how digital twin technology works and how it can transform e-commerce, particularly in terms of data management and customer experience?

SPEAKER_06 4:23

Yeah, absolutely. So, by the way, there was an episode on my podcast with Hunter Smith, who is my guest, who hails from Unity, uh VP of product there, and he explained it perfectly to me. I actually didn't really think about it before that conversation. But digital twin is something that every company that manufactures a product should probably have, but they most likely don't. And it's this concept that like today, the way that we manage product and information related to the product is very much like here's product information and we publish it to multiple mediums. A digital twin is a living, breathing object that aggregates everything about the product, including any interaction with it, any information about it. And so we flip this idea of product management from like here it is, and we publish it, to basically all of these different channels are windows into looking at the product, looking at the digital twin, you know, copy of the actual real life product. And it just has so many benefits, you know, especially when you're dealing with like a complicated type of product that may have a design, may go through various stages of testing, may have some sort of ROI information that could be imprinted on the original idea. And then you can use all that information to iterate and improve and understand the life cycle of your product. And it just has so many benefits from manufacturing. You know, I think last time we talked about a pair of jeans or a pair of unique sort of one-off items that have one exact, you know, like a VIN or like a skew that isn't repeated. And that's where that information would just alleviate so many parts of the product lifecycle process.

SPEAKER_01 5:52

Really cool. So this is a little bit different than my icon that I'm playing Call of Duty with, where I'm equipping it.

SPEAKER_05 5:59

It's funny, that's actually considered your avatar.

SPEAKER_06 6:01

So that this is uh there's this whole concept now of like being immersive, being in the metaverse, um, and then this like representation of you within the metaverse and what that is and what that means for our identity. It's just like a whole, I think, other topic of conversation for a different podcast.

SPEAKER_01 6:18

Very cool. Well, I'm I'm glad that my avatar isn't wearing my latest or using my latest purchases, they'd kind of be useless in most of the maps. But anyway, so in terms of generative AI, you both have implemented your fair share of ceremony. I I know Lisa, you mentioned Epiphany. I know that you've also touched ATG and Salesforce Commerce and Shopify and Martech systems. And how do you see generative AI shaping the future of e-commerce site architecture? And are there any specific use cases like predictive analytics or personalized content generation that get you charged up?

SPEAKER_02 7:00

Yeah, I mean, I I guess I see it first as an opportunity to be labor-saving and opportunity gaining, right? There are all these places in the process and e-commerce, especially for me, around the examples that come to mind quickly are the ones around product, where there's never time to make to put all the facts in about the product. There's never time enough to get enough images or money enough to get enough images. And then once you, even if you have all the images, your ability to sort of serve up the images in the way that the customer is most likely to be inspired by them, I would say, is really limited. So as much as we want to talk about personalized experiences on site, things like that, you're manipulating a lot of if you have the data. So first you could use the generative AI to generate additional views of things, right? So if I have photographs of things or video of things, I can pull out different angles and freeze them and understand, oh, this is the top of the chair versus the leg of the chair. And when I start to see customers browsing and looking the way they're going, I understand that, oh, if I can use predictive and process all that data, that more customers are influenced by the top of the chair than the bottom of the chair. So maybe that's the first thing I want to put in the image lineup. And that's also important to think about in terms of publishing out to other places, right? So we, for instance, we publish e-commerce, we have our product record, like Nat was talking about, that gets published out to other places. It goes published out to Meta. Meta then takes it and does in shops and does a whole lot of different things with it. I would love to be able to give Meta more information and even some knowledge of a better way to see that product.

SPEAKER_01 8:59

Heavens no, more information.

SPEAKER_02 9:01

I know, right? Because they're gonna do it anyway. So why not give them more? Let's just give it up. Just give it up to get the customer what they want. Invite them right in. So one of the examples I used was that in generative is that describing the picture, using generative to describe the picture into the words is a huge opportunity because the copy structure is such that the brand is driving it. They have words that they use that are brand oriented that may not be the way that the customer sees it. And things like color names is my favorite example. Somebody calls a color Apple, and that's open to interpretation for the customer. It's certainly open to interpretation for Google, who doesn't really know what Apple is. It could be green, it could be red, it could be pink, it could be a navy sweater with apples on it, right? And so using generative to describe the thing, to say this is a navy blue sweater with a red stripe and pink apples that has checkers on it, la la la la la. So if somebody's looking for an apple, they're gonna have a better chance of actually getting the described item. The copy team will never want to write, this is a navy blue sweater with the because they're like, well, the customer can see it. Sure, but Google can see it, right? And you're gonna get with generative a better pass at using words that the customer might be using to look for, but aren't necessarily your brand terms to get you to Apple covered sweater, right?

SPEAKER_01 10:38

Well, I've got to say I love the idea of generative serving up the images in uh the way that's going to be most interesting to the viewer. I mean, when it comes to chairs, I have always been a leg man. I mean, I I don't know if you guys are more of a you know a chair top people, but you know, I've always been a leg man. So I like the product video to start off panning up the leg and then slowly revealing the seat and then the arms. But anyway, so back to re-commerce and growth strategy. Lisa, you you've driven a lot of growth through new channel expansions. I know, particularly at Gap and at Restoration Hardware, just where there was a just an explosion in terms of visitors online through that new channel and then customer loyalty programs to augment that and drive growth in it further. How do you see re-commerce fitting into a company's broader growth strategy? And you know, what role does sustainability play in that?

SPEAKER_02 11:47

Yeah. So I think it's really interesting where you see re-commerce emerging most profitably at this point is in the luxury space because you have the opportunity to make more margin dollars on the touch of the product, right? So the opportunity is there, it's still not that profitable. Getting inventory is super hard. And so I think that both generative and the idea of digital twin and the idea of like NFTs or NFCs, right? Where the product information is held with the product, provide the opportunity for more people to gain more fairly in the re-commerce and resale of product. So an example would be, you know, you have the real real investure and some of these other folks doing resale now, mostly of luxury product. Chanel is not getting any of that money back from a resold purchase, right? And they're not, I don't believe, selling, reselling their own. So they're not controlling the resale of that product. It's being handed over to the marketplace. Their incentive to make a better product up front, a more sustainable product, long-lasting product, is limited to the margin of the first sale, because they're not getting the second sale or the third sale or the fourth sale. And so their ability, and then if you if you take it out of luxury for a minute and you say, wait a minute, what about HM, right? Their incentive to make a better product that's going to last longer and potentially charge more for it. But if they had the second sale or the third sale on it, it would give them more incentive to put more money up front, better materials, fairer labor, et cetera. So you're looking at like the principles that kind of work in the luxury space. Can you get the cost per touch down low enough in the mass space to make that work for companies and customers? And for the brands to be able to control the resale of the product, it's a great story. Right. This product is so good that it's been worn and loved and pre-loved, as we would say, and now resold and to be reused because it will stand the test of time and it's worth a higher initial investment. You also get a customer who may not be willing or interested in paying the first price, but wants engagement with the brand and is happy to pay the second price, the used price. Right. Maybe as a trial, maybe as an ongoing thing. But you've opened up another, I mean, at many moons, we were selling product at an opening price point of 50% off of full retail. That's a very different customer if you start at 50% of the price. Right. Used. So, and it tells the brand story. If the brand does a good job telling the story, the brand wants into the story, it tells does a great job of extolling the virtue of the product.

unknown 14:42

J.

SPEAKER_02 14:43

Crew's done a really interesting thing where they're doing peer-to-peer resale. So they're facilitating that for their customers to sell to each other. And then they're also caught a vintage section, which is brilliant, which they control, right? Which goes back to, you know, the origin, you know, the 1980s Nantucket roll neck sweater, right? And they've gone and found them and they're selling them back at a premium. So it's a very interesting strategy to say there's different kinds of re-commerce, but we're opening it up to very different kinds of customers, the collector customer, the resale price-sensitive customer, the trial customer, all these different things, but they're getting a piece of all those interactions.

SPEAKER_06 15:29

I just wanted to point out, uh, you know, as Lizel talks about these like applications, I just want to go back a little bit to her comment about generative. And I think it's interesting what keeps you up at night, Liesel, is like now I have more things to give me anxiety. Like, I don't even know what the color Apple is, so now I'm freaking out. I'll Google that later. But it's interesting how generative has the potential to help us both connect contextually and help merchants be more productive. And so this is just coming off of like the Dreamforce announcements is sort of what we're doing with Asian Force. I just wanted to kind of comment on like how vendors are meeting that need. And we're, from a Salesforce perspective, what we have done so far is like packaging, is putting down on the concept of this, what we're calling an agent. And the market may know of the concept of personal system, which is slightly different from the concept of agent. So personal assistant is like a Siri or a Google, and like they're, I think, on the cusp of being able to do a lot more for us in terms of like reaching into external systems and actually adding in a calendar date, et cetera, purchasing something for us, all of those use cases are great. But when you're bringing it into like a corporate setting, you need to be able to create a personal assistant type that is specifically functioning to your needs, specifically doing what you need it to do, that has trust, that has security. Because generative has this, all these functional issues, like if you train it on previous generative data, here it takes like three cycles before the data it's doing is nonsense. So you need to constantly feed it good data. You need to prevent it from hallucinating by adding in citations and quotations. So these are all things and features that can should come with a sort of enterprise scale ready-made agent. And I think merchant productivity is bang on one of the biggest use cases that we're trying to meet. And then the other flip side of that is the shopper interaction. So the shopper having questions, needing product recommendations, dealing with complexity. You may have and try to have perfect data and information in your about page, on your PDP, on your category pages. At the end of the day, if a customer has questions because they're not looking in the right place, meeting them, you know, where they are is very powerful. I think a lot of people are using Chat GPT now to do product research. And what's happening is that they're opening themselves up to competitive recommendations because you might go in and you know, ask about your favorite espresso brand, and all of a sudden it's like, actually, the Miele is similar to the Barilla and DeLonghi. And here's some other options. This is like my life, but whatever. But if you had GPT-esque functionality in your site, and then people could, you know, lead with that positive brand relationship that they already have with you, go on your site and be able to answer all their questions that they had about your product to begin with, then you're shoring yourself up against that future, you know, Daryl mentioned channels. And we're seeing definitely this concept of omni-channels gonna melt away into it being the de facto standard that we expect commerce to be anywhere and commerce to be almost like channel-led as opposed to one massive digital store from your app and all these like five, you know, different areas that you're like trying to optimize right now to like, I want to be able to shop right now, I want to be able to do it, I want to ask my personal assistant, I want to talk to Chat GPT. These are all different avenues and ways that people are gonna be discovering your products. So product data now becomes more important than ever. So that's like one thing I just wanted to like for tour to Liesel's generative comments. But then also, you know, now that she's going into like sustainability, we're talking about the luxury market, and this is where like all these different technologies like digital twin come into play, uh cleaning up your data, adding generative. We have things like vector search. So we have partners like a prefix box uh that do things like distill your search terms into like a metric or what we will call like a vector in computer science terms. And then they're able to look at correlations between that term and another term. You know, right now, the way that it works is people have these point solutions that do AI on their batch of systems. But if you can start thinking about building a system, a tech stack that works for you and starting from the digital twin, so that your vector analysis doesn't have to redo the analysis, but it has that information that can pull and print on the digital twin object. So it comes with maybe its own vector and it already has a vector that it can plug in. You know, the other sort of level of personalization is something called affinity search, which our partner, like a constructor, do, which is where it's cool, you're looking for an Apple shirt, great. Based on your previous preferences, I know that what you actually mean is apples drawn on your t-shirt because you've bought funky, fruity stuff before. So now instead of it just being like trying to guess what you're trying to communicate to it, it's taking into account your entire profile and saying, well, you've shopped for this in the past, and this is the fit that was the best in you. So I'm gonna recommend similar fit, right? So now we can start to use personalization beyond just the product information, that narrow way in which searchers experience things to like holistically your customer profile. This is where like data becomes even more important and having that data lake and having your customer information all in one place, you know. And obviously I'm biased. I think Salesforce is the best system for that, but you know, there are many different ways that you could go about that. Wrong ways for sure. Uh, we'll mention those here, but in terms of sustainability, then that factors in to the digital twin discussion is enabling that with something like the Web3, being able to track where the product is, how many times it's being resold, and being able to imprint that back on the product information and being able to maintain a certain payout for the original manufacturer so they can encourage re-commerce. And of course, marketplaces, we've got wonderful partners like Miracle and Marketplace where they'll do this today, allowing you to do even like a peer-to-peer scenario where you have the merchant onboarding, merchant tools so that you don't have to be the pass-through, you can just boom, send in an order. So these are all really, really exciting technologies that are gonna start to enable all of these, you know, meeting the pains and the needs of retailers, such as what Liesel's already described.

SPEAKER_04 21:28

So sorry, I I talked a lot, but I had like a backup of things. I was like making notes. So thank you for coming to my TED Talk.

SPEAKER_01 21:35

Well, yeah, absolutely. You know, and uh I appreciate you having us. So thanks, Nat. I appreciate you. You're welcome. You know, you mentioned a few things there in terms of being able to further the relationship with an individual brand using the Chat GPT technologies. It'll be interesting as the chat community and the open AI community and the AI community actually develop. Personal search agents that know things like your size. So they will look across the digital landscape to find brands and fits that are going to be appropriate for you, but they're also going to find alternatives in the resale market. And that's exciting. You brought up NFTs as being a very interesting way for brands to essentially track goods in perpetuity in the digital uh universe.

SPEAKER_06 22:32

Yeah, absolutely. There's like so many use cases. Content is one, verity, the truthfulness of content, verification, tons of use cases for NFCs. I think I learned last time. I actually still didn't Google what that is, but I'll figure it out later again.

SPEAKER_03 22:46

Near field communication. Oh, wow. Well, that's not at all what I thought it was going to be. Thank you for that. I know. I had to Google it too.

SPEAKER_06 22:55

Yeah, yeah. So content is one, verification is another. Also, like I think this concept of like loyalty, loyalty was something that I feel like it kind of rose in prominence before, kind of fell, and now it's rising in prominence again. And I think the concept of loyalty is changing from like, hey, we need a loyalty solution, loyalty point solution to like what is our loyalty strategy? And how can it be more holistic? And so NFCs could enable something like a portable loyalty card so that you as a consumer could actually keep and maintain your personal information. And you could also maintain a privacy policy on your personal NFC for what a brand can see about you and what they can see. So it could give you control. And then you could decide what you want to share with different brands. And so you could potentially have a portable customer profile that doesn't live in a data lake, but is like an aggregate data lake that multiple brands can connect to when they need to. And then that could include things like cross promotion. So if we know, I don't know, if you are like a bulk barn, sorry, bulk barn is a Canadian reference, bulk barn customer, and you know, that might mean you are more likely to shop a Patagonia, right? So it's like a granola to like vest kind of a life cycle, but whatever. And that could be useful for those two brands to learn that you're shopping at a brand and to understand that affinity and have a better idea of like, hey, this person, you know, drives a Nissan and likes Starbucks lattes, and that you can be making certain connections that we haven't been making before. It could be identifying new customer segments, creating new promotions with different brands, collaborations that could be immensely valuable. That's a really exciting area that, like, I don't think we've seen yet. I know I think Lisa, you were mentioning Starbucks was doing something with NFCs. Or was it Starbucks?

SPEAKER_02 24:34

I don't know if Starbucks, but this is company Eon, that's a European company. The EU has a law on the books or a bill, something to have all products have a digital passport so that they can understand. And this is one of the one of the big issues with sustainability, back to that, is to recycle or to compost a product, you have to understand its components and be able to separate it out today. There are people working on solutions that don't require the separation. But if you have a blended product, cotton and poly, for instance, it's very difficult to compost it or recycle it because the poly doesn't break down. It needs a different process. So the idea of an NFC for product has a couple of opportunities. One is, you know, it's kind of the loyalty thing that we talked about. A lot of manufacturers' brands don't just sell in their own channels. So to track where the item is being sold and to whom in retail is often a missed opportunity for them. And to know for resale purposes, like where that's been, what's been done to it, has it been repaired? And then for end of life, what it needs to happen for its disposal and restore, right? So can it be recycled? Is it organic? Can it go to a farm? Does it have to be something else? It has to go into this other kind of chemical process. Those are the things that they use looking to NFCs to start to be able to allow them to manage without having to invest so much labor in every single touch of these things. I mean, the other opportunity, as you talked about, was the content, right? It's a very big cost on a peer-to-peer or B2C to have to take a picture of the item, describe it, vet it, authenticate it, right? So if you can eliminate a lot of that through having something that rides with the product that says, here's my images of what I looked like when I was new. Here's what's happened to me since. Here's my condition. Here are all the hands that have touched me. Then you have a way to make that process much cleaner and easier and less costly. And that's where, you know, again, Chanel can afford to, Real Real can afford to validate a Birken bag because it's a $10,000 bag, right? They have a lot of margin there. HM cannot be authenticating a $12 t-shirt. You know, it's not worth their time. And it's probably not worth their time to put a picture of the $12 t-shirt up to resell it. Right. But if the picture exists, is it worth it at $2 or $3 to keep it in play for another time, another touch? Probably, right? Depending on the condition, and or to get it to composter recycling if it's 100% cotton or if it can be recycled. Those are all things that, you know, using that technology gives you a much more labor savings for this kind of work, which has historically really been an obstacle to keeping things in the market. It's cheaper to throw them away. It's cheaper to send them to, you know, that giant landfill in Bolivia.

SPEAKER_06 27:49

But by the way, like having it say, like, hey, here's what I used to look like, here are the things that have happened to me. I feel like it's useful for people too.

SPEAKER_07 27:57

Although I don't think I don't think I want to see the end product of like, I've been through two pandemics and like I'm here's my gray hair.

SPEAKER_03 28:05

Here's my baggage. Here's my baggage.

SPEAKER_01 28:09

Somebody wore, I mean, I was never coordinated. I was never coordinated. I was always the hideous portion of the outfit. It was always remarked upon when I left. I was just man.

SPEAKER_07 28:23

He goes all the way.

SPEAKER_01 28:24

Never. Yeah. Yeah. I think that there's such an opportunity. I mean, EdFT Technology for every individual product, it exists today. Merchants can use it, brands can use it. I mean, I am a phenomenal consumer in the post-purchase market of tools. And tools are durable goods. And you have an opportunity if a brand had an NFT for every one of those products to upsell me not only on additional parts, but hey, I'm the best possible consumer for additional tools that have perhaps the battery that is on my used tool that I bought fits the tools that you're offering now. If you knew that I had that used tool, you could send me some sort of incentive to re-engage with the brand. Likewise, if you're a manufacturer of a $10,000 bag, no doubt there are merchants out there, there are leather craftsmen out there that would repair that bag if they knew they could get the thread from you, if they knew they could get the paint, or you could operate your own repair shop or refurbished shop. And once again, your best future customer is a current customer of your brand. So let's talk about customer engagement here. Lisa, you you know, you've obviously worked with a lot of the CRMs that are out there. What strategies would you recommend for improving the actual customer engagement and loyalty in the context of re-commerce? And how could companies use that customer data to better serve the recommerce market?

SPEAKER_02 30:02

I mean, I think you know, what's interesting, Nat was saying about, you know, holding your size information, holding your desired information as if goods become more scarce, right? Which that is sustainability, make less stuff, right? Use it more, make less, right? So now goods are more scarce. Birkin's a great example. There's a waiting list for Birkins of multiple years. And so if I'm a customer, I might want to say, like, I'm looking for this, right? How do I put that out into the universe in a really broad way to say I am interested in this? And maybe it's in relationship with the brand that I like, right? I'm crazy about that Nantucket sweater from J. Crew. I always wanted one when I was 12 and I couldn't afford it. Now I really want one and I'm looking for it, and I'm looking for it in a specific color and a specific size.

unknown 30:55

J.

SPEAKER_02 30:55

Crew knows who bought those sweaters, right? Can they make a patch for me to reach out to customers who have them and say, if you're ever interested in selling this sweater, I got a buyer for you. Right. Now I'm I'm putting those things together. I'm also, as J. Crew, understanding that I have maybe, you know, this many people who are interested in that specific thing, or that's a trend that's coming back. And maybe I want to make it new also. So it's a source of information, but it's very personalized to the individual customer. There's no reason why that can't really be a one-on-one transaction if you're letting the data do the work for you, right? So in 1997 at Levi's, we were trying to make personalized genes, like one-to-one dimension genes. We would make them, they really weren't personalized, but the cost for us to do that was about $700 a pair in 1997. And we were doing it for like publicity or whatever, like we were doing it for a thing to prove we could, whatever. But there's no reason why that can't, that kind of one-to-one relationship data-wise can't exist now because there's so much more ability to process and store and all of those things. And you have information like body scans. So you could, in fact, like we had to get a customer to go get a body scan. Now the customer could do it with their phone, right? And that body scan could apply to any kind of number of products. And you could say, I'm looking for genes that fit me like this. It could be one of these three brands, and you kind of put it out as a bid. And maybe the marketplace function becomes a broker of that kind of searching. And or maybe it's a brand relationship. I don't know. But the customer then is in the driver's seat of saying, This is what I'm looking for, go find it for me. It's a very different thing than all this push, you know, where we're pushing email and we're hoping that somebody looks at it. I mean, the performance on email in everyone I've talked to has been falling dramatically the last two or three years. Because you just can't get personalized enough and nobody wants to play in that channel because it's not relevant. But if I could send you the exact thing you were looking for, right? Email of one, it would be much more relevant. Right. The relevancy would come back up and I would send less email. Sorry. I don't know if that was a circle.

SPEAKER_05 33:19

Now, bring me back.

SPEAKER_06 33:21

I was gonna say, I think I'm on the I'm on the wait list for the wait list for the Birkin. I'm like still waiting to get the funds to be on the wait list for the Birkin. I don't know.

SPEAKER_01 33:30

Yeah, I'm just hoping that you know the products don't remember which ones I used to fit when I started my journey as a a size person and what fits me now. As long as that isn't discussed openly in the metasphere, I'll be happy.

SPEAKER_06 33:46

But I'm still mad I can't fit into my newborn onesies. I'm just gonna say it.

SPEAKER_01 33:50

Oh I'm having a moment. I'm failing for you. I'm I'm failing for you in this role. Thank you. I I'm sorry.

SPEAKER_06 34:01

I appreciate that.

unknown 34:02

All right.

SPEAKER_01 34:03

Well, you know, we brought up reducing consumption here. Let's talk about reducing returns. I mean, returns are the giant sucker, they are the biggest cost, most online merchants of any Stripe experience. How can you use data and AI to reduce those returns, which are a humongous contributor to landfills? Can you talk a little bit about some data-driven approaches to companies can adopt to reduce those returns and improve customer SAT at the same time, Nat?

SPEAKER_06 34:42

Yeah, for sure. And and I think this is a huge actually conversation for sustainability because so many returns end up in the landfill just because it costs less to resell them or sell them again than it does to get rid of them. I think, you know, one of the things we sort of hit upon is like, and I'll speak from personal experience, like if I'm buying something online, there's so many times I've bought like a dress where like it looks like it would fit me, but then later it doesn't look like on me like it did on the model online.

SPEAKER_01 35:09

Yeah, I hate that.

SPEAKER_06 35:10

So it'd be nice if like AI, and I'd be totally okay with it if it was like, listen, this is not for you, okay? Wear this other thing. You have there's a reason you have 15 maxi dresses, okay? Like it works. So just go with that. And the other thing is like actually, I think we're sort of getting there is like the virtual try-on technology is not quite there yet. But if it could like actually accurately depict your body and figure out and show you, and so there's so much within imagery that would help you, like sizing, showing you an accurate size, being able to use your you know, body metric scans or whatever, so many ways that we can do that. The other thing to look at for returns is like returns fraud is a huge category, and I think retailers are losing a ton of money on things like I uh you know, the item never arrived, but I actually did, and you didn't have that tracking information. There's lots of loopholes that people are exploiting, or like I got something and I returned, you know, I returned something and you on track. So what's actually in the box is different. And so there are tons of like technologies that we have. You know, forder is one, freeing returns is another partner that they use AI to take a look at what return is most likely fraud, and so that you can couch those, maybe not act on those, save that money, and but then also process existing returns that are perfectly valid faster, so it improves overall customer experience. Those are just like two ways of doing things. I will say, you know, we talked a little bit about fast fashion, and and we know from research that you know, Salesforce is done by like Kayla Schwartz, one of our directors of industry insights, that this is gonna be consumers are more value-driven than they were before. And so it seems like for those of us that are considering sustainability and talking in this space, that it almost sometimes feels hopeless, like, well, consumers are just gonna continue to buy fast fashion. But I think there are ways to do value without necessarily fast. So, you know, we talked a lot about resale. That's one way to capture the value-driven consumer, which is probably most of us. But then the other way would be, and I've heard like Timu or like companies like Timu are doing this, where a lot of the products they have are actually not real. They're haven't been manufactured yet. So a lot of the display images are A-B tests to see what sells and what doesn't sell. Because we know the most products listed on like a second page, you know, whatever, don't go. So, and what they do is they actually wait for a sufficient number of orders of a specific product before they move it to manufacture. So they manufacture it in bulk, which is why you wait longer and you're willing to wait longer to get the value. So it's cheaper, but they've produced more of it and shipped more of it together because they're understanding the market and testing what's going on out there. And that's, I think that's also a fascinating strategy that some um manufacturers are doing today.

SPEAKER_01 37:41

Well, there's another concept that you brought up that really resonated with me: green score, you know, where a manufacturer could have a green score. And Lisa, you just mentioned it as well. You know, how if if a company had to actually say, this is what's in a product, as far as you know, what is it made of? So a consumer knows whether what they're purchasing can be recycled, how easily can it be recycled? What percentage of this product has been recycled? What's it made out of? Is it uh, you know, that how feasible do you think that idea is right now? And and what impact would that have on consumer buying behavior and brand differentiation now?

SPEAKER_06 38:25

That's a great one. And I think it goes back to our NFC conversation. If we're able to actually track where the product is manufactured, then we can actually track its sustainability, its true sustainability. So we can automate something uh called a green score where we calculate the carbon footprint and we distill that to a number out of 100. So this one has a higher carbon footprint, this one has a lower carbon footprint, and you can like reverse that to have a higher score, meaning more green. Then you could do that in a marketplace, right? And we know that consumers are willing to spend more. That's the one thing that breaks the value cycles, up to 38% more potentially for a product that is more sustainable. And so that's one way that you could like in this inflationary period, you could like drive a higher margin is by promoting your green score and promoting products that have a higher green score that are necessarily more expensive, probably because they have a higher green score. But that's one way that retailers can protect margin because they know that's a huge conversation now as they're trying to figure out how to grow during a period when consumers are pulling back, in addition to like cutting costs. So a huge proponent of that. I think we should incorporate that more into sort of the strategies retailers are considering today.

SPEAKER_02 39:31

Yeah. There is a company European, of course, called Green Spark, which is a shared scoring model. And with their brand partners, they the brand that I know of that uses them is called One People, the number one people. Um, that's a green score on every single product page that talks specifically about that product, how it was made, what it's made of, what is the environmental impact of what it's made of. One people does a lot of innovative fabric stuff. So they do recycled nylon and some things like that. They're not purely like organic, organic. And sharing, if you go to Green Spark, they're also promoting their brand partners, right? To say, like these are if you want to shop sustainably, start here because we've kind of already partnered and scored this on a common model. It also allows us to vet their labor practices and also their environmental practices. So it's kind of an interesting thing. And I think it will continue. It's pretty techy. It's not like it's not so inspiring, right? Somehow. So it's pretty like, you know, you gotta really want to read about like percentage of nylon, the manufacturer. It's pretty rough going. But I think as the NFCs happen and this legislation around digital passport, I think it'll be easier to have, you know, something quick and recognizable for people to be like, oh yeah, that's a good company, and they do something like that. You know, they do something that I can recognize and value.

SPEAKER_06 41:00

Shout out to Tony's Chocolone, is also an interesting brand. All right. It's a really good chocolate brand based out of Amsterdam. Oh, and actually it's act delicious.

SPEAKER_01 41:08

And sounds great. Really sounds great. What's it called again? Tony's Chocolone. Tony's Chocolone.

SPEAKER_06 41:15

Yeah. Well, get this. It's really, really hard to take out child labor from the cocoa manufacturing process. And they put in a lot of effort to vet every single farmer, every single person along the supply chain that they work with to ensure the fairest of the fair markets. Yeah, to ensure that the chocolate is not made by kids or made with child, it's child-free. Sorry, not made with child labor. I don't know what child-free labor is. And there it doesn't matter. You get it. Yeah, anyway, that's another brand that's really cool.

SPEAKER_01 41:45

I'd like to have chocolate that's made by former political candidates exclusively so that I know.

SPEAKER_06 41:50

Would you though?

SPEAKER_01 41:51

Yeah, that's what I want.

SPEAKER_06 41:53

I want the I was gonna say, I would like this is kind of random, but Kim Kardashians use clothes. I feel like those would sell really well on the resale market as an example, right?

SPEAKER_02 42:01

Well, it's actually there's a whole thing in what we used to call vintage, right? Collectibles, but also, I don't know if you know Jenna Lyons, who was the design director for Crate Crew for many, many years. Jenna did a stoop sale in her house, stoop sale, it's a very New York thing, and sold like this is the gown that I wore to the Oscars. This is the and like every single thing was like I mean, talk about an NFC kind of situation. And the line to go shop her sale was like around the block.

SPEAKER_01 42:31

Yeah.

SPEAKER_02 42:32

Because she's very style famous, and she's also been a lot of places, and she has a lot of clothes. So there are these opportunities, and people are doing it for charity now. You'll see it on like a Poshmark or whatever. They'll do as a custom posh shop based on a celebrity closet.

SPEAKER_06 42:48

Wow, that's cool.

SPEAKER_02 42:49

It is cool. And it and I think when you think about that kind of collectible consumption instead of just more, more, more, more, then it does really create this idea of these items having stories and value that goes beyond their physical manifestation of, I just wore that once and threw it away.

SPEAKER_01 43:09

Well, I'm gonna I'm gonna tie a bow on this pretty quick, but I did want to mention, you know, food labeling has not been with us for that long. And it was driven first, obviously, by, you know, the nutrition and people wanting to know what am I putting in my body, because of an awareness of that could affect my health. It's like shocker. It's like, yeah, it actually could. Well, now we are aware of, you know, global waste issues and pollution. And, you know, in this time, it is probably right for knowing what we're gonna put back in the earth. What are we gonna bury and what's gonna happen to it and what's gonna happen to us, and having all of that data available on the products that we consume and making better choices in terms of what it is we put on. Or in, or we drive around on uh so that we can reduce our impact. And this kind of to kind of close out the this conversation, actually, Nat, you introduced me to the concept of degrowth.

SPEAKER_03 44:15

Yeah.

SPEAKER_01 44:16

And the idea that growth is not sustainable in the ultimate long term. And it's very thought-provoking.

SPEAKER_04 44:24

It is.

SPEAKER_01 44:25

You know, how do we, you know, the challenge is we've got all these industries that are geared up towards, you know, constantly pursuing growth. We've got to increase our product, we've got to increase our market size, we've got to increase our capacity, we've got to grow, grow, grow, grow, grow. How do you envision the e-commerce industry adapting to the concept of degrowth or mineral growth? And what are the new metrics of success companies should consider focusing on in that paradigm?

SPEAKER_06 44:55

I never thought I would say that automotive is leading the way, but here we are. Because if you take a look at like a company like GM, and if you own GM stock, you don't expect 20% year by year growth. What you expect from that stock is a dividend, right? So the dividend is very constant, and that's what gives you the money. And so the idea is, and you know, there have been certain companies kind of toying with that idea, how can they be sustainable? But like perpetual growth is not sustainable for our planet. And so the concept of degrowth, I think it's relatively new. It's been around sort of like around the pandemic, but it's this idea that we are not maybe shooting for that 20, 30% perpetual growth, but we do some sort of like sustainable ongoing business, and we can still meet sort of shareholder value by providing a dividend as opposed to inherent growth in the stock value, and then moving some of our operations to be more, you know, eco-driven, more green-driven, green scores, and all these tactics that we're doing here today. But maybe there's a world, and you know, I don't know, there's a world in which we don't have this constant up, up, up, up, up trajectory and we're still okay, you know.

SPEAKER_02 46:02

I think it's also, I mean, if you look at profit growth versus top line growth, yeah, right. A lot of the things we're talking about, you know, look in apparel in e-commerce, my apparel return rate for dresses was like 38%, right? So that's enormous. If I could reduce that by selling the size better, then my profit goes up without changing my top line. Right. So those are places where if I could get a percentage of profit against resale, same thing, right? So how do I, if I could charge more for my product because people know it's going to last longer and they're willing to pay more because it's made sustainably, same thing. So how do you grow profit and look at that as your growth line versus just pure top line where some percentage of it is just kind of getting disposed of? And markdowns, honestly, like getting customers to pay full price because the value is there and you have the right product at the right time is a huge opportunity in terms of you know, just company financials for getting, you know, for every new customer you have to acquire, you're you're spending a crazy amount of money. If you retain your customers at a higher rate, you're gonna be more profitable, just de facto. So, I mean, those are all places where we talk about growth and then retail is the worst of you know, everything is comp to last year, right? So I have to comp my square footage, my sales per square footage, sales, top line sales, not profit, sales. So I'm gonna go do crazy things to make myself look better at the top line because that's the measurement that the market is always looking at. So changing that that metric and looking at it from a growth of profit is a very different, it's a it's a much more, I think, much more sustainable way to think about it.

SPEAKER_06 47:51

There are some companies in luxury, again, that are doing this very well. You know, the stat always gets me of like 85% of all Bentleys are still on the road, right? And I think you guys have heard of like, I forget if it was like Ferrari, but their goal or like their new tactic was to like reduce the number of units they're making. They're like, we're gonna make fewer units, but we're gonna drive up the value of those units. So I think there's definitely some companies innovating today. And I think sometimes also we get into the habit of being like, we expect the government to do something, we expect regulators to do something, but we're very much like the owners of our own destiny. And like business has the potential to be business for good, and entrepreneurs have the ability to lean in to any of these ideas and concepts that Lisa and I have shared to come out ahead of their competitors, but also do change for good. And I think that's still out there in terms of us being able to control and drive forward that narrative and that new future. I'm optimistic from that regard.

SPEAKER_01 48:48

Well, I'm optimistic as well. We've discussed some very cool ideas today with digital twins, with NFTs, NFCs. Thank you for the definition, Liesel. That was much appreciated. With the ability of companies to sustain relationships with their customers across multiple ownership experiences. The ability of customers to engage one another with their shared love of a brand and shared love of a product where they both know how each other treats that product, how interesting that is. If these walls could talk, if these pants could talk.

SPEAKER_06 49:34

Those chair legs could talk, right?

SPEAKER_01 49:37

If these chair legs could talk, you know, I've revealed my propensity for chair legs. I'm sure some bot has noted that and is going to be leading off with those chair leg views as I visit the furnishings sites. So I want to thank Nat and Liesel for joining me today. Thank you guys. This was great. Thank you. Thanks. And we will be sharing this out, and there will be links for all of the technology solutions that we discuss today in the comments. And I hope there's lots of them. This has been Daryl Rosensain. This has been Mar Talks. Thank you for spending some time with us.

SPEAKER_00 50:21

Thanks for listening to Mar Talks, the number one podcast for e-commerce and marketing applications. Be sure to subscribe wherever you listen to podcasts, and while you're at it, leave a rating and review. To find out more about how the Rosenstein Group can help you find the right leaders for your client development teams in Martech and e-commerce, please visit our website at Rosenstein Group.com.