There is a lot of talk in the retail and eCommerce media about the current downturn in online sales, especially in DTC, and a good amount of data that backs it up. On the one hand this, like everything else that spiked during the pandemic.
There are many reasons for shrinking D2C and non-marketplace sales. One of the biggest of which is consumer fatigue and boredom with online buying as opposed to ‘shopping’.
With all the investment made in the industry over the last decade, in most cases the one thing that has not changed is the actual experience of buying products online. It is still largely a 2D, flat, scroll, click, non-immersive buying experience.
But that is starting to change. We are seeing an evolution from eCommerce to “Immersive Commerce” where tools, technologies and a rethink of the screen using tools like VR, AR, virtual environments, livestream commerce, shoppable video and creator commerce, make shopping online a two-way, dynamic, personal and fun experience.
One of the leading thinkers on the subject is Chandan Mahajan, Co-Founder of Dotkonnekt, a platform that allows any brand, retailer, CPG or manufacturer to build experiential sites based on the integration of content, community and commerce.
Recently I sat down for a Q&A with Chandan to discuss the “3C” approach, how D2C companies can reimagine and reinvigorate the space and what merchants should be planning for in the next 12 months.
Please tell us a little about yourself, your background, your work experience and how you came to create dotkonnekt.
I come from a business family in the northern mountains of India, born with a retailer’s blood and an entrepreneur’s fire in my heart. Over the past 20 years, I have had the privilege to collaborate with best minds in the global retail and consumer industry, partnering with clients like Amazon, Alibaba, CVS, Mars, Nordstrom, Sephora & many others in their business and technology transformations.
Amidst the COVID-19 pandemic, a longtime friend, Dhiraj and I made the bold decision to leave our corporate jobs and bootstrap dotkonnekt. We were convinced that the future direct-to-consumer (D2C) strategies of brands will require a significant transformation due to increasing digital adoption and customers’ demand for privacy and enhanced experiences. Recognizing the challenges brands faced with tech integration and customization in their D2C commerce, we identified the need for a purpose-built commerce stack that leverages cutting-edge composable technology and industry knowledge to foster organic growth.
Please tell us what dotkonnekt does?
dotkonnekt is a digital commerce and experiences enabler. We help brands transform their transactional storefronts into experiential commerce sites to increase organic traffic, engagement, conversion and customer lifetime value.
In an era where performance marketing led D2C growth is losing its edge, brands now face increasing challenges with rising consumer acquisition costs (CACs), deprecation of third-party cookies and customers with high expectations and shorter attention spans. This has resulted in uninspiring, cookie-cutter websites saturated with promotions, which fail to capture and retain consumers.
To achieve sustainable growth, brands must solve the organic traffic puzzle. Our analysis of successful brands with robust organic traffic revealed a common thread – they offer a differentiated website experience. These brands excel in attracting consumers with exceptional content, fostering community engagement, and driving commerce as a natural by-product of the overall experience. Achieving such a convergence is no small feat. It requires custom development, complex integration of headless/composable solutions and ongoing improvements, which require a significant budget and often years of effort.
This is where dotkonnekt steps in. We have developed a purpose-built Experiential Commerce Platform that seamlessly blends the 3Cs (content, community and commerce) with a composable front-end. With dotkonnekt, brands gain a partner that combines the convenience of a unified platform with the power of custom build, at lesser cost and time.
What are some of the biggest changes we are experiencing in D2C and eCommerce today and will see in the next 2 years?
Across our interactions with brands and portfolios globally, we see the following among their most strategic priorities for this year and beyond.
- Increase D2C revenue – Pre-COVID, D2C channels accounted for a small fraction of brands’ revenue. Today, brands are aiming for at least one-third of their revenue from D2C with deeper customer engagements. This is evident in the increased M&A activity, as valuations normalize, and focus moves to profitability. Successful brands will double down on consumer research and deliver unique experiences at each stage of the journey, from purchase to aftercare.
- Leverage zero party data – Brands aspire to transform their D2C into more than just a commerce site. By increasing engagement with content, discussions and community building, brands can gather valuable zero-party data to enhance their product innovation. Brands are also prioritizing the delicate balance between respecting consumer privacy and delivering personalized shopping experiences.
- Drive content-led commerce – Realizing the value of content marketing in D2C, brands are investing in creating engaging and valuable content (blogs, videos, social media posts etc.) to build brand awareness, educate consumers and drive conversions. Content-led commerce will continue to evolve, with brands exploring innovative ways to seamlessly merge content and commerce.
- Build engaged community – Now more than ever, brands want more direct engagement with customers through engaging experiences, social media, online communities etc. Building a sense of belonging and loyalty among their customers will be crucial for brands’ D2C channel growth.
- Increase AI adoption – For brands, the AI use caseswill grow beyond chatbots, pricing, personalization, content & fraud operations etc. We see significant opportunity for brands to combine generative AI with deep segment insights for targeted content creation, hyper-personalized engagement and next-gen conversational capability to drive conversions and loyalty.
What are the biggest challenges that merchants and brands are facing in eCommerce? How does dotkonnekt help solve these issues?
The biggest challenge for brands today is their dependency on the old playbook – growing D2C with catalog-heavy templated sites and paid ads. In the privacy-first world, expecting the same results as a decade ago is no longer practical. Consumers now have many options and the convenience of marketplaces and neighborhood stores. With lack of differentiation, brands are experiencing bounce rates of 65% & beyond, and average sessions at just 190 seconds.
dotkonnekt is purpose-built to address these challenges. For mid-market brands seeking an experience-first commerce platform, we add strategic value across all stages of their transformation journey.
- When brands outgrow their templated storefronts and begin exploring composable tech with desire to build an experience-first commerce site; our full-stack Experiential Commerce platform offers a purpose-built & modern tech with composable frontend and middleware to seamlessly orchestrate commerce, content and community systems.
- If brands want to optimize their existing content for conversions without changing their tech stack, our Shoppable Content module transforms their static content into engaging and monetizable content.
- If brands want to create compelling & contextual content at scale, our AI Content Creator generates high-converting content quickly and intelligently, eliminating the quality issues often faced with content writers and SEO agencies.
What is experiential commerce? Why is it so important? How does it work in practice?
Today’s consumers are more informed and empowered than ever before. They no longer want to be sold to; they expect brands to engage meaningfully and earn their attention. Commerce only sites that focus solely on products and promotions fail to offer a compelling experience, making brands dependent on paid advertising to attract organic traffic. This approach is unsustainable and fails to build lasting relationships with consumers.
The solution lies in creating brand websites that offer rich experiences, inspiring consumers to discover, engage, and transact because of a differentiated experience. This is achieved through a seamless blend of content, community engagement and commerce, like the engagement consumers have with platforms like Pinterest, Instagram and TikTok.
Brands must shift their focus from commerce-only tactics to content-first engagement. By offering great content that educates customers and building a community that inspires engagement, commerce then becomes a natural extension of this deep relationship between the brand and the consumer. To succeed in today’s digital landscape, brands must:
- Attract with Content
- Retain with Community
- Grow with Commerce
The success of creator brands like Feastables and Chamberlain Coffee stems from their consistent efforts in creating content that aligns with their consumers’ interests.
We understand this challenge and alleviate the complexity for brands with our comprehensive solution. They can migrate to our full-stack platform or start with our modular offerings, like Shoppable Content and Contextual Content Creator, which can be integrated into their existing platform.
We believe that this is a game changer and equalizer for brands, providing them with the power of custom development and the convenience of a unified solution. This empowers business teams to create inspiring & custom experiences that resonate with consumers, rather than promotion-heavy selling tactics.
What role does Immersive Commerce, AI and the Metaverse play in the future of digital commerce?
Digital consumers respond to brands that can foster an intimate conversation by cultivating a store or website that seems specially designed just for them—or, put another way, a segment of one. Consumers are more digitally savvy, leading to increased expectations. AI and immersive Commerce will drive a new opportunity for brands to offer not only personalized shopping experiences but also more predictive experiences. This means eCommerce brands can reimagine the experience they would have otherwise liked to offer to their consumers IRL through pop-up stores.
Imagine a seamless discovery to conversion consumer lifecycle simplified; AI engines can optimize the way consumers search for and then find products based on their behavior, location, and other contextual information. Post-discovery, virtual assistants and chatbots can enable guided commerce, and of course, AI-based product recommendations and hooks ensure a seamless conversion. The future of e-commerce is AI-powered, and it is an exciting moment to be a part of it, whether you are a consumer looking for a more personalized shopping experience or a retailer looking to optimize your operations.
Immersive Commerce, enabled by virtual reality (VR) and augmented reality (AR), is already making waves in the commerce landscape. These immersive technologies offer dynamic online shopping experiences beyond traditional product images and descriptions. Brands are leveraging AR/VR-powered virtual try-ons and showrooms to engage consumers across multiple touchpoints.
What are some good examples?
Goop and Glossier (before the current re-platforming) started as content-focused blogs to inspire their audience, later integrating commerce. They effectively use rich content like blogs, videos and look books, seamlessly integrating products and driving over 50% organic traffic. Glossier’s ‘Into the Gloss’ played a key role in the growth of their makeup and accessories line.
Net-A-Porter impressively enables visitors to ‘shop the look’ and ‘shop the shoot’, allowing them to make purchases directly from the content page as an example of experiential commerce. Hims & Hers exemplifies community engagement through video content with tutorials, influencer routines, consumer stories, and custom expert appointments, building trust before they checkout.
Under Armour saw a 35% higher conversion rate by implementing intuitive, search-as-you-type capability for personalized experiences with live commerce and single-click checkout process. Legacy brands are following suit with virtual makeup try-ons and smart AI advisors, with L’Oreal and Maybelline leading the way by promoting personalized virtual shopping experiences.
What should eCommerce, digital, retail, and marketing pros be planning for this year?
In 2023, with customer acquisition and product costs on the rise and eCommerce sales slowing down, the brands’ focus on retention is more critical than ever. The big opportunity lies in leveraging a hyper-personalized consumer journey to deliver better experiences and smarter targeting.
Start by assessing the current consumer journey to identify any gaps that hinder engagement or waste resources. Conduct jobs-to-be-done research and directly engage with consumers for valuable insights into their needs. Offer incentives like gift vouchers or discounts for their participation. This will help you gain surprising insights and ideas to refine your retention strategies.
Brands should prioritize affordability for VIP consumers and reward them for driving brand reach. The marketing team should prioritize focus on creating authentic, organic content across multiple touchpoints to enhance brand loyalty.
Leverage all these insights to assess your needs for better technology, digital tools and data. While headless, composable and generative AI offer exciting possibilities, it is important to separate reality from hype while staying focused on what truly matters.
Check out the latest Retail Therapy episode featuring Michael Zakkour as a guest host here.