Inveterate’s Dylan Whitman On The Tech Trends Shaping DTC

AI will takeover tasks that don't provide customer value

• ChatGPT was released last year, and it’s not perfect, but it’s certain to get more proficient at solving complexities from service providers like copywriters or strategists

• “When we think about segmenting and sending out emails, it’s inevitable that AI takes over because those things aren’t actually providing direct value to the end customer or the brand.”

Ways AI can impact retailers’ operations

• A large brand with resources can add the extra human touch to get better results from AI. For small businesses, AI can help generate better ads or copy than anything founders can come up with by themselves
•  “We’re going to see AI web design automatically be translated to code. And you’re not going to need a web development agency to develop the front end of your Shopify site.”

The multiple tech tool options has been beneficial for merchants

• One of the beautiful things about the Shopify ecosystem is the amount of different flavors of offerings. More choice is always better for merchants
• “It’s like the iPhone, you’re not mad that you have more choices of things to do [with it].”
• All the tech invested in Shopify has been an absolute net positive for merchants

Adapting to new technology to stay relevant and ahead

• Whatever is gonna win in DTC over the next five years, a lot of it doesn’t exist yet
• “Be open to exploring new ideas but most importantly, never lose sight of the most important thing, which is a great product.”
• “If you have a great product that your customers love and you’re continuing to innovate in that way, then I think everything else is just a cherry on top.”

Beware of all the hype around software tools

• It’s not about scouting new tools or tactics but it’s about finding out what experiences customers are yearning for with your brand and finding tools that solve that
• “There’s no other ecosystem with so many people with their hand in the cookie jar of different software tools. They’ve got equity and so they’re hyping it up for these platforms.”

Context is key to preserve data integrity

• Jeff Bezos said: You have to get as many different people’s opinions as you can, but then you have to really think about, why doesn’t that apply to me?
• “You can’t just look at someone’s tech stack and then copy it and think you’re gonna have the same results because you won’t. Have the context of all the other things going on in the business.”

Loyalty points never get people to become brand believers

• At BVA, Dylan worked with the largest brands on Shopify and loyalty programs were not as successful as they should be because points never get fully redeemed
• “Everybody else is doing it [loyalty-points program] but the data over and over will show you that it doesn’t work.”

What drove Dylan to memberships

• Instead of rewarding shoppers with points, people are more motivated to come back with incentives like cash back, members-only special pricing, exclusives or benefits
• “What drove me to take this route was to find the believers and the lovers of the brand and give them a reason to keep coming back and shopping with you instead of somewhere else.”

Focusing on the true believers

• Find the true believers, get them to be more involved in the brand and give them a differentiated experience but continue to follow through on your brand promise
• Brands rarely exist forever on a single product, even Red Bull has to constantly innovate on new stuff
• “If you roll out your hero products, you follow through on them, people love them, and then you continue to innovate on your product catalog but then give those believers a reason to keep coming back to you.”

How membership programs impact cash conversion cycle

• If 30% of the people signing up are first time customers, that’s immediate upfront contribution margin that you can start putting towards your cost to acquire a customer
• “We have customers who are getting people to buy direct from them instead of Amazon. And it’s so powerful because you control the experience.”

A membership is a differentiator

• There is just a lot of competition in every single vertical and the key is to find the differentiator. Loyal returning customers or members are the differentiators
• “If they’re delighted, then continue to delight them and give them the next level experience. And so I just think it’s that differentiation that’s really important.”