The Future of E-commerce: Consumer Behavior and the Impact of AI with Lauren Livak

Transcribed by Otter.ai

00:17

Hi, today I'm here with Lauren Livak of the Digital Shelf Institute. Hi, Lauren. How are you?

00:22

Hi, Jonny. Thanks so much for having me excited for this.

00:25

Yeah. Great to have you here. Why don't we start with what is the Digital Shelf Institute?

00:30

Sure. So it is a community of digital leaders across almost every industry, I actually looked at some data the other day, we span pretty much every industry. And it's really digital leaders coming together to better understand how they can do their job in their daily lives better. So we have about 5700 members across mostly North America are expanding into EMEA and Asia PAC as well. But we really focus on thought leadership. So how can we bring frameworks, best practices content to the leaders, like I said, that are doing the job day to day and might not necessarily have time to figure all this out or talk to other people. So we're providing them that insight, and also creating a community. So how can they connect with other digital leaders that are doing their role? Ask them questions, ask them what they might be thinking about in the future, what's part of their strategy, because unfortunately, sometimes an E commerce role can be a bit lonely and a bit siloed. Speaking from experience when I was in that role on the brand side, so the digital shelf Institute really gives brand manufacturers the opportunity to really network and meet other people that are doing the same job and ask questions.

01:42

That's great. That's great. And you came up through various companies, j&j was was one company that you were at what you are doing digital shelf and ecommerce, why don't we talk about your background a little bit? How did you arrive where you are?

02:17

Yeah, it wasn't a very straight path. I think like most people who are in E commerce, I didn't come up through E commerce, I was given the opportunity to be a part of it. But I started in a project management role. I was in a central team, I was actually working on p&l productivity, focused on the broader organization and some of some of our operations. And there was a reorganization and they needed someone to focus on the digital shelf. And mind you, this was pre COVID, right? So it's a bit of a different time in the E commerce world. And there was a renewed focus on digital and they needed someone to be responsible for it. So I had a great leader who trusted in me and said, Hey, how about you go in and fix the digital shelf. And that's really kind of how I got into it. And at the time, it was a bit broken, and there was not a bunch of understanding across the organization. So it was a really interesting journey. Because I really got to learn on the fly, I had to figure out what was happening internally, I had to figure out what was happening externally, I had to understand the language. So I loved it, because it was really new and exciting and challenging. But it was definitely a different time where e commerce wasn't as well known, it's took a little bit more convincing. There was a lot more change in communications that needed to happen, a lot more education that needed to happen. But I was able to really build out the digital shelf strategy and the process and the team across North America. So it was a really exciting opportunity.

03:48

Fantastic. And what do we mean by digital shelf as opposed to e commerce?

03:53

Great question. So it's all of the digital touch points. So digital shelf doesn't necessarily mean that it can incorporate in store because if you're sitting in the aisle, you might have your phone out, you might be on Amazon, and you might be searching and saying, Oh, I'm price matching, or I don't want to carry this, let me get it shipped to home. So it's all of those digital touchpoints where you're interacting with a product or a brand beyond just going on your PDP on an Amazon page. So it really expands much broader than just the digital shelf e commerce landscape. I kind of look at E commerce as the transaction. So you're having a digital transaction online where you're paying from Amazon or Walmart or Target, but the digital shelf encompasses much more than that. And all of the places where you might interact with that product or that brand. 

04:43

Got it good. It sounds good and obviously COVID kind of created a burning platform around ecommerce for for brands when stores were shot. How else did they get products to people that settled down a little bit. But in turn in terms of digital trends, As formation and embracing digital transformation within e commerce is quite digital anyway, isn't it? But how is it? How does digital transformation continue to impact it?

05:10

Well, I think that COVID accelerated the digital transformation, I'd say, five to maybe even 10 years, because we needed to, because to your point, it was a necessity, we had to buy things online. I think the challenge with digital transformation is that, yes, it was accelerated. But that doesn't necessarily mean that the organizations have the right people process and technology to be able to support that. And we are now in a world where digital transformation is never going to stop, we are going to continuously need to transform. So I think companies are trying to figure out how they can build the right strategies and the right infrastructure internally to be able to keep up. But that takes many different aspects, right. So when I think of digital transformation, there's so many different pieces of the puzzle from change management, to people to organizational structure, executive alignment, I mean, it's not just someone putting a stamp on, hey, I'm an executive and I say we have a digital goal. And we need to expand our digital sales by X percent, that is a start. And you definitely need that from your leadership team. But it really needs to be both a top down bottoms up and a cross functional effort in order for that digital transformation to really be successful. And I think a lot of organizations understand it, they understand the what they're like, Okay, we need to go through a digital transformation. I think it's the how that's really challenging. And the follow through, I talked to a lot of organizations every day, because of my role, which puts me in a very unique place. And most organizations understand it, they get it, they know that they're behind, or they need to fix it, or they need to focus on it. But really going from, hey, we've set this priority or the strategic goal to we've actually made this change. And we're seeing the effect of that change. That's where the difficulty lies. And that's where the digital transformation is really, really critical. And that's the challenge. 

07:11

Yeah, I think it's interesting to see how I think companies really understand already how to use technology to take what they're doing, and not necessarily changing what they're doing and how they're doing it. But just using technology to make it go faster. I think the the interesting bit where it gets really interesting, and where you start to see people leap start to leapfrog their competition is where they say, Okay, how does technology allow us to reimagine all of this stuff, kind of from the ground up? How does it allow us to, to reinvent the way that we're doing this, rather than just kind of that old Spinal Tap reference of Yeah, but this one goes up to 11. Right, right. That kind of thing? How do they sell? Have you seen any examples recently, and you might feel comfortable naming names you might not have where companies have started to do that really well, particularly around this ecommerce space?

08:06

Well, I think the key piece around technology that I'll address first is that to your point, it's an enabler, right. And E commerce wouldn't be where it is today without technology, because it's a scale, and it's a time thing. I think it gets lost on some people how long it takes to not only find the data in your organization, but to get that data to Amazon, or to Walmart or Target or Tescos, and then get it online. That is a time thing. And technology has sped that up and has become more efficient. And we're going to continue to sell more products online, that's not going away either. But you can't hire more and more people to do that. You can't just have infinite resources to support that. So that's where technology really enables e commerce to happen and to be successful and to scale. I think the companies that are really doing that, well have a very clear partnership between IT and the business. I think previously, and this is pre COVID, and probably a little bit during COVID. It might not have been in the conversation around ecommerce, you may have had the region executing and doing what they needed to in region to sell on ecommerce and building your own technology signing their own contracts. And now they're realizing they might need to sell across multiple regions, multiple categories, multiple retailers. And so it's a much broader scale where it needs to be involved and technology needs to be involved more globally to be successful. I would say one company and not able to name the name of this one. But one company that I've seen be really successful is that actually put an IT lead on each of the brand teams. So they've actually incorporated technology into the brand, where they're identified. During our our brand stories are what we're doing, are they match with our technology? Are we being efficient? Is there an opportunity to do better? Can we look at things like AI? Can we look at how that can support us in our journey to do better on the digital shelf. So incorporating it, and therefore technology into the business, I think is a really key way to be successful in doing that. And I also think, having it understand ecommerce, I know that might seem like a really simplistic thing to say, but unless you're in E commerce, and you're working on the digital shelf, day to day, you don't necessarily know the inner workings of what happens when you send something to Amazon, what happens when it gets published, what happens when someone clicks purchase? So that education element I think is really critical.

10:50

Yeah, that's a that's a missing piece for sure is recognizing that, that when you when you have an attack team, that are purely focused on tax tech, without any commercial understanding. And when you have a commercial team that are purely focused on commercial, without attack understanding, that's where you can start to get a bit of a disconnect, can't you and you create, you create friction between those two departments. And actually, what you've got to realize is, those two departments really need to be allies, right? It's in the same way that when ecommerce kind of first came in, you know, your typical kind of shopper marketer, maybe saw it as a threat. Whereas actually, once they started to understand it more, they said, Oh, actually, it's not a threat. It's just a way for us to sell more products. And it benefits me as much as anything else. And, and getting those teams to work together, I think is, is probably the next bet that that's going to help businesses move forward through that digital transformation journey. You know, lots of lots of the things that McKinsey's and people like this, you know, the, the big consultancies are starting to say that, actually, the reason why digital transformation is, is maybe stalling is because the you haven't you haven't, you haven't brought your functions together, write their percentage, to solve the business problems rather than, you know, whatever their whatever their own agenda is, you

12:12

know, I think we forget sometimes that all of these organizations were built around in store shopping for the past 100 to 200 years, right, like the E commerce world is own has only been around for about 20 years, which, in hindsight, is really not that long, with Amazon opening in 1995. Like, let that sink in for a second where this is really new. And so naturally, organizations are siloed, because that's how they were built. And I think that's the fundamental shift in where we are right now in the industry, where the consumer doesn't care. If you're buying in store, you're buying online, you're a curbside pickup, you're on social media buying something, they don't care, they just want a seamless experience. But organizations are not internally built to be able to support that. And to your point, the ones that can do that successfully will be the ones that can compete and will be the ones that win. Because the internal processes to get there are very challenging, because they're set up that way you have goals and objectives that are for your function, right? So if you're in shopper marketing, and your goal is different than the sales or the E commerce team, you're not all working together, so you're naturally siloing yourselves. So if you can break down those walls and really create a cross functional operating team, that's where that's that's what success looks like.

13:39

So are these is that really the nub of the organizational changes that you sometimes see in E commerce brands? Is that really what what we mean by the organizational changes? Or are there other organizational changes that people should consider?

13:55

I think it's an evolution. So when you think about when e commerce first came on the map, right? It's, you create a specialized function, and you have people who understand it, and you create maybe a center of excellence. So that's how you introduce it into into the organization. And a lot of organizations are still in that stage there, kind of have that central place where the knowledge lives, and they share it with the rest of the organization. As the organization matures. The idea is you want that understanding and that knowledge to be democratized throughout the rest of the organization. Because ultimately, what we're moving towards is you don't have a digital marketer, you have a marketer, and they understand digital, right? We're moving away from those kind of specialized functions. So I think the organizational change really depends on your maturity. And I think what a lot of leaders really need to understand and it's hard to kind of to really grasp this and to really believe it, is that your organizational your organization will change every five years or so maybe even see sooner because the way that digital is changing, you will have to allocate resources differently, change the way your teams are operating. So there is no concrete org model that can stick around for 20 years. And I think that's the fundamental shift in thinking and organizations need to build into their strategic plans. How do we look at our org structure? Is it serving us? Is it matching how we're working with consumers and what their needs are? So it's really kind of a step change through the maturity curve as to what those organizational changes are

15:37

you talking about? You know, capability, you're talking about thinking you're talking about new ways of thinking and capability democratize throughout the organization? How do you see upskilling and training playing a part in the modernization of these businesses?

15:54

Oh, fundamental. I mean, if I look back at my time at j&j, it was the number one success factor for me. Number one success factor. I mean, I went on a road show, and I had to have every function understand why ecommerce and why the digital shelf was important to them, why it mattered, and how it's going to affect their role. And I think when we talk about digital transformation, they're these lofty programs, right? Like, it's big change that's happening. And I think we sometimes forget about the human element, where we're introducing something that's totally new to people. And like you were saying about shopper marketing, some people look at it as Oh, are you taking away my job? Are you making my job? Not as important? Like, what is digital going to effect here? So I think education is absolutely critical. One from a context perspective, like providing context as to why we're talking about this, why this is important to your role, how your role fits into this broader consumer journey and path to purchase. I think that's one element. I think the second element is really helping them to understand what the landscape is. If I go back to a story from from my brand days, I remember some brand manufacturers would come to me and be like, Well, why is this happening? Like, why is Amazon doing this? Like, why did they change my content? And I would sit down, and I would explain to them, why that happened, and how that happened, and how we got there. And they're like, oh, okay, that makes sense. And it just provided more of a collaborative environment, where then they said, Okay, this happened, let's make this change, instead of not having a collaborative environment and kind of pointing fingers or maybe blaming where things have gone wrong. So I think it's a critical element for what we were talking about before, for that cross functional alignment to happen. There needs to be context setting, there needs to be education. And there needs to be education, also about the internal workings. I mean, we talk about what's happening in the world, right? You might need to know about AI, you need to know about how retailers are selling, what types of pathways, all of that, what what are the important elements of E commerce. But you also need to understand internally, where do I find my data? Who creates my content? What is the pin, like things like that, that are just really important for anyone in any function to know, I think education needs to be built into every single digital transformation program. And it's not a one and done, it's a you will need to educate your entire organization for the rest of time, like it is just going to be a continuous effort. Because things are going to change. people's roles are going to evolve, your strategies and goals are going to change. So a very long winded way of saying it is incredibly important. And it was one of the keys to my success, building out the strategy. 

18:50

That's great. What factors do you think will be driving change in E commerce over the next couple of years?

18:57

You know, I love this question. Because there's so many ways to answer it. I think the two pieces I would focus on are one consumer behavior. So when we look at how consumers are shopping today, it's fundamentally different than the way they were shopping five years ago, and they're much smarter. They know what to look for. They know where to research, they do their research, they are looking for more sustainability in the economy that we live in, they're looking to stretch their dollar much more. So that means that manufacturers brands need to really understand their consumer. They need to understand how they're shopping, what they're looking for what they want. Personalization is going to be I think a differentiating factor, because no longer do you want to go to a store or go online and just see a generic product. You want to see something that's tailored to you. You want to customize it, maybe you want to have it for if it's beauty for your skin tone or your hair color. and you want it to be specific to you. So I think the change in consumer behavior is really going to dictate how brands and retailers are kind of building out their strategies. And I think the other piece is AI, I think that it is accessible now. And it is enabling brands to be more efficient. I talked a bit about how the digital shelf is a scale and a time game. Ai helps with that, you can do so much more with so many less resources, or with just the resources that you have, where you might not have been able to do it in the past, I was talking to a hardlines brand, they work in the home improvement space, they have over 25,000 skews, that's a lot of skews, and they only have three team members, there's no possible way those three team members could create all of the content for their skews. But they've incorporated AI, where they can actually write out all of the descriptions and all of the titles for all those 25,000 skews, they do still need to be reviewed by a human, I will put that out there. But they've really been able to upskill their entire capability just with AI. And I think that's where we're going to see a big change in that space. I'm not scared about it, replacing people or replacing how we do things, but I think it will replace the people who don't know how to use it. So I think it's really critical to think about how it can improve your efficiency, how it can improve the insight you need, about your content, and what's online and how your consumers are consuming it. So I think that'll be a really big change.

21:38

Yeah, I think AI is really interesting from the point of view of how it will do some of the heavy, heavy lifting. But what it's not going to do is, is telling you that you need to get better at consumer insight, you have to decision yourself, it will then help you get better at consumer insight. But you need to understand that you need to get better at consumer insight first, and also why you should be doing it right. So it's not I don't think it's I'm really glad you didn't just say AI right? And then that was it. You know, it's it's a it's better software, isn't it that allows you to do these things much quicker and much faster. Yeah, fantastic

22:13

tool in your toolkit. And I always warn people in the in the digital space that I call it the shiny object syndrome. Like things like the metaverse, or VR or AR or whatever is happening in this space. Those are all really exciting things. And they all can really create new experiences for your consumer or help you try something new. But the fundamentals are still the fundamentals. And they are the things that are going to get you to profitability, they're the things that are going to get you to growth. So think about all those shiny objects as things to test and things to look at and supplement and use as tools in your toolkit, but not fully replace what you're doing or fully change your strategy. 

22:59

What do you think we should be talking about that we aren't?

23:02

Good question. I think change management, we touched on it a bit. But I don't think it's talked about enough. I think that in this digital age, you have different types of people who were either brought up in digital or who are not brought up in digital. And that's a very big divide. And I think change management, especially at organizations who are going through a digital transformation is just so critical, and is always overlooked. I said this before, and I'll say it again, the human element, right? Like we're making people do things differently, we're having them think differently, use different tools, have different analytics to inform their decisions. So the change management piece is really, really critical. And I encourage any organization that is doing anything that's a change, to really build out a program, not just have a townhall or send out an email, like really, really build advocates in your organization that understand this, and can help you go through a change. I've worked with hundreds of companies at this point in my role, and that with education, that's the secret sauce, educating people providing the context and then having a change management plan to really move throughout every stage of your maturity. That's the people who can do the how part of digital transformation Well, and that's the most overlooked aspect. Because most digital transformations fail unfortunately, I think there's a stat, was it. I don't know the numbers. I can't quote it, but I'll have to look it up there. There was a stat that said that most digital transformations really are not successful. And I think a big reason for that is one it's hard. And too you need to have the right people processing technology. You need to educate and you have to have a change management program that really supports

24:56

that. Yeah, I've seen the stat and it's 70% 

25:00

I was going to say that but I wasn't sure if it was 70. So well, when you consider

25:03

when you consider that since since organizations have have kind of been doing this digital transformation efforts, collectively across the world, there's been about $10 trillion spent on this. Wow, if you consider that if 70% of fail, that $7 trillion that has been wasted, I don't think they're failed, I think they've just kind of stalled because the change management that hasn't been done as much as anything else, right? It used to be easy used to say, Well, look, if you've got an issue in your organization, there's two options, you either change the people or you change the people. Well, good luck with changing the people, because what you're going to change them with everybody's kind of in the same space, right? Most people that come through organizations that have had this approach of, you know, we'll tell you what we think you need to learn, and we'll tell you what you think you need to know. But that's not going to break down your fear and your resistance and all this kind of stuff. And this is this is why it's not working. You know, it's not just happening in one or two instances, it's happening all over, right? People just aren't getting on with what they need to get on with because of this resistance to change and a lack of understanding and all this kind of good stuff. So yeah, I think that's, that's a really interesting thing to consider. What what one piece of advice or learning Do you want to share that we maybe haven't covered today?

26:24

I think I talked about it already i and I've said it now twice. So I will say it one more time, the human element, I just, I think back to I've been very, very privileged in my career to have really amazing leaders. And I really kind of compare what I'm saying about the human element to servant leadership. And the leaders that I've had, that were servant leaders are the ones that have moved my professional career forward, moves the organization forward. And a critical element of servant leadership is understanding the people on your team, understanding what drives them, what motivates them, how to work with them, what environment they should be in to be successful. And I compare that to change management and a digital transformation, like you really need to understand for the person who's filling out all the data that's going into the system that's going into Amazon, they know what's going on, they understand the strategy, ask them questions, ask them, what's important to them, and what might need to change, or for someone who might have been in sales for the past 25 years and never worked in digital, explain to them how digital will help them grow and will help their profitability and, and sit in their shoes. And really try to understand from their perspective, why this is important. Explain the context to them. And that's where you'll really make the difference. I think at the end of the day, we're all people, it all comes down to that. And I think we look at these digital transformations and, and I think there's a sense of panic sometimes that it's like, we need to catch up, we need to do this now. It needs to be fixed. We need to grow ourselves. And that might be the case, but if you don't do it correctly, to your point, everyone's gonna be behind anyway. So do it right. Think about the humans at the end of the day, think about adding that context, and really enabling them to do their job in the best way and understand why they are a critical piece in this much broader picture.

28:21

Laura, and this has been fantastic and very insightful. Before we finish where can people find more information on the digital shelf Institute,

28:29

they can visit the digital shelf institute.org. If they're interested in viewing the content, they can look at our resources or they can become a member. It's free to become a member. And if anyone has any questions, they can also reach out to me on LinkedIn.

28:42

Perfect. Well, great to talk to you and thank you so much and hopefully hopefully we can meet up when when we're in the same town soon.

28:49

Yes, hopefully. Thanks so much, Jonny. I appreciate it.