Q&A: Jason Stuckey, General Manager at Linnworks
Linnwork’s Jason Stuckey talks total commerce, digital marketing and disruption.
Linnwork’s Jason Stuckey talks total commerce, digital marketing and disruption.
Jason Stuckey is an authority on advertising and ecommerce with over ten years of experience in digital marketing, ecommerce strategy and back-office operations. He’s launched successful DTC endeavors for celebrities including Rihanna, Kate Hudson and Michael B. Jordan. As a general manager at Linnworks, a RETHINK Retail sponsor, Jason shares his insights on total commerce strategies — including how to harness this time of global change and market disruption to create thriving brands.
To hear more from Jason Stuckey, check out his full podcast interview.
How important is customer experience for today’s e-commerce shopper?
Experience is huge. Traditionally e-commerce and wholesale have been viewed as distinct channels. Each channel is treated in silos because e-commerce at best only drives about 20% of sales for an established brand. It’s no wonder that a lot of focus has gone into retail, generating 80% of sales. For this reason, ecommerce strategy has generally been an afterthought, but now it doesn’t make sense to think of digital channels as an afterthought. It’s leading to an identity crisis for many brands who don’t know how to make that leap but have to make a strategic transition. Just in the last 18 months over COVID, we’ve seen a 5% increase in e-commerce as a percentage of retail sales. This increase is the same amount that we’ve seen over the past seven years. It’s a tremendous amount of growth and is a strong indicator that digital-first is inevitable and now is the time to make the shift. Over the next ten years, we will see the difference between brands that decided to shift now and brands that waited, hoping things would change.
A new acronym is on the lips of retails – OMO, online merge offline. OMO refers to concepts like buying online pick up in-store, buying online and returning in-store, accessing the company website for online purchase, and getting rapid last-mile delivery services. The last thing is digitizing in-store touchpoints by taking consumer insights gathered online and making them a part of the retail experience by helping consumers make smart choices. Digital-first promises to deliver a much better experience for consumers, and the big win all around will be centered on convenience. 76% of consumers say that convenience is their number one priority when making a purchase. Convenience is king now, and the cost is less important. Consumers are now demanding convenience, and sellers will have to work very hard to meet those demands. We are at a critical inflection point in this 20-year evolution and a reimagination of what commerce will be moving forward.
What are some e-commerce trends you expect to see as we approach the holiday season?
We’re seeing four things as trends emerging, and brands are thinking more strategically about how they shift their strategies.
The first is marketplace strategy. Marketplaces have gowned their gross merchandise volume, or GMV, by more than 80% over the last 18 months. They control online transactions in terms of the overall share of ecommerce transactions marketplaces. About 50% of these marketplaces are masters of engagement, and trying to compete against them as a brand is a fool’s errand. Many brands are now thinking about how to work with these marketplaces, which marketplace to sell on, and how to do it successfully.
The second topic is inventory and fulfillment strategy. More channels mean more complexity in these areas. Making brands ask questions like how we deploy our inventory everywhere simultaneously and how you get it to your customers quickly and conveniently in a way they expect.
The third topic is personalization. Brands want to get a holistic view of the customer using data to provide personalized experiences. Many major brands are talking about getting customer data into one place that provides a holistic customer view. Then, how to use that data to make better product decisions and drive a better customer experience.
The last topic is fascinating – how do brands make money from e-commerce. Companies used to have a single sale mentality; how much margin are we making on a single sale? Today selling online, the competition is for eyeballs, and brands compete against millions of websites while also competing against marketplaces. Some of these marketplaces spend billions of dollars to create engaging methods to keep eyeballs on their environment. It’s a challenging position to be in, where brands have to spend a lot of money to drive traffic to their website. Often, brands are spending to the point where they are no longer making money or even losing money on a transaction. But still, consumers demand online shopping, making it difficult for sellers to profit. A mindset shift is required to move away from a single cost per acquisition (CPA) or cap perspective to focus on a customer’s LTV lifetime value. Brands have to consider how they engage the customer and earn their loyalty to gain a long-term relationship. That is how to make money in e-commerce. However, it’s challenging for big companies to spend millions of dollars retooling their technology stack to deliver this expectation and delight customers, but they are not making money.
Do you think brands and retailers should go big on advertising since it is getting more expensive?
I was a part of creating Savage x Fenty, and if we did not have a subscription and membership model, we would not have been successful. The cost per acquisition of a customer exceeded the money we made from that customer on the first sound. It wasn’t until the third or fourth sales where we would break even. That determined our benchmark: how we bring customers and delight them enough to stay customers long-term.
In terms of advertising, we see traditional ad channels turn into commerce channels. We’ve seen the likes of Google put their foot forward into changing their platform from advertising only to a commerce platform. Looking at Facebook’s Q2 earnings call with Sheryl Sandberg and Mark Zuckerberg, all they were talking about was how to take their social channels, which are currently advertising channels, and turn them into commerce challenges. This concept presents opportunities for partnership between brands and commerce channels that they are already advertising together and start to take it from advertising only to transaction services. We will see more of this popping up because, at a certain point, something’s got to give. You can’t have brands losing money and continuing to push forward. These challenges will make commerce channels rethink their strategy, allowing brands to make money by transacting on their platform.
How does total commerce help create a differentiated customer experience?
Total commerce is looking at where things are heading. As I discussed earlier, channels have been seen as silos or treated as silos, but as the number of channels increases and the need for sellers on these channels increases. We can only come up with so many acronyms and names, so it will blend together at a certain point and just become commerce, or what we call total commerce. That is where the market is heading, and ultimately, sellers need to ask is how do we make that experience with us seamless? They are focused on driving a seamless experience for customers across all these channels. As a technology provider at Linnworks, we try to provide that same experience for our customers. Consumers demand that sellers and brands meet them where they are, and the demand is increasing at an accelerating rate. The charge for us at Linnworks is to unlock this capability for brands via our platform without increasing overhead or complexity. If technology and processes are dialed in, the process from clinic to ship should be the same no matter what channels a brand is selling. This can be done by providing them with a technology platform to offer a seamless experience. Brands can focus on driving more energy into engaging with customers and delivering a better consumer experience across channels.
They can then make more strategic decisions rather than reactionary, tactical decisions that come with the chaos of managing and being everywhere at once. I think channels are starting to become commoditized from an operational perspective. There are all these new channels; you’ve got your website, you got Amazon, all of a sudden you got that’s the house Wayfair, and now you got these social channels that are rising, such as Instagram, Facebook, WhatsApp, and TikTok. You know you’re going to be seeing more of these types of channels because they are coming faster and faster to sellers. That presents a real challenge because it is essential to make sure that you are seen in the world if you’re a big brand. Now a new channel enters that you need to use and if you don’t your competitors are going to do. It’s a complex world to be in, but as more and more channels arise from an operations perspective, it doesn’t matter what channel is used. The internal back-office operation should all be treated the same. That comes down to working with the client’s technology stack to ensure that process is homogenized and they can deliver on customer expectations across all channels.
These channels are driving consumers’ expectations. For example, Amazon has conditioned consumers to believe that they click a button, and in two days or less, your order arrives. That’s the benchmark across all a brand’s channels, so they need to build the technology that can drive it towards the marketplace that sets those consumer expectations for delivery or consumption.
What is your take on social commerce, and where is it headed?
There’s a lot of growth in social today – 4% of e-commerce is occurring on social channels, but that number will grow very quickly. If you look at the generations, Gen Z is spending 20% more time on social media, almost 4/12 a day, so it is essential to embrace the idea of meeting customers where they are. 43% of Gen Zers have already purchased social commerce, and as they gain more discretionary income, that will grow exponentially. Some data suggests that you can see it moving linearly. Still, I believe it will grow exponentially, especially as social platforms build more robust tools for enabling commerce. Remember, Facebook is still early doors on where they are with its commerce strategy. It is a challenging thing to do super well they’re getting those tools together. So, as these channels add more tools for sellers, I expect a rapid adoption and increase to meet the demand and start to transact on these platforms. The other thing to pay attention to is how much data Facebook has on consumers and leveraging that data to target consumers. Gen Z is the one generation that grew up in a digital world, and they have grown up in a social work where Facebook knows a tremendous amount of information about their generation. I am very bullish on social commerce and its ability to target consumers. But I will say it’s not all doom am gloom; it’s a good thing because of what the permutation of commerce has done to the psyche of individuals. There are 353 million listings on Amazon, and if I spent one second on each listing, it would take you over ten years to look at the entire catalog of Amazon products. That creates a lot of unhappiness because it’s difficult for consumers to choose what products will suit them best. If you look at it positively, the more information these platforms know about us, the more they can help solve that problem by introducing products that we like. I think it makes the journey for consumers much easier, and it gives rise to what we’re calling the effortless economy. Consumers always trend towards the path of least resistance, and in this effortless economy, social channels are going to do this incredibly well
What are some other channels that you think will be key for retailers to be competitive?
I think that social channels will continue to grow. TikTok is where we are getting the most interest. Our sellers are asking us about what is TikTok strategy is and how do we prepare for that. I think it is apparent that social challenges are the leading channels. The second one is that it goes back to retail and its role in building a strong DTC brand experience. I know I’ve used the word reimagined but right now, it really is a time of reimagination in retail and considering how social channels can add value to that digital experience. We’ve been hearing for a decade now that retail is dead, and retail is not dead; it is just in the process of a transformation. This transformation is more about delivering an excellent boutique experience where you get to step into the brand. People were laughing at Apple when they said they were going into retail, and it turned out this was a genius move. Apple said we will spend a lot of money on our stores, not to turn those stores into profit centers necessarily. It allowed consumers to experience the brand and have a place to go to have a better experience than online.
The next frontier as these digital-first brands start to grow up is creating different concepts of how they will do retail because the need for retail can’t be ignored. With Savage x Fenty, we used a different concept by taking the membership model and using that customer data to drive a much better experience. When customers walked into our stores, the associate would ask if they were a member, get their name, and then pull up their profile on an iPad. Customers can look at what they already purchased and learn more about the in-store products. Before they walk into the changing rooms, they can look on a screen and interact with the screen to learn more about the fabrics and the products, why they were designed the way they are, and how they might complement products already in their closets. I really think it’s a reimagination of retail, and I know I’m probably going to be an outlier on that, but I think again, looking at the channels, sellers need to pay attention. Of course, there are digital channels that are very present, but retail is something that brands should not forget.
When you’re talking with your clients about managing a brand across many or new channels, what are some key factors?
The first thing I tell brands is that your brand is your power, and that is your leverage against the threat of these marketplaces homogenizing your brand. It is the Achilles heel of Amazon, the everything store. Amazon is not a great place to step in and experience a brand, so owning your band and its power is how to combat that desire from marketplaces to make everyone look the same. Ultimately we tell sellers they’re not your customers or Amazon’s customers, so you have to lean into building a strong brand. For example, what we did at Savage x Fenty with Rihanna, was to have a conversation with Amazon and said, ” Look, you want our brand, but what can you do for us? We created our own branded experience with Amazon that gave us more control, and then we leveraged their channels like Prime Video to sponsor Rihanna’s NY fashion show. That’s an example of great synergy across that challenge, and of course, it was only possible because we had Rihanna, a huge draw.
In return, Amazon said that is a great revenue channel for us; it drove more sales back to their website.
Another example of this is Nike. Nike cares about their brands, and Amazon was not providing them with the data that would allow them to drive a better experience for their customers. So Nike said thank you, but we’re going to take our business elsewhere and then partnered with Zolando, who was more than willing to give them control over the branded experience and provide more information on consumers. As a result, Nike recognized that marketplaces are significant but developed a strategy to utilize them in a way that doesn’t destroy their brand’s power.
Focusing on brand value is vital as brands approach marketplaces. As a small seller, there is an opportunity to ask what marketplaces can do for your brand and how they can participate in the marketplaces without destroying their brand value. There are a couple of strategies you can deploy. First, don’t give the marketplace your entire assortment of products. If customers want your entire assortment, customers should have to go to a brand’s channel. Brands have more control over their own channels, so utilizing your best products on their channels is most effective. Marketplaces should serve as fishing bait to attract customers to your brand, but ultimately, they will have to go to your website to get the entire assortment. This is an excellent strategy for smaller brands, especially to ensure they’re not just throwing their brand value out.
The second thing is to focus on is sharing your message on as many channels as possible. Consumers care about what the brand stands for, and Gen Z and millennials are all now very focused on brand message and the impact that the brand has on the environment. These are the challenges of our generation and time, so consumers need to understand what a brand stands for. Consumers care about sustainability, best practices in the supply chain, and treating workers fairly, so sharing these messages with customers about what you are doing is an integral part of owning your brand. Communicating these messages on your brand’s channels is ultimately required to succeed in the world as it moves forward.
What would you say is essential to manage to scale up across selling from different channels and international markets
I would say focusing on your technology. I’ve sat with many huge brands this past week in the discussion, and they were talking about this legacy technology that they have in their stack and trying to make that bend and flex to a very rapidly changing environment. Many of them are concluding that they need to throw it all out and start from scratch. That begins with really choosing technologies that unlock the ability to run your logistics more efficiently. If you have powerful technology, logistics should be much easier and much less of a worry. Brands should be able to add a new territory plug that into your tech stack, and ultimately, that doesn’t slow them down. Then as the market grows, brands should be able to switch out that technology with their own warehouse in the back end to drive down costs and increase efficiency. It comes down to making some tough choices about what technology partner you’re going to pick moving forward. To be successful, you want one that has an international presence. I can’t stress enough that there are plenty of technology providers out there, but most of them are focused on a single market. Choose a provider that is international and does that well. The second thing is to choose ones that allow you to be as flexible as possible without customization. That’s where you get into problems because change management is difficult, but the more you change your technology to fit your business, the more inflexible that technology becomes. We were laughing in a session earlier this week with a brand leader who said if an associate sneezes in Germany, it affects the store in California. This is because they customized everything to fit their needs rather than addressing the complex process of changing how they operate.
It’s like a double-edged sword, the customization aspect. It comes down to a decision between changing internal processes or changing technology, and it’s harder to change internal processes because people are hard to move. We call these “change antibodies,” as soon as a brand says we’re going to change how we do something, there are always those change antibodies that pop up in the business. That makes it very difficult to get people on board with that change, leading retailers to customize things. However, it is a short-term fix that has consequences over time. At Linnworks, we tell brands to look at this massive time of change resulting from covid and recognize that now is the time to make necessary changes, which leads retailers to start to customize things. Customizing things is a short-term fix, but it has consequences over time. We’re telling brands to look at this time of massive change with COVID and recognize that now is the time to have those difficult discussions. Right now, everybody is open to the idea of changing how things are being done and acknowledging that change is needed to be successful. Have those difficult conversations with suppliers or distributors and say, we’ve got to go DTC, and we will do this with or without you. It comes down to leveraging the COVID catalysts as an opportunity to have these discussions and do it the right way rather than trying to customize and stitch everything together along the way, just to placate those change antibodies within your organization. I think it’s a good message because it comes back directly to the question about scaling. Changing the process is hard, but it allows brands to scale and adapt faster in the long run.
Do you think established incumbents should have a DTC strategy, or do you think it’s not for everyone?
100% DTC all the way. There will be two types of companies that are successful in the future of ecommerce, companies that provide technology to make e-commerce easier and DTC brands. It’s essential to control your supply chain to drive your success in a world where products become commoditized. If you’re a retailer, like Bed, Bath and Beyond, for example, that sells other people’s products, they have a high real estate expense. What consumers have been doing is walking into those stores, trying those products, and going and buying them somewhere else online for cheaper. Ultimately, to be successful, you have to adopt a DTC strategy, and that’s what the product-ready company behind Bed Bath and Beyond is starting to do. Retailers are creating white-label brands that you cannot get anywhere else other than their stores. That is their strategy to fortify against what happened in retail in general. This is why we see brands so successful because consumers can’t get those products anywhere else other than them other than where they decide to sell them. That gives the brand complete control over price and its supply chain. It keeps them defended against other people undercutting them on price. Price has always been a big driver for commerce. Think about Walmart always rolling back prices; it’s a place to get everything you want for the lowest price possible. Over the last ten years, it’s been hey come to Best Buy; if you find it cheaper online, buy it from us, please. Ultimately the way to defend against this strategy fully is to be DTC and control the products and distribution entirely rather than giving them in the hands of other distributors that will do that for you.
What are some challenges that you are expecting for this holiday season?
I’m not sure we’ll be able to run a Black Friday promotion because the inventory is so challenged. Consumers have been protected until about mid Q2 of this year, and they have not felt the pain sellers have felt in the supply chain. As we advance into Q4, they can’t hold that off any longer. We have seen shipping costs rise by 7-8 X. There are pileups in ports, and we’re seeing major supply chain constraints across the board. Going into the holiday season, products are simply not available, so that has been hard on sellers, and now it will start to be hard on consumers. As consumers, we’ve been trained to click a button, and it shows up on our doorstep in two days, but consumers will be shocked to find that many products are not going to be available. The deals that they’ve seen in past years in specific categories are going to be nonexistent. There are many question marks about what Black Friday Cyber Monday will bring, such as how many discounts we will see and what types of products will be discounted. I think it will be an interesting story to watch and see what sellers do to pivot. Consumers’ discretionary income and spending desire are there, which was proven on Prime Day, setting records this year. There’s money there, and people want to buy products, but there’s a real risk of a drop in revenue without inventory to meet that demand.
To hear more from Jason Stuckey, check out his full podcast interview.