E-commerce experts: Delight your customers and they will delight you with sales

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Date:
06-Nov-2013
Input sound file:
1003.MP3

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Session Name: The Age of Emotional Design-Centric E-Commerce

Chris Albrecht
Katie Fehrenbacher
Kirsten Green
Ilana Stern
Jess Lee
Recorded Voice

Chris Albrecht 00:01
Thanks Katie, thanks Joe, we’re actually going to bring, we’re not gonna let Katie stay backstage for very long because she’s gonna come out and moderate our next discussion The Age of Emotional Design-Centric E-commerce, that’s going to be talking with Kirsten Green of Forerunner Ventures, Jess Lee of Polyvore and Ilana Stern founder and CEO of Weddington Way. Thank you so much, bring out the next panel please.
Katie Fehrenbacher 00:26
Alright, you guys are all on the couch. Alright, this time we’re talking about the age of emotional design-centric e-commerce, can you guys fit over there?
Kirsten Green 00:38
Yeah, we’re good.
Katie Fehrenbacher 00:39
And Kirsten Green, she’s the founder and managing partner for Forerunner Ventures, that’s a three year old venture firm, and they’ve got 40 million fund under management?
Kirsten Green 00:49
Yeah.
Katie Fehrenbacher 00:49
And they do invest in many next generation e-commerce companies like Birchbox, Warby Parker, Wanelo, Bonobos a lot of those firms. And Jess Lee, she’s the co-founder and CEO of Polyvore, that’s a five year old social shopping site which I have used many times, and they have a community that clips and makes collages of clothing and home decor most recently, and they have 20 million users per month. And Ilana Stern, she’s the founder and CEO of Weddington Way, that’s a two year old bridesmaid’s online site, it’s a community site.
Ilana Stern 01:28
Group shopping for weddings.
Katie Fehrenbacher 01:29
Group shopping site. So today we want to talk about how kind of design and e-commerce has emerged in creating that emotional experience that we’ve been talking about all day. So, I’m just going to kind of throw this out there, how is the importance of and role of design evolved in the e-commerce space? Whoever wants it most can grab it.
Kirsten Green 01:50
I actually think it’s the backbone for this whole new generation of e-commerce companies. If you think about, sort of, what I think of as the first generation which is Amazon, eBay, those businesses were really founded on the basis of closing a transaction and most of the process was all geared towards that. And as technology has become more advanced and we have more ways to interact with it and it’s more around the fabric of our lives, it’s just lead to more opportunities to use it in a really dynamic way. And so now commerce companies are able to really create experiences for their consumers, so it’s as you know, ultimately it’s about closing a transaction but there is a path to close a transaction that has become a dynamic, engaging experience which is part of the journey to build loyalty and to really create a brand and have that halo with your business.
Katie Fehrenbacher 02:41
And some of your investments like, across those five or six companies, like how has kind of design lead the way through those companies?
Kirsten Green 02:52
I think it’s fundamental to who they are. Many of them really were founded on the premise of we want to build a brand, and how do you go about building a brand? And going about building a brand is very closely related to focusing on understanding your customer, and developing a relationship with them, and part of developing a relationship is creating an experience and so that is the DNA in which they think about creating a business, and technology and all of the digital devices and tools is a way of bringing that to life.
Katie Fehrenbacher 03:24
Yeah, and you guys are building brand new e-commerce brands kind of from the ground up, like how has that bringing experience in turning into design?
Jess Lee 03:33
So I think that one of the biggest shifts that’s happened with e-commerce and social commerce has been a shift in the design patterns from search to browse. So it used to be if you were trying to buy a camera or a computer, you know what you’re looking for, you type in a search query, you search for camera and then you filter by megapixel, gigahertz and then you end up with search results, and that pattern’s been around for a very long time, you know Amazon started it a very long time ago, but now as more lifestyle products are moving online like fashion or wedding or buying a sofa, you buy those based on your taste and you buy them not because you need them right at that moment but because it’s fun and it’s a pastime to just shop and browse those items, so I think that’s one of the biggest design shifts that we’ve seen and it’s certainly true of Polyvore, we’re very browse-centric.
Katie Fehrenbacher 04:21
What are some of the biggest tools you’re using to create those kind of emotional e-commerce experience, you know, personalization, mobile, social, what are the main strategies you’re using?
Ilana Stern 04:34
So I think at Weddington Way for us the two core tenets are both social and personalization, so from the perspective of social for us we have a group of friends coming together around one of life’s most important events. So there is natural– a naturally, emotionally driven experience and so creating a really robust environment where they can all come together online, collaborate, discover and transact sort of builds on the natural behavior that we’ve seen historically among this group of friends and so that is where we see really, really high engagement, really, really high customer happiness. And then from the personalization perspective it’s all sort of we say it’s data driven personalization, so we have a customer who comes to our site and for our brides for example we know her wedding date, we know what color she’s been looking at, what merchandise she’s been browsing, how many people she has in her show room, how many people she’s involving in sort of this process in her wedding, and so we’re able to create really tailored communication and experiences to exactly what she’s doing, and we found that to be really powerful in sort of playing with, sort of her emotional heart strings in creating an experience that really resonates to her and her specific experience.
Katie Fehrenbacher 05:50
And you’re creating, I mean, there aren’t bridesmaids really communities, I mean maybe some kind of like online question and answer type thing but there aren’t kind of these end-end services where you buy the actual clothing and then you manage it online so you’re kind of creating a whole new category.
Ilana Stern 06:08
Yeah it’s a whole new category, it’s friends coming together and no matter where they live to shop together online, to share an experience, to go through the sort of experience from discovery through to transaction which is just totally different than anything she’s been able to do elsewhere.
Katie Fehrenbacher 06:25
And you’re using a lot of data I’m sure, a lot of your companies are and you are as well. How do you– what type of data do you bring in and how do you use that type of data to personalize the service or offer them better, more products, better experiences?
Ilana Stern 06:40
So for our customer in particular I think what’s really nice for us is we start with a highly qualified lead for a lack of a better term, she’s a customer who’s very discoverable, we know where she is, so you know whether it’s certain blogs that she’s reading, certain even magazines still that she’s reading, whether she’s on Facebook with her status engaged or there are a number of different ways in which we’re able to know sort of exactly where she is in her life stage. And so that helps us bring in just a very you know, qualified customer and then obviously word of mouth and the space is huge, so with that as a foundation then through how she engages with our site and through what she shares with us on our site that’s where we really are personalizing the experience, so it’s a lot of the data that we’re actually collecting as she moves through the experience that lends to the personalization.
Katie Fehrenbacher 07:37
Jess, yours is based totally on data.
Jess Lee 07:39
Yeah, so with Polyvore our goal is to help people discover and shop for things that they love that cater to their taste, so what we need to do is understand what peoples taste– what is their taste? What is their– taste is very personal, it depends like I might like this particular leather jacket but it’s different from that one, very, we’re very specific taste. So to understand that we have tools to let people mix and match their favorite products into sets, they’re collages, it could be outfits, it could be mood boards, but every set is essentially a really unique set of data about products that go together, so we know that this leather jacket matches a particular shoe, that those brands go together, that that trend is rising in the first place and so we have this really unique data set about taste and fashion and home decor and the goal is to use that to power a really amazing shopping experience, and you can see this in Polyvore when you click on our products and you look at the product recommendations, a lot of that is based on interesting taste data that we have, so it’s a very core part, I think you hit on taste data and design, those are two really important parts of what we do.
Katie Fehrenbacher 08:40
What about for your portfolio company? Is data something that when you see kind of the business plan they come in and you’re like, you know, that’s the one.
Kirsten Green 08:48
I think unlocking data and using it to your advantage is one of the most exciting opportunities within these companies, and if it’s done right you’ve really made some fundamental shifts to the business model, because these direct-to-consumer brands now have visibility and understanding where they’re customer’s coming from, how they found them, how they came into the site, what they did while they were there, as Ilana was mentioning all of that creates this information map about the customer, which then the best companies are able to use to their advantage around planning their merchandising strategies, planning their other marketing strategies and programs and even planning their inventory, so I think you know if you’re actually tapping and using those to your most advantage you’re creating efficiencies in all of those core kind of expense items in your business, and creating a better experience while you’re doing it.
Katie Fehrenbacher 09:41
When I think about two e-commerce giants, the transactional giant that you were talking about in the beginning like an Amazon, and then a kind of more modern company that is using that more of like an indirect type of e-commerce browsing and is a Pinterest, how do you think these two companies are still shaping the way you run your businesses and kind of the future of e-commerce?
Kirsten Green 10:09
I’ll lead by saying Amazon is a formidable company. They are impressive in every which way, and as an investor we’re always being challenged to try to make intelligent decisions of early stage investments and one of mine starts with I like to stay out of the way of Amazon. Because it’s already hard enough to get a business off of the ground and if you think you’re going to compete with Amazon, like it’s that much harder so–
Katie Fehrenbacher 10:35
Do you think Amazon can compete on that emotional experience level?
Kirsten Green 10:39
You know I don’t think they have–
Katie Fehrenbacher 10:40
Or they don’t mean to?
Kirsten Green 10:41
You know I think what they’ve chosen to compete on is certain elements you know, assortment and choice and convenience and those have proven to be really powerful drivers for a business that has served them well for a decade and will probably serve them well for another decade. And that is important in certain categories of shopping and in other categories of shopping the romance of the process and the experience you have is a lot more important, and so I think that there are certain categories where Amazon might win for a very long time or always and there are other categories where it’s not the ideal set up.
Jess Lee 11:16
I was in New York recently and all the cabs and bus stations have Amazon.com slash fashion ads everywhere, so it’s clear that Amazon’s really investing in this space but I think what’s difficult, you know they’re great for the I need to get something, I need to get in and out, I’m going to do a search, I know what I want, I’m going to filter and I’m going to find it and it’s going to be super convenient but the emotional part of shopping is pretty absent from Amazon right now, and I think at the crux of that is understanding peoples taste, what’s going to– you know, Amazon is actually very good at data but they don’t have that data, and I think in order to understand personal taste you actually need a community to get that taste data at scale you need a community of people who are constantly telling you this is hot right now, this is the trend that’s in, these things go together and without that community you can’t get access to that taste so you need a community of taste makers.
Katie Fehrenbacher 12:08
Do you think Amazon would be interested in that space? Like do you– maybe I’ll, you know try to help sell for these companies [laughter] do you think they’d want to get into that space? They’re definitely interested.
Kirsten Green 12:17
I think they’re interested in every space as you can already see by the way that their business is evolving.
Katie Fehrenbacher 12:25
In terms of Pinterest I know, you were saying a lot of kind of the leads on the bridesmaid’s dresses kind of come from that area, how has that shaped your company?
Ilana Stern 12:34
Yeah so Kirsten and I were talking about this before actually. Pinterest is an incredibly important medium for our customers to– it’s where they go to find inspiration, but what we found is the mindset of our customers, a bride on Pinterest is very different than the mindset of a bride on Weddington Way. So when she’s on Pinterest she’s in this very blue sky mentality pulling, just driving inspiration from different places and trying to create a vision for this event that she’s working on. Whereas when she comes to Weddington Way, it’s much more transaction oriented, she actually has a goal that she’s trying accomplish, and she needs to find certain merchandise, bring people together and get a transaction going. So everything that we focus on in inspiration is much more driven and directed towards facilitating that transaction and that mission that she’s trying to accomplish on Weddington Way, so it’s very complimentary in that once– when she comes to Weddington Way from Pinterest she has a clear vision of what she’s looking for which means we can also get her more quickly to what she’s trying to accomplish.
Katie Fehrenbacher 13:43
And you do that type of more browsing based type of experience, more like a Pinterest less like an Amazon right?
Jess Lee 13:49
Yeah, but our experiences is quite similar. If you go to the women’s fashion section on Pinterest you’ll see quite a lot Polyvore content and people discover Polyvore outfits that way and then end up on the site. Polyvore’s much more focused on actual shopping.
Katie Fehrenbacher 14:06
And e-commerce is kind of a notoriously difficult business to maintain growth continuously, maybe you disagree with me on that?
Jess Lee 14:14
No.
Katie Fehrenbacher 14:14
Okay [laughter] You know it’s seasonal sometimes and things go in and out of fashion, flash sales for example. You know fab has been in the news a lot lately. How do you kind of maintain some kind of steady growth or how do you recreate the experience and evolve it to keep your customer going, keep them maintained? I guess for the entrepreneurs here.
Ilana Stern 14:40
I mean it’s definitely for Weddington Way it’s a matter of always– it’s the design thinking, it’s always going back to your customer, for us it’s going back to our customer understanding what she’s trying accomplish, what barriers are in her way and creating the best experience for her to get to her goal, and sort of staying ahead of her in terms of anticipating her needs and leveraging intuition to, based on an understanding of our customer, to try to sort of get ahead of her and bring new forms of discovery and collaboration to her that wow her and sort of answer that I never knew I needed this but it’s so much better this way, so for us it’s really about the customer-centric thinking and staying true to our core.
Jess Lee 15:33
Yeah I agree, the fundamental thing you have to do is delight your user and then that generates word of mouth but the thing you can do on top of that is be very scientific about working on that growth loop, that word of mouth loop, making sure that your users can share the content that they’re creating to all the major social platforms, to Pinterest, to Tumblr, to Twitter, to Facebook so we’ve been quite scientific about that as well as you know SEO’s and other growth loops, so all those things. But the world’s going mobile, so everything’s changing.
Katie Fehrenbacher 16:04
Let’s talk about mobile. How important is it for your business? Go ahead.
Kirsten Green 16:11
I think it’s really important in general. I think that an underlying core truth of this whole segment is that the consumer’s in charge and that you really need to be wherever the consumer is, and the consumer is everywhere and they are increasingly on their mobile devices so being able to address them in an appropriate way in that space in that venue is really important.
Katie Fehrenbacher 16:33
Do you find, like is there a growing percentage of your users are coming on strictly mobile, do you have any data or anything on that?
Ilana Stern 16:40
Yeah we definitely see continual growth in the percentage of users coming from mobile. For us what we actually see is our users will jump back and forth between mobile and desktop a lot, so she’ll consume a lot actually on desktop and tablet but she’s very transaction driven when she’s on mobile. So she’s either typed in Weddington Way dot com for a specific reason or she is clicking through from a Weddington Way email or an SMS and she’s actually going to the site for a reason, so that’s how– sort of we think about what she’s trying to accomplish from different perspectives when we’re thinking about mobile design versus desktop.
Jess Lee 17:28
For us, what we found is that our mobile users are more engaged, so they spend I think three times as long using Polyvore on the phone, in our iPhone app versus on the desktop. But the transaction rates for us are actually higher on desktop than on mobile because we don’t sell anything directly so you have to click through to the merchant’s site, and many of those sites are not as mobile optimized and it’s annoying to type in your credit card number on the phone, so we found that the transaction rates are higher on desktop.
Katie Fehrenbacher 17:55
And does she spend more time on mobile because she’s out browsing?
Jess Lee 17:59
Yeah, you have that with you all the time, it’s fun, browse through, look at some styles.
Katie Fehrenbacher 18:05
How do you think the online and offline experience of e-commerce has evolved, so you know you go to the store and you’re using your phone constantly to check prices on the things in the store, and then at the other hand, Warby Parker, online brands will launch a brick and mortar store only. What’s your perspective on that?
Kirsten Green 18:25
I think it’s very connected to the last comment I made which is that the customer is leading the charge and they are everywhere and they want you to be able to address them when and where and how they want to. And so I think that retailing and brand building and product building ultimately needs to be a 360 degree experience, and that might mean something different for a Warby Parker or a Weddington Way, but I would say most retailing platforms probably have some element of how they can touch a consumer in an offline capacity. That’s just an important part of closing the loop on that experience.
Katie Fehrenbacher 19:03
So are we going to see any Polyvore or Weddington Way stores out there?
Jess Lee 19:09
We aren’t planning to sell anything ourselves but, you know, we have done a couple of events and things with community members.
Katie Fehrenbacher 19:16
And you have a built in, physical presence because they’re getting the dresses and they actually have the wedding at the end.
Ilana Stern 19:24
So we definitely– we’re very thoughtful about I think one of our theses is we’re going to win with our customer in the unique and innovative ways that we combine technology and touch to delight her beyond what she would ever experience in a pure brick and mortar, pure online. So we definitely think very much about how we can touch her and ways we can access her physically as early as possible. So in even in the form of– for us fabric swatches, so we ship out fabric swatches pretty early on and it gives her the ability to have the tactile experience with our products, to understand what a color looks like on the screen versus in real life and it’s an opportunity to send a hand written thank you note, so it’s really just building that relationship with very early in her cycle with us.
Katie Fehrenbacher 20:13
What are the biggest lessons you’ve learned with creating the experience with your customer? I guess for the entrepreneurs.
Jess Lee 20:20
The biggest lesson?
Katie Fehrenbacher 20:21
What are some of the biggest lessons, what’s the most important thing? Hopefully there’s like an anecdote where, [?] and I really needed to created that experience or I did a really good job on this.
Jess Lee 20:36
I mean I think, one thing that’s been confirmed over and over and over is you really have to delight the user, like you really have to build something that they want to tell their friends about, like Polyvore has grown almost entirely off the back of that through our core creators who really love the site and who we– we really try to go the extra mile with our community managers to make them understand how important they are to us and how– because you know Polyvore is really just technology and a platform, kind of a blank canvas. Without our user community who’s very talented and has great style, we would literally– we’d have nothing. So making sure they know how we feel about them, we send hand written notes, this Friday we’re flying out a couple of members to, well more than a couple of members, 13 members, to come visit us at the company. And to see those stories and people in real life and how much this means to them, it’s incredible. And then what happens is those people go and they tell their friends, we’ve grown through people posting their content to Facebook, to Pinterest, to Tumblr through those people guiding the other community members to create the right kinds of content. They also help moderate the site but literally we would be nothing without them so that’s always been a very important lesson and it’s really great when we actually meet them in person and to hear the story and how some of them are even going back to school for graphic design, or fashion design, or starting their own jewelry line. Those are really amazing moments, some of the rewarding moments.
Katie Fehrenbacher 21:59
And you’re unique because you are actually a user right? Tell them the story.
Jess Lee 22:06
So I started out as a user of Polyvore. I was a [?] at the time and someone showed it to me and I fell in love and I wrote to the original co-founders and said hey I have all these suggestions for what you could do and then they wrote back and said why don’t you do these yourself, why don’t you just join us? So that’s how I ended up at Polyvore.
Katie Fehrenbacher 22:24
What about you, the biggest lessons you learned from creating that experience for your customer.
Ilana Stern 22:30
I think there’s a lot of consistency, the customer eccentricity and really thinking about how we delight the customers. I mean wins for us, either the elements of growth and word of mouth and all of that but we see, we have a stylist team that is sort of the customer facing piece of our company, so we’re the personalized, the data driven personalization meets human touch. They’re getting invited to weddings of our customers and stuff so really thinking about how we’re building that emotional connection. And then again the technology meets touch is really huge for us, so it’s always thinking outside the box and it’s not limiting our experience to exactly just what’s happening on the website but it’s really about imagining her experience end-to-end and where she’s at emotionally throughout the process and how we’re touching her both through our site as well as physically. So really sort of understanding the road map of her experience and getting into her shoes beyond just the site is really, really important for us.
Katie Fehrenbacher 23:32
I’m going to open it up to audience questions. Wave your hand if you any questions about e-commerce experience and design, I’ve got my own questions but raise your hand if have any more questions, I have one for Kirsten. From a Venture perspective, what are the types of disruptive ideas in the space that you’re looking for, that you’re looking at out there? What can be disruptive still?
Kirsten Green 24:02
I kind of think about it from two perspectives, so one if you’re talking about a direct-to-consumer experience either around bringing a new product to market or a retailing opportunity, you’ve got to think about categories where there are big tail winds and so either there’s a positive trend towards people jumping on to the wave of that category like beauty, like outdoor recreation sports–
Katie Fehrenbacher 24:28
You do Zozi right?
Kirsten Green 24:29
Zozi? Yeah. Or some sort of tail wind in the category where they can leverage all of these new tools to really bring a more efficient business model to market, I think there’s still a lot of opportunities there and those are kind of, they’re one off, I can’t sit here and say there’s a big theme it really starts with an entrepreneur who has like an authentic point of view around an idea, and really is in touch with his consumer and has a point of view on how he’s going to bring– he or she’s going to bring that to life. Some of the big trend that I think has underlined ties to technology or anything, we’ve talked about them a little bit today but anything along the lines of discovery in personalization. So discovery is I think the direct result of having just– consumers are being bombarded with so much information and so much newness and so much product so how do they go about kind of figuring out what they really do want, what they need. And then obviously this personalization thing has come up, I think there’s a lot of opportunity for innovation around that that just creates a more dynamic experience, and ultimately leads somebody to a transaction and leads somebody back to another one.
Katie Fehrenbacher 25:36
Are there any traditional brands that you think are doing a good job? Are there any kind of the brick and mortar stores that you think are still doing a good job incorporating these experiences and becoming more experienced, design driven?
Kirsten Green 25:52
Yeah it’s a great question actually for me it’s been like really interesting to see the evolution of that start to take shape, because I’ve been following this phase for nearly 20 years now and there’s a lot of retailers that have been companies that scale for a decade or two decades and they’re kind of past the prime of growth and I think that a handful of years back, all of this stuff that was happening in the digital world was the stuff happening in the digital world, and slowly but surely it’s started to catch people’s attention and now we’re at a place where we get phone calls from staples or home depots or these big retailers that are like, we really want to make sure that we understand where the consumer’s going and where this space is evolving and while our business might be intact today, if you look down the road five, ten years from now, the consumer that’s going to show up with more purchase than ten and more dollars, has been trained and grown up in a different way and we need to understand how to interact with them, and how to incorporate that into our business model and some of them have the capacity to be innovative but like happens in most sectors, the companies that are large and that scale and mature, they’re not hubs for innovation so they look to things like our community and start up’s for accessing that and so I think there’s a handful of retailers that I think are at the forefront of it and then there are a group that are kind of middle pack watching and then the ones that are eager to play catch up, but most importantly there feels like there’s a lot of momentum from the big guys in the sector to take this very seriously.
Katie Fehrenbacher 27:24
And do you guys have any advice for the designers in the audience who want to get into, or who are interested in the e-commerce business, do you have any advice for them?
Jess Lee 27:36
For starting an e-commerce business?
Katie Fehrenbacher 27:38
For starting an e-commerce business, also kind of getting into that space. What would you tell them?
Jess Lee 27:45
My biggest piece of advice would be to do a few things well. That’s one of the mantras of Polyvore, it’s pick the thing that you want to focus on that matters the most and just do that incredibly well and polish it because you’re going to end up being known usually for one thing that works great rather than like, you know do many things poorly, sort of a bunch of features that are all mediocre. So I think that that comes very early on in your start up’s life.
Ilana Stern 28:10
Yeah I’d say from that, I guess from the perspective of founding, the other piece would be focus on a consumer pain. So there is a lot out there that is nice to have or need to have but at least from Weddington Way’s perspective there’s been nothing more inspiring than focusing on a real consumer pain that exists in a large market that’s impacting people at a time in life when they really care and working on solving that, and I think for design thinking, customer-centric thinking there’s nothing more inspiring and it’s a great challenge.
Katie Fehrenbacher 28:45
Well you inspired us and we have no more time left but thank you so much Kirsten, Ilana and Jess.
Chris Albrecht 29:01
Alright, remember in college when you had like the extra-long class and the teacher would be like, we can either power through and go home early or you can take a break? We’re going to take a shortened break right now, instead of an hour we’re going to have 30 minutes where you can network, go to the product booth and all that stuff up. You can tell we’re towards the end of day two. So, we’ll be back here at 3.40. Go grab some refreshments, talk to each other, have fun, thanks everybody.
Recorded Voice 29:30
General session will resume at 3:40.