In 2023, the world of e-commerce finds itself in a state of transition. The pandemic-era online shopping boom has slowed, and customer buying behaviour has shifted to adapt to the backdrop of inflation and a looming global recession.
While e-commerce remains a dominant force – accounting for almost half of retail growth by 2027 – online retailers find themself needing to adapt to a more hostile retail environment with fewer sales, a shifted buyer persona, and a host of new headwinds.
Exorbitant payment fees on platforms like Amazon have reached new heights, forcing retailers to hand over as much as 35 per cent of their sales in a so-called “Amazon tax” that has slashed profit margins for businesses selling products online.
Meanwhile, Google’s plans to eradicate the third-party cookie by 2024 and Apple’s recent privacy changes on iOS have forced retailers that once leaned on third-party data to look to new channels to target customers online.
This has led many to turn to the technology of marketplaces like Amazon in the hope it will make it easier to manage and run their storefront.
But according to Barada Sahu, co-founder of the AI e-commerce engine Mason, it’s time to break free. Mason is helping brands create valuable and personalised experiences to drive engagement and acquisition online, allowing retailers to create and manage their own online stores and fight the dreaded “Amazon tax”.
EM360 Tech’s Ellis Stewart spoke to Barada about the current state of the e-commerce space and how platforms like Mason can reshape the future of online shopping.
Ellis: What are some of the biggest challenges the e-commerce space is facing in 2023?
Barada: “A large part of what brands are facing are these headwinds in terms of scaling up their business. It really comes down to everything that's happening around them. If customer attention is just getting more expensive, no matter what channel you're using, your tax will continue to rise.
“There is more competition in the space all around. There are a lot more brands today. It's become much easier for you to come online and set up a brand. But the problem is that privacy is now front and centre for a lot of these brands.
“[Companies] could rely on third-party cookies, share the data and get a bunch of traffic, but that's just not the case anymore. They need to invest in customer relationships and figure out how to make sense of consumers. This is really challenging when it comes coming online and making any kind of profitable business.”
Ellis: You touched a bit on third-party cookies. Google’s plan to cut cookies by 2024 and Apple’s privacy changes to iOS have made it more difficult than ever before to target customers online. How can retailers adapt to these new headwinds?
Barada: “One of those first things that you got to understand is that an online business or any brand business exists if you have a connection with your customer and if you understand your customers.
“In the previous era, you could rely on things like cookies to help them understand consumers and to target them and talk to them. But now you've got to invest in that yourself. You've got to figure it out because marketplaces are not sharing any data with you about consumers. They’re keeping this data away from brands to protect their privacy.
“The first thing is to invest in your own data platforms and to invest in your own customer experience platforms that help you connect to the consumer. And that's really the heart of it. To get across these headwinds of iOS privacy laws and cookies being phased out, you’ve to start investing a customer experience stack and start investing in connecting to consumers directly, build your own data platforms and invest in your own data platforms
“That really helps you get a better understanding of consumers and build products that make sense to them. That's really the heart of what makes a great business. You understand consumers and build good products.”
Ellis: The world of retail has changed so much since the pandemic. What are some of the big shifts you've seen in the industry over the past few years? What, what shifts do you expect to see?
Barada: “Beyond the headwinds that brands and retailers face, the consumer journey and the shopping journey have become more omnichannel. The internet is one vast plain for us.
“Consumers are often between watching something on Instagram, looking at something on Pinterest, maybe going to a store sometimes, and then reading a blog about it somewhere else.”
“Brands don’t how to operate across a lot of these channels. In the past, you would go to a physical or online store and shop. But that’s not what the shopper is doing anymore. The shopper is looking at least eight or nine times before deciding to buy. It’s no longer about marketplaces, but open markets which are going to be the next generation of what defines commerce.
“Shopping is about much more than just buying and purchasing. It’s about buying at the point of inspiration and discovery. And so discovery-driven shopping is going to be a big trend. We see that already happening. The ‘TikTokification of commerce” as we call it. TikTok is bringing so much more to the shopping experience.
“So you’ve got to think about how to make your direct relationship with the consumer work – how do I understand the consumer across all touch points and invest more in discovery-driven commerce?"
Ellis: How are recent advancements in AI affecting the world of eCommerce? Are we seeing some shifts in the way people are, well, are people using this analogy to their advantage?
Barada: “Large language models are doing a phenomenal job of making it much easier for us to understand topics and browse content, and that is going to play a key role in changing how people shop online.”
"Search-driven shopping will change to discovery-driven shopping. [Customers] will interact more with AI-based agents to figure out what you want to buy and get recommended products rather than go and find products on your own.”
“AI is [also] helping brands build a one-to-one relationship with the customer. Generative AI tools make it much easier to create shopping experiences, and so customers could have shops made uniquely for them. We see AI playing a big role in the days to come.”
Ellis: How is the Mason AI sales engine different to traditional e-commerce platforms like Amazon and Walmart?
Barada: "One of those big differences that we see is that if you look at any of these traditional marketplaces, they do not help you.
“While they help you get access to the consumers, they don't really help you understand consumers in any sense. Your products get sold, but you don't really have a relationship with who are you selling to, why are they buying from you? You don't get to know any of those.
“The shopping menu that [Mason] brings to the table helps you develop a relationship with customers on the channels that you know best. It helps you do that, not on your own channels, but across all the channels that consumers today are on, whether it's on social direct channels like email and sms, whether it's, on your phone or whether it's your website.
“It helps you understand the consumer across all of these channels and gain an understanding into the whole consumer's intent – why they want to purchase what they want to purchase.”
“The other part of it is avoiding the ‘Amazon tax’. The Amazon tax as you know, every year it continues to grow, and for branches, it is becoming super difficult for them to build a sustainable marketplace strategy because the tax goes all the way up to 50 per cent in specific categories,
"It's really hard to make a product if Amazon is taking 50 per cent of the entirety of that what you have left to really kinda build a business out of. As you get a better consumer understanding, you can reach out to consumers directly. You don't need to pay that tax, and you can invest in building better products.
"With Mason, we are bringing the engines for you to do that, helping you understand consumers, helping you create all of these audiences on your own so that you don't have to give your profits to a marketplace.”
