Aaron Conant  0:18  

Happy Tuesday everybody, my name is Aaron Conant, I'm the co founder Managing Director here at BWG Connect, networking knowledge sharing group 1000s of brands. And we do exactly that we've been around for six years now, we're going to host close to 100 in-person events this year, if you'd like a major tiers tier one city around the US, let us know we'd love to meet you in person. And our focus is kind of two fronts. One is educational informational networking sessions. And the other side is helping brands and you know, different organizations find the right partners in the digital landscape. And that's everything from help with Amazon, to direct consumer to packaging, to international expansion, whatever it might be. So with 8500 brands in the network, we were constantly refining the shortlist we have. So at any point in time, if you need a recommendation around service providers in the digital space, never hesitate to shoot us an email, more than happy to get back to you as quickly as we can. A couple of notes. One is we're gonna try to wrap this up right at 2pm. Eastern time. So 28 minutes from now, the other thing is we want it to be as educational and informational as possible. So submit questions you have via chat or the q&a. And with that, I'm going to kick it over to Michael Zakkour 5 New Digital, fantastic friend, partner supporter, the network for many, many years now. You know, you Michael, just always a pleasure to have you on always appreciate your insights, the crystal ball that you have, and just to help you provide people in the network, but I'll kind of kick it over to you. And we can kind of, you know, brief intro on yourself and 5 New Digital would be awesome. And then we can kind of get back to this eight back to basics. What's going on in the digital landscape. 

Michael Zakkour  1:59  

Right, but Thanks, Aaron, and good morning. Good afternoon to everybody. My name is Michael Zakkour, I'm the founder and chief strategist at 5 New Digital. We are a research Strategy and execution firm that works with global brands, retailers, CPGs and technology companies. We're focused highly on the new retail model, the integration of online offline technology content and supply chain were pioneers in the Unified Commerce space. It's a term that's being used a lot today, but we've been doing it for six years. We also do a lot of international expansion through digital. And we have a full suite of products and services, for execution, everything from our own live streaming studio, to micro fulfillment, and pretty much everything in between. So we're titled to a back to basics, and the game hasn't changed and the playing field has, you know, we see it as digital commerce is actually going through a major disruption right now. Much in the same way that digital commerce disrupted traditional retail over the last decade and a half eCommerce itself is in a state of flux evolution and disruption. You know, one of the key topics we're going to talk about today is AI. If you're like me, you've heard nothing but AI since September when ChatGPT launched. And it's amazing how quickly an industry is built, build yourself up around it on my Twitter feed at least three times a day, I see a promoted ad from guys who will coach and train you on how to do proper prompts. On ChatGPT. It's like that's a business out. But you know, the truth is, there we go. The truth is, Back to Basics means and we're going to talk about this a little bit. But going back to the core pillars of retail, right, and the idea that retail is everywhere. But part of that context, if you if you see this slide, it's tough to scale in the eCommerce business. And it was tough enough already, it's become exponentially more expensive to do so in the last five years. So if you look at you know, these numbers here, there's only 1200 US based eCommerce sites that make 100 million plus there are only 7000 that make 10 million plus and so getting that you know journey from the big purple circle to the small blue circle is harder and more expensive. Probably then it's ever been a hard time There we go. So we talk about new retail and Unified Commerce. If we think about new retail well being in the center, what we're really saying there is customer centricity, right? How do you spoil the customer, and the four power sources in this new retail model that's being used by Walmart, by target by Home Depot, by Lowe's, by Alibaba, by Amazon, et cetera. This is the model that emerged about six years ago, and has become the standard for a lot of big retailers and brands. So you know, how do you power everything commerce related digital and it logistics and supply chain and meet entertainment? And, you know, the idea here is, we're not talking about omni channel, Omni channel is if you're a unique channel brand, who maybe was only selling online or only selling in physical when you add channels, okay, that's omni channel. The real goal is Unified Commerce. How do you tack all that together, and this is the model that's being used today. Further on context setting, what we're really seeing in the direct disruption of digital commerce and retail in general, is we can now break down the environment into three parts, their ecosystems, their platforms, and their habitats. And every brand, every retailer, we see CPG needs to think about how am I attacking these three major models for retail and retail is everywhere. So on the ecosystem side, you know, you see Amazon, you see Alibaba it to agree, see Walmart and Target. On the habitat side, you have all of your offline channels, all of your online channels, and squeezed in there, in the middle of the platforms. This is one that's not gotten a lot of attention, and not as much as it should. But you know, Aaron, mentioning my crystal ball, Microsoft ball tells me that platforms like neck, Netflix, Twitch, YouTube, and others are going to become major major players in in retail and not just in live streaming. So already, we've seen Netflix set up a store, we see them doing a shop and shop and Walmart. But the big takeaway here is, you know, as you think about your go to market Strategy, think in terms of how am I attacking ecosystems, platforms and habitats. So, in getting back to the basics, right, the pillars of retail are still the same, right? It's price selection, convenience, and service, right? That goes back to, you know, the agora, or the Roman Forum or Egyptian markets, all the way to today, price selection, convenient service. So that's the pillars, and the mission is still the same, right? So we all have four things, we have to do drive traffic, drive conversions, build baskets, eyes, and maximize retention. So that's really getting back to basics, right. And if we think about this, as you know, as a retailer on our brand, we want to keep this as our centerpiece of our thinking, we need to offer this, and we need to deliver that. And so in this disrupted period, you know, we find that it's good to recenter yourself and say, essentially, you know, whatever channel you're using, this is the model for retail for excellent retail. But, as I mentioned, you know, digital commerce itself is being disrupted. And that's only gotten more chaotic over the last six months, as AI has come onto the scene, and put the power of artificial intelligence in the hands of everyday people in the hands of brand managers in the hands of CMOS. And we're also trying to figure out what does aI mean? And what it means is that eCommerce disruption, and evolution is actually speeding up. AI is going to accelerate trends that were already in place, and it's going to create new trends. It really quick Do you

Aaron Conant  9:15  

like what is the percentage a year it looks like you're gonna read through some numbers, these what the percentages of brands like leveraging AI today, because I have a lot of brands in the network. Now, you know, I'm talking about 20 to 30 brands a week and there's a small percent, there's a large percent of them that want to be in it just don't have the time. And there's a small percentage then that are using it and just trying to learn nobody's, you know, optimize the use of it yet. And there's a small percentage of people with just their head in the sand. Like, how does that do you see something similar, like Or is everybody? Nobody's using AI everybody's behind? But it just seems like there's some early adopters in my mind, and I do want to read through these but I'm also thank you You know, a lot of times people are trying to do that gauge, where should I be at? My head? Am I behind?

Michael Zakkour  10:06  

Yeah, I think where they use it has been highest, right, previous to September is using AI in the behind the scenes. Fashion, right. So AI is really what powers algorithms, right? Machine learning. So we've seen, you know, companies using AI behind the curtain, the question really is now what are they using it for in a consumer facing way? Right? Which,

Aaron Conant  10:36  

which Gabriela, you phrase it much better than I did for early adopters? What are they using it for? Is it driving a meaningful impact to their business? Yeah. And you're gonna get through these ones?

Michael Zakkour  10:45  

Yeah, I'm not gonna get right, that to answer that question. So if we look at this, right? How are retailers using it? Adding horsepower to creative, right. So I talked to the CTO of one of the three biggest cosmetic retailers in the world a couple of weeks back. And we were talking about creative and campaigns. And he told me, they run, you know, about 2000 campaigns a month, and they want to run more, they simply don't have the people to do the creative. So I think what we're seeing is brands are already using it to create images to create, copy, and to fill those empty spaces. Because a lot of these companies can't afford to do it solely through human power, or having a hard time keeping up with the demands of creative for their brand. Connecting and optimizing content, community and commerce. This is a big one. You know, the trend going forward and retail is for those who are going to be successful is how do you blend the three C's, and AI and machine learning are a big part of that. Speeding up online offline integration, optimizing consumer data platforms, product development, sales, forecasting, and supply chain management. So for the companies that are using AI right now, these are the seven most common applications of AI. To answer your question, I'd say, you know, this isn't scientific, but based on the brands I talked to and work with, there's probably you know, about a 10% adoption rate. But that number could I think, by the end of this year, be up to 50%. It's moving that quickly. And so, to answer the question, also from the chat, how are people using it, the one on the left, really surprised me about a month ago, I got an email from OpenTable, announcing that they were integrating ChatGPT into their system. And the first use case is to actually make restaurant recommendations. So you know, you feed a couple of prompts into open table. So rather than and it's really fascinating to think about that, because it really is a big value add at low costs for OpenTable. To be able to use artificial intelligence for these recommendations. Another use case we're seeing this is in Asia, we're not seeing it so much yet in the US. But digital humans are becoming a big part of go to market. We see brands and retailers in China and the rest of Asia, employing these digital KOLs key opinion leaders, digital influencers. And what's fascinating about it is they're not simply rendering a lifelike vision. They're building entire backstories and personalities, you know, who is this influencer? What's their favorite ice cream? What's their favorite color, and they're being used very, very effectively, for one to one and one to many engagements. In eCommerce. I think digital humans are going to become a big part of digital commerce and a big part of the immersive experience. A couple of other use cases. I thought that was interesting North Face using Watson and using AI and ChatGPT to ask you questions and learn about what kind of activities you'd like to do, what climate Do you live in? And so here's a use case for product recommendation. Neiman Marcus and other one for visual search. Take pictures of what they see. And you know, they'll search their their inventory to see if they have it for you. Instacart just announced that they're going to be using ChatGPT for biting customers with shoppable answers. So you could ask Instacart for a recipe to make lemon squares, and then boom, all the ingredients can get put into your cart automatically. So, you know, this stuff is happening. And I think it's, it's reminiscent of the metaverse conversation we've had over the last year and a half. You know, we've established Aaron and I've been talking a lot about the fact that look, the metaverse is just an ongoing development of what the front facing interface of the internet will be like. The real story in retail and commerce is immersive commerce, right. And so what we're seeing is more and more companies are adapting the immersive commerce model. And they're using AI to power it. So it's just a really interesting intersection. Right of these two incredible technologies and big stories in retail, over the last year,

Aaron Conant  15:59  

so a couple other questions comes in and says For now, seems like highly it capable and larger brands seem to be using it? And I would say yes. And no, a lot of times, there's a lot of bureaucracy, there's also some smaller startup brands that I think that I'm talking to that are using it that if they can move and pivot fast enough, there'll be the next target of acquisition of one of these larger brands who hasn't quite figured it out. And then Gabrielle's comment, well, I guess choose my digital human, and will she rule the world to take over mankind? But we'll kicks in a question as well, like how many companies navigate ChatGPT for consumer data, given the data sensitivity with using ChatGPT?

Michael Zakkour  16:43  

Yeah, I mean, obviously, privacy, and and there's privacy issues there intellectual property issues, you know, the rules just aren't in place out there. So you know, it's a good point, you have to be very careful. Make sure you're not infringing on copyright, or using somebody else's creative. You know, the question I think Gabrielle asked in the, in the chat also, was, this seems like it's really for, you know, big, big operations that have high IT capabilities. Though, I completely disagree with that. That's the beauty of it. Whether it's dolly or ChatGPT, for any other tools out there. It doesn't require a big organization. If anything, these tools help smaller organizations go to toe to toe better with the big organizations. So if your resource low, artificial intelligence helps fill that gap. And so, you know, this is where I'm saying, no, what we're really doing here is we're tying in artificial intelligence with immersive commerce.

Aaron Conant  17:57  

And I want to add that because we have been talking about this for a long time, which is, I think, for the longest time, people thought there was going to be the metaverse launch. And go on there was going to be epic. And all these things were going to happen. And we're just waiting for that moment to happen. But I would say it's closer to the launch of Netscape Navigator, which, you know, changed the interaction, but also completely over, you know, evolved over 510 15 years. And the metaverse, kind of what you're saying is, as we chatted before, is it, it's there, it's interactive. It's right now, but it's not fully evolved in was fun to interact with is,

Michael Zakkour  18:38  

I mean, the common perception since you know, the metaverse, you know, hit people's radar about two years ago, was that it was going to be a singular structure or destination. And the perception that you have to wear, you know, goggles and go into a virtual reality world. You know, again, the metaverse to me is just a catch all term for what 1000s of companies and hundreds of 1000s of people are working on globally, that will fundamentally alter the plumbing and back end of the internet, and fundamentally alter the front, the back end and the front end and how we interact with it. Right? So the attitude to me is, you know, put the metaverse over here in the corner, let it develop. And by the way there are there companies that are doing immersive environments really, really well. Right. And that's the difference. So, one of my favorites is if you go to the Kiehl's website, there's a button to enter their virtual environment and it takes you into their virtual store. And it's just an amazing experience that offers products for sale. It offers content. You have a concierge If you can do quizzes, contests, and what kills us found that they looked at all the traffic to their website, and the people who went into the virtual environment had a 16% conversion rate, right. And that's a world where people are struggling to hit 234 percent conversion rates. So really what we're talking about with immersive commerce is things like 3d imaging, live streaming, virtual humans, anything that's going to make your digital experience a fun shopping, social experience, right? Because we think about it with all the changes that have come. In the last 15 years, the one thing that hasn't changed is the visual experience of shopping online. It's two dimensional, it's flat, it's scroll, it's click. And so immersive commerce, I think, is the evolution of eCommerce, that it's going to be immersive, both in store and online. That's the key. And, you know, kind of AI stepping into picture at just the right time. Because AI and machine learning will facilitate better immersive commerce, shopping experiences, right? So again, what does ai do, if you use it correctly, you're going to solve one of your biggest problems, which is your cost of consumer acquisition. So you want to lower CAC by employing new methods, channels and tools, AI being one of them, drive conversions by employing AI. So this has applications and immersive commerce. It also has huge applications in three C commerce. So the merging of content, community and commerce, on your website, building basket size by building trust and optimizing data, right, that's how we really grow the basket size, if we develop a trusting relationship with the consumer, and we personalize through data, AI is going to power that. And then maximizing retention, spoiling the customer with the four C's, right? You want to be consumer centric, you want to offer convenience, you want to offer customization. And you want to allow the consumer to contribute to who you are and what you are. And so really AI and immersive commerce together are the evolutionary next step. And this is for online and offline retail that that provides these these foresees. So I have one more slide to go. Any any. If there's a check the chat for a question.

Aaron Conant  22:49  

Well, it said it would be really cool to see some of these examples post meeting today, more than happy to connect anybody with Michael, he's great friend, partner support of the network and just works with a ton of brands would be probably more than happy to walk through, you know, some of the leading people that he's working with or knows about. And the other one is, so it's fair. So is it fair to say that it's really AR that will be a big driver of eCommerce? And I would say yes, along with AI, powered personalization in this immersive experience. But Michael, I can pick it over to you as well. But I think if people want personalization in those areas, and what we've lacked is that truly real time personalization, which is rather than guessing I'm feeding in inputs, and I'm interacting and you're, you're responding to my inputs on the next, you know, best option for me. And that's where we get to real time personalization. But it'd be great when it's completely immersive. So, but we'd love

Michael Zakkour  23:50  

to again, and absolutely, I think it's a good point AR is a big driver here. And so that's, you know, the reference so immersive commerce, that's the things you can do today. So employee, AR employee VR, you know, for bigger companies like like keels, building, that virtual experience. You know, that's where you get 3d products, AR VR, live streaming, digital humans, these are all the things that are going to make shopping immersive. And definitely AR is is an early and key driver of all that. And so, you know, the couple minutes we have left here, you know, what do you do? Right? Okay, you've got all this information. You know, some of our suggestions that we do with our clients. We first conducted an audit to test your Unified Commerce readiness. We conduct workshops to define your Northstar challenges, strategies and tactics for this disruptive digital commerce world. Work developing new strategies and tactics for Unified Commerce, immersive commerce, three C integration with the goal being lowering your CAC and increasing your returns, and definitely have a Strategy for data, AI and new sales and marketing channels. Right? So if we go back to that three tiered system, you have ecosystems, platforms and habitats to plan for. And how am I going to use data and AI and channels to get high returns? And then you know, the basic is start with I want to spoil the consumer, right, the overriding consumer demand today has boiled down to one thing, spoil me, or else spoil me or else I will find the brand, the platform or the retailer that will, you know, so kind of work backwards from that, and say, How do I spoil the consumer and retain them through immersive commerce and artificial intelligence. So this is kind of some of the things that we do with our clients. And we're doing this very successfully with some big brands and retailers. And so I would just say, you know, in closing, this is this is kind of what you want to think about is the next step.

Aaron Conant  26:17  

Yeah, I also I dropped in the first there's two episodes there, I dropped the first one and great conversation I have with Michael on our Digital Deep Dive podcast, where we just bring in resident experts to kind of do those deep dives on all these newest topics that are popping up. So I encourage everybody, you know, just check out that and any other episodes, that makes sense. But all right, quick question comes in. How much did you know how much Kiehl's invested in their AR store?

Michael Zakkour  26:45  

I don't, I don't know that.

Aaron Conant  26:49  

And in this might be a customer, I should say, product or brand by brand specific but great presentation. Quick question for you. You know, do you have a top three tools that eCommerce companies should be looking at or using? Beyond? You know, Dolly? Or ChatGPT?

Michael Zakkour  27:11  

Oh, God, you know, there's so many of them out there. Can I come up with a top three right now? That's a tough question. Because it really, it really depends on what you want to use it for. Right? So if you're looking to optimize operational efficiency, or increased traffic and conversions, I think just as

Aaron Conant  27:37  

high fashion design, I've seen it pop up now for fast fashion this Yeah, I tools that are looking at real time fashion styles and pricing, and then providing recommendations on colors and fits for fast fashion. Yeah,

Michael Zakkour  27:53  

yeah. Yeah. And actually, I've seen it, you know, used in in virtual fitting rooms, you know, having, you know, the the fitting room on your phone, and you set it up and you do your measurement. And then what happens is you keep doing that over and over. And the AI and machine learning learns more and more about you, and what clothes look good on you or don't are too tight, too loose. So it's tied in right there. But the truth is right now, where I'm seeing brands and retailers are really relying heavily on ChatGPT for it's really kind of the the foundation stone that they're building everything else around. Awesome. Cool. Well, we're right

Aaron Conant  28:40  

here at time, Michael, usually to grab an hour of your time. But thanks for carving out 30 minutes for us today. Yeah, this has been incredibly helpful. Again, you know, I would love to talk with anybody that was able to join us today. We don't sell anything here at BWG Connect. We're just a networking knowledge sharing group, we'd love to hear what your pain points are. It's how we craft the topics for these, as well as the dinners we do. But also, if you need any recommendations across the board on service providers, more than happy to do that, in this space. Michael Zakkour are 5 New Digital, just helping a ton of brands on the network out, encourage everybody to have a follow up conversation with Michael and check out the podcast. A lot of great stuff there and ways to learn there as well. So, again, Michael, thanks so much for your time.

Michael Zakkour  29:22  

And just to say anybody who wants to extend this conversation, I'm pretty sure it will be an introduction made post presentation. And I'm happy to go into much more detail with anybody who wants to talk. And also if you want to reach out to me around the conversation, we can see if I can share the deck with you as well. So thanks for your time, everyone.

Aaron Conant  29:42  

So Thanks, Michael. Yeah, guys, they're great. Take care, everybody, everybody. Take care. Stay safe. Avoid having a future event.