Aaron Conant  0:18

Hey, everybody, welcome to the call today. Happy Tuesday. Hopefully this is going to be the most fun event happening anywhere in digital e-comm today. We want this to be as interactive, educational and informational as possible. My name is Aaron Conant, I'm Co-founder and Managing Director of BWG Connect. We're a networking and knowledge sharing group with 1000s of brands to do exactly that. We network and knowledge share together to stay on top of the newest trends, digital strategies, pain points, whatever it might be, I, we don't sell anything here at BWG Connect. So more than happy to jump on the phone with anybody. I connect with about 30 brands a week, somewhere between 30 and 40. We just do digital planning sessions. That's everything from Amazon, direct to consumer, international expansion, anything that's shaping the digital space today. So helping a lot of brands out with that, and also doing a ton around partner selection right now. So if you need any help across the board recommendations, we've got a shortlist that we've made from the 1000s of brands that they've sent over the network. So it makes some great recommendations in pretty short order, don't ever hesitate to shoot me an email or put time on my calendar always love conversations. A couple of housekeeping items, as we kick this off, we're starting three to four minutes after the hour. And just you know, we're going to wrap up with three to four minutes to go as well. So just know, if you're looking at your watch, we're going to get you wrapped up here and give you plenty of time to get on to your next meeting without being late. Last thing is just you know, an invite to anybody that wants to attend an event that we're having on Thursday, if you'd like to reach out to the team and learn more about that. So it's going to be a fantastic event that as well. There's a link there I put there in the chat, you can look at any of our upcoming events, we'd love to have you share it with people as we grow the network. Now as we kick it off here, as I mentioned, the talking with 30 plus brands a week, with the same questions with the same topics come up over and over again, we host an event like this, that's how we get the ideas for these. And so we always try to stay very, very relevant. And so we did a series of these last year, and just had fantastic feedback. And I had a lot of requests to have a follow up one as we keep going forward. And our intention here is to continue to do it on a routine basis as well. And so this was all around, you know, the new online shopper. So we started this right on the onset of COVID. We did you know, three or four of these last year. And we've got some great friends, great partners, supporters of the network is, as a whole come highly recommended from multiple brands in the network. And most importantly to me very, very data driven. And so they're all around great people. And just, it's there, it's our friends over at NetElixir. So Udayan is here to help answer any questions that we might throw I'm giving us give us some overall an overview of what's happening and what they're seeing. But also just a reminder, you have questions drop in the question section, chat them in, or email them to me as we go. But Udayan, I'm gonna kick it over to you, you want to do a brief intro on yourself and NetElixir, that would be awesome. And then we can kind of kick off with the information, does that sound good?

Udayan Bose  3:21

Fantastic. Thank you so much for having me. Always an absolute pleasure to join the BWG Connect calls. As Aaron mentioned, we started this sequence on March 18. If I'm not wrong, 2020. And this is probably our seventh or eighth event, our eighth webinar. Like always, our information is extremely intense and data driven. And today is not going to be any different. But today, I really wanted to start with an interesting statement that some of the predictions that we had made. When we did the last event of last webinar on 17th of Feb. I must say that we will, we sort of missed, missed the mark by a fairly wide margin. And I'll explain you why. And that's where I think I can call it all goes with the pandemic effect. And there are some interesting stats that I'm going to share with all of you. But before I dive in, let me just do a quick introduction of the company NetElixir and the agenda as well. So I just talk a little bit about NetElixir. I spend a lot of time on the retail ecommerce trends, it's extremely important, important for me to really share the data, the actual live data, this is like live data in the sense of two days old. And also really try to understand as to what what are some of those factors and drivers which are influencing these trends. I will also so we have our own customer intelligence platform called Elixir Insights. And we have identified three, what we call the pandemic customer personas. We call them the new online shoppers find her here as to the three very prominent online customer personas which have really come up. Then going with the theme of this particular webinar session, we will be focusing a lot on the DTC, the direct to consumer has been a has been a massive growth area for us. And I think overall direct to consumer businesses growing exponentially. So I'll just try to identify some of the growth drivers being a little more narrowly professorial. They're just trying to identify those factors which are recommending. And finally, in sort of end with recommendation for marketers, I don't have too many slides, but I would really appreciate if you guys can keep on asking the sharing your questions on the question box or chat box, etc. and we can we can stop after each of these, each of these sets of segments, and really sort of spend some time on the questions as well. A little bit about NetElixir, what we have been around for about 17 plus years, and we help ecommerce brands, find and engage high value customers and acquire game changing insights. A big focus of NetElixir is extreme extreme focus on data, analytics, and trying to do sort of identify that high value customer that we can really help our clients target. We provide a wide range of solutions, we call them the growth solutions, starting from helping businesses build their digital marketing strategy to paid search and shopping page social advertising. Amazon marketing services have been growing at a very fast pace 13 year optimization of course analytics consulting. And last but not the least, we do a fair amount of ecommerce site development as well work with a wide range of clients. Many of them are pretty prominent leading DTC brands, like S’well. We are privileged to be a customer technology program partner for UPS. And we are also one of the Top Producing partners for Google and Bing. And one partnership that we are really proud of is the Miva partnership, we happen to be a strategic partner for Visma as well. Some of the key differentiators that we have really, really bring to the table, we have been around as I mentioned, and spent a lot of lot of hours in terms of just the growth marketing concept for e commerce companies. And when I say e commerce, there are three specific areas that we have really focused on. The first is retail e commerce. The second is direct to consumer ecommerce. And the third one is, which is a part of direct consumer more of the CPG e commerce, I'm just sort of pulling it out separately, I have have been have been very fortunate to get a chance to work with over 500 ecommerce companies and drive success for them. And a big driver of our success is our proprietary first party lead customer intelligence platform called Elixir Insights. We have a fair amount of understanding and experience on international search marketing experience. And we are very passionate about democratizing the email marketing industry. We have our NetElixir at university, we host webinars, workshops all the time. In fact, we have our annual virtual event coming up on the 10th of June. And I would, at the end of the presentation send you an invite to all of you to attend this where we bring in some top leaders from the academic world, as well as the industry as well. And last but not least, we have a site called Elixir Marketplace. This is for small solo businesses. It's a collection of 35 free search marketing digital marketing tools, which are currently being used by more than 1 million businesses coming from 136 countries worldwide. So that's just a very quick introduction about NetElixir I'll I'll dive into the right retail ecommerce trends. And there will be again a lot of data. So please feel free to stop me and ask any questions.

Aaron Conant  8:13

Yeah, and I'll just we've had a bunch more people join here. Just want to remind everybody, if you have questions, drop into the Questions tab as we get going here. drop into the chat. It's easier, or always even you can always email me Aaron aaron@bwgonnect.com. We can feel questions any way you want. But yeah, we want to make sure we get as many answers as possible. So don't don't hesitate to drop them in there. So yeah, awesome. All right.

Udayan Bose  8:42

Thank you. So these are essentially the online sales data that we have collected. This is, again, the source for this is the retail data published by the government. And as you can see, it was very interesting the blue line that you see the blue bar, that that stands for the year on here increase in online sales. So last year, the same month versus this year, that particular month. And the orange line is what is the contribution of online to the total retail sales. Now, this is from Jan 2020. And as you can see online was growing at a very steady pace of about 9% to about 10 12%. But suddenly, the pandemic effect really sort of took it if you really look at the month of April, suddenly the year on year growth growth completely went into a different level, it doubled more than doubled to almost about 30% here on here. And this is all from the government data which has been sort of published as a result of which the contribution of online to total retail sales went up to about 22%. And if you really go back to 2020, you will see that number was close to about 14%. So suddenly, that was a massive relief, as most of the US went into lockdown during the pandemic. Again, we saw a little bit of a steadying effect in the month of July onwards where the online As contribution to the retail sales came down to about 18, or 19%, it went up interestingly, in September again, and this year has been interesting, because despite, despite effectively, the fluctuations, we are very clearly looking at the online sales settling down probably around the 20%. Mark. So what really has happened, if you really look at, in the last 14 months of the pandemic, the contribution of online sales to total retail sales has gone up from 13%, to 20%, or 6% leap, which would normally have in our, if you really calculate the prior year's growth rate, it would have taken about two and a half years. So we can, we can very easily claim or safely claim that it has not been a 10 years of acceleration in commerce, it has been about two and a half years of acceleration, if purely in terms of the revenues. Now revenues is probably just one part in terms of the capabilities that were being developed by the company in terms of a shift, we can very clearly say that there were massive, massive leaps forward, which many companies really took. And I think a lot of disruption that we can expect in the in the coming years would be as a result of those capabilities that companies really invested in moving forward.

Aaron Conant  11:10

Yes, the people that are looking at this right now they can kind of use this as a gauge, right, or an average as a whole as to where they ended up at the end of the day. Right? So they kind of overlay their data and see, hey, did we accelerate and keep it going? Or had it back down? Are we average? It's a great slide. I think a lot of people right now are trying to tell that story internally. And it's a it's a story that's not been told before. And so they're still trying to not only look at what happened to them, and piece together data, but also what happened as a whole to eecom. So this has to do, this is awesome.

Udayan Bose  11:48

Fantastic. Thank you. Let me move on now purely to the online part. So when we look at the online retail sales, we we have had this customer base that we have really done this analysis for it's about 73 customers, they come from seven categories. And there are a lot of my observations are essentially based on that customer data set. The first comment is online sales seem to have certainly at around 20% of total retail sales. And you will see me sort of using the word seem to have probably maybe a lot of times, and I'll explain as to in the next couple of slides, why I keep on not trying to be too definite about things just because of the pandemic effect. The year on year growth in online sales in q1 2021 was 34%. So q1 2021 versus q1 2020 was about 34% higher. Now you must remember the two and a half months were pre pandemic in this time. So Jan shape and the first half of March, we were still not really in the in the pandemic, the pandemic phase. So that was a big driver because in German fare, we saw that number was a lot higher in terms of the growth. The year on year increase percentage came down in April, actually, from the latter half of March to about 14.4% of Amazon's online sales in the first quarter of 2021 grew by about 40%. And when I say Amazon's online sales, this is excludes the third party marketplace. This is essentially just Amazon's as an e commerce company, their their online sales grew by 40%. The reason I wanted to quote this number, if you really look at 34% and 40%. And if you really map back probably about five or six years, you will see a pretty direct correlation. And when I say correlations, we have been tracking this data since 2013. And we have seen as to Amazon's share of the overall e commerce market in the US constantly and progressively increase. And we have seen a very similar number. So if the overall e commerce grows by about 34%, Amazon beats it by a few percentage points, in this case, about six percentage points and so on. And at this point in time, we believe Amazon's share of the overall US ecommerce market only when I'm talking about the online sales has really sort of become become higher than 40% overall. So overall, more than 40% of the US ecommerce, essentially is driven by driven by Amazon. In April 2021, the online sales were actually marginally lower than March 21. That was pretty interesting. But again, March 2 half was pretty strong last year, it was in line with total retail sales trends as well. So there was a sudden deceleration in the overall online sales as well. And we were pretty surprised. So that was the first big surprise. We had expected it to still marginally crow for most categories. But as I'll show in the next slide, that was not to be the case. Wrong March. Retail sales numbers really have prompted many analysts including us, including me to comment that we will be entering a hyper boom phase of growth for e commerce. that expectation definitely has gotten a lot more tempered now with the flattening of sales. So I think that was I think the big, big, big shift that we had. I mean if you remember Those of you who were joined our, our webinar in Feb, we had a tremendously optimistic outlook of the remainder of the year where we believe it may sort of actually follow the the hockey stick curve. Unfortunately, the month of April and as I show, the month of May has been fairly muted, are more muted compared to what we had expected. It is not muted, muted, except sort of expected. And that's one of the things which really, really prompt a further investigation as to why what are the factors which are leading to that. Needless to mention, I mean, since the April numbers were lower than what we had expected, we we got into much, much more closer tracking of the online sales numbers in May, your scenario can refer to get a better understanding of the future as well.

Aaron Conant  15:44

No, I think you've nailed it, because that's like one of the questions that comes in and just reminded everybody, you can submit questions via the Questions tab there any idea what cause the APR deceleration? Because it's pretty significant, right? It's obviously significant of a drop, as we saw, again, from February to April, last year.

Udayan Bose  16:03

So there were there were certain factors. So let me and any questions, comments, again, please feel free to add to this to this bar. But let me, let me go back. So when we track the main number seven, and I've taken the first 14 days of May, which is the actual data from our data set, we are seeing something interesting, we are seeing the stations have actually gone down. So may 2021, the first 14 days versus 2020, by about 13%, the orders are down. And this is an aggregate number overall, all the seven categories that we'll get into the category wise as well, as revenue is down by about 11%, the only part which is increased is average order value. Now, if you look at it, I mean, I mean, it can be fairly safely mentioned that for some reason, people are not really as much in a in a search and a short mode as we had expected them to be. Now I absolutely agree that we are comparing with a very high base of may 1 214 of 2020. That was still the lockdown time. But still those numbers is something which was a lot more muted and tempered compared to what I had expected it to. When we dive down further into the conversion rate, and this is for the first 14 days of May, we see something interesting, even the the conversion rate in 2020. Again, these were the start of the pandemic times was about 22.5%, that on an aggregate has come down to about 1.9%. And this is literally an average hourly trend for the first 14 days of the month of May. And that is an other interesting parts of people earlier in the month of May probably it was just because the shipping times if you remember, a year back Iran were quite stretched and quite unpredictable. In many cases, or probably there was the physical store operations were were unfortunately disrupted. But whatever it was, people were converting at a faster pace last year, this time compared to what they are converting now. So that was I think one one direct sort of a variable impact that we had. And when we break it down into individual categories and interesting sort of picture comes up. The overall aggregated as I mentioned, the sessions are down by about 13% orders were down by 15% revenue 11% average order value went up by 10%. So people are still buying I mean average order size has gone up. Now the average order size has gone up there. Well, if you really dive down a little bit. I believe there are multiple factors sort of going into it lesser discounts, or inflationary pressures as well, which have increased the average overall item price as well. And the last part is there is an impact of the supply chain disruptions as well, which is leading merchants to really price twice their products, I have ordered the discounts. But if you really dive down into the individual categories today and gourmet, I mean, even though it is minus 26%. I was not too surprised, primarily because last year was completely an abnormal spike. We saw that the e commerce which was part of the the food and grocery segment, only about 3% of total sales go up to as much as about 9% before settling at about seven or eight 7.5%. Right. So I that's not too much of a surprise. What is surprising in this one is home furnishings, which was growing at a fast pace, the pace of growth has come down. Again, I'm sort of looking at a much higher base as well. So the revenue 13% increase is pretty good still, but probably we have been spoiled because home furnishings has been growing at a much faster pace. Fashion apparel, if you remember more much of the 2020. And even in Jan 2021. It was actually a deep growth for most of 2020. So it was actually declining compared to the previous year. And much of it sort of really sort of picked up probably around the month of July, August and then sort of came down and again picked up during the holiday season. But what happened was, so what happened there, so only 1% is pretty much sort of flat right? We are comparing to a lower base in the month of May, right. So already may 1 to 14th in 2020 was actually lower compared to may 1 to 14th of 2019. So, what is happening really to the category and what may be the some of the factors who are driving this. So, effectively the APR, please based on our data, and I would love to sort of hearing from anyone who may be in that particular industry. But that was an interesting one, because I would have expected that, plus 1%, to be a lot higher, a lot higher. Just because that means that for the last two years, the overall industry orders seems to have been flat. So that that's that's a bit of a concerning trend and why so we really need to diagnose that gifting again, sort of went through a bit of a spy primarily because, again, last Mother's Day was bigger than this Mother's Day has been in terms of online sales, at least for our customer data fair, but not major surprise tools. And hardware, again, is a little surprising. Probably last year, a lot of people were still stuck at home, there were a lot of DIY tools being purchased. But we see that that trend has really come down a little bit this year, as people started sort of going out. A little bit of normalcy has started returning back to our lives. And pet supplies was interesting, because stations went up. So people are still searching. Right. So people have come to the website, but they're not really purchasing at the same rate. And that was again, an interesting part. So it'll be really helpful, as you mentioned. I mean, I'm pretty sure many of many of the attendees today, they they may be from businesses in some of these categories as well. It would be interesting to sort of hear as to what your observations and what what are the trends that you are seeing. And these numbers become interesting, because it really goes exactly counter to our projection of a hyper boom. So that's where we would, it seems like almost like a what we call, again, in a very British term almost like a fixin start. So you take one step ahead, and you think that you sort of zoom forward, but you seem to be hitting some roadblocks. And we believe that that's probably the pandemic effect, which is at play here. So then we tried to compare also, the online sales in May 1 214, versus the last 14 days of April as well, you want to see if you see red discoloration going on out here. And interestingly, there seems to be, as you can see, the last 14 days of April versus the first 14 days of May, there seems to be further deceleration happening, at least in our data set, I would again love to know as to how what what everyone is realizing with the See, these are some of the trends that I think it's important for us to talk about, discuss and so on. Otherwise, we may, we may sort of end up having some misconstrued expectations out of the overall ecommerce gains that we will sort of get if you really don't look at the overall numbers. So why are online shoppers not buying as much, I mean, in the month of March, I think be very clear. And the first few days of April as well. We very clearly saw a stimulus check, impact or spike. And that's when I'm in March, there was a spike. In fact, so much so that even in the second half of March, were in 2020 was pretty high. Still it was we sort of for most categories, except for food and Gourmet, it was still sort of growing at about 14% or 14.4%. And that somehow, that somehow is an interesting trend, that means that people are still preferring to save as much as possible. And they use the similar check. And then they're not really some of the engine and surroundings of getting into an auto mode. Right? It's almost like he sort of made a bit of a start, and then you are stopping again. And then probably waiting for another kickstart into the entire thing that we found that to be interesting. And we believe that still still apparently based on this data, it becomes quite apparent that there seems to be there seems to be at least a perceived uncertainty overall, that that that that really is sort of concerning a lot of shoppers as well. Now, that is pretty interesting, primarily because in the same time, if you look at the overall consumer confidence in the Consumer Confidence Index, that really is at an all time high, that is probably as high as it has been, in the last about 14 or 14 months. It was probably about February 2020. The consumer confidence the same level is what we have in the month of May or April, actually. So that's interesting. So that's where we were unable to understand as to why is there such a gap. Why are people not buying as much if the consumer confidence is so high if the rate of savings is so highest? Well?

Aaron Conant  24:40

Yeah, I mean, it's interesting, there's this report that came out as well that the the credit cards are being paid off at a record pace. And so credit card companies are jumping in with these crazy offers of zero interest again for extended period of time to try to capture and spur some of that way. You know, I think a lot of this money at this point in time we've been spending spending spending on mine. You know, they're the point that comes a point in time you get the check, and you finally pay down your credit card bills. Yeah. But the other thing that had me thinking, and there's a question that comes in here about returns, if you jump back to a couple slides, you know, I just think about in the fashion space, are people getting smarter about how they buy, you know, you think about you go to a store, you try on, you know, you know, nine different things and you buy three of them. In this case, I can see where orders are only up 1%, but the AOV is up 13%? Because they're ordering more. And that goes along, then with a question that comes in it says, you know, as a DTC company, we've noticed a much larger return percent on our Amazon market versus Shopify, which I think can go hand in hand, though, right? I know a lot of, you know, companies that have a direct consumer site where, especially in the fashion category, where it's through there, is there any research around this phenomenon before we, you know, this one says before we pour dollars in Amazon marketing, it's, it's pretty considered return rate that is 5x, the native,

Udayan Bose  26:11

That's a great point there. And we don't have the exact data. But as I mentioned, we partner with UPS. And we have some understanding that the overall return rate is substantially higher as to what is the percentage per category, I don't really have the exact data, but the return rate continues to be quite high. So if you really look at it, specifically, the category, which has been hit the most is probably fashion apparel. And that may be sort of playing a role here. But these numbers are essentially, net numbers, these are not really the demand numbers, these are actually sort of netted for returns. And probably that may be pulling down the net net incremental orders as well. So yeah.

Aaron Conant  26:48

Awesome. And Joseph sI ee your your note here as well. And I can connect you with Patrick after the call. Just as you know, that, you know, there's some brands that are seeing a lower return rate increase year over year. And you know, that's just a networking event. So more than happy to connect you to after the call to tackle the return rate. Maybe there's something interesting that you can share there. But you know, a reminder here is we're about halfway through the hour. You know, if you have questions along the way, just drop them in or comments to make drop into the question space there, or the chat or email them directly to me Aaron, aaron@bwggconnect.com just having an awesome conversation with Udayan at NetElixir here, the great friends, partners of the network supporters have a lot of different brands in it. So on any of this, if you'd like follow up conversation more than happy to connect with  Udayan and the team there as well worth the 30 minutes of your time for sure. But anyways, I'll kind of kick it back over to you. Again, thanks for letting me interrupt here a couple questions.

Udayan Bose  27:50

I think the other party I'm since we manage a fair amount of the Google ad spend as well. And our overall thesis out here is I mean, we have seen that normally the Google Ads CPCs really are a good indication of the competitive intensity and so on, just check out these numbers that we have. And I was I was actually extremely surprised. I mean, as you as you can see the overall aggregated increase in cost per click, so I'm talking about the overall cost per click, again, in the same time of me, compared to essentially the same timeframe last year, has gone up by 37.2%. So it has become that much more expensive every click on an aggregate basis. But look at fashion apparel, and tools and hardware. 63.5%. Right. So if you really compound let's just talk about fashion apparel, since we're talking about this thing. So you are parclick paying 50% plus more per click on Google, your conversion rate, remember is down right 2.5% versus 1.9%. This year, you didn't really get into the details. And at the same time, you really have a return rate as well. Which which really is higher compared to what it was with the pre pandemic times, you're really looking at a very difficult overall decision, which the market really has to make, should I keep on investing? Or should I really do something differently? How exactly can we stimulate the demand? And that's where I mean, I think a lot of businesses are really struggling to figure it out, primarily because this impact of pandemic, most of the economists didn't really try to predict, we are predicted that overall the conversion rate will keep on going up and the overall demand would keep on increasing. And where it makes sense. I mean, when things are increasing at a fast pace, then you sort of keep on investing so that you are able to make more money. But what do you do in this situation? So some of the comments which I had was the increase in CPC is obviously more competition very clearly in search across retail categories. It would be really difficult for businesses to grow their share on search, unless they have a strong executional expertise for let us the paid search paid social paid media challenge because the competition is that much higher right the other guys are paying a lot more. You the only option for you to grow share is to grab share from competition. When when the overall pie is not really increasing as much, or at a pace that you are expected, I mean, that's the only option that you have left, but you really have to grab share from your competitors. And that sometimes is not easy, specifically, specifically when most retailers are seeing a lot of new entrants in the, in the in the entire search advertising space. And the biggest shift has been a lot of direct to consumer e commerce companies have really kind of come in, who really owned the brand and own the customer as well, or at least trying to own the customer as well. So as a result of which is a bit of a catch 22 situation, should I really keep on investing more? Or should I be sort of pulled back? What should the strategy be? But not I think it can, it's very safe to say that the market should do two things. One, please do track actual life performance and base your decisions, or the investment decisions based on actual performance, rather than what you expect and belief because, as you have seen the numbers can be, can be completely different from what you may have expected. And the second part is you really need to build or probably partner with very specific experts who can help you grab that market share from competition. Other than that, I think this trend is overall ups and downs can be a very difficult and difficult situation for any marketer to make a decision otherwise. So those were my comments. And those are the ecommerce trends they wanted to share.

Aaron Conant  31:22

Yeah, yeah. mean, that's, I mean, I think what you kind of touched on there, especially this lesson is in how much it's gone up is what we've seen over the past 14 months here. You know, especially with Amazon first in this spring, doing the, you know, not shipping non essential items that they randomly, you know, picked is not essential or essential. I had a lot of people sit up and realize, you know, Amazon can't be their digital strategy, it should be part of it. And then there was a focus to direct to consumer. And they started put things in place. And then Amazon came back around, and they thought, well, maybe we don't need it. And then last fall, when Amazon, you know, you get into q4, Amazon was having constraints at that fulfillment center. And they stopped buying a ton of non giftable items or cut down on POs or limited FBA space. And companies, you know, needed to do something with inventory. And now we hit you know, q1 of 2021. And they're going full bore into direct consumer, which comes with it paid media dollars, and now there's this huge slug of new paid media dollars that have been dumped in. And so last year, a lot of at the beginning of last year, a lot easier to win in the space. Now, just by throwing money at it, now you can throw money at it, but you need a very, very strategic, methodical data driven process for handling the spend or your you're going to be just flushing money down down the drain.

Udayan Bose  32:59

And so yeah, so let me move on to the next segment and and the new online shopper. So I mentioned at the start of this presentation that there are three personas I really wanted to highlight. And the and, as we as we all know, in the last 14 months, these are all the consumer value elements right as to why people buy or engage with your brand. Overall, we have seen some of these factors become more important, some of them have less important than so on and so forth. One of the parts, which we continue to sort of get a little intrigued with is some of the factors like the continuing uncertainty part really is making the risk reduction continuously an important overall element as such, if you look at the functional that reduces risk, that count continues to be an extremely, extremely important driver, as Aaron gave the example of the credit card sort of sort of paying out the overall credit card debt, or as we are seeing as people being very conservative with their overall spend. So risk reduction. And that's where I think I sort of get to the point about the direct to consumer part and the importance of the brand and the brand value as well. We believe that the direct to consumer brands have an advantage primarily because if the brand stands for a particular purpose with which the consumer is able to relate to then there is a perceived risk reduction, it has been clearly proven in very many actual practical as well as academic sort of papers as well. So I really wanted to highlight that but let me move on to the three, three overall personas. The first one we we call him frugal Freddy, he is hyper focused on value. The pandemic has really made him much more in tune with his financial spending habits. And I think I have already shared enough data that the percentage of frugal Freddy's is pretty high even currently, right? Because if you really look at the US savings rate has now exceeded almost about 15%. And still people are not spending this like an all time high of overall saving. The Consumer Confidence is high. Why are people still not spending? Right so he's still four Focusing on needs rather than bonds. He is not just looking for a quick bargain, he is looking to make an actionable long term change concerning where, when and on what he spends his hard earned dollars. So really you are having to compete with not just your category, but all the associated category which which is sort of playing for the the mind space of Frugal Freddy. And he's not just a value conscious customer, he is an extremely informed shopper as well. He's constantly comparing he sort of making those comparisons before really making the buying decision. The second persona which has come out and become extremely prominent is what we call the Socially Conscious Sally. She focuses on spending time and money on brands that really aligned with her core values. These are my values, does this brand align with my core values, and the Socially Conscious Sally wants to see actionable measures to progressive change, she will support the brands that more frequently engaged with topics like social justice, mental health, inclusivity, etc. She is not interested in purchasing from blacks, black box brands, and so on and so forth. Right. So she's focusing more on the authenticity part, we are seeing a big spike in the increase of the Sally's. Specifically, that has really happened to the last 14 months, which again, I sort of make a make an argument for the direct to consumer brands, where they have a substantial advantage in trying to really go after this particular segment. And last but not the least, we have New to Online Delhi we I mean, I think there is a lot a lot of lot of publications out there a lot of research out there, which shows that this has been really a very strong emergence of first time online shoppers. And the interesting part based on our research is around 17% of these first time online shoppers have continued to shop online. So accurately the pandemic help break the first barrier of team embracing online shopping. And once you sort of through that they sort of kept on purchasing. So we are seeing For example, we work with Kansas City Steaks, we are seeing for the first time that the first time online shoppers are the new to online shoppers, they have continued to purchase and compared to the pre pandemic online shoppers. For Kansas City Steaks, the pandemic online shoppers are the new online shoppers that we have been able to one, they already have outspend them in terms of lifetime value. So a big request would be I mean, understanding as to who your new online shoppers are that you have acquired over the last 14 months, and how customized is your overall solution and your overall messaging so as to be able to really engage these consumers. So those are the three personas I really wanted to call out as well. And last but not least, we shouldn't come as a surprise that mobile is really driving more sales than ever before. I mean, 43% in 2019, now has become 54%, that that really continues to work. Again, any question from these personas, I'll be more than happy to address them. But let me let me-

Aaron Conant  37:49

Yeah, I want to just tag on the last one, the New to Online. That's so it's really interesting, who have watched that across lots of brands that I've talking to, you know, a lot of times people think about social media platforms, you know, tricked into an older demographic. This has been, you know, one of the most interesting things to have happened. And it's not that they they go routinely, then back to the same website over again, over and over again to order. It's like this whole new world of shopping has been opened up to them. And they're actually bouncing around in ordering from the routine. This here is not just back to a single site. It's not just to Amazon or to Walmart, but it's literally they will go anywhere and buy at this time, which is it's awesome. It's really, it's really neat.

Udayan Bose  38:35

There was an interesting statistic, which I, I must have extremely surprised by that. I mean, we were shared by eMarketer, apparently, only 5% of the overall digital marketing budget, essentially is spent on to acquire the consumers who are baby boomers, that is a 60 plus consumer group 5% for this group, which is sort of probably arguably the fastest growing in terms of their adoption of online, I find that there is a massive opportunity out there massive, massive opportunity for marketers to really study this segment very, very close to the baby boomer segment, and really make those smart data driven decisions to acquire more customers in that.

Aaron Conant  39:17

Yeah, I mean, it isn't a time though, where, you know, the performance is something that everybody's looking at what was the return? And when you're addressing a new group online, you know, it's tough, you don't know what the data is going to show. So do you go with the tried and true or you get the performance right now for the reporting and in the executive teams that are asking for it? The more you go after this huge opportunity that may take you know, three to six months to curate. But yeah, I think at this point in time, you look at that demographic, the the rate at which they're adopting and in purchasing online, the amount of disposable income they have the amount of free time they have. This is If you're if your product at all fits into that demographic, you know, is addressable to it 100% like it should be something top of mind for you, for sure.

Udayan Bose  40:09

Absolutely, absolutely. So, let me move on to the last part of this presentation, I mean, just the DTC growth drivers. Again, I worked with quite a few very prominent DTC brands across Spend and S’well and so on. So, these are some of the understanding, and some of this is external research data as well. So, we have been very intrigued with overall direct to consumer growth, I mean, understandably, these are some of the eMarketer numbers as you can see, I mean, in terms of just purely the direct to consumer brand buyers online, has, has gone up from 79 point 1 million per marketer to about almost 88 million and is expected to grow to about 112 million for understandably 1/3 of the US population by their by 2023, is expected to really sort of engage and shop with direct to consumer plan. If you look at the overall ecommerce sales, again, is a very, very strong number, I mean, ignore the 2024 number, because there is some sort of a gap there. But if you look at it $111 billion to $175 billion is again a massive shift. So there is understandably a lot of interest, we wanted to identify some of the key factors. And the other factors that we have, we have observed sort of managing and working with brands direct to consumer brands, these are also taken from some external research from our friends at Google and friends of CB Insights, eMarketer and so on. So let me share with you some of the things. So one of the things which is becoming extremely prominent, and we're sort of seeing it every day with S'well the water bottles, right, that the entire concept of direct to consumer is not just ecommerce, but it is as much of a brand relationship. In fact, I would even sort of make a counter case that it is probably a little more skewed to a brand relationship than even ecommerce initially. Because you are trying to really build that engagement in association with the brand not with the consumer. And some of the benefits obviously from shopping from the b2c brands, understandably, the consistent quality and so on the better understanding of the environment material footprint of the purchases. So very clearly the quality experience and values are really driving this brand love. So counting, which I'm pretty sure the direct to consumer companies on this call, really know about it, the question is as to what exactly are we doing in terms of doing these are some of the things that we have seen the how the DTC brands are really winning the online consumer engagement. Now, if you really look at the discovery to the loyalty process, we have, I mean, it has been broken. I mean, this is this is actually from Google, effectively broken down into four different segments. The first is believing in what are you buying moment. The second one is the simplicity part, just making it easy and simple. And the third part is being feeling inclusive, essentially sort of feeling included in something. And last part is feeling valued, of course. Now, how really DTC brands are pinning these movements. The first part is obviously having a strong brand story. Effectively, if I was to we did a bit of a just an anecdotal research in terms of going into a lot of these companies, we feel that there is a big opportunity, big opportunity to for for a lot of the brands and direct to consumer companies to really tell their story their their brands to do a lot more convincingly. And that's where primarily because very specifically, what you have to focus on the authenticity part. And that's, I think one of the areas that we would sort of recommend, definitely to focus on. The second part is more of simplicity. Again, most of the direct to consumer companies that a lot of research have analyzed, they have a pretty simple, easy, strong discovery process. But where I think the struggle has been, is trying to combine the focus on this concept of having a minimalistic approach and a simplistic approach versus showing us to whatever they have to show. So I think it's a it's a very fine balance ban, we feel that still there is an opportunity for a lot of direct to consumer brands to be a little more minimalistic in the overall consumer experience of the user experience that they are really labeled by the last part is build this the third part is building the communities and so on. So that's where again, the tribalism component, a lot of brands have started speaking out, for example, we have, we have a lot of companies very prominent kind of reach out and really sort of stake a claim in terms of this is what we feel about this particular social topic and agenda. Now it becomes a very sensitive issue, understandably, we feel that still the percentage of brands who are sort of doing that, and really letting their voice to and this is what we stand for is almost a miniscule percentage. So that's again, an individual corporate decision for direct to consumer companies. But effectively, I think it really helps for a brand to really get it What is your point of view? What exactly does it really feel about a particular point? An area of low social importance, I think that that can be really helpful as well. And the last part is the personalization part, I think there has been substantial substantial progress has been made over the last about 14 months by the direct to consumer companies. Now, when it comes to the key action items, the first part is straightforward content and creative, right? Do you really have to lead with the content and the creative part, and really emphasize the brand story. The second part is where, for example, like why working with cross pins, we were really just focusing on getting the search into a clearly an overall funnel of full funnel marketing approach. And that's where the generic search and overall search becomes extremely important. Are you really find able in the right places, and on your website, Can people really find what they're looking for as well. The third part is an interesting one, the part of something movement moment, which is more of an engagement for first party data, this is a big advantage of the direct to consumer prime service, primarily because they can really sort of own the entire customer value chain. And that's where I think a big shift towards the first party data, we believe, really sort of positions the direct to consumer brands as a tremendous advantage. And the last party, again, is utilizing this data for experience building as well. Now, the first party data strategy is something which we would very strongly recommend to for to all the DTC brands out here to really make that your competitive advantage. And you can really collect from from different parts, right, you can really have the site behavioral data for online interactions, you can have online sales data, omni channel data, and so on. But the entire fundamental in the question is, do you really have your first party data strategy, because that's an important, that's a very, very important component, we would request all the brands, or all the direct to consumer companies to really focus on this. We live at NetElixir, they really have have a customer intelligence platform, as I mentioned, and it works with first party data, effectively, which we are more than happy to sort of partner with you and really help you identify and engage with your high value customers. And we call Elixir Insights. And you can really sign up for a demo. Because I love being around ping me directly, we'll be more than happy to take you through a demo of the Elixir Insights participant. As the as the world really moves from a third party to a first party or a cookieless. world, I think it's extremely important, I can't really emphasize it any more than saying that this probably is going to be the biggest strategic competitive advantage for any direct to consumer companies, which can really take you to a completely different plane in 2022. So do not ignore this. And there are technologies available. And we'll be more than happy to have a conversation with you and help you build your first party data strategy.

Aaron Conant  47:39

This will really help brands, they connect them with you afterwards. And you do this analysis there through Elixir.

Udayan Bose  47:41

That's right. Yeah, absolutely. So we can help you identify as to who your high value shoppers are, and help you gain the insights into the monthly trends help you meet, make better strategic decisions about the brand. And look at the marketing dollars. So I've been just sort of as Aaron has mentioned, rather than almost like spray and pray, approach the laser focus on the data and really figure it out, we believe the first party shift RL would really lead to the next level of advertising, just because it is more going to be more responsible, is going to be more engaging, and as a result of it is going to be more effective as well, to do have the big advantages of moving the first party.

Aaron Conant  48:23

Yeah, I agree, it goes back to like that little bit of a conversation earlier where you know, 15/16 months ago, it's fine to do that huge net. Now there's 500 nets fishing the same spot. So you can't just keep throwing more and more and more money at it. Because you have to be more strategic. You know, just to make it to make it ours work that may have it makes sense. You know, it just on that time just had a really quick question that came in around, you know, when they're talking about the CPC is going up, and Amazon is bidding on terms as well as you've seen that ramp up because there's around 10%. Now it's closer to 30%. Like they over indexed on what's going on.

Udayan Bose  49:08

Yeah But I think that's a that's a great point. And then as I mean, I sort of mentioned in one of the BWG Connect even before we sort of got into a lockdown last year as well. I think what is really happening is something interesting. We see Amazon advertising in all the prominent keywords on Google. And as a result of a lot of they're able to direct a lot of the customers to their website, where they are essentially trying to sell them aAmazon ad effectively they are able to recoup some of the money effectively through a little bit of a almost like a trade off sort of a situ almost like a set of thing. So let us say Amazon effectively spends $1 cost per click on a specific category, let's say women's shoes, right and you are able to direct traffic to Amazon, where you are essentially taking them to the Amazon ads page or the overall marketplace page. Where if if the customer is Sort of clicking on any of the Amazon ads, understandably, the person who is Amazon advertising on Amazon and has to pay Amazon, let us say the customer really pays them about 50 cents or 60 cents. So net cost per click on Google for Amazon becomes $1 minus 50 cents, which is equal to 50 cents. And as a result of which it will be very difficult for companies to directly compete on Google with Amazon. Now, understandably, Google has not really done so far, primarily because Amazon, understandably, is investing a tremendous amount of money on Amazon. But that's the that's the big challenge. And what is happening is Amazon is taking advantage of this situation and constantly sort of ramping up their overall cost per clicks, which really drives up the cost per click of the entire category as such, so you end up paying a lot more compared to what you really need it to be if Amazon wasn't there. So that's the that's the challenge that that's that's a big challenge, which we are sort of seeing in Google advertising as well as being Microsoft.

Aaron Conant  50:58

Awesome. When then, yeah, just a quick note, we can keep going a little bit further, closer, right up to the hour, because I know there's a few more slides and if not, you know, we didn't we-

Udayan Bose  51:11

I basically have just one one or two more slides. That's pretty much it. So I just wanted to end with Aaron a recommendation for some DTC market and the first part is are reassessing and refreshing your plan? I think it's a I can't really emphasize this more, it's important for to focus on your brand story, what is your brand story. The second part is understanding the customers pain points. The customers digital behaviors really provide signals about what they really want. Building the first party data strategy, however, just don't be data driven, be data informed as well. Don't jump into a data just for seeing this because as we have seen the fluctuations can be huge looking to a slightly more holistic approach, creating camp campaigns, which combined branding and performance as we have seen is as much about the brand relationships as it is about performance. So you really have to factor it out. And the last part, which is extremely important, a lot of DTC companies are jumping in purely based on the cost of customer acquisition right or almost like And lastly, ROI, please prioritize lifetime value of the consumer, because awareness and loyalty are really at the heart of your DTC strategy. So those are the recommendations that that we had. I mean, I will be more than happy to continuing the discussion on direct to consumer ecommerce. As I mentioned at the beginning, Aaron for for all of our friends, the attendees from the BWG group, we are we are conducting our second annual connecting the dots conference. So we bring in, bring in a great mix of thought leaders from the academic world and the industry as well. We'll have the very famous Professor Jerry Wind from Wharton, talking about strategy. It's all about as to how exactly can companies innovate to really survive in this post pandemic world? We'll have Alex Cohn and I'll be doing a q&a with Alex, in terms of what is the implication for brands in terms of sort of moving into a cookieless world. We have Professor David Bell. So David was a very famous professor at Stanford, I'm sorry, I'm sorry, Wharton and currently teaches at Stanford as adjunct faculty, but he also runs that Idea Farm Ventures, we have the lady Natalie who helps Think with Google I'm pretty sure many of you will be familiar with Think with Google. And then we have a fantastic panel discussion, Lewis Broadnax as our axis ecommerce and so on. So please be-

Aaron Conant  53:20

100% a couple of things I would say is number one, thanks to everybody who dialed in today, encourage anybody have a follow up conversation, take a look at the Elixir Insights, tons of brands and the network as a whole just you know, love it and come highly recommended and today his team are just fantastic, great people, but data driven, and just you know, high performance come highly recommended. So worth that follow up conversation for sure. From my perspective, I'd love to have a conversation with you as well. We don't sell anything here at BWG Connect, it's a networking group. But we'd love to do digital strategy session if you're looking for any kind of service providers I know right now. digital age three pls are huge who can pick pack ship and not break the bank who can help out with with Amazon optimization as a whole obviously on this side of things, who Dan and the team at next that elixir on top of the list there. But anything international expansion, content, influencers whatever it might be in the digital space don't ever hesitate to reach out love to have a conversation with you on and also get topics for future events just like this. We'll make sure everybody on here also gets invited to the next round where you know another quarter from now we'll do another event with your day and for sure. But look for that follow up email from us if anybody like to have more information, just check out bwgconnect.com and go to our our events will we have probably close to 300 revenue this year. And we're going to get back to in person events this fall which is going to be incredibly exciting to be back rubbing elbows and having these in person kind of small format 25 person dinners or so but again like last minute key takeaways I you know, encourage everybody to follow up but key takeaway Udayan, just as we wrap up here.

Udayan Bose  55:02

Thank you again for the opportunity. And I think that there are two key takeaways. The first one is focus on the data because the trends are really fluctuating at a very fast pace. And for the direct to consumer customers, please tell your brand story, focus on your brand purpose and tell your brand story convincingly and authentically. So those are the two key takeaways which I had for everybody.

Aaron Conant  55:24

Always love these, with you, my friend, so much fun. And thanks for your insights today. Thanks for allowing us to put you on the hot seat and throw different questions at you. You know, and we're going to do another one of these for sure. Again, thanks to everybody who dialed in, look for a follow up email from us. And if we can get you the the deck afterwards, we'll make sure that we do that and we're going to try start posting these on to the website as well. But with that, we're going to wrap up here, everybody, take care, stay safe and look forward to having you at a future event. Alrighty, Thanks again, everybody.