Backchanneling: the future of commerce will change our understanding of the customer journey
Brands' influence on customer journeys and shopping decisions will be minimised by a fracturing of traditional channels and their differentiation becoming blurred.
In the beginning
E-commerce was built in the skeuomorphic image of bricks-and-mortar and has remained similar for decades. Consumers’ online experiences continue to evolve and there is now a period of accelerated innovation.
E-commerce pure-plays and online shopping penetration challenged department stores to implement omni-channel (online and offline) strategies. Many e-commerce pure-plays started opening (Amazon Go), acquiring (Whole Foods) or partnering with (click-and-collect, lockers) bricks-and-mortar outlets to similarly provide more consumer choice to compliment the core business. Consumer adoption of online shopping was accelerated further by the launch of smartphones, which distributed commerce across multiple devices.
As most department stores struggled to compete with online and direct-to-consumer (D2C) specialty stores, a similar trend began to occur online. E-commerce everything stores saw “unbundled” competitors targeting specific industries and customers while major brands launched online D2C offerings. Shopify unlocked this opportunity further for small businesses and up-starts through establishing a headless commerce platform. Their back-end infrastructure powered niche stores from drop-shippers to single items.
These were all versions of a similar front-end customer experience though. The consumer decides they either need something or want to go shopping and they then visit the mall or their website of choice.
In the image of the creator
Social media may have roots in blogging, but after the explosion of Instagram (and now TikTok), it has evolved to become the future of shopping. Through influencers, affiliates, associates and partnerships, brands and creators started monetising their content. Platforms integrated (e.g. with Shopify) or launched their own marketplaces (Facebook).
Power has now shifted toward creators and influencers. The most famous example is Kylie Jenner, who converted her near captive following into a billion dollar business through her Lip Kits. This has been conceptualised as linear commerce. Instead of the traditional process of creating a product and building an audience to support it (e.g. FMCG), the creator can capitalise on their existing audience to release a product based on their innate understanding of their followers. It’s like elevated merch.
The importance of Instagram to brand and individual identity was a surprise to many, evidenced by the rapid growth of the creator economy. Many start-ups that foresaw this trend are long forgotten, like The Fancy from 2009. It was similar to Tumblr with an emphasis on photos like Instagram. Users could buy items directly from the photos that appeared in the feed.
The Fancy was an early precursor to what is now described as contextual commerce. Many consumers were still adjusting to online shopping at the turn of the 2010s. Now with increased time spent online, behaviour has adapted and consumers appear ready to do what The Fancy had anticipated. As a result, influencers and affiliates are fragmenting the customer journey, leading to lower conversion and weaker customer experiences for brands.
So one-click checkout start-ups like Fast, Bolt and Shoppable launched solutions to reduce this friction and allow customers to purchase from the moment they’re inspired. These turn impressions, individual creators, articles, display ads and more features from across the internet that promote products into instant checkouts. This is instead of multiple redirect links and open tabs. Voice commerce through Amazon Alexa, Google Home and other smart speakers also enables shopping through voice commands, which demonstrates the scope of contextual commerce as well as being distributed across more devices.
The beginning and the end
The evolution of shopping can be tracked from left to right on the below timeline, where the consumer shopping experience evolves from active to passive. Consumer attention spans are increasingly absorbed by different online activities and they no longer need to consciously decide to “go shopping” to have their needs met.
The next stage is coined here as diffusion commerce. In each stage before this, the consumer experience is highly concentrated to a narrower set of retailers and platforms. This will become increasingly less concentrated across the internet driven by all types of content, creators and decentralisation. It’s taking social and contextual commerce to its limits. On the consumer-facing side it may appear less concentrated if people can buy from anywhere, but these experiences will still be powered by the world’s largest companies (e.g. Amazon, Shopify, Meta etc). The future is a state where shopping is built around the experience. Backchannels will be created to usher in these possibilities.
For this new vision of commerce, it can be imagined as a single item being released and appearing in an infinite number of channels through different people, platforms and protocols. The memetics will change the narrative, influence and transparency of marketing and product positioning.
This can take the form of decentralisation of seller platforms, product listings and furthermore the consumer’s shopping experience. This is sometimes described as dCommerce (decentralised commerce e.g. Boson Protocol, Origin Protocol DShop, DIGITALAX). Web3 principles of community and incentivised contributions could see users and/or sellers benefit financially from the platforms that wouldn't have network effects without them. This is instead of them becoming reliant on that same platform and at its mercy once the network effects shift the power away from them.
Commerce. E-commerce. DCommerce. The name doesn’t matter, but the customer always will.
This article was originally a speech by the writer presented in August-September 2021.