EP088 Strategy versus Tactics - Why Some Ecommerce Brands Fail and Others Thrive
===

[00:00:00] 

[00:00:06] DARIN NEWBOLD: Well, good day. And once again, uh, it is a great day here at Commerce Today. My name is Darren, and I'm excited to be here with Josh Warren. As always, Josh, good to have you. We have a, have a fun topic, strategy versus tactics. Why some e commerce brands fail and others thrive. So, so important, I guess, from your standpoint and the broader standpoint of our e commerce merchants out there?

[00:00:32] JOSHUA WARREN: saw a really interesting post from an investor recently that has invested in a lot of e commerce brands, and he shared that this year, the e commerce landscape is really competitive that, um, basically the average brand is up 4 percent year over year, but they're having to fight really hard for that 4%.

[00:00:50] JOSHUA WARREN: He said that he's seen basically like, 80 percent of brands are falling around that level. 10 percent of brands are losing crazy amounts of money this year, [00:01:00] and 10 percent of brands are making crazy amounts of money. And so I kind of looked at that. I'm like, what's the difference? Like, what is setting those brands apart?

[00:01:08] JOSHUA WARREN: And it really, a big part of it seems to be kind of balancing the short term pressures and challenges. I know a lot of brands were doing things based on lower interest rates and easy financing and You know, obviously the crazy consumer spending during the pandemic on e commerce, um, and now they're having a lot of pressure as those things go away, and some of the brands are focusing on very short term tactical responses.

[00:01:33] JOSHUA WARREN: Others have had a more long term vision and really have set a strategy, and those that are thinking more strategically seem to be doing better.

[00:01:42] DARIN NEWBOLD: Well, that's definitely part of our topics, that strategic thinking with some examples and how this all plays out for e commerce success. So, Josh, kind of, Thinking about this overall, why these, why strategy is a, is a key topic here. how [00:02:00] would you define strategic thinking in, in e commerce?

[00:02:03] JOSHUA WARREN: Yeah, so it's, it's fairly simple. Strategic thinking in e commerce is just long term planning when you're considering market trends, consumer behavior, and technological advancements. And we've, we've had a lot of all three this year.

[00:02:17] DARIN NEWBOLD: So, and, and what you and I were talking about prior to this, and, and I was very interested, I haven't had a chance to read it yet, but it appears you have, but you were going to share a little bit about a Harvard Business Review.

[00:02:31] JOSHUA WARREN: Yeah, and we'll have links to all these articles. There's a lot of articles that I pulled from this week. Links in the show notes or wherever you're watching this. And Harvard Business Review found that strategic thinking is 10 times more important to leadership effectiveness than any other behavior.

[00:02:46] JOSHUA WARREN: The runner up was actually communication. So to hear a Harvard Business Review say that strategic thinking is more important than communication, was surprising. Uh, but it really, again, when you, you go back and you look at the brands that are really [00:03:00] thriving this year, um, it makes sense. Like, you see that, that they are the ones that obviously have leadership teams that are acting very strategically, engaging in strategic thinking versus being more tactical and, and, you know.

[00:03:11] JOSHUA WARREN: Yeah,

[00:03:13] DARIN NEWBOLD: Well, and I imagine that there's ultimately some risks involved if, uh, if you're overly focused on the short term tactics. What does that end up looking like?

[00:03:24] JOSHUA WARREN: so when you rely too much on short term tactics, um, which can be a lot of different things, um, the common short term tactic I see is like, hey, we're down on our numbers, let's throw out a big promotion to our email newsletter. And so let's give everybody 20 percent off. Well, short term, that'll get your numbers up, but long term, that'll get your numbers up.

[00:03:42] JOSHUA WARREN: You're eroding your customer lifetime value because you're teaching them to look for discounts. So, really, that's kind of the first thing that happens with over reliance on short term tactics. It's that you get those kind of inconsistent customer experiences and it'll drop their loyalty or it'll teach them, Hey, this is a brand [00:04:00] that, I just need to watch for the discounts on, uh, we can also make you a lot more vulnerable to market shifts and to, uh, shifts from your competitors.

[00:04:08] JOSHUA WARREN: And you also just miss out on opportunities for innovation and growth. No one, when they are engaged in very short term tactical thinking says, Hey, let's try a composable architecture or let's be one of the first brands to leverage, um, chat GBT in our website. You're not thinking that way.

[00:04:24] DARIN NEWBOLD: Gotcha. Gotcha. Well, I can only imagine it's, it's best to have a, a balanced approach. To this overall that, that as, as I think you've commented and, and would definitely advise tactics must be there, but it must support the overall strategy and definitely not replace it.

[00:04:43] JOSHUA WARREN: Yes, definitely. It's kind of a, a cart before the horse situation. I see so many teams that they just dig into short-term tactical actions without having that strategy, and you just don't really get anywhere. Um, versus if you formulate the strategy first and then [00:05:00] engage in the tactics to implement that strategy, you'll be a lot more success.

[00:05:04] DARIN NEWBOLD: So what's the importance of all of this, especially in our landscape today?

[00:05:09] JOSHUA WARREN: Yeah, so consumer expectations are changing a ton, and that's, that's kind of a thing we like to say in e commerce. We've said for a decade or more now, but I mean, it's so true. When you look at everything changed in 2020, when suddenly everyone wanted to or had to buy everything online, then after a couple of years of that, there's almost, um, they talk about revenge vacations and revenge travel.

[00:05:33] JOSHUA WARREN: Which was basically all the pent up demand for travel like Disney World saw a huge spike in people attending in 2022 because they were just so they missed it so much that it caused a spike. I think we almost have revenge shopping of people are like, Oh my God. You didn't let me shop in stores for so long.

[00:05:50] JOSHUA WARREN: I'm going back to that now. I missed that. And so consumer expectations just keep shifting back and forth. And I think there's so many brands that they were so focused on the [00:06:00] tactics and the number, the short term numbers that they got really excited in 2020, 2021. They're like, man, we have 50 percent plus year over year growth.

[00:06:08] JOSHUA WARREN: And they didn't think about the fact that that was actually due to a short term change in the world that was going to change back. but then also I already mentioned the technology that you can miss out on. Again, when you're in short term tactical thinking mode, no one's going to think of applying ChatGPT to their business.

[00:06:24] JOSHUA WARREN: No one's going to think of Composable. Even a lot of the things that brands are doing around AR, VR, the Apple Vision Pro, those are from brands that are thinking very strategically.

[00:06:35] DARIN NEWBOLD: Well, and, and along those lines, couldn't you also run into those situations where even though what you're describing is strategic in its thought process. If you're still tactical, you may still apply it. You may have put on chat GBT, but it may be very ineffective because of the, you haven't thought it through in how you're going to really apply that to your, your store and how it's going to impact you.[00:07:00] 

[00:07:00] JOSHUA WARREN: Oh, yeah. Yeah. Especially if you don't have a strong strategic vision for your brand, what sets your brand apart, what sort of interactions you want consumers to have with your brand. And you know, you have one team member that throws chat GPT on the website, another team member that's throwing some other fancy new thing on the website, and they're not communicating and they're not following kind of a strategic brand voice, then you're going to just create a very chaotic consumer experience and user experience.

[00:07:26] JOSHUA WARREN: So you definitely need that strategy.

[00:07:29] DARIN NEWBOLD: Got to stay away from that. Well, how, how then that kind of brings us to, how then do we balance? Strategy and tactics. And I really love your three core behaviors here. I can't wait to, I mean, dig into those.

[00:07:41] JOSHUA WARREN: Yeah, and this was actually new to me. I love strategic thinking and leadership and e commerce and I had never heard of the three A's, and this is from Harvard Business Review, and they say that strategic thinking breaks down into the three A's, acumen, allocation, and action. So Acumen, being able to understand the broader business context [00:08:00] that you're in and the implications of that.

[00:08:02] JOSHUA WARREN: Allocation, being able to effectively allocate your resources to support your goals. And then action, actually implementing your strategic decisions and adapting as needed.

[00:08:12] DARIN NEWBOLD: Wow. With that, uh, how does this then kind of adapting your strategic thinking? How do you adapt this then to e commerce, especially with the three A's?

[00:08:22] JOSHUA WARREN: one thing I like is the three A's are all about really, Understanding the external environment, understanding your internal resources, and then taking action and that adapting as needed piece. And that's so, so important in e commerce with the need for agility in responding to all these different market and consumer changes.

[00:08:41] JOSHUA WARREN: Um, it also pushes you back towards, you know, Really data driven decision making and data analytics. Um, and making sure you have those. Then also just, um, taking regular strategic reviews. So at Creatuity, internally, once a quarter, our team meets and kind of looks at what's our strategy, and then how do we keep this aligned [00:09:00] with what the market wants, what our clients want, and what our internal resources are.

[00:09:04] JOSHUA WARREN: So making sure that you're, you have some sort of regular strategic review like that.

[00:09:09] DARIN NEWBOLD: Well, I agree. I agree. And like we kind of teased earlier that, uh, there's kind of the good news and the bad news. We'll start with some cautionary tales. What are some, uh, some places where the e commerce kind of failed due to lack of, uh, lack of a strategy?

[00:09:26] JOSHUA WARREN: Um, so I'll have links to these, but for the actual show, I'm not going to name and shame these poor brands. Um, but an interesting thing I saw is, is it's both exciting and sad that it is very easy to launch an e commerce brand. Now, it's easier than it's ever been before, and it's pretty cool. But because of that, 90 percent of e commerce brands are failing within four months of launch.

[00:09:47] JOSHUA WARREN: There are so many. People that stand up a Shopify site, get a cool product, start selling it, and literally within four months, they're out of business. And, um, two of those failures, um, one [00:10:00] was a luxury brand that has really been struggling. they had a completely failed digital transformation, and it really came down to there wasn't a strategic leader.

[00:10:10] JOSHUA WARREN: There wasn't strategic thinking behind why they were going digital. So they didn't really prioritize digital at all, and they didn't, prioritize the online user experience, and they were really inconsistent. They really didn't have a consistent omni channel strategy. So what basically happened is they looked like an old company that was hard to interact with on the web, and it was just a bad, um, experience, and they lost a lot of market share to their more digitally savvy and strategic competitors.

[00:10:41] DARIN NEWBOLD: Well, that, yeah, I can see how that can happen. Well, another one, uh, you talk about here is, um, electronic, uh, retailer. Yeah. Having the decline? Tell us about that one.

[00:10:52] JOSHUA WARREN: Yeah, so they had a very outdated website, they weren't focused on mobile at all, and they didn't have a good personalized [00:11:00] experience that was offering, um, product recommendations, so again, kind of some fairly basic things that if you're thinking strategically about your e commerce operations, you probably should have in place, and, um, they've just had a lot of customer churn to other more user friendly, um, brands, and, um, that's led to a big drop in their sales.

[00:11:21] DARIN NEWBOLD: overall, as you were kind of putting this together, I'm sure you kind of came up with a common theme. So what's kind of the, the common strategic mistakes?

[00:11:30] JOSHUA WARREN: Yeah, so neglecting customer experience in favor of short term sales tactics. I have worked with brands before where their leadership really tracks sales growth over prior day, sales growth compared to same day last year, that sort of thing. Some that are literally tracking it by the hour and if by noon it's not trending to the right number.

[00:11:52] JOSHUA WARREN: They start getting reactive and they say, push out more discounts, push out more discounts. And that just breaks, I mean, that's just a terrible [00:12:00] customer experience. Um, again, it, it really, it makes your brand look and feel desperate. And then it also just trains your customers to wait for the discount, wait for the discount.

[00:12:09] JOSHUA WARREN: Super common, um, strategic mistake that has led to brands failing is not adapting to mobile first shopping behaviors. And this goes beyond just have a fast mobile friendly website. But this is really think strategically about that customer. Think about where they are when they're using their mobile device to shop on your site and make sure that experience really fits in with the rest of their world and their lives. And then I always like to harp on data driven decision making. another one of those things that everybody likes to say they do, but when you actually dig into the details, it's like test driven development where so many companies say, Oh, we use test driven development. You say, okay, show me the details.

[00:12:47] JOSHUA WARREN: It's like, well, you know, hey, look over there. So, I mean, like that's kind of where a lot of brands are with data driven decision making. Or, um, I follow the CEO of a really good analytics agency and he talks about how, [00:13:00] especially with AI, There's all these brands that are getting all this data and they think, Oh, this is amazing.

[00:13:04] JOSHUA WARREN: We have all this data, but they don't have someone that has the experience that knows how to actually interpret and apply that data strategically. Um, and then finally, just underestimating the need for continuous innovation, continuous improvements. Um, there's so many brands that think, Oh, okay, we launched a new website.

[00:13:22] JOSHUA WARREN: Now we're done. We don't need to do anything else. And you have to have a, a bigger e commerce strategy than launch new website, send some emails.

[00:13:31] DARIN NEWBOLD: Well, definitely. Well, just as there was the, uh, the challenging, uh, situations, there's always the success story. So tell us about some e commerce brands that, that got it right in their strategic approach.

[00:13:43] JOSHUA WARREN: Yeah, so, um, the first one up was a brand that leveraged user generated content, to really grow their brand. They'd, um, really focused, they created a strategy around a community driven shopping experience. Um, they had a really cool campaign they ran with a specific hashtag, and [00:14:00] then they tied that into some style inspiration galleries and really increased the engagement.

[00:14:05] JOSHUA WARREN: on their, uh, their site and on their, um, social media channels gave them a much higher brand loyalty than just that random discounting we talked about before and increased their conversion rates. another one, and I will name a couple of these, um, Going back and looking at Dollar Shave Club is such an interesting case study.

[00:14:24] JOSHUA WARREN: They have actually since exited, they were acquired by Unilever. Um, but they really focused early on on video marketing, really before a lot of other e commerce brands were focused on video marketing. Um, and they just decided, Hey, our overall strategy is we're going to, we want to disrupt the shaving razor market with humor and a direct to consumer model.

[00:14:44] JOSHUA WARREN: And we're going to use fun videos to do it. and so. They then, however, did keep a very consistent brand voice across all those efforts, so like I mentioned earlier about when you don't have that strategy and everyone's kind of using a different voice for your brand, um, they avoided that with their strong [00:15:00] strategy.

[00:15:00] JOSHUA WARREN: yeah, I already mentioned their, their successful, uh, exit, so

[00:15:05] DARIN NEWBOLD: That's awesome. So, Looks like we have one more that, did it through a distinctive color strategy. That sounds interesting.

[00:15:11] JOSHUA WARREN: Yeah, that was, that was really cool. And this just goes to show you that you don't, strategy doesn't have to be complicated. So many people hear strategy and they think, Oh, we need a 30 page document. We need to hire, you know, a consulting group to come in and write it. It can be super simple. Glossier strategy was basically, We're going to use a very specific shade of pink and minimalist design across all interactions with our brand And it created an instantly recognizable brand and it allowed them to transition from basically A pure content site to also an e commerce brand.

[00:15:44] DARIN NEWBOLD: Interesting. And even looks like it created a cult following and, and really kind of a, an amazing story all the way around. So. As we wrap up those, uh, those great stories and, and kind of ultimately bring us to a close, there's, there's [00:16:00] some strategic foresight that we want to look at 2024 and the overall landscape, uh, that that looks like.

[00:16:06] DARIN NEWBOLD: So Josh kind of, kind of put it all together for us.

[00:16:10] JOSHUA WARREN: So definitely have a long term vision And that is so challenging right now. I can't tell you say AI or VR. What's it going to be in five years? No idea. Anyone who says that they know, too, probably they know. But you do need to at least have a vision for, okay, if there is new technology available in AI or VR, what does that look like as we apply it with our brand voice?

[00:16:35] JOSHUA WARREN: Also preparing for shifts in consumer behavior. The shift to e commerce and then a little bit of the backlash away from e commerce, I think is over. But now there is such a focus on sustainability, such demand for hyper personalization. There's just so much that consumers want. and then real briefly, I know we're running out of time here.

[00:16:55] JOSHUA WARREN: but strategic thinking for an e commerce brand, it comes down to doing a regular market [00:17:00] analysis and trend forecasting. Um, doing some scenario planning for various market conditions and being willing to invest and experiment with emerging technologies. And we've talked a lot about technology and strategy.

[00:17:13] JOSHUA WARREN: I think the most important part is the people and the team members and aligning your team with regular strategy sessions and really encouraging Kind of risk taking and innovation and forward thinking, and then that culture of learning from those things and adapting it.

[00:17:30] DARIN NEWBOLD: Yeah, we've mentioned it a couple of times that continuous learning, continuing improvement. Well, as we can real quick, kind of what's the role of an independent agency in this whole strategy process?

[00:17:41] JOSHUA WARREN: So, agencies like ours, like Creatuity, can come in and provide an objective perspective. I see so many times, you're just so close to your brand, or you have competing stakeholders that need a tiebreaker, basically. And so we can come in, we can give fresh eyes on your existing strategy, your challenges, your opportunities.[00:18:00] 

[00:18:00] JOSHUA WARREN: And we have a broader industry knowledge base from working with a diverse set of clients. and my favorite part is challenging your internal assumptions and biases. that's always fun to get to come in and do that for a brand. And so we definitely encourage y'all. Um, and even if you're already, you know, if you already have a development team, I think it's helpful to bring in a third party agency to give you some feedback on your strategy and help you best utilize them.

[00:18:24] JOSHUA WARREN: So definitely encourage you to reach out to us if you're interested in something like that. Um, on my, um, LinkedIn page, you can actually book a free 30 minute e commerce problem solving session with me. More than happy to help you with your e commerce strategy as much as I can in that 30 minutes. And then obviously we can do a larger engagement through Creatuity as well.

[00:18:44] DARIN NEWBOLD: That is awesome. So I definitely, I'll echo that, encourage you to reach out to Joshua Warren on LinkedIn. And grab that 30 minutes. Uh, it can, uh, it can only help. So as always, we appreciate you, uh, tuning in. We always want to hear from you [00:19:00] and your challenges and what you're coming up with. So with that, as always, thanks again for tuning in to Commerce Today.

[00:19:06] DARIN NEWBOLD: Until next time.

​