The next evolution is all about the consumer.
Before I became an investor, I ran growth and analytics for a direct-to-consumer startup, advised and consulted for brands and led a growth and data meetup across 20+ brands in the NYC area. My job required me to dive deeply into data to better understand the ways people decide to buy online and working with these brands gave me a unique lens into the commerce as a whole.
Now, as an investor, I’ve become fascinated with technologies that power these exchanges. I’ve developed a focus on three categories that I predict will drive us into the next era: commerce enablement, marketplaces, and go-to-market (GTM) technology. While they may seem disparate, in my view these categories are harmonious as commerce becomes increasingly focused around the consumer — whether that person is buying something physical or digital, a product or service, for themselves or on behalf of their business.
I believe that historically, people have too rigidly tried to define commerce by bifurcating B2B and B2C sales. In many ways, these categories are not only interconnected but can help fuel each other. Why limit the way we invest in them?
The future of all commerce is consumer-first
Over the course of the last decade, the democratization of business tools has led to a rapid evolution of what commerce looks like. D2C brands like Everlane and Warby Parker were early players in disrupting traditional supply chains and distribution channels to prioritize customer convenience and save money on retail space. Ever since, as new commerce tools have emerged, companies have leveraged them to meet increased customer demand for everything from multichannel purchase options, to rapid fulfillment, to flexible financing. As a result, it’s never been easier to be a consumer of goods and services.
These commerce models are becoming even more varied thanks to the availability of new, flexible tools. I recently co-led an investment in Swell, for example, which offers a headless back-end platform for companies to build any type of commerce business they can dream up. By making the system so customizable — and easy and affordable to build on — we’ll see more companies be able to take advantage of commerce enablement tools, from personalization to financing options, to better attract and retain consumers.
Consumer businesses are still trying to find the right ways to offer experiences and products that drive customers away from Amazon. Since brands cannot compete on time to products or price, where can they win? Seemingly, it’s quality products and more personalized storytelling. Where these may be unique products, sustainable products, or limited batches, I believe that supply chain and inventory remain the critical parts of this experience for retailers to deliver on this promise.
For the moment, consumer businesses are miles ahead in terms of pushing the boundaries of traditional commerce (think: live shopping and digital assets). Still, the same trends will quickly permeate the enterprise sales cycle. That’s in part thanks to the effectiveness and scalability of new tools, but it’s also part of a generational shift in buyer demographics. Today, close to half of B2B buyers are millennials and 73% are in some way involved in the buying process. While an organization is technically the customer in B2B, the decision-maker within that organization is still a consumer and behaves like a consumer. Today’s buyers are not interested in hearing a sales pitch over the phone; they’d rather conduct a dozen online searches themselves before purchasing from a brand.
In response, more companies are leaning into marketing content with tools like Contentfly and SEMrush (which Headline was an early investor in) and personalization tools to entice this new, consumer-like buyer. This belief that content and visual assets are going to continue to be personalized and at everyone’s fingertips helped us get to conviction in investing in Air Inc, which we believe will be at the heart of all marketers lives, both B2B and B2C.
As we think about the customers needs and wants, we will continue across both B2B and B2C to juggle how to enable activities that drive ease, convenience and loyalty while keeping the companies selling to them economically viable. Can both of those things really be achieved? I believe it is possible if powered by the right technologies.
Online marketplaces will explode
The rise of online marketplaces is one trend across B2B and B2C commerce I’ve been watching closely for the last few years. In 2020, research suggests consumers spent $2.67 trillion via online marketplaces — an estimated 62.5% of all global online spending. As these marketplaces grow in number, they are becoming increasingly niche in their purposes, whether it’s offering fast delivery like GoPuff or specific types of merchandise like The RealReal or FARFETCH.
Brands are also using marketplaces to create communities around their product offerings. Spinn Coffee, for example, sells coffee makers on its website in addition to offering a marketplace for coffee beans from a variety of independent roasters. We’ll see more of this kind of one-to-one connection between sellers and buyers through marketplaces.
B2B marketplaces have even more runway: one-stop shops for B2B buyers for all of their business needs. Similar to the trends in commerce enablement tools, B2B marketplaces are a few paces behind their consumer counterparts, but quickly catching up. Take Tropic, for example. The platform acts as both a B2B software marketplace and procurement tool, helping buyers easily discover and purchase software. It’s a solution designed to mirror the consumer experience. For millennials and Gen Z who are used to quickly downloading and then using an app, the friction of typical enterprise sales cycles and contract negotiations can seem overly cumbersome and untenable.
B2B marketplaces won’t necessarily become carbon copies of their consumer counterparts. They will have trouble monetizing as effectively, for example, because the gross merchandise value take rate doesn’t translate perfectly, but we might even see B2B trends inform the consumer space, such as custom pricing.
I believe we will continue to see the ease of technology that powers B2B marketplaces, which was part of our thesis around investing in Swell. As this happens, coupled with the growth of embedded fintech, we’ll see an emergence of B2B marketplaces that disrupt the buying experience whether it is Vetcove, Torch Dental, Felux, Valdera or Verse Medical. Oftentimes, today, we see many of these companies wedge in as vertical software companies and continue to emerge into marketplaces. It will be interesting to see if that trend stays with the emergence of more enablement tech and how technology will need to support or compliment those vertical efforts as well.
A new class of GTM/CS and enablement tech and tools will emerge
Already, we’ve seen an explosion of sales and marketing tools designed for winning new business and expanding the wallet share of existing customers. This ranges from prospecting tools like Revenuebase and UserGems to customer onboarding and nurturing tools like Onramp and Skilljar. We’re also seeing the rise of customer success tools meeting customers where they are like Channeled. With the rise of both product-led growth and demand gen-led businesses, we see the approach to customer acquisition and expansion across both B2B and B2C tools mimic each other. While B2C and B2C companies may use different tooling, ultimately they need to prospect, target, nurture and expand their customers' buying behaviors — and both may start to use the same tools.
For example, a tool like Hightouch enables the sending of data to different platforms. In both B2B or B2C businesses, teams often use a reverse ETL to connect to a consumer data platform and push data about customers to other platforms to trigger their next behavior. Some other tools that help both business types are product analytics tools like Mixpanel and data collection tools like Freshpaint or Segment (which we at Headline were seed investors of). These tools help focus on the right customers at the right time to build products for and effect decision making.
As someone who built a data warehouse, set up marketing tools and focused on customer behavior and segmentation, I think we are continuing to see B2B companies evolve their practices to look like B2C. This trend is driven by a combination of the buyer population becoming millennial as well as the post-Covid lack of in-person sales and increased Zoom time that I don’t think will go away any time soon.
As a result, GTM technology is poised for massive growth as these tools can support any kind of business looking to sell goods and services to an end consumer. Even companies like Primer, an audience creation and targeting tool for B2B companies, are treating the buyer for B2B businesses like B2C consumers and helping companies meet customers where the consumers are.
I believe much more of the tech that will continue to evolve will emerge around helping buyers make decisions and try products with ease much like B2C purchases. For example, there are companies helping to create more engaging product videos, companies building better demo experiences with real data and even technologies like try-before-you-buy via a company like TestBox.
Not only redefining commerce, but improving it
It’s true that not all types of businesses and industries have identical problems and solutions that one model of commerce can solve. But as these three trends evolve, we are seeing testing and learnings from one industry benefit the next. For end consumers, we’ll see a better buying experience across platforms. For sellers, it means the ability to find the right customers for products and services at scale. For both, it means flexibility: to buy or sell on whatever platform, with whatever payment method, at whatever volume they choose. And while there are still plenty of challenges to work through along the way (such as supply chain issues, sustainability), I’m optimistic about this next phase in commerce. Moreover, I’m excited to continue to invest in the businesses powering it.
If you’re building in this space or know someone who is, please email me at [email protected]