On today’s episode, Kunle is joined by Nirav Sheth, Founder & CEO of Anatta, a digital products agency that partners with different brands to accelerate their growth through design optimization.
Nirav Sheth comes back to the podcast to talk about insights from 2023 and how 2024 will fare for commerce brands. Nirav had been a guest on the podcast in season 8, episode 12. Since then, a lot of changes happened in the eCommerce world and with Nirav’s own agency, Anatta.
The year 2023 has ended and there are a lot of lessons to be taken from it. Nirav points them out clearly and sees 2024 as a brighter year for eCommerce, in general. Nirav believes that with strategies that are thought through, businesses can capitalize on the opportunities in the industry and achieve success in 2024. He hopes that businesses will use the lessons from the previous year to make informed decisions and make the most of the new opportunities.
It’s an exciting episode as you’d hear Kunle and Nirav talk more about the changes in Anatta, brand resilience, and insights on why 2024 would be a good year for eCommerce.
Here is a summary of some of the most important points made:
In this episode, Kunle and Nirav discuss:
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If you have been following my journey here on this podcast, you’ll know that I am a Co-founder at Octillion, a consolidator of digital-first good-for-you CPG brands. We acquire brands with a view to scaling them up. We currently have a portfolio of three brands all powered by the commerce platform Shopify.
Shopify is the global commerce platform that helps you sell at every stage of your business. From the “launch-your-online-store” stage to the “first-real-life-store” stage all the way to, “did-we-just-hit-a-million-orders-stage,” Shopify is there to help you grow. Whether you’re selling scented soap or offering outdoor outfits, Shopify helps you sell everywhere from their all-in-one eCommerce platform to their in-person POS system. Wherever and whatever you’re selling, Shopify has got you covered.
Shopify helps you turn browsers into buyers with the internet’s best converting checkouts, which is a whooping 36% better on average compared to other leading commerce platforms. You’ll also sell more with less effort thanks to Shopify Magic, your AI-powered all-star. I remember the first brand we acquired was running on another platform with quite poor conversions. We made it a point of duty to get it migrated over to Shopify and our checkout conversions doubled.
What I love about Shopify is its ease of use. I don’t think there are any other eCommerce platforms that beat its usability. Shopify powers 10% of all eCommerce in the US. Shopify is truly a global force powering Allbirds, Rothy’s, Brooklinen, and millions of other entrepreneurs of every size across 170 countries. Plus, Shopify’s award-winning 24/7 help is there to support your success every step of the way because businesses that grow, grow with Shopify.
Nirav, welcome to the 2x eCommerce podcast. This is the second time. I am super excited to have you. For those who don’t know much about you, you’re the CEO and founder of Anatta, the premier eCommerce partner for fast-growing direct-to-consumer brands or D2C brands like Rothy’s, Dollar Shave Club, Athletic Greens, Four Sigmatic, Buy Buy Baby, True Botanicals, and BRUNT, a workwear brand. You guys are dip into the D2C space and commerce. We love to speak commerce. The reason you’re here is it’s 2024 and I would love to pick your brains on the outlook for 2024. A warm welcome to you, my friend, Nirav.
Thank you so much for having me back, it’s such a pleasure, and I loved our conversation the last time. I’m honored that you invited me back here.
Did I cover all bases with Anatta or do you want to speak to what you guys do, particularly anything that’s changed from our previous conversation, which was in Season 8 Episode 12. You should definitely check out the episode with Nirav. We spoke a lot about what they’re doing with Athletic Greens and the impact of landing pages. That inspired me to take a look at landing pages. What has changed at Anatta? Please, give us your elevator pitch.
Thank you so much for allowing me to do that. Nothing has that drastically changed. We’re an agency now and over fifteen years in the space. What’s changed in 2023 is that our brain trust has gotten better and better within the organization. Having been around for this period of time, we’ve worked with so many amazing brands like the ones you mentioned and many other both pure-play D2C but also enterprise eCommerce players like the Buy Buy Baby’s of the world. We also signed and work with Vuori now.
It’s these amazing talents and amazing companies that we get to share our information with and we get information back from them in terms of data, analytics, and user experience. We’re learning so much more every year and what’s working and what’s not working. Every commerce is changing, especially what works and what doesn’t work and what got you to where you are to what moves you forward.
It’s constantly changing. We’re always feeling like we’re deep within and we have a pretty clear understanding of where things are headed in the next couple of years that will allow the roster of clients that we work with but also any future clients to be able to stay ahead and get ahead of it.
Congratulations on the new accounts. I’m excited for you. Let’s step back a little bit. Let’s look at 2023. The reason I like speaking with SaaS companies and agencies such as yours is you are privy to a lot of data and you are able to see macro trends once you’re able to join all the dots with the accounts that you have access to. Reflecting on 2023, do you want to give a brief summary of how you think things panned out in 2023?
In 2023, we saw everybody, for the most part, pulled back on their investment, specifically in the D2C channel. They pulled back on technology spend, they pulled back on media and ad spend, and they pulled back in any place that they can to start pulling out of growth and pushing towards profitability. We projected that time that towards the end of 2022, everybody started to make moves towards this but we saw it coming to fruition.
I’m talking about major tech stack changes to reduce overall total cost of ownership and being able to right-size their team so that they had less people or they started hiring more in-house because they felt like the cost that they were incurring, whether with agencies, freelancers, or outside, wasn’t sustainable and that they needed to bring some things back in-house or the idea of making changes in how they went about acquiring customers and what other channels they could be looking at.
2023 was that year of taking a pause, resetting, and reestablishing where people wanted to be in their businesses. We saw some businesses do pretty well coming out of that and we saw some businesses struggle with that approach because they’ve been focused on growth for so long and when those specific marketing channels or those specific tactics weren’t working, they got stuck and they were burning too much cash so they didn’t have any other cash to replace it.
2023, overall, was a pretty challenging year. I would put it at the 80/20 side of things. 80% of companies saw it as a pretty big challenge to go through and 20% maybe saw some good success out of it. For the majority of side, it was a pretty challenging year not only just on the agency, the partners, and the SaaS company side. SaaS did well in 2023. The agencies had a pretty tough year and eComm brands as a whole had a pretty tough year. The ones that focused on profitability were at least right-sized where they needed to go towards.
We’re seeing this different trend going into 2024. We’re seeing some optimism, which I haven’t seen in close to a year. I’ve seen a lot of sad faces on calls. Now, I’m starting to see some optimism on where the brands could be headed. Budgets are opening up a little bit that we’re like, “2024 could be a different year.”
There are so many moving parts with what you said and one is discretionary income from customers because they faced inflation in so many ways, from rent, mortgage, food, and many other things. They had little to spend online and debt is rising and that’s one hand. On the other hand, you have the after effects of that happening on eCommerce businesses and then agencies bear the grunt.
You have the fact that eCommerce businesses or brands want to cut costs and they’re looking to automate a few things and SaaS solutions tend to solve it so it was a good year for SaaS. There are many interesting things. I want to focus on that 20%. There’s 20% of brands that did well. What do you think was their formula for success? Why the success? Luck is opportunity meeting timing and preparation meeting opportunity. What did they do differently to the 80%?
One brand I can think about, and I’m happy to talk about them because they were talked about by Harley from Shopify on their Black Friday and Cyber Monday sales, was BRUNT Workwear. I love the brand. They’re not only part of our roster of amazing clients that we get a chance to work with but they’ve been pure-play D2C for a pretty long time. Their marketing and the way that they attach themselves to building a community of customers is solid.
I haven’t seen so many brands have such an amazing channel when it comes to their marketing of having built both brand and growth. They do such a great job on the brand side as well as on the growth side. When brands can do that well, they can weather these storms. A lot of brands that were in the 80% side were good at either brand or good at growth but they weren’t necessarily good at both.
When these tailwinds come, especially on the macroeconomic side of things, it’s hard to keep your sailboat aligned. It’s hard to be able to move through that. The brands that were able to stand a station between, “We have strong brand value and our community loves us. At the same time, we’re willing to try out a couple other things on the growth side of things to iterate and innovate through these tougher times,” they’re the ones who were able to steady the ship.
I’m not saying that they were flourishing or growing at this crazy rate, some were but very few on that path. Some were able to do well through this scenario, which meant 10% or 15% growth when at previous times, were at 50% year-over-year growth. It’s okay not to be at 50% year-over-year growth but it’s also to know what expectations are and to be able to meet them by being able to have a steady ship. That’s what differentiated the 20%.
How do they anchor the community around their brand?
A lot of it is through that direct outreach through the community. It’s loyalty. It’s developing thoughtful loyalty programs and not just plugging in any SaaS solution. This isn’t about the technology that powers it, it’s about what you’re willing to do to provide for your best customers. What are the experiences you’re willing to give to them? What are the personal outreaches you’re willing to do? What is that touch that you can give to them?
You get that Zappos-style customer service back into play and that level of, “We love you as our customers. We’re willing to do more for you. We’re willing to offer free products or give you discounted components.” In this period of time, discounts matter. During the Black Friday and Cyber Monday with our discretionary income being less than what it’s ever previously been, we need those abilities to have deeper discounts.
My wife and I, during Black Friday, went to the retail stores and the discounts weren’t very good. It was interesting to see they were having these sales of, “Buy 3 and get 10% off.” It’s like, “Buy three? We didn’t even buy 1 or 2. What do you mean buy three?” They weren’t able to. I understand where businesses are.
At the same time, for the consumer side, if they weren’t willing to understand where they’re coming from and what type of discount they need at this period of time, not to say forever and not to say that every company needs to discount everything but to be mindful of where we are in our current society and current economic side of things to see and meet the customer where they’re at, that’s the leveling that’s needed. That’s how they built strong communities but also be able to connect with the individual consumer.
Interesting points there. That sensitivity of the macro should be translated. It’s also customer empathy. Understand what your customers are going through economically and try to adjust so you weather the storm with them and not just push them to the side with, “Buy three for 10% off.” There are those discounts, which is interesting in and of itself. Quarter 1, Quarter 2, and Quarter 3 were tough. From my understanding, many retailers were able to get out of the red in Q4. Is that a fair assessment of 2023?
This is a very fair assessment. Those first three quarters were incredibly tough and incredibly hard to weather overall. The fourth quarter was that time where brands and companies got to see the revenue come in and be able to make up for what those past quarters were lacking. Q4 was a strong quarter overall.
I’m hoping to see that trend going forward into Q1 and Q2 of 2024 because the overall consumer sentiment seems that they’re willing to spend and that overall discretionary income is coming back to a good level. In the US, we’re seeing jobs overall being at a good place. I’m hoping to see the trend continue and I’m hoping that the overall eCommerce world gets to get a sign of relief compared to the year before.
From a 2024 perspective, at least in the states, inflation seems to be calming down and that’s reflecting on interest rates. In the UK not so yet. Inflation is coming down but biased sentiments are still a bit down in the UK. In the EU, it depends on the markets. The German market is a bit resilient. Going back again to that 20% and even some of the 80% that managed to break through in Q4, would you say 2023 was a year of maximizing lifetime value due to the fact that most brands were focused on profit rather than growth? With growth, there’s always acquisition and trying to acquire. It’s about CAC. Is that why some did well, especially going down your community points on anchoring that community around their brand?
You said something that brought something to my mind, which is that the brands who have always been focused on acquisition purely had a tough time when they had to focus on retention. The brands that were always focused on retention and had acquisition being side-by-side with it did well in 2023 because they’re like, “This is not a new playbook that we have to write. This is something that we’ve already written and that we need to accelerate on.”
The ones that had subscription programs like the Athletic Greens of this world did phenomenal in 2023. Based on everything I’m seeing and everything that I’m reading out there, they had a great year. There are brands like that who had stellar subscription programs that were able to accelerate their growth or maybe not see it go accelerate too hard. At least they were able to build the base income that they previously didn’t have prior to that.
The ones that have a strong retention program overall and think that way makes a big difference in towards how they were able to continue focusing on customer lifetime value versus the acquisition players who never played the LTV game and never looked at 2nd or 3rd repeat purchase rates. They were stuck when they came to a market like this where acquisitions are down, “How do we make money from returning customers? We don’t know how because we haven’t played that game yet. We haven’t done the work or the strategy.” The good news is those brands did catch up in 2023 and they do have subscription programs, loyalty programs, community build, and overall organizations. Those are the ones that are definitely in a much healthier start to 2024.
Good points. I remember an interview. I was listening to Chris Ashenden, the founder and CEO of Athletic Greens. He kept on emphasizing, “We’re a retention business.” This interview was years ago, “We are in the retention business,” that was it. That was his key tip, being the retention business because it’s resilient, and it’s like SaaS. We’ve got a fair assessment of 2023. What should eCommerce brands reading this be doing this quarter in Q1 and then we’ll talk about the rest of the year?
In 2024 Q1, there are a few things I’ll be looking at and one is 2023 taught us that a single channel approach isn’t going to be the only approach that can be taken and that there has to be a more of an omnichannel and multichannel approach overall. One channel that opened up in 2023, which isn’t a new channel and is one of the oldest channels, is B2B, wholesale, and that retail plays that you can make.
Retail being whether you want to set up your own brick-and-mortar is one thing and I highly advise against setting up your own brick-and-mortar unless you need to create a specific user experience that cannot be done in another setting. I read a post on Modern Retail talking about how Nike, which made a significant increase in their D2C side of things, has pulled back out of D2C and said, “We’re going to reestablish our relationships with Foot Locker and other shoe stores.”
The reality is that when you are in these markets where consumers like to buy in diverse environments, they don’t want to just be in a single-branded and single-experience store-only. They said in the Nike article, “People bought more Nike shoes when they got to be next to Adidas, Reebok, and other brands.” They could pick, mix, and match what they would like to get. There was more purchasing in that experience. That’s similar to clothing and apparel, wellness, and many other places.
In Q1, I’d be looking at where the B2B opportunities lie. I didn’t know about this until I looked at the stat but B2B total sales is double the market of D2C or even significantly larger than 2X. There are a lot of opportunities in that space as long as you can make the margins work. I’m not trying to be a proponent to say anybody should go to B2B but there is. When you see Nike making that shift back towards out of D2C and seeing, “Maybe we shouldn’t have over-indexed on D2C. There is a B2B component to the world.”
Brands should be looking at where the B2B opportunities exist as well as what are the tech stacks around that. Shopify has launched a cool B2B platform. I would never have promoted or thought about that but it’s been phenomenal what we’re seeing in the overall space. I would be looking at that in the first quarter of 2024. I would also be looking at ways that you can be able to optimize the overall user experience through some recent AI upgrades.
Let’s speak to the wholesalers please. I read and summarized the article. It was an interesting article, the Nike one where they were cutting down their D2C. With wholesale, would you say launching on marketplaces such as Faire would be a good enough first step for D2C brands? Should they put a people infrastructure in place and a systems infrastructure in place to own that wholesale opportunity or the wholesale channel?
Like any other aspect of your business, which is to first start with strategy before you go directly to implementation. I would strategize what the overall wholesale and B2B approach is going to be and how you’re going to scale that as well as how are you going to approach it? Of course, you can always activate a channel and say, “You’re selling on this new marketplace.”
Is that really all you want to do or do you want to strategize and say, “For this market or for this channel that we’re going to open up or this area, we’re going to market ourselves this way. For this other side, we’re going to market ourselves this other way.” I would much more take a strategic approach about how you want to set up that business and what it means and then set up the technical infrastructure to oversee that and then go launch it. It doesn’t require a lot.
A lot of the technologies out there don’t require you a six-month process. This could be a 30-to-60-day process. I would encourage businesses to think about it. In Shopify, everything is so easy or in the system is so easy, just click a button and you’re like, “You live on this marketplace. That’s great but, at the same time, are you going to get the most benefit from doing that? No. You’re going to get the most benefit when you strategize, you construct a team that’s good with that, and you approach everything and then go execute. Execute as hard as you can but start with some strategy up front.
Get the people first, that’s what I picked up from that. Smart people are that. The second point you were talking about is investing in UX.
Invest in UX in terms of storytelling. Still many brands are missing the mark on telling a good story and guiding users to experiences that they want to be guided to in terms from the ad all the way to the landing pages. We’re seeing a lot of technology coming out now that can let you segment your audiences so they’re coming from a specific ad set or specific area. Give them the content that they win at.
If you look at brands like Athletic Greens, which we both mentioned earlier, they have versions of their landing pages. This isn’t because I have insider knowledge. Go through their website and you can see that they have 3 to 4 of their pages that are segmented. If you’re in the wellness category, you get a certain content versus if you’re in the athlete community, you get certain content.
It’s a slightly differentiation on what you are and who you represent. It’s making sure that you do the work to segment your audiences because you’re doing all that work to segment it. Why not do that same work on the website experience and the content you’re sharing and the content that comes afterwards so that people can feel like they’re being more personalized towards?
I’m not talking about full-end personalization. Take a step back and go to segmentation. Can you do that as a brand to be able to isolate to make the consumer feel a little bit more with you and like you’re talking to them versus talking to them in a broadcasting-style conversation. The user experience from that makes a difference.
The segmentation approach works. I like the fact that you have distinguished between personalization, which is going all-in versus segmentation. From a more technical standpoint, would they need to have a decoupled architecture where they have a headless content for CMS on the front-end that dynamically serves content based on the data you feed it or based on segments, essentially?
You can but it’s not needed. In today’s world, whether you’re living in the Shopify ecosystem or you’re living in another ecosystem, they have tools and apps that work directly without having to be headless or completely compartmentalized. You can also keep it really simple. Build a few more landing pages. Take your landing page builder and create a few more contracts. Yes, it takes a little bit more manual work but sometimes you gotta do it.
As the CEO, I was sending messages on LinkedIn to a few people and I could automate it but there were 50 messages I had to send and I typed them. Sometimes you got to do the work to create those landing pages as much as automation you want. Do the work, put the landing pages out there, and then once they’re there, you segment it out to which landing page you want people to go through and it’s that easy. Sometimes we all have to get back into our startup mentality and be like, “This isn’t that hard.” Some things are easy, we just don’t always want to do it.
Fair enough. We have wholesale and then we have a segmentation strategy. Any other Q1 tips for readers?
The other tip I would have in Q1 is to pay attention a little bit more in this market to see what else is trending. My tip here is to listen and see what else is popping up in the community. I wouldn’t take any other action yet because as we come out of Q4, we’re just seeing some trends, we’re starting to watch the economy and where it’s going.
One of the things that we’re reading on the map on an economic level is how much the supply chain is affected through a lot of the things in the wars that are happening in the Middle East, between Russia and Ukraine, and through all of the areas. There’s a lot of warfare and a lot of changes to the supply chain overall and how that could affect overall costs. I will be watching some of these macroeconomic conditions to see how that might affect the other aspects of the business and how that would fall into your world of what you might need to do to maybe make some modifications.
Right now, it’s a good time. This is not specifically any for a web optimization guideline but overall, commerce play is to look at the supply chain side of things and see where you might need to potentially reposition your components of your supply chain or move things. If you don’t and you wait too late, by Q3 or Q4 of 2024, if you’re not well prepared for it, you might not be set up for success this 2024. Because the market conditions are changing so often, if you don’t have the preparations done, you might not be able to succeed as well coming forward in 2024.
Good points around observation, the supply chain, world-wide geopolitical status of things, and adjusting as necessary and planning ahead. What is your outlook for 2024? I know you don’t necessarily have a crystal ball but you have data and hindsight? Go for it, please.
Right now, I’m optimistic about where 2024 is headed. Now that 2023 is out, a lot of brands who couldn’t make it had to reposition themselves or leave the space and market. The brands that have done well had to rise to the surface. 2024 is going to be a good year overall for commerce now that there’s been this reset in 2023. Everyone has assessed where growth needs to be and where profitability needs to be.
Overall, we’re going to see a good year in 2024 based on interest rates hopefully dropping or staying pretty flat and consumer confidence still being there. We’re going to see a pretty good year for commerce overall. The same thing as before, be willing to pivot, and maybe be willing to make changes where needed. Overall, in this year, we’re going to see some upward trends and hope for some good growth trends in 2024.
I’m super excited for 2024. Thank you for sharing wholesale tips, UX tips, and supply chain tips. Those are the core pillars running an eCommerce business. That wraps our episode. Do you have any parting advice to the audience before I let you go?
It’s been a mantra for me going into the end of 2023 and this 2024 to slow things down a little bit. 2023 taught us a lot of things. Slowly make some decisions this year around. Don’t make fast decisions. Think through them, strategize, and then make your decision. Don’t bake anything in haste because we’ve gotten out of that hasty in-and-out work. Let’s take the time to strategize and think through things. My guidance here is to slow down. It’s a good life component but it’s also good for our businesses, slowing down a little bit.
Slow down you’re thinking. Even the holidays in December helped us slow down a little bit. Yes, I’ll take that on board. For people who want to find out more about Anatta, it’s Anatta.io. Your model is you outsource dedicated teams, not just randoms. You dedicate UX designers, researchers, UI developers, backend developers, and project managers to oversee the deployment of projects in the eCommerce environment. Is that it or do you do more than what I just said?
It’s that and we do it on both large-scale re-platforms, re-architectures, and migrations from big platforms into the Shopify ecosystem. We do the full gamut of it. Whether it’s providing a digital product team or a team to do a large migration like we did with Buy Buy Baby, those are the types of engagements we love doing and we would love to partner with.
I love the focus on D2C. If you have any projects that you’re looking to deploy in 2024, check Anatta.io Nirav is one of the guys I trust in this space from a UX standpoint. It’s the second time he’s been on the show. I want to thank you again for coming in and sharing your insights, Nirav. A pleasure. Cheers.
I appreciate it. Thank you so much for having me.