The Forbes Midas list is a ranked collection of the world’s leading Venture Capitalists, each of whom has contributed to some of the biggest and most notable investment rounds. Mary Meeker, of Kleiner Perkins Caufield & Byers, is ranked #6 on the list because of her early investments in several forward thinking companies like Airbnb, Spotify, Houzz, and Chinese commerce site JD.com. She is known for her shrewd investments based on hard data and thorough industry research.
Each year, Meeker releases an expansive data-driven report that discusses the current state of technology. On May 31st, Meeker released her 2017 Internet Trends Report, which covers a wide range of topics including e-commerce, global internet usage, media, gaming, healthcare, and cloud systems. Due to the breadth and scope of the 355 slide report, we can’t provide an in-depth analysis for each of Meeker’s claims; this post will analyze her findings on consumer behavior and e-commerce trends/technology.
Ad technology in e-commerce
In an early section of the report, Meeker breaks down the platforms that deliver targeted ads at “The right place/right time,” and noted Google Adwords as the leader in paid advertisements. Their ability to take user input (Search Strings) and produce relevant paid ads gave them a $679B Market Cap.
However, the report shows that visual recognition technology that has only recently become available allows for new advertising applications. Snap, Inc now has a gigantic opportunity to produce targeted ads that relate to user uploaded images.
While search engines and ad tech have historically been limited to specific inputs that users have to type out, image recognition technology allows brands and advertisers to interpret what a consumer may be interested in based on content they post as pictures. This opens up an entirely new source of data for retailers, which they can collect and leverage to produce targeted advertisements or predictive content.
Meeker also demonstrated how voice search is growing in popularity, and the technology that enables it is becoming increasingly effective. Voice recognition systems have gotten to the same accuracy threshold as a human, which significantly improves the quality of chatbots and virtual assistants like Siri, OkGoogle, Cortana, etc.
Meeker shows that these improvements to the back end technology behind voice recognition (and in the case of the Echo look, combined voice and visual recognition) allows companies like Amazon to broaden the “skills” or use cases that it can perform.
The rise of voice recognition and visual recognition applications like those mentioned above greatly improve user interface and user experience for the average consumer, who are proven to covet convenience over all else. In Jetlore's consumer survey report "Add to Cart: The Deal Makers and Deal Breakers of Online Shopping," more than 40% of consumers agreed that 2 pages of scrolling/search for a product was their limit before frustration and abandonment.
Aside from the obvious benefit of giving consumers additional ways to search for relevant content or products, these technologies increase the amount of accurate and timely data companies can digest on their consumers. This influx of customer data, when analyzed properly, can greatly increase the effectiveness of advertisements, personalized content, and communications.
Meeker also noted the shift of advertisements from engagement mechanism to transaction platform. Advertisers are now able to create a transaction directly from an ad, rather than simply point users to an e-commerce site.
The lines between ads, content, and products are blurring, in a way that enables transactions to occur almost instantaneously and from any channel. This is meaningful, because it significantly reduces the amount of steps to purchase, and increases the likelihood of conversion.
Social media’s influence on brands
The report also demonstrates the continued effect social media has on retail and e-commerce. Meeker states that user generated content is 6.9X more effective when shared than brand generated content.
As brands build a more robust social media presence, customers are holding them to higher standards of excellence - this idea is compounded by the fact that user generated content is much more shareable and visible; just as positive experiences are highlighted as in the example above, negative experiences with a given brand are much more widely distributed. While only 76% of customers would abandon a company in 2014, negative experiences alienate 82% of customers today.
Consumers know that they can communicate directly with a brand and hold them accountable for any negative experience, and require the ability to do so effectively. A study quoted in Meeker’s report showed that easier access to customer support channels and faster agent response times drastically outweighed the need for a consistent customer experience across an entire site.
Rising expectations from brands are causing consumers to be increasingly sensitive to all negative experiences. Jetlore’s consumer survey report demonstrated that 69% of consumers would completely abandon an e-commerce site if irrelevant product recommendations were given.
All of Meeker’s statistics regarding the state of social media in e-commerce speak to the notion that brands who focus on fostering a strong community of engaged customers and positive experiences have generated strong growth.
Meeker’s discussion of eCommerce included a look at the retail enterprises that are doing things right, by combining community and technology to create sustainable growth.
Meeker includes Chewy.com as an example of a noteworthy e-commerce business in 2017. Their focus on community, high speed customer service, and easy subscription service has doubled their revenue (prior to their enormous acquisition).
Untuckit merges the digital and physical world to create positive user experiences, which grow their online sessions.
Instacart remembers user preference and focuses on ease of use for consumers doing their grocery shopping online.
eCommerce is still a growing industry
Meeker wraps up the portion of the report on advertising and commerce with a section titled, “eCommerce A-HAs.” While this section includes several additional claims that can be posts unto themselves, there were two slides that summarize the state of retail and eCommerce quite nicely.
First, eCommerce is still growing at an accelerated rate.
This chart shows that online shopping will continue to grow and absorb an even bigger portion of the retail market as time goes on.
This isn’t to say that one day we’ll be 100% e-commerce; another of Meeker’s eCommerce A-HA’s pertains to digitally native companies developing a brick and mortar presence.
Meeker’s assertion here is that there is no indication that brick & mortar stores are on the way out, just that it’s important to create experiences that efficiently blend the physical and digital worlds in a way that emphasizes what consumers have shown is important: convenience, ease of use, and relevance.
The primary takeaway from Meeker’s report (or at least the parts relative to e-commerce) is that technological advancement and the increased adoption of social media are causing customers to expect more, because they’re beginning to receive more; accurate and relevant content, user friendly search, increased availability of customer service, and better use of customer data have all contributed to consumer empowerment.
Essentially, the advanced technologies that focus on providing positive and robust consumer experiences have shown a direct correlation to growth. Businesses that continue to focus on the next generation of consumer facing technology will succeed, and those that are glued to old-school methods of consumer engagement will struggle.
Join the conversation on social media!