#152: Conquer the Ecommerce Challenges of 2023

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Claus Lauter: Hello. Welcome to another episode of the e-Commerce Coffee Break. 2023 are new year, new challenges, new for online merchants, and a lot of things are going on in the world of e-commerce. Obviously with the pandemic, a lot of e-commerce, Companies made a huge profit. Things were going uphill.

Now we are on the opposite side. There's economic fears there. We see, , recession on the screen. We see the evaluation of money there so people start saving money and so on and so forth. So we are in far right in 2023, and that's one we would talk about today. So we wanna have a little bit of an outlook of what experts think is going to happen this year.

And with me, I have Gian Maria Gramondi, he's the co-founder and chief operating officer. At Shop Circle Tech Co. A technology company focused on buying and developing e-commerce apps for immersion start.

He holds a master’s degree in management from ESCP Business School, and a master’s degree in international management from the Bayers Business School. Gian Maria graduated cum laude from Luiss Guido Carli University with a bachelor’s degree in economics and management. He enjoys mentoring early-stage start- ups, collaborating with an online incubator, the Startup Builder program, created by Italy’s Startup Geeks.ics.

So he's the perfect partner to talk today. Hi Gian, how are you today?

Gian Maria Gramondi: Hi Claus. , thanks so much. All good. Thanks for having.

Claus Lauter: Sure Jen, 2023 will be a bit of a rocky road, but I think still things are going uphill. Give a bit of an idea, , where you see the market trends going right now before we dive deeper into topics.

Gian Maria Gramondi: Yeah, sure. I think that we can read on the news everywhere about, couple of, pretty concerning starts and numbers ahead of us, right? Obviously, consumer recession being one of. Hot topics, , very likely to happen. So clearly 2023 might be, a pretty complex year. , and obviously, you know, in the same way that these might impact and will impact families in the same way, will also impact obviously brands and e-commerce brands even more, I would say, our world and our industry for a couple of reasons.

The first one, obviously being that, , pandemic was an absolutely, , I would say unusual, unexpected, , time and, , clearly, somehow inflated obviously , by what happening during that time. Even some of the merchants, I would say, some of the brands, , and even some of tech operators, , thought that that was the new, , normal.

, but clearly was not a new normal, , because [00:04:00] now we are back to similar, growth rate when it goes to eCommerce as the one before pre pandemic, which again is something that, , economist would've absolutely expected, right? So we moved again from under 50%, 60% year over year, two or more.

, rational, if I can say 20, 25% year over year. Still, the future ahead of us is bright, but it will be more, , let's say conservative and I will say based on actual fundamentals which we did not see obviously during the pandemic. So I believe this is the new normal. This is what we should expect, ahead of.

Claus Lauter: Okay, now Shopify is on two and a half million stores right now, and the number is about 20% growth year on year. So there's still more merchants coming on board. That might be brick and mortar stores that are going into e-commerce, that might be small businesses starting up in e-commerce. So there's still a lot of dynamic in the market there.

Lots of merchants when they come in, specifically when they're solopreneurs or , brick and mortar going in there, it's a complete new world for [00:05:00] them. And I see overwhelm, I see a lack of focus. , they're looking for clarity and you guys are chop circle. Obviously you do a lot of things helping merchants with getting in the right direction.

So I want to dive in a couple of topics today. One is traffic generation. That's most likely the one number one thing on every merchant's. And there's a lot of things going on. What's your take on what's happening with

Gian Maria Gramondi: traffic right now? As Azure Credit pointed out, absolute shop circle, , tri 12 merchants, and to have brands really navigate, the very chaotic, I would say, see of the technologies when it goes to eCommerce and in particular of Shopify apps, right.

The, as Azure credit pointed out, like Shopify Yes. Is growing the ecosystem, the apps ecosystem is also growing massively. I would say like now there are more than 9,000 apps, , in the Shopify ecosystem and merchants in particular s. , brands are struggling to underst. What are the right apps that they need, the right technology, the right tech stack that they need?

And this is exactly the proposition of Shop Circle. Our proposition is really being the go-to [00:06:00] choice for merchants, for brands, when it goes to picking up the right technology that they need by providing one suite of tool with one streamline communication channel so that merchants don't have to deal with 20 different.

, tech providers, but just with basically one provider like Shop Circle on the points about traffic. , and again, I think I'm linking back to what I mentioned before as part of, again, a macroenvironment. , changing that also means that traffic is changing and that means that basically merchants cannot expect, , to, , get the same inflow, , of new merch, of new customers.

, Reaching their website, reaching their legacy stores as it happened, , two, three years ago. We faced times in the past couple of years. It was all about customer acquisition, conversion. How do we get more customer, how do we convert more customers? And we are seeing, for our apps, right?

We are facing, not a decline, but definitely slowed down in the growth of new customers, , approaching our merchants, , stores. What I believe and what we are [00:07:00] seeing and what we are recommending more and more, , to our brands is really to focus.

In particular within, again, in this macro environment to focus on the existing customers that they have. And again, there is this buzzword, I'm sure, , Klaus, you heard it from different e-commerce folks who were part of this program, but like, Again, the word is retention. How we can retain the existing customers, why we should retain the existing customers.

We believe that that's exactly the right approach. In particular in this, conservative market that , does not mean to abandon , the new customers. That not mean, you know, this regard, the other ways of attracting customer through paid advertis, et cetera.

But that means . Be more and more focused on marketing retention. And we have some stats, we have some data. And marketing retention on average is between five and 25 times cheaper than any other, , marketing, , strategies. And so that's an important number , that merchants, the brands, should really focus on how [00:08:00] we can retain our customers.

And again, another stats I wanna mention is that, for instance, on average, , Recurring clients generate 300 times, a hundred percent more revenues than new customers. So all these stats really confirm that again, even more in this market, climate is way better for brands , to focus on their existing, clients.

Claus Lauter: Yeah. When it comes to retention and a hundred percent you, that's the most important thing. You can work right now. Instead of with increasing, , eight ads, Facebook becomes reasonable, , and expensive. They're all becoming more, more expensive. So focusing on the customers you already had makes perfectly sense.

Now, you touched on there is about 9,000 apps in the store. , and there's, for every. Arian vertical. Within the market, there is a dozen of apps, which again creates overwhelm. Very, very difficult for a store owner to. Right apps. What do you think are the most crucial apps that a store should have?

Because a lot of them, they're just throw more and more apps and they're [00:09:00] hoping that they help, usually that backfires. So what's your take on that?

Gian Maria Gramondi: Let's focus on, retention. And I believe that , what retention means is also changing , for brands before and for customers ultimately.

Before it was all about, Emailing, sms, , and basically engaging on an ongoing basis with the match. And since still. Core, and that's part of the strategy, right? And again, there are, , literally some great apps out there, obviously helping with email marketing events. I'm just naming like Clavia, for instance, like the, the largest one.

But now retention goes above and beyond because what, brands should strive, , should aim is to have, , an audience, , of fans like having not just, your customers should become your fund base basically, and really be a huge supporter, of your brands. I'm gonna mention two other elements and two other type of technologies.

Let's say they could help the first one of just subscription apps and the fact when merchants, when brands. Can really build this long lasting and ongoing relationship with their end, , and [00:10:00] customers through subscription. And again, always in particular, there are some industry which I believe are more suitable, for this type of product thinking.

For instance, on the content creator side, for instance, Klaus, I think it's an interesting, , industry that really benefit , from a subscription approach. But again, we can think about, , supplements, we can think about, , many other, , type of goods. They should really try to find the right app and the right stock for them to really, , go in front of the merchants and build this ongoing relationship.

, even in that space, there are , some great partners out there. And then the last important point, It's on building this, , community of excited, , customers that really buy, , regularly through, for instance, , loyalty programs. And again, here, there are different apps, shop Circle.

We are basically operating and supporting con referral, which is, , one of our core up. , and really allow. Brands to build bespoke referral program. , allowing to really build this and foster this words of mouth, this community, , among the customers.

These are some of the apps [00:11:00] which I believe are crucial to really build this, type of ongoing recurring, , relationship with the customer.

[00:12:00]

Claus Lauter: Makes perfect sense now with retention, loyalty programs, all of that. The, , merchant needs to create a lot of content to get people back to the store.

A little bit out of the context, but I just wanted you get your [00:13:00] take on that. What do you think, how does artificial intelligence help creating content for building re.

Gian Maria Gramondi: There is a lot, , many, , gurus and experts writing on this topic. My take is that it will have an impact for sure, I believe the ai we are reading a lot about, you know, new technologies, , popping in.

They will be fundamental , and they will really help. The merchants, the brand's life easier, more scalable at ultimately at a, , decreased cost, which again, , is definitely something that merchants want to have and are struggling to achieve, in this current environment.

So I'm a huge believer that in the right way, this technology will be , a huge help and a huge enabler. , Retention, , strategies, retention campaign. That does not mean obviously that the human touch will be completely, put aside. But definitely it will be, , a huge enabler when it goes to retention because what these technology now allow merchants do is really, uh, , incredible.

Literally they could save lots of money, [00:14:00] and the more we will see, , the new development and what's gonna be, ultimately then the actual pricing of these technologies. But definitely, I'm pretty sure that they will make a huge impact. In the good sense though,

okay.

Claus Lauter: You also help, , developers scale their apps. You buy the apps. You've really built a scalable business out of, new apps. Which apps are you looking into right now in the market that where you see the most potential?

Gian Maria Gramondi: We basically are operator of these tools, but in most of the cases, we actually start by acquiring, , this house , from some incredible, , founders, entrepreneurs, developers, who really were great at doing from zero to one, getting to product market fit, getting the first thousand of customers and building great products, but then, you know, they want some help and some support to really scale to the next phase of growth.

And again, here is where, , shop Circle comes in by acquiring. And joining forces with these, , developers and these founders, which in most of the cases really they become part of Shop Circle family, and they become part of, , our larger vision. , in terms [00:15:00] of, focus and, category, we say subcategories that we are looking at specifically at the moment, , clearly personalization is a big focus for us.

Personalization. Have different, , angles and perspective, right? So for instance, we already. Pretty, committed, in this category. We have two great product options apps, that, for instance, a part of this , macro category. And we are looking more and more, , at other apps in particular in the video space.

Again, personalized videos, shopping, , videos, and which we believe is a definitely odd space because that goes back to the point on the macroenvironment, what we are seeing is that clearly shoppers are becoming way more and more sophisticated, and selective. And so by being sophisticated and selective means that obviously they want to see the right product at the right time, and we want to be.

Able to help brands to do this and to make it happen. The second very important category is that , we always, keep, liking are all the apps in the space of automation. those apps that help merchants to, , automate their core processes.

, because [00:16:00] again, that goes back to the point merchants want to save some money and they want to obviously decrease the number of human. Processes that they have and in order to that technology, , can help. And then another area very interesting from our side is really on the pricing.

Back to the environment. By having shoppers more sophisticated as well as more price sensitive, due to, , the matter condition, we want to also help merchants understand what's the. Price point as well as a product that they want to the end customer.

So these are some of the categories that we really like and that we are looking into.

Claus Lauter: Okay. So from what I hear from you is that merchants in 2023, Three should really regroup and focus off the most important things. , in the good times, they're just spending money all over the place on really focusing on what helps the business the most.

What helps the customers the most and what takes them even in this difficult times, helps them forward even to grow. Bringing back to your apps, what, what's the process if somebody approaches you guys at Shop Circle? What's kind of the customer journey here?

Gian Maria Gramondi: We [00:17:00] have different type of programs, on the merchant side. Clearly all our apps are listed , in the Shopify app store, right? So we have, some of the best app in the respective categories where merchants, , can just Google , and find them.

Most of the cases they find it. Very high , in the ranking, which is good for us because, you know, we keep, , operating , and try to provide excellent support and excellent service. Right? So basically it's very likely that, , if you type again, obviously product option, if you type digital download, if you type, , order management, you would already find as merchant, our apps feature number one or number two, and that's the first, , element.

Then obviously we are running a lot. , different content campaign because the idea of Shop Circle is very much to explain to our merchants how they can basically leverage not just the full suite of Shop Circle in order to achieve , their ultimately end goal. Right? So we have published, some great playbooks, for instance, back in the days he was to, , black Friday, Saturday, Monday, you know, Ready And also giving visibility, for instance, to which from our [00:18:00] perspective, were the write ups.

We are not just, giving visibility to Shop Circle Hub. We have absolutely some great tech partners , that we work on a day-to-day basis with. So really understand, , and suggest what do we, think based on looking at more than 80,000 merchants that are trusting our solution and clearly finding.

Common trends, , what they like and what's their tech stack in particular for the best in class. Hence, obviously for us means, try to share this with, many other, , SMBs. And then we are also launching some new programs. , more on the consultation side, I will say.

So basically merchants reaching out to us and telling us, but thanks to the fact that you guys. Multiple product offering. Can you run a quick, , overview and consultation on our tech stack and how we should optimize our tech stock?

What apps are we missing? What apps do we have? And in that, , it's pretty straightforward. Just, going through our website, sending us, quick note and then , , we can reach out because that links to my, , last point they want to mention. One [00:19:00] of the key requests that we are getting the most for much at the moment is that how we can optimize our tech stock.

I have many, many apps, in particular of the past two years. I kept, , spending money and, and basically expanding my tech stock. Now I find myself with pretty high, , bills when it goes to my tech stock. How can optimize that? Do I need all these apps? And this is, by the way, particular January fabric, Q1 is generally the time when We're doing that even more right now. They're doing with more, care. we are here to try to help you and, give , our feedback on what we believe is the right tech stack. , by , always comparing , and benchmarking against the thousand of merchants who are trusting our

Claus Lauter: so, Okay.

That's a very important service that you provide there. , because as you said, a lot of merchants just adding apps and then , it's $20 a year, $40 there, a hundred dollars there, and then at the end of a month, , the bill comes, and then it's a big shock. What actually it really does cost and it might slow down your store, which again, has a negative impact on the user journey, on conversion rates and so on, so forth.

And then having someone. From the [00:20:00] outside looking into what you're actually running there, it's very, very helpful. how do you charge for that? , what's the pricing structure

Gian Maria Gramondi: When we work on this consultation, we try to offer some package.

Which means that basically, depending on the number of apps and the stock, we can offer some discounts when, , we support more than one shop circled product. So basically when they install more than one shop circled products, because obviously it's also our interest , to work with merchants closing , and providing more than one, , solution.

So we don't have a fixed price. , this , depends again on the specific needs. , and the specific cases , of each of the merchants. But obviously when we are having this discussion, we can be pretty competitive because ultimately also our goal is to make sure that merchants are happy with the apps that they have installed.

And ultimately they use these apps and they do it in an efficient way without, , slashing money. What we are also seeing, for instance, that, There are some tools that, in particular the more SMBs brands they were used, , to work with the largest tools out there, very pricey app.

And then they realize, look, well what there is an app which basically does probably 98% of the functionality, but [00:21:00] cost me, , five times, , less. . On the, , type of store, complexity, size, turnover of the store, et cetera. But we can definitely be

Claus Lauter: Yeah, I think it's a very helpful service as said, , to have someone looking into this, can people also come to you when they basically have no clue what app they need? So they basically said, I have this problem, and is there a app for that?

Gian Maria Gramondi: Yes, because it's very likely that we might have some solution either from our, , suite or very likely as well from our , tech partners, , network that can help.

So it happens to me pretty often. I even get some LinkedIn messages , like, I have this problem, what should I do? And, we are always happy to help. Definitely. Yes, because , that's the mission and vision from the time that we, , launched Aerco really being able to be the one stop shop, really being able to, , support, , merchants across, , different needs.

, and obviously if we don't have the right solution, we are more than happy to refer what we believe is the right tech partner, , for these merchants. Okay.

Claus Lauter: Our coffee break is slowly coming to an end. Just to summarize, what's your, outlook in one sentence? What's happening in 2023 in a market?

Gian Maria Gramondi: , normalization, I believe [00:22:00] so getting back to , the real, , new normal, which would be, , spending money and investment when it goes to technology, when it goes to us, when it goes to, any, part of the chain. Spending money is smartly, which I believe is gonna be the key, , point for merchants.

Claus Lauter: Okay. And where can people find out more about you guys?

Gian Maria Gramondi: , www.dotshopcircle.co. Our website, , you can find no, contact us as well as feel freek, , to reach out to me. Link in, , John Maria. I'm always open to put you in touch with the right people, within our team.

Claus Lauter: Great. I will put the links in the show notes as our always, and you just want click away.

John, thanks so much, for this chat. I think a lot of gold nuggets in there and I hope that people will, or merchants will have a great 2023. Thanks so, Thanks, alos.

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