w/ Smriti Jayaraman, Corazon Capital
Also available on YouTube: https://youtu.be/XXSr4Po30oY
Paid ads are busted. SEO is back but weirder. Gen Z isn’t using Google. What now?
VC Smriti Jayaraman pulls back the curtain on the Shopify brands building futuristic funnels today. We’re talking AI quizzes, voice search, digital oracles, and tech that reads your face to guess your shirt size. It’s strange. It’s smart. And it works.
🎧 The Unofficial Shopify Podcast is hosted by Kurt Elster. Subscribe for weekly interviews with Shopify entrepreneurs and experts.
Kurt Elster
This episode is sponsored in part by Viralsweep. Thinking of running a giveaway or contest? Meet Viralsweep, the app that makes it easy to build and manage campaigns that drive traffic and boost brand visibility. With Viralsweep. you can engage customers through Instagram giveaways, automate winner selection, and ensure smooth prize distribution. Viral sweep also keeps you compliant with legal regulations. so you don't have to stress about the details. Plus, you get helpful analytics and seamless integrations to make campaign management a breeze. Need a hand with setup? ViralSweep support team and managed services are ready to help. Start engaging your audience today. Download ViralSweep on the Shopify App Store and watch your brand grow. New customers can get 50% off the annual plan. Just tell them in the live chat that the unofficial Shopify podcast sent you. That's viral sweep. So here's the problem. Shopify brands are spending more than ever to acquire customers. Like it's it's just the way of the world, right? Our old tricks aren't necessarily working quite so well. So our our cost of customer acquisition, especially that top of funnel, is getting more expensive, is more expensive than ever. And other tactics that may have worked in the past aren't working quite so well anymore. So what is working these days? What is the landscape? What are people seeing out there? And I've got someone who's in a unique position to talk to us about it. Smirthy Jaimaraman is going to join us and she uh has an interesting perspective from her seat at uh the the venture capital table. And she's gonna walk us through some of the the tech, some of the things she's seeing and you when I talked to her in the pre-interview, I thought Wow, she's got so much experience. There is so much to learn here and share with us. And so we're gonna dive into it. Uh Smithy, thanks for joining us.
Smriti Jayaraman
Thanks for having me. Very excited to be here and love the intro.
Kurt Elster
The first thing I want to go over is AI and SEO, right? How in the past, organic search was such a big deal if you could get it. You know, if you could optimize your site and get that free search traffic from Google, you know, free being we're not paying ads, but still had to put in the effort. to get it. But now suddenly, you know, I heard last year SEO is dead, and then by Q4 I heard, well SEO is back because these search engines you could game or you gave the search engine for these AI search tools like Perplexity. Um so if AI-driven search is changing everything, Well, would you agree with that statement, first of all?
Smriti Jayaraman
It is. Um and uh it's going to continue to. So I think the short answer is uh AI is absolutely changing uh what the top of the funnel looks like today, you know, I go into Chat GPT or Perplexity or I Ask AI, any of the AI search engines, and I'm asking it uh you know for the same thing that used to go to Google, um, but I'm probably also asking it in a different way, and that's why I say it's evolving a little bit. And brands, you know, it it sort of was a major shift, but brands now suddenly have to rethink their top of funnel strategy. And, you know, I think it means a couple things, right? It's actually an opportunity for brands that historically may not have um performed with either non-branded search or branded search uh on Google. They didn't have the budgets to necessarily uh rank high on Google. Or I think more interestingly, they may not have had business models that lent themselves to Google-based search because, you know, they didn't have brand names that resonated or they weren't intent-based products. So someone wouldn't actually be Googling for them in the first place and so they had to really obviously uh spend a lot of money on paid media and other channels. So I think it's a moment of opportunity. Now, of course, that'll calibrate, but I think right now, if you're a Shopify brand, it's it's actually a great time to be innovating around uh this new funnel that's coming from uh AI-powered search engines. Um and and just to kind of give you a couple examples of what that looks like, we are seeing businesses going back to traditional landing pages and just sort of uh infiltrating the internet with content, with landing pages tied to specific occasions that their products are used for, try tied to specific attributes that their products have. Um we are seeing uh a lot of folks using AI to actually help them identify what keyword search now looks like in a uh AI search engine world, which may not have been the keywords that folks were using on Google, right? Um simple example, if I'm a cowboy boot brand Um, you know, previously I might have been like, hey, I need cowboy boots. Um but now uh if I'm going to a search engine uh that is AI powered, I'm probably asking it a different set of questions. I'm saying Hey, what's the best outfit to wear to the rodeo this weekend? And so if I'm a cowboy boot brand, I no longer just need to compete, you know, on cowboy boots. I need to be thinking about Someone is talking about the rodeo, they're saying weekend, like when is the rodeo, right? How do I uh in this in this town where um you know uh I have a user that I want to go acquire that it may have been tough for me to acquire before because I can't compete. So So certainly I think SEO generally and then thinking about the tech stack around SEO, how do I identify keywords? How do I in real time automate use of those keywords? Um and then of course, you know, the other thing that's happening with AI powered searches, it is, you know, I won't say the early days maybe in the uh in the middle days uh of actually being able to power image uh and voice search, uh which Google, traditional Google search, you know, had capabilities, but nobody really used them. And so again, another opportunity for brands. Obviously, you know, many Shopify brands have amazing visual content, visual assets, maybe have, you know, done interesting content in the past or are doing it now around video and sound. and can actually now perform uh and with with those assets and and show up with those assets because users are using AI-powered search for visual uh and audio uh in a way that they never used Google before.
Kurt Elster
So really what's it here it used to be that Google was the be all end all. I'd type in my search and then I you know ads would appear and then I had my my listing results which were you know ideally I want to be on that first page and realistically top five. Top three and if I'm number one, amazing. That idea of I want to rank at the top for particular phrases really has not changed because if I'm using a tool like Perplexity or you know ChatGPT's web search. They're essentially still doing Google searches, but they're coming back and they're summarizing that info for me based on those top results. And then including they cite their sources. Like you could click the link and then it it'll pop into, you know, that actual the page of wherever it got the info from that it's summarizing. Because that man, that thing likes to make stuff up. So, you know, I want to check it. So it does, yeah. Um And so yeah, we went from like, well SEO is dead because the AI just knows, so it answers me outright, to discovering, oh, you know, you can't actually trust what it says because it, you know, it doesn't really know it makes things up. To now we're doing just a automated version of search with summary. And so with um your suggestions there, where A, I want to get more landing pages out there that have Yeah, specific phrases tied to them. Well that's no different than what we were doing before. And in fact, it becomes more important to do more because maybe we get really lucky and that becomes part of the AI's training data. And so now it just knows like, oh, the you know, these are the best cowboy boots for the rodeo kind of thing. Um so yeah for sure SEO kinda in content marketing, it seems like it's making a comeback.
Smriti Jayaraman
Yeah, it's definitely making a comeback. And again, I think landing pages is just one strategy, obviously rethinking, you know, native sites, rethinking blog posts, um, and even how you're engaging influencers. and affiliates uh all contributes to how you perform an SEO. And yes, in many ways, you know, maybe the words are different, maybe, you know, the number of opportunities is greater. Some of the experience sure does look similar, but I think what we're also seeing, you know, we're investors in an AI search engine, so we are sort of getting the real-time feedback on how users are evolving their use of these platforms.
Kurt Elster
Um do we get to know which one?
Smriti Jayaraman
Yeah, sure. It's called IASkAI. They are performing amazingly. So iask. ai is uh the URL, they are uh top ranked in terms of uh accuracy uh based on a study done about six months ago. They also uh do really well with sort of Gen Z and younger users in many ways, sort of the the way that they've built the speed, the engine, the user experience, the ability to curate output based on, you know, if I only want verified sources or I only want sources that come from publications that I can cite in a you know research paper. Um or I want, you know, really short summary, really long summary. They you know they've sort of performed really well on all of that and all of that tends to appeal to sort of the younger user. The other thing about the younger user, um to your point, is the younger user is not Google native in the way you know, the millennial and and and Gen X and Boomer is. They haven't used Google for 25, 30 years. And so they actually don't necessarily behave with these engines the same way we would behave with Google. Um the usage tends to be much more conversational. There is a back and forth. They might say, ask the first question and they're like, actually, can you focus on this part of your answer? Or can you elaborate on that or can you give me a shorter answer to that? And again, I think the opportunity there is, of course you still need to proliferate content, but the opportunity there is rethinking, you know, what is what is the need that you're appealing to in your buyer. And it's not going to be, I want to find a gray shirt, you know, a gray casual t shirt or I need uh a really great ca webcam. It's gonna be something perhaps more involved and, you know, also I think like I said, giving gives opportunities to brands To sort of like show up when they never were able to before, because they can appeal uniquely to a use case. They can authentically talk about their distinct attributes, and they can authentically talk about the problems that they're solving.
Kurt Elster
And so in practice, what's this takes the form of content? It's text content plus image, but the image is gonna you're gonna attach alt text to it to describe it. Which again, like AI can write the alt text. I've done that already in in ShopFi, which is great. Uh and AI can help come up with ideation and then help create the article. But garbage in, garbage out, you know, we don't want to flood the internet with with low quality, thin results is what Google politely calls it. Is it thin results?
Smriti Jayaraman
A hundred percent, yeah. Um and again, that's why I use the word authentic, which is obviously, you know, an overused word. um, you know, for for a few years now since kind of the burst of the e-commerce bubble and the realization that brands have had that not every brand is built to be a DDC business. You know, based on a bunch of user testing and consumer research that we've done, like authenticity, which is an overused term, actually stands out as one of the most successful ways that brands have been able to navigate the growth in CAC. And, you know, anytime one, you know, you just have to be very nimble. You have to keep trying different things, figure out what sticks. Uh you can't you can't sort of um remain stale, but then uh having authenticity be sort of that thread of what the strategy is, what the content looks like, what the visual assets look like And again, visual assets now I think have more power than they did previously just because of of how sort of AI-powered search and internet engagement can actually leverage images. Of course, that that has to be sort of the the underpinning of all of this content. It's not, again, we we definitely don't want content for the sake of content.
Kurt Elster
The and that it's kind of interesting. I don't see brands creating nearly as many landing pages or content pages as one would think when the criticism of AI is that I could just generate AI slop continuously. And yet at the same time, you know, garbage in, garbage out. If I put in good content, you know, if I do some research, give it an outline, I can Yeah, define brand tone of voice. I could use AI to generate great content as well as bad content. I just think what more people would take advantage of it. It feels like such a missed opportunity at the moment.
Smriti Jayaraman
Yeah, I think look, I I think we've also, you know, now dealt with several years of the you know inundation of content. So I think people are wary of that. Um, you know, the other thing is We talk about just volume, but then in terms of quality, we're also seeing um, you know, consumer brands and consumer tech companies, frankly. really think about um quality in terms of like what actually you know what do users want, right? So there's authentic to your brand, like what what does your brand actually stand for? And then there's what do users actually want to engage with? What type of content and you know, I think we I gave you this example potentially when we chatted earlier on, but um something that AI can also do that's really interesting is make content more interactive. And in general, um, you know, we see that interactive content uh outperform static count content by at least 50%. I think that's an understated number. It's like 53% is is sort of the stated number, but um in terms of more engagement. And and I think it can be much higher.
Kurt Elster
My mind goes immediately to quizzes or polls. You know, vote for your favorite or like find the right tea for me. What uh what did you have in mind with interactive content?
Smriti Jayaraman
Well, we are still in the era where um the consumer is curious about what AI will tell them about themselves. And that we are seeing being actually leveraged quite interestingly. And so what used to be a poll or a quiz or you know, the whole all of the the brands that went to market with a funnel that ultimately they claimed would personalize your hair care or personalize your skincare or personalize your uh smoothie mix or whatever. Um, you know, that was interesting for a moment, that had a moment, or maybe more than a moment. Uh but now with you know, this curiosity around what AI can tell me about myself and as much as there is absolutely still d distrust in the market, there is I think just a little more curiosity, mystery And maybe a belief that like, you know, it's like a horoscope, right? There's a belief that like this might actually be more interesting and accurate than just what the, you know, five years ago machine learning algorithm told me uh based on a quiz. And so uh we are seeing some interesting uh customer acquisition plays gamifying that, right? Like what would AI tell you um is, you know, I'll use a simple one. We talked to a company recently. Um, I won't name the name, but uh I'm sure they'd be fine with the publicity. Uh we're not investors, but um their top of funnel gamification is uh do you want to know what day you're gonna die? And it is ultimately a uh you know health and wellness platform, but
Kurt Elster
You know, what a great hook, right?
Smriti Jayaraman
Uh I might not want to give you all this health and wellness information if you're like, take this quiz and you will help you you know find a way to get healthier. But I definitely want to know what day I'm gonna die. And so yeah, it's I mean it it works phenomenally. We have a business in our portfolio, a fantastic consumer uh tech platform, AI-native consumer tech platform called Bold Voice, which um helps non-native English speakers improve their accents uh to make them more confident uh in speaking uh when they speak with an American accent or an English accent. And They um had a uh a sort of productization um that went to market end of last year called the Accent Oracle, which was supposed to tell really anyone, but specifically not native English speakers, but I know a lot of native English speakers also use the tool to tell you where your accent comes from. And if it's a combination of accents, what that combination is and in what ratios. And, you know, they basically grew like, you know, 3x in a few months based on on this with you know, completely there's completely organic growth because of course everyone wants to know, like, oh yeah, tell me where my accent comes from, right? It's the same sort of like mystery and curiosity that like 23 and me fed off of uh when they first came out
Kurt Elster
Ever had a customer cancel an order because they were shopping, well high, or because they broke up with their significant other. Those are real reasons customers could cancel, and they're a real headache for both you and your customers. Why should they have to email support to change, cancel, or update an order? Enter Cleverific. With Cleverific, your customers can edit their orders themselves through a self-service portal. That means fewer support tickets, faster shipping, and fewer returns. Everybody wins. Peter Manning, New York cut their order support by 99% with Cleverific. Now it's your turn. Listeners of the unofficial Shopify Podcast. Get 50% off the pro plan. Just $49 a month. Go to Cleverific. com slash unofficial and use promo code Kurt50 at checkout. It's less hassle, happier customers with Cleverific. There's novelty to it. There there's totally novelty to it. Especially in e-commerce. Novelty really it helps get people engaged. It helps sell.
Smriti Jayaraman
Exactly. And especially when you can tie it to what your core product or value proposition is. And you know, in in some cases when you can in the case of bold voice, um, which again that's consumer tech, not not products, but Um, you know, they have actually, they're the only ones with the data that can actually tell you at the level of quality that they can tell you where your accent comes from. So it's just another way to think about um, you know, if it's sort of productizing and gamifying based on the data that these businesses have, you know, an e-commerce brand, the same thing would apply, right? You've got unique data on your product, your users. Um and you know, I think it's it's not unrelated to, for example, when Chipotle came out with the receipt that tells you the digital footprint, not the digital, the the environmental footprint. You know, I'm a tech investor when I differ to Digital footprint. Um they tell you the environmental footprint uh of your burrito bowl or burrito or whatever you ordered, it actually did really, really well for them because it's this moment of like connection with the brand. It's sort of data that they have that nobody else could really give you or provide you. You can't just like Google that information. And um so yeah, I think it's it's these unique moments of connection with the brand. It feels very personal, but it is actually only something that brand can deliver to you. Um
Kurt Elster
Yeah. So our our core problem here is simply the paid ads are expensive, right? And so we're everyone's looking for alternatives to that, to scale, to grow, you know, and and to smooth out when you know there's an outage at meta or whatever. And so we, okay, uh Gamification marketing, which is these interactive elements, AI-driven quizzes, AI could can make a lot of really neat stuff possible. What about you with with AI, with content marketing, what I'm starting to see, and it seems inevitable now, is just like full-on fictional AI influencers. Do we have any experience there or thoughts?
Smriti Jayaraman
We do, uh a little bit. It's hard to generalize what that means, right? Of course one mean jerk reaction, maybe it just it's inauthentic and these aren't real influencers and it's not a personal experience. Um on the other hand, you know, uh the the way we're able to proliferate you know, whether it's a persona or an avatar or an experience, um, can drive a level of inclusivity in someone's experience with a brand that couldn't happen when you had to find a certain person who looked a certain way or had a certain background or had a certain experience. And, you know, the fine line is of course transparency. And I think, you know, very quickly we've seen that like brands need to be very transparent about, you know, is this a paid, I mean maybe this happened with even paid influencers. Um, and now this next sort of evolution is Is there an AI component to this? But certainly, you know, in the fashion world, for example, we are seeing the use of AI to uh enable users to see you know a body that looks like theirs or at someone who's you know their height uh to internalize what a product is gonna look like on them. Um and, you know, in the influencer world, um, i we've actually seen for some categories that like Microinfluencer is actually sort of at a peak, and everyone thought microinfluencer was dead three years ago. Um, and so I think like there is room for the authentic you know, more authentic is is again I'm overusing the word. There is room for the real individual to still stand out maybe more than ever because of this fear of, you know, what is AI powered, what is AI driven. And I think we're actually going to see that it creates a little bit um of of you know it future proofs sort of the legacy influencer a little bit. Um and at the same time there are absolutely avenues to engage shoppers in a way that you couldn't before because at a cost that is actually viable to an emerging brand, you can deliver that kind of authentic personalized experience.
Kurt Elster
I like that take. Hey, it can make it a hyper-personalized experience, but it also creates more value for you know just really slicing things thinner. Yeah, we want those we want to find you know content that resonates with us that I could find a whole bunch of people who make Shopify content But I'm only going to listen to the one that's like, okay, I like this presentation or I like this person, right? It isn't necessarily about the topic or the content. Now there's so much available to you. It is about you know, finding what resonates with me. So there's advantages.
Smriti Jayaraman
Yeah, and I think I would encourage brands to sorry to cut you off. Uh I I I think I would encourage brands to like lean into you know, lean into the parts of their business that are clearly not AI powered as much as they are embracing the AI tech stack. You know, to give you a simple example from uh our portfolio we're investors in a company called Songfinch, which has real musicians, real artists developing personalized songs for individuals. based on, you know, their experiences, their loved ones, etc. It's a phenomenal product. You know, the the emergence of AI-powered music. We were like, oh, this is a big threat, right? Because, you know, now someone can create their own personalized song for my husband, wife, daughter, whatnot. And it actually turns out it just created like much more space for Songfinch's sort of message to resonate with individuals, right? Because You know, you have all these videos out there of people like AI-powered song that they created and someone's like laughing at it, is joking. And then you have Songfinch's content out there, which is someone is crying because they hear a song that someone wrote for them that has just that like personal touch. Um and you know, obviously I think there's just in in the entertainment music, cinema, you know, uh sort of like writing community. There's I think there's gonna be continue to be big waves of sort of how innovation and and technology can really, you know, protect those industries uh in this environment. But I think from just like a you know, from a brand standpoint, I think it's an opportunity as well for for every Shopify brand to sort of think about, okay, if I'm gonna embrace the AI tech stack, I'm gonna use AI to automate keyword search and and generate some content and um you know personalize and optimize my funnel of course I'm also going to recognize that like a real human experience or a real narrative that I can tell on my site in my influencer marketing, that's also going to stand out a little bit more now.
Kurt Elster
You're fascinating. I love your takes. I'm so glad we did this. But okay, do you as a as a venture capitalist, have you done any investing in Shopify apps?
Smriti Jayaraman
Depends um how you categorize Shopify apps.
Kurt Elster
Shopify app does make it sound like I'm, you know, in d small individual Shopify apps. No, uh Shopify Tech Stack will expand. Or e you know what e-com tech. We'll go really broad.
Smriti Jayaraman
Yes, we we absolutely have, um in in various shapes and forms, um a couple of which are are certainly sort of like AI first and One of which actually is a great example of some of what I'm talking about. It's a um it's called Laws of Motion, uh lawsofmotion. ai. is um sort of the tech stack site. They also basically incubated the technology in their own D2C brand, which I think is actually like you don't get more credible than that to you know build technology for brands when you built it in your own brand. And it's basically AI-powered sizing technology, you know, the the fit tech landscape if if you're a a a Shopify fashion brand or really any e-commerce apparel brand, you um we find many brands have been burned by sort of the fit tech promise. And It turns out now you go.
Kurt Elster
I get why they jumped into it. Just from working with apparel and lifestyle brands, what what's your biggest issue? Is The biggest barrier to people buying is hey, will this fit me? Yep and then once they do buy it, oh, I gotta exchange it. Well, you know, if someone buys a single item and they're the first customer, uh I probably lost money by the time I've exchanged it for them just in the hope that they make another purchase. Like for so many merchants will just throw money at whatever solution can solve this. And as a customer, you know, we want it too.
Smriti Jayaraman
A hundred percent. Um I think returns last year averaged forty percent uh for most e-commerce apparel brands, like I mean, that's you've got to have a really high gross margin, uh, to be able to sustain a business with that. And so a hundred percent I I, you know, it it it it almost became table stakes at some point because you're like, I've gotta have this on my site. What we found is actually more most traditional fit tech solutions, um, they didn't price based on you know, were they reducing returns or were they like impacting the flow? They made most of their c claims actually on the acquisition side, not on the returns reduction side, because Again, it became table stakes to have you know a sizing sort of quiz or whatever on your website, and maybe you would get a couple more percent of people to actually like take the step and buy. But your returns, you know, remain the same. Like everyone's return rates were, you know, super high, if not went up because they had to start now offering free shipping to compete with Amazon. Um so everyone's like, yeah, of course I'll just buy every size, right? Um turns out AI, this is an area where AI actually does make uh a dramatic difference in the power of this technology. And so laws of motion, for example Um again, incubating the technology within their own DDC brand. Um, you know, this the the quality of AI today can not just say, hey, look, you know, you wear this size in this brand and this size in this brand. So we think you're X size in our brand. It can actually predict your measurements. Not by you putting them in, but with a two-photo sort of input, right? So that's basically their their go-to-market. You can fill out a quiz, you can also put in your measurements. But the de facto um input is I take two photos, just two photos of myself, no video, nothing, and it predicts measurements within such a high level of accuracy that, for example, Laws of Motions owned brand has a less than 1% return rate. Whoa. And and that's like tip of the iceberg. I know, whoa, uh, hence we invested. Um that's the tip of the iceberg with what they can actually do with all that data, right? Like They can, you know, the big vision here is, of course, not returns reduction is its own huge vision because just think about going from 40% to 1%, like what can that can do to the PL of of an apparel brand? Um, but the big vision could also be or or is also now, you know, I think it's something like I'm gonna misquote these numbers, but it's something like 80% of the US population actually fits into like less than 10% of sizes available to the US population. And they now have the data to not just prove that, but then to help brands think about you know how they should be creating sizes and there's a huge product development angle there's a supply chain angle as brands think about you know what do they need to have in inventory versus not um from a sizing perspective So it I think that's transformational technology. And then again, another example of like also how AI kind of makes things inclusive or can make things, products, brands more inclusive.
Kurt Elster
Are your upsells stuck in the Stone Age? Your store runs on data, so why aren't your upsells? Outdated upsell apps make you guess, test, and tweak manually. That's costing you money. Zippify one-click upsell changes everything. Its AI engine automates upsells, analyzing every cart in real time to offer the highest converting product. No guesswork, no setup, just results. Over 10,000 Shopify stores trust OCU, and it's already generated nearly a billion dollars in extra revenue. So flip the switch and let AI handle your upsells. Try Zippify one click upsell free for thirty days at zipify. com slash curt. That's zipify. com slash K U R T. Don't leave money on the table. Start AI powered upselling today. Well it also helps reduce waste if we're more accurately predicting, you know, what sizes we'll be able to sell consistently. Or, you know, there's also people receive an item, never return it, but it doesn't fit them. Uh, you know, guess what? It's going to Goodwill. uh or a landfill or you know ends up on a beach in Ghana, which you know that's the thing we're trying to avoid, um, while at the same time that you know avoiding that helps greatly improve unit economics in a business. and our our bottom line, which, you know, everybody wins here. I wanna know what tech do you think is overhyped? Right? Like we're going hard on AI and like I've bought I've bought into the hype. It's just it's obvious. I'm not gonna hide it. Is there anything you think is overhyped right now?
Smriti Jayaraman
There's a lot that's overhyped right now. Um We saw the emergence of sort of how AI was going to affect the shopping experience and a lot of innovation around that, I would say, over the last two years. Um Sort of with the belief that like, okay, you know rather than rely on Google or even any of the you know new emerging or now more past way past emerging AI search engines. Um you know, kind of what like LTK did for fashion, can we take that even closer to the individual and allow, or not just fashion, for for brands and products in general? How do we allow users to really like curate what they want to buy in a way that is hyper-personalized and and essentially create the like uh universal basket. concept, right? Where I am, you know, shopping on all these different sites. I may not want to transact right away on everything. How do I bring everything into one place? um and then be able to engage with whether it's images or links or some sort of catalog or repository I create myself. And there was, you know, AI was a big part of that. not necessarily this generation of AI, but you know, maybe a couple years ago generation, just the ability to like efficiently do that curation, you know, pull like, oh, if you like this, you like that, and a recommendation engine component of it. Um, I think we're yet to see anyone really break out in that. And I think it's, you know, at the end of the day, it's really hard to get consumers' attention. And so if you're you're, I think the biggest hurdle is if you're getting them, if you're trying to get them to like engage with a standalone, whether it's an app or a tool of some kind. Um that's just that's hard to do. And and the experiences also, the product experiences just weren't that great. The user experiences weren't that great. Um I think the another sort of something similar happened, I think, to the like native search concept, which is a I think now, you know, there's probably a question as to what happens to native search, and by native search I mean search on your Shopify site. So again, there's uh you know businesses that, you know, again, solving the same problem, right? Acquisition is expensive, LTVs doesn't LTV doesn't compensate for it. How do I get, you know How do I bring in users more inexpensively? And then once I have them, how do I monetize them better? We saw, I think we talked a little bit last time about just like what's gonna happen to subscription and membership, which we can talk about
Kurt Elster
Um that was good play. Like acquisition and retention, how do we keep customers once we have them? Right? If I can Even if I'm gonna break even or lose a little money on that initial customer acquisition, how do I hold on to them longer now?
Smriti Jayaraman
Absolutely. Um so one I think uh strategy there is once I'm on the site, right, AI, AI tools that help person personalized merchandising uh of my site um you know can also adapt in real time to how I'm behaving on the site, uh especially again in a cookie-less world and in a privacy focused world. You know, brands still just don't have all this data to be like, oh, you came to my site, I know you know the last 50 things that you shopped for, unless that brand happens to have that data on the individual. But I do know what you're doing on my site. I do know how long you've hovered on this, that you went back to this product page and then you went, you know, to this product page, but then you came back to this color or whatever. Um I again, I think we will, I think that actually has the potential to be pretty powerful. Um we've looked at a few businesses in this space, we haven't made a bet yet, but I think sort of, you know, call it like intelligent merchandising, I think absolutely has a role to play. You know, the one I was speaking about earlier is um intelligent merchandising.
Kurt Elster
So the way I'm picturing this, based on how you described it, which I think is really clever. I think algorithm anxiety is real. I have it with Instagram reels like that. Instagram, they're they're for you page equivalent. It's like if you even slowed down to look at something. They're like, oh, you slowed down, you looked at a toad photo? Oh, guess what? You are into toads. You're into toads, buddy. Like, oh man But it it's sometimes it gets it right. But like now that I've seen it, you know, I'm scared to use the thing, but I think that same concept You're right, absolutely. You could apply to stores with big catalogs or even, you know, smaller catalogs but like several types, just to to help make it more relevant when I'm you know reaching out to people, whether that's retargeting or email. Is there any tools that do this?
Smriti Jayaraman
Uh there are a bunch of tools that do this. Um we're not we're not investors in any, so I'm hesitant to name names. Um but there are. And and I think There are a a bunch. Um and then there are also a bunch that are um are, you know, sort of like chatbot enabled or now sort of agent enabled to take that experience even further. So it's not just that, you know, the site rendering is is personalized and reacting in real time to how I'm behaving with the site. But now you've got, you know, sort of an agent or a chat bot or something that is helping me navigate it in a way that is, you know, intended to be a much better experience than the chat bots that emerged on websites a few years ago that were really more customer experience focused. This is more like, you know, engagement focused, right? Like, oh, like I saw you really like this color. Like, do you want to um you know, have you checked out this outfit product of ours in its color? Not do you need help, right? Um and then I think you know the other thing is just like on-site search, which I think I don't want to say is overhyped, I think that has not been figured out yet, right? But is there an opportunity now that the entire search funnel is changing? Previously the belief was like if you made it to my site, like you already know what you want. That's why you came here. Um, you know, I think that's not actually true, and there's data that support supports that, but Brands just found it very difficult to be like, I'm gonna invest in like a you know a really high-functioning search engine on my site when I could just spend those dollars on Google and try to just rank really high on Google. Now there may be an opportunity to rethink. Like once someone's on your site, you know, they might have come there for, you know, a number of reasons, not just because you ranked high on Google, you may want to find more ways to engage them. Um and then, you know, on the other end, on the LTV side, as you said, um You know, we we saw the emergence of subscription uh in the post-Amazon era um with brands just trying to sort of compete. We're now seeing some AI-powered tools that are really going to market to try to get brands that are not sort of de facto subscription to think about building a subscription offering. I think easier said than done, right? We find a lot of those tools at the end of the day, they're still kind of in RFPs for subscription-powered uh products that are sort of inherently subscription. Um Now, on the other hand, membership models, I think, is something that we will see emerge. And, you know, you do sort of need some unique tech to be able to turn a one-off invoicing business into a recurring revenue business. Um and there are a set of brands that I think are succeeding at building community and membership. It's something like We we looked at an investment in the space, so I know this number, but I think on average, like 80% of uh an e-commerce brand's value comes from what how they define their sort of existing buyers. And you know, it there's a whole calculation around like over what timeline you define an existing buyer. But I think the headline, even putting the number aside, is there is a lot of value to be captured from your existing, you know, your repeat customer, someone who's come in once, like now you don't have to spend a single dollar bringing them into the top of the funnel again But you can really, you know, invest a little bit in gauging how much they spend with you, how much they evangelicize you, uh, etc.
Kurt Elster
I like I think a a missed opportunity, but a certainly a a growing growing importance is membership. Um subscription is the is a tough sell. Just, hey, we're gonna ding your credit card once a month and this product's gonna ship to your house. People understand that that's you know that that's the a much tougher sell than the one-time purchase. If you have a consumable good, those subscriptions are great. But then, you know, if you don't have a consumable good, how do you sell it? And I how do you get that recurring sweet, sweet, recurring revenue? And I think the answer is membership model. We're seeing more of it. But I never just, you know, what's it look like? Like what advantages do we give them? You know, Amazon saw sold us memberships just to get faster shipping.
Smriti Jayaraman
Yeah, and look, I think uh people still don't do the ROI calculation on that. I mean I certainly don't, uh right. I have I have dash pass, for example. Um I door dash somewhat often, I don't know how often. I have no idea if like what I'm paying each month i is actually worth you know, the savings that I apparently get. I mean every time I check out a DoorDash, there's a different fee structure. Sometimes there's a delivery fee, sometimes there isn't, sometimes there's a service fee, sometimes there is there isn't I'm sure there are people out there who are um more shockful than me. Yeah, exactly. So so I know there are people out there who get it, but um but yeah, but I I think the point is not that people don't care, it's that it is hard to communicate the value that you get. Um but that's it again where you know at the same time like your your repeat customers spend two-thirds more than your non-repeat customers for you know any brand, right? So if you can Drive someone to become a repeat customer in any way, shape, or form, even for a limited period of time, like there are huge returns on that. Um and and I think also just as a behavior, subscription has continued to be um you know something that that buyers are comfortable with, right? Like subscription is growing pretty rapidly. uh even in the sort of d downtick, if you will, I won't say downturn, downtick of e-commerce, subscription e-commerce actually continued to grow quite quickly. So I think, yeah, uh, you're right. It is sort of what do you provide them? Um, I think brands have to be thoughtful and have to probably iterate a little bit and A-B test a little bit around what that looks like. You know, is it is it perks, is it discounts, or is it, you know, sort of maybe access to the the community that's created around a brand, right? I mean in lay back when like FabFit Fun, uh, which has been through many generations of its business and um and and highs and lows, but but I think did actually Um, what are the best jobs of building community and and their first couple chapters, I think that was the underpinning is it wasn't, you know, it wasn't the products, it wasn't the quality of the products, it wasn't that you know, they had they weren't really from a shipping standpoint, I don't think they were doing anything innovative. It was this idea that like you had people in this community you wanted to show this stuff to and they wanted to show it back to you and they wanted to talk about it. Um And you know, and there was a willingness to pay for that sense of community.
Kurt Elster
That subscription membership model, not overhyped Because there is such outsized impact that it can have on our business and by adding that that recurring revenue and not having to reacquire customers. Exactly. In your experience, what's one thing you think a a Shopify store owner, you know, an e-com brand founder should stop doing today? They're just like, look, you guys are wasting your time.
Smriti Jayaraman
Well, this is this is maybe the philosophical answer. I think you know, relying on what works is always dangerous. I think we're in, you know, th this has always been true, but we're definitely in a moment where Things are are changing very quickly. Um, you know, we used to say, I used to say, like, your hero product is your hero product, like just invest everything in that, right? And I think, you know, while that might still be true, I think this notion of like um stagnation or sort of assuming that like what worked you know, for the last six months, we're gonna work for the next six months is very dangerous because the customer acquisition landscape is changing, the you know, cost of fulfillment landscape is changing. the you know the requirement or the requirement to which you need to be in retail for example alongside your you know your Shopify presence is constantly changing and and also the like economics on those two things are constantly changing. So I think the like maybe the tough truth is I would say at least every six months you've got to ask the tough questions, right? Like what might be around the corner What am I sort of just like relying on as being true forever that may not be? Um that obviously goes for AI as well. Um and I think, you know, the other thing to maybe not stop doing, but I think there is uh, you know, there are categories which are certainly having a moment. And there are ebbs and flows around that. And, you know, beauty, for example, beauty was great and then it wasn't, and then it's great again. But but I think it's
Kurt Elster
Yeah, but Peloton would, I'm sure, have uh thoughts on the topic.
Smriti Jayaraman
Exactly. And and so I think you are relying less and less on category trends and relying more and more on like your own you know connection to the consumer and does this brand speak to the consumer and do you have loyal, loyal users, right? It's not It's a lot of and again, I think this is why subscription, membership, LTV, all those things that we talked about are super important because it's kind of like it used to be all right, we're we're gonna ride this category trend. And everyone's gonna buy this and it's great because everyone wants this, but now it's like no, you you find your buyer, they want you not because they love the category, they want you because you are you as a brand, and then you really build you know, your entire strategy around that that kind of, you know, cheerleader buyer or or or hero customer, if you will.
Kurt Elster
For sure. Wow, I love your perspective. I didn't expect this episode to turn into like, hey, here's kind of near future tech predictions, but that's what you gave us, and I loved it. Thank you so much. Thank you so much.
Smriti Jayaraman
You asked great questions. So uh I'm not in the business of knowing the future, but it's always fun to think about how things could trend. You know, I'm also happy to be proven wrong, uh, which which happens all the time.
Kurt Elster
Currently you're uh uh principal at CoreZone Capital. Just uh tell us about it a little bit.
Smriti Jayaraman
Yeah, sure. Uh we're an early stage venture firm. Um The Origin Story is uh one of our founding partners is a serial entrepreneur. in uh consumer internet businesses, iconic names that um you know many of you have have probably heard, um starting, you know, largely in the dating world and the ed tech world. And then, you know, also a bit in the commerce tech world. And that really influences who we are as a firm. We um are very high touch, uh, very sort of like operator-led mindset. Um and very heavily focused on consumer tech, tech enabled consumer products, and commerce enablement where we invest. And we're based in Chicago and Los Angeles, but we invest all over the country. And Yeah, welcome, welcome. New ideas, great founders. Nothing is too early for us. So uh but yeah, we we love what we do and we're we're really passionate about these spaces.
Kurt Elster
And if someone wanted to reach out to you, uh would you mind if I put your LinkedIn in the show notes? No, not at all. All right, I'll include that. Smirthy Jaimuramen, thank you so much. Uh Corazone Capital, you know, check it out. Uh everything, all the All the the apps resources you mentioned, I'm gonna put those in the show notes so people have them. And you know, I I hope your crystal ball proves to be true. I I think it will.
Smriti Jayaraman
I'm not sure I I care strongly that it comes true, but I um I do hope that you know great brands that are innovating and staying on top of trends uh are very successful.
Kurt Elster
I hope so too. Thank you.
Smriti Jayaraman
Thank you.
Kurt Elster
Thanks so much. Have a good one. Crowdfunding campaigns are great. You can add social proof and urgency to your product pre-orders while reducing risk of failure. But with traditional crowdfunding platforms, you're paying high fees. And giving away control, all while your campaign is lost in a sea of similar offers. It can be frustrating. That's why we built Crowdfunder, the Shopify app that turns your Shopify product pages into your own independent crowdfunding campaigns. We originally created Crowdfunding for our private clients, and it was so successful we turned it into an app that anyone can use. Today, merchants using Crowdfunder have raised millions collectively. With Crowdfunder, you'll enjoy real-time tracking, full campaign control, and direct customer engagement. And it's part of the Built for Shopify program. so you know it's easy to use. So say goodbye to high fees and hello to successful store-based crowdfunding. Start your free trial and transform your Shopify store Into a pre-order powerhouse today. Search Crowdfunder in the Shopify App Store to get started.