The Next Revolution in Commerce Will Be Driven by the Seller
Today, the internet is the indisputable focal point of our day-to-day lives. Our smartphones seem as critical as our right arms. We Slack our colleagues, SMS our friends, Zoom our business contacts, find new content on Substack, store data in the cloud, and purchase online via personalized tools that seem to know what we need before we do.
A decade ago when we started Forerunner Ventures, the commerce ecosystem was in flux with the proliferation of online shopping. As the internet became a more vibrant place, the consumer’s path to purchase was reimagined; this evolution inspired the rise of digital-first brands like Glossier, Away, Warby Parker, and Dollar Shave Club catering to the buyer and expanding the shoppable universe to tens of thousands of direct-to-consumer outposts with global reach, while simultaneously forcing traditional retailers to rethink their longstanding value propositions and business models.
The market is well into reorganizing around a new digital-first reality as we’ve evolved our tech habits as a society. It started with the personal computer. After computers were adopted en masse as a more efficient way to conduct business, everyone started becoming fluent in the ways of the World Wide Web. Once the internet had gone mainstream, and we started toting it in our pockets, users embraced social networking platforms as a means to connect with their friends and colleagues. Finally—and critically for commerce’s next chapter—users collectively embraced discovery via new platforms, becoming increasingly adept at making digital mediums work to meet their needs, further their goals, and seize opportunities to be the master of their own online universe.
As COVID-19 forced us into our homes this past year, digital’s widespread adoption only sped up, especially in relation to how we buy and sell. According to McKinsey research, categories seeing customer growth rates of 25% or more include OTC medicine, grocery, household products, personal care, alcohol, home furnishings and appliances, food takeout and delivery, fitness and wellness, vitamins and supplements, and children’s. At the same time, social discovery became even more pervasive. Over the past year, 54% of consumers claim their social media usage has increased—led by the Gen Z and millennial cohorts—and 43% now say they engage with social platforms to uncover new brands that pique interest.
Times of hardship and change often bring about innovation. As we were all downloading TikTok, learning about NFTs, stumbling upon new brands via our favorite influencers, and diving down the rabbit hole of online potential, we were also ushering in the next revolution in commerce powered by the seller.
The Evolving Environment
As we’ve created new norms online, and restructured our lives around the internet, commerce has barreled toward an opportunistic moment. Digital access and fluency has continued to bring us closer to more people, opening up a new era of potential built on one-on-one connections.
If commerce is a transaction between buyer and seller, the face of the seller is evolving with new tools for discovery and purchase that allow for a personal relationship between creator and customer. Beyond a corporation or mass retailer, the seller is now frequently a person or small business. We are seeing a new long-tail retailer learning how to make the internet work in their favor, enabled by social media and without the need to lean into a digital mass marketplace—they simply need a captive audience, which is easier to attract than ever. Newer platform entrants like Curated, The Yes, and Faire are also continuing to uplevel the digital retailing experience with a stronger eye toward interaction, one-to-one engagement and personalization.
This more personalized form of digital commerce is fueled by the social realities of our current culture, and the empowerment of the seller. Arguably, the potential and desire for independence has never been higher than it is today. According to recent data collected by Forerunner, 37% of people have more interest in working for themselves after the pandemic; 57% of respondents claim the driver of this wish is flexibility, or put simply, more control over their own lives.
We see the independence thread play out in the creator economy. With the platforms and tools emerging to sell products, services and content, “creators” want to cut out the middleman and sell directly to their consumer on a 1:1 basis with genuine connection as the foundation. Think of an influencer on TikTok, who is selling her art via Cashdrop. The wholesaler or the retailer is no longer a requirement; she only needs a product, a means of discovery, and a platform to enable the purchase. Think of the journalist, who no longer needs to cater to a publication’s vision for his work. He can start his own newsletter on Substack, tap into his engaged Twitter audience, and charge a subscription fee to generate content completely in line with his own vision. Think of a digitally-native brand on Instagram that 'drops' a new product every six weeks. With social media, Shopify, and a personal relationship with me, the consumer, a single individual has the building blocks of a modern business in the new commerce economy.
There’s a consumer appetite to reward those bootstrapping it on their own, as well. Even though the concept of a creator is still in its infancy, some 27% of our survey respondents reported purchasing from one over the past year. For Gen Z, that number increased to 45%. We only expect these statistics to grow.
The Commerce Economy
As digital tools enable a generation of new entrepreneurs and “solopreneurs” to attract, engage and transact at scale, we imagine commerce coming full circle: from the barter system, all the way back around to one-on-one intimate connections. Today, this manifests as digital microtransactions with single consumers.
To pull off this reimagined form of commerce, we need new tools, different marketing platforms, access to reach the consumer and pose a transaction—and we’re getting them. A new suite of technologies, from Shopify to Pietra, Universe to Stir, will bring to life a cohesive purchase experience: efficiently and securely collecting personal information, processing payments, routing orders, executing fulfillment and shipping. Solopreneurs will have the ability to participate in the commerce economy, with tools like Islands, Creative Juice, and ShopShops, designed to enable direct access to audience, data, capital, and product collaboration, allowing individual influencers to have impact beyond “likes.”
In these ways, the commerce ecosystem is so much more than retail. Commerce encompasses the way buying and selling is inspired, motivated and facilitated in the digital landscape, and typically involves three prongs of business: product, discovery, and enablement.
-Product: The service, content or goods around which transactions are based; these are the creators and artists who sell online, or your favorite brands (encompassing offerings ranging from physical goods, to digital goods, to services, to access). -Discovery: The means by which we discover new goods and services on the internet. This is social like TikTok, Instagram, Pinterest, and YouTube, as well as digital platforms personalized for the preferences of unique users, like Curated, Chums, The Expert, The Yes, and Faire, or those bringing shopping into the social sphere, like Loupe, WhatNot, ShopShops, Newness, and Finary, or those gamifying shopping (look for more to come here). -Enablement: The means by which we facilitate the path to purchase. Think Stripe, Shopify, Cashdrop, Linktree, Substack, Stir, Catch, Imprint, Karat, and Canal.
Commerce companies show up everywhere in the new digital landscape.
For instance, TikTok isn’t just a social media company. With its tens of thousands of creators, it also stands to become a huge driver of commerce in the coming years. The New York Times or The Information? These are not just news or media companies, but also commerce companies with revenue built on subscriptions to their content. Stripe is not just one of the most exciting fintech companies of our generation, but you guessed it—it’s a commerce company, powering transactions across a broad range of digitally-native brands.
A move to commerce-based business models is being further fueled by the increasingly transparent shortcomings of ad-supported models, where the users themselves are the products being sold. Some tech companies have exploited this model in a way that the consumer doesn’t appreciate—not to mention, allowing ads to disrupt the user experience in the process—and many are begging for something better. The commerce model gives them that, allowing consumers to not only buy with their dollars, but to vote with them. In a commerce business model, revenue is derived from actual value in a consumer’s life via a good, a service, or access that they’re willing and happy to pay for.
As share of spend continues to expand across categories including education, entertainment, technology, the digital realm (NFTs), and influencer-endorsed products, the potential for commerce as a business model makes sense in more places, like online courses (from formal to informal), online services and advice, specialized writing and content, video-hosted gatherings, and assisted-discovery services. From charging admission to events on Clubhouse, newsletter subscriptions on Substack, or shopping with an expert on Curated, there’s no end to the ways commerce can fuel the next evolution of online business—driven by an empowered seller who’s finding a world of opportunity in the new 1:1 economy.
While the transformation in digital commerce over the last decade was inspired by a thoroughly modern buyer, Forerunner is convinced the next evolution will be propelled by the seller.
Not only will this shift create an incredible environment of inspiration for new business, it will also provide an opportunity to further grow the universe of entrepreneurs and expand the pathways to pursue financial freedom.