Aloha! Welcome Fringers. On the slate today:

• Editorial: The Rise of Relational Commerce

• The Latest: Walmart & Amazon are Exploring the Metaverse

• BX: Rebuilding a Fashion Brand With Purpose Post-Pandemic

• MX: Doing PR the Local Way

• UX: Position Common Purchases As Upsells

• CX: The Customer Hierarchy of Needs

• EX: The Employee Hierarchy of Needs

• DX: Amazon Ads: The Impact of Purpose-Driven Brands [Research]

Let’s get to it.

The Rise of Relational Commerce

Last week, I argued that the current Transactional Commerce model cannot, in its current state, sustain your business over the long-term.

Put another way, it’s broken, and has always been broken, in the sense that this model’s current focus is short-sighted by default. It’s not a bug, it’s a feature. And to break the mold requires a new approach, and a new way of thinking.

This means a shift from a model that’s NOT:

• Short-term conversion focused solely

• Limited by technology

• Data abundant, but insights deficient

• The blind following the blind, i.e. “best practices”

Because of rising buyer expectations, AI’s emergence, and other cultural influences, it’s imperative to move on from a purely Transactional Commerce model into a more Relational model for its long-term business potential and value-driven philosophy.

But that takes:

1. A new model

2. Which requires a new way of thinking

Current macro trends point in this direction. We’re seeing a big shift in how business is done and a seismic shift in various sectors and industries.

Business Macro Trends

It might not be noticeable to you right now, but take a step back, and consider the following trends or new ways of doing business:

1. The Rise of Direct-to-Consumer (DTC) Brands:

   DTC brands have already shown that a focus on customer relationships is a huge differentiator. As more brands go this route (hello B2B), the principles of relational commerce will become more mainstream.

2. Adiós Third-Party Cookies:

   As data privacy becomes a primary concern, the ability to collect first-party data through direct customer relationships will become increasingly important. You can’t avoid this.

3. The Experience Economy:

   Consumers are increasingly looking for experiences, not just products. The demand is there, but the supply is lacking. Try to offer a unique experiences as product add-ons or extensions.

4. The Rise of Niche & Taste Communities:

   Brands now realize the value of building communities around their products. What could you build community around?

5. AI and Personalization:

   As AI becomes more sophisticated, the ability to offer highly personalized (or individualized) experiences at scale will become a reality. Technology is already driving the shift from transactional to relational commerce. How are you using AI to deliver better experiences?

6. Sustainability & Social Responsibility:

   People are already making buying decisions based on a brand's values and social impact (see BX in this section for more). A relational approach allows for deeper storytelling and value alignment, which is having a direct impact on revenue. Just ask Patagonia or Warby Parker.

7. Subscription Models:

   Subscription-based business models are all about long-term customer value over single transactions, making them a natural fit for a relational commerce approach. I know, you have subscription fatigue, but that’s not slowing this trend down. If anything, it makes people even more discerning in what they subscribe to.

8. The Pandemic Effect:

   Maybe this should’ve been first on the list. COVID accelerated the adoption of eCommerce and simultaneously increased the desire for human connection. Relational commerce sits at the intersection of these two trends. How are you solving this problem for your market?

9. Micro-Moments & Omni-Channel Experiences:

   This is a difficult one. The customer journey is increasingly fragmented across different channels and touchpoints. A relational approach allows for a more cohesive, unified experience. And good news: the tech is finally catching up.

10. Brand Trust & Authenticity:

    In a world of fake news and mistrust, brands that can build and maintain trust will have a significant advantage. Even Influencers are taking a hit now—just take a look at the rise of “Deinfluencers”. And business is already seen as more trustworthy than other institutions, so that’s a wide-open opportunity for you.

All these signals aren't just isolated trends; they're pieces of a larger puzzle that come together to form the future of commerce. And that future looks relational, personalized, and deeply connected.

But it doesn’t stop there.

How The Relational Model Influences Other Sectors

Now, take a look at how this is affecting other sectors and industries, including sports, politics, and religion & spirituality.

Journalism & Media:

The media landscape has already seen a shift toward subscription models and membership communities. Yes, people are willing to pay for quality journalism, or someone’s deeply informed point of view.

People want to feel like they're part of a community and the explosion of newsletters and independent journalism platforms are also a testament to this.

Politics:

The old model of politics as a "transaction" (I vote for you, you provide services) is giving way to a more relational model where constituents are coming to expect ongoing engagement, transparency, and authenticity from their leaders.

Social media played an obvious role in this, making politicians more accessible and, depending on who you talk to, more accountable. Expect this to continue.

Science:

Even in scientific research, the old model of "publish or perish," where the transaction (getting published) is the ultimate goal, is now being questioned. Open science, citizen science, and collaborative research models are more relational in nature, and look to gain more traction.

Education:

The transactional model of education (pay tuition, get a degree) is being challenged by lifelong learning, online courses, and other models that focus on the ongoing relationship between learners and educational institutions.

Just take a look at what Gen Z thinks about going to college/university.

Healthcare:

The transactional model of healthcare is this: you get sick, you see a doctor, you get a prescription, end of story.

But there's a growing movement toward more holistic, patient-centered care that considers the whole person and aims for long-term health and well-being, not just treating individual symptoms.

The trends are well-documented.

Non-Profits and Philanthropy:

The old model of charitable giving was very transactional: give money, get a tax receipt. But modern philanthropy is becoming more relational, with donors wanting to be more involved and see the impact of their contributions.

This is leading to more transparent, accountable, and effective organizations. Charity Water comes to mind. Pay close attention to their message around transparency. It’s powerful.

And Only One, a climate activism brand, also shows the specific impact your dollars have around the world.

Entertainment:

Streaming services have changed the game here. It's not just about the transaction of buying a ticket or a seat; it's about building a long-term relationship with viewers through quality content, personalized recommendations, and interactive features.

How many streaming subscriptions do you have?

Look. It’s not just a “business trend”. It’s a sweeping cultural shift that reflects broader changes in our societal values, which are, of course, influenced and accelerated by technological advancements.

In next week’s issue, I’ll dive deeper into its implications for business, and how to adopt this new model, both technologically and philosophically, in order to thrive in this new era.

The Latest

Walmart & Amazon are exploring the Metaverse

What if I told you that the total addressable market for the Metaverse was in the range of $8 trillion and $13 trillion by 2030?

Would you balk? Scowl? Or fully embrace it?

Well, Walmart and Amazon are betting on this future. Here’s a few reasons why:

1. Changing Consumer Behavior: Thomas Kang, VP and general manager of Metaverse Commerce at Walmart, mentioned that virtual worlds are "changing the way we connect, play, and shop," anticipating the ever evolving consumer expectations.

2. Market Potential: That’s $8 trillion and $13 trillion by 2030 according to a report from Citi (yes, the bank). That's a pie both companies want a slice of.

3. User Engagement: It’s not Walmart's first rodeo. They delved into virtual fashion before which actually led to increased user engagement and purchases—indicating that there’s a there there.

4. Innovation & Experimentation: Both companies see the metaverse as a new frontier for retail, offering a chance to "redesign the shopping experience and invent the future of retail," as Kang puts it.

Maybe Zuck was right all along. You can read more here.

Holiday Returns: Expect More of Them

According to research done by True Fit, an AI platform, they’re projecting that one in every six fashion purchases made will be returned in the UK.

Ouch. What does this mean for the US? Probably the same. Some good news: people plan on spending more this year, so there’s that.

True Fit's COO emphasizes that fit assurance is crucial for online fashion conversions and that getting the right size and fit is key to building consumer trust and loyalty.

What can you do to reduce returns, particularly if you’re an apparel brand?

1. Fit Assurance: Given that finding the right fit is a significant factor in returns, you could use technology like virtual fitting rooms or AI-driven size recommendations to help consumers choose the right size. Let us know if you’re trying this. Would love to hear about it.

2. Flexible Return Policies: While it's essential to minimize returns, having a hassle-free return policy could build trust and loyalty. However, the policy should be designed in a way that doesn't encourage 'wardrobing' (buying, wearing once, and then returning—yeah, I’m talking to you ‘influencers’ out there).

3. Disincentivize Returns: Going against the previous point, what if you disincentivized returns by, say, charging for them? H&M and Uniqlo are doing just that. Also, they’re highlighting the cost to the environment, which is a core value among Gen Z and Millennials.

4. More Detailed Product Information: Providing comprehensive details about the product, including material, measurements, and high-quality images, can help consumers make more informed decisions. Doing everything within your power to help them find the right fit and style.

5. Customer Reviews and UGC: User-generated content like customer reviews, photos, or videos help people have a better idea of what to expect, reducing the likelihood of returns.

6. Dynamic Pricing: To balance out the costs associated with high return rates, you could also consider dynamic pricing strategies that take into account the 'true cost' of a sale, including the potential for returns.

7. Post-Purchase Engagement: Send people follow-up emails with style tips or care instructions. How can you help people get the most from their purchases?

8. Data Analysis: Does a particular item have a high return rate? Find the most returned products and do a mini investigation. And don’t forget to reach out to people and just ask.

This was a long one. Hope you found something of value. If you did, feel free to leave an emoji.

Enjoy your weekend, and be safe everyone.

Paul