The Creator-Led Future of Retail
And how the rise of community-driven commerce will have brands rethinking their retail strategy
With the ascension of social commerce and the collapse of the purchase funnel, creators are playing an increasingly important role in product discovery and consideration. As brick-and-mortar retailers continue to weather through the harsh combination of continuing inflation, supply-chain disruptions, and labor shortage, savvy creators are increasingly leveraging the increasing number of social commerce tools and marketplaces to monetize their content and drive purchase, forming the basis of community-driven commerce that will rewrite the rules of engagement and conversion.
From Influencers to Creators to Vendors
We’ve discussed the shift of influencers to creators in a recent article on the state of the Creator Economy:
The term “creator economy” has been thrown around in the tech and media circles in recent years, typically as a rebranding of influencer marketing that elevates it from the shallow connotations associated with influencer culture today. Creators are supposedly about creative self-expression above all. Yet, they are often faced with similar paths towards monetization today when their content attracts a big enough audience over whom they can wield influence. While they may reject the label, the top creators today are often de-facto influencers in their own right, and the line between influencers and content creators is getting blurrier day by day.
Now, as social platforms increasingly start to seek alternative paths to monetization beyond good ol’ advertising, many has settled on social commerce as a main area of interest: from TikTok to Snapchat to Instagram, social platforms are racing against each other to become to next digital mall — only in this mall, creators are the new brand ambassadors and salesperson. Digiday recently profiled Katie Sands, an instagram lifestyle influencer turned Amazon Live host:
Sands has 332,000 followers on Instagram and she uses the social platform to give both fans of her blog and fans of her Amazon Live stream a look into her personal life, which is used to plan out the narratives and themes of each live stream. In the two-year period since acting as a host, she has accumulated anywhere from 1,000 to 20,000 active viewers per live stream.
TikTok is leading the charge on empowering creators to become brand ambassadors by launching several initiatives that would directly connect them with brands. It famously launched the Creator Marketplace last summer, which premises to play match-making between brands and TikTokers looking to monetize their creative talent. The latest program “Branded Mission” program allows brands to crowdsource the creative content that they need for campaigns, and provide a leveled platform for emerging creators to get share of the pie. Similar programs also exist for the likes of Snapchat and Instagram.
More and more enterprising creators have started to utilize their influence and trust built with their audiences to sell products, becoming vendors themselves. Armed with ecommerce service providers like Shopify or Squarespace, it’s never been easier to start an online business. Most creators won’t bother setting up their personal shops, but the ones that amassed a large following usually tend to sell branded merchandise as an additional revenue stream. Expect to see more digital shopfronts to be integrated into the social platforms, which will likely open up their ecommerce toolkit typically reserved for brand partners to creators soon. Perhaps brands can learn a thing or two from how creators add differentiations to the homogenizing online shopping experiences with content and personality.
In the future, as the metaverse platforms mature and start to subsume more ecommerce activities, creators could lead the charge on that front as well. After all, the metaverse is theoretically supposed to be a co-creative environment where users can build out the utility use cases, similar to the way that Roblox operates today. Creators will be empowered to become vendors of the future in a decentralized network, like how every NFT creator is also an NFT vendor by default. Of course, not everyone will be selling their own creations — the division of labor will still exist. And that’s where community-driven commerce comes in.
Community-Driven Commerce
Admittedly, “community” is an overused term these days in marketing — every consumer brand dreams of fostering a community of loyal customers, and strives to become more “community-oriented” through services and unique brand experiences. Yet, truth be told, very few brands have been able to pull that off. Why?
Community is about a sense of identity and a sense of belonging. And the way we shop is directly tied into this sense of community. Every community has their own local stores and businesses: Chinatown is Chinatown because that’s where all the Chinese-owned businesses tend to concentrate, and the same goes for any other types of ethnic communities. In our digital age today, however, connected communities formed online break away from such geographical boundaries and even demographics, instead forming around shared interests and purposes. In a way, communities are the new demographics that brands should be targeting against. And, to put it bluntly, not every brand generates enough passion for a stable community to grow around their offers.
Sometimes, these communities are organized around certain platforms.The popularity of TikTok has also spurred a number of “TikTok, but for X” copycat platforms. “What’s Cooking?” is a TikTok-like short video app for cooking tutorials and food porn content, while Playhouse positions itself to be TikTok for real estates. These vertical-specific TikTok copycats may not ever get as big as OG, but their existence does provide new interest-based platforms to brands to reach those communities.
Besides short video platforms, alternative channels also exist for brands to tape into a community’s peer recommendations to drive brand awareness and sales. For example, Headwear brand New Era has set up its own Discord server to let fans show off their collection of caps and outfits to others, engage in spirited discussions about US sports (New Era is the official hat company for the NFL, NBA and MLB) and in the future possibly also be able to take part in live audio events.
Meanwhile, on Reddit, several subreddits exist to crowd-source product recommendations — Buy it For Life is a one such subreddit with 1.1 million members. It follows a strict ad-averse rule to ensure the integrity of the recommendation, as it does not allow members to post referral links, no sponsored post, posters must disclose any & all affiliation to brands, referral/affiliate links or if a product was free/discounted for review.
The web3 movement brings up another way to think about online communities. Although the crypto market has recently crashed and NFT-hawking celebrities have been staying quiet ever since, there is no denying that there is a sizable DeFi community out there that are passionate about web3 technologies. For that community, having a crypto wallet is an identity marker that can be used to form new types of community-driven commerce.
In a viral post from Not Boring, web3 thinker Packy McCormick talked with Alex Danco, who heads up Shopify’s blockchain team, about the idea of Tokengated Commerce: essentially the idea that certain shopping experiences can be limited by the NFTs you already own, and that this enables new forms of transactions, particularly in multi-brand collaborations that involves multiple level of membership access. It offers crypto wallet owners an easy way to “fit in, and stand out”:
Within local communities, we’re naturally non-fungible buyers. You go to your favorite neighborhood stores and restaurants and the people there know you, know what you’re going to order before you say anything. You’re part of the local community (you “fit in”) but you’re you, with your own preferences and visible style and all (you “stand out”). This is one of the most important raw ingredients for so many wonderful things in the world — culture, community, commerce. And now we have wallets, with an inventory of NFTs in them, that stand for this exact atomic unit of behavior: fit in, and then stand out.
Of course, the creators-truned-vendors will play a crucial role in this tokengated commerce as the one driving interests and generating demands for memerships. On what Shopify is building to facilitate this futuristic sense of community-driven commerce, Alex Danco shared that:
As an ecommerce platform, Shopify merchants have been able to accept crypto payments for several years now, thanks to third-party app developers building payment gateways. Now as a developer platform, Shopfy is building a platform for Tokengated Commerce with the GM (Gated Merch) Shop app. When a buyer shows up to a Shopify merchant’s storefront, if they show up with a wallet, all of the stuff that their wallet can sign for, and all of its public, social significance that the buyer wishes to put forward, should be accessible to the storefront and to third-party developers to facilitate personalized drops, access, and experiences.
Of course, building a community does not always require NFTs or any web3 shenanigans. Indie studio A24 has amassed a sizable cult following among hip cinephiles with its slate of unique and original films. Now it has launched a membership program that, for a $5/month subscription, offers members an exclusive quarterly print magazine, early and exclusive access to merchandise, and access to the brand’s Close Friends list on Instagram for exclusive content, and in the future, offline events. The goal is obviously not just to sell some print magazines, but to offer a multi-channel touchpoint that makes fans feel like they are part of a larger A24 fan club — an identity that they can wear with pride and show off with branded merchandise.
New outerwear brand Early Majority is also taking a community-driven membership model in order to realize its degrowth mission in fashion. With only a nine-piece collection, the sustainability-minded brand says its community membership fees will eventually contribute more to overall revenues than product sales. Per Vogue Business:
Members will be given an Early Majority badge, but there will also be collaborative designs which raise money and awareness for charities and grassroots communities such as hiking clubs and bird-watching groups. This allows customers to refresh their garments without buying new products. Each badge will be NFT-enabled, so secondary sales of the badges will earn royalties for the brand and its affiliated communities.
China offers another interesting direction for community-driven commerce to grow. As a market that has been leading the world on mobile purchases and social commerce, China has pioneered some fascinating models for social commerce. Group ordering platforms like Ping Duo Duo have been popular in China for nearly a decade, rewarding shoppers with group discounts if they could convince more people (either friends online or real-life neighbors) to join the order — everyone that joins the order gets a discount. Due to cultural differences, this model might not work well for the more individualistic shoppers in the West, but one could see this type of social buying make its way into the west via creator-driven social commerce, as they turn to their followers to start a bulk order with them. Interestingly, in the cases where the creators are also community leaders, then it would be the communities generating demands.
In a way, the impact of community-driven commerce is already playing out on fast-commerce platform like SheIn — only in this case, the community is invisible and ever-shifting, jumping from the comment section of a SheIn haul video to another. Although every day Shein updates its website with, on average, 6,000 new styles, not all of them have inventory to match — that’s left for the TikTok algorithm and creators to decide. The more people like and buy a similar style, the easier and cheaper it becomes for the manufacturers in China to make them. The economical dynamic of community-driven bulk order is playing out even without a solid community to speak of.
Want to Learn more?
If you want to learn more about the future of community-driven retail, or simply to discuss the emerging trends that are reshaping shopper behavior, the Lab is here to help! Please reach out to our Group Director Josh Mallalieu at josh@ipglab.com.
