State of the Industry: May's eCommerce Trends & Insights

[00:00:00] Taylor: welcome back to another edition of the state of the
industry report. It may not be the definitive as we've seen the state of the
industry published already maybe, but we are here with the providers. Of
a giant set of data to give you our best available truth as a group from
the DTC index.
And I will allow each of them to introduce themselves as we dive in to
my right, Mr. Steve Ree Cook, who are you and what is the data you're
providing?
[00:00:27] Steve: I'm director of data at common thread collective, and
I'm aggregating data from statless. io our platform. We use a common
thread collective and that a number of other brands pay into to utilize
from us as well as consumer confidence. Data that I get actually from no
commerce and our buddy over there, Jeremiah,
[00:00:49] Taylor: Well, that's good. T up Jeremiah, who are you and
what is the data you're providing?
[00:00:52] Jeremiah: I'm Jeremiah, founder and CEO of no commerce.
We work with close to 4000 brands, helping them survey their
customers. And there's a subset of about 50 million responses per year
that we look at for some of the research that we do here. And it's all
aggregated and we're really trying to understand big macro trends and
discovery. And who people are buying for and all kinds of different
pieces of information like that.
[00:01:19] Taylor: And last, but most in terms of data Yarden, who are
you and what are you bringing?
[00:01:26] Yarden Shaked - Varos: Hey, what's up? I'm the co founder
CEO of Vero's. Basically provide KPI real time benchmarking for digital
marketing and Shopify metrics. It's a first party data co op from nearly
7000 brands about 6 billion of ad spend. Yeah. So we're looking at that
large database uh, for these insights here.
[00:01:49] Taylor: Awesome. And we're today, we are going to be diving
into the month of May. So it is June 10th today as we record, and we're
going to be looking back on the month of May that included some key e

commerce cultural moments in particular mother's day and the
beginnings of shopping for father's day. We're going to explore that as
well as trying to understand consumer sentiment, macro performance of
our industry, and tease a little bit of what you're going to be getting In the
may edition, which should be out this week.
If you haven't signed up yet, DTC index. com is where you can sign up
to receive this report. And if you sign up now, June 50, we'll get you 50
off this month's edition, as well as access to all the previous additions.
These reports are beautiful. They're rich. And they're, I think almost 70
pages long in the, I think is our longest one.
So they are full stock full of really valuable information. Some of which
we're going to discuss today. And we want to start Steve with a little bit
of the consumer confidence and the macro environment that we've
looked at. So you teased a little bit about your R D T C C I chart that
we've been tracking for over a year now that is in partnership with no
commerce, where we're asking a bunch of respondents about their.
Personal sentiment as it relates to the economy, but where are we at
and what are you seeing in the month of May as it relates to consumer
sentiment for e commerce consumers?
[00:03:09] Steve: we've actually seen quite a nice bump kind of the end
of April, beginning of May and into May we're at like 112. 2 out of, you
know, with a hundred being kind of our median or, or average actually
index. And that has kind of really been reflective of Kind of a pretty good
outlook by eCommerce consumers that we're looking at in terms of their
view of the economy.
It sounds like we're ahead of the conference boards numbers that they
published. They were kind of looking down the beginning of this year.
Whereas we kind of been tracking upward since March. You know, they
recently finally bumped up in the last month from 97, 5 to 102, but we've
kind of been running a little bit hotter than that for a little bit longer. You
know, we've been above that since about yeah, early March. So we're
looking pretty good in terms of those numbers for the, at least for
eCommerce consumers that we're surveying.
[00:04:08] Taylor: Yeah. And part of the intention with this was to try to
draw some specificity to the consumers in our industry specifically. And
so that's what we're doing. Two comparative things. Steve just

mentioned the U S consumer confidence index put out by the
conference board which saw the consumer confidence rise in May to
one Oh two from 97.
So they had the same directional movement that we did, but another
report that I. Found that we're going to include some reference to in this
month's edition was the McKinsey and company produced a consumer
package. Good sentiment report. And the headline there leads with U. S.
Consumer or U. S. Consumer sentiment are consumers on the cusp of a
shift, and they published consumer optimism declining after peaking last
quarter.
Now, to be fair, their decline was a decline from last Mixed from
optimistic to a slight change and increase in mixed and a slight change
in increase in op or in pessimistic. So very subtle changes. And what I
want to maybe come back to you, Steve, with is that in all three of these
different reference points is what I see when I look at the charts.
And we're going to include these in this month's edition for you to see
visually is actually. Not that much change overall is that there seems to
be a bit of stability in the consumer sentiment over this year so far. Do
you think that's a, a fair conclusion?
[00:05:30] Steve: Yeah, that is a fair conclusion. We've also seen that
kind of intent. So I talked about the 1 component, the economy and their
overall view of the economy and how that's kind of been pretty high this
year. But we've also seen kind of a slight increase in their intent to
purchase. In the most recent month, as well as that 3 month segment.
So, relative to that report from McKinsey, we're actually seeing a little bit
more positive feedback.
[00:05:56] Taylor: Yeah. And even if I look at the D-T-C-C-I reports
versus, I know you're always tracking them as it relates to the s and p
500 the D-G-D-J-I-A. And in both of those cases, we've seen continued
forward progress in the stock market, right? So we've been trying to map
consumer sentiment as it relates to the market.
And I would say that's actually even been more positive than the
consumer sentiment reports.
[00:06:18] Steve: Right? Yeah. And we have a pretty good correlation
there. The economic sentiment versus the S and P 500 and the Dow

Jones industrial average, we're running around 0. 9, just slightly below,
it's Yeah. 0. 87 to 0. 89, depending on the particular open or close that
I'm using and then normalizing it. So it winds up being pretty closely
related to the stock market, which yes, is actually bumped up a little bit
more this past month than our economic sentiment even.
[00:06:49] Taylor: And one of the other questions that we ask is about
the spread between plans for spending in the present versus the future.
And that tends to reflect moments when customers are declaring intent
to spend their money presently. And as an example, that response tends
to peak dramatically in December and in the end of Q4, when obviously
it's gift giving moment, but we've seen this increased in declaration to
spend presently over the last three months versus a flattening or decline
in future spending.
So we seem to see a little bit more general positive sentiment across the
Reported behavior as well as a declaration for spending.
[00:07:27] Steve: That's right. Yeah. We've seen kind of a little bit of an
uptick from the lows of The doldrums of winter in the present spending,
and then you're right, like, a little bit more flat in terms of future spending
that that's up from the beginning of the year. Obviously, January,
everyone says they're going to cut or December.
Everyone's cutting back on their future spending. Their intent was I've
purchased my Christmas gifts by holiday gifts. And then the future
spending for the next 3 months is probably less than what they've done
during December. Cool.
[00:07:58] Taylor: And it was, it was interesting to see in the McKinsey
report, they asked a similar question around plans to splurge. So their
question was related with regards to product and services. We'll spend,
we'll spending money on, do you plan to splurge or treat yourself over
the next three months? And they broke it down actually by generation.
So they looked at Gen Z, millennials, Gen X, baby boomers, and all
generations. And they actually found that Gen Z had the highest intent to
splurge in the near future. Whereas Millennials and Gen X tend to be
more likely to pull back, especially in the higher income brackets.
Overall, across all age generations, the low income and middle income
actually said they were likely to splurge, where the high income tended
to be pulling back.

And so, Jeremiah this is a thing we thought, hey, could we use the
information we have from NoCurm on this? No commerce to slice our
survey in a similar way and compare it to what McKinsey found. So can
you talk a little bit about how we'll look at that for the upcoming edition?
[00:08:50] Jeremiah: Yeah, so we're asking a few questions. The
looking at backwards spending. So have you spent more or less
recently? Are you expecting to spend more or less in the future? And
also do you basically what's your perception of the future of the
economy? And so those 3 questions, I think, would all be really
interesting broken down like this. What is interesting is that we see In the
past, when we've looked at this data, we actually have not we we've
seen older demographics having a little bit more confidence in the future
of the economy. So it's a it's a little bit different question. So we'll break
that down and see, has anything shifted there?
Is that changing over time? But also, There's a, there's a really
interesting point as we were kind of talking through this prior to actually
recording this. I think it's, it's worth stating that splurge may mean
different things for different generations. So I think that was Steve, your
point, but you know, splurging if you're a Gen Z probably means less
actual spending than, than potentially the standard spending for
somebody who's 65 plus. So that's something that we'll, we'll look at a
little bit too, is how does that, how does AOV plan. With these people is
there actually a difference in how much these people are spending and,
and what it looks like moving forward into the future?
[00:10:01] Yarden Shaked - Varos: know, you know what else is, you
know, this is surprising about this, like when I was reading the McKinsey
report and bringing it back to our world in DTC, is that like, first of all,
sentiment is high you know, high relative to where we are. It continues to
be. But in the slight decline that I had in the past couple of months, a lot
of things that were cited is inflation is so high, so I, you know, can't really
afford to spend more. And I try to look at in Barros data like AOV
differences. I said, maybe, you know, the revenue, maybe the revenue
increases are, are because of are, are because of inflation and maybe
there's, you know, bigger inflation in B2C and these are, you know,
driven by a, a inflation increases. And AOV is actually not super up in
Barrows.
It's up, you know, 1, 2% year over year in May. And that's, that surprised
me because I, you know, I mean, maybe, maybe, I don't know, maybe

any of you guys have a theory on, on why that is, but I would have
expected that it would go up similar to how we've seen the rest of the
economy be very hot in terms of inflation.
[00:11:11] Taylor: Well, I, I wonder if there's a relationship, cause one of
the things we've seen is continued growth and discount rates a little bit
where maybe some of that price increase is being masked a little bit by
increased discounting. So maybe there's some offset there that could be
worth exploring, but you're sort of teasing the lead here, Yarden, which
is that you're trying to search for reasons why revenue is Up
substantially.
So maybe you can give us a view of all this sentiment. Okay. That's
great. Survey data, people's feelings. But give us the facts. How is e
commerce doing in the month of May and how did it perform year over
year? Are we still seeing growth?
[00:11:48] Yarden Shaked - Varos: Yeah, in reality, I mean, it's, it's not
it's not the most it's, it's not the most, or it's exciting in my mind to report
that, that things keep you know, continue to be good seven figure brands
up 42 percent year over year in May. 25% percent up for eight and nine
figure brands year over year in May. This is on a revenue basis. Again,
this is based off thousands of companies, ultimately statistically
significant. I mean, this is actually what is happening. Brands are for the
most part having a good year you know, on eight and nine figure brands.
25 year over year, 25 percent year over year that's putting up a good
numbers. On seven figure brands, we even see closer to a normalization
of revenue coming from new and repeat customers and on eight and
nine figure brands. That spread is larger you know, 42% year over year
growth on the revenue side from repeat revenue and, and only 13%
coming from new revenue. So yeah, and then increased span across
that platforms as well of 23 percent year over year on meta. Up 8
percent year on Google and interestingly on meta the CPM had a big
increase you know, nearly 20 percent increase in May but click through
rate and conversion rate were up a bunch as well. So, so ROAS was
actually flat even with that even with the spend increase, which is quite
impressive.
[00:13:20] Taylor: 23 percent increase in spend flat Ross 20, 17%. But
tick tock though, spend down pretty substantially in that channel.

[00:13:30] Yarden Shaked - Varos: Yeah, Tiktok spend has been down
consistently for the past few months and ROAS is, you know, up a bit,
but not as much as you'd expect for the spend to be down. But, you
know, as we spoke about, Tiktok is transforming itself in terms of an ad
platform. You know, introducing TikTok shops, introducing a lot more, a
lot more different, engaging content.
It's not just ads. So, you know, while it's a, it's a big channel, they are
diversifying there. So, you know, some of that spend. Shifts from the ad
platforms, but it doesn't go away from, you know, spending time and
energy on the platform.
[00:14:11] Taylor: So to recap, may seven figure brands up 42 percent
year over year, eight and nine figure brands up 25 percent year over
year. And this is for seven figure brands. Now, four consecutive months
of annual growth in excess of 20%. For eight and nine figure brands,
we've seen it go from about a 5 percent growth in February to about an
18 percent in March.
To almost 29 percent in April and then 25 percent in May. So we're
seeing a steady, consistent output of growth that's sort of in my head.
What I consistently see is a map to this semi stability. These aren't a
hundred percent year over year growth numbers, just like consumer
sentiment isn't bouncing multiple standard deviations every direction
every month, but we're seeing growth repeated, consistent growth, and
we're seeing it while spend goes up on meta.
These are sort of the general common themes of our industry, and we
can say that may reported another month that reflected that.
[00:15:11] Yarden Shaked - Varos: Yeah. And, and I think, you know,
speaking from, from experience in, in how people use various a lot,
which is more on the ad platforms, very tactically. Was it me or was it the
market? If my costs went up. Then, you know, was it just me and that
means I need to change things or was it everyone? And that means I
need to stay stable. But for some reason on the revenue side people
have this view of sentiment being very negative. And even if they're
having a softer 2024. They're sort of putting it on the market. They're sort
of blaming it on the market, not really changing things because based off
what's on social media and I would, I would stress to actually look at
these numbers and, and also go into various and look it in your category,
maybe it's a little different for your category in terms of change, you

know, different categories are affected in different ways, but if If the, in
your category, revenue is up for others and it's not for you that's okay.
But it does mean that, that you probably need some change you
probably need some different tactics and, and you shouldn't just assume
that this was happening to everyone. So I think it's very important to, to
to take this, this data in and act on it.
[00:16:29] Taylor: Yeah, I think it's great in every scenario. The data in a
benchmark or a context is an opportunity for you to think about how to
differentiate yourself from the mean always right? And whether that
mean is positive or negative, I think you have a baseline then to operate
from, but the goal should be to constantly seek out novel actions to
differentiate yourself in performance.
And it's a constant reminder. That in this moment in particular, like the
market is not the reason for the suppression of growth. General
consumer sentiment and spending is fine. It's not a crazy hyperbolic
period, but it's solid. Consumers plan to spend businesses are growing.
And so that's the environment in which we exist.
And if we think about may a big piece of that has to do with the
pandemic. Mother's day, it's one of our, the five cultural tenants of e
commerce purchasing behavior. If I can lump our friends over at
Amazon prime day is our fifth made up one that we threw in there
alongside Valentine's day, mother's day, father's day, and black Friday.
But how did that go? Did we see a similar sort of solid expectation of
growth year over year for mother's day yarding?
[00:17:39] Yarden Shaked - Varos: Yeah, I can start and Jeremiah has
got a lot to add here, I think, as well. And so from the revenue side, I
mean, we looked at 14 days before, up until Mother's Day and this is all
this all in in the newsletter. And we looked at day over day revenue
change or just daily revenue between 2024 and 2023. And we saw
about a 35 percent consistently about a 35 percent year over year
increase in revenue. In the days leading up to Mother's Day for 2024
than it was 2023 we saw interestingly big spike in both years nine days
before the holiday up until about seven days or six days before. And
then the biggest difference of this year, other than the gap into the
increase in 2024 was the two days leading up to Mother's Day were
really strong including Mother's Day were really strong this year, even

stronger. Than they were last year. So, Mother's Day in general was,
was a good was a good holiday this year and brands saw significant
increases than, than what they saw last year.
[00:18:52] Taylor: Yeah. Hopefully we can take some credit for that.
Trying to get people to buy
[00:18:55] Jeremiah: Yes, that's what I was going to say. I mean, we've
been talking about it, so hopefully that's because people took took note
and kept running their ads through Mother's Day because people do still
buy through Mother's Day. We've seen that in the data. Yeah, on our
side, I mean, we're seeing some interesting stuff actually.
So year over year, we actually have seen a softer gifting rate in terms of
the percentage of people buying gifts. So more shopping in general is Is
good. It's up, but it does look like people are purchasing gifts less often
but the gifts are higher AOV. So there's a few different potential reasons
for that.
We're gonna be diving in more in the newsletter to why that could be
differences in the number of customers who are new versus returning.
We also are just seeing a little bit of a difference on total gifting rate this
year in terms of year over year from last year. And then There's also just
the fact like the, the, the one thing with our data set is we are not looking
necessarily at who was collecting data a year ago and, and are they
collecting data this year?
So there's, you know, 400, 000 responses basically to that question. So
it's a pretty good sorry, in the, the month of. May 400, 000 responses to
that question. So good number of respondents coming in. I don't think
that should impact the data too much, but we'll kind of break down a few
of those different things in the newsletter.
But yeah, in general, year over year, gifting as a percentage of
purchases was a little bit softer for Mother's Day, but the AOV was way
up. And I do think that's probably a good sign. Overall, the number 1 way
to grow your revenue is actually to get each customer to spend more
money. So it's good news that we're seeing that happening this year.
[00:20:37] Taylor: So given that we now know that we are sitting here
for the third month in a row, sort of telling you things are up and they're
pretty good and they're solid and people are spending on meta. We want

to start to layer in some more specific analysis about the kinds of things
that are true for the top performers so that you can say, okay, great.
Thanks for letting me know. Why things are winning, but what is true
about those brands that are winning. So in this month's edition, we're
going to tease right now, three in depth research projects that we did to
help answer some specific questions. And the first one comes straight
out of something that I've been mired in lately on Twitter, which is about
creative output and volume.
And so one of the things that we wanted to analyze was for the top
performing brands on Metta, how many ads are they making and
launching each month relative to their spend tier. So Yarden, maybe you
can talk a little bit about the research that you're doing here and how
we're going to publish that in the upcoming survey or in the upcoming
report.
[00:21:34] Yarden Shaked - Varos: Yeah. So, so, you know, if you think
about the scale at various, we could really see from bird's eye view, what
is actually working and what strategies people are taking. So, you know,
of course, creative is the biggest lever that people have in terms of the
ad platforms performing well there. So we are breaking down based off
spend and, and other KPIs in different buckets. What the high
performers are outputting in terms of a number of creatives per month.
Whether that's new creatives or they have creatives live that have active
uh, impressions and you know, this should be a guide for people to know
to target how many creatives they should launch whether they're in that
current spend bucket or they're trying they're trying to get there and
know what they need to get there.
[00:22:24] Taylor: Great. So that will be a deep dive section of this
month's report. And the next thing we're going to look at is an interesting
set of data coming out of no commerce that has to do with AOV by
different channel source. So Jeremiah, tell us a little bit about what
you're going to be breaking down. On that.
[00:22:41] Jeremiah: Yeah, so looking at 2023 data specifically at a set
of about 13, 000, 000 responses to the question. How did you first hear
about us? We are analyzing the click source of that and comparing it to
the. Response survey response source, right? So, for example,
somebody could say I found you on Facebook, but the click says that
they came through. And so we're going to be looking at that data

breaking down some of this. But really, the question we're trying to
answer is. Is getting somebody to see an ad on Facebook, click the item
by the most profitable path to conversion. I think it, and Taylor, I know,
you know, one day click analyzing all this stuff.
I'm not trying to say you should not be doing one day click analysis and
using that as kind of your source of truth. But what I am saying is that
there, there may be something interesting here where higher AOVs
come out of people doing more research and kind of having a longer
path to. To conversion.
So we're gonna be breaking down some of that, looking at basically all
the major ad platforms and that AOV when they're coming directly from
the platform versus when they're coming through something like search.
[00:23:51] Taylor: Yeah. And I think there's an interesting overlay here
between one of the most common meeting of buying errors I see brands
make, which is that when the vast majority of your spending is on lowest
cost optimization you tend to drive towards products with lower purchase
value. And so it's very common for me to see someone's Facebook
account reported AOV be much lower than their site wide AOV.
And so there's an interesting corollary here. And it's also why I. We were
told this past week by our Metta reps that there's an internal initiative
inside of Metta to go from 6 percent of spend, which is currently on value
optimized campaigns to 25 percent of spend on value optimized
campaigns by 2025.
I think these things all have a relationship. To one another in terms of
some of the behavior. So it's really going to be interesting to take a look
at. And on that note, speaking of fact checking meta, and by that, I
mean, trying to understand how the broad data that they present relates
back to our industry, because that's our job here.
The, the direct to consumer index is to. Ask a question about ASC. So
ASC, I just came back from the performance. Meta performance summit
is the golden goose. It's the prize child of the meta advertising platform.
And they are encouraging advertisers to increase spend in the most
recent set of presentations that they did from 30 percent of spend to 70
percent of spend.

This is a new platform. You're going to hear research about increasing
spend in those things. And so we wanted to look at how is ASC
performing compared to BAU for e commerce brands specifically,
because meta will tout that ASC has improved efficiency across all the
advertisers, but we wanted to slice it down and look at our industry and
see, okay, how is ASC performing both on new customers and returning
as well as overall efficiency for ASC versus BAU.
So Yarden, can you tell us a little bit about what they're going to see as it
relates to that question?
[00:25:37] Yarden Shaked - Varos: Yeah, I think you, I think you
highlighted well, it's basically, you know, we're going to, we're going to
split out campaigns versus campaigns. And we're going to track the row
as there and the cost per purchase that brands are seeing and see how
much and, and if there is a true uplift. true uplift there. And on the road, if
time allows they just check that for P max as well.
[00:26:04] Taylor: Good old PMAX. So there you have it. May has been
a solid month. It's good indication that our industry continues to be
healthy. Consumer confidence remains stable and slightly optimistic
amidst everything that's going on. And if this month's issue at DTC
index. com, you can get an in depth D type deep dive into three
compelling Projects that you can go and apply to your business directly.
One is about the amount of creative output that the highest performers
on the platform are producing. Number two is about how channel source
from first click affects AOV. And then the third is to analyze the
performance of ASC versus BAU all available in this month's edition. D
to C index. com. And remember use June 50 to get 50 off this month's
issue, as well as access to our entire library of reports from this year.
Appreciate you all tuning in gentlemen. Thank you all for stopping by
[00:27:01] Jeremiah: Thank you.
[00:27:01] Taylor: soon.