Brian Anderson of Nacelle On The Top 5 E-commerce Trends Shaping the Future of Online Shopping

An Interview With Rachel Kline

A Revamped Focus on EBITDA. As we venture into 2024, the digital commerce landscape is markedly pivoting towards a more discerning approach to growth and profitability. The mantra ‘cash is king’ resurfaces with renewed vigor, underscoring a strategic shift from the erstwhile pursuit of market share at all costs to a focus on long-term, sustainable growth underpinned by strong cash flows. This recalibration towards profitability brings EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) into the spotlight, heralding a new era where digital teams are not just innovators but astute financial stewards of their brands.

As e-commerce continues to grow exponentially, businesses must stay up-to-date with the latest trends and innovations to remain competitive in the ever-evolving online shopping landscape. In this interview series, about “Top 5 Ecommerce Trends Shaping the Future of Online Shopping” we are talking to e-commerce experts, industry professionals, and thought leaders with in-depth knowledge and experience in online shopping trends. As a part of this series, we had the pleasure of interviewing Brian Anderson.

(Brian Anderson started his journey as an engineer at an ecommerce agency. Frustrated with the lack of technical focus, Brian created ShopElf in 2016 as a new type of consulting firm in commerce. ShopElf brought a competitive advantage to brands and retailers by leveraging innovative engineering solutions. The ShopElf team started by diving into headless commerce solutions with a broad scope; they solved problems related to progressive web apps (PWAs), internet of things (IoT), and composable APIs that interacted with satellite networks. Brian became a thought leader in the space and was a featured speaker at several headless conferences and ShopElf began to shake up the industry. But a problem perplexed the team; headless work was challenging because robust composable infrastructure was missing from the industry. Tired of relentlessly building and maintaining custom servers and DevOp solutions, Brian began architecting and designing a multi-tenant system to ingest, normalize and syndicate commerce and content data. The architecture for this new platform would streamline the data flows, data structures, indexing systems and APIs needed to execute composable headless projects consistently. Realizing that the opportunity for this solution stretched well beyond the consulting firm, Brian raised capital from notable commerce angels and venture investors, and Nacelle was born.

Thank you so much for your time! I know that you’re super busy. Before diving in, our readers would like to get to know you. Can you tell us a bit about your backstory and how you grew up?

I actually grew up in a small town on Long Island in New York. It’s called Sag Harbor. Even though it’s gotten a name for itself now, when I grew up there, it was pretty unknown. And living there year-round was not the same as the summers there. I had 86 kids in my graduating class, and I went to public school. There was this very interesting contrast in life between winter and summer. In the summer, a lot of folks from Manhattan, who were quite wealthy, would come out to vacation and spend time in Sag Harbor and some of the surrounding areas. The contrast between those two things was essentially this: during the winter, it was very middle class at best; in the summer, it was ultra-wealthy. I was very intrigued by why that dynamic existed. And I think in 6th grade, I had the most incredible Math teacher; her name was Ms. Trilland. In 6th grade, I learned how to build my own website in her class. I also learned how to use an Excel sheet to track stocks that we picked at the beginning of the semester and see how they would perform by the end. Those were all things that made light bulbs start to go off, like, “Oh, right, this is the idea of building equity and using the Internet and computers as a way to what I saw as my clear future.

What led you to this specific career path?

I went to a college called Babson College. You only go there for business, but specifically, people are there for entrepreneurship, so it’s a very entrepreneurial school. In my sophomore year, this funny thing happened where they put me on the far side of campus, which meant that I was kind of a distance from the cafeteria. It turned out we had a sister school at Babson called Olin, and Olin was this engineering school that was this very small, sort of elite engineering school. I think all the kids that got there were extremely high IQ, very talented, and they got a free ride, and that’s kind of how that school worked. But it turned out that school was actually very close to the dorm that they put me in, and it also turned out that my card from the Babson Cafeteria just so happened to swipe into the Olin Cafeteria. So, I ended up having a lot of lunches and some dinners there, and I started to make some friends, and they convinced me to take some credits and learn some basic computer science skills and ideas. I learned how to code by doing that. So, I graduated college with these two great skills, which I’m pretty good at: finance and business decision-making. And I also knew not only how the internet works and how computers work, but also how to build my own programs and write my own code.

Can you share the most exciting story that has happened to you since you began at your company?

Every day kind of feels like a roller coaster ride. I think one of the most exciting times at the company is when we work with FTD. They’ve been a flagship merchant of ours for years and years, but when we first closed that deal, that was definitely one of the most exciting things. This was a very sought-after opportunity by large competitors like Adobe, SAP, Oracle. They ended up wanting to use Shopify, but Shopify wasn’t quite flexible enough for what they needed. So, in order to close the deal, we were brought in, and we were able to offer that flexibility that FTD couldn’t get out of the box from Shopify. We ended up signing a very large, five-year contract, and so I think that was definitely a day of victory. We love the folks at FTD today, and we consider them a great partner, so that is something that has worked out really well

What are some of the most interesting or exciting projects you are working on now? How do you think that might help people?

Personalization has long been a theory in e-commerce. Everyone understands the theory of personalization, especially in the digital realm. It’s a great thing that can help brands succeed. However, it’s been difficult for a few reasons. First, customers are often not signed in, so you don’t really know who’s shopping on your website. Second, existing personalization platforms are old, bulky, and difficult to use. Third, having the systems and tools to deliver personalized experiences doesn’t mean you have the manpower to create enough content for those experiences. I think it’s hard enough for merchandisers today to keep up with just the default version of their website, plus some landing pages here and there. That is more than a full-time job! And probably for many people, the idea that you now have to make 10 different versions or 20 different versions of the website to execute personalization is really challenging.

Nacelle has a new AI personalization product that addresses these challenges. Merchandisers can now scale out the ability to write and produce content for different segments they’re targeting. It doesn’t replace the work that gets done, but makes these suggestions, in bulk, that’s accurate, aligns with the brand voice, and targets specific segments. This makes personalization at scale more practical and easier for merchandisers to execute, saving them time, headaches, and money.

You’re a successful business leader. What are three traits about yourself that you feel helped fuel your success? Can you share a story or example for each?

I think fundamentally being curious is the number one thing. Curiosity is a constant theme in all aspects of my life. I want to know how things work, and I want to understand why decisions are made the way they are. That’s especially true if I disagree with someone’s point of view. Instead of fighting about it, I want to understand why they reached that conclusion. I want to understand how a Tesla doesn’t really have an engine in it. That’s so interesting. I want to understand why our customers make the decisions they do. As a shopper, what makes me want to buy something? When it comes to technology, I had to understand how computers work, how the web works, how code is written, why it’s written the way it is, and how databases work. So, having innate curiosity is one of the most important traits. It’s probably the most important thing.

I also think that being able to control your emotions to a degree is crucial. The human experience is fulfilled when you go through all emotions, not just the good ones. When I say control your emotions, I don’t mean shut them down. What I really mean is to understand that as a leader, you’ll go through a rollercoaster of emotions every day, and how you react to those emotions makes all the difference. This is important for your team to understand, as well as for yourself. I think it’s essential to have a personality that’s not afraid of emotions.

The third trait is being passionate about what you do. It makes the long hours, grueling work, and big pressure decisions easier. I’m not saying it’s easy; in fact, if you’re an entrepreneur, you probably have to be a little crazy and naïve to go forward with your endeavor. But at the end of the day, doing something you’re passionate about makes it worthwhile. Founder-market fit is crucial; if you’re not genuinely excited about what you’re doing, it’s hard to get through the tough times.

Excellent, thanks so much for sharing that. I want to shift gears and talk about ecommerce. What was the original vision for your ecommerce business? What pain point(s) were you trying to solve for your customers?

Prior to Nacelle, I was running an agency that was doing development work. We did peculiar and interesting things; it wasn’t just Shopify themes or work in big commerce areas. We were spinning up servers and building components that didn’t fall within the regular purview of an e-commerce platform.

Our clients started coming to us, saying they were suffering from slower page load speeds, which they believed were hurting their conversion rates. So, we tried several different things, like basic caching and engineering improvements, but that didn’t move the needle as much as we hoped.

At that time, there was a new JavaScript paradigm, which was the birth of React and its baby brother, Vue. These were essentially JavaScript frameworks that let you build applications, instead of just a website. And what we realized, was if the e-commerce store wasn’t a website, but was actually an application that you didn’t have to download, you could just go to www.merchant.com then that might be a really great experience. Because on an application, the page to page load speed, what it feels like when you’re clicking around, it doesn’t lag, it doesn’t have any drag and it makes discovery a lot easier, it makes storytelling and the presentation of the brand a lot more congruent and frankly it makes buying products adding to your cart and checking out a whole lot better.

And so we tried this, and it generally worked , but the problem was the APIs we were using from the ecommerce platforms that we had fell short in several different areas and my belief is that they continue to fall short today. So we had to build a ton of infrastructure. We had to write a ton of custom code on servers, obviously on the front end as well to make this thing viable and make this thing happen where merchants can get this great new experience on their website.

But it turned out that was a ton of work and in theory, we’d have to charge our clients something like a million dollars or something just to break even. So what we ended up doing is building Nacelle, which was essentially that infrastructure that we were building as one offs for our clients. It’s certainly progressed a lot since then. We now have check out, we have personalization, we have some nice new features that can’t speak to quite yet. It has become an e-commerce platform over time, but it started with the infrastructure that was needed because our customers weren’t able to get the best conversion rates or the conversion rates they really wanted out of their website using traditional commerce platforms.

How do you see the ecommerce industry evolving in the coming years?

I think I already talked about personalization and I think that’s a big piece of it. I think if you don’t have a great personalization strategy that’s practical over the next three, four, five years, you’re just going to be left behind by your competitors. I also think that page load speed is curious to me why more business leaders don’t focus on page load speed because our merchants that are able to achieve superior page load speed compared to their competitors are crushing it, with conversion rate improvements 40% and up. So to me, it’s just low hanging fruit and a total no brainer. I think you’ll start to see e-commerce websites and brands really focus on storytelling and brand emphasis, so not just cheap growth hacks, but really things that emphasize the brand. And in order to do that, you’re going to have to have a fast website that is personalized.

How do you balance the need for innovation and experimentation with maintaining a stable, reliable ecommerce infrastructure?

This doesn’t need to be a ‘this or that’. You can maintain your core product and your core codebase and have a great stable, reliable infrastructure. Because we are micro service at Nacelle, we’re able to roll out new things on top. So, I think this was a bigger issue when the world was monolithic, meaning the whole codebase was one big thing, and it all used the same database underneath. But in today’s day and age, the trend is very much more microservice, which means everything is its own little service. And so, you can build new products and features without having to affect the codebase. I think you’re just gonna see that trend continue and at Nacelle, we’ve always had this infrastructure. But you’ll start to see this trend continue where startups will be able to maintain a really strong stable codebase, while also rapidly adding new features.

Ok super. Here is the central question of our interview. What five emerging trends do you believe will have the biggest impact on the future of online shopping? Please explain each in detail.

1.A Revamped Focus on EBITDA
As we venture into 2024, the digital commerce landscape is markedly pivoting towards a more discerning approach to growth and profitability. The mantra ‘cash is king’ resurfaces with renewed vigor, underscoring a strategic shift from the erstwhile pursuit of market share at all costs to a focus on long-term, sustainable growth underpinned by strong cash flows. This recalibration towards profitability brings EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) into the spotlight, heralding a new era where digital teams are not just innovators but astute financial stewards of their brands.

This trend signifies a profound evolution in the ethos governing digital commerce strategies. Digital teams, encompassing the brilliance and foresight of CDOs and CMOs, are now tasked with a dual mandate: to identify and implement technologies that not only solve primary market challenges but also enhance operational efficiencies, thereby augmenting the bottom line. The challenge is multifaceted, requiring a nuanced understanding of the digital ecosystem and an acute awareness of the financial levers that drive profitability.

2. Reinvesting in the Brand
The digital marketplace of 2024 presents a unique paradox. While launching a brand and reaching consumers globally is easier than ever, standing out in a sea of digital noise has never been more challenging. This environment amplifies the importance of brand differentiation — a principle that has regained its rightful place at the core of strategic discussions among digital commerce leaders. A brand’s journey to digital prominence is no longer just about capturing fleeting attention; it’s about making meaningful investments that resonate with consumers and distinguish the brand from its competitors.

In this landscape, the focus shifts from chasing quick wins through clever marketing tactics to a more profound, sustained effort in building brand equity. Digital teams, particularly CDOs and CMOs, are recalibrating their strategies to prioritize investments that highlight what makes their brand unique. This isn’t about mere aesthetics or superficial branding efforts; it’s about embedding differentiation into every facet of the digital experience — from personalized customer interactions to bespoke product offerings and innovative online experiences.

3. Checkout Optimization
In the digital commerce landscape of 2024, the final steps of the online shopping journey — checkout — have come under intense scrutiny. A cumbersome and inefficient checkout process is more than a minor inconvenience; it represents a significant barrier to conversion, turning potential sales into missed opportunities. This realization has led digital teams, especially those guided by forward-thinking CDOs and CMOs, to prioritize optimizing the checkout experience as a critical component of their digital strategy.

The impetus for this focus is clear: in an era defined by the immediacy of mobile shopping and the dwindling patience of consumers, even minor friction points can deter a purchase. Modern consumers, accustomed to the efficiency and speed of digital interactions in other aspects of their lives, expect nothing less from their shopping experiences. This expectation sets a high bar for digital commerce platforms, compelling them to deliver seamless, intuitive, and rapid checkout processes that align with the fast-paced lifestyle of their users.

4. Making Ecommerce Personalization Practical
As we advance into 2024, the quest for personalization in e-commerce has reached a critical juncture. The ability to offer personalized shopping experiences has long been heralded as a cornerstone of digital marketing success. However, the practical challenges of achieving this, especially in an environment where most interactions are with first-time visitors who are not logged in, have often relegated personalization to aspirational goals rather than actionable strategies. This year, however, sees a paradigm shift as digital teams led by visionary CDOs and CMOs harness new technologies to make e-commerce personalization a possibility and a practical reality.

The challenge is twofold. On the one hand, there’s the technical hurdle: crafting personalized experiences for unidentified visitors requires a sophisticated understanding of anonymous user behavior and preferences, a task that traditional personalization platforms, with their bulky, monolithic architectures, have struggled to accomplish efficiently. On the other hand, there’s the operational challenge: even if the technology were capable, the sheer volume of content and experiences needed to genuinely personalize the shopping journey for diverse customer segments would overwhelm most digital teams.

5. The Big Three Digital Commerce Performance Metrics
In the complex and ever-evolving world of digital commerce, understanding and optimizing key performance metrics is paramount for success. As we step into 2024, digital teams, under the guidance of insightful CDOs and CMOs, are sharpening their focus on what we call “The Big Three” performance metrics: conversion rates, bounce rates, and average order value (AOV). These metrics serve as the foundational pillars of digital commerce strategy, offering clear indicators of where to allocate resources for maximum impact.

Conversion Rates: Central to digital commerce, the conversion rate is the ultimate measure of a site’s effectiveness in turning visitors into buyers. Improving this metric often involves a multifaceted approach, encompassing everything from streamlining the user experience to optimizing checkout processes. Digital teams increasingly rely on advanced analytics and A/B testing to fine-tune every aspect of the customer journey. This ensures that potential customers are not just visitors but active participants in the commerce ecosystem.

Bounce Rates: The bounce rate, often a first indicator of site engagement, reflects the percentage of visitors who leave after viewing only one page. A high bounce rate is a clear signal that a website’s landing pages are not resonating with its target audience or that the user experience is lacking. Addressing bounce rates requires a deep dive into page load speeds, content relevance, and navigation ease. Fast initial page load speeds, in particular, have been identified as crucial for capturing and retaining visitor attention in the first few moments of their visit.

Average Order Value (AOV): Enhancing AOV is about encouraging customers to purchase more per transaction. Strategies to boost AOV include upselling, cross-selling, and providing incentives for larger purchases. This metric is directly tied to the bottom line, making it a critical focus for digital teams looking to increase revenue without necessarily increasing traffic. Personalization is key here, as customized product recommendations and targeted offers can significantly influence purchasing decisions.

Is there a past trend that’s now common practice in ecommerce that you would have spent 50% more time focusing on? Which one and why?

I think checkout optimization. About five years ago there was a big rotation out of other ecommerce platforms, like Shopify, because I think they did checkout just better than most of the others. In my opinion, that trend is not done yet. If I could have spent 50% of my time optimizing my clients checkout, I think that would have been a bigger lever to pull. I also don’t think that any of the ecommerce platforms today actually do checkout well, so I think it’s a great place to invest time, money, and energy.

Looking ahead, what are the biggest opportunities and challenges facing the ecommerce industry, and how do you plan to address them in the coming years?

Personalization, Check out, and Page load speed are the three big ones.

You are a person of significant influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I think the idea of not accepting how society thinks by default. I’m not saying the way society thinks is always wrong. I do think it’s really important to be curious and question things if they don’t intuitively make sense instead of taking it for granted. I think if the world can start to think a little more outside the box and use a first principles approach to think about problems in the world. If that were a gift I can try to give to everyone in the world, then I think the world would be a much much better place.

How can our readers further follow your work online?

LinkedIn is the best way to follow what I’m thinking and doing online.

I want to thank you so much for your time and for sharing your expertise with us. I wish you continued success!