Latest / The Interline Podcast / eCommerce, Shopper Passports, MHS, Fees & Gen Zs
Transcript
- speaker-1: ⁓ speaker-0: So welcome to the edit from the Interline, the show where we run a quick far analysis on our pick of the most important fashion and beauty technology stories from the last seven days. I'm Grace, the social editor, and I'm joined by Ben, the editor in chief, and together we have around twenty five minutes to give you our analysis on the stories that we think really matter. speaker-1: Hello Grace, good to see you again. Both of us back in our usual backgrounds this week. speaker-0: Yeah, exactly. Good to be back in the regular places, for sure. speaker-1: Cool. Let's do it. Hit me. speaker-0: So I want to begin this week by talking about a report that the BOF did, so Business of Fashion. And I know that you actually contributed to this report, so I'm really intrigued to get your thoughts. So, in partnership with Amazon Fashion, BOF did some investigation into what big brands like fashion brands and sports brands are getting right and wrong in terms of how they're selling online. So they discovered a whole load of different things. But one thing that really stood out to me was the fact that big brands are really chasing novel innovation rather than mastering the fundamentals when they're selling online. So they're not mastering things like product information or fit information. So since you did contribute to this report, I wanted to get your take on why you think brands are chasing innovation on such shaky foundations. speaker-1: Yes, good question. ⁓ so this is the first time I've been asked to contribute to a business of fashion report. So ⁓ it was ⁓ it was a nice, nice milestone for me individually. I also sent me a printed copy of it, which ⁓ I'm not used to getting printed copies of things. ⁓ feels ⁓ old school in a very pleasant way. So it's eighty five pages. I would recommend people go read ⁓ the full thing. There's no way we can do ⁓ all of it justice in this ⁓ this discussion. ⁓ the bit that you zeroed in on though is the bit that I had the most input. On and was able to share the most thoughts about. And it's also the one that I think is the most relevant to some of the other stuff that we're going to talk about, which is the disconnect between the degree of priority that brands and retailers are placing on user experiments, sorry, user experience, newness and innovation in e-commerce. Which I think the statistics in there are something like fifty plus percent of brand and retail leaders are concentrating their efforts on improving the front end experience versus the back end data and the product information, the completeness and accuracy and availability of all that. Which I think is something like less than twenty percent of industry leaders put that as ⁓ as a priority. Now, those two things, I I hate to kick us off this way, but those two things are both AI stories at the moment in particular, because in order for AI to recommend a product or to translate your intent as a a a consumer, as a person that's been having a multi-turn query with ⁓ an AI agent, it needs a robust, complete, and broad set of product information. It's it's one thing to just kind of have a a woolly product description that says, hey, this is intended for this and you couldn't use it in this scenario. ⁓ it's you also need to supplement that with really accurate information. Because if people are having natural language queries about products Those have to be anchored in what the product can actually be, what the product actually is, as well as the broader story around it. That's also where people or companies are applying these front-end efforts. So when you talk about user experience and innovation and newness in e-commerce, you're talking about new ways to put interfaces in between brands and consumers. you're talking about very likely kind of optimizing for AI interactions either on page or within ⁓ chatbots that already exist out there. So this is one of my favorite type of things to get asked about and have the opportunity to talk about is the fact that to do cool new stuff, you need boring foundations in in data. So ⁓ it's really interesting finding in this report and it's something that I think we've been banging the drum about, not just in e comm and retail, but in in general for ⁓ for years and years at this point. So yeah, ⁓ I would I would say go read the report and not just because I'm in it. It's ⁓ there's a lot in there. speaker-0: The next story was actually something that happened while I was away on holiday and while you were traveling, but it does kind of relate to the BOF report, so I still wanted to talk about it. So a Stockholm-based company called Ecom ID are creating the landscape of shopping passports. These are essentially digital IDs that shoppers and consumers can use. And they carry different information like taste preferences or fit information. And they help shoppers essentially have more intentional purchases while they're shopping for fashion. And they also help brands because the brands have more personal information about their consumers, so they can offer more personalized shopping experiences. So e-com ID has just raised $17 million worth of seed funding. And I think it was announced just a couple of days ago. that they've just acquired Neilam's AI technology. So this is gonna help them enter the second hand shopping space and re-commerce. So this is obviously a really big fashion tech story. So I wanted to get your take on what you make of this news and what it means for fashion. speaker-1: Yeah. ⁓ so digital product passports, as we're aware, are ⁓ a codified way of capturing the journey, the composition, the sustainability and impact profile of a piece of apparel or footwear or an accessory or so on. Ecom ID's proposal is fundamentally the same thing, but for the shopper themselves. So it's designed to capture all of the attributes that are important when it comes to how we shop online. Now, people have tried stuff like this before with fit profiles and things like that. ⁓ I believe ⁓ Zara. So I was one of my guests at Premier Vision Paris, which I've just come back from, was ⁓ Carla Busashi, who's CEO of WGSN. And she was talking about the kind of Zara returns experience and fit recommendations experience, which has this element of personalization to it, which is like, okay, you've you've bought things that fitted before, how likely is this thing to fit you? So people tried this kind of consumer profiling, consumer passporting thing at that sort of fit level before. It's obviously very s straightforward to do it at the what's your name, what's your email address, how old are you, what country do you come from? Like all all of that sort of table stakes for existing loyalty. What e com ID's proposal is, and I think it's the same one that the big AI companies ⁓ are certainly circulate circling at the minute, is all of the other stuff that gets baked into this idea of like intent or or or personality. So that when you or I go and visit an online retailer, we show up. in a way that allows them to instantly know and understand a lot about our preferences. It could be fit preferences, they can be sustainability preferences, a lot about our lives. now a long time ago, I think a good year or year and a half ago maybe, we wrote a piece about how the AI memory was the next kind of ⁓ frontier. And AI memory being if you have it turned on in Chat GPT or Claude or Gemini. the profile of you that it builds up over time ⁓ from the interactions that you have. Now, those memories are all proprietary. ⁓ they're they're all like you can import from like ChatGPT to Claude and vice versa. But generally speaking, those companies want to keep that information about you within their sphere for two reasons. One, it makes it less tempting to switch like chatbot providers. People say this all the time like I talk to ChatGPT because it knows me. versus when I go talk to Claude or Gemini, I feel like it doesn't. ⁓ so that's that's one of the reasons. The other is that this kind of intent information is becoming much and much more valuable to brands and retailers over time as well. Because if you have an AI shopping assistant on your webpage, if you do it that way, if you're like, hey, we have a chat bot, talk to it and it will make product recommendations for you, unless that customer is very loyal. And is already signed in or is a member, if you're like a member-based organization, you're starting that turn every time over and over when somebody new visits. ⁓ it becomes a it can be like a good customer acquisition, conversion, and personalization lever, but you have to be able to pull it fresh every time. The proposition here is very similar to if if you've ever heard about like gang the way gambling approaches things like KYC, like know your customer kind of their stuff. In those regulated industries, it's mandatory to be able to know if somebody has a gambling addiction, for instance. In fashion, it's all preference-based and is non- non-mandatory, but I think this kind of enhanced KYC personalization thing is a really smart idea. If you extend it into the re-commerce and secondhand side of stuff as well, I can only assume that the vision is to pair this with what you and I have talked about before, which is like wardrobe quantification stuff and knowing what people already have and already wear. And enabling them to say, well, okay, maybe now is a time to sell this. Or if you buy this used thing, then it's gonna fit well with the other things that you have. Being able to say, Okay, you are somebody who cares about carbon footprint of the things that you buy. Here's the reduction that you get in ⁓ in this instance. I don't know, we we talk a lot about personalization in fashion. I feel like these different bits of it are starting to come together in a more meaningful way. This is one of those areas where I think I personally will trade some privacy for some level of personalization. This is something that actually does appeal to me as being able to have this like agnostic profile. ⁓ it's potentially a massive data breach risk down the line, but I don't know, what what isn't at this stage? What I don't know. What do you what do you think about it? speaker-0: I think it's a kind of service that will be slow to be adopted, but I do think that in the future it could be a way that everyone shops and it could bring a lot of value for everyone. It's just getting over that initial hurdle of people handing over their data and actually taking the time to give their preferences and everything like that. But I do think it has the potential to really change how people shop, but only time will tell, really. speaker-1: Yeah. And it's it's another third party is the thing. Like every time you introduce a new platform that you have to provide information to, that is a pause, it's a barrier, it's a risk for consumers. But at least it's explicit. This is gonna sound like a completely like parallel story, but I had an email from Manchester Airport Group, so I fly out of Manchester a lot ⁓ last week, saying ⁓ th you know, thanks to a third party processor, information has now leaked about. your name, email address, date of birth, phone number tied to your registration plate. I'm like, cool. I didn't know I didn't opt into any of that. None of that was explicitly made of made ⁓ kind of upfront to me and there's your there's a fantastic data breach. So in in this case at least, I I do feel that that friction is there. But I'm also I think we live in a world where people assume that so much data is being captured about them anyway that actually doing it explicitly in this in ⁓ giving it to a provider where you get value in return instead of just you parked here and now anybody can clone your license plate. Is it feels like a fairer deal. speaker-0: The next story is staying on the topic of personalization in a way, because I know that we've spoken a lot about the rise of agentic shopping in fashion, and this week it feels like there's been a lot more developments in this space. So Anthropic seems to be making an even bigger push into fashion retail and potentially fashion manufacturing as well. So the first story that I wanted to talk about was the fact that Anthropic has just created this blueprint for fashion brands. And the blueprint allows brands to create their own AI agents that they can put onto their e-commerce. And these give ⁓ preference-based suggestions, and they can also add different items to customers' shopping carts. But essentially, this is all to drive more sales for the brand using the agent. And on top of this, there was another interesting story from Anthropic. Because they've just released a research preview of a new model called Model Hardware Standard or MHS, which put very simply is a set of standardized drivers designed to let AI agents easily interface with and also control arbitrary devices. So right now MHS is being used in test labs and it's helping to speed up different scientific experiments. But there is the potential for this kind of technology to be used in fashion manufacturing. So I'm sure you have a lot of thoughts on it. So yeah, what do you make of all these advancements? speaker-1: Okay. So you've been able to do consumer-facing AI assistance and ⁓ kind of merchandising assistance and things for a long time, even based on Anthropic's own model. So you could do something with Claude if you were a retailer and you wanted to say, it's the h the holidays are coming up, which is the thrust for this. I need to make sure I've got a chatbot interface on my website. You've always been able to do that, but you've been able to do it in a more of a DIY sort of way. So you would build You build it on like Cloudflare workers or something like that. And you would plug it into whatever model that you felt like doing it. You would ground it in your ⁓ your product catalog and all those other things. What these blueprints are is a much more user-friendly turnkey way for to me, like small to medium brands and retailers who have not gone down the road of custom building things like that on top of ⁓ either closed weights or open weights models, who literally just play around with with Claude or ChatGPT at the moment. And it's a way of starting to verticalize software that is very, very general purpose. So y you know as well as anybody, you sit down, you chat to Claude or ChatGPT, it can and will do anything within within reason. ⁓ Now both of those companies, OpenAI and Anthropic, have gone through very kind of in-depth cycles of verticalization for specific industries. So they have like pre-packaged deployments and connectors and things for the legal sector. They have the same for ⁓ the financial sector and banking and things as well. Neither of them has one for fashion at this stage for retail. ⁓ I think this is probably a little bit of a stop gap. on the way to ⁓ to being able to do some of that deeper like domain side of things. So it's an interesting curio and I think it also represents just how many rands and retailers are thinking literally Christmas is coming, Thanksgiving is coming, other holidays around the world are coming. I hear so much about Agentic Commerce, I'm not ready to build something by myself. I'm not ready to go partner with a big third party company to do it. I already use Claude, what can I meaningfully do to start to put it in front of people and start to improve the way that I use it. Now the model hardware standard is a little more interesting. So Anthropic, ⁓ as people listening to this will probably remember, are the company behind MCP, the Model Context Protocol, which is the standard that everybody has settled on that allows LLMs to fetch data from ex pre-existing solutions and platforms and databases and things like that. So if you have Claude connected to your Gmail or you have it collected connected to your CRM or to something else. That's that's the standard for that. The push here is to do the same for physical devices. Now, the it is only in science at the minute. That's that's how they've launched the the preview window for it, is is in science labs, as you mentioned. Science labs full of lots of very specialist machinery, ⁓ that specialist people with specialist skills use to ⁓ accomplish very narrow objectives. Fashion manufacturing kind of the same thing. ⁓ now I'm not suggesting that Anthropic is actually looking to have Claude drive material cut plans and and and an optimize yields and things like that, or to drive digital printing or somewhere down the line to push into sewing or what have you, but the principle is the same. Like if this if MHS becomes as established and codified as MCP is. There's a lot of specialist machinery in in a typical fashion shop floor as well. and I think it's not unreasonable to say that if the standard takes off, it's a standard that could play out in not just shopfronts, but on ⁓ on re on ⁓ factory floors and things as well. speaker-0: The next story is also something that happened while you were away on stage at Premier Vision, but I'm still really keen to talk about it because I do think it's really interesting. So, ever since Sheen has been on its journey into the public markets, it feels like it's been facing more and more challenges. And one key challenge that it's been facing has been with the regulatory and financial pressure that it's been facing. That's really forcing the company to raise its prices. Just to give a couple of examples, the US ended its duty-free exemption for small parcels, and also the European Union introduced a 3 euro customs charge per item on low-value imports. Now, this week there's been even more fees being put on ultra-fast fashion because France is importing a new fee on cheap fashion items. Which could reach almost 20 euros per garment by 2030. And again, this is another regulation that could force Sheen's prices up. I really wanted to get your take on this generally, but I will say that from my personal perspective, it doesn't feel like we're witnessing the downfall of Sheen. I think they're just going to refocus their strategy because they've just launched or they recently launched a subbrand called Missouri. And this is a hundred percent operated by Sheen, but it has different branding and also the prices are a bit higher. So it feels like Sheen is trying to train the consumer to get used to these higher prices. But I wanted to get your take on all of this news and this story. speaker-1: Cool. Well, I've never bought anything from Sheen. So ⁓ I would I I definitely didn't notice that they were launching a new brand. ⁓ not primarily an ethical position. ⁓ I'm I'm just lazy. ⁓ I do not object necessarily to the idea of ultra fast fashion. And that is kind of the crux of this, really. So you're right. I was in France as this was happening. ⁓ I didn't didn't notice this news. You brought this one ⁓ across my desk. I think I've on record before of saying I don't agree with the idea of regulating away demand. like I'm I'm not a pure like laissez-faire capitalist, but I also do think for a variety of reasons, not just cost of living, but preference, people like cheap clothes, ⁓ and they like buying cheap clothes in volume. ⁓ and I think you can divert some of that demand temporarily. I don't think you can squash it through ⁓ through this kind of regulation. Now, I'm certainly not arguing against the idea that Ultra fast fashion and high volume is damaging to the environment. It's damaging to it it changes people's perception of what fashion should be. I I I buy all of those ideas, and I do think it needs regulation from that point of view. Now, this also ties to Sheehan's IPO, which ⁓ happened pretty recently. You and I talked about it in the run-up to it when analysts were forecasting that it would be dramatically lower than their valuation was a couple of years ago. That panned out. And since then it's not been faring terribly well either, ⁓ out in the open market. Now, when you and I last talked about Sheehan, the conclusion we reached was it's because it's nothing different than any other fashion brand. ⁓ just it's done a very good job of operationalizing and optimizing making cheap high-volume stuff and shipping it around the world through loopholes that are now closed. But it's been priced as a tech company. ⁓ actually Hannah Crump from Business of Fashion Insights, who was on the Mailroom episode last week. ⁓ she's kind of said some of the same stuff, which is it it it people have seen Sheehan as a very different type of company than a t traditional fashion brand. What we're seeing here with launching a new label and and being and saying, Okay, but we're now moving up markets slightly. We're we're doing the c They pulling the same kind of price and positioning levers that everybody else in the mass market is. Everybody is is is realizing that they can attach a more premium price point to something and start to push into a different segment of the market. ⁓ I don't think we're seeing the end of Sheehan as the vanguard of the ⁓ what it takes to ship ultra high value stuff. I think we'll see more competition in that space and I think that will force Sheehan itself to innovate more. And I think we'll see newness in what it means to ship cheap stuff around the world, ⁓ in in high volumes. But I think we're also gonna see th it's the Toyota and Lexus play. It's the like we need to have multiple brands for people to align themselves with. That's that's what it feels like to me anyway. speaker-0: Finally, I want to talk about a piece that we saw from Puck in Lauren Sherman's newsletter called Line Sheet. So she sat down with I think 18 students across 15 US universities, and they're all scholars from the Fashion Scholarship Fund. And she basically spoke to them about what they think about the fashion industry and if they want to get into it. Essentially, to summarize what all of the students said, they said that they didn't fear that AI was going to take their jobs. But they do fear that AI is going to impact creativity. They unsurprisingly said that they all really are pro secondhand fashion and shop a lot of secondhand fashion. And they also, which was a bit more surprising, they said that they are against celebrity endorsement for brands, and they also prefer to shop or a more or a more sold celebration. by a single product rather than just a brand. Now I am technically Gen Z, even though I'm on the cusp of being an older Gen Z, but I am still in that bracket. And I do still really relate to all of these things that all the students said. Personally I think it's because of the hyper fragmentation of media and the fact that there is no authority in fashion to really dictate the trends. And this has meant that Gen Z has this more mix and match approach to fashion shopping and also how they see the fashion industry. But obviously you're not in the Gen Z bracket. So I wanted to get your take on what you think of this story and also what you think that brands should be thinking about when it comes to how they market and sell to Gen Z. speaker-1: I am visibly obviously not in the the Gen Z bracket, you are correct. Thank you for that. ⁓ I'm also on the older end of millennial. So I if I was born I think like nine months later, I would have been Gen X. ⁓ so I I'm I also know what it's like to straddle two different ⁓ cohorts and not quite feel like you fit into either of them exactly. I don't think there's much that's surprising to me in this one, but the second hand p part is especially interesting. So Again, I think this was Carla ⁓ from WGSN while we were on Premier Vision. She was saying that yes, younger people gravitate towards used ⁓ and pre loved clothing. They don't just do it 'cause it's cheap, they don't just do it 'cause it's valuable. They do it as a a ⁓ method of self-expression and also for the thrill of it, like the thrill of the hunt like that kind of thing. People people people have always liked getting deals. Like I I I don't think you have to go too far back in time to like my parents or my grandparents' generation where people would click coupons out of the newspaper and that was part of their personality. And so I think there's there's there's that kind of behavioral hook that's in there as well. Lack of brand loyalty is something that every brand is wrestling with. ⁓ mm the panel at PV that I hosted about growth, where I did have a celebrity-led brand on there as well as ⁓ analysts from Business of Fashion and Euromonitor. That was talking about how every brand is basically stealing market share from every other brand, because there is not much in the way of absolute industry growth to be had. What that means is that if ev no brand is able to really grow within its own lane, every brand is trying to steal market share from every other brand, you end up with very fickle consumers like this who prioritize product over a particular brand or a particular retailer. I do also think that's a function of what we hear about younger people in particular being willing to spend more on more durable pieces and things like that, because naturally in that kind of mindset you're gonna prioritize the attributes of the product itself rather than necessarily the the company that it comes through. Now, there was really interesting quote in this article that I did like and that ⁓ I think maybe is is good it's a bit of tension between your your generation and mine as well, is there's a student quoted in there who says, their generation's a bit sick of technology. It's the future to you guys, i.e. older people, me and upwards, doesn't feel like the future to Gen Z. ⁓ and that's something that I think we see in our research and across AI. It's something that we see ⁓ it's something I certainly saw at Premier Vision in the talk I hosted about AI, which spoiler, a lot of lot of divisive opinion that ⁓ kind didn't neatly sit across generational lines, but could have done. And I think it's this idea that young people feel like technology is just a thing that's happening to them and that they have no agency over, and that they have not really had a net benefit from it in the way that that my generation did. Like I'm I'm old enough that I lived through the introduction of the internet. I lived through the introduction of smartphones, social media. For for better and worse, ⁓ technology has really changed my life during the course of my life and when I've been aware of it. If you're born in the two the early two thousands and thereabouts, and so you're in your kind of early to mid twenties, technology's had a bit it's been a bit of a raw deal for you. ⁓ like it has not materially benefited you in the way that it has other people. Certainly not in a way that you have like a before and after that you can reference. And I think when you layer AI on top of that right now, I think that's where a lot of this comes from. People do object to AI for creative and ethical reasons and things. But I think a lot of people object to it because it just feels like the latest inner salvo of technology that is not giving or conferring any advantage on younger people. And It feels like it's for somebody else. ⁓ and feels like it's just being unduly piled on them. ⁓ I don't know. As a younger person, bring us bring us to a close. What do you think? speaker-0: Yeah, I think it's exactly what you said with it just feels like new technologies, AI specifically, is just being forced on people and we don't have a lot of control over it. And I think that is exactly where the negative connotations come about. But it'll be interesting to see where it all goes really, especially in terms of fashion. Well speaker-1: We'll be here to talk about it week over week. ⁓ Grace, it's been good chatting to you again. Thank you very much. speaker-0: Amazing, thank you.