The Future of Ecommerce is Personalized: In Conversation with ThirdLove Co-Founder and CEO Heidi Zak

The Future of Ecommerce is Personalized: In Conversation with ThirdLove Co-Founder and CEO Heidi Zak

 Osa Gaius, Founder  |  September 15, 2020

In 2012, Heidi Zak had twelve bras that didn’t fit properly. When she looked at stores for a better fit, Victoria’s Secret was the only brand around. Victoria’s Secret led the industry for decades, creating intimate apparel women wore for men to look at. Realizing a huge opportunity for millions of women that don’t fit the Victoria’s Secret “look,” Heidi wanted to build an intimate apparel business for all kinds of women based on comfort and fit. The result was ThirdLove. 

Things have changed a little bit since 2012. Once an upstart, ThirdLove is now a strong player in the ecommerce space, generating over $100 million in 2019 revenue. Victoria’s Secret, on the other hand, is struggling. The future of commerce is up in the air as a result of numerous factors, including the rise of ecommerce and the devastation of the COVID pandemic. As a result, Heidi is thinking about what’s next for the business and for ecommerce as a whole. In our conversation, Heidi shared her thoughts on ThirdLove’s growth channel strategy, building a scalable personal experience, and how she thinks about giving back.

Osa: Commerce is constantly changing, and with it expectations of what ecommerce is and can do. As we kick off this conversation, I’m curious – what’s something you believe about the future of commerce that others don’t?

Heidi: Right now, commerce is one-to-many. I believe that in 5-10 years, it’s going to be one-to-one. I’m not sure how this will happen – SMS text could be a vehicle for communication, and it will likely be powered by some form of artificial intelligence. 

However, I’m more referring to the idea that today, ecommerce is personalizable to some extent – but it’s not really a one-to-one experience unless someone reaches out for support. In the future, I see brands working to be at the cadence of the customer, for example using texting as a one-to-one channel. 

Does anything stand in the way of one-to-one experiences? Is there something about the structure of commerce today that prevents it?

Absolutely – it’s expensive. For ecommerce in particular, creating a one-to-one experience means you have to take the in-store experience and make it digital. 

I’ll give you an example: Victoria’s Secret. If you walk into a store, what’s supposed to happen is that someone should come up and ask you if you need help with a fitting or help picking something else. If you say no, then you’ve moved to “self-serve,” and that’s fine. But there should be that interaction first to give you the option of a more personalized experience. 

Throughout your experience in a store, there are upsell opportunities. Associates will look at what you’ve already selected and suggest other things you might like based on your items and what you want them for. When you go to checkout, the cashier will ask if you want to add a few items. 

You can upsell digitally in a personalized manner because you know what someone bought. What’s missing is the front end of the funnel. When someone comes to a website, we don’t do enough right now. There’s no digital equivalent of someone greeting you in store and asking what you’d like. Although at ThirdLove we can easily differentiate between a new visitor and a returning customer, there is more work to be done to create truly personalized customer journeys. 

Absolutely. Switching gears, I want to ask about the TL Effect. You’ve created a program explicitly to support women of color. Why did you choose to create the program in this way?

We built our brand on inclusivity from day one. It’s baked into the size ranges we offer and our marketing initiatives that showcase women of different ethnicities, sizes, and ages. That’s been important to our brand. 

When the Black Lives Matter movement took hold after the deaths of innocent and unarmed Black people across America, we approached our response in two ways: 

  1. External: We wanted to support people of color in our community. 
  2. Internal: Focusing on what we can do to be more inclusive of our employees.

For our external push, some of the team wanted to donate money. However, it didn’t make sense for us to do that as a company, since unfortunately due to COVID we laid off 30% of our team in April. But helping to create wealth and success for others is the most important way I believe I can impact the world. So we wanted to leverage our platform, team, and skills to impact others. That was the idea for the TL Effect.

We wanted to create a program that lasted – not just a one-time thing, but something on a consistent basis that would leverage what we already know in order to make someone else successful. From there, we wanted to make space to learn about their challenges and learn what we could do to support them. 

We built the TL Effect to support entrepreneur women of color, and we just picked our first winner, from over 650 applicants. We plan to help her raise money, provide mentorship from our team, and amplify their products on our platform. 

If the TL Effect works, those women will hire other people, build great companies, and mentor others. The effect will continue. 

When I worked at Mailchimp, I saw how a company can be so much more than a money machine. At the same time, growth can help scale your impact. Can you share which channels ThirdLove uses to get in front of customers?

In the past, we marketed on almost every channel – to varying levels of success. We’ve truly tried it all: Influencers, YouTube, paid ads, direct mail, and the list goes on.

Today, we primarily use a lot of Facebook and Instagram. Unfortunately, it’s hard to peel away from those platforms. But at the same time we’ve been scaling display advertising to some extent and are now experimenting with audio including podcasts and Sirius XM radio. We also launched into TV last year.

Given our current environment around COVID, we’re trying a lot but focusing on the most efficient channels we can find.

What do you think about testing and optimizing channels? I regularly speak with entrepreneurs who over-optimize then find out the channel isn’t scalable. Have you had that challenge?

In all of our testing and optimizing, I learned that you need to try the channels that match your current scale and budget. For example, TV is very hard to scale and test. You can do a little bit, such as not advertising on primetime shows, but you need time and a lot of ad slots to really see if it’s working. The same logic applies to budget. Testing TV, for example, doesn’t make sense until you can spend a couple hundred thousand dollars and be willing to not see a strong return. Otherwise, don’t waste your money. 

This is often why I see startups trying digital advertising first: You can see real ROI calculations on a smaller budget and it’s very easy to turn on and off. 

However, marketing is really only as good as your messaging and content. If you don’t understand what your brand does or if your message doesn’t resonate with your customer, no marketing will be effective.

That’s really interesting. Can you share examples of how ThirdLove’s messaging has evolved in a way you weren’t expecting?

All messaging depends on where you are in your journey as a brand. In the early days, no one knew ThirdLove and no one trusted us. Just saying that a ThirdLove bra is more comfortable on a Facebook ad wouldn’t work – our target market didn’t know if that was true or not. 

At the start, our best ads had messages like “Are you ready to graduate from Victoria’s Secret?” since that attracted curiosity. We also had a bra trial program where you didn’t have to pay for 30 days. We focused on getting someone over the line who had never heard of ThirdLove before. 

Today it’s different because a lot more people have heard of our brand. So our messages today don’t need to be the same as at the beginning. 

What about channels? Have any channels worked for you now that wouldn’t have made sense in the past?

Definitely OTT. We were on Little Fires Everywhere and Miss America in April, and saw good returns from Hulu. The targeting is great because you know who is watching. 

I’m also harping on my team about TikTok. It’s interesting because it’s an engaging channel, like Instagram five years ago, where you get sucked into a vortex. It’s lighthearted and funny, and more brands are advertising there. We’re launching and trying to build up some content. 

In reality, though, any new marketing channel is worth exploring. I don’t know if TikTok will resonate. But getting on new channels early can be a tremendous way to grow a brand, if you can prove them to be efficient. 

In all marketing, you need to collect data. How are you gathering and leveraging data for ThirdLove’s marketing efforts?

We’ve collected massive amounts of data – both ecommerce purchase data from our site but, more importantly, through FitFinder. Over 17 million women have done FitFinder, each woman providing us information on their bra challenges and body types. That data is so informative in product development and how we think about building products that serve the needs of all women. 

Combining that data is how we build a personalized experience. If you have three ThirdLove bras and come back to our website, we should know what you bought, make it easy to buy that again, and suggest other products. We should be smart enough to make it feel really targeted for the individual, because we want to create personalized experiences for our customers. 

We briefly talked about SMS earlier on in our conversation, but I’m curious what your thoughts are on the trend of DTC brands trying to sell over text?

We’re actually beta testing SMS chat right now for consumers. For us, it’s thinking about when you’re using text in the customer journey. For instance, texting someone because they are on the site. Or when someone orders we can text them and suggest they try additional products. We’ve started leveraging text for abandoned carts, and so far we’ve seen good success. 

The question on my mind is how you scale this out. It might be a big ask to text every visitor to our website – we’d need a big team. But there’s a ton of opportunity, especially when you know your customer could become a repeat buyer or you might be able to upsell them with texting.

Texting and email are often assumed to be in the same bucket when it comes to customer conversations. Has that been your experience?

Email is personalized, but it’s not really a conversation for ThirdLove unless you respond to an email and get routed to a fit stylist to help you find the right product. With text, on the other hand, you’re having a one-to-one conversation.

Text versus email was also interesting because I was expecting that we’d have different audiences between people who wanted to text versus people who engaged on email. When we did a study though, we found that on average our customers were engaging with us on both platforms. But it’s difficult to say which platform drives the highest engagement since you’re dealing with different audience sizes and different opt-in rates. 

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