Leader Spotlight: Differentiating digital experiences, with Scott Lux

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Scott Lux is Executive Vice President of Global Ecommerce and Technology at Esprit, a retail apparel and fashion company. He started his career in financial consulting at Fidelity before transitioning to program and product management at Infospace. From there, Scott moved into product management roles at companies like Chase, VML COMMERCE, L’Oreal, and American Express. Prior to joining Esprit, he led digital marketing and ecommerce initiatives at Diesel, John Varvatos Enterprises, Intermix, VIDEOSHOPS, and Eberjey.

In addition to his corporate roles, Scott has also served as an adjunct professor in digital commerce, marketing, and technology at the Fashion Institute of Technology and Columbia University.

In our conversation, Scott talks about the future of ecommerce and its need for innovation and excellent customer experience. He discusses the importance of transparency for brands evaluating their attribution models, and posits a future where consumers might control their own data and who they share it with.

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The nuances of legacy ecommerce software

You’ve made the point that ecommerce has become very commoditized. What’s your approach to differentiating a brand’s digital experience to maintain a competitive edge?

There’s two sides of the equation: customer experience and innovation. First, as consumers, I think we’ve been numb to what we expect from brands, as well as how much pain we’ll put up with. Second, I’ve been operating ecommerce for about 15 years, and in that time, the tech, opportunity, innovation, and sales force has lagged quite a bit. In other words, I feel that the innovation in core ecommerce technology has been stagnant.

There are pain points in terms of bad site experiences, shipping delays, etc., and those are things we generally tolerate as consumers. But, what brands have to get back to is focusing on customer experience, which I define as digital, physical, and human. How do we drive that experience and get back to owning a content strategy? Those two components allow a brand to differentiate themselves, tell their story, and create an emotional connection.

You mentioned that the technology hasn’t necessarily kept up to date with what customers are expecting or what a brand wants to do. Could you talk more about that?

When I say that, I’m specifically referring to core functionality. Software like Salesforce Commerce Cloud was one of the first SaaS platforms. When they burst onto the scene as one of the few SaaS cloud-based solutions for running an ecommerce storefront, we had the old ATG on-premise solutions. Part of that functionality was that they gave us out-of-the-box merchandising tools.

Being able to activate content and product merchandise, as well as run customer groups and promotions, gave marketers and operators like myself a lot of capabilities to manage storefronts. But that really hasn’t evolved — the interface looks the same as it did 10–15 years ago.

There has been some headway in decoupling architecture, but if we compare that to Shopify, which came out only five years ago, we would not be having a conversation about which platform to use to run a $400 million ecommerce business. Shopify was originally branded for mom-and-pop corner store retailers, but they’ve since invested in over 2,000 engineers, built a robust offering, achieved $500 million in revenue, and built an entire ecosystem.

I believe legacy ecommerce software got too complacent. Everyone knows the CRM enterprise grades, but platforms such as Shopify or BigCommerce are creating very flexible, powerful software.

How ecommerce integrates with other channels

There are many tools available to help efficiently manage and automate different facets of ecommerce, but maintaining those multiple vendor relationships can be complex and expensive. Can you talk about this and share strategies for reducing technology cost?

Part of it comes back to the history of ecommerce. When I first started in this space, ecommerce was off on its own island. We typically saw the CIO, CTO, or head of IT at a company manage core infrastructure, but IT did not want to deal with things related to the storefront, martech, email providers, etc — that responsibility fell on the ecommerce folks.

What we realize now is that everyone has to work together, especially with data and CRM. So, we’re seeing this blend between what an ecommerce leader’s scope used to be with a modern CTO or IT professional. Technology has to be touching data, CRM, ecommerce, and all of these areas to enable the full customer experience.

For example, at Esprit, I inherited close to 40 different partners driving our entire ecosystem — B2B, direct to consumer, retail point of sale, infrastructure, etc. I focused on narrowing down what we could simplify and what areas overlapped. Especially in martech, there’s opportunities to dive into details, but what I look for going forward is whether we can create efficiency. What technology do we need to own in-house? I’m a firm believer that brands have to own their data strategy, because that underpins everything, as well as their content strategy. Those two things are unique to each brand.

What about from a partner ecosystem perspective? How do you approach that?

I focus on leveraging our network that we’ve built over the last 10–15 years. I approach tech partners the same way I look at hiring: with what I call the “road test rule.” Say you and I were traveling for work. We’re in Boston and we have to get to New York. It’s a 45-minute flight, which is no big deal, but if that flight is canceled, we have to do a four-hour car ride. At the end of that car ride, would I still want to hire you and work with you? If not, why would I continue down that path? The same thing goes for partners.

There are going to be tough conversations, but I want to make sure that personally and professionally, partners have our back on this journey. There will always be challenging times. I approach partners usually through referrals from my network. Or, I’ll ask for opinions on a data integration partner, for example, and see what people suggest. That’s always given me the best results.

Are there any other specific criteria that you look at when evaluating vendors?

Of course, price comes into it. I look for vendors that are not fully enterprise — where we’re big enough and they’re big enough, but we can still influence the product roadmap. For this reason, I love working with startup vendors where we can come in and help guide direction. Often, they’ll let us do a pilot, and I think that’s great. They’re confident enough in their solution that they’ll let us test it out, and I much prefer that to a partner that immediately wants us to sign a multi-year agreement before we even start working.

Transparency and a clear attribution model

Given how paid advertising channels traditionally operate, what are some strategies that ecommerce companies can adopt to enhance their return on ad spend?

That’s a tough one because I think it comes down to transparency. Cards are stacked against brands right now due to big players who have a vested interest in keeping things opaque. They have their algorithms, but very rarely do we have any insight into causality or what’s driving the data we’re seeing. For example, Google has a product called PMax, which gives us as many creative assets as we can get. We set a few variables and the algorithm will target across the Google universe and drive performance. But it’s really tough for a brand to come back and unpack and say, “OK, so what truly caused XYZ to happen?”

Second, a lot of brands and companies still operate through a digital marketing agency. They’re paying the marketing agency a percentage to manage the spend on that algorithm. The agency will make recommendations or optimizations, but they still can’t tell us what they did that caused true causality to drive incremental revenue. On the brand side, we need a team to check and balance both of those parties. And then, most of the time, the revenue attribution that the platform claims doesn’t tie back to our own revenue.

To counter that, I think paid media should pull back on those channels and focus on the more interesting ones that are up and coming. Of course, those have their own challenges, but connected TV, for example, will be interesting. Netflix is doing a lot of interesting work here, and brands have to find a way to partner on the marketplace side where it makes sense.

I also think it comes down to ingesting data. There’s a lot of tools to help with this. We work with a company called SoundCommerce that has a product that plugs into Meta. It allows us to ingest campaign performance and model out what’s working or not. To take that one step further, we also look at how we understand our cost of acquisition by channel and source. Having that data and model allows us to push that back to the customer experience and content.

Even with modeling it out, the attribution is still very difficult. How do you approach this?

I was never a big believer in attribution. As cliché as it is, I would always say, “OK, so what? We have this big attribution model, but what change are we really going to make from that?” That worked well when we were operating in a funnel dynamic of awareness, consideration, purchase, and post-purchase loyalty because we could clearly say that this channel is going to drive awareness.

Now, that model is gone — there is no “funnel.” For example, you and I may see a post on Instagram and go directly to the site and purchase. There is no awareness or consideration there. I follow a company called Bandit Running, and I might see a post for a cool product, go to their website, and buy it. That’s where the whole attribution model starts to get a bit shaky.

Taking back your data

There are some aspects of in-person shopping that are just really hard to replicate digitally, like the feel of different fabrics. Could you talk about your idea for a concept where customers could own their data and their credentials?

If we think of crypto and blockchain, the idea is to have a method for customer authentication and credentials. In my mind, it would be great if there was a mechanism to use blockchain to store our own personal data.

One of the biggest issues for a brand is actually handling that data. But what if we could own and control that data and be willing to raise our hands to share it with other brands? For example, I’m taking a flight this weekend. I’m a huge Delta loyalist. If I have to take a flight on American Airlines, why does it have to take a year of flying with them until they get to know my data and habits? What if I could share my Delta profile and spend history confidentially with them to be eligible for similar perks to those I’d get with Delta?

I think a lot of consumers would like more control on who they share their data with and what data they’re willing to share, but in return, they’d expect something from the brand.

What challenges or opportunities do you think that kind of model would present for customer loyalty?

It’s a significant unlock for loyalty, because part of the challenge of setting up loyalty programs is learning from the behaviors of the people in the programs. Say you spend a ton of money at Urban Outfitters, for example, and suddenly decide to make a purchase at Gap. Why should you have to build up a whole new loyalty program with them?

The benefit to the brand side is to not have to invest a ton of money on technology. There is so much data churning nowadays. But as a brand, if I just have this profile and identifier that can say that, yes, you are a VIP because of your history with other brands, then that makes my job much easier. Then, I’m more than willing to give you a head start on our loyalty program. It doesn’t mean you’ll stay in there, but it would make things really interesting and helpful to start with.

Looking at the future of ecommerce

When you’re looking at the ecommerce landscape, what trends do you foresee in the near future and how do you recommend brands adapt to them?

I believe content is going to return. For a while, we said content is king, but that went away. Brands will get back to owning their storytelling about what makes them unique, because that is the only point of differentiation they can truly own.

My good friend, Ben Harris, grew up working in physical retail stores. When we worked in Barbados together, he used to say that physical retail was the temple of the brand. As a consumer, where else can you go in and get a full immersion of the brand? That’s been part of retail for hundreds of years. People have engaged in that manner, and I think we’re going to see much more emphasis back on physical retail and potentially smaller footprint stores. It doesn’t mean ecommerce is going away, but there will be a greater emphasis on this again.

Some brands are strictly digital. Do you think that they will have to adapt as well, and how do you foresee the future of ecommerce evolving?

I think they have to adapt differently to continue to survive. Think about brands like Warby Parker and Allbirds that started completely online — they almost all have a physical location now. That doesn’t mean they have to invest in permanent stores, though. Many online stores do pop-ups now, which I believe is a good strategy.

The other piece is that I think marketplaces will become a more significant factor to brands. Major companies like Amazon, Walmart, and Target have created pretty compelling arguments to participate in a marketplace of some form. There’s going to be a lot of consolidation, sobrands may have to take a harder look at marketplaces in the future.