Sharon Gai on the Importance of First Party Data for the Customer Experience

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Episode 45 • 12th March 2024 • It's a Customer's World with Andy Murray • Sam M. Walton College of Business

Andy Murray

Hi, I'm Andy Murray. Welcome to It's a Customer's World podcast. Now more than ever, retailers and brands are accelerating their quest to be more customer centric. But to be truly customer centric, it requires both a shift in mindset and ways of working. Not just in marketing, but in all parts of the organization.

In this podcast series, I'll be talking with practitioners, thought leaders, and scholars to hear their thoughts on what it takes to be a leader in today's customer centric world.

[Transition Music]

Andy Murray

Hi, I'm Andy Murray, and welcome to this episode of It's a Customer's World. One of the key promises driving investment in retail media is the ability to deliver a more relevant consumer experience that's enabled by leveraging first party data and closed loop reporting. If you take each of these three components of the promise, first party data, meaning, reaching an audience where the retailer has firsthand knowledge of who the consumer is, their purchase history, and the like, and closed loop reporting, meaning providing the ability for advertisers to then see how those consumers respond to the advertising.

Those two components, first party data, closed loop reporting, offer advertisers an ability to better target and measure the effectiveness of their marketing spend. In theory, the outcome will be a more relevant consumer experience. However, one of the things that became clear to me through our white paper research on retail media networks by the Walton College of Business is the trouble participants had in defining what a more customer relevant experience actually looked like from a shopper perspective.

Now this is because a more relevant experience doesn't have the same clarity and simplicity that other customer facing promises such as free shipping or same day delivery has. And frankly, it's a bit perplexing given the tens of billions of dollars invested over the last three years into retail media networks that the benefit we're aiming to achieve is yet still a bit vague.

I was thinking about this challenge when I heard Sharon Gai speak recently at a conference on how China based e-commerce platforms approach customer relevance. In her talk, Sharon described how China based companies really focus first on the customer experience they want to achieve and then build solutions toward that promise.

A little bit about Sharon. She has a deep understanding of the methods that underpin how companies such as Shein, Temu, Alibaba, and other China based platforms build solutions, starting first with the desired customer experience they intend to deliver. Sharon is an expert in e commerce, digital transformation, and AI.

But more importantly, she has a significant first-hand experience from her tenure at Alibaba, where she advised brands in crafting their digital strategy with programmatic marketing and AI. She's been a keynote speaker at TEDx, Singularity University, UBS, Deloitte, Nestle, and many other organizations.

She's also the author of the book E-commerce Reimagined, what we can learn in retail and e commerce from China. And she has a bachelor's degree in international development from McGill and a master's in knowledge management from Columbia University. In this episode, Sharon and I cover how China based e commerce companies think about the consumer experience and how they use a threefold framework of product, merchandise, and context to drive their roadmaps.

We also talked about where she sees the consumer experience going in the future. It was a fascinating conversation and it reinforced for me the need to think more about how the customer journey can evolve into the future and perhaps how brands and retailers can better define where all this is headed.

Now on to our conversation.

[Transition Music]

Andy Murray

Well, hi, Sharon. Welcome to It's a Customer’s World podcast. I'm so happy to have you here today. Thanks for coming.

Sharon Gai

Thanks so much for having me.

Andy Murray

Well, you know, you have such an interesting background and experience as you connected to this world of customer experience so if you could just help us with the listeners understand a bit of your career trajectory and how it's connected to this space of being customer centric as a leader.

Sharon Gai

f the cloud space when in the: 2010

And then eventually, I think I pivoted into a B2C world where we're direct to customer when I joined Alibaba. In specifically something called Tmall. So Tmall is the Amazon of China. It has about 900 million customers, the largest e commerce platform in the world in terms of daily active users, GMV as well.

Then after that it was a whirlwind of more e commerce marketplaces, working with brands. Also went into the Amazon space with Pattern, my most recent place of work. And everything had been evolving around the customer, their needs and what interests them in the market because e-commerce is such a noisy place.

It's so competitive. Anybody can launch a new brand with a new marketing strategy from their basement. So, you always have to, I think in this space, be on the lookout for what's up and coming, what's trending, and what's working, and always adjusting your strategy. So, I think I've also done that a lot with my career.

Andy Murray

Yeah, that's really fascinating. I got a chance to meet you for the first time, not that long ago at a conference in Chicago, and I heard you speak about your experience and then also the market in China and some of the insights you had from working at Alibaba, which I thought was fascinating in terms of how they approach the customer experience.

In the U.S., a lot of e-commerce players are pretty much chasing Amazon and copying if they can, what they're doing. That seems to be the source of inspiration for, you know, where to go next on the retailer's roadmap, especially omni channel retailers, but if you look at what Alibaba's done, and you had a front row seat to this in China, they didn't really have anybody to go copy.

They had to figure it out in beef first, so just, you tell me a little bit about what you see from that experience, and how Alibaba does it and perhaps contrast that a little bit to what you see in the U.S.

Sharon Gai

little bit. But in the early: 2010

When Jack had gone to the U.S. and then came back to China and said, “Hmm. Well, I'm bringing all of these factories online in China. I wonder who else can be my customer. We're serving so much of the B2B world. What about domestic Chinese consumers?”

And so that lit up the first idea of a e-commerce marketplace in China. And that was right around the time when eBay was entering China as well. And eBay actually had a lot larger of a market share.

This was in: 2003

So, he noticed that people wanted more of a guarantee in quality, guarantee in delivery, branded items. And that was the first start of the ability for brands to start advertising on Taobao. So, then that's when Tmall came into the picture. Tmall actually stands for Taobao Mall. Now it's short for Tmall, but it was an extension of that original C2C platform.

I think in the Tmall space, that's where everything started to materialize. A lot of e-commerce theories came about, so I wrote a lot about this in my book where a lot of Chinese ecommerce platforms is centered around this, what we call golden triangle.

So, there's the people side of things, so that's your consumer. That's the first large pillar. The second large pillar is your merchandise. So as a brand, what is your suite of products that you're selling? Because we can organize that in different ways. And then the third is the context. So, under what context are you bringing these two pieces together?

The people and the merchandise. Is it in an offline context? Is it in an online context? If it's in an offline context, is it inside a mall? Or is it in a store that you're running yourself? If it's in an online context, are you creating this meeting to happen in a marketplace? Or is this meeting happening in your own web app?

And if it's in a marketplace, it goes even further. Are you meeting them in a live stream room? Are you enabling this meeting to happen in a blog article in some sort of written content? All of these different ways of meeting is that context piece. And if you are very successful as a brand and figuring out who are your people to meet what sort of your merchandise under what sort of context, then you'll start to carve out a more and more solidified strategy for e-commerce.

Andy Murray

I've never heard that phrase, meeting, as an expression of connecting the consumer to the brands. And I assume that's what you mean is when the consumer interacts with your product, merchandise, whether it's a retail store or brand, that is kind of a meeting as we might define it, correct?

Sharon Gai

Yeah and sometimes you're meeting it for the first time, um, and so how are you going to show off your product or describe your product in the first time that you're doing this?

Are you as a brand telling this story? Are you hiring an influencer or a live streamer to tell you that story? How are you telling the story? What sort of content channel or in what sort of medium? Is it in a written form? Is it in a two-dimensional photo form? If it's a photo, is it just a white background type of photo or is there some sort of more context, environmental context behind it?

Is it a video format? Is it a live format? There's so many different choices that you would make as a brand, and all of that shapes that meeting.

Andy Murray

Well, it does, but it also adds a little bit more complexity to it. If you think about and you know this space well, programmatic ad buying where perhaps context is not as important as the deterministic first party data.

And you make a lot of assumptions when you're buying through programmatic on context that you're a bit more specific about. Exactly, how does that context work? Which is pretty much where I come from the in-store space of you start bringing retail media network via programmatic maybe into an in-store environment you really do need to understand the context of that meeting, if you could put it that way, right?

And the variables there, but what is the context conversation due to the programmatic side where people want an easy button and just go that route. How do you square the circle with those two worlds?

Sharon Gai

Yeah. I always like to talk about this example where some year into the future.

It's: 2040

And I think we are slowly approaching that type of era where these algorithms know us so well because they know our context so well. I shared how Alibaba is looking at personalization, but just look but a step further and hyper personalizing your experience

So when you're opening this app, it's going to change not just because Andy opened it or Sharon opened it, but it's changing based on when Sharon is opening it in the morning or at night. If I'm at home or if I'm at work where because I'm going through different contexts, whether in the morning I'm ready for some breakfast, and so it's queuing up short term products and then I'm going to work and it's showing me some other products that's related to my office.

I'm now back at home, it's going to show me, a piece of furniture or a cocktail shaker maybe. And then I'm now going to bed and it's going to queue up other things. So those contextual details is different, again, per customer, per user. And then all of that is programmatically embedded into Tmall as an app and a variety of other Chinese e-commerce platforms. So, I think the same thing is happening in the Temu world and a lot of people have seen bubbling up the large amount of advertisements that Temu is doing overseas. In the Shein world as well.

So, I would say any Chinese e-commerce, any e-commerce platform that has come from China or has roots from China will borrow the same type of people, merchandise, context model and have that element of hyper personalization in their platforms.

Andy Murray

What's really fascinating to learn from that is that when we were doing some research with the University of Arkansas, around retail media in the future of that the promise from first party data, closed loop reporting, but then also relevant consumer experience as one of the outcomes.

People had a hard time describing what do you mean by relevant consumer experience? What's the vision? Tell me the story of how relevant shows up. And it was a big range of responses from one-to-one personalization to maybe it's more just lookalike groups, but the lack of perhaps articulating.

What do we mean by consumer experience leads me to believe maybe we don't think about that as much in the U.S. as the starting point for the North Star where it sounds like the platforms, you're talking about from a China perspective, that is the starting point. It's describing that meeting and the user story and then building back from that.

I don't want to put words in your mouth, but you talk a lot more about describing the consumer experience you want to achieve more so than the business model of the mechanics, which in the U.S. it's a bit more around the mechanics.

Sharon Gai

I think what it is is competition breeds innovation. I really fullheartedly believe in that.

And I think that's the underlying reason why it looks so different. If you look at a skew perspective, if you compare Amazon to Taobao Tmall, Taobao Tmall is that 10x that of Amazon. Number of brands, number of sellers, number of consumers, the numbers are just so much higher in the Chinese side, because of so many varying factors, there's the population that's just bigger, there's more companies that are there, there's more products that are made also there. And so naturally, the more competitive an environment that you have, the more you have to think deeper about customer experience, what your customer is going to see when I put my product in front of you.

Because if I'm selling a certain, a body lotion for instance there's going to be a hundred other body lotion providers, and so how am I going to reach deeper and connect with you more as a consumer? I would have to personalize more to your needs. And we say in, in the U.S. as well, even when you get an email, if it's a Joe Schmo with no personalized inkling of any sort, you're going to read it and say is this really for me or is it for the masses?

How relevant is this for me anyway? And automatically as a consumer, you just lose, you just have less interest in something that's more mass produced.

Andy Murray

Then, how do you look at it from a review standpoint, because I think what we tend to do in the U.S. quite a bit is look at user reviews and maybe decipher from that, is this right for me or not, when you start looking and use reviews heavily. But the thing I've always struggled with is I don't know who these people are that are reviewing, and I don't know if they're like me or not.

There's no filter there that says the people that have reviewed this item are very close to my profile and how I think, and my age and demographics or whatever. But how's that work in China? Is the review approach and how the consumer looks at reviews part of that in addition to the personalization?

Sharon Gai

Yes. Reviews are definitely part of each product detail page. In fact, every single item is also ranked according to how well this product is being reviewed. It's out of five. If it's a three out of five product or even two out of five the system will down rank this product in search terms, in search pages.

So, I think that's common in every e-commerce market platform where the higher rank products will just naturally rank higher. So, reviews are definitely part of it.

Right now, I don't think that there's a personalization piece with reviews. So, if I am looking at a PDP, and I'm scrolling down reading the reviews, it is just their usernames that you can see who's reviewing.

One marker that you can see that is a difference is something called 88 VIP. That's the equivalent of the Amazon Prime. So, Alibaba has this product. It's a subscription product. It's called 88 VIP. It's for 88 quay or 88 RMB you buy at the beginning of the year.

Your full year you have extra discounts, you'll know when sales happen ahead of time instead of others. And they are also a group of consumers that are a bit more affluent than your regular e-commerce buyer. And so, from that perspective, when you're reading reviews, you can sort of see, because you have a badge right beside your username, if you're a VIP customer.

But I don't think people are paying especially more attention to those reviews versus a review from an average user.

Andy Murray

Right. Yeah. that is fascinating. Maybe that's an area for innovation still for globally is how can you have reviews that match what it knows about you from other people that are more like you, because I think that's an interesting space to go into.

One of the things I, a big conversation here, of course, is when is the ad load start to create a negative pressure on the consumer experience?

You shared a stat at the conference, which I was just mind blown on in terms of how much more of an ad load you actually could see on Alibaba and such that was several orders of magnitude more than the ad load you might see in the U.S. on an Amazon.

I'm just curious, how does that work and how are they able to deliver that, those ad units without hurting the consumer experience? Because obviously it's working.

Sharon Gai

Yeah, so because that personalization mechanism is so core to the function of the whole platform, sometimes when a product is an ad, it looks so personalized to the user that it's almost synonymous to a product that I'm just regularly searching for.

So if you're a brand selling on these different platforms, the amount of data that you see on the backend on a Tmall dashboard versus an Amazon dashboard is just unparalleled because I have seen both dashboards from the backend. The amount of data and information that Tmall will give you, not just your consumer profile, what, how old they are, where they live, family condition, married or not.

Those sort of what we call primary layers of consumer profile, but the secondary layers of what hashtags do they follow? What do they like? What are they usually watching? What type of content appeals to them to also, you can also see a lot of information on your competitors.

So, if there's a drop off from your store to another store, which other store is capturing that traffic and if it's converting on their platforms or not. They're also showing you information of: this is your current consumer profile, but this is what you can potentially tap into. So, a group of people who have shown a certain level of interest, but right now you're not converting this group of people.

If you, of course, pay for the second tier, which costs a bit more of money, then you can unlock sort of the recommendations that, they'll give you and how you can penetrate more into that secondary market

Andy Murray

Well clearly, you're working with quite a bit more data. I don't know if the data doesn't exist in the U. S. at the same level, or it exists, but just because of privacy laws, they're, unwilling to share that at that level. Probably a bit of, some and some in those cases.

But one of the questions I had for you is that, I feel like at times the learnings we could take from China and what and how you approach customer centricity, and the focus is sometimes discounted because of the cultural differences around data privacy and security and there's two very different approaches.

And I feel like that's a bit of a cop out or maybe it's a bit misguided because it's not just about that.

There's also an approach to understanding what creates consumer relevance for people that's way beyond, the cultural norms of what's sensitive and what's not sensitive as much and what's going to be expected.

Can you speak to that? Do you see the same thing? Do you run into that a bit of, that would only work in China because the culture is different and their approach to data is different, or data privacy. But isn't that kind of discounting it a little bit too soon versus what's really happening?

Sharon Gai

I think it's more of a generational thing. The Gen Z ways of behavior digitally in China is very similar to the behavior of somebody of the same generation in the U.S. or rest of the world. I think that's where it level sets almost.

The expectation of this group of people on a certain brand on a certain experience on a certain app that, if it's loading too slowly, they will just drop off. Or if it's not showing things up in a certain UI, they will just drop off. The pickiness and an exigence of that group of people it's that it doesn't matter what geography they're coming from. That's where it converges.

But I think in terms of, data and privacy and whatnot, of course, I think there's a lot of, and Europe takes this a step further where now there's a paid version of Instagram or a paid version of Meta now for specifically European users where it's an ad free experience. There's absolutely no ads in a Meta experience in Europe. It lines up like that where I think in Asian countries, and China specifically, they are a lot more open with the floodgates in terms of data collection and how much we can learn about each consumer.

I think that's gradually also starting to change with a lot of the new laws and generative AI. For instance, that China has set out what you can take as a avatar, what you can't take as an avatar and what is going to be labeled as something that's generated by AI versus not.

A lot of those laws are being formed; I would say slowly. But the legacy of it all in the China sphere, I think it's quite different. But I think at the same time, the whole world eventually tracks in that direction. Where through time, these platforms will know so much about you that one day you will have a very clear picture of what your consumer looks like and be able to do a lot more creative advertising mechanisms or ways to connect with this consumer as time goes on.

Andy Murray

eah, you described a world in: 2040

But take me to probably a closer in space. How do you see generative AI and the potential there from a shopping, e-commerce-based interaction over the next maybe three years or so. Because today a lot of the investment, probably 70 percent in the U.S. into retail media is going to search.

And that whole space I got to believe is going to change. Have you put thought into, what's that evolution begin to look like? And I know you do a lot of thinking around the generative AI space and how that might change things. So, I'd love to hear your thoughts on that.

Sharon Gai

Yeah, I think what people are starting to notice is from a visual perspective, it's just going to change for a lot of brands where design teams really have to change their way of working.

And coupled with the programmatic side of how personalized we can curate a product experience or a product display those two things coupled together really be able to display something for the user to the point where the user might feel like it's creepy at first how well they know us, because we've all had the experience of, we're talking about buying a computer Just in a coffee shop, and then you get on the bus, and then, you turn on your phone and there you go, you see an ad from a Lenovo or HP or something.

But then you of course click into it because you're definitely in the market for a computer and so on and so on. And that's how this whole world is spinning at the moment.

Imagine if you, open Gmail or Amazon or any type of app and everything is so well oriented to your user needs that, for instance, if you're looking at an ad in cosmetics, we know that whoever is the model that is modeling, whether it's a skincare or a makeup item, if that person looks more like me, then I have a higher chance of buying it.

If they are at the same age range I am, maybe with the same skin problems, that type of model that's telling me that it's worked wonders for her as it would for me, I'm of course gonna more likely to be buying that product than someone who is maybe a different gender or different sex with a different type of hairstyle who didn't look like me.

Andy Murray

So how far away do you think we are from generative AI or some form of AI being able to produce models real time, that have some of the characteristics that might be more inclined to look like we look, or do you feel like that's a really long vision away or...

Sharon Gai

I recently just viewed this UGC video creation company that works with e-commerce brands where right now as a marketer, you're manually picking out which TikToker you want to work with, the videos that they're creating. This product allows you to automate all of this based on what your product is and what sort of consumer profile this product is selling to.

And so, I think it's definitely close around us. Around the three-year mark because I go into these conferences and I talk about that story where, a drone delivers off a package to you without you ever having ordered it and people just gasp, and they say that's so far-fetched or it's so many years away. I really don't think so.

I think it's a lot closer to us than we think. It's also just going to be a matter of how quickly can we adjust to that new pace or that change? Are we really fearing it and not wanting to touch it at all? Or are we experimenting with it a bit ourselves?

Andy Murray

Yeah, what was attractive. To me from the conference was one of the first people that actually started to speak about the potential customer experiences that we might find ourselves in three years from now or less. And then asking the question, how are you preparing yourself for that future?

And I think there's not a lot of people that are. coming at it from that lens. Like I said earlier, it's more around how organizations have to prepare, but the consumer experience, we hope that gets better. As a result of doing business in a different way. How would people find out more about what you're doing?

If you're gonna be at a conference anytime soon, or someone wants to have their mind expanded a bit about, what's happening in other markets and how much different it is. They need to get in contact with you somehow. So how do you connect with people?

Sharon Gai

LinkedIn is always I call it my new Facebook. It's my social media. Of course there's my website. So sharongai.com. They can definitely leave me a message, but also because I'm so knee deep in looking at Chinese platforms, I'm obviously on TikTok where people can find me with short video content.

I'm not frequent in posting in the TikTok space. I really should. I really should also be employing some more new AI tools to create that for me, just more automatically. But TikTok as well as Instagram.

Andy Murray

Excellent. one of the things we talk to a lot is students. I talk to the students a lot.

Any thoughts you have around students graduating seniors into marketing how should they be thinking about this space as they enter the workforce because they're entering a workforce that we, at least, I never entered with this much dynamic change and technology coming at you as a marketer.

Any thoughts or advice to the students that might be graduating how to approach the space?

Sharon Gai

Yeah, I would say really getting ahead of the learning curve and being more experimental with things. I've gotten to a habit of testing out a new AI tool every week. Just so that I know what's possible and what's out there, what's working.

Because I think there's such an explosion of these tools right now, and some are just in a more beta phase, but it's out there as well. And you have to go through and sift through that.

But it's still good to test and to be in the mindset of how can I use this in my current workflow? How can I use this to make whatever I'm doing faster or easier or more personalized? Being open to learning about new things.

Andy Murray

Yeah, I think that's great advice. I also think there's nothing better sometimes than putting your hat on as a consumer. Don't forget, we're still consumers and shoppers and, you know, walking through some of the newer platforms. I heard about Shein for the first time by talking to college students that were like, “oh, yeah, I use it all time”. I'm like, “what is this thing and how's it grown so fast among different groups,” and that building bridges and relationships with other groups.

I think as a college student coming in, you're probably going to be expected to know far more already about culture and what's happening than most of the people you'll be reporting to because of that. So don't forget that that's a pretty big advantage of being able to understand the context and the different ways to meet in those particular spaces.

So I think that's, I think that's great advice. Um, always be learning. Always be testing and trying it out and also just approaching its consumer. Um, I went to an app the other day that promised, um, a different type of like generative AI interface in the shopping environment of this particular retailer.

So I think that's, great advice. Always be learning. Always be testing and trying it out and also just approaching its consumer. I went to an app the other day that promised a different type of like generative AI interface in the shopping environment of this particular retailer.

I went and used it and I was like, I would like to get a chicken dinner for a family of four and can you tell me the ingredients and what do you carry and all that kind of stuff? And it just came back with 15 frozen dinners and like the PDP listing, not even any interface in between.

I don't think this is ready for prime time yet. So, there's a lot of things out there that have noise. I'm sure retailers need to experiment, brands need to be experimenting, and it's not going to be perfect and that's okay. But you only learn those things when you actually go out and use it as a user and then get a first-hand feel for what is this really.

I've had several people say, “well, I'm going to just do all my photography through mid-journey and prompts.” But unless you've been a photographer and you understand DOP and understand how to direct with the right prompt. You're probably going to be disappointed. But those that are really in the creative language space can create amazing things with the same tool, but with just different type of prompting.

So maybe a prompt engineer is a new job title that a student or a school should be thinking about because there's quite a bit of work in understanding that.

Sharon Gai

For sure. And I think there's whole books now about prompt engineering for dummies.

And I think that's also a skill that we all probably have to eventually learn. I think people complicate that prompt engineer title and we scratch our heads and ask, “so what is that?” I really just think it's, how do we ask questions? We ask questions every day. We ask it to you and I, to Google. And there are more correct ways of asking a certain question than others.

And it's basically the skill of how do you ask questions? And it's not as complex as prompt engineering per se, but it's just how do you better ask the question so that your answer is more suited to you.

Andy Murray

I agree. I think that's the starting point. And if you can learn to ask questions that get down to first principles, then all of a sudden you can find things that are much layered deep and why are you recommending that?

And why is this important? And keep pressing until you get to first principle thinking. Then it starts to make sense, how things really work.

Sharon, anything else I didn't cover that you'd like to make sure we talk about before I let you go? It's been a fascinating conversation.

Sharon Gai

The last point is I think a lot of the stories and case studies I've also written in my book called E-Commerce Reimagined and people can find that on Amazon or via Google search.

And I joke that right now, we still have to go out and search for products before we buy them instead of just having this thought in it arriving at your door. That's also , something that I wrote that has a lot more of these principles and stories.

Andy Murray

We'll make sure there's links to those to the book in the shownotes. If you get a chance to download this app if you've done Apple or wherever, find those links. In addition, and go look it up. It is a great book, and I think it just further adds dimension to a lot of the things we've covered a pretty high level of surface. And a lot of good understanding of what's happening in China.

For those that want to know more about the user experience and what's happening with Alibaba and different things, any sources that you would recommend to Where they could keep their eye on what's happening?

Sharon Gai

I would say my website, and LinkedIn, I post very frequently about Ali. I also get interviews from different sources that's covering specifically China e-commerce. So be on the lookout for those channels.

Andy Murray

Excellent. You've been a gracious guest and I appreciate your time.

And thank you for openly sharing all of the insights that you have. So thank you.

Sharon Gai

Thank you.

Andy Murray

That's it for this episode of It's a Customer's World. If you found this helpful and entertaining, I would be so grateful if you could share our show with your friends, and I'd be super happy if you subscribed so you can be updated as we publish new episodes. And if you really want to help, leave us a 5 star rating and a positive review on Apple Podcasts or wherever you listen.

It's a Customer's World podcast is a product of the University of Arkansas Customer Centric Leadership Initiative and a Walton College original production.

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