Operations
19 October 2022
Ecommerce changed over a decade, but the importance of data remains
Tadpull's cofounders discuss the journey to helping brands access and understand their data.

How the Tadpull AI works. (Courtesy photo)
Tadpull's cofounders discuss the journey to helping brands access and understand their data.
How the Tadpull AI works. (Courtesy photo)
About a decade ago, Jake and Eulalie Cook started the ecommerce software and services firm Tadpull out of their basement. They were helping clients make sense of their data at a time when it felt like the “Wild West,” as Eulalie put it.
Ten years isn’t that much time in the history of the world, but it’s a long time in the history of the internet.
Around 2012, user experience was still a relatively new concept. But they saw how orienting design around users could have a huge impact in ecommerce: If a website or app was easy to use, it was more likely that they would complete a sale. This led to a whole new area of qualitative data, which was gleaned from interviews and observations in how people used a website. It was widely available, and accessible enough that it could easily be put to use, Eulalie said.
At the same time, they were finding ways to bring quantitative data into the equation. This inventory and margin data often gets overlooked, and exists in many different places. But when connected to campaigns, it could be harnessed to optimize a brand’s website, or improve performance.
Jake had been an adjunct marketing professor at the University of Montana College of Business since 2007, and noticed a change taking place.
“All of my marketing students were studying marketing, they didn't want to go into finance or accounting. Then they ran smack dab into having to use quantitative data,” he said.
2012 was the same year that Facebook held its initial public offering. There were questions floating around at the time about whether the business would work or not. But soon, they saw how the targeting capabilities propelled a new generation of businesses to become efficient acquisition machines.
Fast forward a decade, and that’s changed. Customer acquisition costs have gone up. Privacy-oriented changes like Apple’s App Tracking Transparency has made attribution, which powers performance, more difficult.
“The tide’s gone out,” Jake said. “It’s getting harder.”
At the same time, Amazon’s third-party marketplace became its own engine. A brand may seek to sell there. But that comes with its own series of tradeoffs, Eulalie said.
“There are so many eyeballs on Amazon, you can't ignore it. Also, if you're an existing brand, and people are searching for your stuff on Amazon, being present there is important. So I think a lot of brands really need to be thoughtful about how they approach the Amazon question,” she said.
It’s a place to land transactions, but it requires conforming to Amazon’s policies. Shipping times must be met and stock levels must be intact. Over the long haul, it could challenge margins. Rates get added, and the issue of private-label knockoffs has emerged. There’s also the relationship with the customer to consider.
“I think you can generate a lot of cash” on Amazon, Jake said. “But the fact is, there's a silent exchange of value, which is the customer data. You have no idea who your customers are, where they came from, what they're going to buy next.”
Consumers also started to become more skeptical about advertising in this realm, as well. People searched for an item, then saw it popping up in ads all the time. They had questions about how this was happening.
“The research shows that consumers are open to giving you data, if they understand how you're going to use it, and if you use it ethically,” Jake said.
As they worked with small and medium-sized brands who were having challenges with Amazon and wanted to have all of their data in one place, Jake and Eulalie set out to build a new way to serve them. They wanted to arm the Luke Skywalkers of the ecommerce world in the fight against the Death Star – with data.
The goal was to make data easy to access, actionable and they wanted to introduce automation for many processes, too. The result is Pond, a proprietary software platform that Tadpull applies alongside services to help ecommerce businesses grow.
The company “identifies the right product for the right customer, and then does that at the right time,” Jake said. When a customer has bought an item, it seeks to help brands sell others. It considers key questions: Is that next product a good margin? Is the customer likely to buy this product? Is it in stock?
A diagram of Tadpull's Pond Software. (Courtesy photo)
This requires upfront work to prepare, and that's where the services side comes in. Tadpull considers strategy, such as what goals a team wants to achieve (growth or profitability) and whether the team has the culture in place to execute the sprints that it uses to get there.
Jake likens the process of preparing a brand’s data to taking a sink full of dirty dishes, then cleaning and simplifying it by putting them in the dishwasher and organizing them. Tadpull’s work begins in earnest when it comes to setting the table. You have to know where the forks and spoons go, and over a decade, they’ve devised a predictable playbook on the order of operations. Then they’re ready for the sprint to put it into action.
Once the sprints are underway, the software guides them. It can detect anomalies, and help ecommerce managers orient around key metrics like revenue, conversion rate or website traffic.
Simplifying the data helps surface what matters for managers that have a lot on their plate, and find insights in places they may not typically look. After all, they have more systems to manage and partners to work with today. This is all producing more data, as well.
Jake and Eulalie have put all they’ve learned from witnessing the evolution of ecommerce firsthand as cofounders and developing coursework for college students into how they serve brands. As Jake puts it, Tadpull wants to make it so that “your job is to push the button at the end of the day. And then when you're not sure he should push the button, we've got a services team on the other side that you can have a weekly call with that'll help you understand which buttons to push if you're not quite sure.”
When it comes to size, the playbooks and frameworks tend to work best for businesses operating at scale. This is the time in a business’ lifecycle when a small change can bring big changes, and there’s a lot of data coming in.
“Based on the maturity, the company and their product selection, there's a lot you can do if you're able to gather that data and make sense of it, and help them really harness it,” Lee said. “Because if they have enough customers coming through, then if you know what they previously purchased, you have a lot of transaction data that you can analyze and surface insights to really help serve new customers better.”
The company tends to work with direct to consumer businesses and omnichannel retailers who have both in-person and digital operations. Jake also sees more potential to work with B2B businesses that are still in the process of going digital. As millennials take over generational trades like HVAC or plumbing, chances are that they’ll want to order online. But the processes aren’t in place. As was the case a decade ago, the conditions are lining up for new opportunities to emerge.
The retailer's marketplace is expanding quickly.
When it comes to ecommerce growth, was the pandemic a blip or a new trendsetter?
As we move further from the height of COVID-related closures, it’s a question that will start to be answered through the lens of history.
So far, the narrative of ecommerce growth in the U.S. from 2019-2022 has gone like this: Ecommerce’s share of overall retail saw a huge spike at the height of the pandemic in 2020-21, when goods in general were in demand and online shopping was necessary to preserve health and safety. Experts looked out and saw a permanent exponential change in the penetration of ecommerce as a share of retail that would last beyond the pandemic. Then, in 2022, everyone went back to stores and the trendline came back to 2019 levels. Growth was no longer exponential. There was still growth, but it was not happening as fast as during the pandemic period.
With this in mind, it’s worth pointing out that 2023 is the first year that there likely won’t be a pandemic-influenced swing to influence ecommerce growth. It is also a year where demand has suffered challenges amid inflation and interest rate hikes.
So as we seek to determine the importance of ecommerce to overall retail, it’s worth it to continue taking a close look at what growth trends retailers are seeing now, whether ecommerce is remaining resilient amid consumer pullback and how retailers are preparing for the future.
The latest example arrived this week from Macy’s. It’s a fitting one for the times. Overall, Macy’s is seeing a slowdown as consumers pull back on discretionary purchases, with sales declining 7% in the first quarter versus the same quarter of 2022. Digital sales were down 8%.
Macy’s is particularly susceptible to the macroeconomic headwinds that many brands and retailers are facing, as spending among the middle-income consumers it counts as a primary customer base is particularly softening, said GlobalData Managing Director Neil Saunders.
But while ecommerce is slowing overall, the importance it gained to Macy’s business during the pandemic is remaining in place.
In 2019, ecommerce made up 25% of Macy’s revenue, CEO Jeff Gennette told analysts on the company’s earnings call. That jumped to a high of 44% in 2020. By 2022, digital reached 33% of sales after the pandemic boom. In the first quarter of 2023, it remained at 33%. So, while the trend line dipped after shoppers returned to stores, ecommerce share still settled in at a higher post-lockdown point than it was before the pandemic.
This came in a quarter in which traffic was “relatively good” across both online and in-store, Macy’s CEO Jeff Gennette said. It was “flattish” online, and slightly up in stores.
“We do expect that this is the reset year with the penetration between them,” Gennette said. “But we do expect more aggressive growth in digital in the future versus stores as we think about '24 and beyond. And that's going to be foisted by a lot of ideas and strategies.
Over the last year, the retailer has made investments in boosting ecommerce, even as shoppers returned to stores. In a bid to boost the assortment of goods available online, Macy’s launched a marketplace in September 2022 that welcomes goods from third-party sellers.
The marketplace had an “outstanding” first quarter, said Macy’s President Tony Spring, who is poised to succeed Gennette as CEO next year. Gross merchandise value increased over 50% when compared to the fourth quarter of 2022, while the average order value and units per order for marketplace customers was 50% above those not shopping at the marketplace.
Macy’s is continuing to build the marketplace even as it racks up sales. The retailer added 450 brands, ending the quarter with 950 brands.
This is helping to draw in new customers, as well as younger existing customers who are buying more items, resulting in increased basket size.
“We're very excited as to how marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible for us to carry in the past,” Gennette said.
In the end, Gennette said a strong digital and social presence is key to attracting younger consumers. That's a different type of shopper than other age groups.
“We know the younger customer starts first online,” Gennette said. That behavior will still be in place as the generation gets older, and gains more buying power in the process.
Going forward, Macy’s is seeking to expand the model to other retail banners in its portfolio. Bloomingdale’s will open a marketplace in the early fall.
The Macy’s ecommerce trajectory isn’t that different from the wider U.S. ecommerce narrative detailed above. With one quarter of 2023 data, there is evidence that ecommerce share settled out at a higher point after the pandemic than where it started before COVID arrived. There is flattening now, but the retailer is taking it not as a sign of a slowdown, or a signal to change course. Rather, it sees changing consumer behavior as a reason to build for the future.