What’s Next in the Connected Economy? VTEX CEO Says Conversational Commerce

If you think the past two years were intense, your perspective might be due for a reset soon.

As the pandemic goes endemic and becomes just another thing to watch out for, the digital shift it set in motion won’t stop. Tectonic technological movements like the connected economy can’t be switched off, per se.

Instead, the number and quality of connections will likely increase and beget new forms of commerce, shopping and spending that are as impactful as the mobile internet. That’s the opinion of Mariano Gomide de Faria, founder and co-CEO of VTEX, the enterprise digital commerce platform that got famous in 2008 as the underdog Brazilian tech firm that landed Walmart Brazil’s digital account.

VTEX has grown from there to serve 38 countries, and along the way, it also garnered a reputation for speed to market and understanding local market dynamics. As Gomide de Faria told PYMNTS in an interview, the pandemic was a wake-up call to CEOs who thought of digital as a side channel — until it was suddenly their only channel.

When the Colombian government asked VTEX to put that nation’s largest pharmacy online to distribute COVID-19 meds, “It was all hands-on deck,” he said. The site was live in three weeks.

“What we are seeing now is that [digital] is not anymore a side business,” he said. “It is the core business how to explore these multichannel opportunities that popped up with COVID. The other side is the population learned how to buy online.”

“This change of perspective or mentality creates a new future,” he added.

That new future is the connected economy forming in real time, and Gomide de Faria said he believes the changes it’s bringing will be disruptive to the max, but with benefits to match.

“How to create brand in a connected economy is a challenge,” he said. “Yesterday, you created brand by buying ads. Tomorrow, you’re going to create brands by having amazing customer service.”

See also: VTEX Teams With Stripe to Offer Digital Payment Options for eCommerce Retailers

Marketplaces, Make Way for Super Apps

It’s a bit hard to imagine given the state of things now, but Gomide de Faria said he doesn’t see the physical store enduring in its current form — and more surprising, he views online marketplaces the same.

“Companies need to face the brutal fact that marketplace is not a new channel,” he said. “Marketplace is a basic functionality. Conversational commerce, live commerce, messaging commerce, business app chat commerce is a reality. It is already more than 50% in Asia. It is going to come to the United States as a tsunami, and the companies are not ready for that.”

He said Facebook and Google are “not affordable as a backbone of the growth of a company,” and that “no retailer, no brand can afford to pay 20% to 25% as a kind of cost. We saw the wave of marketplace taking over with Google and Facebook, and the marketplace started on 10%.”

But even marketplaces have their limitations. For their seemingly unending variety of goods, marketplaces lack a personalization and connection that they simply weren’t built for.

That’s left the U.S. wide open for one or two super apps to bring the connected economy to a comfortable new cruising altitude high above the still-disjointed fray of products and payments.

“What happened in Asia is happening now in Europe and Latin America and will end up happening in the U.S.,” he said. “Why the U.S. is the latest country to surf the wave of conversational commerce is because [the] U.S. doesn’t have a super app for conversation that is popular. If you go to Latin America, 94% of the population is connected to WhatsApp. In China, it’s WeChat.”

Gomide de Faria said U.S. tax has long favored online marketplaces and platforms.

“This will change and will change fast, and one or two apps will take over and the business will adapt fast,” he said. “It is not anymore, ‘Choose what to buy and hope what to sell.’ It’s different. Today, you need to ask your clients [beforehand] what [they] want to buy, and I will pursue it in the market for [them]. The best brand, the best product and the best conditions of price and delivery.

“Retailers are not anymore curators of products. They are a concierge of clients.”

This implies a few concurrent shifts. There’s the shift to online buying habits, the shift in IT infrastructure to create and maintain a connected economy, and there’s the new retail rising.

“Commerce activity is not anymore based on the product that you buy,” he said. “It is entirely based on the clusters of clients that you control, the ones that identify with yourself that you feel comfortable. This is the big shift. This is happening all over. A new category of providers will emerge — Solution-as-a-Service providers, SaaS companies with a connected ecosystem.”

Read more: eCommerce Software Platform VTEX Plans Potential IPO

More Instacart Than Amazon

Not shy about calling likely winners, Gomide de Faria said it’s possible that an Amazon or a Meta buys a hot super app and absorbs it into its existing ecosystem.

“I do believe Facebook and Apple are the two companies accepted by U.S. security policies that will surf the wave of conversational commerce,” he said. “Apple has Apple Business Chat. That’s a powerful platform that is already better in the United States. And Facebook has, in my opinion, the most advanced chat platform in the world. Those two, in my opinion, will be the ones to take over the U.S. market.”

But a super app alone doesn’t get us to connected economy 2.0 — that’s a task enabled by technology but ultimately done by people in a new shopping paradigm more akin to Instacart than to Amazon.

“Instacart is a great example,” he said. “You declare what you want. I send you a photo. I say yes, no, yes, no. I don’t care about the price. Society has more money than time. You don’t need to choose your cucumber or your rice. You have more money than this. You are delegating an agent.”

Saying that most sales will occur through social channels within the next several years, Gomide de Faria told PYMNTS: “You will not go to a store to look for a product anymore. You are going to have maybe three or four concierge that used to be called the salespeople. You’re going to say, ‘For the next three months, I would like this dress, that bracelet, this purse, and could you find it and bring it to me?’ That’s the new context of buying.”

Related: VTEX Expects More Companies to ‘Go the Nike Route’ and Build up D2C

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