Watch, Click, Buy: Video Commerce Will Change Retail Forever

By Matt Pillar, chief editor

September 2016 Innovative Retail Technologies

Move over, product placement. Soon, retailers won’t just be promoting products on TV shows; they’ll be selling them there.

You might call Messiah Jacobs’ path to retail technology entrepreneurship happenstance, or fortuitous at best. It sure wasn’t planned, and he’s the first to admit it. New York born and raised, Jacobs was on track to put his finance degree and uncommon energy to work on Wall Street when the fashion world came calling.

“I had a vision of entrepreneurship, and the opportunity to pursue that vision came from an unlikely place while I was in business school,” he says. A friend was launching a fashion apparel brand, and she needed a business-minded partner to help her do it. Soon, the duo was selling its wares in more than 200 high-end fashion boutiques across the country.

Though getting into the fashion business wasn’t top of mind for this self-described through-and-through finance guy, taking that leap was the catalyst to a series of “aha” moments that allowed him to explore a creative side he hadn’t tapped into. The creative juices really began to flow when Jacobs was approached by a production company with a proposition to create a reality TV show about his company. “When I saw the work that goes into video production and entertainment, I realized how much opportunity there was behind the camera,” says Jacobs.

It wasn’t long before he set out to capitalize on that opportunity by launching his own production company. Shortly thereafter he was producing films, television shows, and long-form web series with acclaimed director Robert Townsend, working with such notables as Monica Calhoun, Vivica A. Fox, and Michael Clarke Duncan.

For the past 10 years, Jacobs has been living in the shadow of the iconic sign in Hollywood Hills and continuing his smallscreen production work. That’s quite a departure from finance and fashion retailing, but his most recent endeavor is serving well to combine his breadth of experience in each of the disciplines he’s pursued. Jacobs is co-founder of tapReplay, a technology-based startup that’s determined to simultaneously change the way consumers shop and watch television.

The (re)Birth Of Video Commerce
During his 10-year tenure as a Hollywood producer, Jacobs says the dramatic impact of technology on the entertainment industry has not been lost on him. Inspired by that technology, he attended the 2014 Launch event in San Francisco, where he met Savalas Colbert, an e-commerce-centric software engineer who would soon become his business partner. “We spent two years discussing how to merge our skillsets,” says Jacobs. “We knew we wanted to work together, but on what?”

The culmination of that self-exploration landed the pair on video commerce. “We decided to address an opportunity that we both believe in, and one that would leverage our combined experiences and knowledge. We sought to create something that would allow consumers to buy the things they see on television — from the apparel worn by actors to the products in their on-screen kitchens — right then and there.” Of course, Jacobs knew the concept wasn’t entirely novel — it’s been broached before, but it’s never been successful. Still, he was convinced that previous attempts at video commerce were simply victims of ideas ahead of their time. “Today, we have all these smart devices, so we took a deep dive into why video commerce hasn’t come to fruition.”

The duo took the concept to the 2015 Money20/20 Hackathon and won the grand prize. That’s when they really realized the concept’s potential. “In the Hackathon, you have 24 hours to make something happen. To win, it’s got to be fully functional and impressive. We spent those 24 hours doing just that, and Replay, which would become tapReplay, was born.”

After the event, Money20/20 Hackathon director Rob Wells approached Jacobs and Colbert with an offer to help them move tapReplay forward. Wells’ network of executives, built through his work producing Money20/20 and Shoptalk events, exposed tapReplay to MasterCard and Wells Fargo, both of which have taken on advisory roles with the startup. With its technology in place and in beta, tapReplay is now busy lining up content and retail partners.

How Video Commerce 2.0 Works
To date, attempts at enabling video commerce have been narrow in scope and frustratingly disjointed for the consumer. Some enterprising video commerce providers have been working with individual brands, particularly in fashion, to place individual products in what they believe are critical moments in a program, for instance. “From what we’ve seen, users just link out of the content and go to an external site to check out. That’s an overly complex process that doesn’t achieve anything significant and fails to execute for all stakeholders involved, across the board,” says Jacobs. “The user experience is fragmented and complex, content creators lose engagement, and merchants have to hope they don’t lose people on the way to checkout. It’s incremental innovation at best.”

TapReplay’s video commerce platform, on the other hand, lets viewers seamlessly discover, shop, and buy products and services featured in the programming that most inspires them. “What we’re building is a solution for retailers and merchants to compete with Amazon through video commerce, and a platform that will completely disrupt the product placement and branded content space,” says Jacobs. “It’s not just putting a link to a product at a certain time in a video and linking it to a web store. This is an entirely new and scalable platform that will turn every moment of video content into a medium for commerce.”

The maturation of the technology ecosystem that drives the platform, says Jacobs, is the differentiator between tapReplay and earlier attempts that were limited in scope and scalability. “We’re at a point in the development of video commerce where a massive infrastructure build out is no longer necessary. The marriage of existing technologies like smart TVs from Apple, streaming video from Roku, and Amazon’s Fire TV Stick is what’s different today.” By combining these advances, tapReplay is creating a seamless buying experience with fewer clicks and steps. Jacobs eschews the idea that video commerce can succeed through deep links, several site visits and page views, and multiple screens.

"U.S. consumers spend an average of 4 hours per night watching television on their couches, and our research indicates that 60 percent of them would like to buy from those couches."

Messiah Jacobs co-founder, tapReplay

A Ripe Market For Video Commerce
While Jacobs acknowledges that shoppable video isn’t a new idea, he’s confident that its failure to this point has been due to technical incapability, a lack of consumer trust and readiness, and retailer loyalty to outdated business models. “We are undoubtedly on the other side of what we see as a fundamental transformation in all those areas. We’ve seen mass adoption of next-gen commerce and payments apps amongst millennials. We’re seeing the emergence of tech-smart TVs and open-access video platforms. And many retailers that are suffering their worst performance since the financial crisis are now being forced to adapt,” he says. As merchants and brands struggle, they’re certainly opening up to new APIs (application program interfaces) and platforms that extend their commerce reach, and video commerce providers are poised to benefit. “Commerce has evolved. Though the market doesn’t even exist yet, video commerce is inevitable and we’re going to make it,” says Jacobs. He cites Q1 ‘16 U.S. retail e-commerce sales of $92 billion and product placement revenues of more than $6 billion as proof positive that video commerce is a nascent trend. “We’ll grab a share of e-commerce, completely disrupt product placement, and completely redefine that market.”

Consumer habits, he says, also play into the positive outlook. “U.S. consumers spend an average of 4 hours per night watching television on their couches, and our research indicates that 60 percent of them would like to buy from those couches.”

Jacobs is quick to renounce the idea that the future of retail is omni-channel. While the e-commerce explosion admittedly caught many retailers with their proverbial pants down, playing omni-channel catchup, he says, is not going to save them. “They might not catch up with Amazon. That shift was too monumental, and for most, the e-commerce opportunity ship has sailed. We don’t believe that our platform is omni-channel. Video commerce represents a bigger shift than that, one that will help brands get back to consumers and reestablish themselves.”

The key, he says, is that reestablishment will take place in the consumer’s home, while they’re having an inspirational moment and buying not just products, but experiences. Guys watching an episode of Mad Men will want the tie worn by their favorite character. Women watching Sex in the City will want the shoes Carrie is wearing. “There’s joy in that micro moment when the consumer is reached where they are and able to enhance the experience by accessing what they want, when they want it without disruption,” says Jacobs.

The Business Proposition Of Content Commerce
Good startups don’t just focus on building their products; they focus on the audiences they’re building those products for. At tapReplay, those audiences are shoppers, content creators, and brands. “We sell a product to retail brands and content creators. We offer a service to consumers. And we see a significant revenue opportunity in the model.”

Imagine, he says, that a video content producer uploads its latest episode of a travel series created on Apple TV and viewers could seamlessly book the Paris Airbnb featured in the episode, order a bottle of wine from Drizly, or buy a photo of the Eiffel Tower. “Content creators have a more effective platform for monetization through our network of merchants. Those merchants can instantly convert viewers to shoppers at the ‘moment of inspiration,’ simplifying the steps between discovery to purchase. And those viewers have the ability to effortlessly curate a lifestyle inspired by their favorite content.”

Arguably, retailers stand to gain the most. They’ve missed the e-commerce train. They’ve been trying through traditional means like advertising and, more recently, product placement to get into the consumer’s living room. “Those approaches are based on hope, and they’re long-cycle at best,” says Jacobs. “With video, in real time, the brand is there. Now they have the distribution mechanism in place to get the product to the consumer, and that’s a big win.”

Fashion, Home Goods, Lifestyle Merchants To Benefit Most
Jacobs says that most merchants are surprisingly oblivious to the video commerce concept, often because they’re so focused on not getting devoured by Amazon; they’re playing catch-up instead of looking ahead. “When it comes to the current deep link video solution on the market, we most often see major fashion brands in the mix,” he says. “While we consider that a big market opportunity, we’re looking at things like home goods, travel, and food and drink as well.” Those segments present opportunities, he says, because they give content creators and retail brands an opportunity to immerse the user into an experience, bring the content to life, and deliver the goods. Jacobs advises those merchants who are interested in video commerce to analyze their product lines and build incrementally, beginning with items that don’t require a lot of input on the consumer’s part.

A New Era Of Commerce
The syncopation of several technical and environmental factors that tapReplay is leveraging opens up a new commerce vehicle, and Jacobs says it reaches far beyond a mere addition to the omni-channel strategy. “If merchants view this as simply another channel, they’re going to get left behind, just like they did when the introduction of the internet enabled e-commerce. That was more than a channel. It required an utter evolution of strategy, and it’s becoming more and more apparent that only a handful of companies realized that. Eventually, the ones that didn’t will no longer exist.”

Video commerce, he says, will breathe life into those who react quickly and will be the final dagger to those who drag their feet. “When this becomes a reality in the near term, it’s going to blur the lines of who does what in retail and e-commerce. Everyone will need to rethink their role in this ecosystem as their success becomes inherently tied to content creators, distributors, and creatives.”

Reflecting on the opportunity before him, Jacobs notes that all big ideas start out small, and from those small ideas entire industries are born. “These small ideas, they are the precursors to big industry shifts. Retail has been doing business a certain way for a long time. It’s a new day for retail to become more adaptive and to serve customers in a new environment where everyone is a creator, a consumer, and everyone wants a unique experience in their consumption of goods.”

That’s a prophetic statement, particularly so considering that it comes from a guy who was creating award-winning longform web series that predated Netflix and Hulu, back when sharing cat videos online was all the rage.