Get a heap of ecommerce & marketplace insights from Vinnie O'Brien, whose expertise from eBay to DTC brands sets the stage for a riveting discussion. Together with host Mike Ryan, he tackles the contrasting marketplace ecosystems across the US and EU, dissecting how these differences influence business tactics, and debates whether retail media networks are now indispensable in today's digital economy. For up-and-coming brands, Vinnie gives his seasoned perspective on navigating Amazon's platform and the discipline required to succeed. He also addresses the contentious emergence of marketplace software providers like Miracle. This episode is a must-listen for anyone in the e-commerce space looking to refine their strategy and understand the broader industry landscape.
We delve into the pivotal role operational excellence plays in the infancy of a brand, the cost of negative customer experiences on repeat business, and the strategic decisions that new brands face in an increasingly competitive digital arena. Whether you're a retailer, a brand owner, or an e-commerce enthusiast, these stories reveal the crucial elements of scaling and sustaining a profitable online presence.
Get a heap of ecommerce & marketplace insights from Vinnie O'Brien, whose expertise from eBay to DTC brands sets the stage for a riveting discussion. Together with host Mike Ryan, he tackles the contrasting marketplace ecosystems across the US and EU, dissecting how these differences influence business tactics, and debates whether retail media networks are now indispensable in today's digital economy. For up-and-coming brands, Vinnie gives his seasoned perspective on navigating Amazon's platform and the discipline required to succeed. He also addresses the contentious emergence of marketplace software providers like Miracle. This episode is a must-listen for anyone in the e-commerce space looking to refine their strategy and understand the broader industry landscape.
We delve into the pivotal role operational excellence plays in the infancy of a brand, the cost of negative customer experiences on repeat business, and the strategic decisions that new brands face in an increasingly competitive digital arena. Whether you're a retailer, a brand owner, or an e-commerce enthusiast, these stories reveal the crucial elements of scaling and sustaining a profitable online presence.
Welcome to Growing Ecommerce. I'm your host, mike Ryan of Smarter Ecommerce, also known as Mech. Today I'm joined by Vinnie O'Brien. He is an e-commerce consultant with experience at companies like eBay and the retailer Arnotz. Plus he's got skin in the game at DTC Thermo Tent, brand Crua and Rethink Retail included him on their list of top retail experts for 2024.
Speaker 1:In this episode, we discuss marketplaces. What are the key differences between the marketplace ecosystem in the US and the EU and what are the consequences of those differences? Are retail media networks nice to have or must have? Is Miracle, the marketplace software provider, enabling a bubble? And why does Vinnie think young brands should walk that mile and get on Amazon, even if they're skeptical? We discuss all that and a lot more Plus. In light of recent news at Walmart acquired smart TV manufacturer Vizio. I asked Vinnie why CTV is so hyped and who stands to win. Remember, if you enjoy this podcast, please leave a review and share it with a friend, a co-worker or on social media. We really appreciate it. All right, let's get into it, vinnie. Thank you for joining us on the show.
Speaker 2:I'm delighted to be here. I've followed you for quite a while and feel really genuinely honored to be here, thank you.
Speaker 1:Well, that's mutual. I've been following you for quite a while, and vice versa. I'm glad we both feel that way. Why don't you get started with a quick introduction? What are your skills, vinnie? What kind of themes interest you?
Speaker 2:I was nervous about this kind of question because I don't have any specific skills. I made a career out of being a generalist and being unapologetic and unafraid of it. From an e-commerce perspective, my first role was with eBay and it was really formative in the way that I do my career and have pieced it all together. It's kind of responsible as well for some of the maybe the neurosis that I suffer around our industry. It was great because enterprise didn't exist in eBay when I joined them. I'll keep this pretty short. I won't go on and on about every single role, but just to give you a quick flavor. But enterprise didn't exist there. I was employee number two ever to meet a customer. From an eBay perspective it was really kind of transformative times. We got the keys to the car to do new product development. We were working within the ecosystem which was really just piecing itself together. You've got to remember this is around 2005, 2006. We developed the UK team at a Dublin. We then set these teams up in Germany, france, italy, spain and then eventually in the US. It's been a formative structure from the eBay perspective.
Speaker 2:I went on from there, using my generous perspective to get more specific experience. I went into retail. I worked in the operations of a big department store in Dublin Ireland. Then I went into start-up mode. I went working with an automotive company. I developed with a developer other proprietary tech for marketplaces. Then I started consulting. I've had a marketplace role in between, working on specific projects. Then I started consulting.
Speaker 2:That was probably the big time that I realized I had to start thinking beyond myself and my own role and looking at how other people did things. Where I find myself today, I'm working with clients here in Ireland, a few more so in the US at the minute. Partly that's because I started working with Rick, as we spoke about briefly working with Rick Watson on some of his content production in the US. That's about 18 months in the making. We've started bringing it to life as of maybe October last year. We've got a pretty ambitious plan, I think, for this year ahead. It's opened up new avenues for me to work with different people and different ways and learn new things, which I think is always important in what we do.
Speaker 1:Big fan of Rick's as well. Thanks for giving us that overview. That's really interesting. I didn't realize how early you were at eBay in that new structure there. I think that must bear some of your DNA to this day, I wonder. That's a really cool legacy.
Speaker 2:Yeah, it was interesting because I'm not technical by background. I was in banking as we shared some notes. I guess that I take a huge leap. I saw all my friends had moved to London. I was still stuck at home in Ireland.
Speaker 2:I was wearing a suit to work. I wasn't allowed to put product in my hair to style it. It was a really conservative environment and something I was rebelling against. I knew I needed to leave it when one Saturday I met up with some of my buddies. We got together for a work weekend. We went to a rugby game, we ate a little bit too much to drink. I decided I'd bleach my hair I'm talking Eminem Stan Blonde.
Speaker 2:On a Saturday afternoon I drove to the office on Monday. Let's just say I didn't get on to that. I decided the real rebellion was starting and I decided I wouldn't get rid of it. About six weeks later I got called into a client meeting and it wasn't to help it work, it was to show them how stupid my hair looked. I decided then okay, I got a leave. I started packing my stuff. I said, okay, I'm going to leave for London.
Speaker 2:I just wanted a job. I needed to be in media. I needed to be somewhere to wear my own clothes. All of these things helped me settle to want to be in a career that I felt like a tribe in. I've been in banking four years at that stage, having left college and went straight into it. The eBay role was great because nothing technical meant that I had to really ask questions around how things worked and why they worked and how processes on the pin them. Then we had to work with developers and product people to design new products. That was really really useful as well. If I think about the environment we're in today. These are really strong skills to have learned very early on.
Speaker 2:Then I could learn all the skills of retail, because my first two clients in the UK were JD Sports, who are growing at a quite a tasty rate right now, Little Woods and Argos. They were the three clients that I was brought into. You really have to learn on your feet about marketing cycles, marketing rhythms, brand activation. All the skills that I got there over a very short period of time allowed me to start piecing together the sort of things that I like. I realized quickly, Mike, that when structured at eBay I was probably three and a half years in. At that point I really started internally rebelling against the structure because I didn't want to be a big sales machine. I didn't feel that we were being as effective. I didn't feel I was being as effective as I could. Then I looked to try and make that transition. When I think about where I am today and being a consultant or being an analyst or any of those pieces, those sorts of mindsets were developed in eBay for sure.
Speaker 1:Thanks for sharing that additional context too, Although I think, having a background in lending and the banking although it wasn't that favorable for you and your stand haircut you must be able to get some dividends on that long term.
Speaker 2:I've been thinking about that. The one thing we had to do with every loan that we gave out and it was different, was to corporations and it was to high network individuals was you to do risk assessments. It got to thinking about all the ancillary ways that you've got to think about this application, which is really about numbers, but you were obliged to go and do this. To diligence it meant that you got to think about things laterally. It meant you got creative in how you observe things or ask questions. The other key thing, I think, was it also meant that people who are more senior than me you could go and ask questions of them.
Speaker 2:You were able to build a framework, and that was really the key thing that I take into my role in e-commerce was developing a framework for thinking around problems. It means that if I looked during the pandemic, I was doing probably like mostly eight or nine hours of calls every day, but each was with multiple clients. You didn't really have time to take as many notes as maybe you would like. I don't take notes. Just as an example For me. I had to be able to switch through calls.
Speaker 2:One might be about branding, one might be about performance, marketing and campaign management, then one might be about an operational setup that we were going through. For me, really, that framework for thinking has benefited me to allow me to do multiple things with different people at different times. Then the final part of all that was I liked stepping out of it to do reading and writing. I liked trying to figure out what's going on in the world, what are people doing well, what are the opinions that people have that maybe I don't have in my train of thought right now. I really enjoyed that part of having the framework set aside to allow me to start part mentalizing new pieces of information for myself.
Speaker 1:By the way, I love reading the things that you write. I don't know if you receive it this way, but I think you're prolific with the stuff that you write. You're putting out a lot of thoughts every week.
Speaker 2:Thanks. It's hard to know what the balance is. Sometimes I'm a bit like Will Ferrell in old school, where he is reading out the answers to the questions at the end or trying to come up with them.
Speaker 2:I sometimes fall into this. I see a sentence and it triggers 10 other things I've been thinking about and I just go with it. There is a lot of stream of consciousness. I try not to polish it up too much. I realize at times I've got spelling mistakes, but I figured that was part of the personality that I wanted to bring to it For better or worse. I'll probably continue on that thing.
Speaker 1:I'd say for better. I want to get into a topic here with marketplaces. Earlier you mentioned marketplaces a couple of times. Can you just fill us in what kind of work you've done with marketplaces in the past or what you're doing now? Do you help the Summers now?
Speaker 2:Yeah, I've worked on and off in marketplaces since 2005,. So almost 20 years. I've been saying 20 years now for five years so I can finally say 20 years next year. But the format of years and those early days were about really managing brands who wanted to participate in marketplaces in the UK. So it was development of I don't like the buzz term, but multi-channel selling. So it was really saying how do we leverage the traffic that eBay has to benefit of you as a brand? And we had to portray the commercial perspective. We had to overcome a lot of brand fears back then. That was a real big challenge for us as a team and we had to develop products on the fly. So eBay back then was really poorly technically built. If you can imagine, in 2005, up to probably 2010, I think, most of eBay still hung together on one coal base. So if we were looking for changes in the UK, they had to look at the implications of them wherever they existed around the world.
Speaker 2:So that meant that we had to be patient, I guess, and product development. We also had to rule certain things out. And that was really useful for me because then as I progressed from my career, I worked on the brand side developing proprietary technology. You kind of understood to a large degree how that was all architected and put together and it meant that you could think about things really broadly for yourself. So that was I suppose my first introduction to it. To give context, we grew that team from zero revenue to when I was leaving, I think we were doing a little over a billion dollars in revenue through that core team in Europe and Europe being a more fragmented market than the US and having cultural and language barriers and all the other nuance that goes with it, it felt like it was a really good achievement at the time and the US team grew quicker, gmv grew quicker and the product was built for them. I think that the legwork we did early days allowed them to benefit and scale quicker, provide better onboarding experiences, things like that, and it made me aware of other things. So if I look at what I learned in eBay that I took the brand side it was something that Stefan mentioned last week. I haven't heard bad buyer experience mentioned anywhere outside of eBay and it was a metric that I knew leadership were really key on that. I wasn't tasked with it, but it was what's the cost? What's the cost of us bringing someone back to the website through marketing spend to purchase again on the basis that they have had a negative experience and that negative experience could have been? I was happy with the item. I was happy with the time it came here and your communication, but I felt like you sent it to me too long and that subjective opinion on something was a really bitter pill to swallow, particularly from a brand perspective, because you've done everything right. There's not much else you can do, but I just felt like you could be quicker. But that bad buyer experience was something then that you can build into your processing and the way I look at it now and this is a really crude, but I think we've got to start looking to this lens from a DTC versus Amazon perspective.
Speaker 2:If you're a small up and coming brand and you think you know we're going to build a community into all these things, or when you shopify, would it not make more sense to build up a sales profile and do profitably through marketplace such as Amazon or eBay or somewhere else. As much as the commercial reality, it's the idea that you get yourself a level of operational excellence that is now considered the norm. If you think you're going to go and satisfy your community with a lesser experience, I think it's a really foolish approach. Well, not foolish, probably too strong word, but to me that doesn't make sense. So if I was starting out today, I go down one of two tracks. I'd use marketplaces, grow, seek, and I do cross border, do that for a number of years, and then I would start saying, ok, let's go into community building. Or I would be all in on TikTok and say, let's build our community, let's create entertaining content, let's develop that train out a little bit differently. So the context I guess that marketplaces gave me through the career was that operational piece, but it also got me thinking what do we do at scale? So how do we think the decisions today are going to impact us in two or three years? Is it going to give us the ability to do the things we need to? And that's a huge challenge today because from one week to the next things change so dramatically and if you take something like Shopify. Now it's so easy to change an app or switch it out or turn it off that we don't really give things time to build themselves up. So, again, that long term thinking meant that you had to focus on something, commit to it, and then your measurement time might have been months and months later. So that idea of thinking at scale was really important, and particularly when I went into automotive to work with a startup brand, I went in as our head of marketplaces, the developer on myself, paco and if you hear this, paco, forgive me.
Speaker 2:Paco came from Alicante with no English, like literally none, but his credentials on paper were brilliant and he and I were put together to build out the marketplace stream of our business. Now, complexity we had a million SKUs. We wanted to be trading in as many marketplaces as we could. Our net result at the end of three years was we had, I think, 14 marketplaces, four languages and we had a database of about seven million SKUs to cater for language variances and all. Paco architected all that with me.
Speaker 2:Like as a developer, it was unbelievable to watch and work, but the way we started doing it, mike, was, I went back to the days in eBay. We drew stuff out, so we started drawing diagrams. We pieced it together then, and I was just lucky that Paco's ability to learn English through reading books and he was a great reader and loved reading anyway meant that our ability to speak English and talk about these things was possible after three months, which I thought was really phenomenal. But there were the sort of things that I was learning at eBay that allowed us to benefit, I guess, and the reason I mentioned that by experience was you were guarded against that from the minute you were stepping into that side of the business because you knew how difficult it was going to be for you as a retailer or a brand to satisfy that customer. Sorry, long answer.
Speaker 1:No, that's good, that's why we got you on here. There's a lot there and I want to pull out a couple of strings. You posed a rhetorical question a bit and I'm going to make it not rhetorical. You were saying, like to imagine that you're a young direct-to-consumer brand or new direct-to-consumer brand, would it not make more sense to start out on Amazon and kind of get operationally excellent? I believe you said something in this direction, so could you just pack that for us a bit? That decision I kind of get it, but do you think which ways is going? Do you think that you can fool yourself maybe on other channels besides Amazon? Or do you think that Amazon offers a certain level of structure or safety? Like, why help me understand that choice more? Am I getting it?
Speaker 2:wrong? No, there's a few. I think everything you say is right the way I think about it. So, as I look at it, your job as a retailer or a brand is to get connect eyeballs to your product and ultimately get them to buy it from you. So if you're starting out, the first thing you'll be taught about is acquisition and you're told go where your customers are.
Speaker 2:If I'm starting out and if I look at the US or I look at the UK very mature markets mostly for customers the first place they're going to go and look for a product is Amazon. I got stats from Insider Intelligence or one of those magazines yesterday and I think the monthly Amazon traffic is about 2 billion unique visits per month. Ebay is second in that list in the US at 500 million and it trails off after that in terms of retailers and sites. So your job is to be where your consumers are. It's most likely your consumer is already there anyway and my contention is that if I look at search and how we are asked to build out titles for eBay and Krikey, I built tens of thousands, if not hundreds of thousands of them. You start with the generic form first. You try and connect with how does someone look for a product Then? How do they filter, how do they navigate and in direct to consumer land.
Speaker 2:We tend to think about it differently. We build out our product name, we give it its cool functional name that we want to call it, and then we try and go find out where customers are and we leave out some of the attributes. So there's probably an operational, technical discipline that Marketplace has put you through that. I think. Even if you decide I want to do shop first rather than go to Amazon, it's the idea of if I can't list it on Amazon or eBay or Recouton or wherever that might be, how do I think I'm going to get that really top class on my own site? And the reason I suppose that to me is the first downfall for people is every year at January we see people posting about the back to basics push that we all need. Those basics still are not solved. We think AI is going to solve them. It won't. It will make someone at workload easier for us. So that's the first rationale I think the discipline that you're pushed through and even down to setting shipping rates, understanding what are the destinations I'm going to do.
Speaker 2:Do I group these by country? Do I group them by rate? Do I group them by weight? You've got to think about a lot of things that you would need to get really, really right and have solved in your business before you start to list there and then, on the other side of it, from an acquisition perspective, everything is contained in one place. So you're just not even acquisition but retention or promotion handling. The tools that you need are there in one place for you to say, ok, I can self manage to a degree.
Speaker 2:So before Pmax, amazon had automated targeting for products that you have, but it's predicated on the fact that you've got your product set up so well that they can understand exactly what it is and present out to people credit feel that's going to be most appropriate. And it's that kind of circularity of it, mike, that I feel that even if you're not going to do it, as I said, you should put yourself through the discipline and see at what point you get stuck. It used to be on eBay. It was stupid user experience things like you bounce the PayPal and if you didn't have a comma in the right place and email address, you're going to be three weeks on to support. That's all gone now. Like it is quite simple to go and set up and get selling. But it's that discipline I think it's such a useful skill for people to go through. They've never done it before.
Speaker 1:Well, that's some good advice, and I want to pull out a second string that you were speaking about earlier. You were talking about the fragmentation in the European market compared to, like, the US, which, yeah, it is a big. I mean it has its own segmentation, of course, and its own dimensions to it, but the European markets are more obviously fragmented. Can you talk us through a bit more some of like these differences between marketplaces in the US versus the UK and Europe and maybe like some of the second order effects of those differences?
Speaker 2:Yeah, I'll do my best to navigate through it. So I'll go back to when I was in the automotive startup. We listed on to all the e-bays, all the Amazons, and then we decided France was going to be a good target market for us, given the availability of products versus what we call the car parts. It was almost like segmenting your customers. We knew what vehicles are on the road, so we knew we could serve them with products.
Speaker 2:We wanted to find out what the best marketplaces were and we didn't really know, if I'm being honest. So what we ended up doing was going as broad as we can and then working backwards a little bit counterintuitive, but we'd know feet on the ground. We didn't have a budget to get over there. So we listed on price minister route of commerce C-discount Very quickly. During that process we learned to be on C-discount was invite only, so my task was to build a relationship with them to allow us to come on and effectively we could create a category because they didn't cater to it. I think it was then I'm sorry it was price minister for the category, but we still have to come on. We then learned in terms of our own development C-discount only had 50 characters of a limit. Ebay at that time it's 77, I think, or 78. We had 250 in price minister and 100 somewhere else. So now all of a sudden we could take a product that already had an elongated product title because of the language kit and now we had to come up with ways to say it in different ways to allow us to get onto each marketplace. And we learned again quickly that we needed to do this because on C-discount, we sold their leisure product bike racks, roof racks, all those outdoor equipment. So we had all that nuance and that was a real challenge. Other things like changing pictures. So in Germany you drive I'm sure you're familiar with this on the other side of the road so we had to reverse our wing mirror picture so they looked appropriate to get the message out there. So we have all that nuance in Europe.
Speaker 2:If you look at the US, it's more monocultural, right. So one language, we've got stake-axes and other things to cater to. But by and large it's a much easier marketplace to start out with. For that very reason, and I think that's the fundamental difference, if I were starting in the US, I think it's an easier task than moving into Europe, and it's why, as well, a lot of the UK brands would look to move to the US rather than into Europe, because the challenge is so great.
Speaker 2:Now, that said, you've got in country, you've got some really good marketplaces. So take Poland. You've got Allegro, which is a phenomenal marketplace. That was an eBay copycat. With the ex-EBay employees they just built a much better standalone version of the site because they needed it, and they focus on categories where they needed. They could be strong on an automotive. It was one of them, so we looked at it really closely. Zalando, which it's a BMO that many people don't even know about. They're a phenomenal company. There's a lot of them.
Speaker 2:I think at Lasthounen I did a piece of work with NetEven in France. There's about 400 marketplaces across Europe, so that gives you some idea of the scale of them. And when you look at the conversion rate on marketplace versus direct to consumer in that area now this is a real generalist comment, but I've seen evidence to this fact working with an analytics platform Maybe you see it differently. I don't know. Conversion rates are relatively low in Europe for direct to consumer. On marketplaces and trusted aggregators they tend to be higher. And it's service proposition recognized brands. Do you find that's a common thread? Do you see that different?
Speaker 1:No, I mean, I wouldn't be so I'm not, I can't benchmark marketplace conversion rates, but my general assumption or impression would be that they're going to be higher. I mean, certainly you're Amazon, of course, but marketplaces in general, they're going to be well optimized and each of them, like you said, it's fascinating because in the US you've got I don't know what are the top three like Amazon, walmart, maybe Target, after that, I'm not sure, but then you've got like 400 here. But it's just. Each market will have Amazon, of course, as a constant across at this point, basically all markets in Europe.
Speaker 1:But you've got your bullcom in Netherlands, you've got your Allegro in Poland, as you mentioned. You've got EMAG in Romania. You've got all of these local players and then you've got then like these vertical specialists like D'Alando that you mentioned, and it's just pretty fascinating. But I think within each of these, these little smaller pools of demand, they're going to be well optimized. I mean the team at Zalando I mentioned this in the last episode with Stefan that you mentioned earlier they're an outstanding team. They just have resources that a D2C brand won't. And of course D2C lets assume you're on Shopify, you've got kind of the power of Shopify helping you out a bit, but these are really the resources that bullcom has or Zalando has are quite impressive, quite impressive.
Speaker 2:And it's not just the resource itself but it's the level of talent that they have is phenomenal and, as you mentioned, ball, another phenomenal organization. But the niche factor, I think is something that is worth considering. The fact that we can niche down in specific verticals, I think is really really useful. And again, if, like come back to the original question, comparing that to the US, it's probably easier to scale in the US, you know, because you have a bigger captive audience. If you do things right, it can be easier.
Speaker 2:The probably the growth of the media networks is the single biggest challenge I think the brands are trying to go through now, both in the US and in Europe. But what I've seen, at least in my experience, is that in the US they've matured a lot quicker. The technology investment is a lot bigger and in Europe it's still evolving. Like I've worked at Yumbo and O'Shan in Europe in the last 12 months and to say that they were archaic in the way that they were working was an understatement. Like I've done campaigns where you commit to, you know, a big five figure spend on a monthly basis. You don't see any analytics three weeks after your campaign closes and that's where they were. But you have to go along with them. I mean, look, these guys have to start somewhere, that the tech investment wasn't here but it is in the US. And, like, I was selling on Walmart prior to the Moosejaw acquisition and the platform was horrific. It was self-serve, really poorly put together. It seemed like when they purchased Moosejaw, they took a lot out of what Moosejaw had already created, built on top of it and built something a lot more robust and I think you know you add something like Vizio on top of that and Walmart is really aggressively putting together a media network that is worth talking about. That's probably the difference. The scale factor in the US versus in Europe is kind of different.
Speaker 2:And the final point in all of this is the US version of e-commerce and I've said this a few times cannot be applied so easily to Europe. I would say that we have a multi-tier, multi-region e-commerce ecosystem and I think Europe needs to identify its own identity for how it wants to go about things, and that, to me, will be. It requires a little bit of a mindset reshift and just final piece of context around that. And I'll give you Ireland five million people, tiny island. It's the most expensive small country in the world together, but we should have four co-ops and I wrote about this in 2011.
Speaker 2:I remember the time I was writing about it. It's too small to expect that every person who needs now engage in digital commerce or e-commerce can one set it up and, probably to the most important point, they don't have the talent to run it for themselves and we haven't invested in the education to bring through this big troop of new e-commerce. People want things to be more convenient, so Ireland should have four distribution centers, shared services you ring fence the budget here and develop a big, singular marketplace for Ireland. It would be more efficient and profitable for small rural businesses like where I live, to contribute to that from an e-commerce perspective than to adopt a model that we have in the US and I would say more than 80% of people participating in e-commerce here struggle to get above half a million a year.
Speaker 1:I mean one more callback to last week's episode about Timu. That's one thing that they've done is unlock those small rural businesses. Kind of fascinating. I appreciate this information from you. Since I just mentioned Timu, I mean, amazon is a majority Chinese sellers. At this point, we also see these Chinese marketplaces coming in Xi and Timu. Maybe we just did an episode about this, but so I don't wanna go into much detail. But what's your take on what's happening here? How do you think this is for brands Like how threatening is this? Or is it just the environment? How should we feel about it?
Speaker 2:We should be looking at it with caution, I believe. Take Shine as an example. Take the UK market 1.2 billion in sales in 2022 alone. That number has gone north again in 2023, after it's believed. That's in a market where one of the top 30 retailers ASOS won't exist in four years. Xing will have eaten their lunch Boohoo another one that will fall into that bracket of being hugely at risk. But also they've come with a user experience that I don't think we have really paid much attention to. I know you and Steph hadn't talked about it a little bit last week, but they're aggressive, I think. Since we started, I've had notifications. I've had three, I believe, from Timu.
Speaker 1:And I'm gonna get into that.
Speaker 2:Honestly the congratulations you've won you know that, yeah, yeah yeah, I love it, but the models that they've adopted are really interesting and you talk about it a little bit, where Xing have been really strong in strategic acquisitions and partnerships across Europe. The manufacturing capabilities that they have are something that will really diminish small independent retail and I think bigger brands should be paying attention to it as well, because they're capturing a bigger basket, more and more. Timu, on the other hand and I'd be interested to talk to Steph and about it I think people like eBay really have to look over their shoulder now and see where people are gonna go for those lower price items. It didn't happen with Wish. I don't think the catalog was as comprehensive and the supply chain behind that wasn't as robust. But Timu now are really delivering something that's gonna be a threat for those lower price items where people have said we're happy to go shopping for lower price goods right now because the cost of living is so high. Like last week, target just launched their deal-worthy selection of 300 products, for I think they were under $1 or under $10, which was bizarre, but Timu have dragged Target to that point. In Amazon, it's really looking at the assortment of products that they have and I think if you've got someone like Amazon who's looking at the assortment versus Timu. That's where they're gonna be deciding. We're going to support or promote sellers in certain categories differently to others, and that's where someone at risk lies, and it would be interesting to see how that plays out over the next couple of years.
Speaker 2:And final point on all of this and I don't know how we can really gauge this, but the deep pockets that they have feel like they're here to stay for a long time.
Speaker 2:They don't seem like they're building a business to kind of be off the radar in three or four years. Sheen want the IPO, that said, to be coming sooner than people might think. They've put feet on the ground in Seattle last week, opened up a distribution center in some office space. So these are two businesses that are really serious about getting themselves embedded in the most mature market in the world and really making a difference. So if you're not taking what they do seriously and looking at their conversion tactics, their service proposition, you really should start paying attention and even download the app to see what happens. And yourself and again you talked about it a little bit last week the upsell in the basket is incredible. It is, it's so aggressive, it's like nothing I've ever seen. It almost compels you to engage in the sort of onsite conversion tactics that they want you to call in the name of free shipping.
Speaker 1:Yeah, absolutely, I mean good notes and I'm tempted to get into them more. But, as I mentioned, we talked about this lately, so I'm really I'd like to give you one final point on it. Yeah.
Speaker 2:Or one other point to think about, and what I think it could do to help people is to say we need to stop short termism. So the idea of profitability became a big topic for everybody last year. For many people, it's gonna take them years to achieve that.
Speaker 2:And if they can survive the next year or two working towards profitability, that's going to improve their overall business. But I think what's happened since the pandemic and even since things like paying monthly for software, means that we have this short termism to get a return on investment much quicker than maybe as naturally possible. So we need to develop maybe a different mindset to that and the metrics again which govern the growth of our business. But I think Team Moon Sheen could do us a favor to say let's get back to actually putting a strategy down on paper and seeing what we need to do. And as I said in the post recently, five of the top 250 UK fashion brands are profitable. Only that tells you something fundamental about their businesses and their business models. This is an opportunity now to say how do we reshape it so that we exist in 10 years time?
Speaker 2:And I don't know if people are really having that stark conversation.
Speaker 1:I mean, let's just pick that up quick. I saw that statistic and it was well, it was both surprising and not surprising. I mean, it's a number that does kind of smack you in the base. But also, what else do they expect? Cause we know that these problems are there, but, like, maybe you could help us understand, is this just a symptom of the current macro environment or is this bigger? Is this a fault in the DTC model, in the e-commerce pure player model? Is it about the channel selection? What could be done differently? Like what is it about those five? That's different from the other 245?
Speaker 2:So there's a couple of things in there that I've observed at least. I don't know if there are definitive answers to all of that, but your play as a starting point feels like it is severely at risk because we have a much deeper market now in terms of the number of entrants and that's going to increase as well over the next number of years. So in the UK I'm just going back to pandemic numbers and I get it pretty accurate but I believe there was somewhere in the region of I think it was about 6,000 new entrants to the e-commerce market pretty much overnight. So that meant there was people done after budgets, there was going to be increase in optimum prices, all the things that go with the increase in people coming into the market. So pure play has got to be exceptionally efficient then at everything it does once that sale happens, and you've got to run probably leaner now than you've ever done before. The idea of loyalty is something that I think we cling on to, but it's not really something we've got our heads around yet. So for pure players it's always going to be based on the fact that we can get repeat purchases from people over a longer period of time and hold on to them. I don't necessarily think that that's true and now I'm there to be proven wrong, but there's no one that really does that too well and I look at my own shopping habits and how they've evolved and that's a good barometer for me there In terms of the fundamentals of what we do as an industry.
Speaker 2:And this goes back to a point that you kind of started out. Is it a macro problem? Probably because we're basing the idea that we need people to maintain consumption at an ever increasing rate. Yet we know that as a plan if we need to change how we consume things. But retail is all about the consumption of product. So if I only buy what I need versus only buy what I want, that's a fundamental shift in the pattern that I'm demonstrating and it came up on Walmart's earnings call yesterday earnings call where they were saying people are buying more frequently, they're buying less items or higher price items, and that's an interesting shift. So I think we've got to wrap our heads around that.
Speaker 2:And I first talked about this. I was talking to the largest independent buying group in the UK, latcher AIS. They account for about 1.4 billion pounds of purchasing every year. So a lot of independent retail, and my opening statement to them was not all e-commerce is gonna be for every single one of you.
Speaker 2:It may be that there's versions of e-commerce and this is the business model. It's an under-improved for people that you need to figure out. So, as a small boutique fashion brand in Manchester, are you better focusing your attention on TikTok or Instagram and using it as a marketing vehicle to supplement your in-store activity, or should you have an old singing, all dancing Shopify store where someone from the warehouse looks after a piece of it, someone from your store gives it two hours a day and you just underserved that asset for your business all of the time. And that's my fundamental problem with it, mike, is that we cannot resource e-commerce stores to the degree at which we need them to in order for them to do what we expect them to do, which is deliver more sales for us. And the other piece it comes back to a huge skills gap in an area that you're in, which is analytics and understanding really what's happening, and I think people don't respond to data quick enough, and then we don't really have a frame of reference for understanding. Well, when will this ever be right? Because we think in terms of accounting timeframe, as opposed to where is our business gonna be in three or four years and what are the fundamental steps? So there's a lack of trust in time and information to get in place the sort of things that we need to.
Speaker 2:So, from my perspective, they're the sort of business model flaws that exist, and that's not just in pure play. I think that's right across the board where you see that there are areas that we need to get better at. Automation is helping, for sure. You know. If we can get in and start making rules based engines for making decisions on advertising or marketing, I think that they're good places to be, but we're a long way off that being in place right now. So again go back to the idea that we need to figure out what flavor of digital recommercy is right for us and we need to double down our effort on becoming really good at that. So maybe it's we take a narrow approach to our step into Econ and we broaden it out as we prove we can do the things we said we would.
Speaker 1:I want to return back to marketplaces a bit. Actually, there's a yeah, this phenomenon, you might call it I mean, I call it market place application, but it's just, you know, this idea that that many retailers could be marketplaces and this is facilitated in parts. The way that I see it, there's a lot of facilitation coming from software like Miracle. They certainly I don't know if there are more in that category, but Miracle is helping to make this kind of stuff happen. And you recently discussed some numbers from Miracle. You were saying that their ARR and your current revenue is up 20 percent, that they've got operators 500 million GMV, which is impressive.
Speaker 1:And I still think that I think that marketplace application, this idea that, oh, everyone can have a marketplace if they wanted enough or if they have a piece of software in place I think that this is kind of in the direction of a bubble and that I would worry longer term about Miracle's business, because I think that there's going to be some uncomfortable conversations coming out as these marketplaces fail to do what they need to do. I mean, it's a question of what their goals are Like. Do they want to become a scaled marketplace? Very few are going to. Do they want to be a niche marketplace. Is this just about an alternative to expanding their merchandising and just deepening their range and their selection a bit? What's it all about? But I view the amount of growth that's happened in the long tail of marketplaces with a lot of skepticism.
Speaker 2:I think it's a well placed skepticism. If I'm being honest, miracle have provided an unbelievable ability for the right kinds of brands to become marketplaces. Now I think if you really defined it, they're probably not marketplaces. They have everything you said at the end. They've got better assortment, the range extension, they have all the things that you need to behave like a marketplace. But you're not.
Speaker 2:And when I think about a marketplace, the marketplace is almost agnostic to the buyer and the seller to facilitate the transaction. And if you're in that space where you've got a vested interest, I don't think you can be classified as a marketplace per se. I think that gets even muddier when you say we're going to introduce a retail media network onto our marketplace and it feels like all that's a bit of a land grab, if I'm being perfectly honest. And that's the danger, because I don't see a world where you could develop a media network within a marketplace where you're a retailer yourself that is not somewhat biased to your own selection, getting preference. I know we'll be told different, but I don't think we can see that happen the miracle model and where they can get to like taking Miracle just specifically, they'll plateau. There's not a world that exists today where they could ever have a thousand verified marketplaces. I don't think in mature markets that can all live in the same place. I just don't think that it's viable at those levels. But you then look at what they're trying to do. It's how do we create revenue outside of core marketplace services and it is the addition of retail media networks. That's where they're saying well, our next layer of revenue is going to come. Our next layer of building that ARR is going to come through media networks that we're going to develop in tandem with key strategic partners. And that's really got me thinking about Shoppay. Like they've signed an agreement with Shopify. They're very much in bed there. The marketplace product is going to be available to select customers only from Shopify Plus and you would think, given the profile of who they are today, there's probably only a handful that fit the profile of who in the Shopify network could be a marketplace, and there's not many.
Speaker 2:When I look at what Shoppay is and could become it was touted at one time of becoming maybe a global marketplace as well I see, for me at least, the development of Shoppay to ultimately be coming a place where Shopify could put a media network. They've got a lot of buyer information. They've got a lot of behavioral data. It's a place, somewhere, that people trust to make payments, so I see it conceivable that they go after it. And that's really further underpinned by the fact that Shopify are placing such an emphasis on the hardware side of things right now, like Paus is a huge deal to them right now. It's a huge strategic imperative. If I compare that to what Walmart are doing with Vizio, it feels like they're also creating a network where they could provide an advertising network even outside of Shopify ecosystem. So I don't even have to be a Shopify user now to get Paus. I can use it anywhere I want. That to me is quite a miracle. We'll look to leverage Pay and Shopify, look to leverage the miracle relationship, because outside of that there's not a huge amount Else they can do. There's range extension, but you can do that with Shopify apps already. There's a number of other providers that do that and do that better.
Speaker 2:No, I was just going to say like, compared to someone like Zalando, who are a long term thinking company, they bought Anatoine, I think around six years ago, maybe a little bit more. Anatoine, now called TradeBike, was a range extension tool for fax and it was developed out of eBay actually two ex-employees and one guy from Superdrive and effectively they made this piece of middleware that allowed me to pull in anyone's inventory from anywhere and map it to my dataset and bring orders back to that person in a format that they're already familiar with. Zalando acquired that within three years of it within three years of it being alive but they focus on fashion only. So there was a really specific purpose. They had 700 brands that they could work with and gave them a very clear strategic foothold in the market that they were already very strategic in.
Speaker 1:That's fascinating. I hadn't heard about that before. Well, as I said earlier, I think Zalando is just an incredibly professional organization. Yeah, I agree that retail media is probably the next layer here, and I think retail media has been in some ways overhyped in terms of this idea of there's this closed loop attribution, it's privacy secure, so it's very future proof and I think that's true. But it's just very, very dependent on having the volume, this large owned and operated space, and I think it'll be questionable who can really be big enough. Also, you mentioned earlier these kind of perish attempts at retail media. So I think, well, that's maybe a place where some of these software vendors can jump in. But I'm just looking at the clock, vinny, I think maybe we'll.
Speaker 2:Just I thought about 10 more minutes, if that works.
Speaker 1:Okay, yeah, one last thing. It's just switching gears a bit, but I'd love to just pick your brain on it before I let you go. Connected TV yeah, so you've said that we shouldn't be sleeping on connected TV. Why do you feel that way, and who stands to win from connected TV?
Speaker 2:Well, the stuff that really got me thinking about it was in talks with the colleague, mike Sikor, and we were looking at where traffic originates or where people spend time online. Over 80% of the time online in the US is now spent on video platforms, so that's either video on demand, streaming apps, whatever that might be. It means that if you're someone who's only operating in the space of search or discovery through meta, you're limiting your window a little bit to get viewed in these places. Now, I know you can do different types of targeting, but it's a huge number of in terms of time spent in a specific area that if you're not trying to tap into it and I look at it through the lens, I don't know if I said, but I've had ownership of a DTC brand myself.
Speaker 2:We sell thermally insulated tents. We do it in the US market and we've been trying to try to grow out of kind of a 3 million turnover cycle for the last three or four years and we always plateau and that's something I've watched happen for like we're a seven year old business. For the last three years we've got to that same rinse and repeat cycle. So in our heads we're a small brand. We know that if we got the product and everyone says this, but people who get the product in their hands, they appreciate it. They're in the outdoors, they can see the benefit because it's insulation for your existing tent, it's an airframe tent that pops up 60 seconds. Your kids sleep happy, you're warm, lots of light, lots of noise, stuck in the thing.
Speaker 2:We know that it has a place in the market. The market is dominated by brands that people already know and, without trying to use the word disruption, we need to figure out a way to get people to think about us and get some mind share from people who we feel we could sell to. So I've been following the kind of rise of connected TV over the last two or three years and really what it boils down to is people are spending a lot of time in that space and, if I can serve ads in a more contextual way, that is not just about selling but delivering a bit of our brand story. To me it feels like an activity worth pursuing for the next two or three years but also, for the first time, allows us as a small brand to compete and say we're worthy of using our ad just as much as the new Chevy ad or whatever that might be Now my fear of it is, and I was thinking about this one Super Bowl.
Speaker 2:If the Super Bowl ads were for small brands no one had ever heard of, would we talk about them Like if it was just a space where anyone could be shown, or would we really care? Would we remember who it was? But we all know who was in the Dunkin' Donuts ad. Right, because we associate celebrity with Super Bowl ads now because of the way that it's gone. But my fear is that we ultimately find out about ourselves that people actually don't care about our brand. But that's okay, because then to me, then we can go and solve that, Whereas people are in the space who already invested in, let's say, brand assets or production and video and continue to do so, but know where to place it to get real feedback on it. I think that's a danger because it goes back to the business model question how are you going to get better or find new places to be if you're not willing to test them Again?
Speaker 2:I think the two most positive signals I've seen in the UK and in the US, where I think this becomes almost passive buying Sky release glass TV probably two years ago now, and that is effectively a digital display board for them to go and put advertising into wherever they want. It's connected to your Wi-Fi, so they can be really good about placements. The new version of that uses the camera embedded in the TV to allow you to do things like try on clothes, try on sizing, fit it at home, so the TV is really extending itself. Now I still think we're a few years away from doing that, because I worked on a project eight years ago now where we tried out Microsoft in gaming and that's probably a category sorry, slight aggression where I think it can work. And with the Walmart purchase of Visio as well, they want the hardware network to be able to serve ads to whoever they want.
Speaker 2:And the question I posed to a buddy of mine yesterday was I wonder, if Walmart were to give away Visio TV to every household in the US, what the payback period would be in terms of media spend to get in front of those eyeballs and I don't think you're looking at a very long period of time. We're trying to piece it together right now, but I have it somewhere between two and three years. So even for a two billion acquisition, 2.3 billion and a free TV for everybody, it still feels like true business, because Walmart can not go anywhere anytime soon and the two businesses are built off models which fundamentally work for them, which is member access and Walmart's member access went up 20%, as reported yesterday and Sky have a huge user base both in Ireland and in the UK, so the penetration that they get through the subscription usage is really really powerful for them and they use that subscription really really well, in my opinion.
Speaker 1:Well, that's a super fascinating thought experiment that you leave us with.
Speaker 2:You know how we get on.
Speaker 1:But I want to be respectful of your time. So sorry if we bring it to a bit of an abrupt end, but I just want to say thank you once more for joining us. And where can we find you online? What are you up to? Anything else you want to plug, or?
Speaker 2:shout out no, look, it's your show, so I'm just glad to be here. I'm usually on LinkedIn so people will find me there. I do the V spot news. It's kind of a satirical look at the week that was every Friday. I do the Watson weekend with Rick. Then on a Friday We've got three new shows coming out this year as well. That's Rick Watson. So LinkedIn is probably the best place. I'm a bit of a regular there. So look, and if people do want to reach out, pop me a DM. I'm happy to talk to people. But look, I'm really appreciative of your time. You've taken the effort to get in touch and spend so much time putting together a really good show, so very appreciative of it. I know how much goes into it.
Speaker 1:Well, absolutely A pleasure with mine. So thank you once again, Vinnie, for joining us.
Speaker 2:Take care. Have a good afternoon.
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