You Can’t Out-Amazon Amazon Anymore: Inside Pattern’s 2026 Marketplace Report | #598

In today's exclusive episode, Merline McGregor, Pattern's Managing Director AZN, joins Add To Cart to unpack what that shift really means for brands navigating Amazon, TikTok Shop and AI-driven discovery. From Amazon’s continued dominance to the uncomfortable truth that your brand might already be selling on marketplaces without your control, this conversation challenges the idea that everything should still funnel neatly back to your DTC site.

Today, we're discussing:

• Why over 90% of Aussies are now shopping via marketplaces
• The real reason Amazon keeps winning in Australia
• What “retail readiness” actually means for brands
• Why your product might already be on Amazon, without you controlling it
• How TikTok Shop could reshape ecommerce team structures
• The shift from single-channel ecommerce to fragmented commerce

Pattern's Consumer Marketplace Report 2026 now available here.

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Transcript

SPEAKER_01 0:01

Marketplaces is actually the inflection point or the point of decision making. I don't think they need to think about is my experience as good as Amazon. I think they need to think about is it as complementary to Amazon as possible? Nothing really gets sold, you know, if you're more than probably six rows down. Their feedback would be we're not on marketplaces. Our brand isn't on Amazon. And our feedback would be your brand is on Amazon, you're just not controlling it. I'm Merlin McGregor from Patton, and in this episode of Add to Car, I shared why marketplaces are where Australian consumers decide and why brands that stay passive are quietly losing brand.

SPEAKER_00 0:39

Hey, it's Bushy joining you from the land of the terrible people in Brisbane, Australia. Today we have a bonus episode for you, the first of a few bonus episodes that will be coming your way. And I'm really excited about today's episode because it is built around one of my favorite pieces of research every year: Patterns Marketplace Consumer Report. Anyone who is a reader of my newsletter knows that this report gets a mention every year because it's such a brilliant barometer of which marketplaces are really getting some traction, which ones might be shrinking away, and what you need to do for your business to stay relevant in a world where marketplaces, let's be honest, are really becoming dominant. If you are responsible for e-commerce or sales strategy within your brand or your retail business, marketplaces are no longer a sideshow conversation. They are where discovery, trust, and increasingly decision making is happening for consumers. To talk us through all of this, we are lucky enough to be joined by Merlene McGregor. Merlene is the managing director for ANZ at Patton. Patton, if you don't know them already, they're a global e-commerce accelerator working with brands across marketplaces, D2C, and omnichannel retailer. We are so lucky to have Merlene here to talk us through the report in a level of detail that we've never been able to get to before. In this conversation, we unpack what's actually changing in how Australians are shopping on marketplaces, which platforms are growing, which ones are stalling, and the role of marketplaces such as Amazon, Timu, Sheehan, and retailer-led marketplaces, which are evolving in the customer journey. We also talk about where D2C still matters, how brands should think about discovery versus conversion on these channels, what social commerce really looks like in Australia right now, and how to get ahead of the game for what is likely to come and how to approach marketplaces without blowing up margin or complexity in your business. We're really careful not to just make this a theory episode. It's got some brilliant strategic thinking from Merlene in where all of this is actually happening and where retailers can get started today. We have the Patton Marketplace Consumer Report linked in the show notes. If you want to read along while we're talking, you can download that for free right now. But let's get into it. Here's my conversation with Merlene McGregor, Managing Director for ANZ at Patton. Merlene, thank you for joining us on Ad Descartes.

SPEAKER_01 3:10

Thanks for having me, Nathan. It's great to be here.

Pattern's Marketplace Consumer Report

SPEAKER_00 3:12

What a special privilege. Not only have we got Patton on board as our silver partners for the year, which I'm very excited about because you bring such amazing expertise, especially around marketplaces, as we'll find out today. We get to have you on for one of my favorite reports of the year, and that's Patton's Marketplace Consumer Report. It's a bit of an annual staple now. So we're going to dive into that. But to kick us off, I want to understand from you, as you got this report in your hands for the first time, what was the biggest shift that stood out for you in how Australians are shopping right now?

SPEAKER_01 3:48

Yeah, I mean, this report is the eighth edition and it's put together by our gun team of researchers. And I think the biggest thing for me or the biggest takeaway was that everything, all the indicators that we had been seeing for the last couple of years around the importance that marketplaces is starting to play in the lives of, you know, the Australian consumer and all the indicators that we're seeing, you know, starting to build in terms of confidence and decision making, we're really seeing those actually consolidate, I think, in this year's report. I think over 90% of Australian consumers who shop online have shopped from a marketplace, I think, in the past 12 months. And even though we have discovery across a range of different channels, and I think 2025 really saw the explosion of both AI and I think that top of funnel social traffic really starting to go downstream into conversion channels. What we're seeing is that marketplaces is actually the inflection point or the point of decision making. And I think a lot of that comes out in terms of trust and convenience.

SPEAKER_00 4:50

And when you're talking marketplaces, can you give me an idea of the breadth that we're talking there? Like what do you consider a marketplace?

SPEAKER_01 4:57

Yeah, that is such a great question. And it's a question that we thought would might be quite confusing, I think, in our report. So we ended up asking, I think, Australian online shoppers what they thought a marketplace was or who they thought actually had a marketplace. And it turns out that Australian shoppers are quite savvy. They clearly understand the difference between buying, I think, now from an actual retailer, and then also what a third-party seller actually might might be as well. So a marketplace can be a something like a baby bunting, which they sell their product on their website, but they also invite a number of trusted third-party retailers of brands to also utilize their website to sell their products as well.

SPEAKER_00 5:40

Okay. And then obviously we're talking all the way through to your Teemus and your Amazons of the world as well.

SPEAKER_01 5:46

Absolutely. So I think the most well-known marketplace in the world would be Amazon. And I think in the last few years, Timu and also Sheehan have really risen to the fore. But also, I think a lot of Australian brands are now jumping onto the marketplace bandwagon. So you've got JB, you've got Woolys, you've got Maya, you've got David Jones. I think the latest to come to the party is also Country Road as well. And so they're all taking advantage of their massive brand recognition and traffic.

SPEAKER_00 6:16

A lot of those brands that you mentioned there are, dare I say it, legacy brands. They're brands that have been around in Australia for a long time as big retail brands. They've all added marketplaces on board to differing levels of success from the outside. Is there something in that? Is that as you get, you know, more established and you're looking for more market share or range that adapting a marketplace onto your existing model becomes a great option?

Marketplaces in Australia

SPEAKER_01 6:43

I think for some brands or for some retailers, it is a great option in terms of expanding catalog and range. I think when you're a vertical brand, I think it's quite expensive probably to do product development and to develop NPD. So I guess what they're doing is they're utilizing the strength of other brands to also bolster or further their own catalogue. I think that can be done in a variety of different ways, and as you mentioned, to varying degrees of success. What we're probably seeing is the marketplaces that actually stick to probably buying in brands that aren't theirs or inviting third-party sellers to their marketplaces are probably having more success than the brands that have home brands and then inviting third parties in.

SPEAKER_00 7:30

Okay. That makes sense. All right, I'm sure we're going to talk more about that. But as a high level from the report, I'm really keen. This is always my favorite part of the report. Just going through that page which goes, oh, which marketplaces are doing really well in growth and which ones are struggling. From your perspective in Australia, which marketplaces have had the most growth in the last 12 months and which ones might be struggling a little bit?

SPEAKER_01 7:51

Yes. So I think Amazon continues its tear. I think what we had was 60% of online consumers actually shopping from Amazon in 2025. And even when you look at the purchase intent, another 10% of consumers say that they're actually going to purchase from Amazon in 2026. So that means 66% of online consumers are going to purchase from Amazon in 2026 if intent equals behavior. We've also seen Sheein really accelerating and expanding, especially past their fashion and their fashion core into more beauty and wellness as well. And they're having some really good success, I think, with that strategy.

SPEAKER_00 8:30

It feels like the Sheehan and Timu hype cycle has died down a little bit, at least in the mainstream coverage, but it's obviously not being reflected in the transactions and the numbers.

SPEAKER_01 8:40

Yeah, I think what we're seeing with Timu is I think just under 50% of consumers actually shot on Timu in 2025. I think what we're seeing is that purchase intent drop. And I think as we discussed in our 2025 report, Timu really isn't winning on the trust stakes and probably on the experience stakes. So we're probably seeing a bit of that retraction because of logistics and offshore shipping. And we might also be seeing some of that retraction because of Amazon hauls. So Amazon also launched their own, I guess, Amazonian version of Timu with Amazon hauls, and they're seeing really good results there too. And then we're seeing, you know, the likes of eBay and Kogan just starting to retract slightly. I think really trying to find their niche rather than, I guess eBay was the number one marketplace, you know, 10 years ago, but we're really starting to see traffic diminish and probably their catalogue in their first party catalogue also diminish over time.

SPEAKER_00 9:35

Do you see much reinvention in the wings for eBay?

SPEAKER_01 9:38

Yeah, I think they're trying to specialise more and really create more of a niche. They're going back to, I feel like, their secondhand goods strength, but with a bit of a twist. So really starting them to invest in things like collectibles and also starting to invest in secondhand luxury goods as well, which I actually think is a really positive move for them. And obviously, with catch and my deal, you know, their demise, I think recently as well, we're starting to see that real middle layer of marketplace be squeezed. And unfortunately, a lot of that squeezing is coming from home-grown marketplaces rather than international ones.

SPEAKER_00 10:16

Okay, that makes sense.

SPEAKER_01 10:17

Yeah.

SPEAKER_00 10:18

One of the things that I just realized as we're talking to you here, and when you brought up the eBay example, is that obviously Facebook marketplace is not part of this, the peer-to-peer selling secondhand, which kind of leave that to the side. We're just talking about retail marketplaces here.

Winners, Strugglers, And Trends

SPEAKER_01 10:31

Yeah, that's what I mean, that's what patent strength is as well. So we don't deal in the secondhand space or we don't work within that space. I think that has a whole life to itself, I think, when you think about marketplaces that actually really focus on recycling and sustainability. This report really focused on new with tags, so to speak, to actually use an eBay term.

SPEAKER_00 10:54

That makes sense. And in terms of those marketplaces, those retailer marketplaces that you talked about, baby bunting, Maya, Bunnings, etc., are there any in there that stood out to you in terms of retailers who are doing it really well and getting the results?

SPEAKER_01 11:07

Yeah, I think for me, once again, I hate to beat the drum, but I do think that Amazon, from an experience and credibility point of view, is just miles ahead of the other marketplaces at this time. I think it's no secret how they entered the market, I think, nine years ago, without much fanfare or probably a little bit of disappointment. But I think what they've done over that time is they've really built up their logistics, their test and learn approach, and their unwavering commitment to what they've seen in other markets work and bringing that here to Australia. So I think from our perspective, from a macro perspective, Amazon is the marketplace that probably fits the widest number of brands in Australia today. And having said that, I think, you know, a Bunnings is doing really well on width and range, but I think they're also just still trying to find where their traffic is going to land in terms of conversion as well. And also that mismatch between what's available in store and what's available online or in their marketplace can also lead, I think, to customer disappointment at some stage.

SPEAKER_00 12:15

Yeah, you see it all over the Reddit forums, don't you? In terms of, you know, I see a lot of frustration at the moment with retailers offering an online marketplace that doesn't match their in-store offering. And obviously that's the idea of a marketplace. Do you see that trend continue? Do you think that consumers will get used to it after a while? Of like there's this whole endless aisle available online that's not available in-store, or do retailers have to get better at educating people on what is online only versus what's in-store?

SPEAKER_01 12:45

I really think the responsibility is on the retailer from a customer experience point of view, from a UX perspective. There are some really great companies out there that can help you with signposting. I think so much better about what is something that is available widely, you know, both in brick and mortar and online, and something that is an online only purchase or product product. I think, yeah, absolutely the responsibility lies with the platform. Customers are even more so now than ever before. They're quite unforgiving, I think, when it comes to availability and logistics. I mean, we found with our research that customers who shopped on Amazon, if they couldn't find a brand that they were looking for, almost half of them actually purchased a similar product from another brand. Instead of them choosing the brand, they actually ended up choosing the platform. And I think that comes into because of all the convenience and the trust and just the, you know, the one-step checkout and all of that sort of thing. I think we've got so much to learn, I think, from that piece of customer experience that we need to flow through even into our D2C experiences.

SPEAKER_00 13:51

I think that's a really interesting take because I couldn't well, I know that that as a retailer, it's daunting to think that you've got to take on Amazon if they're playing in your category and playing really strong. And the idea of doing everything that Amazon does is often unrealistic. You know, to your point, Moline, around they're doing great at logistics, they're doing great at customer communications, they're doing great at product range, product data is there. When you are advising brands on the customer journey and where they might make the biggest impact against Amazon, how are you advising customers to think about that? Are you saying to try and compete with Amazon in certain parts of the customer journey? Are you saying actually just join in on the Amazon party? Where do you usually come from?

Marketplace Dynamics

SPEAKER_01 14:38

Well, one thing we tell our clients, your brands, is that you can never out Amazon, Amazon. And there's no point as well as a market entry strategy or as a standalone channel strategy. That's not where we see even marketplaces fitting into any brand journey. I think now what we will find though is that D2C sites are going to become places of trust and credibility and confirmation. Your customer will not necessarily always discover you from your D2C site first. You've got AI, you've got social, you've got marketplaces, you've even got the retailers that you as a brand might also sell to. But what we found is that even people who shopped on Amazon and discovered a brand, or who people who shopped on marketplaces and discovered a brand, but mainly Amazon, half of them actually went back to the D2C website as well. It'd probably either be to check information, to maybe source another colour or something else that they couldn't get on Amazon, or also just to confirm that the brand was credible, so to speak. And so we need to really think about that next gen of where D2C brands or D2C websites, what they're actually going to play in the next role of the consumer journey. So if they're not the starting point, if they're the middle point or the end point, how do we make sure that, you know, your brand is showing up as strongly as possible? Even from a discoverability point of view. We're talking to brands now about how their brands are showing up on AI. You know, is it crawlable by, you know, all the bots or all the platforms? What does Chat GPT say about your brand? You know, what does perplexity say about your brand? There's just so much to think about, I think, for brands in this day and age. And just realizing that there's fragmentation, but there's also consolidation when it comes to conversion and credibility. And I think that's what brands need to think about. I don't think they need to think about is my experience as good as Amazon? I think they need to think about is it as complementary to Amazon as possible.

SPEAKER_00 16:33

So when you're talking to clients, do you kind of think about it as two separate strategies now? Do you think about it as discovery? Because probably, gosh, five years ago we were like hearing all these stats from the US around X percent of people start their product discovery search on Amazon as opposed to Google. And here in Australia, we're like, oh, we're so far away from that. Google's still everything. Do you think about it as where do people discover your products versus where they convert? Because obviously you want that discovery across networks, as you to your point, around AI and everything else that's coming. The discovery can be so broad. And even that first purchase doesn't really matter where you get it, as long as you get that first purchase. But are you thinking then you want that retention and reactivation through your own channels, or you don't care?

SPEAKER_01 17:18

It really depends what kind of brand you are. Amazon is great for discovery. So, as I said, like around half of people discovered a brand basically on Amazon, but then half of those people then went to the brand's D-Saint site, either for confirmation, credibility, or it could even be to check out. Depending on what kind of brand you are and what your product is, I think that there is absolutely an opportunity for you to capture a customer who wants to shop only on Amazon. That is their primary shopping channel. I think subscribe and save is an amazing way to capture a customer. I mean, I know like I have bought the same brand of washing powder for three years because it's on subscription and I never have any reason to look anywhere else for it. So it really depends what kind of brand you are. If you're a vitamin and supplement brand, if you're a beauty brand, if you're a CPG brand that requires high replenishment. I actually think capturing your customer on Amazon and keeping them there, there is absolutely nothing wrong with that. As long as you have another channel or number of channels that you're also working in the same vein to make sure that you are growing your brand and your market share via lots of different channels. I think what we're finding is, you know, fragmentation is happening. I think once again, at that top level, but customers are starting to be quite selective about where they'll check out from.

SPEAKER_00 18:36

Okay, that makes sense. And so you called out there a couple of categories such as beauty, FMCG, that are really ripe for Amazon discovery. Are there any brands that come to you and go, hey, we're in these kind of categories and we think there's an Amazon opportunity? Like, no, actually, those categories, they're just not as good on Amazon.

SPEAKER_01 18:53

Yeah, and I'll probably get some calls about this, I'm sure, maybe, maybe from certain category managers. Fashion. Yeah. Something with the colour palette that's seasonal, that you need to be in and out of, that maybe requires an experience or a hand feel, I don't think works particularly well on Amazon. There are some marketplaces that have nailed it. Iconic comes to mind. But I think Amazon, you know, if you're selling socks and jocks when it comes to, you know, you want to call it fashion. If you're telling socks and jocks, or if you're selling something that is easily explainable and size and fit aren't an issue, I think that's where marketplaces, specifically Amazon, could work okay or work well. But if you're, you know, if you're selling something that requires, I think, something quite emotional, like a fashion purchase, I think that's better done via other platforms.

SPEAKER_00 19:42

So it's more the the hammer and nail products. It's like, I've got this problem, I need a solution. Amazon will make it quick, painless, easy to get through. Whereas fashion probably needs a little bit more inspiration, a little bit more of a story behind it, a little bit more detail. When it comes to product details and product data, then for Amazon versus, say, your D2C site, do you really encourage customers to think of it differently if people are more at that logical frame of mind on Amazon? Are you writing different things on Amazon versus PDPs?

Platform Loyalty Over Brand

SPEAKER_01 20:16

Such a good question. I think our copywriters, we've got a number of copywriters who work on both D2C product descriptions and Amazon product descriptions. I would say that the product descriptions written on Amazon are generally at the bullet point level much more efficient in terms of communicating features and benefits. But there are also other places on the Amazon PDP and through a brand store where you can communicate much more of the visual element of your brand. We work with a number of beauty and wellness brands. They've had enormous success on the platform, but that's because we've structured, I think, the presence of the brand to both fit in with how Amazon requires your data to be structured, but also really leverage like brand store, A content, and all those elements that I think a lot of brands don't necessarily either know that they exist or don't have the expertise to be able to design and maintain, you know, in a regular manner. So I would say that for me, brands that work really well on Amazon, beauty, wellness, VMS or vitamins, minerals, supplements, you know, electronics, automotive, toys, games, a heap of baby, heap of homewares. Like there's, you know, to be honest with you, most categories work. It's just really about can you drive enough eyeballs and can you drive enough interest to the platform whilst your brand or that particular category is getting started. And there are, you know, some categories that still aren't optimized on marketplaces or on Amazon. And there are categories that I think are quite mature.

SPEAKER_00 21:58

Yeah. I've played with a number. Of Amazon brands in Australia and who also have a US presence. And one of them was actually using patterns technology to help identify insights and trends around customers and what they were searching for and how they were finding products. And one of the most amazing things is by running it through the lens of what customers were searching for on Amazon, gave them insights into what they should be putting on their PDPs. So even sometimes it could be things that have nothing to do with the product, or they would never think of it as a benefit, such as, I don't know, say gluten-free. And it's never come into the realm of what they'd considered. And all of a sudden they're like, people are searching for gluten-free dot dot dot in our category. If we make one of the features or the benefits of this product gluten-free on Amazon, that's actually going to get us the eyeballs, even though we've never talked about gluten before.

SPEAKER_01 22:51

Yeah, it's really what we call like, I guess, adjacencies. So our technology, so we've got quite a few pieces of technology that we've developed over the years. We have about 300 developers who are constantly working on our tech. And we have one piece of tech called Predict, which basically helps you monitor your brand on marketplaces, but also it goes one step further where you can actually also understand how people are actually finding your brand, like what you just said. Like I've got a really good example like Tumi, which is a luggage brand we work with in the US. And we actually found this is a couple of years ago now, but we actually found that people who searched for the term Rolex on Amazon actually ended up converting very highly on the Tumi product when it came to checkout. And it's not like Amazon, I'm sure they probably don't sell real Rolexes, but it just showed the mindset of the customer and probably that upwardly mobile consumer who's looking for a luxury product. And Tumi's also, you know, a luxury luggage brand. And yeah, that was actually something that, you know, we kind of extrapolated into lots of different categories and lots of different brand searches. So you'd be amazed at what at times people associate your brand with out into, you know, either Google or Amazon or, you know, other places that they can search.

SPEAKER_00 24:14

Yeah, that makes a lot of sense. And we know Amazon's not short on data, right? So there's probably a lot of insights there that we might not have found in D2C.

Leveraging Amazon Data for Brand Insights

SPEAKER_01 24:21

No, that's true. And what we've tried to do is really leverage that Amazon data for our own brand benefits. So there's certain information that isn't available to us, but there's also a lot of information that is available to us or that we have serviced ourselves or used even, you know, the information that's available to us from our own brands to be able to create some really interesting category viewpoints and category stats that we're really excited to both, I think, share in the consumer report, but also when we're working with a brand, we start talking with the brand, we can demonstrate to them a lot of category insights that they wouldn't have available to themselves if they're not already either on Amazon or if they don't know where to find it.

SPEAKER_00 25:00

Yeah. And I think that's a big thing, right? Is you talked about discoverability early on. I could imagine there's a lot of retailers and brands who come to you and say, Merlin, we we've finally made the call, we made the decision at a board level, we've got to start selling on Amazon. You're like, great, here are our options. We've got some different options, especially around fulfillment, warehousing, the rest. How do you talk around discovery on Amazon? Because I think for a long time we talked about winning the buy button, but it's become a lot more complicated and diverse than that, especially when you start talking about Amazon ad networks, thinking about using their AI bots, all the different types of content. Where do you start when you talk about being able to be discovered on Amazon? It's not good enough just to list your products.

SPEAKER_01 25:44

No, I think number one, it all comes down to making sure that your brand and your product is safe on Amazon. And what I mean by that is that the brand is safe. So making sure that your distribution contracts are set up correctly so customers aren't also having to make decisions about who they're going to buy your product from. So is it from you? Is it from another seller and that sort of thing? So making sure that you can try and be the only person selling your brand on Amazon is actually really important. I also think from a discovery point of view, making sure that you have something called retail readiness. So making sure that you have, you know, mandatory, like at least six images, you have all your bullet points filled out, your titles are structured correctly, you have got all your SEO down pat both back end and front end. You know what customers are actually searching for for your product to be findable. And you are also making sure that your catalog is set up in the most robust way. So none of your products are actually just hidden behind parent acens and that sort of thing. So really there's a lot that goes into it that's both technical but also creative and design-led. So making sure that you know you as a brand have all of those resources in place or you know where to find those resources, I think is really important as well. The technical aspects, normally, that's what scares people the most.

SPEAKER_02 27:11

Yep.

The Importance of a Strong Launch Strategy on Amazon

SPEAKER_01 27:12

Like upload files and this is getting rejected, and had to log something with the help desk XYZ. But the art of it really comes into almost the creative and the design piece when you don't only just upload a product according to the tech specs and what the product actually is, but you know why people are buying that particular product and you understand what they're searching for to be able to find that product as well.

SPEAKER_00 27:36

Okay, that makes sense. And then there's a lot to do there, right? Because you're talking product, you're talking logistics. Do you jump straight into marketing as well when you're launching, or do you give it time to find its place within Amazon before you start putting in sponsored ads or sponsored search or other pieces to show up?

SPEAKER_01 27:56

Yeah, so it works really differently on Amazon compared to let's say Google.

SPEAKER_02 28:01

Yep.

SPEAKER_01 28:02

So Google have always maintained that organic search and paid search are completely separate and never the two shall meet, and one does not influence the other. At Amazon, one definitely does influence the other. And so what we recommend is generally quite a strong launch budget once you actually launch your catalogue to ensure that you get that flywheel effect going. So the way that Amazon works or the way that the algo works is really as soon as a product starts getting eyeballs and it starts getting conversion, it actually moves it up the organic listing or bestseller rank. So it starts to move up, you know, from page 14 to page two to page one, and nothing really gets sold past page one. Nothing really gets sold, you know, if you're more than probably six rows down. So ensuring that you actually have a healthy launch budget, a marketing budget to put towards your products as soon as they launch is really important. I think what you can do to really maximise that budget, though, is once again I talked about retail readiness. So making sure you've got your imagery, your content, and your logistics all set up to ensure that, you know, as soon as you are investing money into those ASINs or into those SKUs, you're actually maximizing the value from that too.

SPEAKER_00 29:17

Yeah. So when we think about launching onto Amazon, it is really a whole of business activity.

The Rise of Social Commerce in Australia

SPEAKER_01 29:22

Yeah, a hundred percent. I mean, it covers so much. I think a lot of the time, a lot of brands, I'll put one person on it. It's only a sales director. So depending if you're selling to Amazon or if you're selling to a third-party distributor like us, or if you're doing it yourselves, maybe you'll have one or two people if you're lucky, if you've got two, and they're doing everything. So they're managing the content, they're managing the uploads, they're dealing with customer service, they're working on fulfillment, they're working on FBA, they're working on reverse logistics as well, because at times you will have returns. So if you don't have the right tech and if you don't have the right processes in place, it can be quite a labor-intensive endeavor. The number of brands we've talked to who, their finance teams, are just so thrilled to have us on board because it at least just takes away the backing and forthing. I think when it comes to the admin side of Amazon, I think you know, brands are really grateful. And having said that, we've worked with some big brands who globally work with Amazon. They've got the processes down pat, but what they might not have is the advertising firepower in market to be able to enable their brands to fly.

SPEAKER_00 30:32

Yeah, that makes sense. Now, Amazon's obviously the huge giant, and like you said, in the Marketplace Consumer Report is growing so rapidly and is not slowing down in Australia. I want to touch on social commerce because I think this is a really interesting space for us, especially in Australia, and I'm keen to get your view on it because obviously Patton has a view over international markets, especially the US, where social commerce might be very different. In Australia, it feels like we're on this continual precipice of social commerce becoming a thing, whether it's TikTok shop is finally landing here, or it's that we're going to be able to buy through Instagram or that live shopping is coming because we're seeing it in Southeast Asia and live shopping is going to be a thing. This is going to be the year, or I don't know, the metaverse is finally going to arrive. Where do you see the impact of social commerce in Australia? Do you think it is far off?

SPEAKER_01 31:24

Yeah, so that is the hundred million dollar question. I actually think it's the hundred billion dollar question, probably. TikTok haven't confirmed whether or when they're launching in Australia. I think we know it will happen. We just don't have a date. Social commerce is here, kind of half in, half out. You know, you have to go off platform, or you know, you're kind of wondering where you are in the journey, I think, when you're clicking on certain links and that sort of thing.

SPEAKER_00 31:49

It's still a marketing channel.

TikTok Shop

SPEAKER_01 31:51

Yeah, it still feels very much top of funnel. And I think we do a monthly, almost like a baseline report of, you know, kind of Google channels and how much they contribute to revenue. And I think social at the most sits at anywhere between, let's say, 7-10% of revenue. What we're seeing though in other markets, and I think we're really backing, I think, the social commerce, the advent of social commerce, I think both here in Australia and globally, is what we're seeing is that more and more social is both becoming once again a discovery engine, but also a conversion engine too. So probably competing a little bit with the marketplaces or with Amazon in terms of that topping and tailing of the consumer journey. I think social commerce has enormous legs to create demand and also keep consumers engaged. I think in the US, what we're seeing is, you know, when it comes to even something like beauty, I think with TikTok Shop, I think 42% of GMV, I think, has come from wellness and beauty. Yeah, it's huge. So we're back to social commerce in a big way. A few years ago, we bought a platform called Creators, and that is a platform that enables you to find influencers en masse, to communicate with them and to pay for them within platform. And then just recently we bought a called Next Wave, and they are a top TikTok agency in the US, a top TikTok shop. Try saying that fast, a top TikTok shop agency in the US, and we will integrate that into our operations and we'll also drive on-platform conversions, but we'll also use that agency and the platform creators to drive traffic as well to our marketplace listings too. That makes sense.

SPEAKER_00 33:36

In the US, are there any brands that you think are doing, especially TikTok shop, really well that you think if you're in Australia, you could look to these brands just to have an understanding of how they're approaching it?

SPEAKER_01 33:47

Yeah, I think Aura Ring does it exceptionally well. I haven't succumbed yet, but um, every time I jump on, I get served lots of words and lots of content just around. I think once again, I think we're talking about that wellness piece. It just fits in perfectly, I think, with the ability to recruit influencers who basically also become affiliates and advocates of the brand. It's backed by, I think, data and science. So there's lots of credibility there that you can actually play on via these social channels, which I think is really important. And I think it's really an understandable product as well. So it's both emotional, but it's technical. So I think you really grasp what it is really quickly and what it does. And I think they're probably the, you know, the market leader when it comes to wearables, that and probably a what's it called, Fitbit.

SPEAKER_00 34:41

It's a great example too, because they're not a low price product.

The Role of Social Commerce Managers

SPEAKER_01 34:45

No, I mean TikTok shop has worked really well for almost like impulse purchases, but I think it can also work really well for high-value purchases if you have the right influencers, creators, and ambassadors talking about the benefits of the product. And if you trust those ambassadors and those voices, you are more likely to either make an impulse purchase or make a considered purchase. Because you know, you're finding out about products in so many different channels in so many different ways now. I mean, everyone's heard of Aura Ring, but where you finally decide to check out, I think is becoming increasingly competitive and important as well.

SPEAKER_00 35:22

And is that your advice to Australian brands who are getting ready for TikTok shop? There's a strong feeling that 2026 is going to be the year of TikTok shop, but I say that with bated breath because we've said that about 2024 and 2025. And as people get ready, even the rules in the US keep changing. I think last month we had some changes to fulfillment options in the US, what you can do, what you can't do, especially around self-fulfillment. In terms of Australian brands getting their head around how to set up for this, with TikTok not giving too much away, is it kind of secure your influencers and your content partners first and foremost? So that by the time it gets here, you've got a crew ready to go with you.

SPEAKER_01 36:03

I have more brands contact us about launching on TikTok shop than they do about actually just doing TikTok advertising. And I love the enthusiasm, I love the passion. It's awesome. Like we are talking to so many brands about TikTok shop. Is this a year? I don't know. I don't want to put any hard and fast, you know, declarations, but I would hope that it would either be late this year or the start of next year. But my biggest advice to brands is always just let's get the content engine happening, let's get the content machine happening, let's get your operations in place, let's get your logistics in place first. TikTok Shop, as soon as it does come, everybody will be scrambling. But if you've done that work up front to just figure out what it looks like and to figure out what you need from a content perspective, I think you'll just be so much further ahead and then it will feel less jarring and it will feel less obtrusive. Yeah, then if they announce the launch tomorrow, how many brands will be ready? Not that many, I don't think. I did notice something really interesting though around social commerce, and this is why I think it's just gonna take off in Australia in a big way, is that I did see a very well-known, very well-respected cosmetics brand.

SPEAKER_00 37:17

Drop them, drop their names, go on.

SPEAKER_01 37:20

Um, searching for a social commerce manager. And I think if anyone's gonna be on the forefront of that movement, and once again, we've talked about, you know, TikTok shop and we've talked about it's the marriage between wellness and beauty is just so strong. I think if anyone's gonna know, they're gonna be able to pick it. I mean, they've picked every other kind of, you know, brand, big brand launch and that sort of thing. So I think, you know, Joe and Pete would know.

SPEAKER_00 37:47

And if you were pulling a social commerce manager into your team as a new role, what do you think is some of those unique skill sets that person needs that might not have been in e-commerce teams before?

SPEAKER_01 37:57

We held a future of social commerce morning a couple of weeks ago. And I think one of the biggest takeaways from some of the heads of social and heads of digital around the table was that you're not just looking for somebody with social media skills who can architect a great ad. And that in itself can be quite technical and really difficult. So shout out to all the social media managers out there. This isn't throwing shade on them. It's more so about the extension of their skill set. It's going to have to be so much more of a commercial skill set because you're now making decisions about range. You'll now be making decisions around product placement, what to put forward, and you might end up having your own PL or you might end up having, you know, running your own subset channel. It could be as powerful as the website. So you and the e-commerce manager could actually both be responsible for sales driving channels. And you might not report into the e-commer anymore. You'll be reporting into someone different. So I think the skill set of the social commerce person will be a unique blend of both technical and they'll probably need to know a lot about advertising, but they'll also need to know about probably catalogue setup, product, margin, and also have that unique blend of probably marketing as well, where they'll have to be either negotiating with influencers and affiliates as well. So you think about maybe e-commerce and social commerce now maybe sitting side by side rather than social media feeding e-com. It's a big shift.

SPEAKER_00 39:23

It's a big shift, and it's a lot for one person to do when you put it like that. Because if we're talking about a brand new position, it's not like this is a little incremental. This is a whole trick.

SPEAKER_01 39:31

I'll just get the intern to do it. It's okay.

SPEAKER_00 39:33

That's right.

SPEAKER_01 39:34

Do you remember when social media used to be? I still remember when Facebook was, it was just the intern writing comments and uploading products.

SPEAKER_00 39:42

I I remember once presenting like the idea of social media manager was what's your 30-day content calendar look like? And as long as you had something on every second day that's going up as a post, you've done your job.

SPEAKER_01 39:52

Yeah, absolutely. Absolutely. And we're going to boost it. No, this person I imagine will not necessarily be the most junior person in the room, this social commerce person. I think what will happen is they will either need to build their own team or they will work with businesses like ours, or there are lots of other great businesses out there that will need to really help bolster and support, I think, brands on this journey. And it could be for a short period of time, like you know, I think sometimes the people who help you launch something are not necessarily the people that are going to help you move it forward. So I would say use a business like ours for the heavy lifting at the start. Yep. And then you can hire the team that is going to operationalize it and take it forward.

SPEAKER_00 40:35

Well, yeah, let that channel make some money and then invest and resource that up. In terms of that, and I and I like that you mentioned that the social commerce manager might be taking on their own PL. We've talked about D2C, we've talked about Amazon, we've talked about social commerce, and all of these things are interlapping. They're not like these funnels that just sit there because you talked a lot about discovery at the top there and the role that each of them play. They're all going to influence each other. How do you approach it from a profitability perspective for retailers when they're trying to work out is each channel profitable? Are you looking at the end sales that come through them or are you looking at them as marketing channels? I like dropping these kind of questions when we've got 10 minutes to go on a podcast.

SPEAKER_01 41:18

So we look at something, there's a few, I think, stages to it. Number one, when it comes to any channel selling any product, I think you need to look at something called unit economics. And there are lots of, once again, you know, your CFO, it's probably music to his ears or her ears, but unit economics, actually having a look at that everything, all the costs that go into actually selling a specific unit at a particular point in time and making sure that you're really clear on what your unit economics are. And then having a look at what each channel actually contributes to that journey or selling that product and how much it costs. And there's lots of, once again, you know, different platforms out there that can help you figure out, I think, which channels are contributing the most, I think, to that journey. When it comes to marketplaces, it's quite easy, I think, or it's quite siloed in terms of everything funnels into kind of, I think, you know, the one outcome. But when it comes to social commerce on the other platforms and even your D2C site, I think it's really important that you have a clear line of sight as to what consumers are searching for, how much it costs to actually present your brand to them or your product to them, and then how much it actually costs from the whole conversion journey. So my biggest bug bear used to be that when we used to talk to brands about social, is that it had to off the back, I think, be as revenue generating, let's say, or as higher roll-outs or whatever term you want to use as Google. That today is actually not the role that social necessarily always plays in that product purchase space. But more and more, as we get to, I guess, that social commerce zeitgeist where you're going to be able to check out on platform, brands will need to figure out exactly what they're spending on each platform and whether it's actually the juice is worth the squeeze.

SPEAKER_00 43:14

Am I summarizing it right in saying that you're looking at it at a real micro level in terms of product by product at a unit economics level, but also at a total spend level, almost like a MER scenario, marketing efficiency ratio across channels? Is it kind of getting that high-low view?

SPEAKER_01 43:31

Yeah, 100%. Like I think we're going into the age where data is so available that we need to be taking advantage of understanding, not even just from a skewed point of view, but from a unit point of view, how much it's actually going to cost to move that particular unit at a particular time. And there is a cost efficiency to actually holding a product for a specific amount of time, of disposing of it then and there, or holding it over a longer period of time. Brands really need to think about how much it costs them to move units, not just SKUs and not just at a brand level. But then again, you need to be able to take yourself up and understand the contribution that each channel plays in each stage of the consumer journey. Because I know of a brand and I won't name names at this time, but because they couldn't attribute properly, they actually ended up removing their TikTok advertising. And then over a period of six weeks, they actually watched their new to brand visitation absolutely tank.

unknown 44:30

Right.

The Future of Ecom and Brand Diversification

SPEAKER_01 44:31

And because they couldn't actually directly attribute where TikTok played in the role of product discovery or their product journey, they actually thought it was a really easy removal scenario. They very quickly, after six weeks, reinstated their TikTok budget and they're back up to where they were pre-advertising, pre-pooling and advertising. I'll just also say they weren't fine about it. But once again, it is about having that visibility. And whether you can do that with the technology that you have now, or you know, as you said, find an MMM platform. There's some really great ones out there. I'm happy to, you know, provide any names to anybody that asks. And I know you've got some really good examples too, but yeah, it it really is time now to be able to attribute your advertising spend correctly.

SPEAKER_00 45:20

That makes sense. And that's kind of the theme that I'm getting from our whole conversation, as well as the consumer report that you put out, is that e-commerce is getting messier. Like there's no way around it. Is that discovery happens at different points, sales can now happen at different points. Whereas I think that was the simple thing before is that conversion usually all funneled back towards the website. We know that's not the case anymore. So it's this big messy mix, and it's not good enough just to have everything pointing towards a D2C site anymore. And I think it's going to go the next level, right, once AI truly takes off in terms of checkout. From your perspective, if we've got retailers or brands listening to this going, we really need to relook at our strategy to whether we need to, you know, expand into marketplaces, whether we need to expand into social. What would be some of the signs that you would say that a brand is ready to explore diversifying their online presence?

SPEAKER_01 46:16

Yeah, so that's a really good question. I would say that one of the signs would be that they're noticing demand on other platforms even where they're not present. So a lot of times when we talk to brands and they say we're ready to explore marketplaces, you know, we think we're ready to launch our brand on marketplaces. Let's say let's say Amazon once again. And, you know, our feedback is you're already there. You're already there. Somebody has found your product somewhere and they're already selling it on marketplaces. They're already capturing the latent demand that is available on Amazon today. So for me, it would be for brands wanting to know whether they're ready, is also just looking at what's already happening out in the market that they just don't have their lens on because their feedback would be we're not on marketplaces. Our brand isn't on Amazon. And our feedback would be your brand is on Amazon, you're just not controlling it.

SPEAKER_00 47:09

I suppose that's just as easy to see on social, right?

SPEAKER_01 47:12

Yeah, the same on social as well. It will be on social, especially once, once again, TikTok shop launches. That you need to make sure that you know where your product is turning up and you need to make sure that you can control it. Because customers won't differentiate between your brand and a rogue reseller. So other signs I think that the brands are either ready or should be diversifying is when I mean when I worked at Mimco, we used to get lots of customer inquiries to saying, you know, are you available in Maya? Are you available here? Are you available there? I think, you know, if you start to see those recurring questions a lot, I think they're also sales channels that you can look to explore. And I think just going back to your point, Nathan, I don't think e-commerce is getting messy. I think commerce is getting messy. I think that now, even with brick and mortar online and the blurring, I think, of those two channels from stock availability, logistics, the role of the retail store is now playing in terms of e-commerce. Like I think it's all now really fragmenting, but also just coming back to this nucleus of does the brand care where the product shows up and how it shows up.

SPEAKER_00 48:18

I love that. So, what would be your suggestion if someone wants to sense check their strategy, not just for e-commerce, but for commerce? What would be the smart next step in your view?

SPEAKER_01 48:31

It sounds so boring. I would do an audit. I sound, oh no, I sound like we'd love audits. No, I would honestly do a brand health audit, but like almost like a product health audit and just figure out where your product is turning up. There's a million different things.

SPEAKER_00 48:49

Like the what, the top 10, top 20 products.

SPEAKER_01 48:51

Just see where your brand is turning up. And then I would actually look at those findings. And once again, you know, you you've got lots of resources out there that can help you actually just do a really simple audit. And then I would then start to have a look at where you think your product line or your brand where it's going to move into from a channel's point of view, and start to pick those off and start to prioritize them. We can give lots of advice around marketplaces, we can give lots of advice around e-commerce and social. You can take that advice, you can ask your trusted advisors, you can ask your mum, you can ask your mates around the dinner table. But it's really just about understanding in your vertical with your brand where you think customers are going to be finding your product, not only today, but tomorrow and the next day. And it might really surprise you. And it's like asking all your friends, you know, where do you shop now? And sometimes their answers will surprise you.

SPEAKER_00 49:48

Yeah. And I and I love that idea. Like, I know we we made a joke of audits because it seems everyone wants to do an audit these days. But by doing that in point of time, because this space is changing so rapidly, even by doing it right now and then coming back and doing it again in 12 months to see actually, yeah, we can get the reports like the marketplace consumer report and see the percentages of change. But is it actually changing for us as well in our category and for our products? Just having that moment in time comparison, I think you'll realize how quick this whole space is moving.

SPEAKER_01 50:19

Yeah. So what we can do, you know, I think for any brand is that we can actually feed their SKUs into our technology and we can actually spit out essentially a report that shows brands what revenue their brand is actually generating, I think, on Amazon, especially if it's not managed by them. And also, you know, what customers are saying about them as well. So that's something I think that would be enormously beneficial for brands who haven't yet made the leap, but still have an uncontrolled presence on marketplaces as well.

SPEAKER_00 50:49

Amazing. I'm hugely excited. Like I think this is just given Amazon social commerce. I know there are a lot of foreign entities that are going to takes in Australia, but I think we've got so many more options in commerce and e-commerce now, which makes the game a lot more exciting. Merlin, we're going to put a link to the Marketplace Consumer Report into the show notes here for everyone to download for free. It's a great report, as you said, eight to year now. So there's some great baseline metrics and you can see the growth in, you know, year over year, which is fantastic to see. But if people want to reach out to either yourself or the patent team to explore more around how you might be able to help them, what's the best way for them to go about that?

SPEAKER_01 51:32

Yeah, you can just email me. Like my email address is Merlene at patent.com. I try and get back to people as soon as possible. Or you can also say you can phone me. No, you can't.

SPEAKER_00 51:43

I don't even give my phone number out on this show.

SPEAKER_01 51:46

No, uh Merlin at patent.com, or you can even visit our website, which is patent.com, and send off an inquiry. And you know, the amazing Catherine Coleman will probably call you back or email you back.

SPEAKER_00 51:59

Wow, it's worth it for a phone call from KC alone.

SPEAKER_01 52:02

I know, I know.

SPEAKER_00 52:03

Well, Merlene, we are so excited to have Patton on board because I couldn't think of a better partner to have with us by our side as we talk all things e-com, marketplaces, social, AI, like it's all going to move so fast this year. And to have Patton on board with us to help bring the insights and the education as it all moves is just so special. So thank you for your support and for everything that you shared today.

SPEAKER_01 52:29

Always a pleasure, Bushy. Thank you so much for having me. And yeah, really looking forward to listening to my voice when this uh house comes out.

SPEAKER_00 52:41

Well, that was a bit special to be able to go behind the scenes of that report. Eight years in a row, we got the full picture from Merlene and the opportunity to discuss how to make it relevant for your business. There were three things that I found really insightful that I want to bring up to leave with you as you're thinking about your channel strategy moving forward. Firstly, talking about understanding the role of marketplaces. I love that Merlin says you cannot out Amazon Amazon. Don't try and do it. Understand what Amazon is and the role that it plays in your customer journey, and then work out whether you're going to play in with Amazon in that part of the journey or whether you're going to ignore it completely. Both have pros and cons. But don't try and out Amazon Amazon because it's a fast way to going rope. Know why your customers might be choosing Amazon, whether that be price, convenience, range, and work out whether you can do that yourself or whether you need to be enfold. But don't try and out Amazon Amazon. Secondly, D2C is not going away, but it has to earn its role. No longer is it a given that you will funnel all customers back through a single D2C channel. As Merlen said, many customers aren't using the traditional ways of discovery when it comes to finding products, whether that be starting their search on Amazon or being surprised with a product on social. So what role does your D2C play? It's a great place to establish trust, credibility, deep storytelling, and maybe even go that next level with product data. D2C still has to have a place, but it's no longer a given that that is your main channel. And thirdly, get started on content right now. I thought it was fascinating the example that Merlin shared around Mecca creating their social commerce manager, and I can definitely see that path moving forward. Social is going to go to a whole nother level of sophistication when we start folding it in as a sales channel and a merchandising platform. So you obviously can't get started on all of that right now until we know the rules and the platform. However, you can get started on the content, establishing those relationships with influencers, testing different formats and engaging customers, building that followership on those social platforms that will turn into sales channels. You can do that right now before TikTok shop or live shopping or any of those other channels are truly cemented here in Australia. It will give you an awesome head start on everyone else. Now, if you enjoyed that episode and you want to discuss with other retailers what channels they're doubling down on, the Add to Cart community is a great place to do just that. Come and join us over on addocart.com.au where you can join our free circle community with over 600 other e-commerce professionals in there where we ask questions, share tips, and discuss all sorts of things e-commerce. We would love to have you in there. Head on over to addocart.com.au to join today. That's all for today. Thank you again to Merlene and to Patton for being an amazing partner of Ad To Cart. We hope you enjoyed our little bonus content for you, and we'll see you again next week.