Welcome to this week's affiliate marketing podcast with me, your host, Leanne Johnston. And today I've got somebody super special with me. Well then I say that most weeks, but this week I really mean it. Thomas Vasper, the founder of R3, who I met at, I think, PM alive about two years ago now, maybe. And I've been dying to get him on this podcast, but he's a super busy man. So he's kept me waiting until this season to introduce himself and to be here with us. Hey Thomas, great to have you on the podcast.
SPEAKER_04Yeah, thanks so much for having me. Yeah, it does seem strange. Two years ago at probably one of the busiest, best affiliate events of the year when we first met.
SPEAKER_03And even though it was brief, it stuck with me. And I wanted to get you on the podcast this week to talk a little bit about affiliate marketing as you see it. You know, you're currently building a really innovative business in the e-commerce space, which I do want to talk about in a little bit. But before we get started, let's get our listeners knowing a little bit about who you are and what your background is and what's brought you to our podcast today. So talk to us a little bit about your backstory and how you started your business aisle three.
SPEAKER_04Yeah, amazing. I'd love to share the story with the audience. I'm gonna age myself by badly here. I'm an e-Corvet 2 for about 15 years. That started back in the early days of the Amazon UK business building out the marketplace. I think at the time there were around four or five categories that existed. So no clothing, no groceries. And that was a fantastic experience over about seven years before then moving on to Tesco, where we were looking at trying to develop a marketplace on their general merchandise site. Spent you know a good portion of my time in e-commerce, engaging with brands and retailers directly, selling all marketplaces, getting in front of new customers in very big corporate entities. Again, like Amazon, it seems like a lifetime away, when we used to think $11 billion was a big business when there was about 200 of us in the UK in total. But these are very big organizations. And then I got closer to affiliate marketing where I spent three years working at a price comparison startup that was working with a serious trade train up a search engine for prices. And so that's to be the backstory of my career. What's always drawn me to those businesses, firstly, I guess stemming from Amazon was this idea of trying to capture at this everything store. This idea that you had one place you could go to where you would see all of the products you want to buy and every single person that sells that product. And then like layering on top of that, like this fantastic customer experience, fantastic experience. You know, I've consistently kind of found over the 15 years that actually the shopper experience isn't what we think it should be. I think we accept and adapt to a lot of it. And it's also pretty toxic for all the retailers. So that led us to found aisle three just coming up to two and a half years ago. So that was starting off uh March 2020.
SPEAKER_03Yeah, which was a brave move considering that we're in the middle of more or less a pandemic. I think it begs innovation to get you out of situations where you think that there's problems and finding solutions to problems. Talk just briefly a little bit about what aisle three does in case anybody that's listening hasn't actually come across this site.
SPEAKER_04Fantastic. So, yeah, the employer I was working with at the time actually folded just before lockdown, two weeks before lockdown, and that was really like the opportunity for my co-founder and I to say, actually, can we take these lessons from now working in a startup and then also working in corporates to think, okay, what is the problem here and how do we solve that? And so when we think about when you get R3, and I probably just if I frame the problem for you first, because as I said, I think a lot of people have come to accept to adapt that a couple of trillion dollar businesses basically control how we shop online. Yeah. In a generation that can see two billionaires put themselves into space and we can invent a vaccine for a virus we didn't even know existed. We still seem to be able to find our sound. So when we want to do something trivial, like buy a pair of sneakers, end up having to right-click on a bunch of ads and text links and images and sites, and open up a hundred different tabs across the top of our browser to find that most of those sites that we open up don't have our size, or uh, you know, the price is different. And that's before we even think about going through like a lengthy checkout sold out process to go and buy and make a purchase. So fundamentally, that's just so pretty.
SPEAKER_00Yeah.
SPEAKER_04And that's what we do after. We think about that problem, and then we think about how we can fix that problem because the underlying factor is, and this directly affects affiliates. One is the information that exists out there around products, around barcode numbers product IDs, manufacturer codes, and how you then think about aggregating all those products together. And then the other one's a commercial model, which again is really damaging for retailers, which is how Google will fragment all the search results because they want you to spend your time, which they can transfer into ad clicks onto lots of advertisers to generate their revenue.
SPEAKER_03Yeah, absolutely.
SPEAKER_04We reframed how we thought about that. And you know, this is like super relevant for the affiliates that we speak with today. It's really challenging to share your product information out of the ecosystem because even though you would assume that it is fairly standard, the products have barcode numbers and IDs and GTINs, actually they're pretty fragmented and incorrect or absent. And that's where our technology comes into play to actually aggregate all of those products without ever seeing that rich product feed or without ever seeing those barcode numbers.
SPEAKER_03So right now you're focused on sneakers, right? So uh why why sneakers and why aisle three? Why the name IEL3?
SPEAKER_04The name for aisle three is a recently trivial thing. We really wanted to have something that reflected retail that was ambiguous enough to be physical and digital retail, because we definitely see opportunities in connecting online to offline shopping. Absolutely. But why sneakers is a really interesting question because and it's fully what we get asked the most because it's actually about the hardest categories for us at a technical level to aggregate.
SPEAKER_03Wow. Okay.
SPEAKER_04So if we kind of part to one side the experience I'll describe, I think most people can resonate. I think most people who buy shoes on the internet know that feeling of checking lots of different sites and not being able to find one place that you can find sites. And as a super engaged thinker community, you know, it's a really fascinating category of community. But if we got that to one side, what we think about is we think about product aggregation a bit like applied scientists who maybe take some of the open source technology that exists, just like SpaceX did with NASA's work and then develop on that. We think about that with how we think about products. And sneakers are really challenging to match. The adoption of barclothes in the industry is inconsistent. And so if we're then going to take a step back, which we did at the start of the business, to say we will never use a barcon sheet in product code and manufacture code to aggregate products. We have to find a way to make it really easy for retailers to provide information and then appear on the site. We came full circle thought, let's look at images and let's take a computer vision approach. But sneakers again is another challenge for us because sometimes a shoe points left, sometimes a shoe points right, sometimes it's got a leg sticking out the top of it, or it's a lifestyle shot. And that's because within the category, a lot of the retailers will take their own images.
SPEAKER_03Absolutely. Okay, so you found a problem, you've launched a business that is looking to solve that problem. What are some of the bigger, and you maybe touched on some of these things earlier as well, but what are some of the biggest issues you see in the affiliate industry that we're still facing, despite the year-on-year growth that we've seen it claim? And even during COVID, where people were shopping more online, where e-commerce brands have literally thrived. So, what are some of the biggest issues that you still see in the affiliate space? And you've touched a little bit on aggregation of content, which is difficult because each retailer has different ways of categorizing things. But in terms of the brand to affiliate partnership, what are some of the issues that you have seen in your 15 years in e-commerce?
SPEAKER_04So I still see a lot of reliance on like relationships and a lack of collaboration, which I find quite interesting. It's quite interesting to come from a marketplace mindset, which is often quite heavy to integrate and is involves a lot of different partners. Sometimes retailers will integrate directly, sometimes they'll work with the parties to optimize that process. Whereas really it's often tends to be a little bit at Arms Lead. And there might be a number of reasons for that. There's certainly a talent challenge as a whole. But actually, it's a lot more important as a channel than that. And why I think that's important is I still think that there's an over-reliance at the moment on three major channels, which is Cashback and vouchers and CSS.
SPEAKER_03100%.
SPEAKER_04Which are reasonably unsophisticated channels. And so if you're in a role that's focused on in a time when everything's thriving, looking purely at the numbers, then it's really easy to still keep yourself in that comfort zone without being able to think about something outside of the boxes. There's an awful lot of innovation that I think needs to change in the way that shopping destinations work with affiliates. Yeah. And that's hard to do when you're in an area that is thriving because overall everything is thriving. Because you know, if you cut late e-commerce work when most people are stuck at home, then there's probably some serious things to ask around business.
SPEAKER_03Yeah.
SPEAKER_04So yeah, I definitely see some lack of innovation there that I think needs to be addressed.
SPEAKER_03And you touched on talent, and I actually want to talk a little bit about that because I do agree and you hit the nail on the head. It seems like the industry is still viewing affiliate account management or affiliate program management as an entry-level position to get into other digital things. It's sad for somebody like me who spent 20 years in that entry-level position building programs across multiple industries, is that it isn't an entry-level position. It's actually quite a sophisticated position where the account manager needs to know a lot about a lot in order to do and run their program. So it is interesting to see that you with your 15 years of experience, me with my 20, we're both on the same page talking about the fact that this industry lacks talent and how are brands supporting their digital marketers to learn more about this channel and how are networks supporting their staff to learn more about this channel, how are agencies doing the same? Everybody that works in this ecosystem should be engaging more in training and development and learning.
SPEAKER_04Yeah, remember like 15 years ago when I was launching people onto Amazon, I was generally speaking to an e-commerce director.
SPEAKER_03Yeah.
SPEAKER_04And now underneath those roles, you have someone who's purely like a marketplace manager or marketplace integration or performance manager. You have managers, you have people who manage influencer outreach who blockers outreach. There's all these different kinds of subsections. And it's very easy to become siloed. Even more so, people are now working independently of each other a lot more than perhaps they were when they were maybe sitting around the table with someone who's in charge of the overall marketing. You could also have a conversation about what does out-of-home advertising look like and still have someone who is an affiliate one in the room, or someone who looks at the marketplace channels, or someone who looks at their other channels. And I guess that's really important because going back to you know what happens when everything's thriving, an e-commerce thriving, like let's be clear, you like the weirders are when in e-commerce, right? Like Amazon is what, 30% of e-commerce in the UK. So everything goes up, but the strong still gets stronger. And uh, as a business that's raised and invested money, I'm very aware of stats that really frighten me, which is about somewhere between four to six pounds of every 10 pounds of investor money actually gets pumped straight back into ads, into Google and Facebook ads, often to capture that audience and prove like a product market fit. There's no operating the wheel here. Like the money's just going straight back into the very big businesses time and again.
SPEAKER_03Yeah. And so that brings us on to kind of where you think the future of digital lies. Are you kind of looking at breaking that chain the last 15 years? And are you thinking about how that transcends into kind of web 3.0 as well, which seems to be the hot topic that everybody's talking about? I think I saw today Hell's Kitchen has just got into sandbox, I think. So more and more brands, you know, even television, Netflix, all of these people, they're all getting into that Web 3.0 vibe. Is that kind of where the future is headed for e-commerce?
SPEAKER_04Wondering it too much on the amount of brands that start talking about having metaverse strategies but still don't answer emails.
SPEAKER_03We're running before we walk.
SPEAKER_04With partners in the correct way, or the trap things, or think about very myopic processes. Like yeah, I think that's not so. I mean, get the basics right first. But I definitely think there's a future of ownership. And that's the other problem that we see something that we've invented called cloud basket solving. So we recognize the problem with aggregation and how damaging that is for retailers. Really time consuming to shoppers, and it's damaging for retailers because they end up having to continually update budget is to chase growth in this really fragmented space. What we have done at R3 is we found a way to aggregate, uh, let's say, in our launch category sneakers, all the 10 different sneaker retailers that sell a particular brand of sneaker, pull them all into one page. But that only really solves half the problem because you're then relying on the shopper clicking on a link and leaving the experience that they're in at the site that they trust, to then go and buy from someone else and go through an account process or sign up process or put their car details in. And then if they want to buy another pair of sneakers, then think about as once we start having more categories on another product, they then have to go back to the destination and then they have to go and click on again and go through the process again. And that's the fragmented way that Google works. And each time Google makes the money on that, then the shopper has to keep jumping around off different sites. What we did with Cloud Basket is we basically invented a way to take a payment on our site so that we can then handle multiple orders for multiple products across multiple unrelated retailers, which means that from a retailer perspective, when we talk to affiliates, like we're actually giving you an order here. This isn't a click that may or may not go to a program link, may or may not be tracked, may or may not surprise the shopper because they suddenly have to go through a process that didn't feel that they're ready to do. We have an already registered shopper or artery who's already got their card detail score with us, that they can just make one simple click across three different retailers in one basket. So that solves both the aggregation, but then also that speed to purchase and then that conversion rate. But here's the kicker when we talk about the next phase of the web and the next phase of shopping, because really these are now enablers for what we see is a way to actually give money back to advertisers and to affiliates. Yeah. That's what we call the future of ownership to a recaller's model that our Cloud Basket enables.
SPEAKER_03Yeah, I think that's super interesting because customers are becoming more savvy about where they want to shop, where they want to spend, and how much time they want to spend doing that online. And case in point, we were looking for new office furniture, and it took me hours to find the disks that would actually fit side by side in the space that we had. And maybe if anybody's listening to this, you can come up with a great aggregator for office furniture. Or maybe you can plug office furniture in next after Sneedus.
SPEAKER_04Fundamentally, we think about this as in Rikachu as a whole. It's crazy the idea that you can't just buy three or four different things all in one easy place. But we actually think about the future of ownership a little bit differently from that, because it's clearly important for us to be more sustainable when we think about how we shop.
SPEAKER_03Packaging and managing deliveries from multiple different places, that has become a nightmare because some people would deliver on a Monday, some people would deliver on a Friday. So if you can shop and buy everything in one place across multiple different retailers and the platform and the tech, and really we are in a tech savvy world now. We're not talking 10 years ago where things were still being developed, but we should be able to do this kind of thing. It really does surprise me that retailers haven't upgraded and used technology like yours.
SPEAKER_04That's one way of looking at it in terms of thinking about how you choose the processes. But I have a slightly more cynical view on this. That I think a really smart way to encourage sustainability is through cold card cash. And when someone makes a purchase on R3, we assign a smart contract on the blockchain to that purchase.
SPEAKER_03Okay.
SPEAKER_04And as the custodians of the data, we make it super easy for you as a shopper if you wanted to go and resell that item. And when you resell that item, because we have all the information, you can resell it in a single click. It's super, super easy. So we're encouraging sustainability, and you will then have money back in your pocket. We will take a commission from that. But here's some really important thing that I think is a missed opportunity for retailers and brands. We're always speaking with a number right now who absolutely would love to speak to more. But because of that digital record that's imprinted against that border, against that product, when that product has resold, we will share that commission back to the original retailer. And so this is a fantastic way, and let's stick within sneakers right now, because you know that's where we are. There's a launch category. It's really common for a new release to come out and people to buy those sneakers purely to go and take them and list them on another site so that they can make some money back of that. But at that point, like Nike don't see that, Adidas don't see that, like the brands of retailers, they don't see those transactions, they don't benefit from those transactions, and those sneakers could be sold five, six, seven, eight times. And there's there's no way for them to benefit from that. And so when we think about the future of ownership, we think about everyone who sells empathy to one place, you can make a purchase in a click, and when it's time to partner that product, you can sell it in one click, comfortably knowing that you will benefit from that financially. And the original retailer and every other person in that chain wants the matter to be solved for a third, fourth, fifth time, will also benefit from a commission and actually put money back into their pocket that they can use for future purchases.
SPEAKER_03Or even just to donate to, you know, for you can do without money what you will.
SPEAKER_04But I mean the point is that Yeah, you could do a bunch of different things with that, and you could use it for your next purchase, or as you say, you could put that into a charitable initiative. Absolutely. But what's key is that because we're taking the payment of our site, we're actually able to record that and really bizarrely within the affiliate industry here, right? Actually provide commission back to the original retailer and the original seller.
SPEAKER_03Well, that's that's the other thing, is everything's always been a one-time transaction in affiliate marketing. And that what you're speaking about now is actually where I see the future of affiliate marketing headed. Because we are not, we are moving out of being a throwaway culture into more sustainable longevity, fixing things that are broken. I mean, even simple things like I had a pair of shoes, and normally I would have thrown it away, but I actually took it to a cobbler. And the cobbler actually said to me that people don't bring shoes in to be fixed anymore. Leather shoes, you know, shoes that are really well made, that are expensive. And so I think you're right. I think we're gonna see this whole turn. And maybe we're a little bit ahead of ourselves and we're thinking about the kind of unicorn universe where we want to live, where everything is good and proper. But do you think that is where the affiliate industry is gonna head to, where you have these secondary marketplaces to earn additional revenue instead of just having the one-time drive from one place to another in order to earn that commission? I already see some industries doing things like that, where the blockchain is enabling that kind of transaction to happen. And it's just gonna be interesting to see how many retailers actually pick up on this and listen to what we're talking about. And maybe we sound a bit crazy, but that's what people sounded like 15, 20 years ago when mobile phones started. Everybody was like, How can you possibly have a mobile phone in your pocket and look at where we are now, 20 years later?
SPEAKER_04Well, it's it's and it's here now, it's available now. So anyone who is a brand or a retailer, specifically in the sneaker category right now, can contact me directly and we can set this up with the right now. Hundreds of affiliates who are all to Wild 3 at the moment. We've enabled Cloud Basket orders where we have had two or three different retailers, all unrelated, and we've given them access to orders that they might otherwise not have because of the drop-off because of the all of the different single transactions. Actually, we've pulled them all in together. And also, there's been times where perhaps something is out of stock with a particular retailer, but we're able to share that order with someone else because of how we've managed to aggregate the products.
SPEAKER_03And everybody wins, right? Because there's collaboration.
SPEAKER_04And everybody wins there. So yeah, we've it's very open. To speaking to further sneaker retailers who are interested in thinking about beyond that first transaction and simply looking at us as someone to pay commission to for a sale and thinking about how we can actually get commission back to them so that they can earn an opportunity. Because again, that's what would happen here, right? You earn forever, for as long as the product exists that's being resold, you will end up earning back more commission than paying us in the first place.
SPEAKER_03And especially for big ticket items, things like diamonds or Rolexes or things like that that get passed on or have value over time, even maybe secondhand cars and all of the stuff that you're talking about right now can be filtered into any category of commerce. You know, maybe even thinking about housing and things like that in rentals. I don't know, but the list is endless. And I think that's what's exciting about this conversation is that what you're talking about is here and now, but it can be applied in so many different ways.
SPEAKER_04Oh, absolutely. Yeah, I 100% agree. I think we try and not get ahead of ourselves. One of the things that's made us really, I think what we can be really proud of so far is we've been really focused and like almost hyper focused on a particular category of building up a really rich shopper experience. When we think about how comparison sites that sort of existed for 20 years operate, and when we think about that kind of broken Google experience, and I just touched on Amazon slightly, like I think we all kind of pat ourselves on the back as to how we're quite efficient at trying to shop through Amazon and ignore the fact that you look for a brand and you see a challenger brand or an Amazon-owned brand at the top. Like that's not right, that's not how it should work. I think we think about building a really rich shopper experience which can answer like the fundamental questions when you're trying to buy something, which is the cheapest, which is the most expensive. When will solar delivery is my favorite retailer there? Are there any promotions or any discounts? It's really hard to find all of that information in Worldplace. And that's where our, and I'm really proud to say that our award-winning tech because we just we won West Innovative Tech at the Hustle Awards, which is run by Startups magazine. Yeah, then it was super humbling to win that because again, I think that most people who accept or adapt, yeah, this is how we show. And I think most retailers and affiliates think about okay, these are what my buckets of where I spend my marketing and this is how it works. And actually, we think about that really differently. We think that we need to aggregate and streamline the entire process and make it more sustainable for shoppers, but it's also on the other side of that, making this a much more valuable channel for advertisers, for retailers.
SPEAKER_03It's about disruption. This industry's been working the same way that it always has. And it's about people like you who are coming in and actually disrupting that and going, well, how can we make it better? And that's what excited me about getting you on the podcast this week.
SPEAKER_04Well, that's really kind of me. I but you know, we can't do this on our own. And one of the challenges around working with affiliates is often it's hard to get in touch with people. A lot of the information within like networks is inaccurate. And I really encourage dialogue with as many retailers as possible who have shared this vision for us for this future of ownership and to speak with us directly because it's the events of the last few years, like in terms of the world events and the climate has taught us, this is something that we need to look at together. Yeah. So we can take the technology and we can solve a problem, and we can build a great business from that. Believe me, we've had investment with some really prominent angels and VCs to understand that. But actually, together, we do need to think about being more sustainable and also supporting the retailers and the advertisers, but they're not to be more sustainable. And actually, through a mechanism that puts money back into their businesses, it literally paying people to think about a new way of ownership.
SPEAKER_03Yeah, absolutely, 100% agree. Thomas, it's been a pleasure to have you and to get your perspective on where affiliates and operators and brands and everybody in this whole ecosystem that we work in can get more sustainable and can actually get cleverer about how they improve the shopping experience for customers because ultimately they are the ones that drive this industry forward. And whether you're an affiliate, whether you're a brand, whether you're a network, whether you're an agency, we are all working to one goal, and that is to make life easier for the customer and to make the experience as pleasant as possible online. So it's been a real pleasure to get your insights on what you think the future of ownership is, to hear about what IL3 is doing with the technology stack that you're building and clearly winning awards for, and just to hear what you've been thinking about and futurizing and disrupting for the future of the e-commerce space.
SPEAKER_04Thank you so much. So if anyone, I'm sure we can probably share a link at the bottom of the podcast. I'm sure we'll share a link somewhere for anyone that wants to have a look at where we are in our journey for our site right now. There'll be a link and I'll make sure that when you sign up through that link, there is a sign-up bonus so you can treat yourself to a new pair of shoes because we are getting into the uh event season and the industry event season back into the autumn. So there'll be lots of people walking around, lots of exhibition halls. So buy yourself a new pair of shoes with a discount to us. And I'm pretty easy to find on Lid here, or you can email me and umtois at oil-three.copped partners, retailers that we can help as well.
SPEAKER_03Amazing to have me here. Thanks so much.
SPEAKER_04Thanks a lot, Leo.
SPEAKER_02And that's a wrap for this week's Affiliate Insider Affiliate Marketing Podcast. If you're loving what we're putting down in this series, head on over to Apple iTunes and give us a five-star rating and subscribe to our podcast channel so you never miss another insightful episode. Tune in next week for more digital marketing insights and traffic driving tips, tricks, and strategies to keep your digital marketing fresh and your affiliate program driving consistent sales.
SPEAKER_00This podcast is brought to you by AMP. Affiliate Insider is an independently owned business, so we're sponsoring this podcast episode to showcase our exclusive affiliate management performance program. AMP is our unique program for affiliate marketing program managers. We've helped hundreds of affiliate managers across a range of brands to get the best of their affiliate partnerships and build consistent sales. Seats to access each semester are very limited, so don't miss out. Run as a live coaching session once per week. This 12-week intensive training program is suitable for affiliate program managers at all levels. You will learn proven tactics and strategies that allow you to upscale your program or team performances. Growth hack your sales using tried and tested strategies that have been gained from decades of experience running million-dollar affiliate programs worldwide. For more information on what AMP offers or how to book your place on the next open cohort, please visit affiliateinsider.com and hit the training button to find out more.
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