Ilir Sela Q&A On The SaaS Enabled Marketplace Approach & Strategy

Hey, Ash, did you want to jump on? Yeah, I did. I really appreciate this. I was looking forward to hearing your talk. I have a very similar concept, but for local small business retail, but more like value-driven, you know, integrity behind the products, not just like a dropshipping model. We, we started with the marketplace first because we launched during the pandemic and that discoverability was kind of the need, and then we pivoted to software this year. But I'm just wondering, when you, when you were starting, you had such a small team, how did you keep everyone focused on, you know, acquiring the supply side? And then when you launched, you know, the consumer-facing marketplace side, how did you prioritize, you know, capturing both sides, which is, you know, always a problem with the marketplace is, you know, the chicken and egg. So I'm just kind of That's what we're running into right now. And we want the software to fuel the customer side and bringing on other businesses, but we're still pretty early to it and trying not to spread too thin.

Yeah, it's a really good question. And believe it or not, we still, till this day, we don't sign on, we don't acquire any merchants. The supply side doesn't join a marketplace, and they never have. Supply side always joins a platform. And so what we do always do is we say, hey, you can join Slice and we'll enable an e-commerce website. If you have a website, we'll enable online ordering on your website. We'll do CRM for your customers. So it's very much a SaaS company at its core because that's been our product from day one. That's our, you know, in a marketplace you have 2 constituents. You have the demand and the supply side. You still have to pick your side. You have to say who is your, like, you know, big customer and your little customer. By big customer, that means when push comes to shove, whose side are you choosing? And I'll give you an example. A customer, a consumer calls Slice and says, my order was really late and I want a full refund. Now Slice has a choice. We can give the consumer a full refund Or we can ask the shop, the merchant, hey, such is the case, do you want to give them a full refund? If the consumer was our first customer, we would say we've got to refund the consumer. Like, there's no, there's no questions asked. But they're not. So our policy is, hey, shop owner, this consumer had a poor experience, and by the way, we believe you should refund them. But it's totally up to you, and if the shop says no, then it's no. So super tactical example to say you've got to choose, you've got to pick a side. When push comes to shove, which side are you on? For us, it's the merchant side. We've always been that way. So that's one. 2, again, our core product isn't actually a traditional marketplace. Our core product is a software solution for small business pizza shops. Uh, it's now obviously beyond that— point of sale payments, you know, supplies, and so on. And the marketplace side is the cherry on top. Uh, anyone who joins Slice is automatically opted into the marketplace side. And then our economics don't, don't, uh, sort of differentiate. So when you get an order, whether it's from the Slice app or from your website, it's $2.25. There is no difference. And so what we view the marketplace as is a consumer retention product. Say, hey, this is how we retain more customers. This is how we can influence average order values, how we can influence frequency. And so it becomes over time a really important wedge and like moat because now there's like existing demand, but we still don't necessarily make decisions to say, you know, part of our decisions are marketplace-driven, whereas part of our decisions are like supply-driven. All of our efforts, everyone in the company, including our app team, thinks about supply, supply, supply, supply. So in our case, the shops. We have core values that says we deliver for our customers. And in big parentheses it says shops. Like, you have to be explicit about it because if you're not, uh, imagine if we weren't, what our team would think when a consumer wants a refund and the shop says no.

Yeah.

What would our team do? Uh, and by the way, we also— our pricing reflects shop centricity. If we were, if we were to pick the consumer We can charge more money, probably. We can go and advertise directly to the consumer. It would be much more like Grubhub or DoorDash. So taking all of this and applying it to sort of your case, you've got to pick a side. And I think in today's day and age, like pure marketplaces, there's probably very rare scenarios where those can be pulled off. But for the most part, I think we've gotten to a point where you've got to have some software solution as a starting point that is solving some pain point for your supply side or maybe the demand side, but right off the bat. Unless you go and raise millions and millions of dollars and you're gonna say, I'm gonna automatically opt in this supply side for free. I'm just gonna go to advertise directly to the consumer. Eventually I can sell demand to these shops or merchants. I still think that that's a difficult proposition. So I don't know if this is helpful.

Yeah, no, it is.

No one in the company should be thinking about a customer as someone different or something different than who you believe is the customer when, when push comes to shove. And it sucks, by the way. It's a tough choice. It's horrible because you're saying no to some real value. And like, you know, we've got upset customers who are like, I had this really shitty experience on the Slice app and Slice didn't do anything about it. And like, that's tough to read, but I know as soon as I read that, I'm like, hey, there's some merchant who chose that option. And the solution to that isn't to go and refund the customers, it's to educate the merchant why it's important to refund customers in those scenarios. You know, like, it just becomes an anchor. So I would strongly advise, advise anyone in a marketplace scenario that you always have to choose who's the big brother or sister, uh, and then who sort of comes second.

In your, in your like tearing out of their product offering, is there something— because we're at like the preliminary stage for our first product offering and plan to tear it out as we integrate more with the small businesses— but is there something that you've seen that Or that you have that's in every package no matter what, that is, um, you know, something that, you know, every small— every single pizza shop owner wants? Or is there a certain package that encompasses everything of their operations that you're seeing that they're really, you know, leaning towards?

Yeah, for us, our core product is an online ordering product, online ordering designed for pizza shops. And like, that's the product you buy when you join Slice. Everything, everything else is In addition to that. But our core product is an online ordering product. It's either attached to a website you already have, or we'll give you a website. Uh, in our website, the one we'll give you is being optimized in real time, 24/7, for conversion, for improvement. You don't have to think about it. It's kind of like the website you get if you're a Domino's franchisee. Um, that's our core product. And then again, the app is more of a retention product. The app right now manages about half of our volume. The other half is still directly on these websites.

Cool. Okay.

What we're learning is consumers, when they want to reorder and re-experience their local favorites, they're choosing to install the app. And that's very valuable to the shop because now the consumer doesn't have to go and search Google again, and maybe next time they land on Grubhub and now they're paying 20 or 30% for this customer. Or they're not calling because the phone is really inefficient.

Cool, thank you.

Yep. I think again, one of the things to think about is, I think for whatever reason, the term marketplace has become synonymous with discovery. Marketplaces don't have to be discovery engines, by the way. A marketplace is just a product where there's a relationship between many and many, like it's a many-to-many or one-to-many, but in essence it's a community, for lack of a better term. And some marketplaces are incredibly loyalty-centric. They're just like entrenched, you know, there's no discovery, it's just a match of one side with the other, and both sides know about each other. Like there's zero discovery. And then there are marketplaces that are very much all about discovery. I would say Yelp is a discovery marketplace. Like you don't go to Yelp if you don't— if you know exactly the shop you're ordering from and what they have. Like I'm not going to go and search Yelp for my favorite local pizza shop. Like what is Yelp going to tell me about them that I don't already know? So there can be some powerful marketplaces built that aren't necessarily discovery, right? They're more of a collection of 2 sides and you're matching them. And sometimes those matches are actually entrenched, right? Like they're perpetual.