15 Minutes or Bust: What Hospitality Taught Rafael Barini About Commerce

Welcome to another episode of The Ostrich Report. I am your host without a co-host today. I am Vinny O Brien calling in from Ireland. With me is Raphael Barini, who is a friend of mine from the e-commerce or the Evolve Commerce Club. Raphael, good morning, good afternoon, Where are you and what time zone are you on today?

Yeah, good morning. Good afternoon. I'm in Switzerland today, so beginning of the afternoon and it's a pleasure to be here. Thanks, Vinny, for inviting me.

No, thanks so much. We've had a couple of conversations in the build up to this and your experience is something that I feel really privileged to be able to talk through today. And I don't say that lightly. You've had a tremendous career. It's still going. You still seem as enthusiastic as ever about the role that you occupy. And the space that we talk a lot about is marketplaces. And for me, that model is kind of changing. And I want to talk a little bit through organizational change, transformation, the structures that govern the reasons that we do things. And sometimes the why is always not the right approach on doing the things that we feel that we should be doing. So, for example, we're going to be talking to a market placer in a few weeks about the business model shift that is occurring because of marketplaces. And we both have grown up in those areas. But I'd love you to maybe just give the folks at home a little bit of the background that you have had, the roles that you have occupied, and how have you ended up in Switzerland coming from Brazil? And talking to us today.

Cool, sure. Yeah, and as you said, I have a lot in my background related to marketplace. I started my career like in 2000, 1999 to be clear, with e-commerce. So my focus was e-commerce and retail at that time. So I was very lucky to join at the beginning of 4 or 5 big e-commerce operations in Brazil. So I was lucky to be at the really early days, scratching everything and was able to learn a lot. So I started with Magalu, which is one of the biggest retailers in Brazil, then moved to Grupo Pão de Açúcar. Grupo Pão de Açúcar, I have the luck I had the luck also to help to launch their marketplace operation, which was the first marketplace in a retailer in Brazil. After that, I went to Carrefour, so I had some experience launching their e-commerce operation, again their marketplace and, and, and, and the food operation. Then I moved to own company. So I founded a company that is a marketplace platform, and I did this during 3 years, which was an amazing experience. Then I decided to come to Switzerland. In Switzerland, the challenge was to help to digitalize restaurants, so slightly different than the retail career, but a lot of common things including how to deal with online marketplaces and delivery platforms, uh, in, in the markets. Uh, yeah, and basically my, my focus, uh, now, uh, is connecting all this stuff that I've learned, uh, during this, this journey, uh, but, uh, focusing more with— into topics like AI and, and Web3. Uh, so I'm helping some companies to develop and also focusing a bit on real estate business, but also connected to marketplace. So we can talk about any of this stuff if you want, but just to give a quick background.

There's so much there. I think what's most interesting at this point, and I want to get through a few topics, is the idea of marketplaces and it forming opinions that you have or ways of working. And using that to leverage other opportunities like moving into restaurants or moving into hospitality and understanding what I kind of consider to be the sensibilities of marketplaces. You have to think about a lot of components to build a marketplace. And I think if you can build a marketplace, you can probably build any e-commerce business because you just have so many balls in the air that you have to think about. How helpful or unhelpful was it being in marketplaces and then taking yourself out of it to set up your own business and focus on one sector?

Yeah, true. So when you think about the marketplace, you have most of the common characteristics of a traditional e-commerce. So you need to deal with how to bring traffic, how to increase traffic, how to, to have the right offers in the right place. But you have maybe 2 or 3 additional customers. So you have the final customer, but you have the sellers that are important to, to handle. You need to be able to, to deal with them, uh, in a good way because they are part of your ecosystem and an important part of your ecosystem. You can have— you can fix that to have developers or platforms that are also your customers, because if you don't have a wide platform range or good systems that are connected, then it's difficult to operate a marketplace model. So can I just stop you for a second?

It's a common problem that we come across. You've defined two customers. When you're designing and thinking in terms of solution design, who do you serve during that process when you have two very distinct customers?

Yeah, it's cutting a little bit, but just to—

you asked it, who, who, which of those two customers do you serve when you're, when you're designing either process or experience when you've got two very clear different customers?

Yeah, I think both are maybe equally important because it's a flywheel, right? If you don't have a good onboarding process for the sellers or for the products to have like easy listings, the sellers will not bring products that are important for your main channel. And it's just different but equally important, I think. You cannot focus only on the customer side or the final customer side, and you cannot focus only on the seller side. Both are equally important, and you cannot have a marketplace business without growing both.

And sorry for cutting across you on that one. I just think it's one of those areas that people tend to not think about really clearly. And when I think about so many marketplaces emerging now, particularly in the UK, I can't help but feel that there's not enough end customers for the UK to support so many new marketplaces, yet there are so many emerging marketplaces out there. And the argument, I guess, against that is careful product curation. But you still have to design with everything else in mind. So you can over-engineer an experience or you can maybe think too narrow or too shallow in terms of the design that you put in place, depending on what set of those customers that you focus on. And you've touched on a couple of points there that I think haven't been solved. And one of them is data. You've been around a long time. I've been in marketplaces for 20 years. Can AI help us solve the problem with data quality, data curation, the better governance and maintenance of it? Or how do you feel 25 years on looking at the same problem today?

Yeah, yeah, for sure. Yeah, I can see AI playing a big role today in productivity. So it's a lot easier to do things like catalog curation or enrichment of product data and and improving like quality of the photos and, and the listings itself. Uh, not only this, but managing duplicates or managing how, uh, the, the comments that this— the, the customers are bringing to the products can help your, uh, your positioning in the, in the website. So productivity, I think it's the, the the things that are more connected to the short term because it's more easy and practical for now. But the way I see this going is I think AI can help a lot on personalization. So this will be, I think, the second big thing. So on the productivity side, there is a lot to do right now. But when we start to have more like agent e-commerce or things that are more personal and individual, I think we're going to have a big shift in the model. The interface might not be exactly how we have today and things can be— Okay. More towards the customer personalization. I don't know if you agree.

So to kind of pick up on a few of these points and some of the things we've spoken about, AI is such an impactful— AI is such an impactful force on our industry right now, and you're very much in the art to transform— I'll start that question again for you because it cut out.

Yeah, can you start again please? Quite a bit.

Yeah, yeah, no problem.

It's okay.

AI is such a huge impact on everything that we do right now. Okay, you try again.

The connection is really bad. I don't know if it's mine or yours.

I seem to be stable here. I'm not sure.

Um, let me try to switch for the phone. Let's see.

Okay.

Let's see now.

That seems perfect. Yeah.

Cool.

So give me 5, 4. AI is hugely impactful on everything we do right now, whether it's reading the media, being in our day job, or any conference you go to, AI is on stage. And it's one of those things that When I think about your role in transformation, and transformation is so broad, it's not just one word. How is AI slowing that down, making it more difficult, speeding it up? I know you've mentioned productivity, but transformation is very much a cultural change as much as it is technological. So how is AI helping that or making it more difficult for you to do the things that you need to do?

Yeah, I think there is— there are a lot of questions still to be answered around AI and the impacts on the day-to-day. Things that are very clear are things that, like we are talking here, so there's plenty of opportunity to increase productivity, a lot of stuff that is already generating good results. But we are, I think we're just scratching the surface and the impact that this will bring to the business models are just starting to take place. So one thing that's becoming very clear for me is I think we are going to have more speed to build stuff or to build new products. I think we're seeing this in the startup world already. So startups that launch from day to night, all this vibe coding and things that are very easy to build and to test. But this is not for all types of businesses yet. And the impact on the enterprise world are not there. Yet. And of course, there is a lot of additional risks when we talk about enterprise business regulation, data privacy, a lot of new stuff that needs to be handled. But looks like even in big corporations, it's already a lot more easy to test new stuff and to do prototypes and concepts. And this can be very helpful for big companies and also for startups, because then you can create new stuff, test, go to market, and then really tailor the solutions for what you need and base it on your learnings. So it's already a lot faster to do new stuff than what used to be like 2 or 3 years ago. And this is evolving very, very fast. So I think this can bring some mindset shifts in the corporations. In the past, we used to spend time to approve budgets to do tests. Now you can just do something very easy and prove if it will work or not.

And one of the things that you mentioned a little time ago is that you work on Web 3.0 and it feels like you're on the cutting edge of new technology all the time. AI, it seems, is different. Within the development world, the capability is almost endless right now, and your ability to test and learn and do these things in real time has probably never been available to you before. Is there anyone that AI is not for? Who should not be using it right now in the e-com space or Should everybody be trying it?

I think about trying, everyone should be trying. The point is what kind of problem is better suitable for AI or not. So if you have like a problem that is deterministic, let's say, so it's not to use LLMs, you can use traditional programming languages or code that are designed specifically for this. So I think one wrong way to think is to think, okay, let's just put ChatGPT to solve everything that you have in the company. I think this is not a good way to think. So If you have something more deterministic, it's not for AI. You can have other types of solutions. But in terms of testing and learning, I think everyone and every type of business should be investing part of the time really to test stuff, to go into details because This will be and is already very impactful for the majority of the business models. And I think it's good to compare what we are having or will have with AI with the Industrial Revolution in the past. So what was the Industrial Revolution for the manual work, I think we are going to see now for the intellectual work with AI. So every type of businesses and every type of job will have somehow some impact with AI. So it's important to be well connected, to be able to react in a good way and of course develop together with the technology.

One thing that I kind of go back to is casting yourself back to 1999 when you first started in your career. Would AI have made things move faster? And the reason I say that is, could you, do you still picture the world the same from a development perspective today as you did then? It's just that AI makes things exponentially quicker, or does it allow you to think differently about the job as well?

It's a good question. I think We have seen some waves from '99 until today, and all of them were very transformational. So '99, I think everything was starting with internet, at least in Brazil.

Same in Ireland.

Mainstream. So it was a big revolution. So every— at that time, people were thinking, okay, now we are not going to have stores anymore. Everything will be online. So let's close the stores and was not what happened. Just brought new ways and new communication methods and new channels for the traditional retailers. And then we had like the mobile revolution, more or less the same. So now everything is 100% mobile, only mobile will work. And we could think that marketplace was also a big revolution in the traditional retail business. Okay, now everything is only marketplace and it's always a mix. I think AI is one additional wave that is very transformative, but it's not the first and it's not the unique one that we're going to see. If you see backwards, you're going to see more and more things in the past that were very transformative as well. But every of these waves bring, brings new concepts, and, and we need to adapt the reality, not on the personal lives, but also on the, in the business, and how to, to, to react, because we will change how we do stuff. So I would say that is one additional wave and one important wave, but we need to be very well connected to learn and adapt to the reality.

So when you think then about where you are today and serving the hospitality industry, how do you make a leap into such a, what's seemingly like a niche, like a small market, but actually it's huge. It's everywhere. It's all over the world. It impacts us 3 or 4 times a day. How did you make that leap and what is it you want to achieve for that industry?

Yeah, I would say this, well, these last 5 years I spent more time on this hospitality business and what I've learned is we have a lot of common stuff comparing to the traditional retail and some things that are very different. So what, what is very common and similar is to think that you need to be able to handle multiple channels. Being a brand, you need to be on marketplaces, you need to have your to develop your own channel, and then you have different sourcing or methods that are similar to, to provide things. You have all the integration challenges, you have the, the, the challenge to manage your portfolio in different channels, in different channels, uh, all the financial conciliation, uh, in the back. So There are many things that are very common. In the other side, you have like the fulfillment that is very different. It's very dependent on drivers. It's real time. So it's a new world, let's say, on this part. But for me, it was very interesting to do this, this shift and to be able to learn more about this new type of business and apply some concepts that we had in the past with these ones. Other things that are very similar are, of course, when we deal with final customers, how you work with instruments to bring more retention, like CRM tools, like loyalty programs. And in this sector is even more applicable because if you have like a strong loyalty program, this can bring real incrementality because frequency is, as you said, like 2, 3 times in a day you need to eat. So you can drive a lot more results comparing to the traditional retail if you do a very good loyalty program structure, your business. So, and also the play of automation, I would say that is very similar. So retail depends a lot on automation. For instance, if you have a warehouse to manage how the things are delivered, it's not different in a restaurant. You need to have good order process, a good process inside the kitchen, a good delivery process, because it's something very fast and needs to be well connected. So yeah, for me was kind of an evolution. I've learned a lot. Many, some aspects are different, but you can apply many concepts from the traditional retail or e-commerce operations in this food space as well.

I was hoping you said that you're going to say that you love food so much that you just wanted all the free samples and that's what you went after. That would be one of the perks of the job. But as you talk about it, it strikes me that the key thing for you is to make sure that you're process perfect and you need to know how a kitchen needs to operate as well as a chef does so that you can speak the language and be aware of all the things that can potentially go wrong. So that gives you lots of areas from a process perspective to provide checks and balances to say, we need this thing to happen and then we need this trigger to go so that we can take the next action. And I would imagine, unlike certain other industries, those touchpoints are way more transparent and easier to manage to a degree. It's just that the volume of them and the frequency of them, as you say, is so much higher. So if something goes wrong, it can be— catastrophic is the wrong word, but it can be very consequential for the end user who's your customer, who's the kitchen owner or the hotel or whatever that might be. It must be a wonderful industry to work in given the pace and certainty.

Yeah, yeah, it is. And I think timing is one of the aspects that are— that is more important, because if you ordered food for lunch, you need to have this 15 minutes, in 20 minutes, not in 4 hours, 6 hours, as some— as you buy something in the retail. And customer interaction also needs to be online. So that's a bit more challenging than having a bit more hours to handle the operation in the back of the house like you have in the retail.

And, and has it worked in reverse then? Have you learned things from this industry that you could reapply into fashion or, you know, electronics companies, or do you think it's very specific to, to this industry?

Uh, yeah, probably on the CRM side, uh, you, you can— it's not that it's very different, but as the frequency, uh, is higher, uh, you could try to drive this frequency also in other sectors. So instruments that are applicable for loyalty programs in food could be also helpful for other types of retails. But there's not many examples that come to my mind right now.

So when we look forward in the marketplace model, which is again, it's a dominant part of European e-commerce. I think some of the stats that we've been shared with for the show, I think 81% of all e-commerce traffic goes through marketplaces in Europe. You come from Brazil where there's a big marketplace culture, Mercado Livre. How do you think that's going to change over the next 3 or 4 years? Are they going to be small incremental changes to experience or do you think we're going to see much larger, more wholesale changes in the way that, that they operate?

Yeah, uh, I, I, I feel this scenario of having strong marketplaces will continue. So players like MercadoLibre and all the Chinese players that are getting a lot of traction, not only in Latin America but in all Europe. Uh, I think this will continue because in the marketplace model you have the benefit of scale. So you can have a lot of stuff that playing individually as a brand, it's very difficult to have. Okay, so efficiency in transport, efficiency in cost for transactions in marketing, or the benefit of having information about the customers of multiple categories. All this stuff brings, like, benefits that only marketplace model can have. What I think is going to happen is I still think that we are, we have a lot of opportunities to explore in the marketplace model. So not only in retail, but thinking about B2B wholesale businesses, or maybe on franchise model, for instance, could be exploring a lot more. Or banks, Financial institutions, for instance, could be using more of their information, their customers, and try to operate their own marketplace in a more efficient way than what they do today. And also vertical marketplace. I think there is a space for vertical marketplace. Still in many sectors. So I think we are going to keep seeing, and we are going to continue to see, like, big dominant players like we have today, but we are going to see more and more vertical players, B2B players, and also on this, these other sectors like banks and financial institutions trying to to play a role in this game. Because one important asset that every marketplace have is the information. And as they have a lot of information about the customers, it's something that they can use in their favor. So I think there are interesting opportunities to explore.

Sorry, I didn't mean to jump across you. It's just interesting, as you say, that the Irish banks this week announced— there's only two pillar banks and one other financial institution here now, but they've decided to close the open banking system to Meta and to Google and to other potential threats to their customer base. Ireland is a small market, like 6 million people across the island. And they've decided to unify their peer-to-peer payments between the pillar banks only. And they've closed external competition, realizing, I think, the network effect that they have. So it's very interesting. I've been to a lot of their discussions. They've always been afraid of open banking, but it's the first kind of defensive move that I have seen in that space for some time. I can't let our conversation end without asking a little bit about Vitex because it was such a formative part in your early career. I've had the pleasure of working with Mariano and the team over the last couple of years as well. One of the things I look forward to going to NRF in January in New York is the Vitex events and Vitex Day obviously is enormous, 20,000 people. How has that culture set in? And maybe you could just describe what it's like to work in Vitex for people and how has that helped shape the sort of career that you have had or has it not? And do you bring that kind of samba culture with you everywhere you go?

Sure, yeah, actually I have not worked for Vitex itself, but I've worked very close to that in many, many opportunities. So when I was in Sinova at this beginning of the marketplace in retail, I worked very close to, to the guys on Vitex, especially Geraldo, which which is partner for Mariano. And we helped to develop, like, to design really how the things would work. So there is a lot of connections in the history with Vitex. So we continue to be very close. And it's a company that I admire a lot, not only the company, but the founders and how they deal with the business. But I would say they carry a bit about, a bit of the, the, as you said, the samba or the culture. This point about the energy, it's, it's very relevant for them and for many Latin American companies. This is crucial, and the adaptability, because especially in, in Latin America, I think we have a lot to react to. So changes in regulations, the economic scenario is not stable, nothing comparable to what we see in Europe. So to be an entrepreneur in, in some of these countries is very, very challenging. You need to be really changing, adapting ourselves every time. So I think this, this kind of mindset on the day-to-day helps a lot to develop the people that lead the business. And, and this is something I think positive for these companies when they go internationally because they need to play in a very challenging field, and this helps them to get muscles to play in, in different locations. So I think this helps a lot, and it's the case for Vitex and for other technology companies that are doing a good job outside of Latin America.

There's been so much in, in our discussion, Rafael. I'm going to let you get back to the day job now in a minute, but what you've opened I hope a lot of people's minds to is the fact that the principles of e-commerce stretch beyond what we think about. It's not just a retail mindset. You can apply it to services. You can apply it anywhere, really, because it's embedding technology. And I love that you've brought us into that realm of conversation that we should be thinking about e-commerce in many different ways. I also love that you have been able to translate something really important in the Vitex part of the discussion. And sorry, I got that piece wrong, but the idea of being able to work with ambiguity and when things are not certain and being able to react quick means that you've got to really know your subject matter so, so well so that you can make these changes really quickly. I think it sounds like it's actually quite an advantage coming from somewhere like South America or Latin America to be able to experience that and then bring that experience to places like Europe and North America and anywhere else that you want to take it. So I'm really grateful to you for taking time out to speak with us, sharing a little bit of your experience. And I hope that we get to meet over the next couple of months somewhere across Europe so that we can have a coffee and talk some more.

No, of course, Vinny. And thanks a lot for the time. Nice conversation. Thanks for everything.

Yeah, no, thank you so much. And sorry Hendrik wasn't with us. I'm sure you guys will catch up soon. Enjoy the rest of your afternoon in Switzerland, Raphael, and thanks for taking time on the Ostrich Report.

You too, man. Bye-bye.

See you.