The Ostrich Report AKA: The Marketplace Podcast with Vinny and Hendrik - The Marketplaces Wake Up Call.

Welcome to the First Marketplace Podcast. I'm Vinny O Brien from RMW Commerce, and joining me today is my good friend Hendrik Laubscher. Hendrik, you want to say hello?

Hello, Vinny. How's it? How are you, sir?

I am good, my friend. You just got a package a few minutes ago when we were doing the pre-show call. Tell me, was it from a marketplace?

Sadly not.

Uh, there we go, first fail.

So the order was from a chef that most probably needs to consider a marketplace. So she runs out of Cape Town, and you can deliver— get delivered to you preserves, freshly made food, which is glorious. Um, but as usual, and this is how Murphy works, um, when I'm supposed to work with my friend Vinny O Brien, the bell rings, um, and we have to stop and redo everything. So yes, um, excited for today, um, but y'all, there's lots to talk about because I'm looking forward to this marketplace conversation.

Yeah, and I was thinking about it again as we've talked through it. So what we're trying to achieve here is give people a dedicated place to come for the best marketplace information in the world that's not your newsletter. And we feel that it's been neglected. It's the poor cousin. It's one of those places that unless you've been there, you don't really know what you're talking about. To a degree, it feels, uh, feels like a war movie if, you know, we've got PTSD coming out of marketplace life. We live here, we still got the battle scars, and now we're here to tell some of the stories. What we're going to do over the next 10 or 15 episodes or so is try and give a diverse view of what marketplace world is like, why people should be embracing it. It seems absurd to me, having been in marketplaces for 20 years, that we are still trying to convince brands to get on there, earn some money, and figure out what marketplaces means to their customers. That's the key point that I'm taking from our pre-discussion earlier on. Brands think with this blinker on them that they know what's best, but they forget that their customers exist in places that they don't even think about today. So I'm really excited for us to be able to get in behind this, to bring some guests through the show as well. We're going to educate people, I think is kind of a keyword that you have given to me. Um, and we're going to spend some time sharing some of our knowledge, but bring us through some of your your rich history in marketplace world, why you love it, and we'll also explain kind of the format of the show. We're going to try and answer 3 big questions every week, but let's talk a little bit about why it's you in the hot seat and not somebody else. And I'm excited, not just because of your rugby knowledge, but everything that goes with it.

So Vinny, let's be clear, about 15 years ago I was lucky enough to get through the interview process for comparison shopping engines. Remember those? And throwback, when I left the business, um, we were starting to see in South Africa the creation of marketplaces. In the 15 years Something clearly has happened, and that is that in most markets, a marketplace exists and is most probably dominating, i.e., it has the most traffic, it has the most eyeballs, it has the most conversions, um, because people trust, trust them. So how did I get to this world? It's very simple, actually. Management boards of directors, management consultants, insert whatever leadership situation in our business, um, they will ask me to get involved when a brand— I wouldn't say is in trouble because that's also a misnomer— but when a brand needs help. And the help here is, um, what can we do to grow this business? Um, that sounds like a million-dollar question, but I think it's actually even worse than that. When you're having these conversations, you quickly realize that brands are saying no, we don't want to do marketplaces, we do not want to do marketplaces. And I'm left amazed because over the last 12 to 18 months, I've seen brands that work with marketplaces have, I would say, between 60 and 80% of their revenues coming from Marketplace sales. So this is not small. Then you also have a situation of you sit on calls and then a brand manager, or a— I, I doing this, but it's most cases a marketing person— just say flatly, no, no, no, no, no Marketplace. We're not doing it. It doesn't make sense. Well, newsflash, you were saying no to money. What are we doing? What are we doing?

And you've touched on all the points there that I think are going to form some of the, the kind of debate topics in the show. You've talked about trust, you've talked about team composition, you've talked about, um, shutting down marketplaces. One of the things I want to explore early on is we want to define what marketplaces are for people. I think that's going to be an important component of understanding because there's different types of marketplaces. Today we've got a lot of niche marketplaces. Anyone with traffic wants to be one. And now the big extension for them all is retail media. And that's not something you and I've talked about much, but it is the big land grab that we all want. So we gotta get in there and talk about that too. It's hugely important. But some of the other areas like the formative structures that marketplaces have put down for commerce are something I want to really hone in on in the early shows because When you think about them, they've created this world that is a little bit of what I call a false economy. So I mentioned to you that I don't think everyone needs next-day delivery in every product, in every category all around the world.

Hang on, hang on. Go for it. While we're at it.

I see the finger up. Go for it.

We also don't need on-demand delivery. Seriously, seriously.

So we just killed Q-commerce. There it is, folks. That's the first big nugget coming out of this podcast. We've just killed Q-commerce. That's Q-commerce. But it's those formative ideas that marketplaces have laid down for people that I think are really interesting. Even down to— it was '97 when Amazon IPO'd, correct?

Yes.

1997. I think if you use the old Wayback Machine, had a look at the Amazon UX on a product page, it's about 95% the same as what we have today with a few small differences like bundles, a few little bits and pieces in there, but that horrible orange that we all become so accustomed to. Is it orange? Is it yellow? Who knows? But what I'm getting at is that we have spent 10 years looking at UX or 15 years and trying to figure out how do we do better? How do we shift the parameters of what's good, bad, or indifferent? And really we've had an example there all along with marketplaces. So I think when we look at all the thought processes that have emanated from it, we've got to look at marketplace's impact across all areas of commerce, including some of the people. And that's some of the, the other areas and stories we're going to bring to you. Some of the people that have proliferated from key roles in marketplaces to be formative in terms of how commerce is delivered today, and things like logistics and marketing and all those other key areas, live shopping, everything that's coming through as well. So I think they're going to be really fun places for us to get into. Um, but why marketplaces? You kind of said Why leave money on the table? Or why would you, why would you say no to money? That's kind of the first big question. I'm going to give a little statistic that I know about marketplaces in Europe, and I'd love to hear your reaction. So you're, you're the brand owner, you're talking on behalf of all the brands. 80% of all traffic, that's 80% of all traffic according to Internet Retailing in Europe, goes through marketplaces. The rest of you are fighting for 20%. Well, that's your day job. That is the day.

So if that was my day job, one, I, I think I'd most probably get my first letter of warning because what are we doing, competing for 20%? But this, this just highlights the problem because if you have the ability to access 80% of a sector in a large market like Europe Why are you saying no to it? So I have a few thoughts. So one, and I know this is a passion project of yours, so I don't want to kind of give away the goose here, but I think we have a talent problem. Um, I, I think a lot of brands are saying no because they don't have the internal assets and know-how to do it. That doesn't give them an— give them a pass, number one. Number 2, I think the biggest misunderstanding that I always hear, and I've heard it for the last 5 years, is I don't want my brands to be on marketplaces. Well, well, newsflash, newsflash, your products are on a marketplace. Somebody else selling it to you.

It's got a distribution problem. If you don't know that your products are not there, you've got a different problem.

But I'll go one step further. There's this new company called Temu.

Who?

Temu. That's who. Temu is selling brands to consumers where the brands are not knowing of. My point that I'm trying to get across here is brands are driven by my— in my world, by profits, margins, and wait for it— losses. It's a play on the P&L. My point is, is that if you're a brand, if you don't understand that businesses or consumers are using your products in a different way— good of a good old example. I recently worked with a pet foods business, and this pet foods business didn't realize that one flavor of the— one flavor, wait for it— one flavor out of the entire range basically drives all of the business. So what do I do? What do I do, Vinny? Why are we making the other variants? Oh, but we have to. Or the other excursion, which I know you're a fan of because look at your very nice collared shirt, you know. I mean, come on, brands don't want excess inventory to be sold because— and I hear this in many meetings Wait for it. This is going to harm our brand equity and all the investment we've done.

So I'm going to call bullshit on that.

Yes, but come on.

No, but the idea that it harms your brand is absurd. I mean, customers have different ways of engaging with your brand, they have different ways of deciding how they want to consume it. And if you think that you only exist in your ideal customer profile that's stuck on your wall If you think you live in that lens, you're absolutely cracked. And, you know, this year we've seen, we've seen that in effect. We've seen profit compression. We have seen people trading down actively. We talk about it all the time. The rise of, like, Temu have done phenomenal numbers. And interestingly, what they're doing is proving what we've said to be right, that this diseconomy of scale of next-day shipping is not necessary. They're telling us that we're happy to buy cheaper items or value products as they like to call them, as we know. And they're happy to wait a week or two extra or even 4 or 5 days for that product that is not a necessity in their cupboard, which I think is really interesting. And then on the other side of it, consumers are going where value is. And when we look at the stats of 80% of traffic, we know that people are there. We did a study earlier on this year with Feedonomics. Now we're not sponsored by anybody. Yet, but we can talk agnostically about these things that we have done. We're there to grow.

And we will.

And we will, we will. There's no doubt about it. We leave an email address or something in the show notes and you can get in touch with Vinny and Hendrik at rmwcommerce.com. But really, when we looked at the numbers with Phenomics, we saw that brands who engage in multichannel commerce, and I think the full definition was 2 or more channels in play at any one time for your business, and I think the average was somewhere between 7 and 8, and they grew 4.5x more than brands who had a single channel in play. In the year where we have zero profits, we've losses for most people, and this is the key thing for me, no growth strategy. Marketplaces are your key to growth. Now, a couple of areas we're going to zone in on as the show's developed, but you mentioned skills a few times. Marketplaces need attention. You can't just decide you're going to open one and then hope, hope beyond hope that you can service the customer. The service requirements of marketplaces are incredibly stringent. But if you can, if you can do it well on Amazon, if you can deliver a full customer experience, get great ratings, have a commercial proposition that works, you might just have a chance on your website. But if you're sitting there in your D2C Shopify store and you're thinking, I'm going to give a lesser service than Amazon, I'm going to be priced way more expensive than all the competition for substitute products, and I'm going to do better. You're having a— you're having a laugh. I mean, it doesn't work.

Vinny, let me just say this out loud.

I'm all ears.

One of the main reasons why we have this series is to help executives, whether you sit in marketing, whether you sit in operations, whether you even sit in management, people who make these decisions, help is needed, especially now with the economy we're in. For the record, it's not just Europe, it's not just North America, this is a global situation. So if you have a brand, I think the easiest win without you having to do a lot, and by a lot I mean hire and invest like crazy. Just being tactical with being at the right place. For me, the best example that you always recite to me is, for example, if you're— if you sell car parts and you are not on eBay Motors, you are dead to me.

Yeah, it's crazy. And, and I, I think the, the The thing that we want to do for people is open their minds up. We want to bring a proper perspective to how marketplaces are viewed because they are forever the, the, the poor cousin, so to speak. So a couple of other areas that I'd like us to be zoning in on as we, as we get through this is I'd love to hear your perspective on what C-level and board-level executives think about them. I'd love to hear what the marketplaces think about themselves because The perfect example, and we're going to start, is on an ugly duckling story about eBay. Now, my marketplace is—

hang on, hang on, hang on.

They never turned into a swan.

Yes, but, but ducklings are not on our logo.

No, we have called this podcast The Ostrich Report. Can you tell them why, Hendrik? Share the good news.

So, very simple. An ostrich, when things are going bad, generally have a very simple philosophy: you stick your head in the sand and you don't care. And, and unfortunately for me, this is a great simile in terms of what we are seeing with brands and decision makers when it's regarding marketplaces. Why? I think it's a misunderstanding. I think there's a variety of consultants that have shared half-truths. We've, we've heard that before. Um, and thirdly, I think, I think the biggest misunderstanding is that marketplaces are gonna harm your business unless you are a tier like tier 1 business. I, I would say I think there's like 10 brands in the world, you know. There's a famous athletics company in Oregon, there's a famous European company that makes, you know, acoustics and like headphones. Unless you're one of those, what is your favorite saying to me about brands and what people think? Isn't something along the lines of you overvalue your own brand? Or what's the— what's your magic Wexington's.

You're believing your own bullshit. Look, there's a better way I can put it, but right now that's how I think about it. And I think we need to break down that barrier because I've been through that journey with tons and tons of brands, particularly in Europe, where we have broken through that glass ceiling to make them understand that people really don't care. And that's one of the things that marketplaces expose to us? That loyalty, does it exist? That's got to be an episode in itself. So I think that's one thing we should break down. The other, the other areas I've mentioned defining marketplaces, I mean, we have some classics. We have, you know, the eBay, we've Amazon, we've then got these emerging giants like Temu and Shein, and we've also got some regional—

hang on, hang on, hang on, you cannot mention China without mentioning Alibaba and JD. You cannot just—

I was saying we have the historical guys, we have the new guys, and then we have the guys who learned everything from Amazon and eBay and just did it a hell of a lot better. We have Alibaba, we have JD, we have the guys— actually, we're 4 days out from 11/11. Maybe we will talk those numbers when we see them. Like, Singles Day is a phenomenon, just couldn't be repeated anywhere else. But we learned loads from them, and, and I think that's one other key thing that's emerged for me, if you look at someone like Mercado Libre, they have learned from what our incumbents have done and just have done it better. And I want to do an, an entire deep dive on eBay because we know so many people there. The, the, this, the team that emerged from the early 2000s have helped kind of form the sort of commerce that we do. And I want to break down a myth that all all e-commerce is created equally. I don't think it is. I did a study on Africa, which I think I shared with you last year. And it kind of shows you that you can't have same-day delivery anywhere because the infrastructure is broken. And infrastructure projects to solve it, I think it's 65 of them fail at validation stage. So we're not going to solve that anytime soon. So to think we can transfer that model into Africa is a fallacy. But also Marketplaces can be good for small fragmented economies like Ireland, where Amazon is just about to launch Amazon.ie, and I think it will be the single biggest impact on commerce, and it will deliver profitability for those who do it right. I'm going on record, I'm going to say that in 3 years' time, you can hold me accountable to this one and say, Vinny, you're full of shit. But I started writing about it in 2011. I think it's going to hold true, and we're going to be able to hold these guys to account. I'm gonna bring it back though. What was your first experience with marketplaces? Why did you fall in love with them? And what's your favorite historical marketplace story? Because everyone has one.

So for me, my favorite, most historic, um, eBay story is— so picture this: I sit in an office of a fairly well-known Turkish entrepreneur, and he very matter-of-factly tells me, I was the eBay executive that invested into Pepsi, Burda in Turkey. So there's that in the new world, and then the old world We cannot mention eBay without my man Pierre Omidyar.

And if anyone said it better than Hendrik, we will send them a €25 gift card in the post.

But my point is, is that Pierre essentially wanted to collect space candy, um, machines or toys, and That's why eBay was formed. Um, secondly, where I got solved, where I— so I, as I told you, I, I sit in Cape Town, and any emerging markets like South Africa, what is the biggest barrier to e-commerce? It's trust. And trust, I've noticed, is borderline impossible to build for brands. Just because of the lack of scale. So I saw firsthand how platforms were started because having seen the, the challenges that comparison shopping engines— you know, remember those? When what those formed and led to, and what marketplaces did, you know, Vinny, it's very simple. If I can go to a place, search the place, put the item that I want in the place, swipe my card, and know that in 3 days' time I'm going to have somebody in a, in a, in a car or a vehicle ringing my front doorbell saying, um, we have a package for you, that's, that's, that's, that's, that's validation immediately. So, um, That's one. The other thing also is obviously is that worldwide we've seen platforms emerge where customers are feeling like that they can experiment. What do I mean with it? I mean, I can buy a brand that I've never ever seen anywhere else, but I know I'm going to get it. Why? Because the marketplace has You know, those things that we don't want to talk about, you know, warranties and replacements and all of those things, you know, the thing that, the thing that drives our, our sector. That's why. And I'm, I'm, I'm an early adopter. Let me just say it out loud, I'm an early adopter.

Yeah, I never would have pegged you as an early adopter, but now it, it, it all kind of makes sense to me. And couple of things just to pick up on, like, I, I started working on eBay, the first value to teach you is that everybody is good. And it's on the basis of that trust, Mark, that you said about Pierre. And you kind of have to believe it, just given the way the transactions happen. Trust is also built through good policymaking. So you get good protections. You have designed policies before the transactions happen that mean when something does go wrong, it's solved in favor of the customer. And I think that's really forward-looking. And so many brands don't do that. It's also interesting because I compare something like that versus sustainability, which D2C brands are famously greenwashing themselves for the last 3 or 4 years. We're leaving no stone unturned here. We're going to try and shame everybody. Just kidding. But when we did work with the 2023 Brands Report across internet retailing in Europe, the top 1,000 brands in Europe, how many of them had a published CSR? Give me a percentage. How many had published a CSR or ESG report. What do you think?

I'm going to be really nice and say I hope it's, it's less than 5%.

You are not nice enough. It was only 11%, but it's a staggering number. So that tells you how seriously people take policy building. I think if you're saying you're going to be a customer-centric brand, you start with marketplace standards and you work backwards from there. I want to look at as well, because I'm so excited about doing this podcast with you, but to be able to explore things like when is a marketplace not a marketplace and why do marketplaces fail. I'm going to wish upon a star on that one. But when a marketplace is not a marketplace, the network effects have got to be there. You've got to have enough sellers and you've got to have enough traffic to make the two things connect. And then you've got to create the ability for it to happen. But we've so many things we want to get through over the next 6 months with people, really. We don't want to be going anywhere. The plan for this is that we're going to do this podcast every 2 weeks. There's going to be a newsletter, which— Hendrik, what episode— what newsletter episode are you up to now? What number is it? 313. I swear to God, you can check this as well and tell me if I'm right on it. I think I joined your newsletter at number 44. I think the first time. I'd have to give you some email addresses to check, but that's how long I've been following you and reading your rhetoric. We're going to do this every 2 weeks. We're going to answer 3 big questions. We're going to post about this on LinkedIn. We're going to house this on YouTube. You're going to be able to see this in RMW Commerce channels as well. And we're going to be inviting guests on the show, taking feedback from people, and we're going to evolve it as an ongoing discussion without being too prescriptive along the way. So you'll have plenty of chances to get involved, share your own insights with us. And we're going to do this through storytelling, hopefully. Anything you'd like to add before we sign off on episode 1?

I, I can just say I'm very excited. I've, I've been starved looking for an actual Marketplace podcast, so this is kind of sad in the sense that we're having to do this. But, um, and then the other thing that I have to say is I'm so excited to do this with you because I think because we both have massive passion for the sector, I think we are going to do this as best we can, which I think is a big deal because I don't see a world in the next 5 years in which marketplaces are not going to be a big deal. There, I said it. Um, and on that minor bombshell, um, the Ostrich Report today was fun. I look forward to speaking to you in a couple of weeks' time again.

Amen.

But y'all, this was fun, um, and I'm excited. What more can I say?

Thanks for your time, Adam, for putting this together and for being such a good sport in doing it as well. You're one of the best brains in the world on the subject matter. And if people haven't already, I encourage them to get onto your newsletter. We'll include links in the show notes so you can get on and find all this info coming directly to your inbox. But for now, this has been Vinny O Brien Hendrick from RNW Commerce. This has been The Ostrich Report. See you soon.

Cheers.

Sunday, Monday, happy days. Tuesday, Wednesday, happy days. Thursday, Friday, happy days.