008: Building a Brand Fortress in E-Commerce: Strategies for Profitability and Expansion with Paul Sonneveld

Speaker 1: 0:00

Welcome everyone to the Brand Fortress HQ podcast. I'm your host, john Stojan, and in this episode we are speaking with Paul Soneveld. Paul is the co-founder and product owner at Merchant Spring, the lead SaaS analytics reporting platform for agencies, brands and investors. He's also the host of Marketplace Masters, a live e-commerce podcast focused on practical insights for Amazon agencies and vendors. He lives in Melbourne, australia, with his family and his dog, hudson. Paul, I'm really excited to have you here with kind of a unique perspective. I was speaking with Mike Jackness on one of our earlier episodes. One of the things that we were talking about was diversifying beyond Amazon, so I'm really looking forward to our discussion. But before we dive in, tell me a little bit about yourself and kind of how you got to being the co-founder of Merchant Spring.

Speaker 2: 0:54

Yeah, for sure, and I'd love to. I'll try and give you the short version, john, and thank you so much for having me on your show. By the way, it's lovely to do this. So I didn't come from an entrepreneurial background at all. I spent the first part of my career consulting and then working in retail and running some really large recent order retail businesses here in Australia. But then we had this interesting dynamic I think it was around the 2015, 16 mark where Amazon launched in Australia, or there was rumors of Amazon launching and that created a really sort of interesting race. Like a lot of retailers were launching marketplaces to try and offset the Amazon effect, but also from brands at the time, retail industry wasn't that great Brands really were struggling to grow and they really saw e-commerce as a wonderful opportunity, or perhaps the only opportunity to get some growth at the top line. And, of course, marketplaces were certainly in Australia taking the lion's share. Like I think this was back then. Over 50% of e-commerce sales was on three marketplaces. So there was this. Really this all happened really really fast in the space of really six months. So I saw an opportunity and, together with a couple of other colleagues, started. I think what we now know is a full service agency, not just focused on Amazon, but we did eBay and how much miracle marketplace as well, and we're on the first. We didn't even know what to call ourselves. We still called it like outsourced e-commerce management or something like that. And then from there, we run that agency for a while and we really discovered that we needed some better tooling. So we hired our first developer I think back in 2018 or 19 that they built part of an internal prototype that we used to monitor the sales of all of our own clients across different platforms. It's got a long story short. At some point we decided, hey, this software plays much more interesting than running an agency or service business, and we sort of doubled down on that, raised a bit of capital, hired a lot more developers and shut the agency business down, and that's sort of how I got to be an entrepreneur. Actually, it's certainly funny to look back now, because I've never thought of myself as sort of a risk taking entrepreneur. I'm always sort of being on the more conservative, analytical side of the spectrum, but I've certainly learned some new things about myself over the last few years.

Speaker 1: 3:20

Yeah, so doing some background in. One thing that I noticed was that I think you bring that's unique is that kind of that consulting background, and it's not just any consulting but doing that research. I noticed that you were consulting for Boston Consulting Group, which you've got to have some pretty serious chats in order to be working with them. So I'm curious do you feel like there was things that you learned from that experience that translated into the agency that you work, work that you did and now as the co-founder of Merchant Spring?

Speaker 2: 3:58

Yeah, look, I think it's got lots of pros and cons. It's certainly not all pros. I think what helped me is the analytical thinking sort of to think through frameworks and to, let's say, you're thinking about an opportunity to really quickly assess in a robust way whether it's something you want to go after. I think a lot of entrepreneurs like shiny objects and they very quickly get distracted by chasing. There's so many entrepreneurs I meet they're not satisfied with running like starting one or two businesses. They need to have three businesses in the go. I think you might have at least two as well, john, if I'm not mistaken. But I think that's the least. That certainly helped me a lot and I think also just in terms of when it comes to client service, that sort of polish from working in a professional environment and serving clients all the time. That's definitely helped. I think what doesn't help is it does make you I mainly work for blue chip corporates and doing a lot of analysis. You can be guilty of a death by analysis. There's always a reason not to jump into something because you need to analyze this or analyze that. Certainly I found that I just have to. For example, when I started this business, one of the things I said actually I'm not going to do sounds like a silly idea and I wouldn't offer this advice to anyone. But I knew it was going to be a stumbling block for me. So I actually said look, I'm not going to do like a complete market sizing, a look at the opportunity. My gut feel says there's an opportunity here and I'm just going to go for it, which was actually. I mean, entrepreneur goes, yeah, of course, no problem, but for me that was like so counter my personality and how more my training and all that. But I felt I've got to do it Otherwise, as soon as I spend time behind a spreadsheet, I'll talk myself out of the opportunity because it's not big enough for this. So it's definitely been some great, I think some great things to the table, but there's also some watch apps for me because I think it can hold you back as a little bit as an entrepreneur at times.

Speaker 1: 6:04

Yeah, I think it's just good on you, as far as I think, having that skill, where a lot of entrepreneurs that maybe don't have that background really do rely almost too much on their gut without having kind of the chops to do the analysis, if they need to, to look out, you know what's that market opportunity and how can I, you know, stand out from the competition, although I would say that that's probably coming in more and more handy if we look specifically at the Amazon marketplace as it gets, you know, more crowded. You know folks that are listening to this, that probably already have a brand, they've got some traction and they're looking at, you know how do I win on Amazon and beyond over the next couple of years? And I think that that analysis that you talked about is going to be a big part of that deciding, you know, what areas do we expand into. So, with that said, you know, probably the biggest question that I hear a lot for folks that are like, okay, I feel like you know, yes, I can launch some more products on Amazon, but I've kind of, you know, reached maybe 80 or 90% of you know the opportunity there, especially, you know, if they're based in the US and they're focused primarily Amazon US. You know from what you do at Merchant Spring, you know when do you think that it's a? Do you recommend brands start to look beyond Amazon for those additional marketplaces?

Speaker 2: 7:31

Yeah, look, I would say there's no hard and fast rule, right, and the answer to that question is changing and of course, it will depend on what category you're in, but what's really interesting? So, just for context, for your listeners, you know we have about over 220 Amazon agencies in the US, Canada, but also Europe, who use our platform and I talk to them, you know, on a daily basis, not all of them, but you know, probably you know five or six a day. So last year or two years ago, when I was asking the question right, if you have, you know you're looking after your clients, brands. If you have a couple of spare hours in the week you know, not that we have them, but hypothetically speaking they just appear how would you spend that time? All right, and certainly out of North America. Last year or two years ago, when I run this, the clear answer was you know what? There's lots of upside on Amazon. Amazon is so big, there's so many opportunities. I'm going to reinvest that time in Amazon, whether it's like optimizing listings or running better campaigns or launching more products or that. That was a really clear answer, and by clear I mean like 90% of the people will just give that right, they would say don't talk to me about other marketplaces and all these things. What we're seeing now, though, is I think the opportunity is still there from a sales point of view, but profit is getting a little bit harder, right. So you know, obviously it's not a secret that you know Amazon's growth strategies is a lot. I mean, there's lots of businesses, obviously Amazon One of. The big part is obviously they're advertising business and they're investing heavily, and if you look at all the tools that they're building, you know a lot of them is just toolkits to help you advertise more and give you the justification for doing that on Amazon. Now, that in itself is nothing there's nothing wrong with that but of course, it comes at a cost, and what we are seeing, particularly sort of after COVID, after everyone got, you know, their inventory levels back to where they wanted to, you really saw that competition kind of increase again. You know, we all know this, you know cross-biclicks going on and all of those things, so, actually, a lot of a lot of, and a lot of branders may not may have a view of profitability at the total channel level, but at the product level, you may find that a lot of your products are basically becoming kind of marginally profitable or unprofitable, right. So it's almost like they're turning into like busy work. Yes, you've got lots of sales, you've got all these wonderful reviews. Look, I've got 10,000, five-star reviews. That's great, you know, and certainly I don't want to sort of detract from all the hard work that you put into doing that. But you know, my view is, if there's not cash flow flowing into your bank account, you know you're kind of, you know you're at risk of being busy fools, right and I say that in a nice way, you know, I don't want to finnish the listeners, obviously. So profitability is being a big focus. I think you need to really double down on that and maybe de-emphasize some of the sales piece. So, really, what does that mean? That means one looking at your portfolio, say on Amazon in North America, and say, right, how do I optimize the portfolio? How can I go hard on the skews that I'm making good money on still, and maybe pull out of products that are pretty key? Then remember, these are all taking off, your FBA infantry allocation, all these things, right. So there's some of those.

Speaker 1: 10:53

So I just want to double click on a couple of things here because I think they're really important, you know. The first is I mean I think you know most sellers that, once they've got some traction, that are probably listening to this, are familiar, you know, with A-class and they are probably familiar with tacos. I think, first of all, the important point that you make there is to be looking at those not as a brand or as an account, but to get more granular with it and start looking at it at the ASIN level. So you might have a hero product that you're selling. You know lots and lots of units, but if you actually did the math on that at the end of the month it could be that your break even are actually losing money on that product, and so you know you have to understand that when you're thinking about what products to put your time and effort into. So I think that's the first thing that you know. I see a lot out there is that people are very good at looking at the account level but not getting as granular as looking at the actual ASIN level. The other thing I'm curious about is so what is kind of the? Are you looking at that from a tacos perspective? Are you looking at it from like a net gross margin perspective? Or is there, you know, kind of one number that translates well across platforms to measure that?

Speaker 2: 12:11

Yeah, yeah, so we were looking at a profit level skew. So if you think about, I mean this, in Amazon there's about 170 different feed types, but you know. But broadly, you know, there's obviously advertising is a big part of your fee structure, right? So agos, tapos, that's all really important. There's a couple of others that have a material impact on your, on your bottom line. The first one would be returns. Right, so returns are the ones that returns are really things that can really kill your, your product. You know, particularly if you're kind of refunding people and the product's not being returned, restocked, all that doesn't happen that often. The second one, obviously, is cost. Right, you know, and there's lots of rules of thumbs about you know, what your percentage cost should be, but obviously the cost of the product is super important. And the third one is obviously all those FBA inventory fees as well. Now, there's more fees than that, but those are the big ones. And particularly where your price point and I'm probably going a little bit deep here, but where your price point per unit, your average price point, starts to sort of drop below 25 to $20 a unit, it can be, you know, the FBA fees, because these are all based on a kind of dollars the charge, not as a percentage of your price, but on a dollar per fee per activity, and the activity is the same, it doesn't matter if it's $20 product or $50 product. So I'm seeing a lot of you know profit just being eaten up by all of the kind of FBA fees and all of that. Now you can complain about Amazon is so expensive and all of that. But to be fair to Amazon takes it costs to have a person or even a robot to pick things right. So a lot of this got to do with your pricing strategy as well, making sure that you really try not to sell products that are below a certain threshold $20 or $25. Because it's just hard. It's almost impossible to make money Like everything else has to be, so optimized for some you know, for money to flow to the one online after taking into account FBA fees. So yeah, when I come to profitability, I'm talking about like the full P&L at a product level, having everything from you know, obviously the income tax, reimbursements, advertising, fba fees, obviously Amazon selling fees and commission COGS, et cetera, et cetera, to get to it and that number.

Speaker 1: 14:45

Yeah, and I think you know. I think I just want to double click on what you said there as far as the cost, certain costs on Amazon, especially the fulfill by Amazon fee. So there's, you know, two things around that. One is this that at least in the United States it's cheaper to have Amazon pick, pack and ship something than in most cases then if I drove it to you know the post office myself and have them send that to the customer, so Amazon, really, as much as it's hard for us to see those fees go up, which they seems like they do every year, the reality of it is is that, compared to a lot of the other options out there, they still are more competitive than you know at pretty much any other alternative. And then the other thing was is when you talk about profitability, like you said, if you're selling a $20 product and it costs you $6 to ship, well, you know you're talking about absolute dollars, not a percentage. So you know it's going to cost $6, you know whether that product is $20 or whether it's $50, but how much profit you have at the end of that is dramatically different. I think, as you know, we look at, you know, planning out products to launch and looking at opportunities. It's important to look at those price points and understand what your you know your costs are going to be through the full spectrum of that product, not just what's my FBA fee and what's my you know cost to manufacture that product.

Speaker 2: 16:17

Yeah, absolutely, spot on, spot on.

Speaker 1: 16:21

So we talked about kind of profitability, and so you were saying that you know brands that are seeing, you know, volume is still there on Amazon, but they're seeing a real hit to the profitability and that it sounds like that's what's pushing them to some of these other channels. What are you know, maybe a couple of the channels where you see the biggest opportunity right now for brands that are in that situation where, like, hey, we love the volume on Amazon, but we've really taken a profit. I hit on the profit line. Where should they start looking first?

Speaker 2: 16:58

Yeah, look, that's really good. That's a great question and I want to preface that by saying every time you add a new channel, you do, you know, add up adding a lot of complexity. So you know, I'm personally not a fan of you know, let's plug in this piece of software and we've got you live across 100 channels and we're just going to pray and spray because typically that means you get very little sales anywhere. And you know, before I sort of give you my perspective, it's important to distinguish between this concept called, you know, open marketplaces and curated marketplaces. Open marketplaces Amazon, walmart, you, basically anyone can sign up. There might be a small vetting process but anyone could sign up. You know, they're typically large but there are also lots of competition, right. So obviously just a quick word on Walmart. Walmart's growing a lot. It's not there where Amazon is at the moment, but if you look at the ratio of, you know, sellers versus buyers, the ratio is still looking pretty good. Particularly if you know your stuff, you can drive some good numbers on Walmart and, more importantly, profitable numbers, right? So you might only do a third of the volume that you do on Amazon, but on a per skew basis you have, you may actually obtain infallible profit, predominantly because obviously your, your cobs, is pretty much the same. I don't think you'll see much difference in terms of commission and shipping. But on a lot of those platforms, walmart included, the advertising CPCs are way lower than what you see on Amazon Right. So if you're running, if you're running I don't know, a 30%, eight costs on Amazon, you know, maybe you can get down to, you know high, low, double digits on Walmart. You know it will depend by category. But the point is because the competition there's two things we see on Walmart One, you know, there's less competition, but that's changing rapidly. So I'm not sure how long I can keep saying that for. But also, you know, I still even on my platform, we have a lot of, we have a lot of Walmart stores connected where people don't run advertising Right. So that focus on leveraging the you know Walmart connected to their advertising platform is not as intense as you see on Amazon and therefore, by definition, there's opportunities to be had, at least for now. You know whether that's good. That's going to close in three years time, you know. I'm sure it will.

Speaker 1: 19:27

Is that something where what do you think? What you're seeing from that is kind of a halo effect from the brand, in the sense of you know, if I find a product on Amazon, for example, but you know I have a Walmart down the street and now, instead of you know, in some cases I might want to order off of Walmart or another platform, but maybe the awareness is built from finding it on Amazon. Are you seeing? Are you seeing that happen, or is that still pretty early?

Speaker 2: 20:00

It's hard to say. I do know that you know Walmart's part of the application process may ask you things around. You know what's the volume selling on Amazon. No, you know they'll, they'll. Walmart certainly takes a keen interest in that, but they also, I know Walmart has a really keeps a close eye on their top performance in their own marketplace with the view of, you know, maybe bringing them in as one piece, either on the commerce side or actually ranging in stores. Now I'm not saying that's an easy opportunity, but there are potentially further opportunities on the Walmart space that are not necessarily available on Amazon.

Speaker 1: 20:39

Okay, so just for people that may not be familiar with one P, essentially what you're talking about is selling directly to Walmart, kind of like venue, essential where you're selling directly to Amazon. Okay.

Speaker 2: 20:51

Yeah, yeah. Look, the simple thing would be hey, let's say you're selling, you've got, you've built your own brand. Be very successful on Amazon, you know, on to Walmart, you're selling decent amount of volumes. One of the one of the buyers or the category managers that are Walmart is going to go oh, that product it's doing 20,000 units, you know, a month. Clearly there's demand for it from my customer base and I can think I can serve that demand even better by actually buying that product directly. So changing from a sort of a marketplace relationship to their retailer kind of slash supply relationship or, you know, one per party to relationships either just for e-commerce only or then for their stores also.

Speaker 1: 21:35

I've heard rumors about this, but you might have more visibility than I do. In a sense of it makes a lot of sense to me at least. If, say, you get into that one-party relationship for e-commerce, it seems like a good bridgehead for then eventually getting into products into the physical Walmart store to actually have on shell. Are you seeing some of that happen or are we still early days?

Speaker 2: 22:04

I think, look, I don't have firsthand experience, but I certainly talk to some of our. We serve a number of Walmart dedicated agencies and they have certainly seen examples of that. So for anyone that's interested in learning more about potential and all that, feel free to DM me on LinkedIn and I'm happy to put you in touch with some of our agency clients who are specialists in that space.

Speaker 1: 22:30

Perfect, and so those are kind of Walmart's a great example of the open marketplaces. What are some of the what I think you call kind of walled garden marketplaces where there's more of an application process? What are some of those that you're seeing that are doing really well for brands?

Speaker 2: 22:54

Yeah, I think so. Typically they're also walled garden or curated marketplaces that's certainly the other term that gets bandied around. Most of these, in my experience, are category specific. So you know, and they're a lot more stringent around who they let on because they have a very tight view on what they want their range and assortment to be. They're not trying to be you know, everything to everyone, they're trying to win in one particular category. So you know, a great example might be like Home Depot in the US. So if you're selling any sort of hardware related product or anything sort of on the periphery of that category, there'll be a great you know great opportunity for you to try and get in there. Now, the reason that's interesting is because once you're in I spoke about like less competition or Walmart On these curated marketplaces there is even less competition than you can imagine. It's really you can almost run your own race because a lot of these marketplaces, you know they want to fill in their assortment, they want to have the right offer, but they want to just have the offer there. They're not that interested in creating like competition, such there's 10 different sellers selling the same product. If they've got that one product from one marketplace seller. That's great, that fits the need, which means you kind of, once you're in there, you're running your own race with substantially less competition. And keep in mind that some of these you know, some of these created marketplaces and a lot of retailers physical stores, which are curated marketplaces they still have really big brand and e-commerce presence. So hence you can do quite well. And then what's really interesting is some of them have started rolling out sort of an elementary version of, like sponsored brands advertising, but the beauty is no one is using on the platform. So, again, if you're in there and you're starting to apply some of the knowledge that you picked up over the years on Amazon in terms of you know running, you know sponsored product ads, for example you find that you can boost your sales quite significantly with really low CPCs. So once you're in there, it's quite easy. But the trick is finding one that fits your category Right. So you know, play home deeper. Maybe it doesn't fit the electronics category or the apparel category, so you want to go somewhere else and getting through the application process, that tends to be the hard one, particularly if your brand is not particularly well-known.

Speaker 1: 25:29

Yeah, so do you have any? And those are two great things for anybody who's listening. You know, if they're like you know first of all, they don't even know. You know like, hey, what would be a niche kind of marketplace that yeah, my product's not right for Home Depot, but there may be another niche out there for me. Where would be a good place for them to start researching that?

Speaker 2: 25:53

That's a really good question. That's a really good question, particularly in the context. In the US, the market's so you know, amazon has such a dominant position, so a lot of these other marketplaces don't get a lot of airtime. That's a really good question. Look, we certainly have an internal list. I mean, maybe a good place to start would be just we do have a list of marketplaces we support on our website. You can look by geography. You can see all the different marketplaces. So I'm thinking like you know, there's lots of apparel retailers in the US that offer marketplace options. Some of the producers do it as well. Obviously, you've got people like Best Buy. You know it's quite a long list, but a lot of these fly a little bit all over right now.

Speaker 1: 26:38

So a bit of research required.

Speaker 2: 26:39

Unfortunately, I can't think of like there must be out there. It's probably been a chance for it.

Speaker 1: 26:47

So it's merchantspringio. We'll take a second to kind of. You guys have a list on your website. You said right, correct, correct, okay, yeah, so that you know anybody who's listening. And they're like hey, you know, maybe I don't fit into Home Depot or some of the big brand names that pop off the top of your head. There might be, you know, other marketplaces out there. That again, and I think the most important thing of this is that you know you're probably not going to match the volume that you're seeing on Amazon, especially Amazon US, but your profitability could be dramatically more selling through some of these other smaller marketplaces where you know they just kind of really want. You know one of the leaders in the category, so now you're not fighting with you know 10, 20 other products on that marketplace. So I think that's a great insight for people to take away. So the next kind of logical question or you know what I think of is do you have any insights that you could share as far as and I know I'm sure all the applications are a little bit different, but just, you know maybe a tip or trick that you'd have for those businesses that are like hey, I know I'm a great fit for Home Depot or some of these other smaller marketplaces. Getting through that. You know a tip on getting through that application process.

Speaker 2: 28:06

Yeah, look what I'm finding because I've personally interviewed on my podcast a lot of people who make their business to help people get on, say, target or on Home Depot or on. You know they're actually specialists out there. So, practically speaking, I think you know I would say, get in touch with me and I'll just point you, make an introduction to the people on my network who I know are specialists in those marketplaces. You know what I mean specialists is. You know they help with applying for these marketplaces on a day-to-day basis. You know that's not certainly that I do. I have some experience doing that here in Australia many years ago, but I know people who do that, who make a living out of that and also get you know your success is their success. So you know, very happy to point you out to those guys. You know and I think you'll find some of them in my podcast section as well around the marketplace expansion, we've covered like different ones there and you'll find some good topics there. But yeah, just hit me up. I'm happy to come back to you.

Speaker 1: 29:12

Okay, and the podcast for folks is Marketplace Masters, where you have those interviews where people can find it there or obviously they, like you said, they can reach out to you on LinkedIn if they've got a specific marketplace that they're kind of looking for. So once they get through that application, you know, so they get into that marketplace. What are you know maybe, some of the challenges, or do you have any insights into? You know what they can expect to maybe some of the challenges, because we talked about the benefits that they can expect from that marketplace that they, you know, may not have thought of or aren't obvious.

Speaker 2: 29:49

Yeah, yeah. Well, look, the good news is that Amazon sets really high standards. So if you've been successful on Amazon, you know you can be successful on these other markets. It's not like they're. They're even more custom-assisted on Amazon. You know it's almost impossible. You know, in effect, I've had a hard time in my previous life trying to get people from these curated marketplaces onto Amazon and they're in for a root shock. So I think that's already on your side. The biggest and number one issue that I see is people take their content from Amazon and they just use a piece of middleware or a challenge integration software and they just pump it out onto those other platforms without any consideration. For you know what? What is the search engine? So let's take, let's take a target, for example. You know what? What is the search engine on target? You know what is it hungry for, what is it looking for, how do I get rent and how do I optimize my listings? It's not rocket science, but it is true that different search engines look for different things. It's very simple as things like color attributes. They may have a different set of color attributes on on target than you have on Amazon, I don't know. They may call it peach and you call it orange, but by not fixing that up, all of a sudden you're not discoverable on the target platform. So my number one, my number one kind of piece of advice is would be take your best selves from Amazon and spend some time optimizing them for the platform environment. That I mean is you know titles, descriptions and particularly some of the the backend attributes. You know whether it be product attributes or sizing or you know whatever information the marketplace wants to see. They'll all have different requirements. Spend some time like doing it properly, getting it 10 out of 10. Don't just load it up there from Amazon and you know basically get a two out of 10 result and then one with Y. You don't show up at any rankings.

Speaker 1: 31:47

Yeah, I think it goes back to what you were talking about earlier, you know at the beginning, which is, you know, yes, there's 100 plus marketplaces, which is you know all these other marketplaces, which is fantastic. But every marketplace has kind of its different nuances and especially for the ones that where you really want to win beyond Amazon is you do have to put a little bit of effort into customizing, you know, your listing and how your product is presented to be successful in that marketplace. Like you said, it's not a matter of just, you know, importing into 100 marketplaces and then you know, kind of dusting your hands and saying, yep, we're done now. So I think that that's an important thing for folks to take away. And then talk to me about how Merchant Spring kind of helps. You know, once folks are like, okay, I'm going to expand to these different marketplaces, how does Merchant Spring help with kind of those integrations?

Speaker 2: 32:47

Yeah, sure. So we're an analytics and reporting platform that supports over 120 different marketplaces, including e-commerce channels like Shopify, overs, as well as a series of retail media advertising channels. The key premise for brands is really to, at a glance, understand how your business is tracking across multiple channels at any point in time, but also get to the relative comparisons so that you can very quickly distill. You know, because you're ordering. You know, unity to container coming from China, you can only sell the unit once. So you know how do I optimize that inventory across the range of e-commerce channels that I operate on? You know, if I sell it on Amazon, I might get great sales, but I make no money. If I sell a little bit on Amazon, I make some profit maybe, and then I'll do a little bit over here. It's all about how do you look at your business as a whole, compare performance across channels, but also, in a very simple way, we provide you with over 26 different types of reports. So very quickly understand, okay, where the opportunity is to improve. You know whereas you're dropping in ranking or traffic. You know where your reviews going down. You know where you're seeing really high, high A-GOS, for example. You know which ad groups, campaigns, keywords, so allowing to very quickly get to. Okay, what can I do today to make a difference in the numbers I'm going to look at tomorrow? So, very sort of training focused multi-platform for brands.

Speaker 1: 34:24

Okay, well, and this might seem like I mean I ask it anyway, even though it might seem like kind of a silly question so Amazon and Walmart seem pretty straightforward, especially because you brought up logistics and just something as simple as inventory. But beyond that, I mean, if we're talking about, you know, the Home Depot and you know a lot of these other channels, are brands essentially fulfilling those orders through some sort of 3PL in order to for the logistic piece of it, or how are they solving that problem?

Speaker 2: 34:58

Yeah, look, it depends on the marketplace, but it's fair to say that, you know, we're seeing a lot of movement in Europe where a lot of these smaller marketplaces are developing their fulfillment options. I don't think there's that many around in North America. So, yes, your answer is most of them using 3PLs to fulfill that. So, you know, obviously there's no shortage of 3PLs in the US. But, yeah, that is one of the big challenges, of course, in who it'll still become, particularly in the US where you know, as you rightly say, amazon does such a great job in terms of FBA, you know, and you really couldn't do it for the same cost yourself. So, certainly looking at 3PLs or, of course, amazon's multi-channel fulfillment option. So if you can tap into that, that's wonderful. Right, check the T's and C's of the other marketplace, because sometimes you'll find that in their T's and C's they're kind of blocky from doing that, but not all.

Speaker 1: 35:57

So if that's an option you know, certainly worth doing, Because I think a bunch of people got busted on Walmart for using multi-channel fulfillment through Amazon it's, if I remember. I've heard a few of those stories. I'm curious. I know Amazon has put a big effort now into having either unbranded boxes or even, I think at this point you can even have them use your branded boxes. So I think, are you seeing that as a viable alternative to kind of the traditional 3PLs that are out there for brands that kind of want to consolidate inventory and limit the number of places that they have inventory?

Speaker 2: 36:46

Yeah, look, I would certainly say it's worth, without sort of knowing the exact kind of marketplace that we're talking about. As a candidate, if I was a brand, I would certainly try and do everything I could to try and leverage that same set of inventory, because having your own, having multiple pieces of inventory scattered around the country, is not an efficient way of doing it right. Ideally, you'd like to have it in one channel. I mean there might be multiple FBI warehouses, but from there shoot to other channels as well, so I would push pretty hard on making that happen. But yeah, the question is whether you can meet the T's and C's that the other marketplace will impose on you as part of for doing business with them.

Speaker 1: 37:32

Outside of Walmart. Are there any others that you can think of up top of your head that really do not basically ban a multi-fillment channel with Amazon?

Speaker 2: 37:47

Yeah, the big ones. So eBay used to ban it here in Australia. That's probably the biggest one. I can't recall whether they still have that in place or have that in the US as well, actually, so that was probably the biggest one. Yeah, I'll know that. I would have to check with the various I was just wondering if there's.

Speaker 1: 38:10

There's only, yeah, I think every marketplace is going to have different terms and conditions and, like I said somewhere, we're going to allow it and some of them aren't. So, speaking of up and coming marketplaces, one that is getting a lot of attention here recently that I see my notes that you guys are getting ready to launch, to support which is Tiktop Shop what do you see? How is that opportunity? Well, I guess, what brands do you feel like that is a great opportunity for.

Speaker 2: 38:46

Yes. Well, look for us. It's early days, so we're about to launch the functionality and I think we have one Tiktok store connected. Right now we're kind of really early. We're officially launched yet. So once we have a bunch of stores connected, I can actually look at this much more empirically. I think what's really interesting is, particularly if you think about the cost of Amazon and the profitability piece, having other channels either. Take the transactional drive, traffic is a real, real interest. So we are investing really heavily on this. So we rolled our critio. In Europe we've got a platform called the Biow, which is another sort of sponsor that's doing Tiktok. We're planning to do some of the other social media channels this year. I think it's really important as a brand to be in different places. But also keep in mind that most of the clients we serve are agency clients, so they are looking for incremental opportunities to serve their customers. So they're only looking after their, say, amazon business and their sponsor products business. Maybe the DSP business, maybe Tiktok shop is a really good opportunity there as well. So a lot of what we're doing is really come from the needs of agencies and where they see their business going in 2024.

Speaker 1: 40:13

Okay, yeah, and I think Tiktok shop is going to be really interesting to see how that rolls out over the next year or so, as Tiktok has already put a ton of resources behind it and I would expect that they're going to continue to do that, and there's going to be certain brands that that check is probably going to do absolutely phenomenal for, and then others, like you said, they'll probably see more of that small incremental sales where maybe it's not a ton of volume but the profitability is a lot higher, like a lot of the other market places that we talked about, that can have a big impact on the bottom line. Well, pot been super helpful to talk about all these different marketplaces. I think a lot of brands are listening and you're going okay, I've got a lot of information. Thinking about marketplaces, even beyond all the everything goes on with Amazon, what's maybe one action item that you'd leave with the audience as they think about looking at these other marketplaces?

Speaker 2: 41:12

Yeah, I would say if this conversation has sort of generated some ideas and opportunities in your mind. A step one just do the research. Start on our website but find what are the different marketplaces in your region that suits your category. That's step one. Step two if any of those are interested in me, drop me a note and I will introduce you to our agency network or expert network who can help you go, at least give you a good and realistic view of your potential as to when you'll be accepted on some of those creative marketplaces where you have the characteristics that those marketplaces are looking for. I'm very happy to facilitate that intro. Number three keep an eye on complexity. It's interesting that we started off with this question about entrepreneurship and chasing off the shiny objects and all that you may find. Oh, there are six or seven. Oh, there are some over here and over there. Keep in mind that with every marketplace you do introduce organizational complexity within your business. Try and fight that and really do one or two and really make them work. Be happy with the amount of profitability you're getting out of it before jumping into three or four. Make it a slow raise and make sure you really succeed in those incremental marketplaces before you drive a lot of additional complexity into your business.

Speaker 1: 42:45

Fantastic advice. Just to clarify for people that want to connect with you directly LinkedIn, you said. Direct message is the best way. If you're looking at these marketplaces and looking for hey, paul, I'm interested in Home Depot or I think this would be great for my company. And just as a reminder for listeners too is, if you're like, hey, I have no idea what marketplace, because I'm in a very specific niche, your website, merchantspringio, has a list of the over 100 marketplaces that you guys serve and pretty much no matter what niche you're in, I got to imagine that there's at least a handful of other additional marketplaces that you can expand into. Again, just to double click on, something that I think is so important is that you may not get the volume from that marketplace that you're currently getting from Amazon, but you are. Profit margins, which is what we're hearing a lot from brands right now that they're really struggling with, are going to be a lot higher on those secondary marketplaces where you don't have the fierce competition that we see on Amazon right now. Paul, thank you so much for being on the podcast and really giving a perspective of all the opportunity that's in marketplaces beyond Amazon as brands look to grow and really fortify their position now and going forward.

Speaker 2: 44:03

Absolute pleasure, john. Thank you for having me and look forward to another one in the future.