*APAC Heritage Month* This is Your Tech Leader Speaking
Join us as we speak to industry expert Andy Kelk from Marketplacer about the changes and challenges e-commerce businesses face.
Hi there, I'm Gretchen and we're going to explore what's top of mind for local experts in the tech industry in Australia.
So this is your Technology Speaking is a series of talks with local APAC industry leaders.
So I've been lucky enough to curate a guest list that is just pretty stellar.
We've got all these people coming on board who have knowledge, just extensive knowledge of the industry and a whole heap of experience in leadership.
I guess today's guest epitomizes both technical leadership and technical knowledge.
So we're a bit lucky here. He has two decades of experience leading digital product development all around the world.
So he comes to us with a bit of a quirky accent, you have to forgive him. For the past few years, he's been hanging out in Melbourne a marketplacer.
So he's been creating a software platform for online marketplaces.
Welcome, Andy, thanks for getting up early and hanging out with us on a cold Melbourne morning.
Thank you very much.
I'm going to dive right in because e-commerce is a, I didn't know a lot.
I asked you to come on and have a chat with me and then spent two days googling and going, oh wow, this is bigger than I thought it was.
I had no idea. But first of all, can you tell me a little bit about marketplacer and what marketplacer does and also what you do at marketplacer would be great.
Yeah, absolutely. So marketplacer is a software platform for people who want to run marketplaces and that sounds very simple.
In fact, our tagline used to be, that's what we do. So marketplacer, but we've actually changed it recently and we have now taken on the tagline grow on.
And it's really apt because marketplaces are actually all about growth.
So what we've found is that traditionally you think of a marketplace as one of the mega marketplaces, Amazon or eBay, and you kind of say, well, that's not me.
I'm an e-commerce retailer. I'm not a marketplace. What we've found is actually a lot of e-commerce businesses can take on some of the best aspects of being a marketplace.
So what we say internally is that we make it easier for people to sell things that they don't own.
So traditional e-commerce business, they'll own all of their stock.
They'll have it in a warehouse and they're limited very much by what they can keep in a warehouse or what they can keep their hands on, what they can own.
So they're kind of capital, limited by capital essentially.
With a marketplace, they can then go out to all these other third-party sellers in maybe adjacent categories or complementary categories and they can say, why don't you sell on my site?
And what we do is we facilitate that. So those people who want to sell things on those channels and the people who own those channels, bring them together and allow them to create growth for their businesses.
I love that it reduces that need for the capital outlay.
It's just opening up so many opportunities for smaller businesses, right?
It really does. It really expands the opportunities there and there's kind of different ways that you can do that.
We talk about endless aisle.
It's the ability, if you think about a traditional shop, you've got an aisle and it's limited in size by what you can fit in there.
The endless aisle is just you keep going and going and going.
So that could be range extension.
So in my shop or in my warehouse, I can only carry these sizes or these colors or these particular styles of product.
But if I drop ship or if I have suppliers who can send that through the marketplace, I can take the whole range.
And then it can also be, as I say, that kind of adjacent category.
So if I'm a fashion retailer, maybe I need to put in some shoes, but they're not things that I traditionally carry, but I can go and get some shoe suppliers and I can get them to sell through my platform as well.
So it's a really interesting category. And for me, I find it particularly interesting because I started out my career in e-commerce and I was working for a company back in the UK who did software as a service e-commerce platform, although we didn't call it software as a service at the time, but the phrase just didn't exist.
People were very much in the mold of I've got to run and host my own platform and I've got to keep the the ownership of that.
And we really broke the mold and said, well, we can run it for you.
Was there resistance? We had huge growth at that time.
Sorry? Was there resistance to that change in the model? There was.
Yeah, absolutely. I think people, you know, they, earning the trust of people that you could actually run a platform as well as they could back in those days, you know, back in the dark ages, was a shifted mentality.
It's pretty tricky, but you know, it is.
It's a real shift of mentality. And obviously we've seen it across the industry now for the last 15 years where it's really grown and people will just push their whole workloads onto cloud providers, as you know very well, of course.
But, you know, people have a lot more trust now, but earning that trust 20 years ago was pretty tricky.
So how long have you been at Marketplace then?
What's your role there now? So I've been at Marketplace for four and a half years now.
I'm the CTO, so I look after all of product and technology. So I've got a team of people who build out the platform, who product manage the platform.
We've got UX and UI design in there as well. We also do a bit of support for people on the platform.
So we've got a fairly big team, mostly here in Melbourne, but obviously as with lots of other businesses over the last year, we've expanded our footprint and, you know, have people in other places as well.
So on that note, I mean, 2020 was the year for changes.
Many businesses found it hard and ended up not being successful, but where you sit in the industry, there's huge growth there.
What changed for you and what was the biggest, I guess, what did you see change with e-commerce the most?
Yeah, I mean, e-commerce was definitely affected, but in a different way to a lot of other businesses.
As with a lot of businesses, obviously in March, you know, last year, there was a lot of question marks around where do we go?
And, you know, there's different categories of business, you know, some would definitely pull back and say, well, you know, we want to kind of retreat into what we know best.
Other people saw it as an opportunity to just go faster and harder and do more and accelerate plans.
And really that's the approach that won out, I think, in the end, in hindsight, looking at it.
I mean, e-commerce as a category, I think the estimates I saw were reached, we reached the levels that we were expecting in 2030 in 2020, you know, kind of accelerated the growth significantly during that time.
So, and I think the other thing which we saw was lots of categories that people weren't used to buying online suddenly became things that people would buy online again.
And what was, what's an example of that? I think, you know, I mean, obviously groceries is a big one.
There was a big explosion in that.
Health and hygiene, you know, a lot of the kind of daily essentials, things which you usually just pop out to the shops for when you can't do that, you know, people's behaviour changes absolutely.
So, and I think, you know, we've seen them, you know, a return as shops have opened up.
So, you know, I'm thinking particularly about the Melbourne experience, tail end of last year, we kind of came out of lockdown, things opened up, but I think it's still ahead of where it would have been had that not happened at all.
And what's, I think what's also been really interesting is because of that, there's been a real change in expectations for consumers around what they want from e -commerce.
Their levels of what they want have just shot up, you know, and that immediacy and ability to get things as soon as possible has really accelerated as well.
And is that delivery point, was that a pain point from what you saw?
I mean, so many businesses went online and delivery services, I don't think we're quite up to scratch to match that, but how do people deal with this?
Yeah, I think it's absolutely, I mean, fulfilment, you know, of product is absolutely key.
It's really, really important. And I think it's ultimately where a lot of businesses will either thrive or not.
And I think the ones who offer innovation in that and provide new ways of delivering product will do really well.
And those who are stuck in the mindset of, well, you know, I can ship this in two weeks' time and, you know, then put it through a slow channel and it'll get there in three weeks from now, and I won't give you any updates around when it's coming.
They're going to be the ones who will struggle more because, you know, people have expectations.
You know, if I've ordered something, not just I want it as soon as possible, but also I want to know when it's coming and I want you to keep me updated around where it is, you know.
Has it left the warehouse yet? Is it on the road?
Is it coming today? Is it coming tomorrow? People want that level of communication and transparency now.
I just momentarily have a helicopter right above my house, so apologies for the noise there.
Something about live streaming, right?
So given we momentarily hit that 2030 expectation or projection for e -commerce and then we've dropped back a little bit, do you think we're going to get back to the 2030 rate again or do you think we're just going to kind of do a more linear path from our higher growth up to that?
Oh, I definitely think, yeah, we'll continue to accelerate.
And what is it? So I think this year, I think it was Euromonitor put out some numbers.
They said it was going to be 9.5% compound growth annually in e-commerce and that's compared to 24% last year.
So, you know, it's obviously dropped back a bit, but I think a lot of those habits which people have picked up are going to stick.
And I think a lot of the changes that we'll see in the market will accelerate.
And once you kind of, I think you build that trust, you know, e-commerce still suffers and it's ridiculous because it's been around for so many years, but it still suffers from a trust problem.
You know, I'm giving my credit card details to an unknown potentially.
So building trust is really, really important.
But actually, I wanted to give you an example of, I suppose, how the curve has changed.
Yeah, I'd love that. So one of our customers who made a huge change during 2020 was a company called Providor.
So Providor, what they do is they're a high-end meal delivery service.
But what happened was back in March 2020, it was, so Shane D 'Elia, who's a chef here in Melbourne, runs some fantastic restaurants, obviously had to shut all of his restaurants in the middle of March.
So did they previously deliver or was it just restaurants before COVID?
Just restaurants. So immediately went online with, so his restaurant's called Maha, so he came up with Maha Go, which was use the, you know, the ingredients we've got, the chefs, the equipment, the premises, and start putting together meals that people can heat up at home, so at least finish at home.
So to give you an example, they do these amazing Turkish beef dumplings, they're incredible, absolutely recommend them.
But what they'll do is they'll cook them, they'll prepare them, they'll put them in with the sauce and everything in a bag and then ship it to you chilled.
And then your preparation is, you know, I put a pot of boiling water on, stick the bag in, heat it up for 10 minutes, and then sprinkle over the, you know, the herbs and the spices on top of it, and it's incredible.
So it's, you know, it's not a hot meal delivery, but it's also not a ready meal, it's somewhere in the middle, and it's very much, you know, the high-end restaurant experience at home.
So they did that with Maha Go, first of all. I would have needed help and guidance of like, because you're getting that food that's fabulous, I want it to look beautiful, so did they help you with that?
Well, that's right, so they put together the cooking instructions, you know, how you do it.
But then what happened was that was doing really well, and lots of other restaurants in Melbourne kind of went, oh, that's a great idea, how can I get on board with that as well?
What Shane did, which was really clever, was he said, okay, bring together these different restaurants, do central, you know, one fulfilment deal, and put together a platform.
So they put together Provador, which was a marketplace, or still is a marketplace, of all these different restaurants.
So Maha was one of them, but then also Supernormal, Accumulus, and these other amazing restaurants from Melbourne all put their kind of at-home offerings on the same platform.
So they got, I think that was sort of March, April time, I suppose we're talking about, was the real genesis of that.
Went live in May, and then absolutely went through the roof, you know, like in the middle of lockdown.
And then Melbourne had a second lockdown in, what was it, July to October, I think, 2020, and absolutely just huge, phenomenal rates of growth, particularly around, interestingly, around the big occasions.
So around Father's Day, for instance, in September, I think it is, you know, lots of people going, okay, Father's Day weekend, can't take that out to a restaurant, let's order an amazing food box.
And so huge amounts of growth. And then the tail end of last year, of course, Melbourne opens up again, people can go back out to restaurants.
And so, you know, growth slows.
But what's been really interesting is that it's not just collapsed, you know, it's not gone, okay, well, I don't have to do this anymore, I can go back to restaurants, people have now gone, well, there's another option.
There's, you know, I can go out to a restaurant and have that experience at home.
And sometimes that's, you know, more convenient. For Mother's Day, this weekend, just gone, we ordered some, some food.
And we didn't go out for, you know, for a Mother's Day lunch, we did food delivery from a restaurant, finished it at home, and did that experience, because now that's, that's an option, which you see and go, well, I can do this.
And it is, you know, it's gone from zero to 100. And then it's, you know, it's dropped back, but it's still far above where it was this time last year.
I think in terms of I love what you brought up there, because design principles wise, if you think of outliers, or people that aren't necessarily your core customers, you can build amazing products, right.
And if you think, I mean, always have been people that haven't been able to get to restaurants beforehand, before lockdown, and now we're catering to them as well, it was a market we could have potentially covered before.
And it's that same adage, I know, I'm quite passionate about building products that work for everybody, especially, you know, minority groups, so people with disabilities or anything else.
And it's that same adage of if you, you know, if you build a mapping app that lets people with prams get access to buildings, actually, that's really good access for people in wheelchairs as well.
Or, you know, in screen readers came out, they realized that a lot of recipes were being screen read.
And that was my parents at home trying to cook while I had a toddler on there.
So designing products for wide reaching people is just really good business.
And the other thing you brought up there that I adore is that the original guy from Maha went, this doesn't need to be a competitive endeavor.
Let's work together and collaborate and actually just make it better.
What a beautiful shift in mentality, right? It's not a competitive dog eat dog.
It's like, hey, together, we can make this thing amazing. And now I'm just hungry and want to order food and heat it up and take it to the park across the road.
That's such a fabulous story. So it's still running now. And it is, as you said, the levels have dropped, but it's a whole nother product service offering that just wasn't in existence.
And it's interesting you say service as well, because one of the things they've done really well, which I think is fantastic, as I say, you know, events is definitely a big one, you know, so Mother's Day, Father's Day, Easter, all those kind of big celebration events is one thing which they do really, really well.
But the other thing they do is they'll do online events and access is another thing you said there.
So you know, they'll have a chef. So you know, Shane, for instance, or any of the other chefs will do an online cooking class.
So what they'll do is you order your box, it turns up on Thursday night or whatever, then Friday night, you have a live stream on zoom or Instagram or wherever it happens to be with the chef who then takes you through okay, as a group, we're going to prepare all these things together is going to tell you about the dishes tell you about how it gets served in the restaurant.
You can ask questions, you know, so things which you went to the restaurant, you'd be unlikely to get that experience.
But because it's online and live streamed, you can get that access to the people who are creating the food as well.
This is phenomenal, because we talked earlier in the green room, in essence of often shopping is a social endeavor.
And what they've done with this is, it's not just the product, it is that interaction with another human that really just gone outside and gone, what do people want to need?
And how can we deliver it? And it's not just e commerce, like in a product sense, is it?
Well, that's it. And that's, that's one of the things we've found, you know, with with with marketplaces as well, is that there's, it's a, you know, one of the segments that we look at as marketplaces is what we call tribe, which is really a community.
And so we marketplace actually grew out of a business, which is a tribe business, which is called bike exchange.
And bike exchange is a marketplace for buying and selling bikes.
But it's also an activity, you know, cycling is a really close knit community, there's there's also professional cycling.
So people come on to talk about the Tour de France, there's, you know, lots of discussion around, you know, the best equipment or different bikes or cycling routes, all these kinds of things.
So what bike exchange did very early on was they said, Okay, we're not just a, you know, classifieds or an e commerce site, we're a community.
So we have forums and, you know, blogs and content, and we want people to come here to be everything cycling.
And, you know, obviously, then commercialize that through, through bike stores, and everything else, people who are selling those things.
And it's a category which we've, you know, we've seen, continue to be really relevant.
One of our customers in in the US is a that they're, I mean, similar to cycling, it's a real kind of niche passion, is fishing, their fishing app.
So they're called fish brain. And it's a social app for fishing.
So they they grew out of basically being the Facebook for fishing.
So what happens is, you go out of the weekend, you use your your line and your bait and your rod and your reel, and you catch an amazing fish, and then you post it on fish brain.
And you say, Look what I caught. And by the way, these that this is the bait that I used and the equipment I used.
And that's been around for quite a while, it's built a community.
And then probably about two years ago, they said, Okay, now let's bring commerce into it.
And so what they've done is they've gone out to all these different suppliers who sell all of these things, fish brain don't own any of it themselves.
The suppliers and they hook it up and they say, sorry, bit of a pun.
We're still having lunch dinner. But what they'll do is they'll they'll say, Okay, yeah, I bought this fish, and I use this, this fishing rod, and now go and buy it from the supplier.
So they've brought together that kind of social element, and the commerce element in one place.
And so it's a really cool proposition.
It's clever, because I guess Instagram does it for a younger market in a different way, right?
It's that sense of, we're simple beings, at the end, we want to have a sense of connection and belonging.
And if that's built up really well, the other stuff, I guess you've forgiven to if you have a bit of issue with your fulfillment.
And when people feel like that part of the community, they, they stay, right?
I wanted to, you know, I guess it comes down to marketing.
I don't want to say that. I've seen in Australia lately, there's a bit of a resurgence around reusing recycling, like a re, I want to say recommerce, but that's not even just making words up.
Have you seen the secondhand market grow at all around what you're doing?
Or is everything new that's coming across your, your plate?
Oh, it's a mix. Absolutely. I mean, going back to bike exchange, that was very much in the early days, that was its kind of core element was, you know, buy and sell.
And, you know, it was very much peer to peer. So, you know, here's my, you know, I bought this bike for $4,000.
I've ridden it for two years now, now buy it off me, you know, that's definitely a thing which we see a lot, and particularly in communities as well, you know, there is that, you know, that niche, you can go to the mega kind of classified sites, Facebook marketplace, or wherever, and you can buy and sell, but you're going to reach a very broad audience.
You know, for those niche passions, you know, absolutely, the secondhand market and not just secondhand as a, you know, a cheaper way to buy something, but also vintage, and you know, those kind of real specialist kind of things are huge as well.
Yeah, good point. Is there anything you see at the moment that's holding ecommerce back?
Well, because I think I said, you know, kind of fulfillment is definitely the big piece, I think, you know, on the front end, as it were, you know, the buying experience, there's definitely things we can continue to do there.
But ultimately, I can have the best experience on the website of finding and browsing and seeing amazing pictures and, you know, slick UX to get through the checkout and so on.
But if at the end of the day, my parcel then takes two weeks to show up, and I've got to keep reading up to find out where it is, it's a bad experience.
So, you know, fulfillment, absolutely key.
And, you know, particularly looking at the APAC region, you know, such a diverse region, you know, here in Australia, of course, we've got the challenges of the fact that, you know, we're fairly sparsely populated, you know, we've got dense population around the east coast of Australia, but once you get outside of that, it's pretty hard to cover.
But then, you know, even in the rest of, you know, Southeast Asia, for instance, there can be real challenges there.
There's been a big, big rise, actually, interestingly, recently in what's called micro fulfillment, which is your typical fulfillment is, you know, huge warehouse, all the trucks come in, all the trucks go out, you know, and it's a hub.
That's very intensive. You know, if you go to somewhere like Singapore, for instance, which is, you know, pretty small place, big population, finding the space to do huge fulfillment hubs is really tricky.
And expensive, right? Exactly. Very, very expensive.
So micro fulfillment talks to, you know, using an existing store, maybe building a dark store, but having all these really small hubs, and then using more kind of local transport to be able to get things out on the road.
There's big, big kind of trends towards that at the moment.
One of I know, one of the supermarket chains did that here, almost accidentally in that they were ready to open a couple of stores, and then lockdown happened.
So they realized they were not opening it anytime soon, they may as well use it.
That's interesting. I hadn't I didn't know I had a name.
I'm learning all the things today. So once we get a fulfillment is so complicated, though, I mean, at some level, you're talking about people driving vehicles to deliver things.
That's, it's labor intensive, right?
How do you make that better? It is, and you can use technology to make that better.
Absolutely. There's some amazing players out there who do, you know, amazing predictive software to get people to the right place at the right time, make it as efficient as possible.
And, you know, to be able to learn from that as well, because obviously, there's patterns as well.
The obvious ones, if you're driving at peak hour, it's going to take longer.
That's pretty obvious, you can work around that.
But there's all these different sources of data as well around weather patterns.
And then, you know, even things like, if I turn up, let's have an issue here in Australia, but in certain countries, if I turn up, and now I've got to go up 10 flights of stairs to do a delivery, and that's not being, you know, that's extra five minutes going up five minutes coming down, that then suddenly throws my schedule out by 10 minutes.
If I'm doing that at multiple properties, that can really just throw my predictions off.
So being able to then dynamically say, okay, I went to this property, and it took me two minutes to get from the street to the actual property, then they can factor that into the calculations later on and dynamically change how they're going to, you know, move these things around.
There's a lot that technology can do. You know, obviously, there's experiments with things like drones and autonomous vehicles and delivering using those.
Ultimately, they're all still limited by density, really, I suppose.
So yes, there's absolutely a physical component, but software can help with that as well.
I love that. I still have fond memories of the travelling salesman problem at university days.
It's such an interesting thing to model and retweak and optimise and play with that.
And you're right, I hadn't considered how much more data we get now.
So how much more accurate we can be with those things.
It's actually almost, well, not solvable, but you really can optimise well now.
Yes. I like that. Hey, so do you have any other, if someone said, what's your most wild, crazy prediction for the future of e-commerce?
What would it be?
Look, I think, I mean, who can predict, you know, I mean, who would have seen that, like, you know, NFTs, for instance, would have just suddenly exploded and then, you know, pretty much, you know, gone apart so quickly as well.
I mean, that has been an interesting kind of ride over the last few months.
But look, I think, if I were to go bold, I'd say TV shopping is going to make a return.
I reckon that's my big prediction. And is it going to be like, does that mean you want to sell something there?
Well, I mean, by the way, I happen to have, no, look, I think, you know, it's actually happening already in China.
You know, streamers are, you know, the big streamers on the platforms there are doing TV shopping.
And, you know, going back to our point earlier about community and interaction and social commerce, you know, people absolutely really engage with this because their favourite streamers are out there.
They can interact with them. They do, you know, half an hour of their usual stream and then they'll start bringing on the products and people will get online and they'll buy these things, you know, so it's, I think that's going to, I reckon that's going to happen over here as well.
And I think that's going to be my wild prediction.
TV shopping makes a return. Oh, a slightly refined, it's so interesting.
I mean, I see it with my son is into gaming.
And the moment a streamer talks about their new tech or the thing they've got, he's like, can I, can I, can I?
No, you can't. So I think you're right. And it's terrifying.
But anyway, thank you so much for joining us today, Andy. I really appreciate you spending your time here and learning all these wonderful things.
I am hungry, however, after talking about all the fabulous food. So we're back this Friday for a chat with Laura Summers about ethical litmus tests.
I can't wait to see you all then.