A weekly podcast with the latest e-commerce news and events. Episode 226 is an interview with Hendrik Laubscher CEO and Founder at Blue Cape Ventures, and expert in global marketplaces.
Hendrik Laubscherger (@henlaub) is the CEO and Founder at Blue Cape Ventures. He is a subject matter expert in global marketplaces and cross-border trade. He publishes a very valuable weekly newsletter which you can subscribe to here.
In this broad ranging interview, we discuss global marketplaces, the latest events at Amazon, comparison shopping engines, direct to consumer, cross border trade, venture capital, and the future of commerce.
Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.
Episode 226 of the Jason & Scot show was recorded live on Friday, July 9th, 2020.
[0:24] Welcome to the Jason and Scott show this is episode 226 being recorded on Thursday July 9th 2020, I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
[0:40] Hey Jason and welcome back Jason Scott show listeners today on the show we are going to be talking about one of our favorite topics marketplaces
and we’re excited to get a Global Perspective from hendrik laubscher hendrik joins us live from Cape Town South Africa where he is the CEO and founder of blue Cape Ventures.
[1:00] Guys Jason and Scott it’s a massive pleasure to be here as a regular listener to guess I’m glad to be here.
[1:07] We are thrilled to have you on the show as you know we always like to start out by giving listeners a little bit of background about our guests so can you tell us a little about yourself and blue Cape Ventures as well.
[1:18] So background is in the 2000s I worked for.
[1:26] A Fortune 500 company in the u.s. my God badly sick.
I’m was forced to come back home to South Africa and do the the thing that’s happened in 2020 people having to rebuild their lives because of.
Conditions that they can manage themselves so I went back to school then got lucky in 2008 to get onto a rocket ship that was,
a boat by naspers one of the biggest investors in the emerging markets and and I’ve pretty much ID e-commerce box since like early,
I travel around the world I’m not going to Nigeria for business turkey.
I’m China often talk to the u.s. almost annually obviously not this year because of what’s going on and then my company look at the interest we’re a boutique consultancy that helps brands.
Make sense of global markets we help investors basically,
determine what’s next I due diligence and all kinds of things that are not allowed to discuss because of long and long long pages of India’s or not bore you with that
but in general it’s about helping people make sense of marketplaces and of global internet Commerce which.
Is it’s a it’s a thing but it’s still not well understood in my opinion.
[2:56] Awesome and you publish and I may have the frequency wrong but I want to say a weekly email newsletter where you recap a lot of global Marketplace news.
[3:09] So yes so what essentially happened was in Middle 2000s I decided or when I worked for NASA but it became quite apparent that.
Understanding what the trains all for e-commerce is kind of a big deal IE you don’t want to be left behind so I think the most logical thing at the time for me was to basically go to the US which is essentially we converse online started.
And I have since made lots of friends in various cities such as New York Seattle Chicago and the like and
what I saw with everybody was the same problem and the problem is people are time-starved like they are still today however the newsletter is is.
Mostly aimed at helping people understand what’s important because if you miss an important announcement from Amazon or giant or something that happens in the priest.
The implications of massive it could be millions of dollars gone like you’ve never seen before.
So the news late though was was started to help investors and Executives and comments people just know what’s going on and in the news that I normally tackle a topic that’s either on my mind always been in conversations with clients,
that I think is worth discussing Jason.
[4:26] Yeah and I have been a regular reader for quite some time I find it super useful because it’s going to come as a shock to you,
but Americans are very self-centered and we tend to think that everything happening in Commerce and and retailers happening in the United States which is of course.
A giant fallacy,
and so I you know like to track a lot of the other hot markets I spent a lot of time tracking China but outside of the US and China it becomes much tougher to stay abreast of,
everything going on and I found your newsletter to be one of the best tools for doing that.
[5:04] That that that that’s that’s one of the primary reasons I do this in the things that as you mentioned you’ve got to do super Paul’s but then if you’re a brand you know you essentially want to be playing and all these other Emerging Markets as well so
you know understanding what is new or the big players for example in Germany or in Brazil or in Africa it’s a big deal so
yo it’s a it’s a it’s a labor of love it’s 25 hours a week where I basically soft through an inordinate amount of content content
normally about 400 stories and then I curated based on what I think is important and in general in general the feedbacks always good and it’s always nice to hear people like yourself talk about it in the way like you do because.
Daddy’s the purpose of the news lately it’s about helping people track stuff that’s important because not everybody has
focus and the ability to track multiple markets at once.
[6:00] Yeah and for sure and you know it’s an underrated skill to curate and decide amongst all of that information what.
What is important in in worthy of a Time investment so I appreciate that you’re good at that and you do it for me.
Um and I know you primarily have been working from your home office so I just want to double-check has anyone told you that you’re you’re actually quarantine now and not allowed to go out.
yes I think that can can be described as the do we need to any Mantra you know things that we get old a lot of things I’m so sorry Africa we’ve
today’s I think they number 106 we’ve been under covid-19
lock restrictions so it’s not really changed anything for me in the sense that I’ve worked remotely.
404 for over 3 years so I may be based in South Africa but.
My clients are based in the US and in China and in Europe so.
My day is generally like that advertisement you see on TV it’s not a 12-hour day so it’s yes they all restrictions but.
Luckily you know like you like everybody on this call you know we on the podcast you know we are able.
Work remotely and interact with our clients remotely and you know it’s kind of been like really interesting to see how the world has changed in a space of three to four months.
[7:27] Wrinkle let’s dig in on marketplaces so we we teased Folks at the top there
you know so it’s been really interesting here in the US you know we’ve seen these cycles of marketplaces where you had kind of like the pure plays like the eBay’s of the world and then you had a lot of the retailers have added marketplaces that’s been a big Trend now we’re seeing kind of these
previously niche market places get a lot of play like Etsy people have always been surprised how big that niches I’m going to know if calling it a niches of thing
and then even you know we’re seeing marketplaces stretch into car-sharing and Airbnb just a variety of different different explosions of this concept
you know what are you seeing from a from your your position there are kind of the trends and where we are in this life cycle of marketplaces more from a Global Perspective.
[8:16] So from a Global Perspective I think it’s it’s very dependent on What markets the marketplace are in so at a very high level.
I think you can see that in Europe and in the u.s. marketplace is all pretty mature and or in most cases.
Very horizontal and or in most cases either getting regulated or or in the processes of being more regulated so it feels to me personally that the,
the growth of stagnated.
[8:51] So it’s much more of just lit wash rinse wash rinse wash wash rinse repeat but we look at globally I think
in China what’s very clear is that we’ve got the ecosystems that are.
[9:08] Evolving we consumers are able to actually is like Amazon in the UAC anything from entertainment to shopping to undermount to video 2,
all kinds of things where,
it doesn’t it doesn’t I haven’t seen that evolve as fast as outside of China obviously in Latin America India Middle East while these companies in the marketplaces have been there for between 5 and 10 years.
It’s still very early and consumers are still now not sure about using them just because of the trust factors in the fact that.
You know you have in most cases have Amazon available in the market and that’s the The Defector choice in most cases so.
And then obviously I have to speak about Africa because I live on the continent though we are still very very early and I think the general trend for me is that.
Or very very hard to combat I think you also see vertical specific Marketplace such as the Land O in Europe re looking at.
The product Market fit the now going off the luxury consumers just because the fact that they market cap isn’t going at any any write this as fast as Amazon’s in Germany who is globally so
it’s Dawn to your calls for your question Scott it’s a very nuanced quit.
[10:29] Jenny missing States very dependent on the market but I think in general that the strong are strong and the weak on or hopeful hoping that they can grow at the same speed as the big boys.
[10:39] It wasn’t there at one point there was like a mercadolibre of Africa where it was kind of like the operated in all the different countries and had some cross-border trade is is that company still around I can’t remember the name of it.
[10:50] Okay so in Africa at the moment we have I think these two real Marketplace is all three we can talk about so these Junior which is the.
The marketplace that that’s the one you remember friends that’s owned by rocket internet that is essentially being re looking the.
The profitability just because of the fact that going since going public in the US it’s just not been built their reports of equal reports have been disappointing then the other one is.
He’s mole for Africa which is essentially a cross-border service that helps African shop on all things.
Amazon in marketplaces where they control you know aware us we everything is delivered in package and then being sent to the African continent because guys,
the thing is what you guys don’t realize is that if you were in Africa by default.
I’m our created called on mostly blocked by us platforms so if I buy something from Amazon ginley
I will have a follow-up email saying look we need you to prove that you are who you say you are and can you show us a picture of your credit card just because the fact that fraud is a massive issue.
[12:03] All those Nigerian Prince’s that need me to hold their money for him.
[12:07] Yes I was going to get to that it seems really.
We win you get emails almost daily about the fact that you’ve won like some gazillion dollars from some rich oil family in some African country and and sadly that is made.
Cross-border Commerce very difficult in Africa but it’s also.
It’s made it it made it a very interesting place to look at what’s going on and how it’s changed on a per country basis.
[12:38] And then the so the
covid has been kind of a global phenomenon and here in the US it’s you know
it’s certainly accelerated the growth of e-commerce there’s that kind of famous chart that says you know took us 20 years to get to 16% and then like you know an eight months we accelerated another
ten points or so do you think that’s going to be a global phenomena or is it really concentrated in like the US and Europe.
[13:07] I’ve been doing in frying with this this very specific question and and I think.
For me the trends that I see coming out of covid is one is horizontal marketplaces that don’t have cpg products have really struggled so in South Africa
our base Marketplace which is funded by naspers.
Cycle of Dad no CBG products and they got they got really got crush like based on legislation so I think I think.
I’m of the of the belief that I think a lot a lot of consumer Behavior has changed and people have now realized that you can buy over the internet
it’s not as bad as everybody thought also marketplaces in general have whatever you want,
available as quickly as possible and in most cases you get it inside due to three days and then get me started on bond like 24 hour delivery that doesn’t exist.
[14:08] It’s just a case of in most markets I believe we will see the post covid Behavior.
Of consumers starting the online search either on Amazon or some On Demand app or some grocery business I think that’s going to be a reality because the fact these guys is that we are still looking for a,
go Blue go with vaccine and until– that you know going to the retail store with all of the opportunities to getting sick is still there it
it’s not it’s not it’s not a good idea as somebody that’s educated did you go to Ruidoso.
[14:43] That hat is all super awesome but I am very excited because
for the first time in the history of the Jason and Scot show I finally get to utter one of Scott’s catchphrases he’s always stealing mine it wouldn’t be a Jason and Scot show without talking about Amazon.
I’m joking obviously but you recently wrote a really interesting article about PE firms that were requiring like Amazon FBA businesses and that’s something we haven’t really seen in the US and less God’s going to correct me on that,
can you tell us a little bit more about how that’s playing out.
[15:15] So what’s interesting is that.
The firm’s that are referenced in this blog post are all USB phones and all interested in this big gray so as I mentioned in the article.
Be investors and some companies that I’ve introduced active now kind of gotten to the degree way they feel that.
[15:40] As Amazon’s dominance is basically become more visible due to Logistics and selection.
And Jeff’s Infamous flywheel will you get to a point way they want in on it however in saying that these firms.
For me as I mentioned in the article sometimes I just I just like mine like realize it really is this what you’re thinking about doing,
and the great news is that these so many questions that this this FBI thing.
I don’t want to call it the train because it’s not a drained I’m of the opinion that it’s a fad in the things that investors want in on the opportunity so,
these that supposedly 300 billion opportunity for third-party sellers on Amazon but my question to everybody and on these calls that I’ve had with these PE firms or.
You can’t have a third party business on Amazon and and and then follow the Good Ol P model of like basically.
[16:46] Making it bones and basically just bones only without any real investment that doesn’t work so that that’s that’s a major full for me in the thinking secondly.
And this is normally also when I read normally realize you aren’t dealing with is the question is if you ask these firms you know do they know that Amazon in eastern the service is very clear it does not want.
[17:10] Third-party sellers selling their accounts that’s that’s kind of a big deal that’s how that’s for me is that mr. massive red flag in the saints that.
[17:20] Why would you want to spend hundreds of millions of dollars by having something that potentially can be taken away from you very quickly and then these same investors then are also not aware of the fact that you know Amazon.
If you are a Marketplace seller.
The opportunity for them to give you a terms of service violation or for you to have your account Block it’s so large,
that the risk is essentially outweighs in my opinion the whole opportunity in saying that I think yes Amazon is important.
But I think if you are very being very strategic you know I think what’s more interesting is that we are seeing big Brands go directly to Consumers.
[18:06] But these all these companies are realizing that they have to be closer to the consumer so my question to all of these P investors were you know all you away that statistically,
you will get no information from the Amazon black box and also you are not going to be able to.
Interact with the consumer so why on Earth would you want to spend something that is essentially a big bag big black box and.
Then you you have this projections that you can have hundreds of millions of dollars of sales in 24 months time really.
If you want heard of this thing called the the Amazon Honeymoon way after 6 months your audio invitation and hard work of advertising basically goes away I mean.
So as I mentioned in the article I think it’s just it’s a it’s a it’s a trained that’s I think is a fad and it’s also a case of.
People not understanding what the opportunity is and if it’s an opportunity my question is why I have the pig really good investors in Commerce,
you know I’m not going to mention any names because they are plenty of them why they not investing in these Amazon FBA businesses yzp firms that have names that you will never ever hear in public,
because they just you don’t know about me.
[19:26] Yeah it’s interesting Theory so that so you know so I’ll play the other side of the coin.
You could go by four or five of these will call Marketplace Centric businesses and have $100,000,000 kind of Top Line business growing pretty rapidly right and you know
some some diversification of categories but to your point you do have this single point of failure with Amazon and other marketplaces and I think what a lot of the
the theories I’ve heard is you know gosh if that’s a hundred million dollar business on these marketplaces if we really kind of.
Put the offering out with an e-commerce front end maybe we could get double it
go over three or four years now you have a 200 million dollar business hundred million e-commerce storefront a hundred million marketplaces this generating this is all Financial modeling you know that the
the Umbra the cash flow even our elements would then because they’re buying these things really cheap it kind of hits that
private Equity Roi and then of course they’re buying it all is super cheap debt on top of that so,
with you it’s definitely a riskier play than they probably realize they’re getting into.
[20:40] Scot for me the thing is yes teii you that argument but for me the case T’s is that if you’re an investor you’re your biggest like point is you need to generate Roi for your investors.
And for me the biggest thing that I continuously see which makes my age span is is that people forget.
It’s easy to model that something a business that you basically by is going to do a hundred million dollars in either turn all that stuff.
But the reality is that you need skills which are not in the mon.
And it’s not available Jeep number one number two what I also don’t blows my mind is these assumption that the Commerce is easy it’s not and,
the the amount of work that needs to 20 commas business to generate 200 million dollars and in run right Nevada and all that stuff it’s a lot
so yeah consider me just I’ll just consider or discontinue just,
completely in awe of the the delusion that I see from investors just because of the fact that it doesn’t make any sense to me and for that I’m saying it’s not like I have not had any Commerce experience you know it’s.
When I speak to my friends in the space we all say the same thing e-commerce is really really really odd and the opportunity for points of Failure Its.
These a million opportunities for stuff to go wrong.
[22:08] Yeah yeah I don’t know this is a sidebar but I don’t know if you’ve been following the the Elliot drama
yeah so we actually had them on the show really good PR and then they just recently imploded because I think they had this this excellent Vision but unfortunately you know I
don’t think that they could kind of execute on that or and there’s all this kind of weird stuff coming out now so it is hard you know so anything else on Amazon before we change topic.
yes I think I think we just need to quickly mention that yesterday Amazon made something really interesting that might be very interesting announcement the announcement essentially is that
businesses third-party businesses the Account Details will now be shown by default.
And essentially this is on one another one of the attempts at trying to show that they solving the counterfeit.
Problem by showing the details of the business owner and the entity that on Amazon and yeah I must say I think it’ll only on small businesses because.
We will see more lawsuits in terms of enforcement of Brands and all that stuff but doesn’t really solve Amazon’s really big problem counterfeit yeah I’m not so sure.
[23:26] Yeah yeah I’m not sure why they’re doing that
I’ve seen some folks in the Press saying you know this is going to solve all these things but you know what you’ll having having talked to mostly sellers you’re going to find out it’s going to be you know some random llc at some random address it’s not going to be super informative I don’t think it’s going to be this like
oh my God that secret Cellar was really Jason Goldberg and now he know.
Selling Hawaiian shirts sun on Amazon.
[23:52] Exactly I think part of it is is a simple liability issue that like you know in general Amazon takes a lot of positions that hey we’re not the seller the liability is on the,
on the cellar and there’s a bunch of different permutations of that.
And so I think people are like well how can you say they’re liable when you won’t you know you’re shielding who they are.
[24:14] Yes I hear that but my argument to do that specific story Jason is is that this announcement has been active in Japan and in the UK for
overdue years and it’s not changed a lot the only thing that it’s done what’s what it’s done is it’s just basically helped the government cannot collect tax so hello wifey and all of that complications and techniques has,
and doesn’t really solve issues that Scott mentioned Mmm Yeah I’m not so sure.
[24:42] No no I’m don’t get me wrong I hundred percent agree with you I don’t think it changes anything but I think it was a checkbox thing that Amazon had.
To retain their their claim more so than anything out and / Scott’s Point like there’s a funny thing that we see in the US a lot.
There’s a lot of brands that want to toe dip in direct to Consumer but they don’t want their wholesale Partners to know.
And so they find a third party entity to be a three-piece seller on Amazon on their behalf and so it’s it amounts to a shell company for a big cpg and they’re they’re not doing anything illegal they just don’t want.
They’re their trade Partners to know that they’re also selling on Amazon.
/ Scott’s point if they have to disclose their going to disclose that show company it’s not like it’s going to suddenly reveal some super well-known cpg on the on the Amazon register.
[25:40] One thing I definitely wanted to chat about is I know you worked for a comparison shopping engines at one point or were heavily involved in the industry
seems like that’s kind of died off maybe with the exception of Google shopping which I think is trying to turn into a Marketplace there just kind of struggling to get there
do you think comparison shopping engines or dead or are they actually pretty vibrant in other parts of the world.
[26:02] Scot I think the sad reality is that I think you’ve you’ve nailed the explanation number Google’s comparison shopping it’s it’s neither here nor the and sadly the way I look at conferences.
It generally starts with classifieds then it moves to marketplaces and then moves the brains and these no mention of comparison shopping I am of the opinion,
I’m not even on the opinion having seen having worked with companies over the last three years it’s comparison in was it was at the time was great it’s a legion it’s a legion situation but consumers no longer want the legion they want,
a platform with I can buy get everything done and.
Contact somebody means something that was right or wrong and I just think that from a comparison point of view as it pains me to say it’s just I think it’s one of those things that we will just remember fondly and.
Hazel just vanish deadly.
[27:00] Yep yes fun fun fun times but
the time is up how about how about these Marketplace initiatives from so we mentioned Google that you also have Facebook kind of flirting there with kind of they started with a classifieds I don’t know if this is global or not they have the USF this Marketplace and now they’ve announced you know kind of
check out some things that they’re doing then we have Shopify is Shopify a global phenomenon are you seeing or is there a kind of like a version of a Shopify out there that is the
non us Shopify that that’s got a lot of traction.
[27:35] So to answer your multi-threaded question me so.
[27:40] I knew you could I knew you could parsa.
[27:43] So literally start with the first thing is yes Facebook Marketplace is available in South African but,
like in the US and I hate saying this and I don’t want to be derogatory but it’s a Facebook it’s,
it’s a crime I even which is a nightmare so I don’t see that going anyway I’ve heard murmurs anecdotally that they’re going to change the name of it because of the fact that it’s got a very bad
outside the US so I’m not sold on Facebook almost myself I just I don’t think they have the DNA for it in saying that let me just before you guys jump in and hit me over the edge of something
it’s a case of I still think that Instagram is a massive opportunity and Instagram shopping,
I just noticed since like February of this year with the wood with Coburg.
Using Instagram to find local businesses is way easier than using Google so I think these are different definite opportunity for them
time to actually capture the part of the market that isn’t getting a lot of love IE the local situation in terms of your Shopify comment.
[28:51] Shopify outside the US is massive it doesn’t get a lot of love.
Because they don’t want to give away the kimono and show the world that it’s a big business but it’s a massive business and more brands are beginning to realize that
Shopify provides you with all the tools all the extensions and applications and whatnot and expertise that.
You can can whip up a website very quickly and it’s for me it’s it’s,
it’s within an interesting time in a sense that these rumors that we Commerce is going to IPO,
which I don’t think is going to be the case I have a feeling that they might be bought on ninety nine and a half by somebody
and then you have workers comments which is you know they but I think
Toby’s Mission and that of Shopify in empowering the rebels I think it’s a big deal and I continue to be amazed at the
at the Justice League business I know Jason got a lot of flack for not being very cool on the the whole shop at.
[29:53] I saw that and I’ll be honest that I’ve used it and it’s nice but it’s the value-add is questionable but but the but the point is is that.
This is a company that is evolved and grown at the space in the North American Market,
that has basically got people excited and let me just also just jump in and say don’t get me started on the comparison between Shopify and Amazon the is no comparison they are to
different businesses with two different business models he’s nothing that gets me more aggro when I see people comparing Shopify with Amazon,
it’s neither you know they they are either complementary to one another or they do they are in the separate lines but don’t stop me on the whole comparison story because that also is.
Big bowl of hot day.
[30:47] Yeah we’re a hundred percent aligned on that I there’s comparisons and annoying me and I mean they’re inevitable because they’re too fast growing well-known companies that are quote unquote in the Commerce base so it and everyone is desperate to write about their being.
[31:04] Jason will it’s which one’s going to win.
[31:06] Yeah I mean if y’all like nobody likes it when I say this but to me.
Amazon Marketplace and marketplaces in general like the main value-add they give is they find audiences for you there a traffic source,
and so when I think of Amazon marketplace right the primary competitors for Amazon Marketplace in North America are Google and Facebook.
Um and you know I would argue that for audiences with purchase intent.
Amazon’s consistently winning so we’re seeing audiences weave Google and Facebook.
To go to to Amazon I think Facebook’s making more progress on Discovery experiences and certainly Instagram and you know frankly I think.
Tick tocks recent problems are probably also going to directly benefit Instagram.
So that that stuff’s all super interesting I do have to tell you Toby’s blowing up my Microsoft teams Channel right now heat the answer is shopify’s very big outside the US because Shopify isn’t even a US company.
[32:17] Well moral of the story is that Shopify.
It is for me it’s a huge it’s getting to you because terminal seems that it’s helping people get online and that to me is in a time where we see retailer of the retailer growing.
Into liquidation or bankruptcy leave it for me that’s for me is the one angle that I hope,
people spend more in con instead of saying it’s like you’re saying that it’s going to be the future what’s going to win or whatever that’s irrelevant the point is is that this is getting brands.
On the internet with getting consumers the opportunity to buy from consumers.
[32:59] Being able to buy from Brands and do to your question or statement Jason about the competition for Emma for Amazon,
I totally agree with you and I think what you’ve what we what I’ve seen is that these DTC businesses which have also basically been seen as the,
the solution to all bands problems which is also not the case is if you are a what I’ve seen is that if you’re a DDC business and you’ve hit the plateau at 25 million dollars in annual sales,
you know we do you go to get that next round of growth and in most cases it’s Amazon as much as they hate the platform.
That’s the platform that they use to grow whether it be through a different product different product line or something else but point is you’re a hundred percent right.
It’s purchase intent and essentially monetizing data that nobody else is God.
To get people to buy your product and and that is essentially what Amazon is a reviewing microscale in the sense that.
It’s a post office it’s a marketing firm and then with a slight dad – of retail in it.
And that for me is one of the biggest misunderstandings of all of those.
[34:11] Yep and and by the way in important distinction they’re in the business of renting you the audience not selling you the audience for your earlier Point all these.
Yeah all these companies that are you know thinking like oh that’s the way to get customer intimacy and I talked to a lot of brands that are like my direct-to-consumer strategy is to sell through Amazon.
[34:32] Yes nice nice.
[34:33] Mike and Amazon’s in the business of owning the audience and loaning it to you not letting you acquire it through them right so.
[34:44] But you did.
[34:46] This cannot be cannot be seen and and owning versus renting or loaning it’s a massive it’s one of the things that I also see I totally agree with you I’ll see you at night I hear that and I just think but
guys really this is not like inside baseball knowledge and at this he’s out there in the public this is what consultant should be telling variance you know.
Amazon isn’t your friend it’s merely a channel to get you to grow but that’s that’s it.
[35:15] Yeah we totally agree you you mentioned the the digitally native brands that like you know eventually turn to Amazon and marketplaces for scale I want to dive into that a little bit because if you.
If you look at my Twitter feed you would be utterly convinced that.
Retail is dead and nobody nobody know retailers are doing well that marketplaces don’t exist and that the future of Commerce is a hundred percent.
Digitally native brands that like invent their own flavored water and sell it direct to consumer.
A is that like are you seeing that as strongly outside the US as we’re seeing it inside the US and I would argue that.
They’re winning hype but they certainly aren’t winning in terms of actual business success.
[36:03] Okay so these are million ways that you can unpack unpack that question I’ll start with the first thing I also see might would have
do the followers also
one would sway that retail retail was supposed to be dating 1999 it’s still alive and kicking Amazon has come and stole their shops open and now the BBC businesses are supposedly the flavor of the month.
[36:27] I think to answer your question what bluntly I think dtc’s are nice you know but it’s not a silver bullet and,
I think very much that outside the US in markets such as India and South Africa and in Brazil and
all over the show we all we all seeing companies like launching direct-to-consumer you know the thing is what I find mind-blowing is that direct to Consumers was always been late it’s just,
it was called something different but we’ve always bought directly from brands
you know it’s not something new now you now you buy something that’s was made in China and that has a like a massive stick on that says a name of a Bad Company already like a toothbrush or whatever
for me the thing with DBC businesses all yes they are great but my counter quick counter-argument all of that normally is okay how many mega mega,
exit every scene not many have we seen any real growth in terms of getting,
more than 50% of a specific category evening by a b2c business.
[37:37] I haven’t seen that and you know I think what the misconception is that essentially these DTC businesses all
it’s custom customer acquisition opportunities in small towns that’s what it is it’s a bolt-on for a large brand so if you are a,
Julie or you are a Procter & Gamble all your a Johnson & Johnson all whoever you know these companies have their own legacy issues with let’s not get into that.
But the point these is that they haven’t done the best job in getting closer to the millennial consumer so,
buying a DPC business it’s not validation that the business is one you know I mean I find it always ironic these businesses start as they are the ante
incumbent and minute ENB income advised him and then suddenly the pr really Society you know
we said being that we are here and everything is glorious and what a great business that is just like guys kit with it,
it’s a it’s a customer acquisition play in a sense that a company spending 200 300 400 500 600 a billion dollars on,
buying access to a consumer group that they’ve not done well with X is it is it and to answer your question about outside the US.
[38:53] It’s still really the same the sense that these entrepreneurs that are seeing the opportunity for for opportunities to interact with,
with consumers but the question that I always come back during its I haven’t gotten a really nice answer for that is that what
he’s the actual Nexus or like the defensible of advc business and if you tell me it’s Community I’m going to open the window and I’m going to jump
because it’s not.
[39:19] Don’t do it don’t do it but I take your point.
[39:21] Community what what what floor of the building are you.
[39:25] Luckily I’m luckily I’m on I’m on ground level so if I jump up jump out of the window I’m gonna just basically full like a couple of meters.
[39:34] Just landed some bushes okay.
[39:35] With my athletic ability that could still be perilous but I trust that you get.
Yeah no totally agree I feel like emphasizing the the channel so much like.
Completely missing the point like if if you come to me and say I’ve got a great business and its defining characteristic is that we
sell direct to Consumers and that’s all I know about them I’m not remotely interested if you come and say I’ve got an amazing product that has this amazing Market fit and a lot of people want it.
I’m super interested in that business and I’m confident a good good leadership team can find the right mix of channels to get that to the consumer profitably.
[40:16] Exactly Jason and as you tweeted recently in a question from another podcast host is is that these you know I think it’s very important also to notice that.
While these big cpg companies IEP Chico and all these guys are doing the DDC thing it’s very important not to get both,
by the by the actual IP in the sense that yes the website will continue to look the same yes it will continue to basically show the the same products.
It’s essentially just these Brands wanting.
First of all he died a number one number two they One customer feedback without going through a wholesale and Retail which is just the moment is a pain so I think it’s very much,
the DTC thing is it’s a it’s a channel like you mention totally agreed and it’s not a silver bullet as I mentioned earlier Commerce is a hard and the isn’t a silver bullet
maybe except a few Jeff Bezos and you have like a bazillion dollars in your bank account but other than that for us mere mortals it’s hard it’s a daily struggle of you know millions of file filing points and it’s just.
Guys can I make a consumer happy yes or no if the answer is no go back to the drawing board and fix it.
[41:31] Yep cold let’s let’s pivot to cross-border trade I know that’s another area of interest to you here in the US we’ve kind of were years into this kind of
Chinese us trade War which I think is put a bit of a,
blanket on it you know before then we had so Ali Baba had all the express which was this huge cross border trade kind of Behemoth and then we’ve had wish which is a Marketplace I’ve never understood but is always.
Exceeding everyone’s expectations what are you seeing from your perch there in South Africa as it relates to cross-border trade is kind of Ali Baba running away with this globally or are there any other players.
[42:11] So let me just say bluntly in terms of cross-border e-commerce
the Chinese platforms and especially Alibaba that they like light years ahead of the rest IE why number one they’ve invested in it heavily number do they’ve done Partnerships with government do to basically get
local interaction where they can create like trade free zones and everything so to answer your question Scott in my long-winded Way South is that
cross Buddha yes are going to do you are totally agree with you the triangle has impacted definitely however in saying that I think what
it also has its shown companies what they weaknesses are in the saints that,
as much as I also am fascinated by wish in the sense that it makes no good it makes no business scenes in a sense that you are selling low priced Goods but now you are seeing them covid into.
You know wanting to offer retail software they are you know offering a retail Partnerships closer fulfillment and.
[43:14] And they growing massively in a country
with the name of protozoal Which is far away from everybody in the USA so I think cross-border trade for me is there I think,
it will continue to grow at like polite you would like to speed in the sense that consumers will always want products of high quality no matter where it’s made from and,
you know I’ll be honest I buy a lot of products from the US just because the fact that I can’t get it in South Africa so.
The confession I have to make you on this podcast and I am a Swedish fish like expert I love the candy yet
I cannot find in South Africa so I’ve defined the business that brings it to me to South Africa just because of the fact that I love this stuff so.
[44:00] I think with cross-border also we seeing a slight strategy stuffed in the states that,
like wish like what you mentioned wish I think we are seeing the emergence of platforms wanting to,
essentially offer local Solutions so if Alex threesome he’s a business I’m fascinated with in the sense that in the last 18 months they have
the dairy hauled in the saints that they all know offering Brands the opportunity to interact with consumers they are growing
gangbusters in in Brazil in Latin America they’re growing at the mess of not
in Eastern Europe and in Russia just because of the fact that they have the products for both the high end and the low in which is not generally available so.
[44:46] I think the one fact that with cross-border e-commerce that that’s not getting enough attention for me is the whole postage Packaging.
Cost and the fact that you know you have an entity like the usba studies financially under huge strain just because of.
[45:06] Legacy agreements in the Postal Union or if I got the name wrong for that I apologize but the point is is that,
if you look at the postal business World Allied the post has basically been hit really hard in the sense that people are no longer doing Lakers I don’t know,
I can’t remember when last I got a little especially not now we haven’t that boastful like three months but the point is is that packages and online shopping has basically become,
the growth of these businesses so cross-border place has an additional element to it because now you’ve got to go through border control and product organization and
costs to get it to the consumer so I understand that certain got countries like the US one Higher postage rates because it doesn’t make sense that certain countries like China can
emergent consolidating it from China to the US doesn’t make sense it just doesn’t so from a from a macro macro point of view is I think
what I’m seeing is I’m seeing a lot more cross-border shopping and Latin America I’m seeing a half a degree in Africa with services at just morph Africa doing
great work and they gotten a minority investment from DHL which is a big deal which for me kind of validates what I’ve been doing
um and consumers generally want they want quality and if the quality is not available online in the market or in a store you know they want to be able to go to a website and buy it and if if that.
[46:31] He’s going to take thing to know 12 or 14 days thing that’s its I think cross-border is I think Ross board is one of the most underappreciated pots in Commerce just because of the fact that.
It’s hard but I think from a growth point of view it’s one of the things that I’ve seen executed well in the last three years basically it just it makes businesses go from good to Great really quickly.
[46:54] Yeah it’s super interesting it’s we’re all I’ve been on pins and needles here in the US because as you as you mentioned the US Post Office was under some severe Financial pressure prior to covid and in this far there hasn’t been any discussion of.
Economic assistance so it’s.
It’s concerning and obviously if it were to fail that that benefits the one player in the u.s. that has the most of their own Last Mile which is of course a mess.
I do want to oh and I forgot to ask a Kia doesn’t do cross-border trade in to South Africa to get you those Swedish Fish.
[47:34] Y’all but it’s too painful I want a simple solution on the go to one website I want to do basically put it in my car.
Have the easiest execution in terms of my details and they not have to worry about getting it to me so Jason thank you for your very nice consideration but we have it working and it works so yes I get it now.
[47:58] Okay cool I know you mentioned that a lot of your clients and a lot of the readers of your newsletter are from the Venture Capital Community and I’m just curious.
What’s what’s your perception of what’s going on in that segment at the moment like are they all turtling and slowing down because of covid are they identifying New Opportunities and they’re hotter than ever what.
What are you saying there.
[48:24] So from a venture point of view I think
I think what we’re seeing is is we seeing the great the great investors double down but they doing it very quietly in the same state I think
investments in this certain sectors or for example like DDC you know it’s not going to happen just because of the fact that,
the model is now basically being shown like the king without the clothes on so the.
[48:50] The Goodwill is an ox that I work with I guess they had to continue doing Investments but they’re looking for new opportunities so
one of the opportunities that I can speak about because it’s I think it’s very well known he’s is that I’m seeing a lot of interest in the B2B space in the saints that
everybody’s not realized at the global foods are exactly is not going to be unbroken so
I’m getting conned getting from the actual form of manufacturing point to the shop or to the consumer it’s so massively massively massively confusing so there is an opportunity I’m.
I think the I think the Venture investors the question that I always ask myself is that in invest is essentially looking into the future and,
What is the next thing so I think the next thing is stuff like returns which is still up buying the is the B2B space.
[49:54] I think one has to look at the stuff like replenishment rights and you know what do consumers need daily you know so one of the very interesting things that I’ve seen in covid in South African I’ve spoken with friends in the US as well is when covid struck here
flour eggs and orange juice became like a lottery tickets in a sense that finding it
was one thing getting it into your boss good
and actually paying for it was like winning like five multi gazillion-dollar lotteries in a sense but it doesn’t mean it just didn’t exist so the question for me is I think from a covid point of view.
[50:32] The covid is essentially shown investors in my opinion that there is opportunity stolen Commerce as much as the investor Community wants us to believe that Amazon is the be-all and see all of e-commerce
it is they already but they all still opportunities and I think
helping suppliers helping consumers and even helping entrepreneurs solve really odd things you know I find it
Leon to imagine you know you’re a milk foam and you having to basically untap your mouth because you can’t get it to a process so all you know you can’t get your oranges on your farm to a
because there’s nobody throws to me that that blows my mind and I’ve been following the stories in the US on that so.
[51:16] For me the opportunities all day the good investors continue to invest but what the guy what the the guys and the girls in investment spice are doing Jason is justice
they being way more diligent number one and they have been way way more selective in the sense that they want companies that
have profitability from day one they no longer believe in Market Market size winds also the days of uber like growth and spinning like a gazillion dollars and having Bad actors in your business ever
it’s just doesn’t it just doesn’t cut it anymore so from from as I say all in all of Interest still very much alive it’s just
it’s quiet and the guys are all girls all looking for opportunities for the next thing.
[52:02] Cool speaking of the next thing that’s a good time to talk about the future of e-commerce so sounds like you know you’d like the B2B space and some of these kind of less sexy things a returns and whatnot but let’s look out
kind of five to ten years what are some of the trends you see that that are going to be forming e-commerce as we look out a little bit further.
[52:21] So I think one is I think I’m going to get a lot of flack for this but I’m going to state in any case I think live streaming was going to become a big deal
you know since that getting consumer interaction and relationship building was.
Chef’s all creators or t opinion leaders I think that’s going global so that I think is a big deal I think,
the 160 pots of Commerce I think will get solved so.
One of the one of the things that I’ve found really interesting within the covid space is that my QR code for payments as basically,
Skyrocket that just because of the fact that actual.
Money and God usages it’s not really safe so you want something where you can basically pay for a purchase easier or in Jason’s case you know he wants to know that if he whips out his phone and he buys a Starbucks you know he’s going to get it like immediately
these no opportunity for something to happen then we’re gets block sorry Justin I just I had.
[53:31] God bless you yeah.
[53:35] So I think from the from a future point of view I think we will see the the other thing that I think is not getting a lot of a lot of attention currently is I.
Getting X retail staff back to work is a very big opportunity that I see.
[53:52] Gaining more speed with you know today reading that solar table is also gone for bankruptcy it’s really being Brooks Brothers yesterday it’s really being,
Audrina and the thing is what for me it’s lost in this conversation is that retail restaurants in general,
so these are two sectors that have been absolutely battered so
getting those people back to work and and guys like me just be clear on something this does not mean that they are all going to work in FBI warehouses
if you tell me that people are going to work
and we’re Oz’s I am going to once again open the window and jump one floor because that’s not the work I’m talking about actual staff who used to work at mode storms or
Brooks Brothers All In categories that are have been really hard to solve as though fashion is still a returnable user story
large value large items such as freezers and fridges and white goods it’s still a pain,
we just have to look at wifey’s finances to just to see what the struggle that continues to be so I’m pretty bullish I think,
I think one also has to be very realistic in a sense that,
I don’t see e-commerce ever getting past fifty percent of total retail in any Market if I just look at what’s going on in China the investment into like.
[55:18] Multiple channels I’m not going to use the word that I sold another word omni-channel with their accounts and moral of the story is the consumer now expects to be.
[55:29] Communicated with the same message whether it’s install whether it’s online whether it’s in a small version store whether it’s at the collection Point whether it’s with the on-demand delivery The Experience now is it’s way more,
sophisticated than what it what then what he was recovered in the things that covid has made me
more appreciative of the hard work that the logistics Focus do you know I think driving a UPS or FedEx truck daily must not be the greatest job either yet
these people do it and it’s a thankless job but these thankless jobs have become really important so I’m hoping that you know stuff like autonomous delivery
basically evolves from being at the bottom.
Hello GPS annual 60 Minutes section on drones and actual you know getting the Livery is to people in like.
Really Diamond complexes which are at the moment that massive at risk because of covid and these these just,
I think Scott summarize it really well at the top of the question that he’s there’s a lot of unsexy opportunities in Commerce that remains masts of the next opportunities.
[56:41] That is an exciting thing to be thinking about and it’s going to be a great place to leave it because
it’s happen again we’ve used up all our allotted time as always if you enjoyed the show we sure would love it if you’d jump onto iTunes and give us that,
five star review if you have any questions or comments about the show feel free to hit us up on Twitter or face.
But Hendrick really appreciated you taking the time out and really enjoyed your.
[57:11] Gentlemen Scott Jason it’s been a privilege it’s I always enjoy following your Twitter
streams in the since there is always a good it’s a reality check about what’s going really on and being able to share the international specific table with you,
listen as I think is important is because the fact that sadly the world is more flat than what it’s ever been.
[57:35] I think Centric and if folks want to kind of Follow You what’s weird to you mostly publish your thoughts.
[57:41] So the easiest way is on Twitter so my Twitter handle is a chi in Lau be it’s the my.
First three letters of my name and surname I have opened a tweet at the top of the page for folks that want to subscribe to my newsletter because I am blessed with one of the most.
All the names and surnames do you remember so just look at my Twitter handle in the show notes they see easiest way to subscribe to the newsletter,
and I look forward to getting a few new readers.
[58:18] Yeah we think I speak for Jason we strongly recommend your newsletter I know we’ve really enjoyed it and get a lot of really good flavor for what’s going on outside of the our little bubble in the US.
[58:31] For sure and until next time happy Commerce Commercing.