Let's Get Real: Pitfalls of Scaling Commerce

Jamie and David Crow explore how to successfully scale your ecommerce business. Learn the key differences between scaling in the US vs Europe, what multi-X really means, and how failing to adapt can bankrupt your brand. They also break down powerful growth strategies like third-party marketplaces, assortment expansion, and increasing average order value.

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Creators and Guests

Host

Jamie Schouren

CMO at Ultra Commerce

Editor

Constance Jamotte

Guest

David Crow

Commerce & Omni-Channel Expert at Ultra Commerce

What is The Ultra Commerce Podcast?

The Ultra Commerce Podcast offers practical insights tailored for both B2B and B2C eCommerce operators and developers. Each episode features expert guests who break down real-world strategies and share success stories from the digital commerce space. The show places a strong emphasis on the operational side of eCommerce, focusing on systems architecture, fulfillment, and data orchestration, going beyond just marketing and storefront design. Hosted by Jamie Schouren, she invites guests to deep-dive into the complex world of digital commerce, exploring the strategies that power successful eCommerce operations. If you're interested in the nuts and bolts of enterprise eCommerce from systems architecture to fulfillment and data orchestration; this podcast offers smart and actionable content in an accessible format.

00:01 Hello everyone and welcome back to our second episode of our Ultra Commerce podcast. Today we're talking again with
00:09 David because this brain has so much to talk about. But next time we're going to
00:14 have some outside guests. We're going to have people like Matali on the on the call and some really cool AI experts who
00:21 building really the e-commerce AI from the inside out. really excited about these next episodes, but you know,
00:28 there's going to be so much more cool to come in the future. As you might have heard, we are using jingles now. We are
00:36 really getting professional. We're using new software. We're using new tools. I even have a professional light at my
00:42 face, so I should be looking better now. Um, David, he doesn't need that. You
00:47 have an awesome studio in the back of you. So, uh, David doesn't need an
00:53 introduction, but if you haven't heard our very first podcast, and if you don't know him yet, David, can you give us a
00:58 very short introduction about yourself? Sure. Dave Cleo, um, second time back
01:03 with Ultra Commerce. Um, love being back here. I've been spend most of the last 25 plus years in e-commerce and order
01:11 orchestration, order management, logistics, fulfillment. Um, you know, I guess I've been around the block in
01:17 terms of systems integration, career, consulting, but always either in the supply chain space or the e-commerce
01:22 space. And so thrilled to be back here. Ultra Commerce has some wonderful solutions. And it's always fun to get on
01:28 these calls with you and talk about the opportunities for folks like yourselves on the marketplace to grow your business
01:34 and to try to scale your platforms. Yeah. And scaling is what we're going to talk about today, especially with with a
01:41 person like David who has so much, you know, experience in the business. But we're going to do a very nice crossover.
01:46 David is based in the US. I am based in Europe. And I have some experience here with European e-commerce because scaling
01:53 in these two worlds is something very, very different. Let me be clear. We're going to talk about scaling from a
01:58 commercial perspective. So, and a business perspective, not so much from a tech perspective. Actually, next week,
02:05 one of our guests is also going to be Brad. And Brad is uh our leader of infrastructure, our CIO, I think is the
02:11 best is the correct name for that. Um and he is actually going to talk about you know how infrastructure and how
02:17 everything around that is going to work and you know can talk about scaling from that point of view. But today we talk
02:23 about scaling from a business point of view. Scaling e-commerce in Europe versus the v the US is something really
02:30 really different. And one of the main differences that I always encounter is the difference between going to and the
02:37 need to go to multiX uh in Europe compared to doing that in the US. When
02:43 you want to scale your business in Europe, you're going to hit the multiX very very soon. And with multiX, I mean
02:49 obviously different languages, different currencies, different pricing, different VAT, and so many different rules. A lot
02:56 of people forget that it's not just about the language and the currency, but also about the rules that they set. For
03:02 example, when you're scaling your business to uh Germany, you're going to have a lot more rules about what you
03:08 need to ask consent for in the checkout in, you know, instead of when you're doing that in the Netherlands. But when
03:13 you, for example, go to Denmark, there's rules again on when you capture the money. So, it's really into the payment
03:19 site. You can only capture credit cards after you shipped it. If you do that before, it's literally by law stealing.
03:26 So, you're not allowed to do that. So, these are a lot of different things that you need to think about and a lot of different things you might not even know
03:32 when you get into e-commerce first. I don't know them either all by heart, but there's so many experts there in every
03:38 field. So, really important one. When you get into a couple of millions, 10, 20 millions, you really need to start
03:44 doing that because, you know, you cannot build 200, 300 million businesses only in one country in Europe. I think there
03:51 are definitely exceptions there, but generally speaking in the e-commerce, that's a very difficult one. And then
03:57 let's not forget about the products. Sometimes there's going to be products that do not, you know, are not easy to
04:02 sell in other countries. Like I was once working with electrical company. They were they were selling things like
04:07 electrical outlets and you know wall sockets to put into the wall. And then at some point uh we tried to scale them.
04:14 But yeah, these things are very different. not just from the UK and and let's say the Netherlands, like the
04:19 German ones and the Belgian ones might look the same on first glance, but they're not. So, you also have to think
04:25 about your assortment. Am I able to sell it in that country? Am I even allowed to sell it in that country? And what are
04:31 the rules there? For the US, that is really different. And I would like to ask David, you know, what is it? How do
04:37 you skill in the US? There's so many different ways of doing that. Like, but what are the things that that come on
04:42 your path? Look, I think it's it's interesting when you scale in the US because you don't have to deal with
04:47 different languages. You don't deal with different currencies, right? Everyone uses a third party tax package to help you handle how to calculate tax in the
04:54 local jurisdictions in each, you know, state by state, county by county, city by city. So, that part becomes really
04:60 simple. I think the challenges that you face here are a mirror around fulfillment, execution. If I'm a Western
05:06 beer and I want to go across the entirety of the US, I have to start thinking about how do I fulfill, you
05:12 know, our friends that are Amazon, um, if if nothing else, they contribute to market prices that are everybody wants
05:18 it fast, they want it cheap, and they want it tomorrow, um, or at least within two days. And so, how how do you enable
05:24 your logistics and fulfillment network to expand across the country and not break the bank at the same time, right?
05:30 because you can always look at your third party for farers um you know and and have them carry your inventory with
05:36 you but there's obviously a significant cost associated with that but I really like like to think about scale in terms
05:43 of how do I get more people or more share of wallet when people are on my website right um on how do I and there
05:50 are a lot of strategies for that it can be everything from better personalization I'm using AI to do personalization on my site I can improve
05:58 improve my PPC I can do better better recommendations around cross-ell and upsell but there's some other more
06:04 significant strategies like omni chain integration thirdparty marketplaces that allow me to expand my assortment as well
06:11 because one of the things I found most interesting what people um overlook when they talk about scaling the business and
06:18 scaling their revenue is if I have decent traffic already but my conversion
06:24 rate is low then yes there are things I can do to specifically drive my conversion rate but the most impact act
06:30 for most cost effective and and mer highest ROI potential and greatest revenue gains is to expand my
06:36 assortment, right? And that sometimes seems counterintuitive if you're working on only a first party selling process
06:42 because that really requires you to buy a lot of inventory and keep it in your warehouse and put it on your website and hope people buy it. But third-party
06:48 marketplace capabilities is kind of the converse of that because I can add the assortment to my website and I'm not
06:55 taking on any additional inventory and I don't have to take on any of that cost or any of that risk by by royousing it
07:00 first because I'm taking you orders the one with the third party to fulfill that. Are my margins high as high? I
07:06 don't know. Most people would tell you a third party marketplace margins are exceptionally high on the things you're selling based on their commissions and
07:12 the other fees you can take. It's a measure of how can I increase by two, sometimes five, sometimes 10x the
07:18 assortment of products that I have on my website without earning more risk. And so that's one way to scale in the US. I
07:24 mean the other way to think about it is I try to balance or when I talk to customers or advice companies about this, it's around what are the cost
07:30 benefits and the trade-offs, right? When in the US, if I'm if I'm a geographic seller, I'm focused in, let's say, the
07:36 east coast of the United States and I want to go to the west coast of the United States, I have to think about not only how do I get product there quickly,
07:41 so do I need to have a a third party fulfillment or fulfillment capability that's going to be in the western part of the United States so I can offer next
07:48 day or or two-day delivery. So, I've got that expense. I also have to think about how much marketing spend am I going to
07:53 have to involve or put in place to go and find and attract a new audience. um
07:59 there's risks associated with whether or not you were or will not be able to do so to go and find those new people and go and attract that new audience in
08:05 place to get them to come to your website in the first place. Well, I always advise people let's start with kind of the basics that says can I get a
08:12 higher share of wallet from my existing traffic? Can I get improved margins from my existing traffic and can I offer them
08:19 a broader assortment of things to purchase? And so yes, yes, I can go and view that in other marketplaces, but
08:24 it's also um how do I sell more that my customers already have, right? And so that plays in Europe as well. Well, you
08:31 guys there's a lot of complications there with crossber fulfillment even that um it gets very complex and very
08:37 challenging drug you have folks like Jamie uh who've done that many many times with one customers in the past,
08:43 but it is a consideration, right? And so how do I do how do I do this most cost-ffectively? And I at 10 point you
08:49 have a chart that that at Ultra Commerce that we'd love to share with our customers. Maybe Gene will talk about making this available on our website
08:54 that kind of gives you the trade-off. You know, here are nine strategies for scale and growth balance bar. What are
08:59 in terms of cost effective versus the revenue upside versus the return on the investment that I'm going to make? Because it's a pretty interesting
09:05 trade-off when you think look at things like trying to improve my conversion rate. There's a lot of little future
09:10 functions that I can twist or dial or change on my website that might drive my conversion rate. But if my conversion
09:16 rate's somewhere between 2 and a half and 3 and a half% already, that's pretty much industry average. So if I go from
09:22 2.5% to 2.75%, am I really going to get a tremendous uptick in terms of scalability and
09:29 growth? Maybe not. But you can converse that and say if I increase my number of skis by 5x, right, I'm probably going to
09:36 get a fantastic growth in terms of gross merchandise value through my website. Probably get a huge spike in margins as
09:42 well. And so the the trade-off there and cost trade-off lies, it's it's a very effective strategy depending on how you
09:49 move forward. But again, I can spend a lot of money in the marketing trying to find a new audience or I could find a
09:54 way, you know, to to attract more wallet share from my existing audience. spoke a lot there. But the converse of that is
10:01 to say a nice way to think about it is if I can increase my average order value and my share of wallet with my existing
10:08 customers, then I'm going to have a better platform to spring bird into going markets and trying to attract new
10:15 audiences. It' be a lot easier to pay my to move my site from French to another language if I have more water coming in
10:21 from my French customers to begin with. Yeah, definitely. And I you know and I remember a conversation David that we had then you were mentioning like yeah
10:28 you know marketplace and that is because of your experience marketplaces have obvious been around you know we've seen
10:33 Amazon but we've also seen some bigger brands in the US try it and they failed
10:38 and then you explained why they failed and why they're trying again. Well, look, it's it's really interesting because marketplaces were a bad bad word
10:45 in the US in 2015, 2016, 2017 because many money many brands and I'll leave
10:51 their names out of this um but there are many folks who tried it and and it didn't work right and so they abandoned
10:57 their marketplace strategy and went back and just focused on one piece sales again. And what was interesting was from
11:03 an outsers's perspective looking at the things that caused them to fall was everybody was trying to be Amazon,
11:09 right? And it was we'll sell anything to anybody anywhere at any time. And the assortment they went after was massive.
11:15 And and so everybody was trying to go after. You know, Amazon, Amazon has 300 million SKs on the website. How do I get
11:22 50, 75, 100 million SKs on my website? but there weren't necessarily things that their customers would look to them
11:28 for in the first place because there weren't really categories or or skew a
11:34 product assortment that was anyway complimentary to or adjacent to what they sell already. And so, you know, if
11:40 I if I'm a fashion retailer and all of a sudden I'm going to sell garden tools, it's probably going to be a stretch to
11:47 get my audience to start coming to my website to look for garden tools or to get any audience to come where to look
11:52 for it because it's just not what I'm known for. And what's been interesting now to see the people who have been
11:57 really really really successful at it um some of those exact same companies that failed are going back and saying how do
12:04 I find adjacent categories to things that I'm not that aren't too diverse from my assortment or maybe they're
12:11 things that I carry on my site today with minimal assortment and an example is you you have a a big box retailer
12:17 here in the US who carries very little home decor in their actual stores and that's one of the adjacent categories
12:23 that they've relaunched launch on their market price that's been insanely successful for them. In fact, it that
12:29 category alone probably generated about 12 to 15% yearon-year growth in e-commerce from a category that was
12:35 something that people that people could come to their stores and look at a few items of and they could go to the
12:40 website and see a few more that were maybe out of stock or any other stores. But now that category was about 5x the
12:46 number of SKs and it's just hitting it out of the park. And so from there they've gone and expanded because it's a
12:53 big box retailer. They've expanded in sport into their sporting goods category that they've expanded their athletic
12:58 footwear lines that they don't really carry many shoes or brands in there as well. But that that strategy has been
13:03 insanely successful for them and and that brand that um they're they're experiencing somewhere between 45 and
13:09 55% year-over-year growth in 2025 year to date based on that strategy of of
13:15 staying somewhat complimentary to and adjacent to categories that the customers already come to look for. So
13:21 in order just gearing them more things to find when they come there to shop.
13:26 David, you're going to have to explain to me because I'm European. We don't know what a big box retailer means. Funky Moto is like a car for or you know
13:34 if if you have Walmart stores they it's a it's a big B we call it a big box retailer because they sell everything
13:39 from groceries to car car batteries and and motor oil and everything in between and they have a lot of SKs in their
13:45 stores but they don't have a lot of different product selection from a c in each category right you walk into Robert
13:52 store in United States and we might have you know nine different brands of malware but it's all in one row and we
13:58 don't have a lot of the different sizes of it and most of what's in normal is private lab, you know, they they the big box stores try to sell everything to
14:04 everybody. Well, you know, you know what is a a funny thing there uh to mention is that we have this these kind of things. For
14:10 example, in Europe, in Poland and Germany and France, they have this kind of stores, but the Netherlands and uh
14:16 and Belgium don't really have them. They're not that famous. You know, we have these stores where you just go, you
14:21 know, for groceries, you go for that. They are located mostly in the same area. So, I have like my my groceries
14:27 next to my pharmacy, but it's not like that's really weird. We don't have them, you know, in one big thing.
14:33 Eventually, they'll get there, right? You know, I think Walmart's strategy is like Amazon's to take over the world. You know, in the US, you can drive along
14:39 our um motorways and you can find that if there's if there's a big if there's a
14:46 reasonableized population at this exit off of the Hari, there's probably going to be a Walmart store there because if
14:52 there's people, then Walmart's going to put a store there for them to to shop there. But isn't that like isn't isn't this
14:58 like the whole thing that is driving marketplaces and the diversity that because of you know people lazy want to
15:03 shop in one place. Yeah. Yeah, I mean that to me that's what's that's what's appealing about it, right? And that's why, you know, when I
15:09 talk to even some smaller companies that that are running, you know, they're they're measuring the gross merchandise
15:14 value through their sites in the single digit millions, right? Or maybe or maybe, you know, 15 to 25 million, but
15:21 they have a loyal customer following, right? And so they may have somewhere between 50 and 150,000 unique visitors
15:27 or visits to their website every month, but they're usually cutting away for something specific. And that's why if you start to intelligently add
15:34 complimentary SKs to your to your assortment or adjacent categories then
15:40 where you have high volume traffic is so now how do I get them to come to my site and buy more which increases my average
15:46 order value. But that's the way that's the intelligent way to grow your network even if you're starting smaller is the you know if I use my garden tool
15:53 examples. If I sell garden tools now right on my website then what if I start selling work gloves because you know
15:59 people get blisters from using shovel. So actually sell I could sell work gloves or I could sell I could sell
16:04 plants or I could sell fertilizer things that people people wouldn't be surprised to see on my website and from there you
16:10 expand them to selling lawnmowers. It's a great way to try and keep more eyeballs um on your site. Now another
16:17 interesting side benefit benefit of this that people lose sight of it is it actually does increase organic traffic
16:22 because if you think of the about the worry we all we all pay for SEO including ultra commerce right um the
16:29 more indexed pages and searchable or indexable pages that you have the more search results you're going to drive and
16:36 so just adding SKS to your website you're going to flare them with some categories I'm just adding a broader
16:41 assortment I have more index pages that are going to get searched to find those items And so, you know, I'm going to
16:47 drive higher traffic to my site organically just from having, you know, more products available for sale. And
16:53 and let's be honest, adding a product to my website that I don't add in inventory
16:58 cost me a hundth, a thousandth of a cent because it's really just the time it's
17:04 going to take my merchandiser to put it in my product catalog. Well, in case of a third party assortment, right, you
17:09 don't actually have to do that. The third party will put all the product content on there for you. You just get to curate whether or not you want to
17:15 carry it on your site or not. And that's the part people come of. You you see people who go and say, I want to work
17:21 with XYZ company and I'm going to let them put their whole catalog assortment in here and then my merchandiser is
17:27 going to go through and just say yes or narrator or I want to publish this to my website. So you can still curate the assortment or you can let them add their
17:33 entire catalog. And you know the the dirty little secret that I see with with most folks when it comes to third party
17:39 marketplace is for most people who are selling online, you can drive a significant increase in the number of
17:46 products or the assortment you have on your site with your existing supplier base because there are probably things
17:52 that your suppliers make that you don't carry, right? And don't carry them because you can't afford to hold all the
17:58 inventory. The dirty little secret that I always share with is you don't want to carry it in your store because you're afraid your customers won't buy it. But
18:04 somebody's buying it or they wouldn't m it, right? So it doesn't really cost me money to put it on my website. So if
18:11 people are buying it, right, the only person that's not benefiting from that is blue as the site operator. So I might
18:16 as well add that to my assortment for my existing suppliers. If I especially since I don't have to inventory, if they're willing to either drop ship it
18:23 for me or set up a third party, then well, why wouldn't I do that? And even if your supplier doesn't drop
18:29 ship, you can ask them like, hey, who is selling that? you know, who is your your customer there? Who is your B2B contact
18:35 there? Who are you selling it to? And and can I contact them to see if they want to, you know, be a part of that?
18:40 Ser could do the wholeseller that they're working with, the distributor who would also do it, right? Yeah. Yeah, definitely. And I think, you
18:46 know, one thing to keep in mind is that it's not just about products, right? Marketplaces and and selling extra
18:52 things is not just about products. We can think about, you know, selling electronic goods and selling someone to install it. No, sell. You're not selling
18:59 them. I mean that that's not allowed at least in the in the Netherlands in 1700 something but you're not allowed to uh
19:05 to sell people but the thing is that you can you know you can sell their services right you can you can say like hey you
19:11 know I'm I'm a washing machine and I don't know how to install that you know I can I don't have to you know go and
19:16 and find another installer I can actually do that there but also things like extended warranties or software you
19:22 know a simple one obviously software right if you know yours become really
19:28 popular on the e-commerce side is, you know, in take pet food as an example, right? If I know that my if I know that
19:34 my dog goes through 20 pounds of dog food a week, I can set a subscription up so that every every Sunday evening or
19:40 Monday morning might get a new 20 pound bag of dog food delivered to my house. Um, and those people don't stop to think
19:45 about I can also do that through a third party with a marketplace, right? Um, if
19:50 you have a platform that supports that, by the way, but um, you know, you can you can add subscription products to
19:56 that as well. on it and it can and it doesn't necessarily have to be where traditional things that people would think about. You know, we were
20:01 brainstorming with uh some some friends socially that you know if I'm a
20:07 chiropractor, right? Do I want to sell a subscription for somebody to come on to to get corrected every week, right?
20:14 Instead of having to book my appointment, we'll just set this up as a subscription or recurring appointment and you can pair with subscription
20:20 billing, right? Well, you can we can build your insurance practice to subscription billing. So there's a lot of different alternatives and it and it
20:26 doesn't have to be just traditional things that people think of and I mean we're talking about you know expanding assortments with you know more
20:32 products but I think it's also on the other side there's a thing like you know big brands like for example you know we
20:38 talked about carart and and especially since they have a different reputation in Europe than they have in the US. uh
20:44 that is very interesting how a brand lives in such a different ways uh between these and Dickies for example
20:50 also a great example how it lives in in in in US and how it how it is available in in the Netherlands or at least you
20:57 know Europe and I think you know when you're a big brand you have another great opportunities there to add things
21:02 like you know if you're let's say a car brand you know people you sell the cars but there's a lot of people who sell
21:07 things you know that go with the car or that car lovers who has buy this specific model love to have and I'm not
21:13 just talking about like tires and and spoilers, but I'm talking about you know special car wash and you know all these
21:18 different things and but you know there's so much you can build on on your brand just on your brand alone and on
21:24 your audience and you're not even cannibalizing because then you're working with your suppliers you're not even you're not cannibalizing or
21:30 competing with them you're actually working with them the thing is obviously you have to be nice with margins right
21:35 and I think that is one of the big mistakes that some marketplace in the past made they you know tried to trench
21:40 the margin not only see marketplace as a you great way to to to grow our revenue uh one-on-one but also to show like hey
21:47 I can grow my audience I can sell more to the same audience and this way grow market places have matured now I mean I
21:54 I can remember and I've been doing this long enough back when Amazon had a paranoria about letting brands sell on
22:01 the marketplace as a third party seller because they were afraid that the brand would always win on price because they
22:07 wrongly assumed that the brands would come onto the marketplace and sell at the wholesale price. If you think about
22:13 it, it that was never the case, right? Because I'll pick on some giant brands. Like if I'm Nike, I don't want to sell
22:19 Nike shoes at wholesale price on a third party marketplace because then I'm just undercutting my retail price, right? And
22:25 you're going to and now and now if somebody, you know, if I if I sell a pair of shoes wholesale at $50 and I sell them a third party marketplace to a
22:31 consumer at $50, those $100 shoes that were in the Macy's department store are now people are going to expect to see
22:37 them for $50 or they're not going to buy them, right? And what I think it took the long time when people like Nike
22:42 honestly lobbying with people like Amazon to convince them which was I
22:48 don't I don't want to sell these at a wholesale price. I want to sell them at the retail price, right? I want I want to take the retail markup as part of my
22:53 margin. And so that's why I think it's becoming a lot more popular on the seller side as well um to find more
23:00 places that have an audience and and to me that's what you know that that's what's attracted even if I'm a small brand but I have a Laura faring right
23:08 there are people who want access to your customers right they want to sell them things because you have a little following and you have traffic it's not
23:14 a case where they're more this inter this mediator cannibalars their existing
23:20 sellers it's like if you have 20,000 you need visitors to your site and they're coming left for a very specific thing, but my product is attractive to that.
23:26 Then that's 20,000 people that I might not otherwise ever see any place else. So, of course, I want you to put my
23:32 product on your website because that's 25,000 or 20,000 potential new customers. Is it safe to say scaling, you know,
23:39 scaling your e-commerce business the most efficient way today is really to allow third parties? Personally, I I tell people that yes,
23:45 it's probably the most cost effective way. I'm not going to say it's the least expensive because there's a lot of minor
23:51 things I can do on my website, right, that are going to be less that may be less expensive or or timeconuming to
23:56 launch, but it has the highest potential growth rate in terms of dreadling or
24:02 scaling my revenue. Um, and it has the highest certainly the highest potential return on investment. Is it easy? No,
24:08 it's not tremendously difficult. It's it's way more easy than ripping and replacing my entire e-commerce platform,
24:14 right? But it's also provides an opportunity for me to get double-digit
24:20 growth on top of my existing e-commerce growth rate. Um, you know, we see many marketplace operators, as I mentioned,
24:27 folks before that are growing 45 55 plus percent year-over-year because of a marketplace strategy. Um, where I've
24:33 seen people in the five-year period that have doubled or, you know, increased by 150% their online revenues because they
24:41 added marketplace and they might have been growing at 15 to 20% prior to and so it's one of the most effective um
24:47 ways that I think in terms of it because because the risk is low, right, from my perspective, you know, I could I can
24:53 make a lot of changes to my website and I'll have a lot of vendors tell me that if you make this change, you'll drive a
24:59 higher conversion rate from your website. And maybe that's true and it's not. It just depends on depends on if
25:04 your customers desire that feature. Loyalty and checkout program or loyalty programs and membership programs do have
25:10 a pretty decent return. You maybe you already have that right and maybe you're not seeing what benefit or maybe might not be the right time expanding
25:15 international expanding geographically. Again, it's it's an interesting take because I'm going to spend some money to
25:22 try and dur after a new market space before I know if I'm going to have any
25:27 success, right? right? You know, uh we we had a natural commerce customer years ago who told me that when he entered a
25:33 new international market, it cost him almost $20 million to go into that new market. And that and the cost was
25:40 basically an e-commerce site because it's going to be in a different language, different currency, different fulfillment, probably different sources
25:46 of of partners that I'm working with in that market because, you know, I'm not going to bring in a bunch of international freight because I won't
25:53 have any margin on my products. and he said, "So I could spend 10 to10 to $20 million before I know if I'm ever going
25:59 to sell anything." What they actually did was a part of their strategy was they started bing and looking for a
26:05 marketplace in that region where there already was traffic and we might put three or four or five SKs for sale on
26:12 that marketplace and see if anybody wanted to buy their products before they went and tried to spawn, you know, $10
26:18 million to launch a website. It'd go see if they could find a customer. I was like, let's go see if let's go to some place that has customers and see if they
26:24 want my stuff and where I could decide if I want to build a a website, right? And so that's a that's a pretty
26:30 effective strategy when you think about internationalization can be expensive. Going from the Netherlands to solar
26:36 Portugal or Spawn, there was a lot to consider in terms of logistics and performance and and taxing and you know
26:43 crossber crossber fulfillment, right? um and depending on what I'm selling, do I
26:49 have window partners that are closer in space to you know how am I going to h handle the expectation of two delivery
26:54 versus should I try to sell more to my existing customers right and I think you know talking about how
26:60 much does it cost you know where do you sell I mean I I know we cannot give a price that way because it's the same like what does a car cost really depends
27:06 on on what you buy yeah I mean it is less expensive than you know 10 20 million that's for sure but it's also
27:13 you know it can be done with your current website to do it. It's not difficult. We Adult Commerce developed a
27:20 system to do that. We can integrate it in what you already have. You don't have to change your storefront, right? Um you don't have to
27:27 change your infrastructure. It sits on top of your complimentary to your existing tech stack. So, it can be done
27:33 very cost- effectively. And I and I would say that my experience would suggest marketplace is done right
27:38 probably return 100% of your investment within four to six months of go live. if
27:44 you're focused on those adjacent categories and things that are complimentary to what you already sell because you already have a built-in
27:50 audience, right? And so it's kind of the the panacea for what every every retailer wants. I want more I want more
27:56 repeat visitors and I want more share of wallet from the visitors I have. So, if I can if if my ARV is $50 and now I've
28:05 just added three more products adjacent to what people are buying for 50 hours, my AOV could go from 50 hours to 80 or
28:11 100 very quickly because my customers don't have to go to a different website
28:16 to find things that are complimentary to what they're coming to my website for in the first place. Right? If I'm prone to
28:22 you 40% margin on that product as the as the marketplace operator, then that's that's pretty good,
28:28 you know? And the supplier, the one who's actually doing it is also happy. You know, there's also dog store suppliers who don't even, you know, want
28:33 their own front ends. They just want to distribute products. And I'm not talking about, you know, the bad name that things got a bit with drop shipping
28:39 because, you know, that that's a bit of a different thing there. And sometimes the line is very thin. Uh, actually
28:45 today was pretty funny. We got a a chat message from someone who just who told us like a story. not going to, you know,
28:52 he told us a story him and and a whole story about that he brought a a lamp there light and it wasn't working and it
28:58 was actually, you know, drop shipped and it came from China and blah blah blah and the whole story there and that he had to wait too long and then it was
29:04 broken and if we could help him and I'm like well that's not really our business. we're on software but
29:10 uh but I think that was funny it does remind me of how these things happen and
29:15 how some marketplaces and and marketplace in general might get a bad name because of that you know so it's
29:21 always important to protect your brand you know source your suppliers because once you go you want to do it good and
29:27 of course the ones out there who building and finding assortment don't just add anyone
29:32 what's interesting right is like we we've all space spent a tremendous amount of effort attracting customers,
29:38 right? And so the last thing you should want is our customers that are coming to our site. Um, our repeat visitors going
29:45 somewhere else and buying anything, especially that's complimentary to us. And and the dirty little secret is there
29:50 are also a lot of thirdparty sellers that don't have your site traffic. nor do they have the margins that are going
29:57 to allow them to go spend the marketing dollars and less to attract and find that audience because it's a lot easier
30:04 for them to go ahead and find a website that has traffic that wants to sell
30:09 their products and so that's why you know I think anybody who's got who feels confident in the amount of traffic
30:15 they're getting on their website I think I think you'd be silly not to do to do a hard take a hard look at marketplace
30:20 because it is low risk high return and I promise promise you there are people
30:25 that want to sell sell products to your customers. I know you spent a lot of time talking about talking about marketplaces, but there's some other
30:30 scalability things for people to think about too and and timely now is one of the things that I like to tell our
30:36 people is are are you having effective internal conversations around the scale that you're expecting now as as we head
30:42 in towards late summer and heading into holiday season in Europe, right? We're all going to come back to that and head
30:48 into holiday shopping season for Christmas. One the one thing I always find interesting is when I talk to
30:54 people where the technology e-commerce team and the business e-commerce team don't communicate effectively and so
31:01 then they're always surprised when they have performance issues on their website because marketing marketing didn't
31:07 communicate or tech team really didn't ask what promotions and activities and sales and and things are you going to do
31:13 over the holiday to drive traffic. what is the executive team expecting in terms of year-over-year performance and growth
31:20 so that we can start think about how do we make sure our website doesn't fall down when we drive more traffic right that's that's the other part I know
31:26 you're going to you'll get into that that'll be a little bit of tease for your conversation with Brad next we yes of course
31:31 I always find it interesting when people say oh well we we rework with the cloud provider and and our cloud
31:36 infrastructure providers responsible for that and it's like yes I know most of them are also all of them are
31:42 outstanding in performance that way depth Do you really want to take the chance on somebody something or
31:49 something reacting quickly when you go from a 100,000 concurrent users to a million concurrent users and you better
31:56 time react and improve your site performance? Has your mering concurrent user opportunity gone back to 100,000
32:02 because they're just the page wasn't loading. And so I encourage people when you're looking at all of these
32:08 strategies, right, make sure that the whole team's on board with what you're doing so that people can plum
32:13 effectively, right? And I and I love to tell people this little bit self-s serving for us here at Ultra Commerce.
32:19 If you're thinking about or want to have conversations around a 3P third party marketplace strategy, right? Um I I
32:26 won't lie to you and tell you you can have it live by holiday season this year because that's just not realistic and you'd be doomed to fail. But I will tell
32:33 you now is the right time to have a conversation around launching something in 2026 so that everybody can be on
32:38 board and you're focused on the right technologies objectives. We have a lot of really smart people here who would be
32:44 more than happy to invest some time and energy with any of you around what what will that market opportunity look like
32:50 in terms of potential revenue upside growth and and cost execution. Right? We
32:56 also have um access to and relationships with a lot of people who are thirdparty marketplace sellers. So there are some
33:01 folks we might be able to connect some of you with as well uh to help you grow your assortment. Um, you know, we always
33:07 love to have conversations with people about um how to grow business, right? That's as I I started this off saying,
33:13 the funnest part of my job is talking with our customers and prospects and and
33:19 other people I know in the industry about growth, right? I mean, you know, scalability again, you
33:24 know, we're going to talk about that next week because, you know, when you start driving traffic, make sure it happens well. And we've seen we've seen
33:31 these stories. this this black the black Friday and all these kind of things that was happening and and then the big names
33:38 who are failing as well you know it's not the fact that you're working with a good service provider it's very good you know these people are there for you and
33:44 I'm sure there are very hardworking folks but things do go down things do happen so make sure that you you know
33:49 that you have also a backup plan what you going to do if that happens right what's what's there talk to David that's
33:55 basically an advice I can give uh because he's one not only able to give you this business advice and and these
34:01 ideas and and and work with you and think about like okay what is what is possible and what are the steps we take
34:07 because you shouldn't do everything at once you know what are the steps that we take how we're going to test the waters before we getting in if especially when
34:13 you're in the US when you're in Europe and have specific questions around scaling in Europe and you know expanding
34:18 to other countries we have a bunch of experts who've been doing it all over uh Europe really from Norway uh to Italy
34:25 which is a very different uh market between these two just you know just the food alone is already very different um
34:32 the up everything things like like I said we talked a lot about marketplace but whether you're looking at some of these other
34:38 strategies loyalty of membership programs omni channel inter in integration international expansion
34:43 right we do have frameworks can give you kind of a checklist of here's the things you need to do and in what order you
34:48 need to do them but we also have frameworks for things like oning partners or frameworks and checklist for
34:54 if I'm going to expand across border into you know different parts of Europe or from Europe into Asia how do I do
35:00 that and what are the what are the risks and what are the gotchas I got to look out for. We do have assets and templates
35:05 that we can help you kind of think that through and understand it or even even before you make a software decision, right? Yeah. Yeah, definitely. And I and I
35:12 think guys, you know, the people, not just guys, I'm sorry, not being very nice today. Uh but girls and guys and
35:18 and everybody out there uh give a call, you know, give a call to David because like we're here to talk with you. We're
35:24 here not just to sell you our software, but we're here to really, you know, find out your strategy there. And I think that is one of the great assets that we
35:30 can offer as a company. David, we already talking almost for 40 minutes. Look, one one thing before we're out,
35:36 right? You don't have to pick up the phone and call us. I'm going to do a little plug here for constants and Janie
35:41 launched on our website and our chat function. And believe it or not, if you come to ultracommerce.co on our website
35:48 and and you bring up our chatbot, you actually will talk to one of our live experts. It is not it is not a robot. It
35:55 is not an LI bot. You actually talk to someone. uh and you can do that with your firm, you can do it over via chat, but it is a it is a live expert from our
36:02 organization who is available to talk to you about things like this and these strategies and so you I'd encourage you
36:08 if you don't want to pick up the phone and call me, right? You can probably find me available via chat and you could
36:13 ask for me via chat pretty much anytime Monday through Friday 8 a.m. to 8:00 PM
36:19 Eastern time in the US. So yeah, that's you. That's true. That's David. It's David the one running the
36:25 chat. I'm on there quite often and if I'm not, you can ask for me and somebody will ping me and I'll get on and chat
36:30 with you. Yeah. Yeah. Yeah. Definitely. That's that's a that's a good one to add. David, David, before we're going to stop
36:36 this um bring this to an end because we can talk for hours. Drop us one more one
36:41 more very wise thing about scaling. If you want to scale and get these numbers there in 2026, what do you need to do
36:48 today? the what I would do today honestly to scale next year is I would I
36:54 would bring in someone from the outside whether it's your systems integrator you're a strategy consulting partner or
36:60 you know someone from ultra commerce and have a serious conversation around what is the business opportunity for me in
37:06 terms of um either adding a third party marketplace or looking at some of these other strategies for mommy channel
37:12 integration or international expansion because a very short period of time we can help you with a framework to build a
37:18 business case to up to understand what the upside potential is of doing that, but also what's the what's the realistic
37:26 implementation timeline and implementation costs so that you're prepared as we head into budget season
37:31 here in the next several weeks or months if you haven't started already for 2026 to to prepare for something that can
37:38 grow. And I and I would tell you don't wait till December when your CEO comes on or your CFO comes in and says we want
37:44 to see 50% year-over-year growth on our e-commerce side and then you everybody's chins hit the floor and they're like how
37:50 are we supposed to do that right there are ways to do it right and we can help you identify those ways and we will be
37:57 honest and transparent enough with you to to kind of walk you through these options. As I said, I I have a checklist
38:03 here that we built that's in front of me now. But very quickly, you can help a customer understand or a prospect or
38:08 company any of you understand of all these things that are available, which ones are you not are and aren't doing
38:14 today? And then quickly look at, you know, your your market space and help you assess what's the potential upside
38:20 from each of those versus cost and trade-off. then you're in a position to go and put information in front of your executive
38:27 that Sarah's okay if you want 50% year-over-year growth on my e-commerce site next year. Here's the three things
38:33 that we need to do to achieve that goal. And Sarah, you're already in a better position to start to do that than being
38:40 told in January at the end of the year that we're going to we're going to we're going to grow by 50% next year and then you're and then you're going to spend
38:46 most of next year thinking about how am I supposed to do that, right? you know, you we could proactively start to think
38:52 about that right now that says you're going to your executive staff and saying, you know, we think we could
38:58 achieve 50% year-over-year growth and one of the push back is like, well, let's just focus on 35, right? And but
39:03 at least you've got a strategy and a thought process of how do I scale this business, right, in worries that, you
39:10 know, we haven't been thinking about in the past. Cool. We're going to ask uh Constance
39:15 who's who's going to produce this to put like your checklist in screen. I think that would be a really nice one. So for
39:20 those who are listening to us on uh on on Spotify, go to YouTube and you can see it or just go on the chat and ask
39:27 David to send it to you. He can definitely Okay. Well, David, thank you very very
39:34 much again uh for sharing all this knowledge with us. Next week you're going to hear uh from David. No, you're
39:40 not going to hear from David. You're going to hear from Brad. You're going to hear from some other guests. We're even going to do trees uh three ways with
39:47 with three, four, five people on it. Really cool experts coming your way. Uh both from the tech side, from the
39:54 business side. And of course, we're going to talk about AI. Everyone, thank you so much for listening. Give us a
40:00 like, give us a share, share it with everyone, follow and do all the things that needs to be done to help us grow.
40:06 Um and let us know what you think. Thank you everyone and thank you. Good night.
40:12 Cheers. [Music]