Scaling Retail Marketplaces and Platform Business Models with Justin Samakow of Mirakl | Ask An Expert
The Fall retail conference season is officially underway, with NRF Paris having just wrapped and Groceryshop, Shoptalk Fall, NACS, and many others just weeks away. Omni Talk figured what better way to get ready for the upcoming season than to put together our primer of the must-see tech that has caught our attention this year.
This episode features Mirakl’s section of our Fall Conference Season “Must-See” Tech Preview, where Justin Samakow, Head of Platform Strategy at Mirakl, explores what it takes for retailers to build and scale successful marketplace and platform business models.
The conversation covers the continued shift toward marketplace-driven e-commerce and the opportunity for retailers to build new sources of revenue beyond traditional trade. Justin breaks down the organizational and strategic foundations required to launch a marketplace, from executive sponsorship and dedicated cross-functional teams to creating a focused “minimal viable ecosystem” that delivers value for both shoppers and third-party sellers.
Be sure to check out the rest of our podcasts this past week and the next few to catch exclusive content from some of the biggest retail conferences!
We can’t think of a better way to get a bird's eye view into the tech shaping the retail of tomorrow, today!
P.S. To explore more conversations from the Omni Talk Ask an Expert Series, head here.
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Transcript
Foreign.
Speaker A:And there's no one better to break this down on how to do it right, how to get it done.
Speaker A:And to do that, I'm proud to introduce Justin Sammico, the director of Platform strategy.
Speaker A:Welcome to the webinar, Justin.
Speaker B:Thank you.
Speaker B:Glad to be here.
Speaker A:Justin, the reason I wanted to have you on was because I wanted to ask you this question point blank.
Speaker A:You know, I've been talking about how E commerce is essentially marketplaces.
Speaker A: my, my big takeaway to start: Speaker A:So what comes to your mind when I say that, that E commerce is marketplaces?
Speaker B:Well, the most obvious answer is that about 2/3 of all online sales run through marketplaces today, right?
Speaker B:So vast majority of sales go through marketplaces.
Speaker B:So there you go, case closed.
Speaker B:But you know, if we want to double click a little bit further, you know, the parallel I would have is that, you know, E commerce is to marketplace, as you know, digital is to platform.
Speaker B:So platforms is kind of like the key of what's going on here.
Speaker B:And marketplace is just a platform for retailers.
Speaker B:So why are platforms so important?
Speaker B: nteresting, which they say by: Speaker B:So those are activities such as, you know, retail, media, marketplace, financial services, anything and everything that isn't buying products wholesale, selling them retail.
Speaker B:And why that's so important is because all those things are based on the idea of having a platform, having that ecosystem of many different folks in which you're monetizing all of those different parts and you're creating flywheels.
Speaker B:Right?
Speaker B:And everyone's heard of flywheels.
Speaker B:I don't need to go into details on that.
Speaker B:Jeff Bezos with his famous napkin drawing and all that.
Speaker B:But you know, that's really the key here is that if you are a large retailer, you have the traffic, you have a great customer promise.
Speaker B:It's how do you take your existing, I'd say retail 1.0 model and turn into this future platform?
Speaker B:And you're seeing this across the board, all of these retailers are turning into platforms, turning into ecosystems and driving these flywheels.
Speaker C:So just in it, this, this idea that the majority of ecom revenue globally is increasingly going to marketplaces, the overwhelming majority of profit.
Speaker C:What can marketplaces enable retailers do that they can't do with their standalone websites?
Speaker C:Why can't they create that ecosystem just with their standard.com?
Speaker B:One thing that is really difficult for merchants and I was a merchant back in the day is managing both.
Speaker B:Yeah, yeah.
Speaker B:You know, but like managing open to buy, managing the fact that, you know, as a merchant, you are solely focused on how do I maximize the value out of my most important relationships.
Speaker B:Right.
Speaker B:And you talk to most retailers, you'll, you'll hear the similar thing, right?
Speaker B:Like, you know, a top vendors probably make up, you know, X percent and that X percent can be double digits of your entire business.
Speaker B:So the question is, you know, I want to expand, I want to do get more products, more vendors, more categories.
Speaker B:But you know, there is a blocker right now, which is that I don't have the money, I don't have the focus, I don't have the time, and I need to scale.
Speaker B:And the marketplace model allows you to get that scale.
Speaker B:And so scale being the big word.
Speaker B:Let me explain kind of what I mean by that one is speed.
Speaker B:So with marketplace, you do not have to do very bespoke negotiations with all of those different vendors.
Speaker B:It's pretty seamless in terms of onboarding vendors, which means that you can onboard anything you want and everything you want fairly quickly.
Speaker B:And you can, you do that without any of that open to buy being spent, similar to dropship.
Speaker B:But you know, there's the speed is still even faster because of the lack of those bespoke negotiations.
Speaker B:Second, responding to demand in real time.
Speaker B:So what, what do I mean by that?
Speaker B:It's, you know, things like filling out of stocks when you're out of stock in your 1P, adding seasonal products, but then also things like, hey, this new brand is trending on TikTok.
Speaker B:I want to bring that in right now.
Speaker B:How can I do that in the next week or two as opposed to in the next season when, you know, my open to buy is up for it or hey, you know, once I get to it, you know, in, in the world we live in, things move fast, trends are moving faster and faster, and you need a model that can keep up with it.
Speaker B:And then I think, you know, you've heard this also before.
Speaker B:Marketplace is all about long tail.
Speaker B:So the idea is that you want to not only bring things in quickly, but you want to test, test, test, test.
Speaker B:And you want to do that without risk.
Speaker B:So if you can bring something in very quickly, very low touch, you don't have to price it.
Speaker B:Now that said, if you don't like the price, you don't have to show it on your website.
Speaker B:So you still have some control of that.
Speaker B:But honestly, for something that you don't know how it's going to sell.
Speaker B:You don't really want to figure all of that out.
Speaker B:You'd rather let the seller who's the expert do that.
Speaker B:If it does really well, maybe you bring that into one p, you bring that into your stores.
Speaker B:So it's all about scale.
Speaker B:It's scale of getting that long tail of testing, of bringing stuff in faster.
Speaker B:And that's really key.
Speaker A: Yeah, I talked about my: Speaker A: You just hit up my: Speaker A:Because there's a, there's a correlation there as well.
Speaker A:So it's a great point that you just ended on.
Speaker A:So your job, your job is to help retailers define their marketplace strategy, right, Justin?
Speaker A:That's essentially what it is that you do.
Speaker A:So for the retailers that you've seen that have been successful growing their marketplaces, what are some of the key ingredients that they've taken to their approach?
Speaker A:What are some of the things they've done to be successful?
Speaker B:So, great question.
Speaker B:So it really, this all comes from the top.
Speaker B:You really need to start with what is that clear business objective that you're trying to get out of a marketplace?
Speaker B:We have many customers that even say, hey, marketplace is great.
Speaker B:What we actually really care about, as you just mentioned, is retail media.
Speaker B:We, we know retail media is this extremely lucrative profit center.
Speaker B:It's one that also is beneficial to both the vendors and to our customers.
Speaker B:We want to grow that.
Speaker B:How do we do that?
Speaker B:We do that by having more products that we can sell.
Speaker B:And by having more products and more vendors, we can increase cpc, which is great, but then also have a more relevant listing.
Speaker B:So it could be something like that.
Speaker B:It could be, hey, we want to test more.
Speaker B:Oh, we want to, you know, make sure that we have that full basket for our customer.
Speaker B:We want to have a better SEO or Geo for either LLMs, such a ChatGPT or Cloud or for our on site agent to help our customers, you know, fill their need.
Speaker B:Not necessarily a keyword search.
Speaker B:So having that clear business objective, very important.
Speaker B:And make sure that the EBIT based upon that is going to be lucrative enough for you to go forward with this.
Speaker B:Once you have that though, the next thing that you absolutely have to do, and this is where I think we see the most amount of marketplaces fail is, is by having that executive sponsorship and you need to have that early and that generally when I say executive, I mean C level.
Speaker B:Usually it goes up to CEO, cdo, cmo but it usually has to have one, if not all of them.
Speaker B:And we usually see marketplaces fail.
Speaker B:And no one likes to talk about failure, but I think it's super important you see marketplaces fail when things are siloed, when, hey, the merchandising team doesn't agree with the strategy of the marketplace and they're doing everything they can to sabotage it, or it's on a separate website or, you know, a poor customer experience and it's not living up to that business objective.
Speaker B:So that's the second one, incredibly important.
Speaker B:I think the third, and this one's also probably equally as important as the first two, is all about having a dedicated team for Marketplace.
Speaker B:And it's not something you really think about.
Speaker B:You think, oh, it's, you know, just another channel on my site.
Speaker B:It's just marketplace like, can I just have merchants do it?
Speaker B:In the end though, it's a very different business model.
Speaker B:It's a very different skill set and it's a different way of thinking about how to run your organization.
Speaker B:It's a transformation.
Speaker B:And merchants, like I mentioned before, they're very focused on their core brands, not necessarily a long tail strategy.
Speaker B:And this is where I think a lot of retailers that try to do everything all with existing teams get tripped up.
Speaker B:To me though, it's kind of like Omnichannel where, you know, I don't know if you guys remember this from back in the day, but for me at least, you know, when I was working in retail, we had a separate.com team and store team.
Speaker A:Yeah.
Speaker B:And that's the way I see marketplace for most retailers when they launch it, they need that separate marketplace team and retail team that are working harmoniously together.
Speaker B:There's friction.
Speaker B:Of course there's friction.
Speaker B:That friction is healthy.
Speaker B:But you know, having that team, they work together, they understand and then eventually, maybe one day you can recombine those, you know, once everybody is comfortable.
Speaker B:But you need to have a focus and incubation of this new transformative business model.
Speaker B:So the fourth thing that I'll go over is the minimal viable ecosystem.
Speaker B:So we don't call a marketplace or launching a marketplace a minimum viable product.
Speaker B:Here at Miracle, we call it minimal viable ecosystem.
Speaker B:And the rationale is that in the end, launching a marketplace is great and it's great that you have the technology, but like I mentioned, it's a transformation.
Speaker B:And what that transformation involves is a transformation where you're going from, I only care about our customer, which insanely important for any retailer.
Speaker B:But now you have to Actually think about the full ecosystem.
Speaker B:You have to think about what makes it viable not just for your customers, but for your seller base.
Speaker B:And if you look at many of, I would say, miracle scale customers, they're now doing things like having seller experiences, seller days, having seller websites, things that never existed in the retail world before.
Speaker B:So now it's thinking about how do we add value to both the sellers and to the customers and perhaps other partners too.
Speaker B:So it's really important to really think about that, creating that in a very, in a very thoughtful way and make sure from day one, your marketplace is gearing towards maximizing the value.
Speaker B:Because when you see that max the value get maximized, you see the flywheel.
Speaker C:Justin, we are getting ready to get on the road next week.
Speaker C:Chris and I are in Vegas for grocery shop the week after.
Speaker C:He's then hitting Nashville for shop talk for that.
Speaker C:As we preview tech that we think is important for people to see at these shows, you've got two really different audiences there.
Speaker C:When you think about, about marketplaces, is it same strategy for everybody?
Speaker C:Or if you're a grocer versus apparel, should you be doing and thinking about marketplaces in a very different way?
Speaker B:Oh man, absolutely not the same strategy.
Speaker B:Now I say that, but marketplace is marketplace, right?
Speaker B:In the end, it's the same model.
Speaker B:But that same model can look very different across almost every single one of our customers.
Speaker B:And that goes back to those business objectives.
Speaker B:So we'll start with kind of looking at the difference and dissecting the difference between grocery and more fashion.
Speaker B:How about we do that?
Speaker B:So for grocery, the entire idea of the grocery marketplace is that customers are coming to shop usually on a weekly basis.
Speaker B:The goal is not necessarily to have more frequent shopping experiences.
Speaker B:It's to better serve that customer when they are shopping.
Speaker B:Because typically they are shopping.
Speaker B:You know, sometimes it's just for meals.
Speaker B:Maybe it's, let's say for a kid's birthday party, right?
Speaker B:And that kid really wants a spider man themed birthday party.
Speaker B:Now what we know about most grocers is that their distribution centers, their warehouses are all really focused on food, Fresh pop, packaged cpg, et cetera, and not necessarily on long tail.
Speaker B:It's all about their stores, right?
Speaker B:And it's all about in their.
Speaker B:Their e commerce experiences are very much focused on deliver from store.
Speaker B:So what this allows you to do is say, hey, I want that spider man themed party.
Speaker B:I can't put all of that in my store.
Speaker B:But if it's plates, it's balloons, it's napkins et CETERA et cetera.
Speaker B:Maybe it's, you know, hey, I want to make ice cream, I want to get a ice cream maker as well.
Speaker B:You know, as part of this, you probably don't have that in store.
Speaker B:It's not going to turn really well, maybe high damage, shortage, etc, all those things are great for marketplace.
Speaker B:So it's really all about, I would say, a lot of hard goods.
Speaker B:You see a lot of things like furniture, kitchen, electrics.
Speaker B:You do see some soft home things like, you know, towels as well.
Speaker B:Pet is a big category for grocery as well, but it's really all about complementing the food focus of the stores.
Speaker B:Because in the end for those types of categories, you just cannot have that long tail assortment in a store.
Speaker B:But your customers are demanding it and they are shopping with you every week.
Speaker B:So you might as well better them.
Speaker B:That's grocery.
Speaker B:Fashion is very different, right?
Speaker B:Well, grocery is all about this long tail, better serving, like the amazing amount of, of different use cases.
Speaker B:Fashion is really curated, right?
Speaker B:They're really thinking about how do we make sure that we get the latest and greatest in front of our customers as quickly as possible and make sure that we're hitting all the different use cases, all the different events and occasions that those customers desire.
Speaker B:So generally speaking, from a fashion point of view, you're thinking about, hey, you know, how do I go maybe up in price point?
Speaker B:We call that e concession.
Speaker B:Like, how do we bring luxury vendors and sellers on board who maybe don't want to have a wholesale relationship?
Speaker B:You also see, hey, you know, there are some customers that, you know, you know, kids is a great, great category.
Speaker B:As somebody who has a year and a half old boy, you know, we go through clothes like, you know, every week I feel like we have, we're getting them new clothes and so we don't want to spend a ton of money on most of that.
Speaker B:But you know, if you're a retailer, you know, you don't necessarily want to stock a million different things, a million different sizes.
Speaker B:So instead of bring that to marketplace where you don't have to own that, you don't have to make those assortment decisions, you can let, let the sellers do it.
Speaker B:So kids is a great category.
Speaker B:It's a very high penetrated category for apparel.
Speaker B:But it's all about the curation.
Speaker B:It's curation at scale and it's done in a way that's sophisticated, but it's in a way that is done very specifically to help make sure that you have the right occasions for your customers.
Speaker A:I love that point about Grocery, Justin.
Speaker A: oking about my epiphanies, my: Speaker A: Well, my: Speaker A:Localization is always getting talked about in grocery, but, you know, it's really hard to do in the store and there's a lot of wasted effort in the store.
Speaker A:But yet digital, if you take the approach that you're espousing, it unlocks true localization for your customer at the press of a button.
Speaker A:So that's a really great point on marketplaces.
Speaker A:All right, well, let's get you out of here on this.
Speaker A:If someone listening to this, and I kind of hope that they are, is saying themselves, I want to.
Speaker A:Yeah, you know what?
Speaker A:I think it's about time we go out and build a marketplace.
Speaker A:What is the one thing that they absolutely should not do?
Speaker B:Yeah, so I mean, it's really the opposite of all of what makes those marketplaces succeed that I mentioned earlier.
Speaker B:So, you know, there was those four things I mentioned.
Speaker B:Having the clear strategy, clear customer promise, executive buy in, having that team to get that flywheel going and then that minimal viable ecosystem.
Speaker B:Really thinking about both the sellers and the customers.
Speaker B:You know, where we see failures and there are failures is when those four things are not really thought through before you launch.
Speaker B:So that's something that myself and my team, we work with our customers day in and day out to ensure that, you know, the things that have tripped up other platforms in the past don't happen in the future.
Speaker B:Make sure that, you know, you got all the ducks in a row, you know exactly how you're going to monetize, how you're going to add value to the full customer journey and make sure that you launch successfully.
Speaker B:So I know, you know, that's very optimistic way of putting it because, you know, there, there are failures down the road and we really don't like that with any of our customers.
Speaker B:And so anyways, it was a pleasure though, being here today though, and talking about this and yeah, looking forward to the next time we.
Speaker B:We catch up.
Speaker A:Yeah, no, Justin, thanks so much for your time today.
Speaker A:It was really great getting to meet you and chat with you about marketplaces.
Speaker B:Look forward to next time.
Speaker C:Yeah, I look forward to that.
Speaker B:Thanks, Justin.
Speaker A:Wow.
Speaker A:Yeah, Ben, that really hit the mark for me.
Speaker A:That was exactly the type of conversation I wanted to have around marketplaces.
Speaker A:I love how Justin laid out how you should think about marketplaces globally and then how you get into the different aspects of thinking about them when you start talking about verticals, grocery versus apparel.
Speaker A:But I'm curious, what was your takeaways?
Speaker C:I guess Chris, my number one, this has been our tech preview webinar.
Speaker C:But so much of that conversation was about marketplace strategy, was about corporate, corporate strategy, not necessarily technology.
Speaker C:And I love that.
Speaker C:I loved, you know, in fact to the extent where he said, you know, don't put it on a separate website.
Speaker C:It works best if you're a sol.com it's.
Speaker C:But then at waterfall was really interesting Chris.
Speaker C:And I saw your ears break up at this point.
Speaker C:Point as well was when he said actually we absolutely recommend that you've got to have a separate team like the early days of dot com.
Speaker C:Keep it separate, incubate it.
Speaker C:Don't, don't make it something else that your merchants will do.
Speaker C:You know, we've seen this maturity curve where so many organizations are putting their.com businesses back in to make it seamless.
Speaker C:You forget that actually in the early days you needed that separation, you needed that incubation to be able to get it going again.
Speaker C:And I think that was a really timely reminder to not rush this, to dedicate the time and effort that's needed.
Speaker B:To make it happen.
Speaker C:I don't know.
Speaker C:That's what I thought.
Speaker C:What did you take away?
Speaker A:No, I think your points are great.
Speaker A:I mean the people that, when I've talked to people that have experienced standing up marketplaces, they always, the one thing they always tell me is like it's a different muscle.
Speaker A:Like it's not a merchant muscle.
Speaker A:It requires a different skill set.
Speaker A:You're selling to the vendor community to get them on your marketplace.
Speaker A:That takes, it's a whole different skill set that you need to, to understand.
Speaker A:But the point that I love too is, and the other point where I've seen this definitely fail 100 it's failed is when the CEO is not buying on the strategy.
Speaker A:Like oh yeah, you can't, you can't have turf wars over like this item shouldn't be on the marketplace because of this.
Speaker A:It's cannibalizing this, blah blah, blah, blah, blah.
Speaker A:And that's just so frustrating.
Speaker A:It's such a waste of time.
Speaker A:Like if you're gonna do the strategy, do the strategy.
Speaker A:Which is why I think you still see many retailers half pregnant on their marketplace strategy.
Speaker A:They haven't fully committed to it or they haven't really understood what it is.
Speaker A:They're designing it to do.
Speaker A:And so I thought Justin really laid that out, and he did a great job talking about it.
