Inside Retail: From an introductory standpoint, can you please run through the rise of marketplaces – when did it start and what does the future look like?
Andrew Ong: Physical marketplaces have played a massive role in our lives over time and that continues through things like farmer’s markets. Digitally, especially in Australia, marketplaces have really only really seen that momentum over the past five to seven years with global plays from eBay and Amazon and locally through niche plays such as Catch or Kogan.
There’s been a phenomenal rise of marketplaces over that period, with some recent well high-profile launches and acquisitions. I find it fascinating and amazing with the different challenges that are associated with the direct selling e-commerce business.
Amazon has only really entered that space in the past five years or so, and they’ve come with a scalable repeatable model that they’re building on and executing, and different parameters of defining return. To see them set up a fully automated 200,000 sqm warehouse is something many fulfilment businesses aspire to.
In terms of where things are going, of which some we have already gone to: We are seeing a lot of specialist sellers setting themselves up. Whether they’ve done it based on the Amazon model internationally or on a smaller local scale, it’s given rise to a lot of specialist retailers that don’t exist anywhere else except to sell on e-commerce marketplaces.
In Australia, there are currently a few large businesses in the industry that are giving true meaning to the term ‘faceless retailer’ that are focusing on finding what sells instead of the customer channel.
Retailers now know e-commerce and are no longer just becoming sellers on eBay or Amazon, some are becoming marketplaces in themselves, to extend their range and offers. At Woolworths, we have commenced our marketplace proposition, Everyday Market, within woolworths.com.au, branching out from our traditional groceries, and supporting the everyday needs of our customers.
IR: How do you curate meaningful experiences for customers through the marketplace?
AO: From a Woolworth’s perspective, there’s a lot of time that is spent listening to customers. Through calls to our customer hub, feedback upon purchases and delivery of products, as well as more general market research through industry groups, are conducted on a regular basis. More broadly as well in terms of looking at who we are as a marketplace, it’s really about extending our range aligned to our core propositions. When we look at what shoppers want from Woolworths, they come to us for their groceries and their everyday needs. So it’s really about making sure that the experience complements the core purpose of why they come to buy from us, and finding additional products to incrementally add one or two extra items that they might not otherwise have been able to because it is not part of the supermarket offering. From a ‘ways of working’ perspective, we can be purposeful about our customer-first approach, by listening to the customer, creating a trial, and testing something out. Most importantly, have a hypothesis and criteria that you can assess success by.
Touching on the more industry-led perspective, there is a huge balance to what makes up a great experience. What makes up the marketplace itself is the digital platform and the friction that is there that leads to that conversion from the discovery to the buyer experience.And then you’ve got the actual delirium experience within itself, which is once you have made that decision to buy and you have actually completed that purchase, how is your experience, and how enjoyable was it? How informed are you in terms of the way in which you received it? What choices did you have in terms of receiving it?
IR: If you were to look at other marketplaces that are curating these customer experiences really well, were there any in particular that you look at as sort of a source of inspiration?
AO: I think you’ve got some really innovative players out there. It’s certainly not the best digital experience but the fully incorporated experience that Amazon provides gives customers the ability to receive their goods and receive them fast, with continuous development, and investment in their networks and fulfilment capabilities. In addition, their ‘Buy Box’ has had some coverage lately, and the power that it places over customer behaviour.
Simple customer service and proactive solutions put the power in your hands in terms of the customer sentiment when things don’t go to plan, and provide the element of surprise. I was delighted to receive notification and reward when Amazon didn’t meet its two days delivery promise without having to contact customer service, and spend my time and theirs on calls and conversations back and forth.
The proactiveness of how they did that was something that stood out for me. From a digital site side, e-commerce businesses have led the way in terms of the experience as being digital innovators out there, the Iconic is one example where it feels much more like an extended aisle and the customer experience becomes more holistic.
IR: What have been some key learnings throughout the pandemic?
AO: I guess the thing that the pandemic changed along the journey was very much that pivot to essentials. We had massive, massive demand shocks. The number of searches for masks, sanitisers, or toilet paper was immense. Imagine, previously masks were something only a medical professional or some traders may want to buy to pretty much everyone in the world having multiple masks a day, let alone reusable ones created. Fulfilment and delivery capabilities were completely challenged because there wasn’t stock and whatever stock there was, it was very hard to obtain as the logistics providers also had challenges for the health and safety of their own people.
The real urgency and need for those essentials did change. People have gotten a lot more comfortable with the online shopping experience.
There is a greater level of comfort in e-commerce and e-commerce sales. The e-commerce penetration will start to normalise and then trend back upwards again as retail grows.
There’s also a thing about thinking about that experience from a customer perspective. Reliability is critical and the communication coming from that reliability is critical because not everyone needs that product that same day or tomorrow. They’re happy to wait for a week.We are waiting for cars for a year at the moment. It’s a very disruptive time with supply chain issues happening. But Covid has shown that customers want the certainty of when they will receive their products to get it and how they can plan accordingly as a result.
IR: How are you keeping customers loyal online?
AO: Loyalty is a significant part of the offering that differentiates Everyday Market. As part of Woolworths, we are closely interlinked with Everyday Rewards, so loyalty is very much inbuilt into our ways of working and appealing to the customer. We have a great network of loyal and engaged customers using our reward capabilities to earn and boost their shop, which includes their Everyday Market products.
Having a great experience from the online store to the delivery of products also promotes loyalty, and as I previously mentioned, if you are delivering products how customers want them and keeping them informed of the journey so that they can plan, that creates a positive experience, which is more likely to be repeated.