[Voiceover]: They were really, really strong in that mindset. And yeah, short of being laughed out of the room because I think at one point some guy got up and told me I was dreaming. We'll start to move into a territory where the experience online is actually better than a showroom. All the plug and play systems recovering 95%. But it's that last 5% that really makes a difference. Welcome to Add to Cart, Australia's leading e commerce podcast that Express delivers all you need to know in the fast moving world of online ret. Here's your host, Bushy.
Nathan Bush: Welcome to another episode of Add to Cart. I'm Bushie and I'm joining you from the land of the Terrible People otherwise known as Brisbane, Australia on Add to Cart. We welcome everyone to share and listen to e commerce stories. The more diverse the better. I want to especially welcome the traditional owners and the original storytellers of the land that we are on, our indigenous and Torres Strait Islander listeners to join us in our e commerce conversations and our community. I once got told very late on a night out that I couldn't jump down a whole flight of stairs in one bound.
Nathan Bush: They were right.
Nathan Bush: But if you have ever been told that you can't do something and been laughed out of the room for a suggestion that's a bit off the wall. If you've ever had an idea that felt right despite the critics, today's story will resonate. Today I am talking to Joshua Mameliti from from the BlueSpace. The BlueSpace are Australia's largest pure play online renovation retailer with a background in digital. Working for leading Australian bathroom and kitchen brands like Caroma, Josh saw an opportunity for e commerce innovation at a time when very few in the industry saw it. Eight years later, the Blue Space is well established and an online leader in the bathwear category. Josh himself has been recognized by making the 2023 top 50 people in E Commerce and very well deserved. Today, Josh shares the unique delivery needs of the Renovator, where speed is actually a detrimental thing. Sometimes we also go into the AI customer service tool that Josh considers head and shoulders above any other tool that he's got, and we hear the valuable lessons from the BlueSpace's recent enterprise systems implementation. I know that will scare a lot of you just listening to that, let alone implementing it. Was it all worth it? Will find out here. As well as his wisdom, Josh is offering 10% off at the blue space for all add to cart listeners. So listen out for that code at the end of our chat. So thanks to our partner Shopify. Plus, here's our conversation with Joshua Mameliti, founder and CTO of the Blue Space.
Nathan Bush: Josh, welcome to ADD to cart.
[Voiceover]: Thanks for having me.
Nathan Bush: Thank you for being here. I have to kick off with the most obvious question, I think. How did you come to love bathroom fixtures? Seemed odd to me.
[Voiceover]: Yeah, seems odd to a few people, actually. But I spent about a decade at one of probably the industry's biggest brands of products in the market. So Caroma or the guys who owned Chroma called gwa, they had a range of different brands. I spent about a decade there, started there not too far out of uni, and basically I learned everything there was to know about bathroom products there. I was heading up all their digital assets, so all their websites, apps, content management systems. So I got this kind of best of both worlds. I learned a lot about digital. You know, it's kind of the golden age 05 to 15 of the Internet. Yeah. Probably before a lot of e comms were thought of, when ebay really was lit for people. That's where you bought things online back
Nathan Bush: before Zuckerberg was a billionaire.
[Voiceover]: Yes, yes, definitely. I learned everything was about bathrooms there, bathroom products and other products as well. They had door hardware businesses and hot water businesses as well. And yeah, that digital side of it too. And so I learned everything there. But personally also big renovator as well. So I'd love renovations done, a few whole home renos. Always tinkering with things. A hopeless diy, like I'm not anything I touch, I break. But my wife sort of laughs at me because I'll do something on a weekend. Yeah. With all this confidence and I'll go buy tools and I'll dress the part and I'll look like a tradie. And then come Monday, I've got someone out trying to fix whatever I've done. So absolutely hopeless at that side of things. But I love the renovation process.
Nathan Bush: What's your latest project?
[Voiceover]: Oh, my latest project. Well, I've redone the backyard lawn to. Yeah, relaying to. That's my latest one. And that was, yeah, hard equipment for it. I knew I could have paid someone to do it and I should have, but it turned out okay in the end. My wife likes to video me while I'm at the back and just get all the mistakes and yeah, get me looking like a real pro, but then stuffing something up.
Nathan Bush: So surely that can be a tax write off.
Nathan Bush: Right.
Nathan Bush: Because you're getting in the minds of your customer, the DIY home improvement person who wants to do it. Themselves Just write all off on tax.
[Voiceover]: I love it. Yeah, I've never thought of that.
Nathan Bush: Actually.
[Voiceover]: The ATO is listening. Please don't.
Nathan Bush: They don't listen to this. So you're in the big corporate side of the world there. Got a passion for it yourself. How did you go from working for someone in that industry to go, actually, I can back myself here to make a real play at this and do it differently.
[Voiceover]: Yes, I remember a specific moment. I was actually. So as part of my role at gwa, I would meet with all the traditional bricks and mortar guys in the, in the industry or the big retailers and I was presenting to them at an event and I was trying to tell them that people do want to buy these products online and their view of the world back then. So just probably 2013, 2014, around then, that was their view of the Internet was it's a place where it's cheap, it's nasty. People are only there to get a discount. They're not there to experience anything that a showroom has to offer. And that mindset, they were really, really strong in that mindset. And yeah, short of being laughed out of the room because I think at one point some guy got up and told me I was dreaming. I was trying to tell them, guys, that people. There is a cohort of people, not everybody, it's not for everybody, but there is a cohort of people that do want to buy renovation products online. They don't want to go to your showroom, they don't want to spend, spend all weekend looking place to place. And it was kind of at that moment where I sort of thought, yeah, if you guys aren't going to do this, it was really clear that they were not interested. And these were some of the biggest retailers in the space. They were not interested in online. So I kind of thought to myself, yeah, I think I could back myself to do this. And my business partner Les, he just recently left Corona. So I used to be the chief executive of Corona and I was working under him. And yeah, I had this conversation with him and I said, yeah, I think there's something in this, right? Like, I think around that time, appliances online was going quite well, still fresh and new, but they clearly showed that in a category, big bulky category like appliances, that it is possible with the right offer. And I sort of said to him, look, I think, yes, I'm back this. I think I'll give it a go. So I left there and straight away started the business. And you know, Caroma, now one of my biggest suppliers And I've got a great relationship with them, but sort of all just came together quite nicely in the end and I sort of. I looked at myself and thought, yeah, my bathroom experience plus my digital experience, I could make this work. And yeah, eight or so years later, still loving it and I think I've made it work to a certain extent.
Nathan Bush: How many of those suppliers in the room that laughed at you originally are now suppliers to the blue space?
[Voiceover]: Competitors to me actually. Not suppliers, but yeah, they took them a few years to kind of to see us coming. But yeah, they've all done their own online play now as well. So yeah, the one thing I've kind of got over them is they've got. They're still showroom first. They still love their showrooms and that's fine as well. Like from my perspective, I'm not good at showrooms. I've got no skill sets in building a showroom. Some of these guys have amazing showrooms and stuff and locations and they understand that world. But for me, I understand the digital world. So. Yeah, but a lot of them do still hit their toes in, in the water as well and yeah, I know they've seen the success we've had and they, they sort of, yeah, maybe regretting a bit, but yeah, that's. Yeah, you can't. 2020 hindsight. Right.
Nathan Bush: Have any offered to buy you. Buy you out?
[Voiceover]: Has any offer to buy me out? No, none of them have actually. No. No, some. Yeah, no, not yet. Not yet.
Nathan Bush: It'll come.
Nathan Bush: Tell me about. Before our chat you were saying that 96% of bathroom purchases still rely on the showroom. So there's only 4% of customers in your category who are comfortable buying purely online.
[Voiceover]: Yes.
Nathan Bush: That's a pretty big call to go into this industry as an online only player, you must have been pretty confident that you can take a good share of those 4% customers.
[Voiceover]: Yeah, it is, it's very low. Yeah. Something that gave me confidence even way back then was different market but in the UK. The UK in bathrooms, it's. Back when I started was about 25% of sales were happening online. I think since then it's grown. I think now they're race numbers. I saw about 35, 36% but you throw Covid into that, that probably helped boost that up a bit. But they are across any E commerce category so far ahead of where Australia is and I think especially in bathrooms, geographical spread really hurts us just with the size, the sheer size of the products we send around the country and you've got to really be close to your customer to deliver it. Well, in the UK being much denser, they obviously have a little bit of an advantage over us, but when I looked at that, I sort of thought, yeah, Australia's got a long way to go, so 4%. Yeah. Hopefully becomes. Whether we get to 30% in my lifetime, I'm not sure. But it definitely has room to grow. And obviously being such a high percentage sales happening online in the uk, they do a really, really good job at online retail. So there's a lot to learn from that and that gave me confidence. But Les, also my business partner, he's. He's an accountant by trade. So, yeah, you look at 4% of a $30 billion market, it's a huge chunk. And with nobody dedicated to trying to get part of that. Yeah, we saw that as just the numbers do add up, like, let's see, $160 million mark or something we're going after. So that's comfortable for us to try Target as well.
Nathan Bush: Yeah. And is that your dynamic, is that you're the innovator, the big ideas guy, and Les is more the numbers and the planning side of the business.
[Voiceover]: It's a perfect relationship. Yes. So, yeah. So anything online, it's my bread and butter. But the account side of things, the finance side of things, bringing the right people together, that's his forte. It's a very good partnership. Bit of the yin and yang there in that partnership. So I like to spend the money and he likes to watch it.
Nathan Bush: So that's great.
[Voiceover]: It's perfect.
Nathan Bush: It's very similar to. Have you read Rocket Fuel? I haven't, no, but, but it's exactly the. You probably don't need to read it because you're living it, but it's the dynamic they talk about when you set up as founders is try and get one who's the. The big picture move forward, big ideas and one who can manage the day to day and the lines blur. But two very different personalities.
[Voiceover]: Yeah, absolutely. Yeah. And there's, there's so much more to an E commerce business than just the website and the digital side we've got. Majority of our staff are doing the things that many other traditional businesses do, picking, packing products, delivering, you know, customer service, finance accounts, that sort of stuff. There's. So there's two sides to any E commerce business. It's not just sitting behind a computer and in a spare room and, you know, making tons of money online. It's just not that.
Nathan Bush: Can you find me one of them? Because I'll do that.
[Voiceover]: That's what I thought this business was to start with. To be honest, I thought, yeah, I'm really good behind a computer, I think I can do this. But yeah, doing deliveries, picking, packing, I've done it all in the business. And there's so much more to running a successful ecom than just just that.
Nathan Bush: So when you had the idea for the blue space and knowing that it was a very specific market that you were going after in the bathroom category, what were your non negotiables from an online experience that you said? Look, I could imagine that you said, you can't just go out there and list a whole catalog of products. One image, trade description, buy button. What were the customer experience non negotiables that you had in mind to make the bluespace stand out in the category?
[Voiceover]: Delivery was definitely top of mind. So getting the delivery right there, a lot of the traditional and even today a lot of the traditional retailers in our space do delivery. Well, they've got their own trucks. They understand the importance of it. So we have to understand the importance of that, especially in our industry. Delivery. Yeah, we sometimes joke, not that it's a joke, but I guess we laugh sometimes when we deliver something too quickly and we get a complaint. Yeah.
Nathan Bush: Ready for it.
[Voiceover]: Yeah. Customers aren't ready for it, so their site's not ready. Their trades aren't there. They haven't got somewhere to lock it up. That is one of those real different parts or different requirements in our space. Whereas a lot of other E comms, just how quickly can I get it to you and that job done right? If they're the faster, the better in our space, it's the customer wants it when they want it, not necessarily the fastest. So getting that delivery piece right was really important. Getting the range right too. So one of the frustrations that I sort of knew from being in the industry was that customers get really overwhelmed with choice. Really overwhelmed. So if you, and I'm sure lots of people have done it, you go to a big retailer and you look at just the of chrome taps on a wall and trying to decide between 20 different base mixer taps can be quite overwhelming for people. They don't quite understand the differences between them. Some of them look exactly the same, just a different brand on them. Getting the range right was really important. And even today we're striving to reduce the amount of products we have on the website. So we've got a lot of products on there, but within each category we're constantly trying to reduce the choice because it can be really overwhelming and especially when customers doing a renovation, a full renovation, we've got a lot of things to consider. There's a lot of items they've got to buy. There's a lot of things they need to make sure look good together and also work within their renovation. So the look is one thing. Making sure they fit the specs of their renovation is another. Getting that right and still challenged today as well. I don't think we're perfect at it. I think we've got a lot of range reviewing to do and we're constantly looking at that. And delivery. We've nailed Sydney. We've got a DC here full of stock which, yeah, was another thing we kind of learned early on the business. I think when my original plan for the business was to sit behind a computer and have 3pl doing all the work for me and hold no stock. And I remember chatting with suppliers in the early days and yeah, they sort of said, yeah, great, yeah, how much stock you take? What's your opinion? Stock order? And I was sort of thinking, I don't want any stock, I want zero stock. I just want to buy.
Nathan Bush: You guys are taking the risk for me.
[Voiceover]: Exactly. Yeah. I thought surely that's the way it can happen in this space. But no, we found out really quickly that's just not the way. We've got tons of stock now. You have to have as much as you can on hand because there is that customer that does need it right now or even if they need it in three weeks. You've got to make sure you've got that product for them in three weeks. You can't promise something and just not deliver it.
Nathan Bush: Shopify have put together their version of the Australia Australian e commerce avengers. 10e commerce experts, including me, unfortunately, I think I'm the hawkeye of the group to give you tips on how to set yourself up for success this year. You'll even recognize some of the contributors from past add to cart episodes. Mark Bartzer, Kelly Slessor, Paul Waddy, Lisa Jones and more will share tips from how to create great discounts, how to boost conversion rates, optimize email and sms, even use AI to drive sales. It's all in there. I share how to set up your team for success. I can guarantee you will take at least two to three tips that you can use to optimize your sales this peak season. So put on your Spandex and join the E Commerce Avengers with Shopify's free peak season playbook. Download it at shopify.com/guides forward/peaksalesseason2023 or just follow the links in the episode show notes from the device you're on.
Nathan Bush: Did you find that in those arrangements with dropshipping partners in terms of manufacturers direct from manufacturer, they just couldn't deliver to the promises that you were making to customers?
[Voiceover]: Yeah, in the early days none of them would actually do it for us. So when I started the business, drop shipping wasn't really a thing. And especially for the. The brands that we deal with are the big brands in the market. They're used to just dropping it to a retailer or a merchant and they distribute from there. So even back then that wasn't even an option. I was getting the products sent to my 3 PL and turning them around and getting them straight back out again. That was my preferred model. But we very quickly found out that that delay and the potential risk around that is just too high. So anything going wrong in that whole process means the customer, whatever you promise the customer is not happening. So we had to quickly move to holding stock ourselves. And customer places the order and we send it out to the customer.
Nathan Bush: Got you.
Nathan Bush: How many warehouses do you have now?
[Voiceover]: So we've only got the one at the moment. We've got plans. I think it's April, May. We'll have Brisbane open and Melbourne around. For many years known we've had to move into States but now we've just really nailed what we're doing in Sydney. Everything comes from here, but yeah, a big chunk of our market is down in Melbourne and Brisbane followed and Brisbane is growing too. Just a lot of activity up there. There's a lot of people moving to Brisbane which. Yeah, you kind of don't blame them. Or Queensland and beautiful spot. Oh you up there, are you Nathan? Is that where I'm in now?
Nathan Bush: I'm here.
[Voiceover]: Right. Lovely. Yeah. Very jealous. Yeah, it's on the list of places. As soon as we've got a warehouse there, I think I'll consider moving up.
Nathan Bush: Let me know when you're in town and we'll do a tour.
[Voiceover]: Nice. Very nice. Yeah. So we will this year we realize especially with bulky freight, it is very. Yeah, it's very risky, very complex to bring it out of one location. So it's been on the bucket list for us to get done. And this is the year are bathroom
Nathan Bush: products seasonable or highly trendable? So in terms of sell through of stock, is there much pressure on you to sell through?
[Voiceover]: No, no. So it's not so good thing about this industry is that the trends last A long time. I think when we first started it was chrome and black was the two kind of colors in the bathroom. Chrome, black for your tapware and showers and then you had white for everything else. Since we started, colors definitely come more into, I guess, top of mind for customers. And there's different finishes, different material that you can put in your bathroom. So color has started to come in, but it's only a recent thing. But there is still a really strong part of the market that is chrome and white and the shapes don't really change. I think we've got tapware from suppliers that they've been selling the same thing for 20 years. And yeah, we've had others that have deleted a range after 30 years and the market just so upset by it and it's like, come on, that's such a great product. Thirty years later, people still want it or it's just come back tread. I'm not sure I got out of tread, the back end, but no. So we can sit on stock for a while, which is handy in this. I know. Unlike fashionable or fashion products where there is that tendency to need to discount on cycles to get rid of stock. We're lucky we don't have that in this space.
Nathan Bush: I suppose there's that element too, especially in commercial, where if a tap breaks or something breaks, it's like I just want the same one in so I don't have to redo the whole lot.
[Voiceover]: Absolutely, yeah. There's a lot of back of wall components that are reliant on you getting the same product again. Yeah, absolutely.
Nathan Bush: Do you do much in the commercial space?
[Voiceover]: No, we don't, no. So we know there's an opportunity there. We don't do a lot there. We've really focused on your mum and dad consumers, your home renovators, even new builds. We don't do new builds that often. We deal with a few builders that come to us and a few commercial customers that have sort of come to us and got great relations with them and they love, you know, certain elements about our business. But no, we haven't gone after the commercial market yet. And it's mainly because the products are a bit different that the commercial market wants. And there's some really great competitors in that space that service the market really well. We don't think we've nailed the Renovator customer yet. So we're sort of trying to stay focused. It is a. It probably comes up every couple of months though that hey, look, there's a huge commercial part of the market. Why don't we? We try to do something there and yeah, we've got to tear ourselves back and just say, yeah, we know what we're good at at the core and we just need to keep building on that.
Nathan Bush: It feels like you have a really strong approach to customer service and guiding the customer through all parts of the journey. You mentioned appliances online as one of your early inspirations before. I can see a lot of that coming through in your approach to your customers as well. Tell me about some of those things that you've put in place because you are so focused on that D2C customer and that home renovator that you've put in place to take that customer experience to the next level.
[Voiceover]: Yes, I'll be very reliant on our team here. So we've got a team based in Sydney. Well spread out now actually we've had a few people move during COVID so we moved a bit around the country. Yeah, we've got an Australian based team of customer experience people, salespeople and interior designers. So yeah, because there is such a small, I guess the bigger part of the market is used to buying at a showroom so they're used to having that one to one service. It is a good service too that you walk in not knowing anything about bathrooms or renovating anything. Be guided along that process. So we've replicated that with a team on chat, phone, email, whatever, choose your medium. We've got a team that can help people through that. A couple other things we've added to that theme. We've got virtual consultations as well that we can do with customers. We can again bridge that gap a bit more by yeah, we can show people samples on a video call or show them product or just leave out any questions or issues that they've got. And then we've also, I guess being online only in a very tactile world. We've probably three or four years ago we introduced a sample service for our vanities. But custom made vanities are our biggest seller. They're the biggest part of what we do and I think partly because we were well first to market online to do vanities. Yeah, we didn't realize the power of it. Early days in the business we weren't selling vanities because we thought geez, yeah, this is so hard to do. There's so many options. Customers like even the suppliers, traditionally they just print a brochure and you just go off the brochure because they're just so complicated. And we had someone starting our business and she sort of looked at it and dissected the way that it was done in a brochure and put it online. And we thought, yeah, we'll just give it a go. And it took off. You can actually do it easier online than you can do from a brochure. So that really took off for us. So we introduced a sample service because the one thing we were missing, we did a really good job specifying online. But we found a lot of customers are still going to a showroom to look at the finish and to touch it. We've had that sample service run for a while and we do finishes, wood grain finishes, the bench tops. We started to have tapware samples in. You can see, as I mentioned before, tapware colors are now a thing. So everybody does their colors differently, which doesn't help a customer decide. So we started to do samples of the colors now as well. So you can see brushed gold across three different brands is three different types of brushed gold. So trying to educate customers and help them make that choice without having to physically see the product. And just recently tiles as well. We started to get into tiles as a natural evolution in the bathroom for us. We started to add tile samples into those boxes now as well.
Nathan Bush: Are you charging for those samples?
[Voiceover]: I think we charge delivery, but then there is a code in the box as well where you can get, I think a bit more than delivery back off your first purchase. So we try to use to track those sample box and track the success behind them. Yeah, such a key thing when you're an online business, when you're choosing color, especially people are choosing color online. The amount of customers that speak to that team afterwards and just say, that is not what I thought it was. Yeah, you're looking at a wood grain color online and it turns up and natural light, artificial light, what you see on the screen, it is so different. So, you know, if we could cover all the costs, we probably would. If we knew we'd guarantee to get it back. But we're happy to give as many of those out as possible because it just helps when it turns up at the end of the day for the customer. Yeah, they're happy with what they've chosen.
Nathan Bush: I suppose it'd cut down on your returns as well, right?
[Voiceover]: Absolutely, yeah. Returns. I mean, in any industry, returns painful. But they're even more painful for us. Well, for our customer more than us. I think our return rate is really low. I think it's less than half percent, which we're really happy with. But if a customer needs to return something when they've got a tradesperson on site, it just becomes such a costly exercise for them. So it's not just the pain of getting back something big and bulky to us and the costs and. Yeah. The environmental impact that comes with that as well. It is. They usually have a tradesperson standing there saying, you've bought the wrong thing. That's your problem, not mine. I'm still giving you a bill for this half an hour that I'm standing here looking at the wrong product. They can really blow out. So we try to avoid. We do everything we can to educate their customer before they purchase and make sure they've got the right thing so that we can avoid that for them.
Nathan Bush: That level of customer service, in terms of interior designers being able to do video chats, Even things like WhatsApp that a lot of D2C retailers are playing in, combined with the sampling activity there, that's a lot of activity to make sure a customer is comfortable with their purchase before they buy. For a lot of D2C retailers, they'd be looking at that going, oh, that's a big cost that I could never take on. Do you just see that as kind of an offset to not having a showroom and the cost of a showroom?
[Voiceover]: Yes, absolutely. Yeah. We often have that exact discussion, actually saving on rent. So, yeah, high street rent that you're potentially paying for showroom staffing. Those showrooms, you can probably argue staff's a bit offset by the staff we've got anyway. But definitely we see those as things that we just have to do to bridge that gap. And I guess it comes from listening to the customers over time as well. It's something they all want. They want that physical, tactile feel of something at the end of the day. And when I say all customers too, though, I think there are a whole cohort of customers that don't use the services either, and they just buy online. Sometimes we'd love to know why they just bought online. You know, we've seen some cracker sales come in where we're all sitting there scratching our head, thinking, how did that person just specify all that themselves, not contact us at all and just transact online? And even when we try get in contact with them to ask, you know, they're not interested in telling us why. So there is that customer. Drove a bit of the belief I had in the business in the early days, that there are just those customers that don't want to talk to anybody and they want to do all the research themselves. They're Very self guided in what they do. They've got mood boards, they've got Pinterest pages, they follow their favorite people on Instagram and they want to make that decision themselves and they enjoy it and just want to buy the product and get on with it.
Nathan Bush: What's the wildest bathroom brief that you've had that comes to mind?
[Voiceover]: I probably have to ask the team on that one. I haven't had any. Too many wild ones. We were in kitchens for a while where we were building custom kitchens online for people. It was, it was an adventure, I must say. Yeah, we're not in it anymore because we found it really, really complex. Yeah, there were some odd requests there like dog kennels underneath, bench tops and stuff like that. So yeah, we just sort of said, look, we're, we try to sell kitchens online. We can't do these really highly customizable things that your local cabinet makers told you no to.
Nathan Bush: From a tech perspective, what's exciting you in E commerce at the moment?
[Voiceover]: I mean there is a lot around AI. I think everyone's. And we are too jumping on that with a lot to do with AI. But in our space, it really is visualization. So the next frontier or you know, we've started along this visualization path. We run in a few different directions at different times in the business. Years ago when I first started, I think we were doing virtual reality bathrooms when Oculus Rift had this huge. Was introduced and it was so accessible and it was so easy to make virtual reality bathrooms and we jumped onto that and then we soon really quickly realized that yes, it was an amazing experience, but it was very one off. You had to have the tech at home. It was competing against a mobile phone making a transaction online. At the end of the day, a mobile phone is easy to buy on my website than setting up a VR kit and walking around a bathroom and learning a whole new bit of tech. As a consumer, trying to figure out how to make it work to purchase was just too high a hurdle.
Nathan Bush: I suppose if you're already confused about your bathroom and then you add in, make all this tech work as well. It's pretty overwhelming.
[Voiceover]: It is, yeah. And all new for people too, right? Like and every spirit, there was no universal experience behind that virtual shopping experience. So it was quite difficult to educate people. From a cold start where websites generally now are all looking quite similar. The checkout process is moving to quite a standard checkout process which builds a lot of trust. So it's hard to compete with that. We're moving down what the. This whole AI has driven a lot of development in GPU production and speeds, and that's really opened up this whole world of, okay, now we can render images a lot faster, so we're moving down that path. We've recently launched again back to vanities being such a key category for us. We've had to constantly evolve that offer and try work out how to stay ahead of competitors there. And we've got a visualization tool that basically builds a vanity from scratch. So you make your selections, edit builds a very realistic, and I mean really, really realistic image, or I mean, it's about six images it produces of the actual vanity. And to give you an idea where that kind of sprouted from was again, the uk. I was checking out some wardrobe companies in the UK and they've got these really cool wardrobe builders where you can make these selections and see this very customizable wardrobe. And when I dug into the tech a bit more, I realized that all they did was rendered every single permutation of a wardrobe as a static image. And then every time you push the button, just change the image. So I looked at doing the same thing with vanities and we calculated that there are 500, I think it's more now there's 580 billion permutations of vanities. So we just, yeah, we looked at that and just thought, yeah, even if that was a million, right, you could never render that many images anyway, let alone hundreds of billions of images. So we realized we had to build something a bit different. And when we first built was quite slow. But with the kind of the new tech around GPUs and a new way of processing information, we've managed to get that down. So I think it's four to five seconds now. So make your selection four to five seconds later, we can show you some really high quality rendered images. And we're working to improve that now. And we're in the process of rebuilding the entire front end because as these things are always, I guess, in my experience, you launch it, you find out a ton of feedback from customers and staff alike and you've got to rebuild it again. So we launched something. The tech works. We know the tech works. We've kind of done the hardest part and now we're rebuilding the interface to make it a bit easier to use. So that really excites me. So I think one, once you can visualize a highly customizable product like that, then we move into visualizing whole rooms and I think that's where we'll start. To move into a territory where the experience online is actually better than a showroom. So it's not just matching a showroom anymore. It may become the preferred way to do things. People may prefer to do it online because it actually is better. No showroom could show every single option about it. Yeah. Very limited on space. They're huge products. But we can online show every single permutation.
Nathan Bush: And you've come a long way from the brochure.
[Voiceover]: Yes, a long way from the brochure. A long way. Yes, yes. We still get those delivered and we still need to work out how to get them online in our format, but a long way.
Nathan Bush: When you were having these ideas for AI, and I love that you gave us the examples of the Oculus experiment that you did when you were approaching AI, did you do anything differently with those lessons in mind in terms of did you go out and go, yes, we've got to develop this technology ourselves, or did you go, let's go grab something off the shelf and see how we can use that?
[Voiceover]: Yeah, it's a great comparison. Virtual reality. And I, I think AI is, yeah, still early days, but I think it's definitely got more legs than the virtual reality does. But yes, we absolutely. When the Oculus Drift stuff came out, we worked with a company and built this absolutely custom solution and the first in the world to do it. And we thought we were fantastic. But with AI, we've definitely, we've waited a little bit and we ended up going the AI we've introduced, waiting for a very, I want to call them traditional, but we use Zendesk internally for our customer support system and our, I guess our CRM at the end of the day. So all contact with customers come through Zendesk. Traditionally, they've sort of taken a little bit longer than other companies to adopt this really new technology. And obviously being quite a big organization, that kind of makes sense. We're assessing a lot of different techs out there, a lot of different AI, especially in customer experience. It's a place where we see many businesses have a lot of success making the experience better, but also bringing costs down within the business as well. But yeah, we waited for Zendesk to bring out what they, I guess launch what their version of AI was within their platform. And it really surprised us. It really took us back because there's a lot of smaller companies out there doing a lot of bolt on AI test that sits in isolation, especially in that customer service. And Zendesk have really launched a very cohesive set of tools and it's not so much the front end tools that are impressive. Yeah, we do have a chatbot on our side that does try triage questions coming in but that really wasn't what got us across the line. It was a back end efficiencies and one in particular pretty much sold the entire costs for me. When I saw it I just thought this is a no brainer just based on that one thing it can do and what it does. It got an AI tool that listens to the phone conversation and straight away just records a handful of bullet points what the conversation was about. How was the mood of the customer? They're in a good mood or the bad or they're frustrated and what was the outcome? And that alone for any business with high volume calls, like we have any other person in our business that gets a phone call an hour or two later or next day or a week later can just really quickly see what the last conversation was about and just. Yeah, you just don't get that in many businesses. I don't think the amount of times I know I have. I'm sure everyone else has. Yeah, you've called a call center and you've got to explain everything over and over again because yeah, the poor person at other end of the line is just trying to work off handwritten notes or someone else's notes against the ticket and it may or may not make sense. So that alone I think just creates a lot of efficiencies for our business but then also just provides a great experience for the customer.
Nathan Bush: That's an awesome feature. I hadn't heard of that and I could imagine it would spark some pretty big ideas from you in terms of automations that you can do from a customer communications perspective based on keywords based on mood and those options would be endless.
[Voiceover]: Oh absolutely, yeah, this is just, yeah, something like this is just the tip of the iceberg. It's like great, we've got that one part. But yeah, the automations you could do, you could send a customer a gift if they were upset or yeah, if they're happy you could ask them for a great review. You know you've got all these things you could do based on knowing how customers feel at scale too, which is. Yeah, you would just lack without having that kind of technology.
Nathan Bush: Sorry, I'm interrupting this conversation because I have a message for any sales folk listening who are in E commerce services or tech. What if I told you that you could meet Australian E commerce decision makers in their car, follow them to the gym, even join some of them in the bathroom. Well, if you sponsor add to cart, you might be able to do that legally. We have sponsorships available for 2024 right now. Come join our industry leading partners such as shopify, impact.com convert digital and farsight in helping to bring amazing conversations, conversations, events and more to our e commerce community in 2024. Email me directly@nathandecart.com for the full 2024 prospectus. And in the meantime, don't get any ideas about bathrooms.
Nathan Bush: So you mentioned Zendesk there as key to your customer service operations. Are there any other tools or tech that they may not be as sexy but you just go these are the e commerce tool that has just added so much value into our business.
[Voiceover]: Yeah, I guess I'll name drop a few I guess. Especially if you're starting up an e comm and you're listening to this Shopify. Definitely. We've got a great relationship with Shopify and we've been with them for a number of years. We did have our own custom tech CMS to start the business and I think that was 2020 hindsight. I think. Yeah. When I started the business I came from a world where we were building all our own stuff. We're building our own content manager systems, managing all the code, managing security. So I just jumped straight into that and thought spend a couple hundred grand on a website and I'll pay developers to keep it up to date. And yeah, moving to Shopify definitely made things a lot easier. They've come a long way as well.
Nathan Bush: Exactly. That was very common for, especially in those more complex categories to have to rely on custom websites.
[Voiceover]: Absolutely, yeah.
Nathan Bush: Five years ago, like look, Shopify today. Well I think it's today, depending on when this goes to air, just released 100 plus new features. Right. So it's evolving so quickly. So it's. We're in such a different situation than we were five years ago.
[Voiceover]: Oh absolutely, yeah. To tick the box on website security that Shopify. I think unless you've come from a custom dev world. Yeah. You just can't put a dollar value or asset value to that by just knowing that every day our customers have put their credit card information on the site. It is just so secure. Fraud's kept to a minimum. Yeah. It is very, very rare that a customer's credit card is ripped off on the side or customers just have that absolute assurity around that, that for me, that alone, coming from a custom world where we used to spend hours each week just making sure, patching things and making sure Hackers weren't trying to take our site down and stuff like that.
Nathan Bush: So run on the prod side on the test site and all the updates you had. Yes.
[Voiceover]: And then you get a customer phone call saying I can't check out on your site. And it's like, oh great.
Nathan Bush: Yeah.
[Voiceover]: Email is a big marketing channel for us. Our customers can be in our marketing funnels for up to 18 months. So from when you kind of think, you know, I want to do a room in my home, be it a bathroom, kitchen or other room to when you actually purchase, it can be up to 18 months. Things change. Finances, approvals, builders, that sort of thing. So email very important to us and we use Klaviyo for that.
Nathan Bush: Do you find that your customers, you can pick their lifecycle pretty easily, like, so a lot of companies will try and get a customer for lifetime value of five years or whatever it is is yours more project based, trying to pick where they are in the project?
[Voiceover]: It is, yeah. Trying to pick where they project. So we do have a surprising amount of regular buyers off our site, but they're these sort of serial renovators that are doing room at a, or possibly doing homes at a time as well. Which we do love that cohort of customers, but there's a lot of customers that we need to work out. Are they item shoppers? Are they just trying to replace something has a tap broken or a toilet broken and they just need to replace that product? Or do they need your door handle or they look at up at the color or again has it broke and they kind of break fix. So we do have a whole cohort of customers like that that we need to treat a little bit differently than send a really amazing content about renovating a whole home. Because they're not interested in that. They're just looking at replacing a product. Then you do have the customers that are doing a whole project and it may. Where are they on that life cycle? We try to work out where they've come from, I guess the attribution behind them as well. Have they clicked the Google shopping ad for a particular product that means they're probably ready to buy. Have they clicked on an ad they typed in how do I renovate my home? And they've clicked on an ad there because they're probably really early in the stage and we want their email address and we want to get them at the start of the funnel. So it is very tricky. We've got a lot of different types of customers, different.
Nathan Bush: That's a great tip though, using the channel and the intent behind the channel to work out where they are on the journey.
[Voiceover]: Yes, it definitely helps. It definitely help. So if you understand where. Yeah. What part each channel plays in that purchase process because they might come different channels over a very long period of time as well. So understanding the ideal scenario, or the ideal, I guess funnel would be that they find us on social media because they're being inspired to renovate and then they give us their email address and then they work their way through our website and then they click on an ad potentially a few months later for a particular product. So knowing where that customer is helps us tailor that communication.
Nathan Bush: Yeah, great, that's fantastic Tech stack there. Thank you for that overview. The one part that I would love to know a little bit more before we wrap up is you talked around delivery being so key for you to get right. And what's really interesting about your business is that fast isn't always the best in that it's more about accuracy. Have you put in place things like scheduled or time slot deliveries?
[Voiceover]: We've started to. I think we've got scheduled deliveries happening in Brisbane and Melbourne at the moment. We're starting to control that last mile delivery a lot more. So we can. And I think we do it as well. Yep, we do do time slots. The one thing we haven't mailed is how we get the customer to do it online. At the moment it's a phone call and try to coordinate with the customer when we can get a truck there and when we can deliver the goods and when they're going to be home obviously as well, or their trades be on site. So the one thing that is something where we're hoping to nail this year, we've just put SAP in the business as well. Talking about tech stack, it's not common for e commerce businesses to pick an enterprise ERP system but we've. We're going down that path so far. We're really happy with it as well. Finnegan was put in an ERP which I'm sure many of your listeners have. It is never smooth and it's never fun, but we're past that stage now. As well as a warehouse management system off the back of it, we've put in four warehouse managed system off the back of that, which gives us a lot more automation in the warehouse. We kind of need those two bits of kit in the business to be able to then enhance that front end off to the customer where they can select a delivery time. And yeah, being bulky goods as well, it's It's a lot more difficult than you think because we can't just open up time slots and hope for the best. A truck does get full with our products and sometimes a full renovation will take up a whole truck. And yeah, you've absolutely booked out a couple hour time slot straight away. So it's a little more difficult than we kind of hoped it would be. And I know I've mentioned appliances online before but yeah, they do an amazing job at it, but I know they've built a lot of custom tech over many years to, to really nail that. And that's kind of the path we're on though.
Nathan Bush: Yeah, great. That's a big moment in your business growth to implement that enterprise software like SAP. Was there a catalyst or a moment where you went, we're just blocked. We just can't get past this barrier unless we go down this path. Because I know there's a lot of founders who reach certain stage and are starting to go, even if it's not an erp, but maybe even if it's more product management or warehouse management starting to get into those bigger systems beyond just e commerce platforms. Was there a particular tipping point for you?
[Voiceover]: Yeah, there was. There was it. So Covid was a big tipping point for us. So during COVID I think just before COVID hit, we leased a small warehouse and goes 400 square meters. And I looked at that warehouse thinking, wow, I'm going to be for years and this is going to be such an amazing, you know, that first physical warehouse before that we're using three PLs and I was so excited by it. But then I think it was 10 months later we had to bail on the lease and get a 3,000 square meter warehouse. Because Covid hit, we did see this big boost in renovation. But not only that, obviously being an online only business, we saw a huge influx of orders come in. And I think it might have been when Sydney got locked down. I think it was around August, September when Sydney got locked down. We just saw this huge spike in sales and we didn't want to say no to sales because they're sales and as a business you just love sales. But we did for a period they have to turn off ads. We had to try slow down sales because we just couldn't handle it internally. And I think the moment for me I was in the warehouse, it might have been 11 o' clock at night. I'd worked all day in the business trying to keep things running. And then I did a six hour shift in the warehouse just to Try help them pick and pack the orders. I think 11 o' clock at night it was myself and I think it might have been Trevor, someone else out there with me. And we just thought we can't do anymore. We, we can't see numbers anymore. And we still had a pile of paper orders, at least be a hundred orders we didn't get to that were now likely going to be late because we just could not physically get to it. And it was probably that moment there that I realized we can't run the business like that if we're thinking of scaling. And obviously Covid was a very one off boost in the business. But our vision has always been to be the leading player in this space. We want to be the biggest and to get there we sort of, we had that moment in that moment that we knew to be that bigger business would need better platforms that we could customize. And I think for any E comm business, I'm sure many of your listeners get 95% of what you want out of an off the shelf tool and we had exactly that. We had 95% of what we needed. Now all the plug and play systems recovering 95% but it's that last 5% that really makes a difference. And you just can't get there unless you have a system where you can build what you want at the end of the day.
Nathan Bush: That's awesome. I think a lot of founders listening will get a lot out of that because that is a high decision point there and it kind of takes you into that next level of both the investment to do it, but also to maintain it.
[Voiceover]: Yeah, absolutely. And the amount of people are still selling crazy even I look back and I think, geez, could we have done it any other way? Like did we have to make that big leap? But four months later, no regrets Right now I've got no regrets at all. So just even just small things we want to do with the warehouse rollout, it is all possible and it's just, it's a good feeling.
Nathan Bush: Awesome. Josh, we've gone all over the place, made such a great chat. If there was one lesson as a founder that you've been on this journey since standing up in front of that group and them calling you crazy for wanting to go online to where you are today with the blue space, what piece of advice would you have to other E commerce founders?
[Voiceover]: Yeah, I think probably, I think what I touched on before, but it just can't be run from behind a screen. I think there's so many elements to an E Commerce business. There's this whole physical component of making sure your products get to the customer and making sure they're happy with the product. And probably off the back of that, I'd say, yeah, a lot of people I've spoken to in the industry at various stages, try not to do it all yourself. I think I have, yeah. Many times I've been driving utes around, you know, dropping things off or picking things up, and yeah, it's all well and good to get yourself out of trouble, but it's not. You shouldn't try to do everything yourself. I think. I think you need the right people in the business to take things off your hands. And we've. Yeah, there's been real key moments in the business where we've noticed we've brought the right person in to do the right job and take it off my hands or Les's hands. And they're the right person, they've got the right skill set and you see a material leap in the business performance following that person joining. So I think that's recognizing what you're really good at and what you could do but you probably shouldn't do. I think that's really key in any. Not just an E Commerce. I think it's key in any business and it can hold back growth if you don't bring those people in. But I do recognise at the same time, it's a very hard thing, especially with expensive people, to bring someone with really high skill sets into the business. It's a hard decision to make. And as a founder, when it's your money, it's even harder.
Nathan Bush: Yes, absolutely. Fantastic advice. Josh, what are you excited about for yourself and the team at Bluespace? What's next?
[Voiceover]: I think we touched on the delivery side of things. I think this is our year to get that right, at least in Sydney, Melbourne and Brisbane, our three key markets. I think that's the most exciting thing because if we're going to get a complaint from a customer is delivery. It is, yeah. The products arrived broken, it's arrived late, it's arrived early, all those things. Bulky freight is difficult. It's been a real challenge since day one for the business. I know it's a big challenge for any business in bulk freight. If you've got a small parcel and you send it with Aussie post, it's amazing. And we send a lot of small parcels with them and we rarely have issues, but it's the bulky freights that we know we can solve and we just know it takes a lot of hard work. But that's the most exciting thing knowing. Yeah, we're going to tackle it this year. We're going to give it a good crack at trying to fix it.
Nathan Bush: Very exciting. Well, if you're in Brisbane, let me know. And for everyone else, if they want to get in touch, either find out more around what you're doing at the Blue space or you personally, what's the best way to get in touch?
[Voiceover]: Yeah, look, if you're looking to do a renovation, probably don't get in contact with me. Just reach out to the team via the website. We've got some great people here, interior designers and sales staff that will help a lot better than I will. But look, personally, LinkedIn or. Yeah, LinkedIn is probably the best place actually. Just reach out on LinkedIn. I love connecting with new people, especially if there's any founders out there that are, you know, just want to shoot something across and have a chat. Really happy to have a yarn with anybody.
Nathan Bush: Legend. Josh, thanks for joining us on Add to Car.
[Voiceover]: Thanks, Nathan, appreciate it. Thanks for having me.
Nathan Bush: I really hope that some of those people who laughed Josh out of the room originally got a chance to listen to this chat and I hope they're crying into their porcelain thrones as we speak. All right, if you want to give your bathroom a little shake up, head on over to thebluespace.com and you can get 10% off site wide until the 31st of May. Simply use the click code add to cart all one word in the checkout. Remember, if you're not sure, you can start by talking to one of the Blue Spaces. Online consultants Tell them Bushy sent you. They won't have a clue who Bushy is, but tell them he sent you. All right, here are the three lessons that I took from the conversation with Josh. Number one, backing yourself isn't reckless. Josh didn't strike me as the reckless type. And yet in starting the Blue space, he went against the wave of the feeling in the industry. Even though he didn't get a vote of approval from his peers, his years of experience told him it was the right move. And he wasn't wrong. He backed his skills and knowledge, but he wasn't reckless. Number two, automating customer service. I loved Josh's overview of the Zendesk transcription service. The ability to summarize key messages from customer service calls and even capture categorize the mood of the customer is an amazing feature. This really standardizes the data that is captured across the organization and allows smart automations. I could see Josh's head was buzzing in all the ways that they could use that data. So keep an eye on these features with your customer service platform. It could be a game changer for your business. And number three, if something's really hard to do well, that could be your differentiator. There are two ways most startups begin. They get all the fundamentals right and lift the overall standard for the industry or the category. Or they totally disrupt with one or two killer features that just stand out in market with the fundamentals being possible. The Blue Space have actually managed to do both by revolutionizing the way we buy vanities, for example, moving from that catalog system to a more automated and graphical design customized for you. They have something totally unique without scrimping on the fundamentals of delivery and customer service. Very impressive if you can get both a disruption and the fundamentals right. Thanks for joining us today on Add to Cart to listen to all our e commerce conversations now in the hundreds. You can head on over to Add to Cart. There you can also join up to our free private Slack community to share e commerce ideas, tips and questions with other listeners. You can also subscribe to the Add to Cart weekly newsletter and browse some of the video highlights from our chats. There is a lot there that's add to cart.com and if I can ask you one thing before you go. If you enjoyed today's episode, make sure sure you share it with a friend or a colleague who could benefit or leave us a review. It really makes a difference. Thanks again for listening and until next time, keep those customers adding to cartoon.
