Merlene McGregor: Marketplaces is actually the inflection point or the point of decision making. I don't think they need to think about is my experience as good as Amazon. I think they need to think about is it as complementary to Amazon as possible. Nothing really gets sold, you know, if you're more than probably six rows down.
Speaker B: I'm Merlene McGregor from Pattern, and in this episode of Add to Cart, I shared why marketplaces are where Australian consumers decide and why brands that stay passive
Merlene McGregor: are quietly losing ground.
Nathan Bush: Hey, it's Bushy joining you from the land of the terrible people in Brisbane, Australia. Today we have a bonus episode for you, the first of a few bonus episodes that will be coming your way. And I'm really excited about today's episode because it is built around one of my favorite pieces of research every year, Patton's Marketplace Consumer Report. Anyone who is a reader of my newsletter knows that this report gets a mention every every year because it's such a brilliant barometer of which marketplaces are really getting some traction, which ones might be shrinking away and what you need to do for your business to stay relevant in a world where marketplaces, let's be honest, are really becoming dominant. If you are responsible for e commerce or sales strategy within your brand or your retail business, marketplaces are no longer a sideshow conversation. They are where discovery, trust and increasingly decision making is happening for consumers. To talk us through all of this, we are lucky enough to be joined by Merlene McGregor. Merlene is the Managing Director for ANZ at Patton Patton. If you don't know them already, they're a global e commerce accelerator working with brands across marketplaces D2C and omnichannel retailer. We are so lucky to have Merlene here to talk us through the report in a level of detail that we've never been able to get to before. In this conversation we unpack what's actually changing in how Australians are shopping on marketplaces, which platforms are growing, which ones are stalling, and the role of marketplaces such as Amazon, Temu Shein and retailer LED marketplaces which are evolving in the customer journey. We also talk about where DTC still matters, how brands should think about discovery versus conversion on these channels, what social commerce really looks like in Australia right now, and how to get ahead of the game for what is likely to come, and how to approach marketplaces without blowing up margin or complexity in your business. We're really careful not to just make this a theory episode. It's got some brilliant strategic thinking from Merlene in where all of this is actually happening and where retailers can get started. Today we have the Pattern Marketplace Consumer Report linked in the show notes. If you want to read along while we're talking, you can download that for free right now. But let's get into it. Here's my conversation with Merlene McGregor, managing director for Anz at Patton. Merlene, thank you for joining us on Add to cart.
Merlene McGregor: Thanks for having me, Nathan. It's great to be here.
Nathan Bush: What a special privilege. Not only have we got Pattern on board as our silver partners for the year, which I'm very excited about, because you bring such amazing expertise, especially around marketplaces. As we'll find out today, we get to have you on for one of my favorite reports of the year and that's Pattern's Marketplace Consumer Report. It's a bit of an annual staple now, so we're going to dive into that. But to kick us off, I want to understand from you, as you got this report in your hands for the first time, what was the biggest shift that stood out for you in how Australians are shopping right now?
Merlene McGregor: Yeah, I mean, this report is the 8th edition and it's put together by our gun team of researchers. And I think the biggest thing for me or the biggest takeaway was that everything, all the indicators that we had been seeing for the last couple of years around the importance that marketplaces is starting to play in the lives of, you know, the Australian consumer and all the indicators that we're seeing, you know, starting to build in terms of confidence and decision making, we're really seeing those actually consolidate. I think in this year's report, I think over 90% of Australian consumers who shop online have shopped from a marketplace place, I think, in the past 12 months. And even though we have discovery across a range of different channels, And I think 2025 really saw the explosion of both AI and I think that top of funnel social traffic really starting to go downstream into conversion channels. What we're seeing is that marketplaces is actually the inflection point or the point of decision making. And I think a lot of that comes out in terms of trust and convenience.
Nathan Bush: And when you're talking marketplaces, can you give me an idea of the breadth that we're talking there? Like, what do you consider a marketplace?
Merlene McGregor: Yeah, that is such a great question. And it's a question that we thought would might be quite confusing, I think, in our report. So we ended up asking, I think, Australian online shoppers what they thought a marketplace was or who they thought actually had a marketplace. And it turns out that Australian shoppers are quite savvy. They clearly understand the difference between buying I think now from an actual retailer and then also what a third party seller actually might, might be as well. So a marketplace can be a something like a baby bunting, which they sell their product on their website, but they also invite a number of trusted third party retailers, brands to also utilize their website to sell their products as well.
Nathan Bush: Okay. And then obviously we're talking all the way through to your Temus and your Amazons of the world as well.
Merlene McGregor: Absolutely. So I think the most well known marketplace in the world would be Amazon. And I think in the last few years Temu and also Shein have really risen to the fore. But also I think a lot of Australian brands are now jumping onto the marketplace bandwagon. So you've got jb, you've got Woolies, you've got Myer, you've got David Jones. I think the latest to come to the party is also Country Road as well. And so they're all taking advantage of their massive brand recognition and traffic.
Nathan Bush: A lot of those brands that you mentioned there are, are, dare I say it, legacy brands. They're brands that have been around in Australia for a long time as big retail brands. They've all added marketplaces on board to differing levels of success from the outside. Is there something in that? Is that as you get, you know, more established and you're looking for more market share or range, that adapting a marketplace onto your existing model becomes a great option?
Merlene McGregor: I think for some brands or for some retailers it is a great option in terms of expanding catalog and range. I think when you're a vertical brand, I think it's quite expensive probably to do product development and to, to develop npd. So I guess what they're doing is they're utilizing the strength of other brands to also bolster or further their own catalog. I think that can be done in a variety of different ways and as you mentioned, to varying degrees of success. What we're probably seeing is the marketplaces that actually stay stick to probably buying in brands that aren't theirs or inviting third party sellers to their marketplaces are probably having more success than the brands that have home brands and then inviting third parties in.
Nathan Bush: Okay, that makes sense. All right. I'm sure we're going to talk more about that. But as a high level from the report, I'm really keen. This is always my favorite part of the report, just going through that page which goes, oh, which marketplaces are doing really well in growth and which ones are struggling. From your perspective in Australia, which marketplaces have had the most growth in the last 12 months and which ones might be struggling a little bit?
Merlene McGregor: Yes. So I think Amazon continues its tear. I think what we had was 60% of online consumers actually shopping from Amazon in 2025. And even when you look at the purchase intent, another 10% of consumers say that they're actually going to purchase from Amazon in 2026. So that means 66% of online consumers are going to purchase from Amazon in 2026. If intent equals behavior. We've also seen Shein really accelerating and expanding, especially past their fashion and their fashion core, into more beauty and wellness as well. And they're having some really good success. I think with that strategy.
Nathan Bush: It feels like the Shein and Temu hype cycle has died down a little bit, at least in the mainstream coverage, but it's obviously not being reflected in the. In the transactions and the numbers.
Merlene McGregor: Yeah, I think what we're seeing with TEMU is I think just under 50% of consumers actually shopped on Temu in 2025. I think what we're seeing is that purchase intent drop. And I think as we discussed in our 2025 report, Temu really isn't winning on the trust stakes and probably on the experience stake. So we're probably seeing a bit of that retraction because of logistics and offshore shipping. And we might also be seeing some of that retraction because of Amazon haul. So Amazon also launch their own, I guess, Amazonian version of Temu with Amazon halls, and they're seeing really good results there too. And then we're seeing, you know, the likes of ebay and Kogan just starting to retract slightly, I think, really trying to find their niche rather than, I guess ebay was the number one marketplace, you know, 10 years ago, but we're really starting to see traffic diminish and probably their catalog in their first party catalog also diminish over time.
Nathan Bush: Do you see much reinvention in the wings for ebay?
Merlene McGregor: Yeah, I think they're just trying to specialize more and really create more of a niche. They're going back to, I feel like their secondhand goods strength, but with a bit of a twist. So really starting to invest in things like collectibles and also starting to invest in secondhand luxury goods as well, which I actually think is a really positive move for them. And obviously with Catch and My Deal, you know, their demise, I think recently as well, we're starting to see that real middle layer of marketplace be squeezed. And unfortunately, a lot of that squeezing is coming from homegrown marketplaces rather than international ones.
Nathan Bush: Okay, that makes sense.
Merlene McGregor: Yeah.
Nathan Bush: One of the things that I just realized, as was talking to you here and when you brought up the ebay example, is that obviously Facebook marketplace is not part of this. The peer to peer selling secondhand, we kind of leave that to the side. We're just talking about retail marketplaces here.
Merlene McGregor: Yeah, that's what I mean. That's what pattern strength is as well. So we don't deal in the secondhand space or we don't work within that space. I think that has a whole life to itself. I think when you think about marketplaces that actually really focus on recycling and sustainability, this report really focused on new with tags, so to speak, to actually use an ebay term that makes sense.
Nathan Bush: And in terms of those marketplaces, retailer marketplaces that you talked about, baby bunting, Myer, Bunnings, et cetera, are there any in there that stood out to you in terms of retailers who are doing it really well and getting the results?
Merlene McGregor: Yeah, I think for me, once again, I hate to beat the drum, but I do think that Amazon, from an experience and credibility point of view, is just miles ahead of the other marketplaces at this time. I think it's no secret how they entered the market, I think nine years ago without much fanfare or probably a little bit of disappointment. But I think what they've done over that time is they've really built up their logistics, their test and learn approach and their unwavering commitment to what they've seen in other markets work and bringing that here to Australia. So I think from our perspective, from a macro perspective, Amazon is the marketplace that probably fits the widest number of brands in Australia today. And having said that, I think, you know, a Bunnings is doing really well on width and range, but I think they're also just still trying to find where their traffic is going to land in terms of conversion as well. And also that mismatch between what's available in store and what's available online or in their marketplace can also lead, I think, to customer disappointment at some stage.
Nathan Bush: Yeah, you see it all over the Reddit forums, don't you? In terms of, you know, I see a lot of frustration at the moment with retailers offering an online marketplace that doesn't match their in store offering. And obviously that's the idea of a marketplace. Do you see that trend continue? Do you think that consumers will get used to it after a while of like, there's this whole endless aisle available online that's not available in store or do retailers have to get better at educating people on what is online only versus what's in store?
Merlene McGregor: I really think the responsibilities on the retailer from a customer experience point of view, from a UX perspective, there are some really great companies out there that can help you with signposting. I think so much better about what is something that is available widely, you know, both in brick and mortar and online and something that is an online only purchase or product. Product I think yeah, absolutely. The responsibility lies with the platform. Customers are even more so now than ever before. They're quite unforgiving I think when it comes to availability and logistics. I mean we found with our research that customers who shopped on Amazon, if they couldn't find a brand that they were looking for, almost half of them actually purchased a similar product from another. Instead of them choosing the brand, they actually ended up choosing the platform. And I think that comes into because of all the convenience and the trust and just the, you know, the one step checkout and all of that sort of thing. I think we've got so much to learn, I think from that piece of customer experience that we need to flow through even into our DTC experiences.
Nathan Bush: I think that's a really interesting take because I couldn't. Well, I know that as a retailer it's daunting to think that you've got to take on Amazon if they're playing in your category and playing really strong. And the idea of doing everything that Amazon does is often unrealistic. You know, to your point Merlene around they're doing great at logistics, they're doing great at customer communications, they're doing great at product range. Product data is is there when you are advising brands on the customer journey and where they might make the biggest impact against Amazon. How are you advising customers to think about that? Are you saying to try and compete with Amazon in certain parts of the customer journey? Are you saying actually just join in on the Amazon party? Where do you usually come from?
Merlene McGregor: Well, one thing we tell our clients our brands is that you can never out Amazon Amazon and there is no point as well as a market entry strategy or as a standalone channel strategy. That's not where we see even marketplaces fitting into any brand journey. I think now what we will find though is that D2C sites are going to become places of trust and credibility and confirmation. Your customer will not necessarily always discover you from your D2C site. First you've got AI, you've got social, you've got marketplaces, you've even got the retailers that you as a brand might also sell to. But what we found is that even people who shopped on Amazon and discovered a brand, or who, people who shopped on marketplaces and discovered a brand, but mainly Amazon, half of them actually went back to the D2C website as well. It probably either to be to check information, to maybe source another color or something else that they couldn't get on Amazon, or also just to confirm that the brand was credible, so to speak. And so we need to really think about that next gen of where DTC brands or DTC websites, what they're actually going to play in the next role of the consumer journey. So if they're not the starting point, if they're the middle point or the end point, how do we make sure that you know your brand is showing up as strongly as possible? Even from a discoverability point of view, we're talking to brands now about how their brands are showing up on AI. You know, is it crawlable by, you know, all the bots or all the platforms? What does ChatGPT say about your brand? You know, what does perplexity say about your brand? There's just so much to think about, I think, for brands in this day and age and just realizing that there's fragmentation, but there's also consolidation when it comes to conversion and credibility. And I think that's what brands need to think about. I don't think they need to think about is my experience as good as Amazon. I think they need to think about is it as complimentary to Amazon as possible.
Nathan Bush: So when you're talking to clients, do you kind of think about it as two separate strategies now? Do you think about it as discovery? Because probably, gosh, five years ago we were like hearing all these stats from the us Around X percent of people start their product discovery search on Amazon as opposed to Google. And here in Australia we're like, oh, we're so far away from that Google. Still everything. Do you think about it as where do people discover your products versus where they convert? Because obviously you want that discovery across networks as you to your point, around AI and everything else that's coming, the discovery can be so broad and even that first purchase doesn't really matter where you get it, as long as you get that first purchase. But are you thinking then you want that retention and reactivation through your own channels or you don't care?
Merlene McGregor: It really depends what kind of brand you are. Amazon is great for discovery. So as I said around half of people discovered a brand basically on Amazon. But then half of those people then went to the brand's DTC site, either for confirmation credibility or it could even be to check out, depending on what kind of brand you are and what your product is. I think that there is absolutely an opportunity for you to capture a customer who wants to shop only on Amazon that is their primary shopping channel. I think subscribe and Save is an amazing way to capture a customer. I mean, I know, like, I have bought the same brand of washing powder for three years because it's on subscription and I never have any reason to look anywhere else for it. So it really depends what kind of brand you are. If you're a vitamin and supplement brand, if you're a beauty brand, if you're a CPG brand that requires high replenishment, I actually think capturing your customer on Amazon and keeping them there, there is absolutely nothing wrong with as long as you have another channel or number of channels that you're also working in the same vein to make sure that you are growing your brand and your market share via lots of different channels. I think what we're finding is, you know, fragmentation is happening I think, once again, at that top level. But customers are starting to be quite selective about where they'll check out from.
Nathan Bush: Okay, that makes sense. And so you called out there a couple of categories, such as beauty, fmcg, that are really ripe for Amazon discovery. Are there any brands that come to you and go, hey, we're in these kinds of categories and we think there's an Amazon opportunity. Like, actually, those categories, they're just not as good on Amazon.
Merlene McGregor: Yeah, I'll probably get some calls about this, I'm sure. Maybe, maybe from certain category managers. Fashion, something with the color palette that's seasonal that you need to be in and out of, that maybe requires an experience or a hand feel. I don't think works particularly well on Amazon. There are some marketplaces that have nailed it. Iconic comes to mind. But I think Amazon, you know, if you're selling socks and jocks, when it comes to, you know, you want to call it fashion, if you're selling socks and jocks, or if you're selling something that is easily explainable and size and fit aren't an issue, I think that's where marketplaces, specifically Amazon, could work okay or work well. But if you, you know, if you're selling something that requires, I think, something quite emotional like a fashion purchase, I think that's better done via other platforms.
Nathan Bush: So it's more the hammer and nail products. It's like, I've got this problem, I need a solution. Amazon will make it quick, painless, easy to get through, whereas fashion probably needs a little bit more inspiration, a little bit more of a story behind it, a little bit more detail. When it comes to product details and product data, then, for Amazon versus, say, your D2C site, do you really encourage customers to think of it differently if people are more at that logical frame of mind on Amazon, are you writing different things on Amazon vs PDP's?
Merlene McGregor: Such a good question. I think our copywriters, we've got a number of copywriters who work on both D2C product descriptions and Amazon product descriptions. I would say that the product descriptions written on Amazon are generally at the bullet point level, much more efficient in terms of communicating features and benefits. But there are also other places on the Amazon PDP and through a brand store where you can communicate much more of the visual element of your brand. We work with a number of beauty and wellness brands. They've had enormous success on the platform, but that's because we've structured, I think, the presence of the brand to both fit in with how Amazon requires your data to be structured, but also really leverage, like brand store, A plus content and all those elements that I think a lot of brands don't necessarily either know that they exist or don't have the expertise to be able to design and maintain, you know, in a regular manner. So I would say that for me, brands that work really well on Amazon, beauty, wellness, VMS or vitamins, mineral supplements, you know, electronics, automotive, toys, games, a heap of baby, heap of homewares. Like there's, you know, to be honest with you, most categories work. It's just really about can you drive enough eyeballs and can you drive enough interest to the platform whilst your brand or that particular category is getting started? And there are, you know, some categories that still aren't optimized on marketplaces or on Amazon. And there are categories that I think are quite mature.
Nathan Bush: Yeah, I've played with a number of Amazon brands in Australia who also have a US presence and one of them was actually using patterns technology to help identify insights and trends around customers and what they were searching for and how they were finding products. And one of the most amazing things is by running it through the lens of what customers were searching for on Amazon, gave them insights into what they should be putting on their pdp. So even sometimes it could be things that have nothing to do with the product or they would Never think of it as a benefit such as, I don't know, say, gluten free. And it's never come into the realm of what they'd considered. And all of a sudden they're like, people are searching for gluten free in our category. If we make one of the features or the benefits of this product gluten free on Amazon, that's actually going to get us eyeballs, even though we've never talked about gluten before.
Merlene McGregor: Yeah, it's really what we call, like, I guess, adjacencies. So our technology. So we've got quite a few pieces of technology that we've developed over the years. We have about 300 developers who are constantly working on our tech. And we have one piece of tech called Predict, which basically helps you monitor your brand on marketplaces. But also it goes one step further where you can actually also understand how people are actually finding your brand. Like what you just said. Like, I've got a really good example like Tumi, which is a luggage brand we work with in the US and we actually found. This is a couple of years ago now, but we actually found that people who searched for the term Rolex on Amazon actually ended up converting very highly on the Tumi product when it came to checkout. And it's not like Amazon, I'm sure they probably don't sell real Rolexes, but it just showed the mindset of the customer and probably that upwardly mobile consumer who's looking for a luxury product. And Tumi's also, you know, a luxury luggage brand. And yeah, that was actually something that, you know, we kind of extrapolated into lots of different categories and lots of different brand searches. So you'd be amazed at what, at times people associate your brand with out into, you know, either Google or Amazon or, you know, other places that they can search.
Nathan Bush: Yeah, that makes a lot of sense. And we know Amazon's not short on data, right. So there's probably a lot of insights there that we might not have found in D2C.
Merlene McGregor: No, that's true. And what we've tried to do is really leverage that Amazon data for our own brand benefits. So there's certain information that isn't available to us, but there's also a lot of information that is available to us or that we have serviced ourselves or used even, you know, the information that's available to us from our own brands to be able to create really interesting category viewpoints and category stats that we're really excited to both, I think, share in the consumer Report. But also when we're working with a brand, we start talking with the brand. We can demonstrate to them a lot of category insights that they wouldn't have available to themselves if they're not already either on Amazon or if they don't know where to find it.
Nathan Bush: Yeah, and I think that's a big thing, right? Is you talked about discoverability early on. I could imagine there's a lot of retailers and brands who come to you and say, merlin, we finally made the call, we made the decision at a board level. We've got to start selling on Amazon. Like, great, here are our options. Got some different options, especially around fulfillment, warehousing the rest. How do you talk around discovery on Amazon? Because I think for a long time we talked about winning the buy button, but it's become a lot more complicated and diverse than that. Especially when you start talking about Amazon ad networks, thinking about using their AI bots, all the different types of content. Where do you start when you talk about being able to be discovered on Amazon, it's not good enough just to list your products.
Merlene McGregor: No. I think, number one, it all comes down to making sure that your brand and your product is safe on Amazon. And what I mean by that is that the brand is safe. So making sure that your distribution contracts are set up correctly so customers aren't also having to make decisions about who they're going to buy your product from. So is it from you, is it from another seller and that sort of thing. So making sure that you can try and be the only person selling your brand on Amazon is actually really important. I also think from a discovery point of view, making sure that you have something called retail readiness. So making sure that you have, you know, mandatory like at least six images, you have all your bullet points filled out, your titles are structured correctly, you have got all your SEO down pat by backend and front end, you know what customers are actually searching for for your product to be findable. And you are also making sure that your catalog is set up in the most robust way. So none of your products are actually just hidden behind parent asins and that sort of thing. So really there's a lot that goes into it that's both technical but also creative and design led. So making sure that you know you as a brand have all of those resources in place or you know where to find those resources I think is really important as well. The technical aspect, normally that's what scares people the most, like upload files and this is getting rejected and I've had to log Something with the help desk xyz. But the art of it really comes into almost the creative and the design piece. When you don't only just upload a product according to the tech specs and what the product actually is, but you know why people are buying that particular product and you understand what they're searching for to be able to find that product as well.
Nathan Bush: Okay, that makes sense. And then there's a lot to do there.
Merlene McGregor: Right.
Nathan Bush: Because you're talking product, you're talking logistics. Do you jump straight into marketing as well when you're launching or do you give it time to, to find its place within Amazon before you start putting in sponsored ads or sponsored search or other pieces to show up?
Merlene McGregor: Yeah, so it works really differently on Amazon compared to, let's say Google.
Nathan Bush: Yep.
Merlene McGregor: So Google have always maintained that organic search and paid search are completely separate and never the two shall meet and one does not influence the other. At Amazon, one definitely does influence the other. And so what we recommend is generally clients quite a strong launch budget. Once you actually launch your catalog to ensure that you get that flywheel effect going. So the way that Amazon works or the way that the algo works is really as soon as a product starts getting eyeballs and it starts getting conversion, it actually moves it up the organic listing or bestseller rank. So it starts to move up, you know, from page 14 to page 2 to page 1 and nothing really gets sold past page 1. Nothing really gets sold, you know, if you're more than probably six rows down. So ensuring that you actually have a healthy launch budget and marketing budget to put towards your products as soon as they launch is really important. I think what you can do to really maximize that budget though is once again I talked about retail readiness. So making sure you've got your imagery, your content and your logistics all set up to ensure that, you know, as soon as you are investing money into those Asins or into those SKUs, you're actually maximizing the value from that too.
Nathan Bush: Yeah, so when we think about launching onto Amazon, it is really a whole of business activity.
Merlene McGregor: Yeah, 100%. I mean it covers so much. I think a lot of the time, a lot of brands, I'll put one person on it, it's only a sales director. So depending if you're selling to Amazon or if you're selling to a third party distributor like us, or if you're doing it yourselves, maybe you'll have one or two people. If you're lucky, you've got two and they're doing everything. So they're managing the content and managing the uploads, they're dealing with customer service, they're working on fulfillment, they're working on fba, they're working on reverse logistics as well because at times you will have returns. So if you don't have the right tech and if you don't have the right processes in place, it can be quite a labor intensive endeavor. The number of brands we've talked to who their finance teams are just so thrilled to have us on board because it at least just takes away the backing. And for thing, I think when it comes to the admin side of Amazon, I think, you know, brands are really grateful. And having said that, we've worked with some big brands who globally work with Amazon. They've got the processes down pat. But what they might not have is the advertising firepower in market to be able to enable their brands to fly.
Nathan Bush: Yeah, that makes sense. Now Amazon's obviously the huge giant and like you said in the marketplace, Consumer Report is growing so rapidly and is not slowing down. In Australia. I want to touch on social commerce because I think this is a really interesting space for us, especially in Australia and I'm keen to get your view on it because obviously Patton has a view over international markets, especially the US where social commerce might be very different. In Australia it feels like we're on this continual precipice of social commerce becoming a thing. Whether it's TikTok shop is finally landing here or it's that we're going to be able to buy through Instagram or that Live shopping is coming because we're seeing it in Southeast Asia and live shopping is going to be a thing. This is going to be the year or I don't know, the metaverse is finally going to arrive. Where do you see the impact of social commerce in Australia? Do you think it is far off?
Merlene McGregor: Yeah. So that is the hundred million dollar question. I actually think it's the $100 billion question. Probably TikTok haven't confirmed whether or when they're launching in Australia. I think we know it will happen. We just, just don't have a date. Social commerce is here, kind of half in, half out. You know, you have to go off platform or you know, you're kind of wondering where you are in the journey. I think when you're clicking on certain links and that sort of thing.
Nathan Bush: Still a marketing channel?
Merlene McGregor: Yeah, it still feels very much top of funnel and I think we do a monthly almost like a baseline report of, you know, kind of Google channels and how much they contribute to revenue. And I think social at the most sits at anywhere between, let's say, 7 to 10% of revenue. What we're seeing, though, in other markets, and I think we're really backing, I think, the social commerce, the advent of social commerce, I think both here in Australia and globally is what we're seeing is that more and more social is both becoming once again a discovery engine, but also a conversion engine too. So probably competing a little bit with the marketplaces or with Amazon in terms of that topping and tailing of the consumer journey. I think social commerce has enormous legs to create demand and also keep consumers engaged. I think in the US what we're seeing is, you know, when it comes to even something like beauty, I think with TikTok shock, I think 42% of DMV, I think, has come from wellness and beauty. Yeah, it's huge. So we've backed social commerce in a big way. A few years ago we bought a platform called Creators and that is a platform that enables you to find influencers en masse, to communicate with them and to pay for them within platform. And then just recently we bought a. Called Next Wave and they are a top TikTok agency in the US a top TikTok shop. Try saying that fast. A top TikTok shop agency in the US and we will integrate that into our operations and we'll also drive on platform conversions, but we'll also use that agency and the platform creators to drive traffic as well to our marketplace listings too.
Nathan Bush: That makes sense. In the US are there any brands that you think are doing especially TikTok shop really well, that you think if you're in Australia, you could look to these brands just to have an understanding of how they're approaching it?
Merlene McGregor: Yeah, I think Oura Ring does it exceptionally well. I haven't succumbed yet, but every time I jump on, I get served lots of ads and lots of content just around, I think. Once again, I think we're talking about that wellness piece. It just fits in perfectly, I think, with the ability to recruit influencers who basically also become affiliates and advocates of the brand. It's backed by, I think, data and science. So there's lots of credibility there that you can actually play on via these social channels, which I think is really important and I think it's really an understandable product as well. So it's both emotional, but it's technical. So I think you really grasp what it is really quickly and what it does. And I think they're probably the, you know, the market leader when it comes to wearables. That and probably a. What's it called? Fitbit.
Nathan Bush: That's a great example too, because they're not. Not a low price product.
Merlene McGregor: No, I mean TikTok shop has worked really well for almost like impulse purchases, but I think it can also work really well for high value purchases if you have the right influencers, creators and ambassadors talking about the benefits of the product. And if you trust those ambassadors and those voices, you are more likely to either make an impulse purchase or make a considered purchase. Because you know, you're finding out about products in so many different channels in so many different ways now. I mean, everyone's heard of Oura Ring, but where you finally decide to check out I think is becoming increasingly competitive and important as well.
Nathan Bush: And is that your advice to Australian brands who are getting ready for TikTok Shop? There's a strong feeling that 2026 is going to be the year of TikTok Shop. But I say that with bated breath because we've said that about 2024 and 2025. And as people get ready, even the rules in the US keep changing. I think last month we had some changes to fulfillment options in the us what you can do, what you can't do, especially around self fulfillment in terms of Australian brands getting their head around how to set up for this. With TikTok not giving too much away, is it kind of secure your influencers and your content partners first and foremost so that by the time it gets here, you've got a crew ready to go with you?
Merlene McGregor: I have more brands contact us about launching on TikTok shop than they do about actually just doing TikTok advertising. And I love the enthusiasm, I love the passion. It's awesome. Like we are talking to so many brands about TikTok shop is this year. I don't know, I don't want to put any hard and fast, you know, declarations, but I would hope that it would either be late this year or the start of next year. But my biggest advice to brands is always just let's get the content engine happening, let's get the content machine happening, let's get your operations in place, let's get your logistics in place first. TikTok Shop, as soon as it does come, everybody will be scrambling. But if you've done that work up front, just figure out what it looks like and to figure out what you need from a content perspective, I think you'll just be so much further ahead and then it will feel less jarring and it will feel less obtrusive. Yeah. Then if they announce the launch tomorrow, how many brands will be ready? Not that many I don't think. I did notice something really interesting though around social commerce and this is why I think it's just going to take off in Australia in a big way is that I did see a very well known, very well respected cosmetics brand
Nathan Bush: drop them, drop their names, go on
Merlene McGregor: searching for a social commerce manager and I think if anyone's going to be on the forefront of that movement and once again we've talked about, you know, TikTok shop and we've talked about it's the marriage between wellness and beauty is just so strong. I think if anyone's going to know they're going to be able to pick it. I mean they've picked up every other kind of, you know, brand, big brand launch and that sort of thing. So I think, you know, Joe and Pete would know.
Nathan Bush: And if you were pulling a social commerce manager into your team as a new role, what do you think is some of the unique skill sets that person needs that might not have been in E commerce teams or.
Merlene McGregor: We held a future of social commerce morning a couple of weeks ago and I think one of the biggest takeaways from some of the heads of social and heads of digital around the table was that you're not just looking for somebody with social media skills who can architect a great ad and that in itself can be quite technical and really difficult. So shout out to all social media managers out there. This isn't throwing shade on them, it's more so about the extension of their skill set. It's going to have to be so much more of a commercial skill set because you're now making decisions about range, you'll now be making decisions around product placement, what to put forward and you might end up having your own P and L or you might end up having, you know, running your own subset channel that could be as powerful as the website. So you and the e commerce manager could actually both be responsible for sales driving channels and you might not report into the E commerson anymore. You'll be reporting into someone different. So I think the skill set of the social commerce person will be a unique blend of both technical and they'll probably need to know a lot about advertising but they'll also need to know about probably catalog setup, product margin and also have that unique blend of probably marketing as well where they'll have to be either negotiating with influencers and affiliates as well. So you think about maybe e commerce and social commerce now maybe sitting side by side rather than social media feeding E comm. It's a big shift.
Nathan Bush: It's a big shift and it's a lot for one person to do. When you put it like that. Because if we're talking about a brand new position, it's not like this is a little incremental. This is a whole.
Merlene McGregor: I'll just get the intern to do it. It's okay. That's right. Do you remember when social media it used to be. I still remember when Facebook was. It was just the intern writing comments and uploading products.
Nathan Bush: I remember once presenting like the idea of social media manager was what's your 30 day content calendar look like? And as long as you had something on every second day that's going up as a post, you've done your job.
Merlene McGregor: Yeah, absolutely, absolutely. And we're going to boost it. No, this person, I imagine will not necessarily be the most junior person in the room. This social commerce person. I think what will happen is they will either need to build their own team or they will work with businesses like ours or there are lots of other great businesses out there that will need to really help bolster and support, I think brands on this journey. And it could be for a short period of time. Like, you know, I think sometimes the people who help you launch something are not necessarily the people that are going to help you move it forward. So I would say use a business like ours for the heavy lifting at the start and then you can hire the team that is going to operationalize it and take it forward.
Nathan Bush: Well, yeah, let that channel make some money and then invest and resource that up in terms of that. And I like that you mentioned that the social commerce manager might be taking on their own P and L. We've talked about D2C. We've talked about Amazon, we've talked about social commerce and all of these things are interlapping. They're not like these funnels that just sit there. Because you talked a lot about discovery at the top there and the role that each of them play, they're all going to influence each other. How do you approach it from a profitability perspective for retailers when they're trying to work out is each channel profitable, Are you looking at the end sales that come through them or are you looking at them as marketing channels? I like dropping these kind of questions when we've got 10 minutes to go on a podcast.
Merlene McGregor: So we look at something. There's a few, I think, stages to it. Number one, when it comes to any Channel selling any product, I think you need to look at something called unit economics and there are lots of, once again, you know, your cfo, it's probably music to his ears or her ears, but unit economics actually having a look at that everything, all the costs that go into actually selling a specific unit at a particular point in time and making sure that you're really clear on what your unit economics are and then having a look at what each channel actually contributes to that journey or selling that product and how much it costs. And there's lots of, once again, you know, different platforms out there that can help you figure out, I think, which channels are contributing the most, I think, to that journey. When it comes to marketplaces, it's quite easy, I think, or it's quite siloed in terms of everything funnels into kind of, I think, you know, the one outcome. But when it comes to social commerce on the other platforms and even your D2C site, I think it's really important that you have a clear line of sight as to what consumers are searching for, how much it costs to actually present your brand to them or your product to them, and then how much it actually costs from the whole conversion journey. So my biggest bugbear used to be that when we used to talk to brands about social is that it had to off the back, I think, be as revenue generating, let's say, or as higher roas or whatever term you want to use as Google that today is actually not the role that social necessarily always plays in that product purchase space, but more and more as we get to, I guess that social commerce zeitgeist, where you're going to be able to check out on platform brands, will need to figure out exactly what they're spending on each platform and whether it's actually the juice is worth the squeeze.
Nathan Bush: Am I summarising it right in saying that you're looking at it at a real micro level in terms of product by product, at a unit economics level, but also at a total spend level, almost like a MER scenario. Marketing efficiency ratio across channels. Is it kind of getting that high, low view?
Speaker B: Yeah, 100%. Like I think we're going into the age where data is so available that we need to be taking advantage of understanding, not even just from a SKU point of view, but from a unit
Merlene McGregor: point of view, how much it's actually
Speaker B: going to cost to move that particular unit at a particular time. And there is a cost efficiency to actually holding a product for a specific amount of time of disposing of it. Then and there or holding it over
Merlene McGregor: a longer period of time.
Speaker B: So brands really need to think about how much it costs them to move units, not just SKUs and not just
Merlene McGregor: at a brand level.
Speaker B: But then again you need to be able to take yourself up and understand the contribution that each channel plays in each stage of the consumer journey. Because I know of a brand and
Merlene McGregor: I won't name names this time.
Speaker B: But because they couldn't attribute properly, they actually ended up removing their TikTok advertising and then over a period of six weeks they actually watched their new to brand visitation absolutely tank.
Merlene McGregor: Right.
Speaker B: Because they couldn't actually directly attribute where TikTok played in the role of product discovery or their product journey. They actually thought it was a really easy removal scenario. They very quickly after six weeks reinstated their TikTok budget and they're back up to where they were.
Merlene McGregor: Yeah, pre overtime, pre pooling and advertising.
Nathan Bush: Yeah.
Merlene McGregor: I'll just also say they weren't part of ours.
Speaker B: But once again it is about having that visibility and whether you can do that with the technology that you have
Merlene McGregor: now or you know, as you said, find an MMM platform.
Speaker B: There's some really great ones out there. I'm happy to, you know, provide any names to anybody that asks and I know you've got some really good examples too. But yeah, it really is time now to be able to attribute your advertising spend correctly.
Nathan Bush: That makes sense. And that's kind of the theme that I'm getting from our whole conversation as well as the consumer report that you put out is that E commerce is getting messier. Like there's no way around it is that discovery happens at different points, sales can now happen at different points. Whereas I think that was the simple thing before is that conversion usually all funneled back towards the website. We know that's not the case anymore. So it's this big messy mix and it's not good enough just to have everything pointing towards a D2C site anymore. And I think it's going to go next level. Right. Once AI truly takes off in terms of checkout from your perspective, if we've got retailers or brands listening to this going, we really need to relook at our strategy to whether we need to, you know, expand into marketplaces, whether we need to expand into social. What would be some of the signs that you would say that a brand is ready to explore diversifying their online presence?
Speaker B: Yeah, so that's a really good question. I would say that one of the signs would be that they're noticing demand on other platforms, even where they're not present. So a lot of times when we talk to brands and they say we're ready to explore marketplaces, you know, we think we're ready to launch our brand on marketplaces. Let's, let's say Amazon once again. And you know, our feedback is you're already there, you're already there. Somebody has found your product somewhere and they're already selling it on marketplaces. They're already capturing the latent demand that
Merlene McGregor: is available on Amazon today.
Speaker B: So for me, it would be for brands wanting to know whether they're ready is also just looking at what's already
Merlene McGregor: happening out in the market that they just don't have their lens on.
Speaker B: Because their feedback would be, we're not
Merlene McGregor: on marketplaces, our brand isn't on Amazon
Speaker B: and our feedback would be, your brand is on Amazon. You're just not controlling it.
Nathan Bush: I suppose that's just as easy to see on social, right?
Speaker B: Yeah, the same on social as well it will be on social, especially once. Once again, TikTok shop launches that you need to make sure that you know where your product is turning up and you need to make sure that you can control it because customers won't differentiate between your brand and a rogue reseller. So other signs I think that the
Merlene McGregor: brands are either ready or should be
Speaker B: diversifying is when, I mean, when I worked at Mimco, we used to get
Merlene McGregor: lots of customer inquiries to saying, you know, are you available in Maya?
Speaker B: Are you available here? Are you available there? I think, you know, if you start to see those recurring questions a lot, I think they're also sales channels that
Merlene McGregor: you can look to explore.
Speaker B: And I think, just going back to your point, Nathan, I don't think E commerce is getting messy. I think commerce is getting messy. I think that now even with brick and mortar online and the blurring, I think of those two channels from stock availability, logistics, the role of the retail part store is now playing in terms of E commerce. Like I think it's all now really fragmenting but also just coming back to this nucleus of does the brand care where the product shows up and how it shows up?
Nathan Bush: I love that. So what would be your suggestion? If someone wants to sense check their strategy not just for E commerce but for commerce, what would be the smart next step in your view?
Merlene McGregor: It sounds so boring. I would do an audit.
Speaker B: I sound, I know I sound like we love audits. No, I would honestly, I'll do a brand health audit, but like almost like a product health audit and just figure out where your product is turning up. There's a million different things like the
Nathan Bush: what the top 10, top 20 product.
Speaker B: Just see where your brand is turning up and then I would actually look at those findings and once again, you know, you've got lots of resources out there that can help you actually just do a really simple audit. And then I would then start to have a look at where you think your product line or your brand, where it's going to move into, from a channel's point of view and start to pick those off and start to prioritise them. We can give lots of advice around marketplaces, we can give lots of advice around E commerce and social. You can take that advice, you can ask your trusted advisors, you can ask your mum, you can ask your mates around the dinner table, but it's really just about understanding in your vertical with your brand, where you think customers are going to be finding your product not only today, but tomorrow and the next day. And it might really surprise you. And it's like asking all your friends, you know, where do you shop now? And sometimes their answers will surprise you.
Nathan Bush: Yeah, and I love that idea. Like, I know we made a joke of audits because it seems everyone wants to do an audit these days, but by doing that in point of time, because this space is changing so rapidly, even by doing it right now and then coming back and doing it again in 12 months to see. Actually, yeah, we can get the reports like the Marketplace Consumer Report and see the percentages of change, but is it actually changing for us as well in our category and for our products, just having that moment in time comparison? I think you realize how quick this whole space is moving.
Speaker B: Yeah. So what we can do, you know, I think for any brand is we can actually feed their SKUs into our technology and we can actually spit out essentially a report that shows brands what revenue their brand is actually generating. I think on Amazon, especially if it's not managed by them, and also you know what customers are saying about them as well. So that's something I think that would be enormously beneficial for brands who haven't yet made the leap, but still have
Merlene McGregor: an uncontrolled presence on marketplaces as well.
Nathan Bush: Amazing. I'm hugely excited. Like, I think this is just given Amazon Social Commerce. I know there are a lot of foreign entities that are going to take sales in Australia, but I think we've got so many more options in commerce and E commerce now, which makes the game a lot more exciting. Merlene, we're going to put a link to the Marketplace Consumer Report into the show Notes here for everyone to download for free. It's a great report, as you said, eighth year now, so there's some great baseline metrics and you can see the growth in, you know, year over year, which is fantastic to see. But if people want to reach out to either yourself or the pattern team to explore more around how you might be able to help them, what's the best way for them to go about that?
Speaker B: Yeah, you can just email me. Like my email address is merlenetton.com I try and get back to people as soon as possible. Or you can. I was going to say you can phone me. No, can't.
Nathan Bush: I don't even give my phone number out on this show.
Merlene McGregor: No.
Speaker B: MerlinEton.com or you can even visit our website, which is Pattern.com and send off an inquiry. And you know, the amazing Katherine Coleman
Merlene McGregor: will probably call you back or email you back.
Nathan Bush: Oh, it's worth it for a phone call from KC alone.
Speaker B: I know, I know.
Nathan Bush: Well, Merlin, we are so excited to have Patton on board because I couldn't think of a better partner to have with us by our side as we talk all things E Com, marketplaces, social, AI. Like, it's all going to move so fast this year and to have Patton on board with us to help bring the insights and the education as it all moves is just so special. So thank you for your support and for everything that you shared today.
Speaker B: Always a pleasure, Bushy, thank you so much for having me. And yeah, really looking forward to listening to my voice when this house comes out.
Nathan Bush: Well, that was a bit special to be able to go behind the scenes of that report a couple year in a row. We got the full picture from Merlene and the opportunity to discuss how to make it relevant for your business. There were three things that I found really insightful that I want to bring up to leave with you as you're thinking about your channel strategy moving forward. Firstly, talking about understanding the role of marketplaces. I love that Merlene says you cannot out Amazon Amazon. Don't try and do it. Understand what Amazon is and the role that it plays in your customer journey and then work out whether you're going to play in with Amazon in that part of the journey or whether you're going to ignore it completely. Both have pros and cons, but don't try and out Amazon Amazon because it's a fast way to going broke. Know why your customers might be choosing Amazon, whether that be price, convenience, range, and work out whether you can do that yourself or whether you need to be involved, but don't try and out Amazon Amazon. Secondly, DTC is not going away, but it has to earn its role. No longer is it a given that you will funnel all customers back through a single DTC channel. As Merlene said, many customers aren't using the traditional ways of discovery when it comes to finding products, whether that be starting their search on Amazon or being surprised with a product on Social. So what role does your DTC play? It's a great place to establish trust, credibility, deep storytelling, and maybe even go that next level with product data. DTC still has to have a place, but it's no longer a given that that is your main channel. And thirdly, get started on content right now. I thought it was fascinating the example that Merlin shared around Mecca creating their social commerce manager, and I can definitely see that path moving forward. Social is going to go to a whole nother level of sophistication when we start folding it in as a sales channel and a merchandising platform. So you obviously can't get started on all of that right now. Until we know the rules and the platform, however, you can get started on the content. Establishing those relationships with influencers, testing different formats and engaging customers, building that followership on those social platforms that will turn into sales channels. You can do that right now before TikTok shop or live Shopping or any of those other channels are truly cemented here in Australia. It will give you an awesome head start on everyone else. Now, if you enjoyed that episode and you want to discuss with other retailers what channels they're doubling down on, the Add to Car Community Community is a great place to do just that. Come and join us over on add to cart.com where you can join our free Circle community with over 600 other e commerce professionals in there where we ask questions, share tips and discuss all sorts of things. E Commerce, we would love to have you in there. Head over to add to cart.com to join today. That's all for today. Thank you again to Merlene and to Patton for being an amazing partner of ADD to cart. We hope you enjoyed our little bonus content for you and we'll see you again next week.
