Shaun Broughton: People shopped. I mean, we saw 52 million shoppers from around the world spend over 11 billion in Australian dollars with Shopify merchants.
Zhoe Low: We had problems this Black Friday, but for us it was like, oh, shit, how much did we lose by not ordering enough to the store?
Shaun Broughton: I was on the high, low drug with all the rest of the retailers
Zhoe Low: here in Australia and that's my wild card. I haven't tested it yet. So if you're listening and you think you'd work well with us, let's talk.
[Voiceover]: Welcome to ADD to cart, Australia's leading e comm podcast that Express delivers all you need to know in the fast moving world of online retail. Every week, Nathan Bush from E Suite and an E commerce industry expert will share the news, research and insights that you need to know to keep you at the top of your game and of course, keep your customers adding to Cart.
Nathan Bush: Oh, here we are, the last episode for 2022 and we have an absolute cracker coming up. Very special, different kind of format today that we're going to get into, but if you've made it this far, congratulations. We're up to 252 episodes of add to Car. We're pretty stoked about that. But if you've made it through what was an absolutely crazy year in e Commerce, 2022, well done.
Nathan Bush: You've made it.
Nathan Bush: Whether you're lying on a beach listening to this on your holidays or whether you got the headphones in while you're
Nathan Bush: wrapping up the year, well done to
Nathan Bush: you and thank you for spending some of your hard earned year with us. We really appreciate it and we always love hearing from those who get a little bit of inspirational knowledge out of ADD to cart.
Nathan Bush: It really makes our day.
Nathan Bush: But if we look back on 2022, I feel it was a real transition year. You know, we rode the glory times and it's probably not right to call it the glory times of COVID but from an E commerce perspective, we had it pretty good. And we rode that through 2022, all the way through. And towards the end of 2022 started
Nathan Bush: to get a bit rocky, right?
Nathan Bush: It felt like the economy was turning around, inflation was being talked about, didn't feel this party was going on forever. And so that's what we're heading into, 2023 with a bit of trepidation. Kind of like when you used to sneak back home as a teenager after a big night out where you didn't know what you were walking into, whether mum and dad would still be up waiting for you or whether you can slide straight through to bed. That's what we're wondering what are we
Nathan Bush: going into in 2023?
Nathan Bush: And we've got two brilliant guests to set the scene as well as to share some great research around what they saw in Black Friday Friday because it was a Black Friday, especially in Australian retail that had so much riding on it. They have some great stats and experiences from Black Friday to share with you to see, you know, how you compared over your Black Friday experience as well. So let's get into it. First up we have Sean Broughton, Managing Director for APAC and Japan at Shopify. With previous roles at Lego and Microsoft, Sean is now spearheading Shopify's expanding presence in the world's largest market for retail e commerce. The APAC and Japan region now amounts to nearly $2.9 trillion in 2021. Joining him is Zoe Lowe. She's the general manager at July Luggage. Now if you remember, we had July co founder Ethan join us for ADD to CART Live and he told us the July story about launching in 2019 where the brand quickly nose dived into a 90% loss of revenue due to the pandemic. But it has bounced back and boun back with a vengeance with revenue now reaching 10 times higher than pre Covid figures. Zoe has delivered the data driven creative campaigns behind this phenomenal growth and a whole bunch more that she gives us perspective on on how their 2022 was and her look ahead to 2023. So I made sure in this conversation that I asked some pointed questions to get you the most value out of this chat and my guests certainly didn't disappoint. We dissect the year that's been and get some predictions around the value propositions, the key channels and the tech we should look out for in 2023. Thanks to our partners Shopify plus and Paclio. Here's our conversation with Sean Broughton, Managing Director for APAC and Japan from Shopify and Zoe Lowe, General manager of July.
Nathan Bush: Zoe, Sean, welcome to ADD to cart.
Zhoe Low: Thanks for having me.
Shaun Broughton: Thanks Nath. Pleasure.
Nathan Bush: Good last episode of the year and we've got two absolute superstars joining us and it's going to be a bit of a different episode today. We're going to have a look back on 2022 and then a look forward to 2023 and prob. Probably just make idiots of ourselves making predictions but so be it. Let's get into it. Both of you really need no introduction but Zoe, we might start from you. Obviously a massive 2022 for yourself and the team at July recently awarded first place in the Smart50 awards which is just an amazing achievement. What's been the highlight for you this year?
Zhoe Low: I actually don't know where to start. It has been a sensational year for us. We have had as part of the Smart 50 that was announced 640% year on year growth for the financial year. We've. We actually have. The growth is faster now in this financial year. We've had so much brand love and I think the highlight is seeing that come through because we work so hard during COVID So from the very small things of people be telling us in stores. You know, I heard about the brand in Covid, I really wanted to buy it, but I had nowhere to go to. And them actually coming into the store when they finally could travel. So small things like that and what we call carousel share, which is like seeing a suitcase in the carousel to big things. Right. Like the smart company thing, you know, fastest growing SME in Australia and also Mumbrella travel brand of the year. Amazing. It's just been amazing.
Nathan Bush: A few more awards in there.
Zhoe Low: You gotta brag. You've gotta brag.
Nathan Bush: How many stores are you up to now?
Zhoe Low: We are up to four in Australia and we just launched. It's kind of like a little bit of a different format on 80 Collins street here in Melbourne. It's more of a showroom. That was last month.
Shaun Broughton: Yeah.
Nathan Bush: Beautiful. And if anyone wants the full July story, they can go back to the add to cart episode with Ethan that we did live. And that was just a crazy fun night. Like that was incredible. And the story that he told there was just fantastic. So we won't go through the whole July backstory. We'll say in the moment, but incredible what you've been on for 2022. I saw the. The chart that Ethan shared on Twitter. I think it was around. Didn't have numbers attached to it, but the line that just did the hockey stick growth this year was just incredible. So well done. Thank you, Sean. Obviously Shopify has been a long term partner of add to Cart and we're really grateful for that. You keep us going, you keep us pumping and being able to bring these stories out to the Australian e commerce community. The first time we've had you on. So welcome.
Shaun Broughton: Yeah. What's the saying again? Long time listener, first time caller. Yeah.
Nathan Bush: You've just sent all your other people your Reese's and your Josh's on because
Shaun Broughton: I know you like to get a bit technical and into the product and those guys are absolute Geniuses. So yeah, take it easy on me.
Nathan Bush: Oh look, you'll have the insights. You've got a really unique view over the Australian e commerce environment. How would you sum up 2022 for E commerce in Australia? Yeah, geez.
Shaun Broughton: Unfortunately, you have to go a bit backwards, right. To think about what we came out of, which was Covid. Right. I'm sick of talking about it. You're sick of talking about it. I think we're all kind of sick of talking about that. But it's the reality. And so you come out of that and then we find ourselves in this situation of just like inflation through the roof and there's wars in Europe and supply chain's gotten a bit to normal, but it's still not quite there. And so E commerce in Australia I put into two buckets. It's those that are like pure play, just E commerce brands I think are figuring out what new normal is after the boom. And then you've got your kind of brick and mortar physical retailers that also have an E commerce presence and what does that mean for them? And this hockey stick has now come down and the big question is kind of where does it kind of plateau? And that's what everyone's really trying to watch. So I think as we face kind of record inflation here in Australia, it's the stuff that my dad used to tell me about years ago that we're going through. I think consumers are getting really kind of increasingly cautious. And so when I look back at 2022, it's a tale of two stories. Right. The first half of the year was still kind of booming and then it kind of started to slow down a little bit and now we're into the situation we are now and I think a lot of focus on what to do in an inflationary period. And I think we're trying to help as much as we can. Brands are trying to figure it out. I think that like really kind of tailored experience and brand loyalty, customer loyalty is going to be more, more important than ever as you fight for dollars in a wallet. So kind of tailor two stories really.
Nathan Bush: Which of those two retailers like the Omni Big traditional brands or the Pure Play dtc, which one do you think had a better year?
Shaun Broughton: I think still pure play. Just because there was so much margin in the business because of the boom and there's a lot more margin to enjoy Obviously when you're D2C and you don't have to worry about physical stores, but those retail really reacted quickly that have physical stores and were able to do cool, creative things. Like a lot of the stuff that JB hi Fi did, where all of a sudden they stood up a delivery service and curbside pickup. Like, they moved really quick and adjusted. I think those kind of brick and mortar retailers that adjusted real quickly have also had a really good year.
Nathan Bush: Yeah, makes sense. And Zoe, you know, we talked about the hockey stick. We both talked about the hockey stick. And it feels like July isn't living the normal retail story to most people out there. Is that fair?
Zhoe Low: 100%. We're very different. In fact, I would say it's just completely different to everyone else. Like, for example, skincare and beauty that boomed during COVID We were 90% down in revenue. And we saw the revenge travel really take us through. I know I'm kind of sick of saying it, but it's like, you know what? I'm riding the wave. So it's great. We saw the comeback. Well, we launched in the US when Australia was still in lockdown and that was crazy. So we actually saw that come through and this team was so inspired by that.
Shaun Broughton: And.
Zhoe Low: And then we saw Australia return and from November last year we saw it grow really quickly and it's been great then. And that's. I mean, no one already, everyone knows this, but I guess a lot of people have moved their ink, like their discretionary spend into travel because they haven't been able to do it for so long. And it's really exciting. Nothing like a bit of delayed gratification and deprivation to make you want something even more. Yeah.
Nathan Bush: And it's hard watching it from here. The amount of friends that I've seen on like pre Christmas overseas holidays, the holiday before the holiday. I'm just sitting here jealous and going, why didn't I think of that?
Shaun Broughton: I'm still waiting to take my revenge.
Zhoe Low: And this is why this is going to be so interesting to play in 2023. I really want to talk about this later, but, like, how is this going to play out for. How is travel going to play on 2023? It's going to be so fascinating.
Nathan Bush: So some of those headlines that Sean was talking about, like the inflationary pressures, a lot of retailers already feeling that. Have you noticed that impact on July at all in the last bit of 2022?
Zhoe Low: Absolutely not. We are not seeing in Australia at all in the U.S. it's hard to say because we're so early in the market. We're only a year and a half in, so we're not seeing this like as much of a intense growth there. Hot Girl in the room energy, as I say. And I would say we're not really seeing that. What I am really looking out for is in 2024, our target audience, we predict and this is, I need to do a bit more research to back this, but a lot of them will probably be refinancing because they are homeowners that are mortgaged. When they get hit with this rate increase, if the rates don't come down, I would like to see how that would impact us and whether they will curb back on travel. We use travel bookings data, so flights and accommodation as to feed our prediction of how we will perform because we're so closely tied. So that will be a leading indicator for us.
Nathan Bush: Yeah, fantastic. And then if we. Geez, you've skipped ahead to 2024. It's not even in that space yet.
Shaun Broughton: Just trying to make our way through 22 here
Nathan Bush: to the run sheet, please.
Zhoe Low: Sorry, mate, Sorry.
Nathan Bush: And so, Sean, if we talk about that last half, you talked about the tale of two halves of the year. Obviously we've just come through the big Black Friday, Black November kind of period, as Erica from the Iconic put it, and you've got that great view and you've just released a whole bunch of numbers around what you saw in Australia. Can you give us the highlights? Well, how did Australian retail fare over Black Friday?
Shaun Broughton: Yeah, I think, I mean, again, it was kind of against what you're hearing a lot about, like people shopped. I mean, we saw 52 million shoppers from around the world spend over 11 billion in Australian dollars with Shopify merchants. It's huge. And you know, if we think if we look a bit closer into Australia, we ranked fourth on that global spending list. We're a small country and is that my total revenue? Yeah.
Nathan Bush: Wow.
Shaun Broughton: So we're up against it. I think. I always joke sometimes with my colleagues in North America and I say we're, you know, we're about the size of Texas, one of your. We about as big as one of your states. So, you know, also a bit proud of that. So I think that's pretty amazing. And so we saw an increase of 22% of shoppers take part in Black Friday and Cyber Monday. So I think that's partly to do, like you kind of just touched on then. It's not so much as a four day event now. Like what is it truly? And it kind of has expanded to a sale period. I love it. I like that kind of things. In my past lives, I've worked at Lego and I've worked At Xbox and I used. I was on the high low drug with all the rest of the retailers here in Australia and I still hate the high low drug. I really wish we could get off it as a country but we seem to not be able to. So another sales period, yeah, sure. You know, it serves a purpose and I think it's now people are seeing it as that pre Christmas sales opportunity and which is good. It's good for the business and it's doing some good things. A bit of competitiveness too. I know you're up north but Melbourne outspent everyone as a city. So Melbourne came in first as the, as the spenders. So congrats to all the Melbourneites down there. And Sydney came in a second close, claiming second.
Nathan Bush: So we're just out enjoying the sunshine.
Shaun Broughton: Yeah, I would be too. You're buying towels and sunscreen. Yeah, but I mean as you look at categories, fashion and accessories again did very good and topped the Aussie shopping list and followed by health and beauty, home and garden, food and beverage. And so a lot of the merchants that obviously play strong with Shopify. But I think we're at a point now, especially in Australia with over 100,000 merchants, we've got a pretty good cut across all industries.
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Nathan Bush: And anecdotally, and I think your research actually goes against this, I was having, having this conversation last Friday. It felt like there was more transactions this peak period but at lower average order values. But your research actually says the average order value was higher, is that correct?
Shaun Broughton: Yeah, it was about $155 per order last year up and it bounced up to $162 per transaction this year. And so like if you're not in the probably a position where you're, you think about that data point alone, you're like, oh, that's not that much more. It actually is A large increase when you think about the unit volume that a lot of these merchants and brands would do. So it's a healthy, healthy increase in participation. You know, what did Covid do for the E commerce industry? You know, kind of said a few times, what was a QR code before COVID You know, what there. So I think we're still kind of reaping some of the rewards for us that are particularly working in E commerce from a lot of that education and change of behavior. And I think we've seen that impact on the FCM this year.
Nathan Bush: Yeah, that makes sense. And anecdotally, how do you feel that merchants are feeling about profitability and margin? You talked a lot about the high, low drug and the realities of that in retail. Do you feel like most retailers got out of this season profitably or few on the edge?
Shaun Broughton: I think it's a mixed bag out there, depending on the industry you're in, obviously, and the products you're selling. All of us aren't as cool as Zoe in July and just things flying off the shelf and 600% growth. And there's a lot of people who would love to have that. But I think there is a few rough, tough stories out there where people are sitting on a bit of inventory where they may have overreacted to the logistics and supply issues and tried to catch up and, you know, kind of like the clogged funnel, right? And then it all just comes voom, vooming out and then kind of the opportunity dries up a little bit. So, you know, they say retail is detail and it is, man. And I think that that's a, It's a hard, it's been a hard business to run retail and E commerce, all of it over the last, you know, couple of years, I think. And people have definitely been earning their paychecks.
Nathan Bush: That's a really good point because I feel we had this drift of conversation and people saying, hey, we're going to be really strategic about Black Friday and we're going to, you know, personalize offers and keep them behind walls and, you know, only discount to people who aren't going to buy. And then this year, a lot of people were just forced, their hands were forced because of what they had, you know, situation they were in and gone. We've got to clear it, got to get it out.
Shaun Broughton: Yeah, absolutely. I mean, it's been interesting for me, a big week for our family, personally. My wife and I started our own, our first retail store ever, two weeks ago, and we launched just a week, two Weeks ago. And it's kind of like that situation where I feel this intense pressure of cash flow, inventory. We went just Australian brands to reduce some of the logistics complexities and things like this. And I'm sitting here going like, this is just a small little one shop family business. I can't imagine the pressure that some of our retailers and brands would have been feeling over the last two, three years to navigate all of that.
Nathan Bush: You can't leave it there. What's the business? Let's give it a plug through that. Let's get that Cha Ching happening.
Shaun Broughton: Yeah. So, I mean, the website isn't live yet because everyone thought that I'd be able to help and get it up real quickly. The gaps in the product have been revealed for me, but it's called peggyconceptstore.com and so basically my wife spent 10, 15 years as a buyer merchandiser for Gucci and Hermes and basically has been dressing Australia in Gucci and Hermes for the last 10 years. And so we thought, what the hell, why don't you decide what Australia should be wearing in your own shop? So she's buying fashion and homewares and. And some art and things like. That's really concept store. And the name Peggy is after Peggy Guggenheim, who's like one of her icons. And she was known as a real collector and kind of curator of art and all things fine. So it's up in Avalon beach, and that's been quite a journey for us, but it's been awesome. And we put Shopify point of sale in the store. I got to talk about that because, to be honest with you, I've been here four and a half years now, and I noticed spent enough time on the product and it forced me to do it. And I couldn't get over how easy it was. It reminded me why it is so seamless and easy. So that's been a really fun time for us, but stressful too.
Nathan Bush: I hope you gave her a partner referral code.
Shaun Broughton: I'm the partner. Happy wife is the partner code.
Nathan Bush: Zoe now obviously July. Luxury brand. Do you call it luxury brand?
Zhoe Low: I think we call it affordable. Luxury.
Nathan Bush: Affordable.
Zhoe Low: Luxury.
Shaun Broughton: Premium.
Nathan Bush: Premium. Obviously a lot higher than that $172 average order value that Sean mentioned there. Did you participate in Black Friday?
Zhoe Low: Yes, we did. So we never actually go on sale, but we do these bundle promotions, which are technically a sale twice a year. So yes, we did. We did a bundle and save. And yes, we saw AOV increase. And it was. It was very good.
Nathan Bush: Okay. And what did the bundling look like
Zhoe Low: it's very similar to like a spend and save that country road does. So, you know, you spend 300 and then you save 30, you spend above 600, you save 100 and you spend above a thousand and you save 200. And it worked. We've done this before. Like, we've done this multiple times and we knew it would work and it did and it was very successful. So we saw AOV increase and we saw. And we wanted to. We want people to be incentivized to try our accessories. And it's also a push for us to increase LTV and, you know, enter new product, try new categories from us.
Shaun Broughton: Yeah.
Nathan Bush: And when you're on such a growth kick anyway, pre November, and then you add promotions in over the top. How do you know how successful those promotions have been in increasing sales or whether it would have happened naturally?
Zhoe Low: It is really hard. But we saw a huge uplift. Right. So November was 78% up from October. But we all know October is like low. But we saw it. We haven't actually fully finished crunching the numbers for November and Black Friday yet, but I will just say we have never sold out of stock completely in our local warehouse here in Collingwood, and we sold out of everything on Friday. So when our Collingwood store was open for trade on the Saturday and Sunday, they had to ship to customer and we still met the target. It's so rich for me to say, I know we're in the best time, but we also had problems this Black Friday, but it was the opposite for a lot of people. Instead of clearing the inventory for us, it was like, oh, shit, did. How much did we lose by not ordering enough to the store? So, yeah, that was really tough for us. It's a good problem to have, you know, when you're in the business, it's just like a good problem. It's still a problem. You're like, man, we like missed it. So we actually smashed the Target. Every year we do this thing where all the employees guess how much we're going to make. And we're so fortunate to have completely smashed that Target. But next year it's going to be very interesting to see how that goes.
Shaun Broughton: I was really nervous just then that Zoe was about to go into something about Shopify crashing. I was like, oh, here we go.
Zhoe Low: The pause is so good. Honestly, when we hire casuals, the training takes five minutes. We're like, here's the button, here's the button. And it's done.
Nathan Bush: So you've got pods in all Four stores as well as Shopify on the web.
Zhoe Low: Yeah. We're like, where's Shopify from the start? Oh, now it sounds like I'm sucking up because Sean's here. But no, like, we're Shopify from the start. Like, so the business is four years old. We started there with Shopify plus Headless and Shopify. Pause. And again, I sound like I'm sucking up, but I'm not. But it has been really crucial to our retail rollout.
Shaun Broughton: So.
Zhoe Low: Okay, the 80 colon store that I referred to at the start of this episode, Ace and my like the owner, the founder, my boss, he gave me, gave us two weeks to launch that store. He's like, hey, by the way, I signed a lease. We have to open the store in two weeks. And I was like, what? And we did it. And the tech is not what holds us back. And it's not even the stock. It was just like the fit out. Right. Like, how do we get it in? So Shopify just helped us move so fast. It was like two weeks. I reckon we could have done it in a week. But you know, testament to how, how fast you can move as a D to C brand. Online E commerce brand.
Nathan Bush: Sean, you should really hide all that gifted July luggage that's behind you.
Shaun Broughton: I was about to say, I hope I'm glad this is being recorded because I'm going home for the rest of the year. My job's done. See you later. Marketing team. PR team. Like I'm done.
Nathan Bush: No, it is an incredible story and it's a brand new way of doing retail. When you can open a brand new store in one week and it's integrated with your online straight away, that's pretty incredible. And it allows you to focus on the great things like the customers and the product.
Shaun Broughton: Yeah, they just came to Australia. It's not been here for over a year even so it's, it's, it's new to the market and so it's good to get to have stories like this and see the impact it can have. And again, I'm going to go on and out again. My wife spending time with my kid rather than trying to consolidate back end inventory through Excel sheets. And it's all just in one place, one home. And so kudos.
Nathan Bush: Amazing. Were there any other retailers during Black Friday that really stood out for you? Anyone that went, oh, they're doing really cool stuff like they did Black Friday really well. Sean, I might start with you.
Shaun Broughton: I think we're underestimating the interest that a lot of consumers have still in sustainability. And I know everyone goes on about it, but all you need to do is look at the change of government and why it happened. All you need to do is look at a lot of the way people's spending. And so I think a lot of those brands that haven't given up on that and even though people think like, oh, but times are tough, people are watching their dollars like, oh, I want to spend a bit more. I think those that have been thinking about that I think have done well and intelligently because it's a long brand play. Right. It's not just kind of we're here for a bit to make a buck and we're out, we're here, we're part of the community, we're with you, we're here in Australia with you. We care. And so I think those that have leveraged that to not just go on the hey, we've got a crazy deal, but have kind of mixed message has been intelligent because you're going to get a lot of eyeballs. Right. Like everyone's ravenous for it. So even if you don't sell something, there's impact on your brand and opportunities for you to tell your story. So I think those that even just use that opportunity to tell their story, I think that's pretty good. And yeah, yeah.
Nathan Bush: Something where there's a little bit more story than just the price.
Shaun Broughton: Yeah, absolutely, yeah.
Nathan Bush: You, Zoe, anyone stand out?
Zhoe Low: Yes, I'll build off the back of that and I will say, yeah, so July, we don't do like 20% off discount. So during Black Friday we all look at similar brands who don't, don't discount like us so aggressively. And one of the ones that I love was luxury escapes. They opened up a store in Chadstone. Yes, right. And it's like bookings only. So I think I really appreciated how so many brands who never discount leveraged on the consumer's shopping mindset during Black Friday, right. They're like, okay, you're in like shopping season and you're probably going to be thinking about what you want for next year. That includes travel and you're like where you want to go. How can we as a luxury escapes brand, build on that but not do something so crazy like 50% off? And they launched that store. It's like book, book and walk in only. And yeah, I love that. We also saw a lot of like limited edition drops, which I love. Like, I love all that stuff. And I think those retailers and brands that don't discount really shone through this year.
Nathan Bush: Yeah, that's cool. I funny story. We had Adam from Luxury Escapes on two weeks ago and he told us about Chad's own store opening. And then I saw it on LinkedIn and it looked beautiful, beautiful store. And I could just imagine like a little part of that store just selling a couple of July bags, like as a store within a store.
Zhoe Low: I was like, I'm glad you say that. I hope Adam listens to this.
Nathan Bush: Yeah. But even I was in the airport, Em and I went to Sydney last week and you should have seen this carry on bag that she was carrying. It was an embarrassment. Like it is about 20 years old. It looked like a dad's. And I'm like, wouldn't it be cool if you had something in the airport, like a little July store where you could take your old bag in and like there's a little unpack packing stations, like almost like a fitting room where you could unpack and then repack. Come out with a brand new.
Zhoe Low: Oh, my gosh.
Nathan Bush: Don't worry, you can pay me later. Anyway, that's. That's my story. I really liked lskd. I thought they did it really well. It's total opposite to what you guys were saying around having more than price. They went so hard on price, but they really, really, like leaned into it. They didn't kind of go, oh, you know, bit of 30% off, please come. They went, we're going to give you the best goddamn discount you've ever seen. Download the app, you get another 15% off. Sign up to our waiting list.
Shaun Broughton: Like it was this whole event, like true honest retailing. Like, I'm going to give you the cheapest deal I can right now. This year only is the only time to get this cheapest, cheapest deal ever come in.
Nathan Bush: It was like EB Games, But I really like that they just committed to it. And they went, hell, if we're going to do it, we are going to make some proper excitement and even down to things like doing like live behind the scenes of their team. When they pressed the live launch on taking the sale live, like a big ticker down here went. And they actually went down for a minute or so. Not because of anything technically, but just because of the huge volume of people waiting. And I spoke to Mike, they're managing their marketing guy and he's like, it was insane. The volume that they did in that first call.
Zhoe Low: I love that. That's so cool.
Nathan Bush: It was just phenomenal. He's never seen anything like it. So total opposite to your story. But. But anyway, let's go towards 2023 and talk about what's coming up. So off the back of that, Sean, you know, you gave us really great context around. We've had a tale of kind of two halves of the year. We've made the most come out of COVID We've had our bit of dreaming, little bit of play time. So for 2023, let's get your take on a few quick things. I'm going to fire off some things that I want your take on and get your opinion on. So I'm going to ask you for your opinion on the value proposition that you think customers will most care about, Zoe.
Zhoe Low: Longevity, that being quality and value. And I think they will be much more happy to pay a little bit more to make sure that the products last. The test of time will be more important than ever. Which touches on your point about sustainability.
Nathan Bush: Yeah. And does that factor into the customers won't be spending as much but what they do spend on, they want to make sure that it's good.
Zhoe Low: That is exactly it. They want their dollars to go further but they want to keep their standards high. And I'm speaking from us. Right. This is what we've predicted for us, Sean.
Nathan Bush: Value proposition that you think if you're a retailer right now, one value proposition that you'd be hammering home in 2023.
Shaun Broughton: I'd plus one to that. I know that's the easiest answer, but I think that's absolutely everything is value. I think that we're in a situation right now when we talk about the wallet. That wallet is super competitive and guess who's now taking a chunk of it? Your energy bill. Yeah, yeah. There's other things now that are their life. They're non negotiables. Right. You have to pay these price of petrol. And so I think that when people look to spend their money, they're looking for value. When I say value they don't want, I don't think they're looking so much for like I got the cheapest deal in the market. I think they're looking for, hey, I feel really good about this. It's lasted a long time and this is a good value exchange for. Because my dollar means a whole lot more right now than it has in a long time.
Nathan Bush: Yeah. I wrote down my answers to these questions before we jumped on as well and I had quality or indulgence and I think it came back to the research that you did, Sean, before Black Friday and one of the things that stood out for me was that yes, it's going to Be tight. Customers are going to be very price driven and that's going to be in certain categories, supermarket, all those kind of things where you need to be price sensitive. But they're still going to carve out a portion of their budget for their own indulgences.
Shaun Broughton: Absolutely. And I think when tough right too, you want to feel joy. And sometimes feeling joy is being connected to the brands you love. You might not necessarily have to spend as much as you did, but that joy in being connected. So I think being connected through socials and things like that to brands that people love, I think is a big thing. And you mentioned like, you know, just considered shoppers, you're looking for value. I mean, we see 69% want quality and 74% are looking for value. Those are big numbers. 74%. So yeah, let's nerd out on some stats we've found also just in our recent, recent Conscious about surveys about being conscious. You know, 51% shop sustainably and 39% are actually willing to pay more, which is also a pretty big number.
Nathan Bush: Yeah.
Shaun Broughton: And so people want to feel good about what they're buying. And so when we think about like channels where people are in a shop, people are looking 69% more going to social media and 92% of retailers are telling us that that direct relationship is going to be so critical for that to happen. And so this movement to being connected, even though you hear, it's funny, right, you hear these stories like everything's invasive, technology is getting invasive. But every time you ask people and you look at the big, the total numbers of any kind of statistics, people are enjoying being connected. They just want to be connected to the things that add value to them.
Nathan Bush: Oh, beautifully put. So if, if we're a retailer listening to this and we're planning 2023, it's going to be very tempting just to go price driven, discount driven in 2023. But make sure you don't lose that quality and value message as well throughout because there will be moments for that second one. I want your opinion on the marketing channel that will give retailers exceptional returns. Sean?
Shaun Broughton: Yep. I think there's that many now. And I think it's really dependent on who your shopper is and what you're selling. And I know that sounds like the cop out answer, but it's true because every channel provides a different access point to your shoppers and the people that love your brand. So I think only what people should do is test them all. Like it's not that hard to test them all. And see where your shoppers are, find out where they are, go where they are because they want to be connected to you, they want to talk to you. Some of our other research, again, sorry, like research is pretty interesting. We're seeing that 31% of retailers believe that sales through social media will form the largest part of their business by the end of the decade. So it's something that a lot of retailers are saying like, hey, this could end up being the one of the largest channels that we connect and sell to our shoppers through. So it's here, it's big, it's constantly shifting. I think that's the interesting part. And as you get a bit older, maybe they shift without you knowing about them. There's one executive that I know of in my past life that used to employ one of the 14 year old kids on his street and he would give him $200 and once a month he had to write to him, what are the video games that all the kids at school are playing? What are the apps all the kids at school are using? Really smart, right? Because he knew he didn't have a way to do it. So local kid, next door neighbor made a couple of hundred bucks a month and he said to write a one pager on. What's the cool stuff right now?
Nathan Bush: That's really smart of James Johnson. Well done.
Shaun Broughton: That's it.
Nathan Bush: From that social perspective it feels like the social selling is still obviously key, social channels are still key. But two things we've seen in social this year I feel is that obviously the CAC has just gone bananas. But also this promise of direct buying through social channels. We've seen TikTok and Instagram kind of pull away from their buy direct features. Do you think that will continue or will go again, you know, in the next couple of years?
Shaun Broughton: Oh, I think it'll continue. I think it's just because it's forever moving. Like you know, real life, live shopping, like if you go to China right now, like that's the thing, like live commerce. Like people are just like, we don't really like, we touch on it a bit here. There's a few brands doing it. Then you start thinking about AR&VR. It's like people love it when it's done well and it's just gathering more and more momentum. So it's kind of the ability to consume your brand or product or how you are going to interact with that is changing. And so the way to buy it is keeps having to change. And so there's endless, I mean Nathan More than I know about the endless number of companies that are popping up that are capturing a lot of this movement onto different social networks, different platforms and ways to consume. I mean, it's hard to keep up with.
Nathan Bush: Yeah, it is, it is. Zoe, any marketing channels that you think will give retailers exceptional returns in 23?
Zhoe Low: Yes, you guys actually touched on it. So affiliate marketing is really big for us. It's growing and it's quite surprising because we're, you know, a little bit more of a premium brand and we don't go on discount. But it is so good for us because, yeah, we work with some really amazing, reputable content partners through our affiliate platform. We also work with like to know it. I mean, we see we're seeing this grow a lot in the U.S. right? And so, and we see we're starting to see it really grow in Australia. So like to know it is influencer affiliate marketing, which is enabling this social commerce thing that you're talking about. Right. There are also a couple of platforms that I'm starting to see that I'm really interested in. One is called Cartage. They're enabling publishers so like any publisher to let their readers convert on site. Like you don't click the link, like you buy it while you're in the article of like top 10 suitcases. I'm really excited about that. The conversion rate will be so much better. The other thing, and this is a wild card one, I went to New York a few months ago with Ethan. We were talking to someone about direct mail. Like, I'm talking old school snail mail, right? And I was like, oh, that's like, I know it exists in the US and I think it would work so well here because I read all of my mail, unlike my email, I'll like scan the subject lines or like pick all of them, select all and then just delete. Right. But like in my mail I actually have to physically go through it. So I really want to test that next year with our team and I really think the return will be super high because like sms, I think we're going to see the same results. You know, they'll definitely look at it. So I'm looking for a vendor to help with that. And I don't think we should just do it with us. I want to pair up and group up with other amazing Aussie brands like us to do like a little envelope of like, hey, here are some really cool brands you should hear about. So that's my wild card. I haven't tested it yet. So if you're listening and you think you'd work well with us. Let's talk. Let's put it through together.
Nathan Bush: We're making magic happen.
Zhoe Low: Yeah, let's do it.
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Nathan Bush: I've had this idea in the back of my head and I pitched it a couple of times about three years ago and it's like how do we create a network of like minded retailers? Because we all send parcels out, right? And you unpack everything in the parcel of like offers to go to the next retailer. And I know a lot of people do it kind of ad hoc but I reckon there's a really nice network there of of cross promotion and cross selling that way. I just don't know how to bring it together. So someone do that please. And I think it's something I had marketing channel. I had a bit of a cop out but I had creative cut through. So I think it's next year is the year for the big ideas, right? This year was let's sell through, let's ride the wave like we talked about. Let's get as much out there next year we might have to reposition ourselves and really catch those eyeballs. And I think it's the time for the big ideas. You know we had Mike at Zeroco creating the rubbish mountain in Egypt and I just went back and listened to the episode with Michael Beveridge and he's all about big ideas. And I think now that we've got so many different channels that we talked about and experimenting with different channels. If we can leverage our big ideas around all those channels and kind of experiment that way, I think there's next year is the year to do it, give or take. All right, number three, which product category do you think will explode?
Zhoe Low: Zoe it sounds like a cop out too but like really passionately and I'm very Passionate about op shopping and thrifting and secondhand stuff. And I'll back that up with TikTok. Right. TikTok has made, like, secondhand clothing and secondhand things very cool again. So I think it's going to explode. And I don't think there are any major merchants who are really leveraging that on, like, the iconic level. Because I would. I mean, actually, no, there is like, depop. Right. Depop, Facebook, Marketplace. And there's one more, but I can't remember. And also I think I have seen. And it's off the back of COVID So I actually will be interested to see if it continues to grow. But in my head, sexual wellness is really having a moment, and I'm very curious to see how it pans out next year if more people live the best life and not stay at home as much.
Shaun Broughton: Yep.
Nathan Bush: The fact that sexual wellness is just a term now instead of industry. Right. Like, it says a lot about how
Zhoe Low: fast the rebranding is real.
Nathan Bush: Exactly. Yeah.
Zhoe Low: So that's really fascinating.
Nathan Bush: No good insights, Sean. The categories that you think will pop,
Shaun Broughton: it's corny, but travel.
Zhoe Low: Thanks, Sean.
Shaun Broughton: But I would look at the accessories that live around that experience, you know, So I think extra series will ride a wave by people wanting to travel again. And you kind of dust off all of your. What's that. What's the word? Like dental kit. That's the word. Like, you know, the bag that you put your toothbrush and toiletry bag. There we go. Thank you.
Zhoe Low: Amenities kit.
Shaun Broughton: There we go.
Nathan Bush: That was only someone sold them. Like, imagine that.
Shaun Broughton: Yeah. But I think all of that. That category that sits around the category, I think so. I think, like, if there's a category that would do well, you'd say it's apparel, accessories. That one. But that. That ties closely around that. I think will. Will go well.
Nathan Bush: Yeah. Nice. I had probably the opposite again. I had kind of the home and garden category and the self improvement. I think people might take a moment,
Nathan Bush: not everyone, but to kind of look
Nathan Bush: inwards a little bit more. Like, we had that explosion. And I think there will definitely be people who can still travel and we'll do all that and still be out there. But I think there's people like, okay, this is my house for a while now. Like, let's. Let's make the most of it.
Shaun Broughton: People are back out. They're out of their homes and it's summer, and they're like, oh, geez, better tidy up a bit.
Nathan Bush: That's right. Exactly. And with these interest rates. So we're not moving anytime soon.
Shaun Broughton: No.
Nathan Bush: All right, number four, your pick of technology or apps that retailers should have their radar on for experimentation.
Shaun Broughton: Sean, I think a big one is, again, is ar. Like that whole category, I think is just really good. And I think that when you can bring your physical experience into someone's home and they can see the couch in their living room and say, oh, wow, and it's to size and get a good visualization of that, it's getting to the point now that technology is actually really good. There's actually like, when we're in lockdown. I went and got my eyes tested and found I needed. I needed glasses. This is no, I'm just for no word of a lie. And I couldn't go into a store. They wouldn't let anyone go into stores. So went on Bailey Nelson, and they've got this amazing AR app that literally just. I just tried on all the different pairs of sunglasses and ordered one and it came in. It was exactly put on my face. That was my first shopping experience of doing that. And I know their business somewhat well. I know that just by putting that capability on their website, their sales increased 400%.
Nathan Bush: Amazing.
Shaun Broughton: And so, like, that kind of experience, I think is getting better and better. And. And I know for us alone, I think there's more than like 8,000 apps on our app store for Shopify. That lets merchants and brands to consider that. So that's what I would highly recommend people have a think about. Obviously, it depends heavily on your product and your own capabilities in some way, but I think that's getting to be a not creepy experience, if that makes sense. You know, you're going to be a bit like, oh, that's a bit weird. That looks terrible.
Nathan Bush: There's 8,000 app owners out there who are like, oh, I was waiting for Sean to name my Apple. Zoe, what about you? From a technology perspective, what should retailers keep an eye on?
Zhoe Low: I will say for us, and I would say a lot of retailers too, is our CAC is so high, we want to get our dollar to stretch further. So one of my personal goals for next year is to really improve loyalty in July. And we're going to do that by offering incredible customer service. So anything that's tech like that enables us to build this into our offering is going to be really huge. I'm going to be doing a lot of project work on this starting next month and that will be, you know, how do we implement this? How do we provide the best level of customer service, keep them coming back for more and get our marketing dollars to stretch further. And AI, you know, we're seeing some really cool stuff come through. We use Gorgia just like amazing stuff. Like our rep is helping us to really build that because we're seeing the volumes really come through and we really need good automations and good, good things to help us with that.
Nathan Bush: Yeah, I had AI written down as well and I'm gonna actually out someone here because last Friday we went for drinks here in Brisbane and had a bunch of the old digital crew and we actually had Paulie Goldston, Sean from the Shopify team come along.
Shaun Broughton: There's a lord and a legend right there.
Nathan Bush: Lord and a legend all in one. And he came along and you can tell when Paul is onto something good because he's got this little glint in his eyes, discovered something and he's been up for nights like playing and exploring. He goes, Boys, OpenAI have just released their chatbot and it's this new iteration of a chatbot from OpenAI which is like a Microsoft project and it's pretty cool. Anyone can go in there and have a play. And he's like, we're going to do some stuff with this today. And where it ended up getting to is that he asked this OpenAI chatbot to create a cocktail that was summery and involved blue and give me a recipe. And Chad, I gave one and named it the Pink Batman. And so he took it to the bar, this. And it was a recipe that doesn't exist anywhere on the Internet. It was a brand new recipe. Took it to the bar and asked the bar staff, he's like, guys, can you make this? And they looked at it. Yeah. And they made it. It was the most disgusting cocktail ever. But he drank it. But, but the playing around. And then I actually played around with a little bit more and it's the best chatbot I've ever played with. But even on an episode last week, I'm interviewing this person and they have a background in this, this and this and they specialize in this. Can you give me a list of questions to ask? Spat out 10 questions and I use two of them.
Shaun Broughton: Yeah, it's getting really, really good. It's been floating around our company for a bit. Everyone's playing with it when looking at what it can do. And at first you're a bit taken aback, like, you know, the PR team's like, whoa, hang on a minute. Sorry, Ben. We were playing with it. You were there, Ben. So yeah, it's getting. It's definitely worth, if you like that stuff to get in and play with it because it's the use cases I think are, I mean, somewhat endless.
Nathan Bush: Well, you wouldn't want to be an SEO copywriter at the moment.
Shaun Broughton: Yeah, yeah, it's pretty amazing.
Nathan Bush: All right, last prediction I have for you. Tricky one. Can you give me a number on the overall year on year growth or decline that you expect in Australian e Commerce in 2023? Zoe?
Zhoe Low: Oh man. What I mean for the everyone it's flat but okay.
Nathan Bush: Yep. If you had to pick one side or the other gross decline, I'll say
Zhoe Low: it's hard because I'm not educated enough to make the guess. But for us it'll be a growth.
Shaun Broughton: Yeah.
Nathan Bush: Cool. Sean.
Shaun Broughton: I think dollars will decline but as a percentage of sales between online and offline will plateau a little bit as an increase on past years. So everyone's different but it's always kind of been around the 10 to 14% of sales going through E commerce. If you look at like the whole commerce side, like first online and offline, I think we're plateauing a little bit. What we're seeing, I think we'll plateau, but we'll plateau at a higher percentage of a mix of the business than what we have been in the past. But the total dollars will drop.
Nathan Bush: That makes sense. I had slight growth, had about 5% growth because I've been caught out by other years saying it'll decline and been proved wrong multiple times. But I think we'll see a lot more basics. The supermarkets, the. All the basics rather than the big shiny stuff making up a big bulk. But whether it's profitable or not is the next question.
Shaun Broughton: Yeah, Australia's a hard country to pick. Right. Let's. I mean it's an awkward thing to say, but we're rich and so sometimes we get pretty insulated and even through Covid and things like that, there was months during COVID that there was more dollars being spent GMV wise than the uk, which like they're out of that. What have they got? 80 million people. We're up. Yeah. Up against our 26, we'll call it. So every now and then we bat above our weight.
Nathan Bush: So yeah, better at cricket and shopping. Zoe. Sean, thank you so much. You've given us such a brilliant look back on 2022 and some thoughts for people planning their 2023. Is it tools down now? What's on ahead for the holidays?
Shaun Broughton: Done. I got one more week to go and I'm uninstalling slack. I'm uninstalling my email Client throwing my mobile phone in the ocean and I'm going to do nothing. I just. After this run, man, I don't know how everyone else is out there talking. There's a partner event in Sydney last night. Just the word on the streets, like, everyone's pretty, like, out of fuel. And so I'm pretty keen to just do nothing, sleep, sit on a beach barbecue and have a very, very chilled, chilled holiday and then get my travel revenge in winter when I'm going to go back to the Mediterranean. That's when my travel revenge is coming. I'm waiting a while, so.
Nathan Bush: Good. Zoe, what are you doing?
Zhoe Low: I just came back. Well, you guys are going to laugh, actually. This audience will appreciate this. One of my best friends decided to get married on Black Friday weekend. So in Thailand.
Nathan Bush: Yeah.
Zhoe Low: And decided to take us out on a yacht with no reception in the middle of the Andaman Sea on Black Friday. So I actually have just come back from a full week of Phuket island holiday. So I'm ready to go. I'm actually working the whole way through because I've spent most of the year doing, doing, doing, and so I'm going to spend that, you know, transition from December to January to work on strategy. And I'm really excited, really, really excited about it.
Nathan Bush: Beautiful. And so, Zoe, if we've got listeners who haven't snapped up their July luggage yet, or maybe doing a bit of Christmas shopping, best place for them to do that, july.com.
Zhoe Low: but, you know, if you're a listener, you should definitely DM me on LinkedIn and maybe I'll hook you up because we love a friend of Bushy's.
Shaun Broughton: There you go.
Nathan Bush: What an offer.
Shaun Broughton: Look at that.
Nathan Bush: Christmas presents all around.
Zhoe Low: Hit me up, hit me up, you
Nathan Bush: know, And Sean, you mentioned some of that amazing research. Best place if people want to dive into that a little bit more.
Shaun Broughton: A lot of it's all readily available on just shopify.com we've got access to a lot of all the data and research that we've done, so those that love that stuff, dive in. It's all readily available and I think very recent too, which is good.
Nathan Bush: Yeah, it's awesome, guys. Thank you so much. Enjoy that break and we'll see you again next year, hopefully.
Shaun Broughton: Thank you very much. Have a good holiday.
Zhoe Low: Thanks. Wishing.
Nathan Bush: I know there was a lot of talk in there around some potential headwinds coming in 2023, but I left that conversation so much more excited about the prospects of 2023 than I was before it. And I think July doing such amazing things as a retailer and Shopify obviously leading the pack when it comes to technology solutions and empowering retailers. One of the messages that I took out of that was that our destiny is still in our own hands as retailers, no matter what else is happening around us. Here are the three things that stood out for me from that conversation. Black Friday is not quite over we obviously heard from Sean around Black Friday numbers from 2022 and they were up across all key metrics. That was a surprise for me, but Sean and the team are the ones that would have the best view across a whole bunch of retailers and industries in E commerce in Australia. But I believe that there is a fallout still to come as many businesses were relying on Black Friday to clear inventory and to hit revenue and cash flow numbers. It will be really interesting to see what 2023 brings, especially those first three months around what stores can make it profitable. And based on Sean's numbers, it's a great story so far, but my focus would be to get those Black Friday Cyber Monday customers coming back for a second or a third drink in 2023. That customer lifetime value from that period will be critical. Second one I've got is doom and boom. So one of the key lessons I'm holding onto from that 2023 Shopify research is that 2023 will be tight and customers will be price conscious. So we're going to have to play the price game. But overall spending may decrease but but it doesn't mean that wallets are glued shut so we can't go in with that mentality. Customers are still looking for an escape no matter how tight it gets, and they will spend on themselves if they see it as valuable and of quality. You just need to be there and adjust your positioning for when they are ready. And the third one I've got is that beauty still wins. There's nothing tangible or if I'm honest, uniquely blue ocean strategy about July. In my opinion anyway, it is just incredibly well executed from redesigning the suitcase wheels in a way that they've never been designed. Head back to 8th and story in episode 231 if you want to hear that one. All the way through to creating stories that ignite the travel revenge passion. How good does that work? But there is heart and beauty throughout everything that July does and this puts them in a great position beyond what short term promotions or what the external economy is doing. They've actually created their own playground and the benefits of that playground will come for many more years. So that's it for 2022. It has been such a brilliant year. I feel incredibly lucky to have the opportunity to speak to so many Australian e commerce leaders, founders, experts and and of course you lot who keep sending in your comments and your questions. I just absolutely love it. And thank you so much for being so involved throughout the year. I can't wait to do it again. And speaking of next year and we are kicking off with an absolute superstar of the Australian e commerce industry. They are our number one requested guest and we'll bring that episode to you starting in the second week of January. Between now and then we're going to release some more time checkout episodes for you on Monday and Friday, so keep an ear out for those, but we'll see you again in full form. 2023 with a amazing episode. Have the best, most brilliant, relaxing, rejuvenating Christmas break and we'll see you then. To get the highlights of today's episode, head on over to add to cart.com and sign up for our free newsletter each Tuesday. We will send Monday's episode summary links and discount codes for you to go next level on. And if you're looking to explore your next e commerce opportunity, come and Visit us at eSweet. We're a dedicated e commerce talent agency connecting the best e commerce talent with the fastest growing brands in Australia. Head on over to esweettalent.com where you can download the free e Commerce Salary Guide and sign up to our weekly e commerce job emails. Thanks for listening and until next time, keep those customers adding to cartoon.
