Podcast transcript
James Dihardjo
Johnny, thank you so much for making time in what I think is probably, I don't know, 9am maybe in your part of the world?
Jonny Staker
8 am here, light's just starting, sun's just starting to come up, yeah.
James Dihardjo
Yeah, it's very early for this sort of thing, but thank you very much. I just wanted to do our usual interview layout that we've been doing for a very long time with various agency owners, but I wanted to get you to kick off and maybe tell us a bit about yourself, your agency and how it differs from the rest of the field.
Jonny Staker
Okay. Yeah. So first of all, pleasure to be here. Thanks for having me on. Early mornings are fine. Gets us out of bed. So, Vanquish have been going in this form for about two and a half years. My background is kind of over 20 years in physical product and brand building. So I've had various companies and then transcended into ecommerce companies been involved then in sale to private equity and joined the board there and assisted with running one of my businesses beyond that and decided that corporate life wasn't for me. So, we built Vanquish with one thing in mind, which was the, you know, we wished that we had this kind of a service and a product when we were running our own brands really. So we just found a huge hole didn't exist. So, effectively we built a model for end to end international expansion and scale and we feel that we do that in a very unique way.
And effectively, you know, we're channel agnostic, so we don't rely just upon Amazon. And we've got international expansion as a core competence, whereas a lot of other agencies will obviously look to outsource that kind of thing and kind of stitch together a patchwork solution. And finally, our Accelerator Model, which usually comes after the full expansion stuff is we call it our Reliance Model, which is differing completely to other accelerators, because it's a win win kind of shared revenue scenario. So that's got a lot of people excited. So in a nutshell, that's what we're doing.
James Dihardjo
Interesting. I think the thing that caught my eye is the whole expansion mentality. Like I've seen my LinkedIn feed, you're the guy, it's always the comment is like, you got to go multi-channel got to go global. And you know, that's what caught my eye when I think of you. But I guess just on that point then in terms of like content, so, you know, you've got some great case studies on your website talking about Okko and Lomel. Tell us about how multi-channel expansion plays a role in those sorts of scenarios, if you can.
Jonny Staker
Yeah, so obviously, every brand is different, and it depends on the site. So, two that you've mentioned there. One is a personal care product this big, another is a homewares product probably this big. So just depends entirely. So for some Amazon presents an obvious solution to just go straight into a new market and we can leverage things like FBA and it's a great way in but for others with oversized products and things that are a little bit more a bit more big and bulky, if you like, the scenario is totally different and you have to kind of look at where does outside fulfillment come into play so that we're not affecting Amazon's inventory scores.
And, you know, kind of what does outbound freight look like? And so in that scenario, it kind of naturally presents itself that Amazon's not always the only solution. I think with, particularly with things like home and lifestyle products. We'll often look at that and see the 20 to 30 percent of sales are coming from places like Wayfair, Overstock, Bed Bath and Beyond, places like that. Well, the two of merge now actually, but so yeah. Of Amazon channels, totally depending on brand. But I think generally speaking, brands that are aggressive and consider themselves a true brand that wants to go out there and build something meaningful with a strong exit multiple or a good, a good solid retained profit or looking at multi-channel. I think everybody's seems to be excited about that. It's just navigating that.
James Dihardjo
Get it. I just want to drill down on something there. Like you just talked about building a proper brand, getting a nice exit multiple. Is that through the perspective of if you're a single channel reliant brand, you have this centralization risk. So when you talk about that, are you talking about like diversification of revenue being a good thing or it's actually a great opportunity and you can show more growth? Like what lens are you kind of like applying in terms of like multi-channel relating to a good exit multiple?
Jonny Staker
Um, well, I think obviously my background and experience with Private equity gave me a lot of insight into the exit piece. And I think whether that event will actually culminate in an actual exit or whether it will continue to be a business that you'll own forever. I think the end goal is the same and that is to maximize the EBITDA in the business. So I think when you look at multiples, you can kind of see the progression. So I think we, I've done some posts on this and we have some infographics that we show around, but effectively, if you imagine that a wholesale company selling to retail stores has probably got a one or two times multiple, you can kind of follow that through as a progression as to how that works in terms of going online is probably pivots into a three X, go at international, probably pivots into a four or five X. And then that diversification of risk, which you kind of touched on is particularly attractive to institutional acquirers, because obviously the less eggs in one basket, the more exciting and saleable and solid a company is so absolutely the multiples go up. In a business, if they're spread across their kind of sales sources in a nutshell.
James Dihardjo
Get it. That's clear.
Jonny Staker
Yeah.
James Dihardjo
So looking at the other side of the coin here, obviously lots of folks talk about multi-channel being a distraction. Maybe that's something that comes out in this particular region. But, clearly, you have a different view, and I know we just touched on what, maybe why you have a different view, the PE background, but what is the foundation for that perspective of multi-channel not being a distraction? And actually, it is a really good thing for the business.
Jonny Staker
Well, I think ultimately, what's the distraction and what's not a distraction? I think everything in some ways a distraction in our business, but it comes down to, what else are you going to do? I think if you haven't, if you're kind of a 30 percent and you've got another 70 percent you could do on Amazon because you're out, you've constantly out of inventory or you're constantly running out of ad budget and you're not pushing the throttle in various areas, then absolutely focus in an exploit one channel.
But what we're seeing more and more is that, you know, brands are coming to us and saying. You know, we've either peaked and plateaued at a certain level on one channel, and let's say, for example, that's Amazon and in some, in many markets, particularly the U.K. and the U. S., U. S. A., you're seeing that flip on its head and say it's actually reducing because there's more competition, Ad spend is going up because of that. So, it's a bit of a self-fulfilling prophecy. So what do you do? Well, you can either just keep pushing harder and kind of watching your ACOS go up and continue to spend on Ads and you could probably bring in new SKUs, which again, new SKUs are a risky thing. I think one in 10 SKUs, new SKUs fail. So it's kind of like a new SKU is like a new business effectively and all that comes with building that traction. So, you can either look at it as a distraction or you can look at it as well.
Actually for a lot of people, particularly now, there seems to be more excitement around or in some cases, not even excitement, just absolute desperation of how do we, how do we get past this plateau and this wall that we fit? So, you know, not a distraction at all, but a necessity for those people. So I think it comes down to, again, as you mentioned, the true brand scenario, if you really want to push past being an Amazon seller, because being frank, being an Amazon Seller, it's not your business, it's Amazon's business and you're kind of a part of their business. If you want to go beyond that and become something bigger, you've got to have challenges or call them distractions or whatever. That's I guess why we're all in business.
James Dihardjo
Yep. Now I hear you. Now, I'm throwing another lens on this. How do you think this multi-channel multi-geography will affect agencies? How does that like, obviously go back a couple of years and none of them would talk about it. Now it seems to be more of a popular topic. So what's your perspective? How will affect agencies going forward?
Jonny Staker
Yeah, well, we're seeing the good question. We're seeing the effect of that on a daily basis, really, I think we don't go out to, personally, we don't go out to compete with agencies, we support them. And I think that's a good thing as well. So as well as, you know, having our direct relationships with brands, we're also supporting agencies, and helping them to do this piece.
And I think going back to what you say, yeah, it's a challenge for them because, there's kind of two camps, you know, brands are coming to them and saying, we'd like to expand overseas and agencies are either saying, yes, we can do it and going off and trying to patch things together and come up with a solution, which is dangerous and risky for a brand. It's not something to kind of just sell it together. But we are seeing that happening. And alternately, we're seeing brands say, look, we need to gear up to be able to do this, but it's, you know, it's a vastly specialist area.
So we've kind of set out to say to them, look, you don't need to go off and try to learn how to do this stuff and build the capabilities in-house. We've already got it. We can support you and help you to do that. So we've got an agency program and we're helping lots of agencies on a daily basis to do that. So absolutely, they need to be a fair with it, but they don't necessarily have to be able to do it in-house. They can rely on a partnership to do it. Yeah,
James Dihardjo
Yeah that's, I mean, that's very interesting and certainly opens up a lot of opportunities for you. I guess changing gears just a little bit, next three questions I want to talk about technology, events, and just new markets in general. So, the technology one I wanted to hit you with was and it's probably good timing given what you're probably looking at in terms of making a decision. As agencies move, like their clients since multiple geos and markets and what have you, you know, how do you see kind of technology playing a role in that? Do you, like, for example, do you think new tools will pop up or agencies will revise their technology stacks? Like, where's your thing here in terms of the technology side of agencies moving geo and multi-channel?
Jonny Staker
Well, yeah, I mean there's obviously heaps and heaps of new tools coming out to assist with it. I think again, there's two sides to it. There's the AI conversation and there's the straight kind of tool conversation. And I think AI, I was having a conversation with a mutual friend of ours, Martin Zerudo last week, and we were talking about AI and the effect that it's having on some brands and agencies.
And I think the big mistake with that is that a lot of them are relying directly upon AI to just do the job. So they're just saying, look things like translations when you're going overseas, they're just saying, let the tool do the job, um, and building listings, there's a tool for that. It'll do it in 30 seconds or whatever, and so on, you know, right across the board of what's available. And I think from an AI perspective, again, it's dangerous because humans have got this awful, lazy habit of thinking that a tool will just do the job. But, I think the real standouts of the people and brands that still understand that it takes brains and a real creative human being to inform an AI tool, how to do its job.
So, you can tell a listing that's been generated even by the best AI tool, you can just tell. And if you're native to a country like France and you see listings that have been AI-generated, you can just, you can see them a mile away if you're a native French buyer. So it's going to be destructive. So I think therein, there's an opportunity for people to say, well, yeah, we need the tools, but we have to leverage them and combine our own sensibility with it as well. So that's, that's kind of the AI side of it.
And I think, you know, tool-wise, absolutely, there's no way that you can go multi-channel, multinational and blow things up without a very, very hefty tool stack, and obviously, things like MerchantSpring are just absolutely essential there being able to see from one dashboard, all of your sales and all the brands that you're managing, things like that. It's going to quickly run out of control and it does for many people. You'd be amazed how many are still using spreadsheets and flicking across 20 screens and disparate data. Um, you know, incoherent reporting. It's still rife. So, I think absolutely it's crucial when you go in multi-channel and, and global to get it right.
James Dihardjo
Get it. Well, I kind of expected that answer, but you definitely delivered it in a very polished way.
Jonny Staker
Yeah. (laughs)
James Dihardjo
So, yeah. The next thing was events, right? So, are you big on events like e-commerce events and which ones, if any, are you planning to attend in 2024?
Jonny Staker
Well again, we used to do kind of all of the ones that we could do, but I think just before we press record, I think we both agree that bandwidth is a major issue now and kind of getting your priorities right. And where you're going to expend your time is just crucial really. It's busy. Everybody wants us from one direction to another. So we do one that's kind of non-negotiable is Prosper. You know, obviously, that's the one that I think it's great for networking with other providers, you know, tool providers, brands, anybody that we kind of really need to connect with. It's a great place to do it. So we'll do that. But otherwise, we're kind of more focused on rather than industry, we're kind of more focused on trade show events that brands are exhibiting that so we can get around and talk to them, touch and feel the product. So we get we get people out to as many of those ones as we can across the US and Europe really.
James Dihardjo
Yeah, I get it. Okay, that is great because I'm now looking forward to bumping into you next year.
Jonny Staker
Yeah, it'd be good. Look forward to it.
James Dihardjo
The final question. And I'm trying to steer your answer a little bit here because I'm quite interested. So, since you've got such a global multichannel view, right? If you're in the UK or you tell me the answer, but if you're in a particular country that you're familiar with where are you seeing the most potential at the moment? So just give us like a geo and a channel. So, if you're maybe if you're in the US, what's the most opportunistic geo and channel, or maybe if you're in the UK, what's the most potential new geo and channel?
Jonny Staker
Okay. So obviously like all of these things, it's not a straightforward answer,
*(Both laugh)*
Jonny Staker
But, as straightforward as it can possibly be, I think we talk a lot about manufacturing blue oceans. So, you know, it sounds like a bit of a bit of jargon, but we talk about saying, well, if the market's saturated for somebody, it's a blue ocean for somebody else. Like one man's meat is another man's poison type scenario. And the reason for that is because if you're a European brand, let's say you're a British brand and we do a lot of British brands into America. American consumers have a good, a great affinity with British brands, for example, So. You know, everything they perceive as not everything that's an overstatement, but they perceive a lot of what comes out of Britain has been quality and with prestige and so on.
So you've kind of got to work to that and ensure that your brand's positioned to that rather than kind of going in and trying to beat people at their own game. So in that sense, there's tons of room. It's not saturated if you come into it with the right mindset and the same as vice versa, you know if you can come into Europe. Bearing in mind that only 2% of for example, 2% of US brands ever cross the Atlantic and sell in Europe, which is crazy. So, you know, and given that the 60 odd percent less sellers in the e-commerce market in Europe, it's just wide open.
So, the opportunity kind of to do that is dependent on where you're coming from and you can manufacture that blue ocean. But in terms of where the big opportunities are, we kind of, let's take the UK for it for example. We'll kind of say that the US is the next best place to go. And vice versa for the U. S. to Europe, really. And the last frontier is Asia. So, you know, Asia's got huge, obviously phenomenal opportunity, but it's the last frontier of e-commerce, in my opinion, because it's the most difficult market to conquer. But yeah, we're seeing 12% annual growth. And even places like pop-up places like, um, MENA and the UAE, that's kind of an outsider that's emerging. Quickly and they're I think, 12% annual growth. So we're seeing a lot there.
And in terms of channels, again, we could pick any example, but in the US, for example, depending on the brand, if it's a home and lifestyle brand, which we tend to work with a lot, not exclusively, but a lot, a nice combination of something like Amazon, which is advertising Hungary combined with something like Wayfair or Overstock, which is more drop ship friendly, we're seeing that that does wonders for an overall TACOS in the business and kind of does wonders for the bottom line. So something like that as a way in would be great. Uh, you know, hope that gives you a good enough answer to that question.
James Dihardjo
No, that's great. That's great. Because especially you mentioning Wayfair and basically anything that's not Amazon. That's great. I love that answer.
*(Both laugh)*
Yeah, look, we're about we just hit a 22 minutes and I am conscious of time. So firstly, thank you very much for sharing your thoughts. I have really enjoyed it. And I'm sure people listening to this will actually find it quite insightful how you think about the different markets and how it ties to value and so on. So really appreciate it, Jonny. And, Yeah. I have to have you back for another session.
Jonny Staker
Yeah. Likewise. No, thanks so much for your time. And I'll go and start my day with a cup of English tea, I think.
James Dihardjo
Goodbye mate.
Jonny Staker
Okay great. Take care. Thanks for your time.
