Show Notes
Carl Lewis: Welcome to The Connected Enterprise podcast. I’m Carl Lewis, your host from Vision33, and my guest is Regina Ye from Topsort. Regina, welcome to the podcast. Please tell us about yourself, your journey, and Topsort.
Regina Ye: Thank you, Carl. I'm a serial entrepreneur. I studied computer science and started a small eCommerce business while in school. I sold travel cases through retail and wholesale channels and on Shopify and Amazon. That planted the seed for what's now Topsort. At Topsort, we're democratizing the technology behind Amazon and Facebook ads and turning it into an infrastructure API for other sites that could benefit from the same ad technology.
Carl Lewis: Wonderful. Many startups get interested in marketplaces, and everybody knows about Amazon and eBay—but you've taken this to a different level with Topsort. What are some benefits of being part of a marketplace?
Regina Ye: Marketplaces are fascinating. They’re a delicate ecosystem. Especially if it's two-sided and you have to consider the user, the seller, and yourself. Any little tweak affects every party. Being in a marketplace helps with exposure for small brands. It's especially exciting to see a big rise of multiple vertical marketplaces. It gives sellers more options. And many provide good infrastructure and value-add services beyond just a platform to list yourself. They help with fulfillment and hopefully the top source of growth strategies. Those things together make starting out even easier.
Carl Lewis: Along comes a relatively new business, and they want to do business on three marketplaces. How does Topsort help?
Regina Ye: We don't go to brands directly, but many come to us. Smaller merchants say, "We love your product. We sell on three or five different marketplaces. Can we tell the team at X, Y, Z that we love working with you guys through this one platform and help you grow more?" A lot of our organic growth comes from that, but we also have a simple, direct go-to-market strategy where we tell the marketplaces, "You have all these sellers who are also on other platforms. And their marketing dollars only go to the big guys: Amazon, Facebook, and Google. Not you."
Regina Ye: "But you have a chance to capture some of those marketing dollars with this tech." Then, we develop a relationship with the small vendors where they use our product to manage their sell-through rate and exposure on a marketplace.
Carl Lewis: What are some keys to succeeding at selling on a marketplace?
Regina Ye: You need to be resourceful and understand the audience. Different marketplaces and apps have different styles and characteristics and attract different audiences. That requires different strategies. Say you’re selling earrings on Depop, eBay, and Amazon. They’re so different. You must understand the competition and landscape to be a successful seller. The product is also important.
Regina Ye: Some people have a product that just sells. It always turns out well. They have strong ratings and reviews, and their product transcends different styles of marketplaces. Sellers also need to stay in touch with the marketplace’s direction and try to make a name for themselves.
Carl Lewis: Since we talked last, I’ve visited many niche marketplaces. Every time I go, I notice things that show up as ranked high. Sometimes they say “sponsored ad.” What are they, and how does that work? How do you get ranked on these sites and get a good reputation?
Regina Ye: It’s discreet on Fiverr, Upwork, and similar sites. They’re sponsored listings/ads, so when someone goes to those sites or marketplaces, they can browse categories and search for specific keywords or one item. When the results come in, sponsor listings essentially run a real-time auction with everyone who wants to be the first, top-of-shelf result because that's the most valuable spot on the page. And there’s one winner.
Regina Ye: So, that “sponsored” post is the winner of the thousands of vendors who competed in the auction. When you win an auction, it means you got that “impression,” and they see your ads. It looks small, but there’s sophisticated technology behind it that needs to be fast and render in real-time.
Carl Lewis: And when a site tells you something is the most popular item, is it really, or is it just because a vendor paid behind the scenes to rank that item as the most popular?
Regina Ye: That's a great question. The auction algorithm isn’t responsible for every label. If you look at a product listing on that image, there are four corners. On some eCommerce sites, three corners have labels like new release, bestseller, back in stock, etc. Topsort only does the “sponsored” label. In many countries, it's not regulated, but in the US, you must label it saying it's a paid promotion. And that part’s decided by either an algorithm or a human.
Regina Ye: If the marketplace is new, they don’t have any machines supporting that. But ‘back in stock,’ ‘editor's favorites,’ ‘most popular,’ etc. are curated by the team. It's often manual and a combination of human effort and curation—and maybe a little mathematical ranking. Those things are a bit combined and sometimes run parallel.
Carl Lewis: So, there could be machine learning helping with the rankings, but sometimes it's just people behind the scenes saying, "This one's popular, so we're going to mark it as popular." A combination of a mathematical expression of popularity and some human judgment.
Regina Ye: Yes. And not every company keeps it simple. Sometimes companies, especially the bigger ones, weigh in 20-30 variables for that algorithm, and winning is more of a mystery. That’s why, if it's just a mathematical game, it makes it much easier when the rankings are things you can figure out and have clear metrics to point to.
Carl Lewis: Interesting. You work with multiple marketplaces, some big, some small. It seems the trend is for marketplaces to become more specialized. Is that what you see?
Regina Ye: Yes. We see multiple trends because that's how we spend our time—talking to marketplaces, thinking about marketplaces, and talking to retailers. Many retailers are trying to find their edge. Trying to be more ‘out there,’ embracing the DTC brands, growing their offerings, and betting on new trends. Retailers move faster than a few years ago. And the marketplace is becoming more vertical. When we looked at different marketplaces internally for our sales, we realized the best ones didn't exist two to three years ago. And the ones that were very prominent two to three years ago are either public or gone.
Regina Ye: There's lots of consolidation on top, but the up-and-coming ones need to be unique and stick to a vertical to be recognized as having a chance in this very saturated market. And the benefit of marketplaces is that they’re a little bit like fun, right? You're going on an adventure, finding different things. The winners of marketplaces will have clear positioning and grow in their verticals.
Carl Lewis: It's easy to go to Amazon and look for everything. And even though it seems like they have everything, it also seems like they have a limited supply and limited vendors. If I want auto parts or cosmetics or women's clothing, it’s like marketplaces are the new department store. And the department store has a theme. Are people moving away from the superstore back to shopping in product-specific stores? What are the challenges to the superstores like Amazon and eBay that have so much? How do they see this competition?
Regina Ye: It's fascinating. The smaller marketplaces have stronger relationships with their consumers sometimes. They're the best in cars, flowers, vegan food, whatever. The ones who stick to their niche, are passionate about one subject, and position themselves as the lead in the vertical attract stronger consumers and more loyalty. And that’s not how it works for the big guys. I think that's why they're feeling the heat and looking for places to innovate. But it's harder to manage the curation and message when you sell everything. There are things I used to buy on Amazon that I don't anymore because of the fake reviews and products.
Regina Ye: I’m not saying they can’t develop a strong relationship, but I think it's harder. Sometimes, large marketplaces and retailers have innovation departments that break out and almost become startups within the larger company. And those do well if they have their own voice and talk to consumers. It's the authenticity—feeling like you can trust people and they care about what they're selling and the vertical. Those things help the little guys win.
Carl Lewis: It seems like these smaller marketplaces care about the niche place. They care about the quality of the items. Whereas it’s just about adding one more vendor for the large marketplaces. Quantity over quality. They're not part of the community. But the smaller marketplaces care more and know more about the products on their site.
Regina Ye: Yes. And they may not be maximizing for the SKUs they carry. Many say no to vendors. They don’t welcome everyone to list on the platform with open arms. I think that's helpful. Like Amazon used to be a bookstore. Books were their niche. Then, things opened up with third-party sellers. It's essential to go through that initial stage as a marketplace where you stick to the lane and position yourself as the best in one vertical. Then getting that shared mind is key for when large retailers transition to a third-party marketplace model. With brand equity, they can transition smoothly and quickly.
Carl Lewis: I’ve also noticed that when I find a product I'm interested in, the marketplace has more information about it than some of the bigger stores.
Regina Ye: Yes.
Carl Lewis: I prefer a more in-depth discussion about the product and its benefits. One last question for you, Regina. How do you help your startup marketplace clients? What is Topsort’s top value for them?
Regina Ye: I've spent a lot of time thinking about this. The market is so big, it’s sometimes hard to narrow down what to focus on. It’s, "Ok, we can't boil the ocean. What are the most critical pain points for the marketplaces? What do they need?" That’s for the small guys and the big ones, because even the top 20 players globally have all kinds of pain points. Marketplace eCommerce infrastructure is behind DTC eCommerce infrastructure. There’s Shopify and its universe of plugins, but there's no equivalent for marketplaces.
Regina Ye: We're developing something now—hopefully launching in a month or two—to help smaller up-and-coming marketplaces. When I consider features, products, and conversations with the smaller and newer marketplaces, much of it comes from first-level insights, like understanding what's going on before acting. There's not much visibility and data available for people running marketplaces.
Regina Ye: A lot of it’s still on Excel spreadsheets. Managing the relationships with the sellers is a manual back and forth. They may not know the value of a certain real estate spot, like a page, or which products are being searched for the most. Although these things are basic, they’re critical to business—and they don’t have a solution now at scale. That's where Topsort comes in. We want to help the new and up-and-coming marketplaces.
Carl Lewis: Did the pandemic give rise to a lot of new marketplaces or new ideas about marketplaces?
Regina Ye: Definitely. It also helped marketplaces grow—explosively. Some marketplaces we're talking to that weren’t public three years ago are public now. And there was a behavioral shift of adopting eCommerce and scaling quickly within a vertical because of the pandemic. Those helped the marketplace ecosystem boom more.
Carl Lewis: You've worked with several marketplaces in the last two years. Do you have a favorite you would recommend? As a consumer.
Regina Ye: I'm a beauty products junkie. I’m very into skincare and cosmetic trends. There's a company called Detox Market with lots of clean beauty products. They remove things that are traditionally in cosmetics but are bad for you. And they have clean vegan beauty products. The site is beautiful, and I've been to one of their stores in New York. That's my favorite marketplace.
Carl Lewis: Detox Market. I'm sure some listeners will check that out. I wouldn’t be surprised if one of my good friends, who’s a startup in the natural skincare products industry, had their products listed there too.
Carl Lewis: Regina, thank you for being here. It was educational. Most of us are searching the internet and doing business with these folks but don't know much about them.
Regina Ye: Thank you for having me.
Carl Lewis: And for everyone else out there, stay connected.
