"Total cost of ownership [of an ecommerce platform] is often much higher than you assess during the RFP process." - Mark Friedman talking about the real costs of tech decisions
Commerce Famous Podcast, episode 16: Mark Friedman on the journey of the mid-market merchant
In this episode of the Commerce Famous Podcast, host Ben Marks chats with Mark Friedman from Details Interactive to delve into the nuanced world of mid-market ecommerce.
With his extensive background in the apparel industry and a keen eye on digital evolution, Friedman, alongside co-author Rick Watson, has penned a revealing report, "Breaking Up Is Hard to Do: The Journey of the Mid-Market Merchant." This discussion is set to uncover the critical challenges and decisions faced by mid-market merchants in today's fast-paced ecommerce environment. Tune in to gain valuable perspectives from industry veteran Mark Friedman and navigate the complexities of ecommerce with greater clarity.
Listen to the episode right here or subscribe to Commerce Famous on Spotify, Apple Podcasts, or your preferred podcast player
"Mid-market merchants have almost all the requirements and complexity of an enterprise business with no margin dollars to pay for it." - Ben Marks
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Transcript of Commerce Famous episode 16, an interview with Mark Friedman
Ben Marks: Hey, everyone, welcome to commerce famous. I'm your host Ben Marks, and with me today is Mark Friedman of Details Interactive. Now, Mark is a seasoned veteran with decades of experience in the apparel industry. What's really exciting for me, though, is that Mark, along with his co author Rick Watson from RMW Commerce, have released a report called breaking up is hard to do, the journey of the mid market merchant. This report delves into the challenges facing mid market merchants, challenges especially around platform choice and what's happening with them today in their industry. You can download the report at Dashmarket. Mark, welcome to the Commerce Famous podcast.
Mark Friedman: Thanks for having me, Ben. Good to be here.
Ben Marks: Now, you've been in business for a while, right? Your cv goes back, I think we're.
Mark Friedman: Not going to say.
Ben Marks: Okay, it goes back a few years right now, you started out actually as an auditor group that ended up eventually becoming part of Deloitte, and then you quickly ended up in the apparel world. So we'll say 90s, right? So that won't betray your h too much here, right? So in the 90s, you end up, you're at Tweeds, you're at the company store. Great story there, by the way. I was reading, you guys took it from 40 million to 150,000,000 in four years. And then eventually they're required by Home Depot in 2017, Brooks Brothers Redcats. And then we get into the digital age, right? So you're chief digital marketing officer at Varnaco. And this period of time, so 2006 to 2010 was a really interesting point in the history of ecommerce. This podcast is all about telling the story of ecommerce, how it was and kind of why it is the way it is today.
Ben Marks: What were some of the interesting challenges back then? I mean, it was almost Greenfield. Maybe a little bit like a completely untrod field at the time. Anything stand out to you back in those.
Mark Friedman: Well, you know, I was very lucky I got to Warnico because the fellow that was the CEO there had taken it out of bankruptcy. He's the same guy that I worked for at Brooks Brothers, as I like to say, at the turn of the century in 2000. So he asked me to come there. It was a $2 billion wholesale company. They had some legacy brands. They also had licenses for Calvin Klein underwear, Calvin Klein Jeans, and Speedo North America, and predominantly, like, 95% of the sales or more were done to other retailers. In the wholesale vein, we had a digital business, but it was very, very small for Calvin Klein underwear, for jeans, and for Speedo. And that was kind of my domain.
Mark Friedman: They were on a really small mom and pop kind of platform. We ultimately replatformed with the idea that we wanted to try and grow these businesses digitally, although we weren't quite sure what that really meant, because we were a wholesaler, we were competing, like many brands were. We were competing with the retailers that were also selling our product. Speedo was available in tons of stores, Calvin Klein underwear in Macy's, and all the major retailers. So we had to find our way there. It was hard to find people that knew the technology. It was hard to find people that knew how to drive traffic to sites. Although there was technology available, it wasn't the shiny object syndrome, kind of a timeframe that we live.
Ben Marks: Mean. If you look at the period of mean Google Analytics was in, its mean. There was no Facebook for driving a know. So you really had to kind of make all that stuff up. And I think that was great experience for you going into the very long term. You did at Steve Madden, right? You were there for about seven years, right?
Mark Friedman: Yeah, I was there seven years. And they were very early to digital. They had been doing some things. I got there in 2011. They had already been doing return to store. They'd been doing ship from store. They had a homegrown net platform with a homegrown team in marketing. And they also were a wholesale business, predominantly great brand, lots of longevity.
Mark Friedman: Customers that were growing with them from the time they were in high school until they became moms and then buying with their kids. So the site, when I got there was, I kind of look at sites as kind of two extremes. It could be very branding or very commercial. They were extraordinarily commercial. And for a business like that, which kind of thought of themselves as it was an early lifestyle brand, we needed to kind of swing the pendulum back to the middle. So we redid the creative and the execution of the creative and the messaging, and we looked at it like it was. It was our largest store, and we wanted to use that store to help extend the brand. So we put a lot of storytelling, a lot of great creative, but we also think we improved the commercialization of it from being less friction, improving conversion rate, and driving growth in the business.
Female Narrator: Commerce famous is proudly presented by Shopware, the leading open source ecommerce platform for midmarket and lower enterprise merchants. More than 50,000 clients already process over $25 billion in annual GMV through Shopware. Find out more about Shopware and the best value in e commerce at.
Ben Marks: You know, with that kind of pedigree. And you and I talked in the run up about how you'd went through a replatforming there at Steve Madden. Steve Madden. I think it's a really interesting story because the namesake, he was like, there in the office every day, right?
Mark Friedman: He absolutely was. It's pretty funny. There was a time he called me into his office and he liked to trade stocks. And one day he said to me, this Google, do we really need it? And I was like, well, yeah, we kind of need it because it's the only thing, really, that's driving traffic to our site right now. And he's like, okay, that's good enough for me. And then two weeks later, he's know, that was very smart of you to tell me that we really needed Google. I made a few bucks after we talked about.
Ben Marks: I love this story, the down to earthness of some of these legendary founders. And for me, it drives home that you're there. You're not working for a nameless, faceless private equity firm. You're working for someone who's put their own name on the business. And I think that even ups the stakes of a replatform decision. And I think replatforming is one of the. Whether to replatform or not is one of the big topics that the industry as a whole deals with. And certainly for those of us like Shopware, who are actively pursuing and trying to serve the mid market, that question itself becomes the elephant in the room and how you take a risk to move away from what is effectively a tap, whether it's an ugly tap, a leaky tap, whatever the case may be, that's flowing, actively flowing revenue.
Ben Marks: That's something that I'd love to chat with you about a bit now. And I don't want to fail to mention the rest of your time as you've gone more into the consultancy world of late. And then again, your work at details Interactive, which I guess has been around, what, since 2018. Is that right?
Mark Friedman: Yeah. It actually started after I left Warnico. It was the first time that I left that business in a restructure. It was the first time that I didn't have a job and wasn't quite sure what to do. So like many, I started an LLC and details interactive was born.
Ben Marks: So it's been around and so that is for me really know you spent time know in the intervening kind of a, kind of a shame what happened to that. But back to Brooks Brothers doing consulting and then Eddie Bauer. So got a long established presence in the apparel world. But also looking at this from the evolution of digital commerce, the evolution and the establishment of platforms as the big playmakers in the world because I think it's absolutely the exception these days that someone would roll their own ecommerce solution at this point, right? The choices are abundant, many are mature, but yet we still find ourselves in a day and age where I think a lot of the conversations I'm having and I'm assuming in your role as a consultant, as an advisor, you probably hear that people are completely dissatisfied. And we have these discussions regularly that people are dissatisfied with the platform that they are on and sometimes that platform, they've been on it for a decade, five to ten years, and you talk to people in various roles, from the executive suite down to the actual people, the operators, who are interacting with their commerce platform day in, day out, and they are frustrated with it and they can't wait for it to change. But you talk to them a year later and they're still on the same platform. What are your thoughts around that and how often are you encountering that in your business?
Mark Friedman: Well, I think we saw it a lot when we were writing the paper that we're referring to here. But whether I've been in the business and I'm the brand guy, or whether I'm just mentoring or consulting, advising, call it what you want. I think you're absolutely right. So many people are frustrated with the platform that they're on, but there's tons of risk for making a change. The grass is always greener. All these systems are so intertwined with back end kinds of OSM, so order management systems, other ERP systems, financial systems, so you kind of can't take out the hub in the wheel without impacting so many different things around it, especially if you want to be integrated into, if you have stores and you want to be integrated into a point of sale system now you have another complexity. Sometimes you have a loyalty program that's got other iron that's supporting it. So it's not quite as easy as saying, I'm just going to replace my ecommerce platform and everything else is going to go around it.
Mark Friedman: So there's a big cost involved. There's the risk of while you're doing the transition, and once you go live of a short term, hopefully a short term blip, there's a lot of SEO juice that's been built up over time. That despite the technologist, and I'm not a technologist, despite the technologist telling me that, yeah, we can save all that and make it all good for you, even though you replatform, I'm just not sure, and I don't think I'm alone. I think a lot of people are not sure, which is why right now, I think companies that are in the ecommerce platform game are having to work a lot harder to push brands to make that change.
Ben Marks: I would agree with that characterization based on my experience. There was the greenfield without the pain of having stepped through a whole bunch of brambles on the way there. My challenge, having my background in the agency world, when we used to have to advise merchants on the right platform, and often even a platform that wasn't serviced by the agency I was working for. Right. So we would recommend against our own interest, but of course, in the interest of the merchant, the decision was easy because it was all basically net new to them, or effectively new. And you're right that as time has gone on, we're at this curious point in the evolution of digital commerce platforms, whether the build has started out good or not, and the platform decision was the right one or not, and may or may not still remain the right choice, largely philosophically, from a functionality standpoint, et cetera. There's been so much built around. It's like ecommerce is a room full of corners, and merchants end up painting themselves into all of those corners.
Ben Marks: Merchants and the technologists they work with sometimes, whether that's an in house team or external agencies. Now, when you go in, if you have to have some of these conversations, what are some of the techniques or frames that you put around this so you can help to be that? I think you described it as that fresh set of eyes on these incredibly smart and introspective companies, but they can't see the forest laid out before them.
Mark Friedman: Yeah, I think, look, having been an auditor, have been an analytical performance marketer, I think there's a lot of information that's available to us, and the question of, should I replatform? Has so many different tentacles. First and foremost, I think it's got a lot to do with what's your total cost of ownership today versus what it might look like down the road if you have a high cost of ownership today. Well, maybe that's one of your motivations to make a change. Number two, are you still in an antiquated kind of a situation where you're actually hosting on Prem? And I say that that's antiquated only because I'm not a technologist and I've seen how the world has changed. And from a marketer's point of view, who is responsible for digital commerce? I don't want to be a technologist. Right. That's not what my core competency is. And if I digress for a second, you go back in the days when I first got started in digital commerce.
Mark Friedman: Not only do we have to be marketers and product people and analytical, we had to be technologists, right? Do we have enough iron to support the peaks and the valleys and having to do load tests ad nauseam during Christmas time, during holiday. Right. As time has progressed, and let's call it the shopify's of the world for a second, if I can say, use that. You know, they've taken a lot of that anxiety away off of plates for people like me. So I think total cost of ownership is really important. And then what are the other pain points that you have in the business? Usually people will say, well, my conversion rate is good or my conversion rate is not good. If it's not good, well, is it something that's being caused by the platform? Is the platform slow? We know that site speed plays a big role in this. Is the site antiquated in the sense that it's been around for such a long time and it's become Frankenstein.
Mark Friedman: You've had code additions and code subtractions and every time you want to do dev work on it now it breaks something else. So you have no confidence of being able to build on the foundation that you have. So those are kind of the things we talk about. And then after a while people will say, well, that's too big for my appetite. I'm not willing to take the risk. And now, frankly, in the economic climate that we're in, so many brands are, unfortunately we're seeing more and more layoffs, even though the economy still feels fairly robust. And then you see a lot of brands really cutting back on capex and focused on capex that will keep the lights on as opposed to being truly innovative and developmental.
Ben Marks: Yeah, and that is for me the interesting choice. And I often use, and I having had many an old janky car in my possession over the years, and I'm a tinkerer and I enjoy extending the life out of life of something that has been with me for a while, but at some point you do say, okay, wait, now I'm pouring more money into this clunker and that amount of money, that amount of investment, and not just the monetary investment but the time and tools I need to fix it. You have to start looking at that as, okay, well this has become a real drag and could this money be deployed more strategically? Could I be getting more return? But that is of course another way of me paraphrasing or making metaphor out of what you've just said. But I do wonder if they're not prioritizing or failing to prioritize correctly the cost of remaining on something, especially a platform that's stagnant. Right. So one of the things that we've seen, it's not the case for Shopify. I think Shopify are great at innovation, but they do move at a kind of glacial enterprise. I mean yes, they announced sidekick AI shortly after we released a functioning AI suite almost a year ago, but as far as I know they're still accepting invites.
Ben Marks: It's not out. It's going to be great I think when it comes out. But then you have other platforms like my former employer Magento, now Adobe commerce. There's still a lot of zest and innovation that happens on the open source side. So on the Magento side in that ecosystem, but that's not Adobe. Adobe recruits some of that ingenuity. But fundamentally Adobe commerce as a product seems to be an afterthought and someone will call me out if I'm mischaracterizing things, but I'm not too far out of the you. I think you and Rick found some of this actually when you looked at it, when you looked at also Salesforce and a lot of businesses, and I think Salesforce has even more of a moat around it when you look at, well, Salesforce is our e commerce platform, but it's also all of these other things.
Ben Marks: So it makes it even stickier, even more difficult to switch off of that. But is there a way that you look at, look, I have empathy for the technology buyers, the people that have to make this decision because there are some bangers in this report which by the way, I should mention you can get at midmarket. One of my favorite pull quotes is no one ever got fired for not replatforming, but plenty of people have been fired for botched replatforms. Right. And as you mentioned, Mark, they're inherently, you know, you ever find yourself sitting in a room with people or a person and say I think the right thing for this company to do is to make the tough decision, start the replatforming process. But how do I let them know that this is what they need to do? How do I convince them? Or is it even your job to convince them? Do you just say, like, hey, here's the data, here's the opportunity, here's what you're missing out on. How do you work that out? Especially look at how details interactive you describe yourselves. Businesses need better data within the platform to activate, which in turn drives more business.
Ben Marks: That for me is really powerful. So you all are the eyes that come in and you come in and you start to actually look at this, you look at the different silos and you figure out, I assume you figure out how to basically have the best path forward and the right tooling for businesses to make the right decision and take advantage of all the data that is just washing over them.
Mark Friedman: Yeah. As much as I like to use data, sometimes you have to use the data, but take it with a grain of salt because there's a whole bunch of other things out there that are not data driven, like what you think the cost is going to be versus what the cost will be. Total cost of ownership is often much higher than you assess during the RFP process, number one. So number two out of this is that quote that you referenced about getting fired for replatforming. I have to attribute that to Rick Watson. My comment was, in the old days, you didn't get fired for choosing IBM, right? And now maybe it's shopify or something like that for your know, I think the other interesting piece on these replatform things know, the information changes over. You know, when I was at Steve Madden, we made a decision to replatform because we felt that the homegrown version that we had was no longer going to support us for growth. And we made a decision along the way that company got acquired and it didn't work out well for us in the end.
Mark Friedman: And I still go back and say that I think that the information we had at that time was the right decision, but it just didn't work out. So you've got to have a lot of guardrails, too. And one comment that I'll make, so many businesses try to replatform and rely on the people that they have in their team and they do this replatform as their day job. And you really can't do that. You need to bring in experts, consultants, and that's not a pitch for me. That's for the real technologists and really have them own this so that your day to day people can continue managing their day jobs.
Ben Marks: Yeah, I've seen that in the past. I trained development teams, and I would very often show up for training, and there would be a team from an agency that had done an implementation, and seated next to them or in front of them was a team from one of their customers, and they would actually be there kind of as a handover to hand over the knowledge to start to enable basic. But they would do the heavy lifting because they are the experts. Right. It's sort of like, it's okay, well, go back to my automotive analogy. It's okay to, like, you can change your own oil, but it's a far different thing to completely swap out an engine and tune the whole thing and try and build those skills as you're also trying to do the day to day of running the business. Right. Because your team probably should be close to somewhere between 80 and 100% utilized, and the replatform is a herculean effort.
Ben Marks: You're right. It's a recipe for disaster to think that you're going to do this all in house, leverage someone else's knowledge and experience expertise to get up and running, to do the enablement and move forward. Have you seen that as a trend at all? Or do you think it's more common that these companies just try and go at their own?
Mark Friedman: I think the smaller companies that are looking to save the dollars. It's the cliche pennywise pound foolish. I've been in a couple of situations where we didn't do that. I mean, frankly, at Madden, I think one of the biggest mistakes I made was not pushing harder for us to have a third party. I mean, we didn't do all the integration ourselves, but we didn't have a day to day project manager that was specifically focused on bringing the replatform together. There was just too much time of my own and from my team diverted to the replay.
Ben Marks: Yeah, but at the same time, we mentioned Shopify, and I want to just quickly 100% endorse this idea of Shopify. For technology buyers today in the digital commerce platform space, it makes sense that Shopify provides that same kind of coverage for the would be buyer as IBM did back in the day. And it makes perfect sense because Shopify builds for a certain box, and this is not knocking Shopify at all. They have a massive share of ecommerce and in a highly varied set of customers. But I think, as you and Rick found in the report for the report, that there are really not really merchants of note above 100 million. And it really goes to the complexity of the problems being solved. But that doesn't mean that as a buyer, you're not looking at what they've done and what they're saying, and then what they put on their roadmap and say, okay, well, I can actually adjust some of my needs. We can adapt our business around this particular box.
Ben Marks: But what I would say is the case, especially for the mid market, and this is maybe raison de tray for Shopware, is that we recognize that especially in the mid market, you have, and I'll have to cite another pithy quote here from a full quote from the report, mid market merchants have almost all the requirements and complexity of an enterprise business with no margin dollars to pay for it. And that's what we think. We, and I think Shopware is also not alone. We're not the only platform that thinks about this. What is the value that the buyers get for the decision that they make? But we think that there should be maybe even some privacy against these businesses that are in this middle space and roughly defined ten to 250,000,000. It's pretty fuzzy at the borders, but a lot of these businesses are like the silent behemoths in the industry. They are part of products that are in everyone's home or that it's on everyone's body, or maybe in the facilities that manufacture these things. And they deserve a good solution, too.
Ben Marks: And that's what I think is really interesting. What I think is really interesting about this market, but also the messaging is not clear for those buyers. Now, if you were to offer a little bit of advice to help people marketing themselves, their services towards this group of merchants and brands, what would you say? Or how would you at least tell them to suggest that they approach the decision making process?
Mark Friedman: Yeah, I think some of it has to do with getting to know, and maybe the presentation and the talking points are different depending upon who you're trying to sell to. If you're talking to a CIO, they're going to be focused on some different things, and if you're focused on the marketing guy or a CFO for that matter. So sometimes having talking points targeted that way. But if you're selling to me, which is, I think the lion chair, people like me have to be the decision. I need to be able to figure out how easily is it going to be to train people on the front end tools to make the site do what I need it to do. I need to be able to understand how I'm going to train the technologists. Are the technologists. Is there going to be a plethora of people that know how to code for the particular nuances of the platform? I need to be able to understand the roadmap, but I'm also a little believer that for so many brands, the roadmap, I don't necessarily think that a lot of brands need to be party to the roadmap.
Mark Friedman: Let me make my decision based on the feature and function that I know you have today that is being used, that is referenceable. And I'll worry about the roadmap down the road because I can't make my decisions based upon what you tell me, what a salesman tells me might happen down the road. I need to see it for myself.
Ben Marks: It's hard to establish customer engagement and payment rails on hopes and dreams, but it also is important, I think, to have a good ecosystem of providers and maybe direct providers like agencies, SIS, and then also you also want to make sure that you have those third parties in the room, the payments companies, the retargeting engagement, all these customer data platforms, et cetera. These things are all essential to success. Is that something you'd agree with as well?
Mark Friedman: Absolutely. Couldn't agree more.
Ben Marks: Well, Mark, it's been a great conversation, and I have to say once again, the report that's just come out today, it's brief, it's really digestible, and for anyone who knows me, this is exactly the kind of, this is how we should be talking about the problems and the challenges in this space in general, and certainly when we're talking about mid market businesses. And the name of that report once again is it's actually breaking up is hard to do the journey of the mid market merchant with Mark Friedman and Rick Watson as the authors, you can download that slash mid market. Mark, it's been an absolute pleasure having this conversation with you today day, and I will look forward to seeing you, I'm sure, at some event later this year.
Mark Friedman: Absolutely. Good to talk to you, Ben. Thanks for your time.
