Minimum Viable Recommerce Stack - And How to Scale It

Karri: Hello and welcome to the Recommerce Podcast, the podcast where we talk all things Recommerce and circular businesses. Like always, this week I'm joined by Tuamo Lainet, the CEO and co-founder of TwiceCommerce.

Tuomo: Thank you, Kari. I could also say like always I'm joined by Kari Hjakkaren. That is being correct so far and nice shirt.

Karri: Thank you, nice shirt also. You have a very good taste in clothes.

Tuomo: Thank you, thank you.

Karri: This week we are focusing on the Recommerce ecosystem. So basically all the software partners, add-ons, services, everything that can be related to a Recommerce business but it's not the supply side or the customer. Let's start with the minimum setup or the minimum ecosystem for example for a new entrepreneur who is looking to launch a Recommerce business, rental or resale business. What do they need to actually get up and running?

Tuomo: So like you said leaving out the supply, so the stuff and the customers. So what do you need in your business? Let's start with the basics. You have the customer arrive so you need to be able to charge them some money. Either they came in already paid so that means that you would have had an online store up and running where someone is capable of doing both the order and the payment. Now if they come in store as a walking customer then you need some kind of way of creating that order in store and then charging the money. So you need some kind of a commerce system and then you need some kind of a point of sale system to charge the customer. So at this point we've already listed a point of sale system if you accept like payments in store and an online store if you accept orders and possibly payments online.

Karri: What are the differences between point of sale and like commerce system or software for example Recommerce OS? Can it actually include the POS system as well?

Tuomo: Yeah there's a few key differences. I think the commerce OS tends to help you with things like order fulfillment and inventory management and catalog management. So it goes a lot beyond the kind of moment where you just charge someone money for the order that they had. So the commerce OS helps you like for example in the case of you having an online store usually it has some kind of a connection to your commerce OS or the online store itself is kind of a commerce OS where you get the orders listed and you can start fulfilling those orders. The main role of the point of sale system is then just kind of charging the customer money and it kind of creating the almost like the VAT received. In order to do that in your point of sale system you might have your listings or your products kind of listed so that it's quicker than just always write a custom received line. Usually that source of truth might come from a commerce OS or you might have set up some products to your point of sale system to make it quicker. But the point of sale system rarely helps you with things like inventory management or availability management or any of these things.

Karri: Okay but can they be the same system so can a Recommerce OS also be and like point of sale system or like in-store system which maybe sends just the charge to like a terminal.

Tuomo: Yeah it depends a lot on your region to be honest because it's connected to taxation laws and received laws and so on. So in many regions and nations or there's kind of the point of sale system is somewhat regulated meaning that it might be demanded to connect to a tax officials like a black box so it kind of duplicates every received to make sure that kind of VATs are charged correctly and so on. So it is often kind of a self-required so it's often kind of regulated instance. So commerce OS can connect to payment terminals in order to create a payment event that is capable of charging the end customer but then the question is that who creates that VAT received. Usually get the kind of payment received out of the payment terminal but who creates that VAT received that goes to your books and accounting. Some commerce OS take that responsibility and some don't and often it's the responsibility of the merchant to make sure that if they use the commerce OS for that purpose that the commerce OS feels the local laws that when it comes to taxation so on. That's why if you look in the market you quite often see regional point of sales providers that are more catered to the local received laws and so on making sure that you kind of create all of the needed material for tax officials in your accounting. I think the best solution usually is that in online you it's a little bit of a maybe easier space so you have a commerce OS that provides an online store in that online store they create the receipts they take the payment they kind of help you with payment facilitation but when it comes to in-store orders there the commerce OS just provides the catalog to be used in the point of sale system that meets your criteria locally and it might even generate that received automatically for you so that you don't you kind of just can quickly manage the payment with the POS rather than acting as the POS also. So yeah it's a complex thing but I think there are benefits of using a local point of sale systems and then there are of course markets where in US you have square or similar that have been pretty successful in creating a point of sale system that works nationally or in some cases even internationally and can meet the demands of many many businesses when it comes to kind of the complexity of their catalog and one thing that we've also seen is that if you have a good commerce OS you can probably do with a more lightweight point of sale system because then the point of sale system is less of a thing that helps you manage inventories and so on but more of a thing that just streamlines payment acceptance in store.

Karri: So the minimum basics that you need is basically if you are online you need online store on way to get bookings and payments there and if you are in store then it's more of a like POS system but most likely you also need some kind of software or OS to actually manage the business the inventory and the availability.

Tuomo: Yeah definitely one thing that we might think is obvious but it's worth maybe mentioning is that why it's beneficial to have a commerce OS that has that online piece and then connects to your point of sales is that if you have a point of sale system which is trying to kind of independently handle the in-store environment and then you have an online store system that is independent in online it can be very hard to unify your availabilities and catalogs across these two systems leading into problems like multi-sales channels selling in multiple channels becoming super complex or even impossible or you're risking a lot of double bookings in case of rentals and so on. So I think the benefit is one commerce OS handles catalogs, inventories all of that connects quite natively to an online store and then you can connect whatever local point of sale system you have to that system.

Karri: Okay and in this case the commerce OS basically just sends some basic details for example like order number and maybe some category like rental order ID and then the charge and then the more detailed information about that order actually lives in the commerce system.

Tuomo: Yeah I think that's the kind of most dynamic and future proof setup usually so it is important to have in the point of sale system kind of enough line item information and even some product grouping in order to make sense of their reporting but most of the times those you can send from the from the commerce OS to streamline that actual kind of process of creating a payment or kind of received and then charging it then getting that information back to the commerce OS.

Karri: And does this minimum setup require some type of additional services like related to this or are the POS systems commerce OS for example generating some account reporting or do you need to have like separate system for that and maybe some legal requirements terms and conditions and so on.

Tuomo: Yeah so the point of sale system kind of creates the material for accounting but it I haven't at least heard that they would be kind of accounting systems by themselves so usually you need some kind of accounting system then so that might be quick books or similar where this material from the point of sales or the online store payments can be then brought in to consolidate then your accounting or kind of to create that. So you definitely need some kind of an accounting system on top of that quick books in the US probably being a prominent brand in the market. Then when it comes to legal again extremely regional I think there are markets where the legal environment is quite standardized I think where there's less need on creating things like waivers and so on because the the rule of law is a bit different but then I know that in markets like US waivers might be extremely important thing so that's an area where you probably need to again consult a legal provider describing your business case and generating those terms and conditions and other needed document templates for you to use to run your business. So that's kind of the boilerplate that you would also need in many cases to get up and running.

Karri: Okay so the waiver is almost like an add-on or something that might not be necessary in some markets and in some markets so is that something that for example a new entrepreneur should look that is already available in the commercial system or is it something that is kind of already part of this ecosystem that I have to find some type of a provider and see if we can integrate it there.

Tuomo: I think the best providers at least that's what we try to do is that we kind of enable you to create a waiver template that can be used so it's kind of you can create a document that can be used in your business but of course we as a service provider kind of a commerce OS provider guaranteed that hey this waiver is written in the laws of you know your local state and city so that's where the contents of that waiver is kind of then on you. There are then waiver providers I know in the US for example I think Smart Waiver who are then productizing more that scope of alright how long do you kind of hold the records and certain signature strengths and so on that help you more in that like depth if that is needed. I think for anyone starting out probably a good thing to do is to visit a few of your local or in your city or in states some of some of rental or similar businesses that you're planning on starting and just seeing how they manage their risks when it comes to kind of these legal scopes and maybe chatting with the owner on like what do they see as the needed one and it's a really you can I think you can always find a different school of thoughts there are the ones who say that like optimize for the happy path so to say trying to make sure that a customer has minimal amount of friction when it comes to booking and kind of assuming that everything goes smoothly and then accepting that if something doesn't go smoothly it might maybe be less managed but we're optimizing for the happy path and then the other approach is that you are building a lot of safeguards around any possible negative thing at the cost of being friction for each one of those happy path customers and whether you choose either or or whether you're going to lean towards either or of those options is probably dependent on the legal kind of surrounding where you are. If you're in an environment where you can be sued for millions that can bankrupt your company and maybe you personally or whatever then yeah probably most will lean towards that let's create a lot of safeguards to feel comfortable in running the business if you're in an environment that has less of a culture of suing for millions but rather having like a written law and penalties that are fixed maybe you are more capable of then optimizing for the happy path.

Karri: Maybe before we are moving into the other parts of the ecosystem just getting like the general idea or the approach like a new entrepreneur is looking to start for example a rental business and they identify that hey these are the things that I need for example the waivers like is it good starting point to find some type of solution that already provides these or is it that I'm want to have like the best inventory management system and then I'm gonna do a lot of work or maybe even outsource like the integrations with the waivers like what is the approach like if I'm starting what would you like guide me am I looking for all in one solution or should I kind of like pick the best because I think for example twice commerce versus smart waiver both can provide some type of waivers but most likely the smart waiver has like a lot more features and capabilities and all of these things that that's their main business so that's that's what they're focusing on so what is what is the approach

Tuomo: I think the approach is that like that's always the point we're into just stop and think that why am I starting this business and how do I make money and why do what do people pay for and your customers do not pay for the fact that they get to do waivers for example or that they get to read your legal documents or that they get to generate a lot of nice receipts so they are there in order to book or buy an experience or a used good or whatever so I would start from the point of let's first pick those providers that allow me to create that business offering and that value proposition to the market why I exist and make it super easy for customers to find it engage with it and to purchase it both online and in store that's the kind of starting point and and if we're talking about rentals part of that is like all right you want to also run your business smoothly so let's make sure that you have a inventory management system that is that you can kind of map your inventory into connect easily to different channels and to manage over time from that point of on each one of those next steps of like whether it's waivers or whether it's the point of sales or an accounting system so on you should kind of just shop around and try to find a provider that is good enough for you and that provides the value but you shouldn't necessarily make that kind of the must-have decision around which you build everything else and all in one solution that says that we do everything very really well is rare so I would kind of restart from the fact like at least we try to focus on on the inventory management can like manage the commerce side of things enabling you to do re-commerce both in store and online and then from that point of on allowing you to connect the needed pieces that fit your risk preferences and regional needs rather than us trying to solve all of that so that would be my guide just like start with the kind of same idea that why do I exist and why do customers even want to come to me in the first place making that super easy and then incorporating all of these other services to to kind of around that

Karri: Absolutely yeah make make sense and I bet a lot of our listeners have some experience with some software that does like 50 different things and usually the fact is that if they have let's say like the same amount of employees focusing on 50 things than the other company have 50 people just focusing on one feature it's not comparable like what what they can do but your suggestion is basically if you're starting a business you most likely want to make some money and and that's what you should like focus on and then you get all the support systems and and those from providers after you are able to have your business up and running and actually start making making revenue there's there's a good example of one of our customers where we're talking about a optimization of one specific process regarding the picking up of equipment for them it now costs that in employee time maybe five minutes per booking but then this happens in the in the volume that they've grown to which is tens and tens of locations and and all that that five minutes happens so like 200,000 times a year so then when you calculate the cost of that five minutes over employee costs and whatnot it starts to be reasonable to optimize that and maybe digitizing a otherwise analog process now if that same same friction point exists for the new entrepreneur that experiences these five minutes maybe hundred times a year or even thousand times a year it's still questionable whether it's worthwhile to make this the kind of stepping stone of whether whether you should go forward with a solution that doesn't digitize that so I think being sane in like how often and how big of a friction point this is now for us versus in the future and is this something that we solve once we get 200,000 orders a year rather than 1000

Tuomo: Absolutely those sound like the positive issues that you want to you need to solve once you are actually up and up and running in a business but I bet there are a lot of entrepreneurs I used to be one of them also that kind of optimized a lot of stuff beforehand before they actually became issues because that's for some at least it's usually the fun part to kind of like make everything work super super nicely and then that's the time that you actually should have probably used to get more customers and get the business yeah that's definitely but it's also like a characteristic that goes with ambition so ambitious founders tend to live in the future and they tend to already kind of feel and live in the world where they get the 200,000 orders even though they might in realism just still be in the zero orders so but it feels very important to optimize it because in their head they're gonna be in 200,000 orders in a half a year or a year but maybe there are the things like well trying to find a middle ground is that let's figure out those steps when we start to implement our plan this is when we've gone through the first 1000 for example so yeah but yeah it's maybe to say that it's a trait that goes hand in hand with ambitious founders and ambitious founders are the ones that build big businesses also so once they get the first 1000 orders in

Karri: Absolutely absolutely all right let's move on to maybe these type of like add-on services that are not for everybody but for some they are super crucial so one that comes to mind immediately is like online based business or even in-store based business that is offering deliveries so they are providing some type of way for the customer to actually get the products renter or resale or secondhand items to them rather than they going to pick it up so I assume that that already needs some type of help from the ecosystem

Tuomo: Yeah definitely there's I think most of us who has ever bought anything in online knows that there's different ways of for example getting the shipping done there's a there's delivery like of course depending on the package size and the cost is always different based on the package size and whether you pick it up in a local 7-eleven or whether it's delivered to your home home door and so on so and whether it's a five-day delivery 10-day delivery or inside an hour so this is a world where usually if you have a commerce OS the commerce OS tends to integrate to providers that aggregate these shipping providers you can also as a merchant make individual deals with different shipping providers for example in Oryx and Finland many might do a deal with posti kind of or use postis service for that so it's not necessarily demanded the commerce OS needs to be integrated the shipping provider you often have a way of that when you get an order into a commerce OS you check what it is and then when you need to ship it you have another you kind of log into the post post service or UPS or similar you create the kind of shipping label there printed you have a deal with them on the rates then you have the packaging material we put it there and you kind of ship it out if you have an integrated integration between the commerce OS and the shipping providers often it means that maybe you can select from multiple different shipping providers maybe you can even bring that forth to your customer that they can make the decision and then the commerce OS kind of under the hood creates those labels and prints that label shipping label for you automatically so you can kind of just focus on picking and packing and then the shipping part rather than creating the shipping label but again I think this is one of those things where for example we are in our platform kind of new platform we've been putting a lot of effort in separating these contours so that it's easy more easy to integrate globally and even maybe to use agencies in between if needed because there's so so many different shipping providers and ship ways of doing it but if you're starting out it's still a world where it's one step and the important step is to get that order have a system where from which you get all of the information that you would need in order to create the shipping label you have the customer information you know what they've ordered and you know maybe the heights and weights of those items so that you can create an appropriate label and have a appropriate packaging material for it you can still manually create those in another system to get started and once you've shipped I don't know one thousand of those it starts to be the question again that okay should we now look to integrate these things or so it's a volume question still that how important it is to have a system that is already fully integrated to every shipping provider in the world of course it's a job of companies like twice to try to build those pre-existing integrations to help people get up and running quicker but it shouldn't again be the like tripping stone or Kompostvskiv, I don't know what's that in English but to get started so yeah I think that's something where people might again over optimize too early

Karri: And I assume that in re-commerce space especially rentals if you are offering deliveries it's also bringing a little bit more complexity that you actually need to also get the item back so I think almost all logistic companies or third-party providers like offer a like a return type of service but in for example rentals it's like there is always the return so it might actually need some type of different integration points rather than hey this is now a return that for example they might not provide that via API which is like super crucial in the re-commerce space that you actually know that hey now the package is coming at this time and that's gonna make it available again for the next booking but maybe some of the providers just kind of bring it back to you and then you have a pile of them which is not something that works in the re-commerce world

Tuomo: Yeah it's it's really like depends on the on the provider so well if we first operate on a national level you might have like return labels that work or state level that work you know from a single provider so you can basically prepack a return label prepaid return to each one of your orders that is going out kind of the rentals and then in in commerce OSS that are designed for re-commerce like like twice you can add buffer times to make sure that you know there's enough time for the parcel to come back to you before the next booking and so on the complexities start to happen in global shipping let's be more precise global reverse logistics so outbound global shipping in my best understanding is somewhat sold so I can still make like local deals with local shipping companies that ship globally so sending stuff outwards is easier now it's the reverse logistics part that starts to be challenging because that reverse logistics is handled then by the local shipping provider wherever that item went so in order to have local reverse logistics and return support if you would do it yourself you would kind of have to contract individual companies in each one of those countries where you ship there are aggregators that have tried to solve it so that they kind of continuously hold these agreements all over the world and renegotiate them and that way kind of provide global return management but yeah it's the global reverse logistics that starts to be more challenging but I think most rental companies anyhow would start with the national online shipping based bookings but yeah just as a interesting thing that I learned a while ago was that like you tend to think that yeah it's the same thing but actually the provider changes like when you can have a single provider that you make a deal with that ships everywhere but those returns are all managed by those endpoints and that's where your contract base explodes essentially I hope that makes sense

Karri: Yeah absolutely so if you're offering deliveries that's basically a whole world which sounds like there is a lot of players and like these third party logistics servers services and and a lot of shipping companies and most likely a lot of solutions for different kind of needs already

Tuomo: Yeah definitely and I think after you reach a certain maturity in business you probably want to find a partner rather than trying to solve that mystery by yourself

Karri: Absolutely now let's move on to the maybe next add-on service so in both resales and rentals maybe more in rentals there is a lot of refurbishment so of course in in resale business you might do some type of refurbishment when you actually get the item and and before you sell it out but for example between rentals you most likely want to do some kind of checks or maintenance and of course you can do this in-house but this is also a point where the ecosystem might actually help you and help you scale

Tuomo: I think in most cases if you're running a rental operation you tend to be able to refurbish the items that you have yourself because it is kind of there you don't have to do have it you can have a partner like a lot let's say that you have a local partner next door that you just always get take the item to and then they fix and rent it and you have an agreement with them that you paid them sure that amount for the repair but quite often if you have like high volume rentals for example then you tend to be able to do the refurbishment also yourself to kind of internalize and optimize that cost now you mentioned resales or like refurbished resales I think that's where things might kind of then be a bit different because you're kind of buying those stuff and if you have a the wider your catalog is in terms of product models and variants it might make sense to try to kind of partner with local repair shops of that category but yeah so it is that the refurbishment side of things and kind of repair side of things is a potential partner area especially before I think we've seen that in cases where we have an existing retailer or a brand that wants to launch a buyback program for example or or some cases rental program but they aren't their organization really isn't designed and staffed around this kind of refurbishment capabilities but they still want to engage in this offering so the project manager who's kind of responsible for launching this offering has two options can I find people to do this refurbishment for me which is organic like then this entity doesn't need to hire people and train them but and provide them with healthcare and all of these things but rather let's contract a existing company to do this for them or or yeah kind of that that's the second option so I think with these existing setups it just governance wise is easier if you're able to find a refurbishment partner rather than internalizing all of that as a as a player who hasn't done that before.

Karri: To my mind the outsourcing can actually make sense in like for let's say very small businesses who are maybe just starting out and maybe figuring out if there is a market so they don't have to do the investment to get all the equipment and everything and then on the other hand like very large businesses where the volume is huge and might actually do maybe some seasonal variety on the on the demand side so maybe like on the middle part where you have pretty constant demand you are actually in a best place to kind of internalize that because you know how many employees you need what type of equipment you need and and so on.

Tuomo: It kind of probably is more related to your capability of having this kind of organizational unit and culture for it then then kind of anything else so it's just kind of for Walmart to launch re-percenters I don't know whether they have those but that that's like a bigger initiative as a large employer than for a middle to small-sized business who specializes in in certain product category then again like you mentioned someone just starting out they might lack the kind of cash to invest in assets that is needed to just to carry out the repair or it would be too risky to employ one person part-time full-time to do this kind of stuff so yeah first you can get over the hurdle by contracting a re-perchop and then later on you can avoid some organizational and governance related mess if you have a trustworthy partner that can handle your brand value and brand quality and all of those things and then in the middle if it's like if you are for example high volume renter you probably are doing that or we've seen brands that already kind of have for their value's sake been offering repair as a service for their items I think for example equip UK so Rabi is kind of one of those companies that for a long time already offered repair to their customers if you have a broken sleeping bag because they are fully sleeping back but it's broken you can send in they repair it for a certain cost and then yeah it's good as new so it's part of their value of being a sustainable brand also for someone like rap it's easier to think that hey let's internalize this because actually we already have been doing this stuff ourselves as a as a manufacturer and a brand who puts effort into making long-lasting products so yeah it's it depends really on the on organizational capabilities that you might have or what you might be willing to invest for the future

Karri: Let's then move on to some other maybe add-on services that might be relevant for you so there are maybe more on the rental side again for example some services or software that provides some type of insurance products or protection type of products and maybe fraud or know your customer type of products that you might need in for example or prevention hopefully for prevention absolutely absolutely but for example in the let's say in the car rental space you probably need for example some type of system to take care of the storing like driver's license and this kind of sensitive information so some partners and and the ecosystem around these type of services

Tuomo: Yeah definitely so the more you well we can maybe let's make it make it into bite-sized categories so let's start with the fraud prevention and payment service so these are things that I'd say nowadays are more already packaged by the payment service providers to be kind of almost automatically included in their offering or if not automatically included then like as a as a don't service that you can acquire as a at the cost of like increased transaction cost so in these categories it might be like you can do KYC checks or you can do like there's automated like providers like adien or stripe have such a wide coverage of the kind of DNA and fingerprint of any payment card that they can kind of start doing fraud scoring that hey this this payment card has been attached to many many fraudulent payments so you can confound the boxy so I think that category is actually something that is increasingly invisible for the merchants because it starts to be embedded in the kind of FinTech and finance side of things then you mentioned like identity checking and so on for cars or extremely high value goods so that is yeah something where you can partner so I think the basic one is again that you check some kind of physical license and if you take a picture or anything of that all of a sudden you have personal information so that system where you would store that needs to be kind of regulatory secure enough to store that kind of information and also in order to verify that this is really a real entity it can be the judgment of your your own eyeballing of the ID card or you have services like verif or others that then you can use that first of all you can take the image of that and try to verify that is this a real person and then have like a stronger authentication that might hold in court for example if that would be the case and then provide us like verif can enable you to kind of bring this to even your online booking processes that alright you upload a picture of your off your passport or your identity card and then these checks are done automatically and by strongly authenticating people this way you you lower the fraud rate you can probably never remove fraud completely because there are people in situations where they are more than willing to do fraud with their own name because it gets them off of some kind of a hook so you can never fully probably remove fraud but alright so but I think these are categories that are applying mostly to high value goods that you cannot like cover if something would happen to it like a car can be quite valuable or if your regulatory demanded to identify every customer strongly and then I think you mentioned what were the other categories we had for prevention and insurance and protection and then I think insurance is then it's a tough category for for the micro to small businesses even medium-sized businesses because for insurance companies it can be hard to insure a small operator like if you're doing only hundred two hundred thousand in revenue ensuring you against certain things can be hard to hard to do or then there are companies that would like to sell insurance to the end user kind of cover and that's that's hard because it's often insurance selling is in most countries regulated so you cannot just sell an insurance you might be able to sell something like a wear and tear cover or something like that but an actual insurance product you cannot just come up with yourself

Karri: What is the difference like if I add to my online store for example rental store I add like pay ten bucks and then you're deductible kind of like is smaller than compared to the regular terms versus then the insurance like is it like loss or what kind of makes the difference at least for the end customer like if I'm able to only pay hundred bucks if I break it rather than a thousand bucks like I'm pretty happy I'm not sure if does it like affect me if it's an insurance product or if it's just some type of add-on service

Tuomo: Yeah I think it's a little bit of a gray area probably and everyone should kind of check locally what their what the regulation says but I think it's probably more connected to like how do you instrument it so I'm not a professional in insurance companies and insurance productization but I think it's it's probably gotten gotten it's kind of connected to the idea that are you creating like a financial product where you sell kind of insurance to a group of people and everyone pays for it and then from that pool of money you pay something and you're able to invest some of that or whatever what however insurance products are structured and then and built into portfolios or whatever she seems to be a profitable business but so I think it's more connected to kind of the underlying instruments and mechanisms that are in play that some kind of mechanisms are governed by financial authorities that want to make sure that people don't get scammed so wear and tear coverage maybe maybe it's it's it's more of like okay it's quite clear for the customer that there's no insurance here like there's no there's just a deposit amount that maybe gets lowered or or something like that I think it's it's it's gotten played that but I'm not a lawyer so I cannot really give up like I cannot give financial investment advice I probably shouldn't give legal advice so this is the place where you would be best to consult your local regulatory authorities on understanding where is the line of insurance but yeah I agree with you that for the end-end user probably they're just more they think simply whether am I am I like what's the worst case is it 500 bucks 1000 bucks or 20 bucks what's the and am I am I willing to pay more in order to make the worst case less worse

Karri: Okay maybe next move into the like the marketing and kind of business operations side so for example CRM's third-party email providers maybe some analytics tools and so on I think this is something that's quite standard in like the whole commerce world do you see that there is some specific things that need to be taken into consideration when you are in the re-commerce space

Tuomo: Yeah I think with well yes I think re-commerce has this umbrella assumption that we are trying to build long-lasting customer relationships with the idea that hey bring the old back we repair it we sell you a good as new and so on or bookings that can like go beyond over days and you might have some communication so customer communication becomes more important and there's kind of few few key things I think when it comes to customer communications first of all just the delivery of the message what channels is it SMS is it what's up is it email what kind of channels do you have in use commerce OSS like us can usually help you with the basics like maybe email and SMS and you can customize your emails that are triggered in in certain key points but if you want to go beyond that and analyze things like hey when someone has purchased this and this much then I want to send a promotional thing and so on they tend to be things that CDP is our customer data platforms or or or other kind of email sending providers might be better because they you can aggregate more triggers across different touch points to this place to understand when should I contact this customer and then what do I send to them yeah and and you mentioned also then CRM CRM I think is something that a good commerce OS should have so at least on the basics again you should be able to see who do have I had as a customer their basic information if they've left those or you've been able to record it for with the permission of the customer getting the permission from the customer to add them to marketing lists for GDPR that's kind of getting the consent for various emails either verbally or or or in those digital touch points and then seeing their usage records so just meaning things like how many times they have purchased what they have purchased what items they have used because I think a good re-commerce like a rental company should be able to help do things like where you come to the store and say that I want to use the exact same bike I did the year ago please so you should be able to see whether you have it available or not or if you come and say that hey I was here two weeks ago I really like that bike and I be thinking I'd like to buy it if it's okay what would be the cost for that as used a good CRM system helps you do it so that in or a good commerce OS has a CRM where I can go and find Karri and see his previous order histories or item usage select that specific bike and then decide what would be the price I'm willing to sell it for if at all so CRM is in the in that category but then that also should be able to be connected via API's to CDB platforms or other communication focused platforms that help you automate and plan your communication layer from that

Karri: Okay so CRM is something that you see more as part of like the re-commerce stack like what is the core features of that and then again it can be integrated for example if you have like third-party loyal customer base or something like that you can eat need them to talk to each other but then on the let's say email communication and so on it's it's more like similar to waivers like re-commerce OS rental software is probably have some type of standard version and if you need more features then you are looking into the integration world and service providers

Tuomo: Yep exactly and it's customer communication is again its own kind of art form you might want to make sure that you don't spam the customer from like six different systems that automatically also in email so you might want to centralize communications to the one provider that then reads stuff from any providers to make sure you can have a clear and and communications layer with your customer base

Karri: Okay maybe analytics that are something that is again something that the re-commerce OS can provide some simple stats for example on website visitors but I know that in this space there is some pretty standard like integrations that for example Google Analytics like just input your tag code here and will automatically sync

Tuomo: Yeah I think it's again that market has gone to a place where those analytics products are so tightly coupled in with your marketing tools and so on that it's not only about seeing the data but it's almost like guiding a ad algorithm based on the data for example over the conversion data so I would say that commerce OSS or re-commerce OSS should help you do like business inside analytics like seeing what is has what has been purchased by whom and maybe some basic like trends on on visitors and so on but you definitely need a version where your touch points like an online store for example is connect can be connected to more specialized analytics tools because it's not that much anymore about analytics of understanding what has happened but it's to automatically provide data and feedback to add algorithms and so on that automatically react to things so that's why I would like to say that you you probably want to make sure that you have analytics tool connected to as many places as possible I think the cool things start to happen where commerce OSS can kind of go deeper is that if they can provide also conversion touch points from like in-store somehow and connecting that loop somehow back I know that this is a world that has been made a lot harder and it's it's for many of the good reasons that like how much companies can track end users but I think that's the that's the value of like if you have a modern commerce OS there might be opportunities how you can bring even in-store conversion moments or in-store moments do the usage of your ad algorithms and so on which can be of course usually beneficial

Karri: And then maybe jumping into the world of like third-party sales channels and market places and so on so I think this is once again something that for some brands might be majority of their revenue shores and for some it might be like a nice add-on and some might actually just make a decision that we only sell through our own brand but I know that there is quite a large ecosystem already in this space

Tuomo: Yeah definitely so it's it's the question whether your commerce or again going to the place as a merchant what what kind of stakeholders and ad-on services I need well if you're able to have a marketplace connection or additional sales channel connection it just means that you're growing your footprint and potential sales so it and then it's a question that if you add these kind of services is it separately managed market like you have to create every listing that are manually and then when the sales come in it's in no way connected or do you have for example again a centralized commerce OS to have the business brain from which you can kind of spin out listings and so on and to kind of get a better visibility there but again this might be a thing that you don't need it from day zero if you just do the occasional sell in eBay for an old item that you have but if it becomes a key thing that you constantly want to spin out eBay listings for your inventory items then an integration by the commerce OS might be might be helpful

Karri: And there are also these more maybe offline type of ways to actually grow your footprint so I know at least we have some customers who are maybe doing some type of partnership with other businesses in the in the area in some cases even competitors and they kind of agree that hey if I'm sold out or or all of my equipment is rented on this day I might actually tap into your inventory

Tuomo: Yeah definitely so not everything these things in some systems even like we're planning on helping on that help you share inventories across accounts and or kind of listings and so on to enable this kind of behavior but I think this is especially true I think for like regions or local ecosystems that for example cater to a lot of tourists kind of everyone agreeing that hey if I was the first one to sell out after that point if still people visit my site and and I'm showing that out of stock in everything we would still want them to come to the area and spend money here because it's like our our region that we want to make sure is is successful so in that point if I'm able to also sell a competitors availability for free or against the fee for example or kind of a revenue share model that is beneficial to all players and the end user because at the end of the day the end user probably searched something like bike experience in in Yellowstone and if they land on a website that shows that we're sold out how many providers to are they willing to go through until they kind of say that I'd seems that I'm not able to have a bike experience in Yellowstone but so I think this kind of a regional like alliances make a lot of sense usually it's kind of growing the pie for everyone rather than just making sure you have the biggest slice

Karri: So is it gonna be possible on top of twice to for example come up with like a new alliance so let's say around Yellowstone that all the entrepreneurs there who are for example renting out sport equipment bikes and so on kind of come together and hey like let's let's build like a new online interface that actually is like tapping into all of our stores and all of our inventories

Tuomo: I think where we would probably position like yeah that's that's something that it's been requested from us and like I know that our new system is kind of enabling that like under the hood and then productizing it and it all takes a bit of time but I think from our angle is that we probably are gonna enable things like if there's two providers they have their own online stores but even though I would be purchasing under one brand I can kind of make a booking from them but they will create an underlying booking to another provider so so that way they can maximize the amount of bookings to the area for example so but then I as end user wouldn't necessarily be visiting like a regional alliance marketplace I think that's then a separate question that what we are already kind of helping and building there is that these players can elect to have a local marketplace for that they probably they can build it on top of twice but there are also better marketplace providers I think like white label marketplace products share tribe is one and so on where or visit group or similar who might be specialized in like other regional communication aspects also because then they want to probably talk about events and so on and build that website to cater those needs also where twice wouldn't probably be the best solution but what we can help with is that if these providers used wise when they have this regional aggregation website or portal in the terms of 1990s we can help them bring their products to be available or even bookable in that centralized marketplace with the sales channel integration capabilities that we have so and then that those bookings like underlyingly flow to the right providers from this one centralized marketplace so I hope that made kind of made sense so we can help customers get more availability under their own channels by sharing availabilities or we can help them bring their catalog to be available on a third-party website which might be this kind of a regional portal for example

Karri: Okay so that type of an integration is more close to an integration with eBay or similar player which basically just checks your inventory and your availabilities and then handles the actual order and the transaction on top of their system

Tuomo: Yeah I think that's a that's that's a compare like good comparization and then yeah we can give a shout out to companies like visit group who have been specializing in this kind of regional regional websites and and portals I think for a long time

Karri: Okay now we have covered a lot of different add-ons and integrations that you might need or or might want to introduce at some point and these are on top of the core of the re-commerce which to my understanding are inventory catalog order management and CRM and maybe the last part or part of the ecosystem that we want to focus on is kind of outsourcing or these type of partner agencies or similar who are actually doing something on your behalf

Tuomo: Yeah yeah so you I would if we try to create some categories I think it's you can have agencies that help you bring your own online storefronts they could even build a custom app for you and then that app connects underlyingly to your commerce OS so they can do the design and then building of that or they can do a website design for you or you can build a website on top of weeks and use a week's web agency to kind of customize it and then underlyingly connect twice app there to make sure that you get the orders into your commerce OS so there's that kind of agencies that help you spin out channels and customize them and then to connect them to the key services that you use which often means the commerce OS and then there are I think categories like that are I could call them like middleware so you have some systems in use and you just want to share data between these two systems and both of them have APIs for this but you lack the technical knowledge on how to connect the API so I think that's then another place where a development agency might just help you kind of build these middleware pieces these kind of pipes that that share data between the two systems which might be like hey I have a maintenance system that creates some kind of automated logs and I want them to be visible here in the stock item logs in in twice so let's build this connection and that agency can help with that a bit similar might be that you have some IOT stuff for example you want a GPS locator to ping every hour where where it is and then that to be visible in twice in the in the items audit log as a event that hey that I can later on see where the item has been moving so I think these are then the kind of developer agencies and this is maybe a category where for example I know that we're putting a lot of effort and thought into AI's and MCP layers and so on that if you're technical minded but not necessarily capable of writing the code syntax I don't think we're far from enabling people to connect two systems via AI prompting so the AI can build the data bit pipeline if you know kind of how to initiate the process and to guide it with with natural language but I think that's that's an interesting place because I think we've been referring in earlier episodes that commerce and e-commerce in general is this market of extension course that you just connect multiple systems to each other and and previously it's been these agencies or then technically capable merchants that build a lot of custom code to make sure that data flows from one system to another the more the ecosystem is building MCP layers so model context protocols around their APIs and so on it means that a bit less technical people can start connecting extension layers sorry extension cords to each other so that's gonna be interesting to see what what that like how that shapes the market and what kind of spaghetti the AI will build what could go wrong

Karri: Okay so these were examples of like on-demand services but you also have these continuous services that could for example run your marketing constantly

Tuomo: Yeah yeah so then these are companies that do not just make some technical connection possible but also or rather takes over a process so it might mean like marketing or it might be even things like hey we run your website completely and so on and we've seen even setups where someone says that we run even the commerce side of things that you just you're just gonna get an email from us that here's the orders that you need to collect and this agency or service provider might use twice to manage all of these things but they're kind of trying to be a turnkey solution for someone who doesn't want to deal even with the commerce always side of things but just wants to I don't know what's left maybe charge money in store

Karri: Yeah absolutely and there are also these companies that are basically providing like logistics and warehousing as a service so I guess you can pretty much outsource every single part of your part of your business and maybe maybe as a tip for new entrepreneurs like should they even be looking into this space as like larger companies they probably know really well like how much their operations are costing them and is it something that they should outsource or do internally but someone who's they're starting out should they even look into this space

Tuomo: Probably depends on what the premise of your company if it's like if the day minus one vision is that I this needs to run without me doing anything at any point well then you probably need to start thinking about like end-to-end what service providers are there and how the data moves in between systems and so on so that in in a few months years time you can sit back in in at the beach and just look at your phone and see see the business running yeah so I think for those entrepreneurial minds it might be worthwhile to I don't know prompt with AI or similar on understanding what are the key connections that you have to have in place and making sure that you always select providers that have pretty good API connections because it's gonna be a lot about how can you move data between providers and systems in a trustworthy way

Karri: Absolutely

Tuomo: And hoping you have some margin left at the end of the day

Karri: Absolutely that's that's a really good point the more more you outsource the more margin you are losing because the companies who are doing the outsourcing for you they of course want to have their own margin as well

Tuomo: Yeah

Karri: But yeah I think that was a pretty good overview of the most important part of the ecosystem for a re-commerce company

Tuomo: And our active listener race will tell us what we forgot I think yes

Karri:  Yeah absolutely but thank you again to Tuomo

Tuomo: Thanks Karri