VTEX is the only multi-tenant commerce platform that unifies customer experiences across all channels into a comprehensive enterprise solution. With an auto-scaling cloud infrastructure and a powerful, out-of-the-box set of tools, the platform accelerates the commerce transformation of complex operations. VTEX is trusted by Sony, Walmart, Whirlpool, Coca-Cola, Nestlé, Motorola, Stanley Black & Decker, and over 2,500 online stores in 28 countries. In 2018, the company was named as a major player in IDC MarketScape Worldwide SaaS and Cloud-Enabled B2C Digital Commerce Platforms and ranked in Gartner’s Magic Quadrant for Digital Commerce. In honor of their 20 years celebrations, I sat down for a video call with VTEX Chief Strategy Officer Amit Shah, to talk about the current challenges businesses are facing and how collaborative commerce can turn things over.
Please describe the story behind VTEX and it’s evolution so far.
This year, VTEX will be celebrating its 20th year. The company has, by some technology standards, a long history in the e-commerce market. Unlike many of the software companies today, it’s grown not from the US, but from the emerging markets. It first started in Brazil. One of our early customers there was Walmart of Brazil, which always makes for an interesting customer to start with. It’s a very large business with 500 stores across Brazil. In terms of how they wanted to sell online, we had lots of complex enterprise demands and challenges right from the beginning.
They had complex needs around e-commerce but also around order management because one of the values that they had was that they could deliver to the customer more quickly if they took advantage of their physical footprint of 500 stores. I think Wal-Mart in Brazil was a visionary 10 years ago, in understanding that they should use the physical stores not only for in-store but also for fulfilling the online commerce orders.
And so that customer served to guide VTEX in building not only the e-commerce platform but also a full order management system at the same time, because the two really worked hand-in-hand. And today, obviously, we’re seeing the leaders in the market like Amazon demonstrating to every company, whether it’s a business, a consumer or a business to business company, that half of the e-commerce experience is how you sell, transact and merchandise online.
But equally important and powerful is how well you fulfill the order, because at least in America, until maybe the last month or two, we were very used to and spoiled by the idea of everything showing up in two days. And then they pushed the envelope and said, no, it’s not two days, it’s one day. And by the way, you don’t pay for the delivery. It’s all included.
So I think VTEX, with the help of those early customers, understood that a business is not only about the beautiful website and the online customer experience, but also the physical experience. Completing the order online is just the beginning of building that relationship with the customer. So I think we were lucky to have a demanding customer like that to help shape the product vision.
Over time, the company also developed what it calls the marketplace functionality. And again, I think the leader is obviously Amazon. People joke that there’s a reason why Jeff Bezos is the richest man in the world because he figured out that although building an online business is great, it’s even better when you don’t own the inventory. You’re not responsible for fulfillment and you can just be the website that aggregates customer demand and lists third party products. And so, very quickly he was able to turn Amazon from the online bookstore to the online store for everything because he let third parties sell on his store. And VTEX has built that same marketplace functionality. So now we have 160 customers around the world, lots of different types of companies, building marketplaces using VTEX.
One amazing example, which I was very surprised about was a large bank in Latin America that’s built a marketplace for physical goods that they offer inside their banking application, and it’s had great success. I think one of the reasons is that the level of trust the bank had with its customers was very high. Those customers were already sharing their money and financial records with the bank and used them for online transactions, so the leap to the next step was maximizing that customer relationship by offering a marketplace for third party goods and services. It makes sense. That’s not how banks in America think, but if you look at the evolution of what we call the mega mobile apps in China or India, where you have your banking, your games, your entertainment, your chat, your shopping, and your finance, all in one place. That’s the trend we see now in other parts of the world.
I think VTEX was fortunate to be able to develop that marketplace, offering e-commerce and order fulfillment under the same umbrella. So that’s the history of the company.
Again, we’re celebrating our 20th year this year. Last year, the company was fortunate to raise one hundred and forty million dollars from Softbank. And maybe uniquely, as a Softbank Company, VTEX has been profitable for the last 10 years. They built a culture of learning how to stand on their own two feet. The DNA of the company is obviously to build things that customers want. You cannot be a profitable business unless you actually meet customer needs. So I think that heritage is continued. Now, with the funding from Softbank, we have the ability to expand the team and grow in the US market and in Europe as well.
Below are some screenshots of the VTEX dashboard.
Can you explain the term collaborative commerce?
It’s a term that describes the trend of marketplaces, but also, what we’ve seen more clearly than ever in the last few months, is how connected our economies are. That we’re no longer these independent self-trading islands. The entire supply chain of our economies is global. And whether you’re a brand selling to consumers in the US, your manufacturing may be somewhere else.
Or you could be a B2B company that relies on a very complex supply chain, and you’re selling not only products but also this idea of the aftermarket. So what happens after someone buys your product? How do you service that product? How do you send them parts when something needs to get fixed or replaced or refurbished? So when we think of this term of collaborative commerce, it’s trying to capture the idea that there is an interconnected economy today. How do we deliver that same experience online and allow industries or companies to build ecosystems around their product and service offerings?
A marketplace is one example of that, that you may want to sell more than just one category of goods or services to your customer.
What are some of the challenges that e-commerce professionals are struggling with and how can VTEX help?
What I have seen, having spent more than a decade now in e-commerce, is an evolution of the e-commerce industry and the sophistication of our customers. I speak primarily of the U.S. customer where 10 or 15 years ago, customers were looking for best of breed solutions, saying, I will find the best ecommerce platform; I will find the best order management solution; I will happily manage 20 or 30 vendors and spend the time and integration budget before I go live.
In the US, where there are larger enterprises with budgets of 1-2 million dollars for software and even more to spend with Accenture, Deloitte, there used to be the patience for waiting 12 months before going live. What we’re seeing today is that customers no longer have that patience. They no longer want to deal with having to build, run and manage all of these systems in-house.
In a world where cloud computing environments are so stable, it doesn’t make sense to try to buy a software license and run it on-premise yourself. You expect your e-commerce platform to work the same way your Google mail or your resume video works, where it all happens seamlessly in the cloud. You never have to stop your business for a software update, it happens automatically on your iPhone. You don’t turn your iPhone off for twelve hours hoping for your phone to work better the next morning.
All things we’ve gotten used to in the consumer part of our world, enterprises now expect from software as well, and VTEX, coming out of the emerging markets, was able to skip that generation. Much like in India and China, people skip the whole desktop-laptop phase and go straight to mobile applications. VTEX had the same opportunity to skip that whole on-premise wave where you sell software, the customer puts it in his own servers, and runs it on the data center. They went straight to the cloud and by doing that, our products we’re built for a more modern age and we were not spending our time on tech-dev.
At the same time, by starting with the emerging market customer, who had a different budget, and a different time window to go live, there was a focus in the company on this idea we called time to revenue. So whereas in the US, someone could wait twelve months and spend 1-2 million dollars to go live, in many of the emerging markets the customer budget is not as high and their time window is three months, not twelve months.
The way the company had to build the software was to meet those customer demands. And customers in the emerging markets didn’t want to deal with three or four vendors, they wanted to deal with one vendor. So we learned that if we’re going to build the e-commerce platform, we should also build the order management solution, and if a customer wants to sell third party products, we probably should build a marketplace. And we need to build them in a way that when a customer goes live with us, they can use all of that functionality from day one.
Now we are seeing that this approach is also appealing to US customers who don’t want to wait a year, don’t want to spend millions of dollars, and would rather deal with one vendor than three.
How has COVID-19 affected your business?
One of our co-founders, Mariano Gomide de Faria, has been quoted saying “Digitalization has leaped forward 5 years within 15 days.” That’s what COVID-19 has brought to light: A huge demand from customers and businesses, asking to be able to transact in a digital world. In a world where customers can’t go to the store, and may not be able to call because no one is in the office, how do you still meet the end customer requirements? Whether it’s a business-to-consumer or business-to-business landscape. I think COVID-19 has only increased the focus or the need for digital solutions that meet the enterprise requirements.
So I think that’s been a multiplier effect for our business because if they were talking to us before saying, we’re not sure if we want to do it this year, now they’re saying, we NEED to do it this year. How do we get it done next month? So all of a sudden, even that customer that didn’t have digital spend on their priorities has no other choice now.
The physical stores may be shut for a period of months and even when they reopen, we don’t know what that would look like. Will every customer have to get their temperature checked before they can go inside the store? And will we limit 10 people at a time to go into a store? What does that experience look like? So I think COVID-19 has had that impact on our customers.
The same way, we’ve now seen that there are businesses that had not fully caught up to online commerce. Even pharmacies that hadn’t yet been selling online, now all of a sudden, no one can go in the store. So how do you buy online and pick up at the curbside? That’s the new trend. Or how do you shop using facetime? Or even if you are a restaurant, how do you order and allow the customer to drive to the restaurant or pick up in their car? These are all requirements that we’ve seen in that wave, but all of a sudden, everyone understands that this is the new reality. You have to meet that customer expectation.
Looking forward, how do you envision the future of eCommerce?
I think that’s a question we are all asking ourselves. As a company, we now have a company-wide call every day where we gather our six hundred and fifty employees around the world. Originally the call started with COVID-19 and what’s happening to our people in every office, in every country. How are people dealing with this crisis? And now the subject of the calls has changed from COVID-19 to the customer demands and the requirements that we’re hearing about, and how do we meet that customer need in the different countries that we operate?
So we have offices in 14 countries, we have customers in over 30 countries. And with this new world developing, our customers are asking for help in lots of ways. Our job as a company is to help them meet the new requirements.
It’s too early to say whether the world will ever go back to normal. No one knows when people will start traveling for business meetings. I think everyone is saying, well, I’m not going to be the first one to travel. We don’t know when shopping malls will open. And whether that will be an experience people look forward to or not.
So I think there’s a lot of unknowns. What we’re seeing now is that next week, Germany will start opening stores, but again, with lots of restrictions. So it may be a year or two before we return to the life we used to have. We all have to figure out what that means for our customers and for ourselves.
More than anything, we’ve all learned this new definition of an essential worker. For those of us who work in IT and software, we are not the clear definition of the essential worker. You and I are in a privileged position where we can work from home and still have jobs and work in a safe environment. But the essential worker, the bus driver, the subway train operator, the delivery person who’s getting the food to the supermarket, the cashier clerk, the nurses, the doctors. Those are the people who are essential. So as a company, we try to think about how we can support them, and what are the digital commerce efforts they need from us, to be able to keep doing their jobs.
I’ll give you an example from the physical store world. First, it was the supermarkets who said if you’re elderly, we reserve the store for you from 7 to 8 in the morning. The next step is if you’re an essential worker. If your shift ends in the evening and you try to go to a store, all the shelves are empty. So how do you create that shopping experience for the essential worker online, who should have a privileged position to get access to the things they need to keep doing their jobs?
Those are all new things that we’re grappling with and trying to understand.