E191: Michaela Wessels

Richard Hill [00:00:04]:
Hi there. I'm Richard Hill, the host of eCom@One, and welcome to episode 191. Now in this episode, I speak with Michaela Wessel, CEO at style Arcade with over 15 years experience in fashion and e commerce retail. Michaela now heads up Style Arcade working with merchants all around the world. In this episode, myself and Michaela chat using AI and tech for assortment planning, becoming a better buyer in the retail world, using sizing to your advantage in merchandise planning. We talk inclusion in fashion and Mikaela's predictions for retailers over the coming months, and of course, so much more in this episode. If you enjoyed this episode, hit the subscribe or follow button wherever you are listening to this podcast. You're always the first to know when a new episode is released.

Richard Hill [00:00:45]:
Now let's head over to this fantastic episode. Hi, Michaela. How are you doing?

Michaela Wessels [00:00:53]:
Hi, Richard. So well. How are you?

Richard Hill [00:00:55]:
I'm really good. Welcome to the Ecomot 1 podcast.

Michaela Wessels [00:00:58]:
Thank you for having me. Thank you.

Richard Hill [00:01:00]:
No problem at all. Looking forward to to getting stuck in. But before we do, I think it'd be great for you to introduce yourself and how you got into the world of ecommerce.

Michaela Wessels [00:01:09]:
Right. Well, I'm the founder of Style Arcade Software, which actually comes from my background in merchandise planning and buying for 15 years. So I worked across some of Australia, South Africa, UK, some of their largest retailers, and realized that I couldn't do my job the way I wanted to be able to. So, yes, headed into the world of becoming an accidental tech founder. And, here we are, obviously, 6 years later with Starlarcade, and very grateful for for everything it's kind of become and just, yeah, excited to share that today.

Richard Hill [00:01:44]:
So so I I always like to hear the stories of, especially in SAS, for example. You know, you I think what we're saying is, you know, you worked in an industry and spotted a, you know, an opportunity to explore and and to sort of from your previous roles. And then here you are sort of 6 years later with a very successful SaaS software. But it's, you know, I'm quite excited to, hear more about Style Arcade. Maybe just give us a little glimpse into what it is that Style Arcade does.

Michaela Wessels [00:02:12]:
Yeah, sure. So it's an analytics platform for fashion brands and retailers, and essentially what it does is it brings together all of your product data into one source and allows you to make better product decisions. But the key one being, how much do you buy? Because brands and retailers, this is the hardest question to answer. So how much do you buy of each product? How how many in each size? And where do you send it to are all the things that Starlocate helps, the teams with.

Richard Hill [00:02:43]:
That I mean, just just that sentence that you said there, I think, you know, it's the it's like a the bane of most pea most, store owners when they look at their balance sheet and they think, do you know what? We've got 5% sat in the warehouse that we are never gonna sell. We've got the wrong sizes, we've got the wrong colors, we've got, so much cash tied up in stock. You know, it's never ever changing market potentially, different seasons. There's so many factors, you know, you're solving a big problem in the industry. I I would imagine that there's a lot of very, very happy clients.

Michaela Wessels [00:03:16]:
Well, Richard, you make me laugh when you say 5% because unfortunately, it's a lot larger than that sitting in the warehouse. It'll never sell. Right? But there's, everyone talks about inventory management as this hot topic that we all need to be all over our inventory management. But I almost have a a counteractive point to that, which is inventory management is the result of, poor buying decisions in the 1st place. We shouldn't get to the point where we're desperate for some kind of inventory management. We really should be making better decisions right at the beginning of this cycle. So, yeah, that's kind of how I see it.

Richard Hill [00:03:51]:
So maybe step me through then. I'm a obviously, your tech will handle a lot of the stuff, but, you know, I'm an ecom store owner. I'm not. Well, I'm assuming I am. I was for many years. Yeah. And, you know, that problem of what to buy, obviously your tech sort of takes a lot of that pain away. But, you know, if I'm sitting here listening to this episode as an ecom store owner doing, you know, 20, $30,000,000 a year, you know, and I'm in apparel, which has got its very unique or a lot a lot of challenges with sizes and colors and fittings and things like that.

Richard Hill [00:04:29]:
What are some of the things I should be doing, you know, to really to really sort of reduce the issues that I'm having with Overstock, over ordering, getting a lot of returns? That's quite a big question, actually. There's a lot of things there, but I'll see how you

Michaela Wessels [00:04:44]:
You've kind of described, one of the perfect places to start with Style Arcade, which is, you know, you're a growing brand. You've kind of hit you've hit 30,000,000 at this point. And one of the brands that joined us, they joined when they were turning over about 25,000,000, they're now, over 500,000,000 per annum in GMV. Two and a half years later, these guys have crushed it. And what they did was really just get obsessed about their product. So if I was using style arcade to advise you on your, ecommerce business, the first thing we do is connect all the data, then have a look at the supply and the demand. Right? So Richard's going off buying all sorts of different apparel products, and he may not know what the supply is of tops versus the demand for tops in his business. So this was the actual pure example we had with this customer, And the demand for tops was double what was being supplied.

Michaela Wessels [00:05:40]:
So that's easy. You know, we just double the investment in tops, but, like, what tops? So then you go a little bit layer deeper and style arcade will have a look at subcategory and point out that it's crop tops. Great. So by double the amount of crop tops. You can even go further. It was white crop tops, which was a 6 figure opportunity for these guys in that single year. You know? And then, you know, most businesses, I guess, if I were to, make an assumption on on Richard Hill's ecommerce business, Your accuracy on how you buy the sizes will be around 80%. And really, if you can get over 90, you're saving a ton of profitability and revenue.

Michaela Wessels [00:06:19]:
So Style Locale will just recommend which sizes to purchase based on the demand in your customer base.

Richard Hill [00:06:26]:
Clever stuff.

Michaela Wessels [00:06:28]:
It is clever stuff. Yeah. But it's Perfect. I think, Richard, you know, the merchandise planning principles, it's just it's mathematics, but then you combine the mathematics with this art and science so that you can put these 2 together and actually have a a brilliantly performing business that you have full visibility on how your products are performing and why they perform the way they do.

Richard Hill [00:06:51]:
Yeah. I mean, I I'd say clever stuff, but also very simple in what in one respect. You know, you've got you know, you you're getting to that maybe 9, 9, 9.5 out of 10. But trying to get to that as close to 10 out of 10 on the ordering, that's where it gets really challenging, I think. You've looked at the sizing or you've looked at the colors, you've looked at the sizing and you predicted. But can you really predict sort of the chain, you know, like a lot of different body sizes? I know you guys do quite a lot around the sizing and size calculators, which I think is, you know, a critical part of most ecom stores now. You know, I'm I'm a big guy. I'm actually 647, you know, which is, you know, obviously pretty tall.

Richard Hill [00:07:32]:
A lot of brands, you know, that double XL in one brand was very different. Obviously, as we know in other brands, you know, a lot of the US brands fit me quite well. A lot of Italian brands don't fit me at all. You know, it's like it's like it's been sprayed on. So, you know, what sort of advice would you give to guys, you know, that that are listening and and owners around this sort of sizing, using calculators, using tech to help with that sizing piece?

Michaela Wessels [00:07:58]:
Well, Richard, it was, when I was in merchandise planning, it was the biggest bane of my existence to try and calculate which sizes to purchase, especially for a large product range, multiple stores. And with booming ecommerce brands, they're gaining thousands of new customers, sometimes in a week. So you can imagine this group of customers and their sizing preferences is changing constantly. So you need to be able to keep up with that. And you can't run it in business intelligence tools and spreadsheets. It's just impossible. You have to have algorithms driving those recommendations. So, that's a big part of it.

Michaela Wessels [00:08:34]:
And I think a lot of brands don't realize, you know, I'm passionate about sizing, but also size inclusivity. A lot of them don't realize the market share that's available in being size inclusive. And I think Yeah. What we've seen historically, which is a little sad, is that brands go gung ho into size inclusivity. And then huge investment behind it and then very quickly decide that there's excess in sizes, this ROI is not paying off, let's pull out. So I think if you take a measured approach, use the data, use AI and algorithms, you're in a much better place.

Richard Hill [00:09:14]:
Yeah. It's an interesting one when I look, you know, look at the different retailers that I just buy from and obviously the ones that we work with. And some of them do it very well, but some of them just don't do it at all. And the the the big retailers, you know, I just think, gosh, you're just missing a trick. You know, obviously, everybody knows that returns is the bane of everyone's lives as a retailer, as a merchant, you know, if you're not trying to reduce those. And obviously, that's just one way to reduce them. But if you're not using some tech, you know, and I mean, I quite like obviously being actually, no, I won't go there. I was gonna because I I quite often, you know, go to certain brands knowing full well that they'll have a lot of my size left.

Richard Hill [00:09:52]:
So I'm, you know, when when a lot of people are obviously buying, say, yeah, the the norm the more normal sizes, should we say, I'm a bigger guy, so I'm at this

Michaela Wessels [00:10:01]:
this end of sizing. Yeah.

Richard Hill [00:10:02]:
Yeah. So I'm the I'm the guy that's looking for your overstock maybe because you can't sell your 3 your 3 XL and your extra tall. So I come in and swoop up the bargains, other other sizes.

Michaela Wessels [00:10:14]:
Me because I'm also I'm 52, so I'm swooping up the the extra smalls as well. Because I know there's always gonna be a miscalculation somewhere, but there shouldn't be. There really shouldn't be.

Richard Hill [00:10:25]:
I I literally I'm a it's literally a store that I go to. I mean, this is this is actually a physical store, and I drive. It's not near my house. It's a big brand, but one of the biggest brands in the world. I drive there maybe twice a year, and I'll spend about, I shouldn't say this actually on the podcast, but quite a lot of money, should we say? You know, and I'll just say, right, can you get me every single pair of trousers you have in the store that's this size and every shirt that you've got in this size? And I'll literally just try them on. And if I like them, I buy, buy, buy, buy, buy. But they're always, like, discounted so heavily, because of the size. You know, they've got usually have quite a lot left.

Richard Hill [00:11:01]:
But so Yeah. I think Do

Michaela Wessels [00:11:04]:
you want me to tell you if it's of interest exactly why that problem is so hard for these retailers to get right?

Richard Hill [00:11:10]:
Yeah.

Michaela Wessels [00:11:11]:
It's because when you go into a store and it's sold out of a size, you never know how much you could have sold if you'd been in stock. So what happens is very quickly when you're just guessing at the size curve or applied basic math to it, you very quickly run out of sizes. And all of these out of stocks just skew all the data across all of the stores. So you just move along.

Richard Hill [00:11:33]:
So you don't know what it could have been. Yeah. Yeah. Self fulfilling process. Had. What you could have won. Yeah.

Michaela Wessels [00:11:39]:
What you could have won. Yeah. That's it.

Richard Hill [00:11:43]:
So what advice would you give then to retailers that are listening now that really wanna grow in today's climate? What's your sort of one big bit of advice you'd give to them?

Michaela Wessels [00:11:54]:
I think if you had to think about it very simplistically, most retailers and brands know of only 2 ways to grow. Right? You spend more money on marketing or you buy more product. And there seems to be a lot of tech to help us know what to do with marketing, a lot of expertise out there. There's not a lot of tech to help us know how much to buy in product, and I think getting that right is essential. So I there are lots of ways to grow, and I've always believed that hidden in product data, there are about 8 different growth levers, but I'll give you my favorite. My favorite is the 80 20 principle. So if you consider that 20% of your range will deliver 80% of your revenue, and then invest to that. Now this is this makes most people uncomfortable.

Michaela Wessels [00:12:43]:
You say, well, then 20% of your styles need 80% of your investment in inventory. And people go, no, no, I can't do that. You know, most brands would buy a 100 styles and place a 100 units in each. That's just natural instinct. You know, spread your bets. But if you were to double down on your winners, that's where you get the leaps towards growth. So what we usually see is, you know, if a brand is placing a 100 styles in a 100 units each, at least 20 of those styles will have sold out within the week. Yeah.

Michaela Wessels [00:13:17]:
Just 20 of them and could have had 5 to 10 x the volume that they were placed in. And that's my biggest lever. If you get those bestsellers and you back them with the right investment and depth, you're making leaps towards growth.

Richard Hill [00:13:33]:
So, I mean, that sounds quite obvious to me. No. But, yeah, it sounds quite obvious that, you know, there's more certain sizes that obviously gonna sell a lot more of. You know? I'm obviously, it's I don't know if there is a an average size that the the a certain population is, you know, and and, you know, whether that's, you know, you're gonna double down or 5 times down on on a certain size or 3, you know, and then the the larger sizes and the smaller sizes, you're gonna do your normal you know, know, I'm a massive believer in the 80 20 principle. You know, that that goes without saying. But why don't people do that? Why don't people do that? Because it just sounds quite straightforward. You know, the the the sizes, whether that's the sizes in the middle, the the the larger amount of the population are. I know whether that's a, I don't know, a size 10, 12, 14.

Richard Hill [00:14:25]:
That's the 60% of the population in maybe I don't know the numbers. So why do why do buyers get it so wrong? Because I think they do seem to get it so wrong. Is it just they're not allowed from a lot of the manufacturers to order more of the more popular sizes? They're not getting allocation. They're not very good negotiators. You know, why are they not doing it?

Michaela Wessels [00:14:43]:
Well, actually, Michael, it's the styles. 80% of the styles will make you know, 20% of the styles will make 80% of the revenue.

Richard Hill [00:14:52]:
Got you.

Michaela Wessels [00:14:52]:
So firstly, they're nervous to pick the 20% because they don't know what the 20% are. And I remember this feeling because I had only spreadsheets and BI tools to rely on to try and predict which ones are the 20 that are going to kill it. So having well, style arcade was an absolute game changer for me personally, which is why we developed it. But to do my own job, the ability to see visually what's working for the customer, what are they telling us in the data, and then what attributes about the products do they love to be able to pick these kind of repeatable attributes that win for you often. So, yeah, back backing the winners. And then with the sizing, it's just too damn hard to go and flick around the size curves by product, by category, by store. It's a labyrinth that only a single person in a business would ever do, you know, the merchandise planner or the data analyst. And, yeah, like I say, the spiky problem of having those out of stocks means you never have the right information to begin with.

Richard Hill [00:15:54]:
So it's quite a lot of pressure on these buyers, isn't there, to get it right?

Michaela Wessels [00:15:58]:
So much. So much.

Richard Hill [00:16:00]:
Yeah. So when they get it right, they're like, yay. But when they've got, whatever, $400 sat in the warehouse because they got it wrong with the style, the weather changed, the fashion changed, somebody posted this different style on Instagram, and all of a sudden they haven't got any of those. And, yeah, a lot of pressure in there.

Michaela Wessels [00:16:15]:
A lot of pressure. A lot of pressure. I remember a really nice story, actually. One of the brands we were working with, they they had a seeming disaster. They had sold all of their wholesale for the season, and one of their major, major, retailers canceled their entire order. And we thought, no. We will never move through this inventory. But what was amazing is we took it back into the warehouse, and because we had had the additional industry sorry, additional inventory, we were able to 3, 4 x our revenue.

Michaela Wessels [00:16:48]:
And we'd had no idea before that we could actually do more revenue than but it takes some of these, acts of acts of nature to bring about these insights if you don't have the right tools.

Richard Hill [00:17:02]:
I'm getting sort of cold sweats and memories from I used to do this, you know, not in clothing, but in computer components. And, you know, when you get it right, it's a it's a beautiful thing. You're like, yeah. You know? Oh, yeah. We just sold all the gear, and we've just timed it right. But then when you get it wrong, obviously, it's it's quite a painful exercise, isn't it? Especially if you're employed somewhere and, it might it might be your last week in the job. But, so

Michaela Wessels [00:17:26]:
Do you know what's funny though, Richard, on that, you know, component selling out and things moving really fast?

Richard Hill [00:17:32]:
Yeah.

Michaela Wessels [00:17:32]:
The when we speak to brands and retailers, the thing that hurts them the most is not the inventory sitting in the warehouse. The thing that really hits them is having their best sellers sell out in days and not knowing how much they should have bought of those bestsellers. That's that's actually where their pain begins. So I think just being able to quantify those upfront orders properly and know your true demand is is a big deal for them.

Richard Hill [00:17:56]:
Yeah. Yeah. So so let's say they've, you know, they're using some of your tech. They've got more of an insight, you know, they're an experienced buyer in terms of the quantity, you know, and they're getting that they're getting better at that. They're using insights. They're using data. They're using, you know, style arcade, etcetera. But then they've still got to then negotiate a good deal ultimately.

Richard Hill [00:18:20]:
You know, I think, you know, I've always my my my father was bought and sold all sorts of things in a as a and I I was brought up buying and selling as a and he always said, and I think a lot of people say it, but, you know, you may you may your money when you buy something. Oh,

Michaela Wessels [00:18:34]:
that's so true.

Richard Hill [00:18:35]:
Yeah. You know? So, you know, I know we used to watch my father buy houses and cars and tractors and land and all sorts of crazy stuff and grow up around this from, you know, as a child and, you know, negotiating ultimately is, is something that's been drilled into me and I now drill that or have drilled that into my kids and it's just normal for them to walk into a clothes store and or, you know, they know we'll go shopping, we will not pack, we will always ask for a discount. So the thing is

Michaela Wessels [00:19:03]:
That's good.

Richard Hill [00:19:05]:
But obviously, as a buyer, you know, what would you say, you know, what sort of advice would you would you give to them around how to negotiate better?

Michaela Wessels [00:19:16]:
I think, Richard, negotiation is one part of the a toolkit that a buyer needs to have. Absolutely. But I think there's a lot more to be gained. You know, you come into a business and sure, you can go and negotiate with the factories for better prices. Quite often that leads you to poorer quality outcomes

Richard Hill [00:19:34]:
of your

Michaela Wessels [00:19:34]:
product, which can hurt you more. So I think when we ask those 2 questions, which potentially are a little shortsighted, is like, how do we get people to either pay more for our product or get our factory to give it to us at a lesser cost to try and increase the first margin. That's all good and well, but there's actually a lot to be gained on just selling that item at full price. And if we understood what makes a customer buy our item at full price versus having to discount it because most brands, their average discounting rate across the year is a 25% discount on all of their products. That's a lot of discount. So if we could just gain back, you know, 5 points there, we'd be in such a better place. So my advice is always, you know, explore what you can do with factory and your retail price, but there's a lot to be gained on full price sales and understanding that deeply as to how you gain those customers. Mhmm.

Michaela Wessels [00:20:30]:
Mhmm. Yeah.

Richard Hill [00:20:31]:
No. I agree. I think yeah. I'm not saying it's all about obviously trying to get the best, best deal, you know, to try to absolutely screw people down. But ultimately, I think you can use sort of levers around, or what would you say? You know, you're you've got the AI. You've got the tech that's gonna predict better. So then you can forward plan and forecast, then you can forecast with these factories, with these suppliers and demonstrate, you know, a forward order or, you know, order, you know, several whatever it may be, 1,000,000 of or 1,000 of over a period of time. Obviously, that you can use that as a as a lever, can you not, to then get, obviously, a better price if you're ordering 10 times as much over a year as opposed to a, you know, an all a single order or 5.

Michaela Wessels [00:21:14]:
Yeah. And, Richard, that's a great gain as well because if you think about most fashion businesses or apparel businesses, roundabout 20% of their range would be evergreen product that lives all year round. Those items should be uber high margin for you. And I think a lot of, a lot of buyers can tend to look at the new shiny thing and not go and look for those bread and butter items that are delivering year on year. So I think the when I look at the style arcade data, and we've got over 120 brands and retailers on the platform turning over more than $5,000,000,000 If you think about all of that data, and it's 26% of styles delivering 43% of revenue. That's those are them money spinners. That's where you want to put some focus and where you really want to negotiate on volumes.

Richard Hill [00:22:04]:
Yeah. Yeah. No. It makes makes a big difference, isn't it? A big difference. So maybe step me through a, you know, I know you've you know, I can see, obviously, you've got a lot of big brands on the on the site, and I know you've worked with a lot of different brands. But what's been you know, maybe step me through and step our listeners through, you know, maybe a more recent piece of work or a client that you've worked with where you've sort of implemented your tech, implemented, whether that has to do with sizing, whether that has to do with the forecasting, you know, that's helped a retailer recently?

Michaela Wessels [00:22:35]:
I think one of the more recent surprise and delights moments that I've seen is we're currently working with a large sportswear brand, and, you know, the team is, like, a 100 strong, and they've never been able to get down to analyzing colour performance or subcategory performance or even sleeve length, neck length, neckline, silhouette, all of those things. So putting in style arcade and allowing them to see what is your performance by color, what is your performance by neckline, they were just blown away by all of these insights. It was really exciting for them to see, and then the buyers are armed with all of this amazing information on how to do their jobs better. So that was really exciting because that's you can imagine it's a bit of groundwork to go and take an image of a product and say, well, that's a v neck. It's long sleeve. It's dark blue. Like, humans shouldn't have to do that. So just let the AI do for do it for you.

Richard Hill [00:23:32]:
Yeah. So, I mean, you you obviously, we've mentioned AI AI a few times, but where do you see it going on the AI and on the AI side over this next 12 months? I think, you know, every every tech partner, every tech brand that we work with, talk to on the podcast with all of our clients. Obviously, AI is at the forefront of most, SaaS' tech partners' platform, actually, ecom store platforms. You know, obviously, some of the things we've even touched on now, you know, what you can do with the AI to predict, what you can do with the AI on size. It's just an incredible, you know, I'm spending so much time just playing with the I say playing, but a lot more than playing. But, you know, where do you see it going, with this kind of thing?

Michaela Wessels [00:24:19]:
It's interesting because AI is such a buzzword and a hot topic specifically for retail. It's funny because we were speaking to a number of brands, and they all say, well, please say you do AI because my director director won't approve technology that's not AI. And you think

Richard Hill [00:24:33]:
if you'd had to go and talk to that director and say, what do

Michaela Wessels [00:24:33]:
you want this AI to do for you in fashion retail? They cannot tell you. They can't

Richard Hill [00:24:41]:
tell you.

Michaela Wessels [00:24:41]:
But what it can do, I mean, from our experience and I just actually posted something on LinkedIn about my favorite uses for AI in fashion tech. And, it's speed to market, and it's taking the grind away from your team. Let's just begin there as a big win. So I think some of the fun use cases is, like the earlier example, advanced product attribution, that can all be automated. No one has to go and label dark short sleeve V neck T shirts anymore. Allows your customer to search that on-site easier. Also allows you to really quickly analyze performance by all of these, more advanced attributes. And then cannibalization, Richard, if you think about in fashion retail, if you have large ranges, sometimes you'll sit there and the team will go, how did we end up? You're looking at current trade.

Michaela Wessels [00:25:32]:
How did we end up in June with 5 dresses that do exactly the same job for this customer at 5 different price points? So having AI help you instantly spot cannibalization in your future ranges so you'd never make those mistakes. Yeah. And then one last one is the sizing. Just not have to ever think about how many sizes to place for a particular style. That's a win.

Richard Hill [00:25:55]:
Yeah. It's huge, isn't it? It's just huge. It's just like a sizing piece. You know, everybody we speak to, you know, we've probably got 5th 50 plus apparel brands as clients, you know, the sizing piece, the returns, the RMAs. It's it's good times, I think, at the moment. Well, it's get, you know, we're in a we're in a good sort of almost like a sweet spot of of being able to close that gap and and and the tech for good to to help. It's a it's a good thing. A really good thing.

Richard Hill [00:26:24]:
Yeah. Exciting. You must be, obviously, when when clients come on board or you speak to retailers, brands for the first time and, you know, they may be not using anything too much. They're using pen and paper maybe or whatever it may be, and and you guys jump in there and show them some of the stuff you're doing, but obviously some of the stuff that's coming down the line as well. It's very exciting.

Michaela Wessels [00:26:45]:
It's super exciting. I think, also, my favorite thing, Richard, is that the brands grow. Right? You've got these really amazing brands that are able to achieve their full growth potential, which they Yeah. You know, you have to have data to do that. Yeah. And I think, you know, you're talking about sizing, and it it is definitely one of my favorite topics, but no one cares much about it. You know, we see we see the problems in sizing for sure. Yeah.

Michaela Wessels [00:27:11]:
And if you think about the number one shopper complaint, I can't find my size. Surely, that's a problem we have to solve for them. Yeah.

Richard Hill [00:27:22]:
I think it's probably half the planet, isn't it? Can't find the maybe. I don't know. There are a lot. You know? I know. Yeah. All my all my family are, like, 6 foot 7, you know. So it's a problem. You know, all my cousins, my my uncles, my aunties, they're all, you know, we're all very large.

Richard Hill [00:27:38]:
And that's just one, you know, one example. But there's obviously, you know, there's yeah. It's it it mind boggles the the problems that people have, especially obviously online, getting the wrong sizes, it's just sort of taken for granted that we're going to order extra and then send one back, which is just terrible for the industry, terrible for the planet, you know, full stop. So this sort of size inclusivity then, you know, how where do you see that going? What do you think brands should do more of around the inclusivity piece around size?

Michaela Wessels [00:28:13]:
I think, undoubtedly, there's market share to be gained, which I think a lot of brands are perhaps doing size inclusivity for the wrong reasons. You know, maybe it's, you know, where as brands, you you kind of look to to set the tone for culture as well. And it could be, you know, let's let's do it for a greenwashing effect or those are the wrong reasons to do it. I think using the data to tell you whether you could be more size inclusive and whether your customer is demanding it is the key. Because ultimately, at the end of the day, how it doesn't benefit any brand who's, you know, it's a business at the end of the day, doesn't benefit them to range additional sizes on the fringe of their size range for customers that aren't there to buy it. You have to know that before you do it. So I think, my advice would always be to first use the data, identify whether you have the demand, then invest slowly and incrementally to make sure that the demand is growing and and keep backing it up. So, yeah, we we actually had a customer come to us once and say, we want style arcade because we want to be we know that we've got opportunity in larger sizes because we get this anecdotal feedback from customer service.

Michaela Wessels [00:29:27]:
And then when we actually analyze the data, it was the complete opposite. They had the opportunity on the smaller end. More than 30% of their revenue was coming from an extra small. So you can easily see that the bell curve is all skewed. You need an extra extra small in that case. So just very interesting how how brands see this and their different motivations for doing it.

Richard Hill [00:29:51]:
This is the thing. I mean, ultimately, you know, what are you know, I guess, I'm thinking about sustainability, inclusivity, you know, people, unfortunately, do it for the wrong reasons quite a lot of the time. So it's, it's an interesting, what's the word I'm looking for? It's an interesting discussion, really, you know, ultimately, you know, doing things for the right reasons, but at the same respect, you wanna run a profitable, successful business. So but it's doing really, you know, if it's my business, you wanna be doing the right thing and and, building a business that you're proud of, that people wanna buy from. But it's also can be a, you know, like, sustainability, greenwashing, this sort of thing, which a lot of people, you know, seem to be unfortunately jumping on. But, yeah, it's a difficult, it's a difficult conversation even that, you know, that

Michaela Wessels [00:30:47]:
people don't for

Richard Hill [00:30:48]:
the right reason. Yeah.

Michaela Wessels [00:30:49]:
But I think what what consumers are putting a lot of pressure on brands to be size inclusive. But if you don't have a quantum of customers that need that size, you shouldn't be providing

Richard Hill [00:31:00]:
it. Yeah.

Michaela Wessels [00:31:01]:
So I think that's about analyzing your customer base. That's my Mhmm. My best suggestion Yeah. And understanding the data.

Richard Hill [00:31:07]:
Cool. So maybe tell me a bit more about some of the other functionality and features of style arcade.

Michaela Wessels [00:31:17]:
Well, one of the favorites, and, people underestimate how important this is, is the visual nature of how Style Arcade actually operates. So we're dealing with merchandise buyers, planners, marketers, ecommerce managers. These humans, and even you and I, we're all visual creatures. We need to see our product alongside our data so that we can actually see what the customer is seeing. And I think so many traditional tools that have been in this, industry have all been spreadsheet based, SKU based. How do you how do you make product decisions on a SKU number? It always baffled me. So that was my biggest issue in in retail, which I wanted to solve. So, yeah, it's a very visual tool, Richard.

Michaela Wessels [00:31:58]:
And if you think about, you know, we've got a 100 and something odd brands and retailers on the platform. We've got 6,000 global users. That's a lot of people in the retailer using it, and I think it's down to how delightful it is to use. And and, actually, it's smart too. So you the more you get people to use it, the smarter and better trading decisions you have. So it's almost like a bit of a trick at the end of the day. Make it fun. Make it fun, and all of a sudden, you're doing better business.

Richard Hill [00:32:29]:
That sounds like the dream, doesn't it?

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Richard Hill [00:33:13]:
So, obviously, we've covered quite a bit of ground there. We talked a lot about sizing, inclusivity, but, you know, what would you say are some of the other, you know, we sat here in 12 months' time. What are a couple of things that merchants should really be on the lookout for this next 12 months, to get ahead? You know, what are some of the trends, other trends? It can be anything that you're seeing your successful clients that are embracing or they're about to embrace. You know, what are a couple of other key things that you're seeing at the moment?

Michaela Wessels [00:33:45]:
I think, Richard, that's the key because, you know, we sit here and think, you know, we know a lot about a particular topic, and you wanna, you know, hypothesize about what the future's gonna be. And I feel like there have been so many false prophecies of late. You know, we were told, you know, TikTok is gonna take over meta, and, you know, Web 3 is the biggest thing, AI, but then there are no practical use cases. And so I think let's get down to basics and simplicity, what I've seen brands doing that I think they're having a lot of success with, or at least I can see in their numbers they are. Investing in brand marketing over performance marketing, controversial, but it is delivering. And, the second thing I see them doing is really getting smart with their construction of their tech stack. No one's making a decision on technology that's gonna lock them in. They want to be, dynamic, agile.

Michaela Wessels [00:34:40]:
They want their systems to talk to one another, and they're really being particular about how they construct their tech stack, which makes them, you know, have the ability to have greater speed to market, quicker implementation times. They're open to newer tech and stuff that is more innovative, versus going with the kind of bigger, more brand name technologies that will take you a year to implement.

Richard Hill [00:35:06]:
Giving them the sort of flexibility to be able to connect rather than tying them into some sort of, very

Michaela Wessels [00:35:15]:
difficult you see with with this brand marketing versus performance marketing? Because you know, as a brand business myself, it's hard to quantify the ROI on that brand marketing, but it's there it's there somehow.

Richard Hill [00:35:28]:
Yeah. I mean, we are seeing, we are seeing a shift more, you know, obviously, normal, if you like, sort of paid ads, a lot more firms who are investing more in brand. Yeah. Yeah. We're definitely seeing a shift towards that. That's for sure. Yeah. But, yeah, the tech the tech stack, I think, you know, what tech to to sort of back.

Richard Hill [00:35:48]:
That was always the challenging one, isn't it? Because, you know, there's, there's always a shiny object or 2 coming around the corner depending on what conference you've been to or who you're sort of backing. But I think as you sort of alluded to having a tech that is sort of you're able to integrate easily with other, you know, it's not closed off. It's it's open. I think, you know, it's quite quite a key one. We see you know, we work with a lot of brands that you know, it's the nature of the game, I think, where, you know, they start as a small business however many years ago with, you know, somebody built something based on a friend of a friend maybe, and then all of a sudden they're doing 20,000,000, 50,000,000, whatever it may be, And they just can't do much with that tech because they haven't got the resource or the, know, so then they look to them replatform or or whether that's an actual platform, you know, an ecom store platform or whether that's a, you know, an ERP, but they're making those decisions. I think a lot of people are quite shortsighted on some of those decisions because they'll make the decision. It might take a year to move it all over, and then actually, we're now at 50,000,000 a year or 100,000,000 a year. And actually, we can't actually the international side.

Richard Hill [00:37:03]:
We didn't think of that. So doing a real deep tech audit of what you have and making sure it's sort of more future proof, you know, and that's that's where you really need to sit down with somebody that knows what they're talking about and do a proper tech audit and and, look at, sort of, right, what are the the bigger aspirations for the for the company, for the brand. Yeah.

Michaela Wessels [00:37:25]:
You know what I think might be a trend as well, and I'm hoping it will be because everyone at the top end of town in retail and ecommerce, the big players are always looking for the monolith, the thing that does everything from end to end and that I pay, you know, 6 figures for, and it does take me a long time to implement. I think those technology companies are going to have to have a way to let you try it. They have to give you some kind of entry point to figure out if this is the right tech because who can sign a 6 figure check without knowing if it fits into everything else in your ecosystem?

Richard Hill [00:38:02]:
Yeah. It's a hell of a decision, isn't it? We see it all the time, you know, they've gone from 0 to 20 mil, right, we should replatform. Right, we'll just pick this platform. I know it's not that that straightforward, but it's like they're they're sort of backing a horse in a

Michaela Wessels [00:38:16]:
face. Yes.

Richard Hill [00:38:18]:
And then they go, actually, we didn't we didn't think of this, so we didn't think of that. And, yeah, we actually need to replatform again or yeah. It's it's an interesting one. It's an interesting one. We we have a lot of dialogue with brands, and we recommend, obviously, a lot of different tech to our listeners and to our, obviously, clients behind the podcast with our agencies. Yeah. But it is, you know, it's an interesting conundrum really of, you know, there's obviously a lot of good tech out there, you know, so many good brands, so many good SAS is coming through.

Michaela Wessels [00:38:50]:
But It's interesting to see because as well, we can see in the data because we have to connect to all of this tech. So we see exactly what they're switching from and to, and it also depends on the geographic area. You know, the returns platform that's popular in the United States is not the same as popular in the Southeast Asia. So I think, it's very much a it's a trend thing in each location. And then also, you you hope you got the best tech, and you can only go by reviews and, you know, peer advice as well.

Richard Hill [00:39:21]:
So I'm gonna ask you more couple more questions. So I'm thinking peak peak season. You know, this this episode's gonna go live. It's going to be sort of mid July, and we're for a lot of apparel brands. You know, we talked about that a lot, you know, peaks of, you know, a few months away. And then we've we've obviously talked about sizing and and and forecasting, you know, using AI. But any other any sort of parting advice other advice you would give to our merchants around peak?

Michaela Wessels [00:39:56]:
I think, Richard, if you look at what are the important times in a retailer's year, you know, it's important, to get those events right, the planning and forecasting for those events. So Black Friday, Cyber Monday, all that all those things. For a lot of retailers that we see, that can be 10 to 20% of their entire year's sales budget. So being able to plan for those is key. And if you neglect the rest of the year, you're almost okay. So I think really doubling down on the data analysis and postmortem of these big, big sales events really, puts you in a better position. And I would say when you look at, you know, all of the kind of anecdotes that come out of those times, people say, oh, well, you're gaining you know, markdown customers if you're if you're gaining customers during Black Friday, Cyber Monday. It's not always true.

Michaela Wessels [00:40:47]:
Like, you really need to look at your data from your customer base and and what you were selling at the time. So I would always encourage people to just dig a bit deeper, to understand the numbers a bit more. Because we're on a hamster wheel. We can't look at everything. Just look at the things that matter.

Richard Hill [00:41:03]:
Love it. Yeah. Love it. Well, thank you, Mikaela, for coming on the show. I'd like to end every episode with a book recommendation. You have a book to recommend to our listeners?

Michaela Wessels [00:41:13]:
I'll give you one if you give me one.

Richard Hill [00:41:15]:
Oh, okay.

Michaela Wessels [00:41:17]:
Do you have one?

Richard Hill [00:41:19]:
I have so many books. Let me think. I'm I'm looking around my, my office now because I have so many. I mean, I think, there are so many books. I've had 200 recommendations, but personally, I think, do you want me do you want me to go first?

Michaela Wessels [00:41:36]:
Yes. I would love you to.

Richard Hill [00:41:39]:
So I would say one of my favorite books is by an author called Eckhart Tolle.

Michaela Wessels [00:41:44]:
Oh, yeah.

Richard Hill [00:41:45]:
Which is the it's called the and it's called the power of now.

Michaela Wessels [00:41:48]:
Yes. It's magic. It's magic.

Richard Hill [00:41:50]:
And it's, there's not many books I read 2, 3 times or have on audio and listen to quite regularly. But I think just to be in the moment and to focus on what you're doing now, not to worry about what's maybe gone on. I'm worried too much about the future or think too much about the future. Not saying don't plan for things because absolutely you wanna you wanna do that and and have have plans and things to look forward to. But I think we can spend so much time thinking about what's going on and what might be in in in negative ways potentially. So I'm very much about being in the here and now, and I think that book just really resonates with me. And it's a book I'd recommend anybody, especially a lot of people that are listening to this, will be in senior positions with maybe a little bit of pressure on them or business owners. And I think it's just a really nice book that grounds people down to sort of what's really important in life.

Michaela Wessels [00:42:44]:
Yeah. I love that book. I I like you read it a few times. I also read his, The New Earth, not as good as The Power of Now, but, incredible book. I I loved it.

Richard Hill [00:42:57]:
Yeah.

Michaela Wessels [00:42:58]:
So interesting. You and I sound like we have the same taste in books, but I'll give you my, recommendation. It was actually more aligned to you're You're also a multiple founder of businesses, so you'll know what it takes to start something and the kind of resilience. And I think the one book that really gave me some groundbreaking principles to operate off was The Obstacle is the Way, and it was written by Ryan Holiday.

Richard Hill [00:43:24]:
Holiday. Yep.

Michaela Wessels [00:43:25]:
Yeah. Have you read it?

Richard Hill [00:43:28]:
I've read it. I I I've I've dipped into it a few times, but I haven't read it all.

Michaela Wessels [00:43:32]:
It must have been a moment that I needed it because I Yeah. Dove right into that book. And

Richard Hill [00:43:36]:
Yeah.

Michaela Wessels [00:43:37]:
Just some, a lot of breakthroughs come from facing obstacles. It's It's like you get the obstacle and you think, well, let's just go around it. No. No. No. Go right at it. Really deeply understand this obstacle. It's been a lot of breakthroughs for me in understanding the obstacle.

Richard Hill [00:43:52]:
That's a great one. That is a great one. The more I think about our listeners, you know, ultimately, you are gonna get smacked in the face many times. It's just how it goes. How are you gonna deal with it? How are you gonna prepare for it? Are are you gonna see it coming? Because it's gonna come at some point. This thing, you know, you're gonna Yeah. Navigate it. Are you gonna take it head on? Are you gonna, yeah, planning for what might be? It's like playing in the game of chess, but trying to be 20, 30 moves in front and yeah.

Richard Hill [00:44:20]:
It's it.

Michaela Wessels [00:44:21]:
But you're right about it smacked in the face, but I remember when we first started style arcade, you know, in the first couple of years, I felt as if I was daily putting on kinda like boxing gear. I'd I'd just visualize it, you know, a pat on the chest, a couple of gloves on. I'm ready.

Richard Hill [00:44:36]:
Yeah.

Michaela Wessels [00:44:37]:
Bring bring on anything.

Richard Hill [00:44:39]:
That is that is winning the business, isn't it? Or that's or or life depending on how you wanna, you know, I think, it can be, you know, I think, you know, I've been I'd say I've been doing this a little bit longer than you, I'm a I'm a lot older than you are, so, you know, I think it's inevitable that, you know you can have some fun, should we say. Some people say challenges and fun along the way, you know, and I think you you when you've had a few years of fun, if you like, you sort of get used to the the docks and they're just sort of, you know, you just navigate them and keep smiling.

Michaela Wessels [00:45:10]:
Now it's water off a duck's back. I mean, what have we not seen? Yeah. Yeah. It's good.

Richard Hill [00:45:15]:
I guess that ties in quite nicely with, you know, we've just launched a new podcast, on the on the on the show, which is called sort of aligns with this show a little bit, but it's it's around building agencies, ultimately building businesses.

Michaela Wessels [00:45:28]:
Yeah.

Richard Hill [00:45:28]:
And it's called Agency Intensive, agencyintensive.com, and, we've got sort of 4 or 5 episodes out there now, but very much, we talk about this this side of business a lot on that podcast, you know, this sort of, dealing with the ups and downs of of running a business. Yeah. I I sense we could do a whole another episode, Mikaela, on this.

Michaela Wessels [00:45:46]:
I think so too, Richard, because I think that's why you've had such, wonderful results on that podcast is because people are desperate for this information. This is a hard thing to do. Yeah.

Richard Hill [00:45:56]:
Yeah. It is interesting because that podcast actually is doing about 3 times the numbers of this podcast.

Michaela Wessels [00:46:02]:
I'm on the wrong podcast. Yeah. But but it's so good. You're you're giving back. People are desperate for this this knowledge.

Richard Hill [00:46:10]:
Yeah. Well, thank you. It's been an absolute pleasure having you on. For those who wanna find out more about you, more about style arcade, what's the best way to do that?

Michaela Wessels [00:46:18]:
Hit me up on LinkedIn, makayla vessels or at stylearcade.com. We're always here to, yeah, meet new people for sure. No problem. So much for having me on this trip. Such a pleasure.

Richard Hill [00:46:29]:
Problem at all. No no problem at all. I'll see you soon.

Michaela Wessels [00:46:31]:
Speak soon. Bye.

Richard Hill [00:46:33]:
Bye. If you enjoyed this episode, hit the subscribe or follow button wherever you are listening to this podcast. You're always the first to know when a new episode is released. Have a fantastic day, and I'll see you on the next one.