Amit Shah, Chief Strategy Officer and US General Manager at VTEX

Julia Raymond:
Amit, one of the first questions I wanted to ask you is, you were a co-founder of Joomlatools back in 2008. How did you become an entrepreneur?

Amit Shah:
Sure. Before I ever became an entrepreneur, I was actually working in venture capital for seven years, both in Palo Alto and then in London, investing in technology companies. Usually, after you give an entrepreneur money, you then get to sit on the board of their company, and every few months you have a board meeting, and you ask the entrepreneur how the business is going. So, many times I found that the board meetings had the exact same theme, which was why are revenues not growing faster and why are you spending so much money.

Julia Raymond:
Right.

Amit Shah:
At some point, I thought, “How hard can this be? I need to try this for myself.” Of course, I discovered very quickly, it’s much harder than it looks, right? Just like every YouTube video makes it seem really easy to plant that tree or put up those curtains, you discover that running and building a company is very, very challenging, and it’s a lot different from sitting on the other side of the fence giving advice and walking away. But I also found that I really enjoyed it, right? The idea of pushing the ball forward every day and a feedback loop that was faster, right? You send emails. You talk to a customer. You help someone go live. You help them become successful. That felt much more fulfilling than sitting on the sidelines or in the backseat of the car, right?

Julia Raymond:
It’s a lot different than giving advice and walking away, but it sounds like you had a lot of fun.

Amit Shah:
I did, and I enjoyed it for a very long period of time, but it also takes a toll. To some degree, you always feel like the world is resting on your shoulders, and eventually we sold our business to SAP.  And then for a period of years, I no longer had to worry about payroll or accounts payables or account receivables or pretty much anything. Then I started again going back to sitting on the boards of software companies. That was originally how I met the founders of VTEX and eventually remembered how much more fun it was actually building a team and helping to build a company and not just sitting on the fence.

Julia Raymond:
Absolutely. VTEX is huge in South America and other countries and growing rapidly here in the US is my understanding.

Amit Shah:
That’s right. We always think of in the startup lab, we have this false dream of these overnight successes, right? The truth is, almost rarely is a company successful overnight. The incredible thing about VTEX is that we are celebrating our 20th anniversary this year, and that should tell us something about the fortitude and the endurance of the founders to continue to build through ups and downs and lots of different economic cycles. Now, in some ways we feel like we’re just hitting our stride, right? This year this will become a very large triple-digit revenue software company growing and profitable, which are all incredibly rare things in the world of technology and software. We all feel like we’re just getting started. It’s an exciting time to be here at VTEX.

Julia Raymond:
Certainly. It’s an exciting time for VTEX, but we are going through the pandemic. Globally it’s affecting everyone personally and professionally. Being the Chief Strategy Officer and kind of sitting at the top and having a bird’s eye view of the company, have things been dramatically different? Is business actually doing really well because people are coming to you to boost eCommerce? I see a lot of articles online about that. What’s it like?

Amit Shah:
Sure. I always tell people, “Don’t get fooled by fancy titles” right? In the team we have here in the US, I tell everyone, “My job is to make them more successful.” It’s not to, as you said, sit at the top, but it’s almost to be at the bottom of the pyramid and make sure that every single member of the team can contribute and feel like they’re achieving their goals.

Amit Shah:
You mentioned the crisis. I think we’ve all maybe relearned the definition of what we call the essential worker, right? We’re learning in a kind of humbling way that we’re not the essential workers, right? The essential workers are the subway drivers, the bus drivers, the folks driving trucks to make sure food gets to supermarkets, and the people at the cashiers, those are the essential workers. Those of us working in software and technology are in this privileged position where we can work comfortably from home even though we might have kids in the background or in makeshift home offices, but we have a role to play to help our customers be successful.

Amit Shah:
To some degree, I think the virus has been beneficial to our business. Many of our customers are retailers. They have lots of physical stores and also an online channel with VTEX, and we’re seeing that their online businesses are booming because their customer base can’t go to a store anymore, so if they want to keep buying goods or services, they have to go to the online channel. That’s the message I give to our teams, that, hey, we’re not an essential worker in the sense that we’re not in the front lines helping patients, but we are essential to our customers, because we’re now their only store, right? We’re their online store, and that is bringing in the revenues to keep them being able to put paychecks for their employees.

Amit Shah:
For our business, I think unfortunately COVID-19 has been an acceleration force, right? Because even those customers that were maybe thinking about, “Do we open another online store? Do we build a marketplace offering?” They’re now all saying, “We can’t wait any longer. We have to do this now because this is our best chance of survival or growth in this era.”

Julia Raymond:
You’re hearing them say, “We can’t wait any longer,” and in some ways, this is good, because it pushes retailers to innovate through online channels.

Amit Shah:
That’s exactly right. I think what we’re also seeing is that our customers are really focusing on the customer and this idea of convenience. You can now buy online and pick up at the store or the curbside, right? Or our customers that are sending emails with the WhatsApp channels by which they can buy something, those are all new creative ways that commerce is evolving in real-time to help customers, right? Even this idea of the toy stores, where the in-store associate is now literally doing face time shopping with someone to say, “Okay, what is that toy you want to buy for your kid,” because they’re all going crazy at home, right? So, all of this is happening. Yeah, it’s an industry we’re all rapidly finding new ways to make it easier for the customer to buy.

Julia Raymond:
I do like to make the distinction when it comes to retailers because obviously grocery is an essential retailer and comparing it to nonessential retail in a lot of ways is not fair, because they’re facing very different challenges. Some would say that grocery’s facing the positive challenges of having to respond rapidly, but have you seen other ways, like the example you just mentioned with face timing consumers and allowing them to pick out toys that way for their children, have you seen other examples of this, where not necessarily grocery retailers, are shifting to either offer grocery products? Have you seen that happen here and there or similar?

Amit Shah:
I think one of the benefits of being at VTEX is we have customers in 30 countries around the world, so we’re seeing basically everywhere in the world people adapting and creating new ways to be of convenience and of value to their end customer.

Amit Shah:
In Colombia, for example, there’s a large restaurant chain called Crepes and Waffles, and their new online offering is that you can order online and you can pick up in your car. Literally you drive by the restaurant and they give you your order to your car. In Romania, we’re working with a company that had their own eCommerce site and now what they’re doing is building a marketplace offering around their native eCommerce site. The benefit there is that they can offer so many more goods to the end customer without having to deal with inventory or fulfillment.

Amit Shah:
That’s this idea that we think of as collaborative commerce, how do you work together with other third party goods and suppliers to offer more value, convenience and service to your customer. That’s probably the biggest trend we’re seeing now, is that a lot of our customers are calling us back and saying, “Hey, we sell in one category of goods. How can we increase our product assortment in other categories without taking that inventory risk or fulfillment risk?” That seems to be one of the big areas of growth this year.

Julia Raymond:
You’re saying this company is one example of a customer of VTEX that has physical stores in Romania and quickly was able to work with other third parties?

Amit Shah:
That’s correct. It’s called Miniprix. It’s a Romanian fashion brand, and now they’ve launched a set of new product categories around non-perishable food, pet supplies, all these other what became essential categories, and they were able to do it literally in two weeks.

Julia Raymond:
Wow.

Amit Shah:
Because using our marketplace they could just add third-party vendors who had already the inventory in categories where they were not strong.

Julia Raymond:
Two weeks. That is very impressive in terms of response time.

Amit Shah:
Exactly.

Amit Shah:
Yes, absolutely. We’re seeing other examples, where another boom because of the crisis is around the home office. Now all of a sudden, everyone needs a desk and needs new furniture and needs new microphones and better lighting so they look great on Zoom, right? These are all examples where all of a sudden these new categories have popped up and everyone, they’re searching and even every company is giving their employees the home office budget of whether it’s a hundred bucks or $500, to outfit themselves because this may not be for a few weeks, it may be for a few months, it might be even longer. If you’re a retailer, how do you overnight add new categories to your offerings, and that’s where marketplaces allow you to be that fast and agile.

Julia Raymond:
That’s really impressive. I’m reading a lot recently on the value of marketplaces. Most of our listeners are retailers and vendors, but for some of the everyday listeners, I think there’s a little bit of confusion when it comes to, okay, well, what’s a marketplace if you’re not talking about Amazon or the other big players?

Amit Shah:
Sure. It’s not an accident that today Jeff Bezos is the richest person on earth, right? He’s figured it out before any of us, in that he started with the online bookstore and said, “Well, if I have a customer here, what else can I sell them,” and eventually discovered, “Maybe I don’t want to take all of that product inventory risk. Maybe I should let other people help me.” And so Amazon of course is the most famous marketplace. I think Walmart has copied that. Dick’s Sporting Goods has copied that. Modell’s has copied that. Now I think most larger online retailers have started thinking about, “How do I add more convenience and selection and choice to my end customer and make it easy for them to spend money with us?”

Amit Shah:
I think the marketplace trend is one that’s first been accelerated in B2C but we’re also now seeing it in business-to-business environments as well, where the manufacturer thinks not only about selling the product or the equipment but thinks about what happens afterwards, the aftermarkets around auto parts, for example. If you’re selling a Volkswagen or a Porsche, how do you make sure that end customer can continue to buy with you, make sure that they’re getting parts that are guaranteed and respect the warranty. How do they buy service that they need to? So, they’re all creating these new ecosystems that span a longer customer relationship than that initial purchase.

Julia Raymond:
Wow. It makes sense you said to use marketplaces to add more choice and make it easier for your customers. Do you think this is the future of eCommerce, where most mid- to large-sized retailers will be operating using marketplace models?

Amit Shah:
It’s always hard to predict the future, right? It’s even harder to tell you when it will happen. Certainly people like Amazon and others have proven that customers want convenience. They want choice, right? They want to have a broad selection, and marketplaces make that easy to happen. I think one of the great things about Amazon, as much as other retailers may not appreciate it, is that they have kind of democratized commerce, not only for the end customer but also for lots of small suppliers, right?

Amit Shah:
My wife runs an online business. She sells high-performance socks for Yoga, dance, Pilates, and one of her main channels is now Amazon in 10 countries around the world. So, Amazon has allowed anyone with a good or a product to reach a very large customer base. I think that continuing idea of a collaborative commerce world, where manufacturers of small, medium and large can now access any customer, is some of the power that marketplace offers.

Julia Raymond:
That’s so cool that your wife sells you said high-performing socks, like Yoga socks, on Amazon in 10 countries. I bet you never run out of socks.

Amit Shah:
You know, we are lucky now, because when we started, when she started her business, all the socks would come to our apartment in New York City and we’d have a hundred boxes along the living room wall. She’s now grown to a size where she’s outsourced fulfillment. Yeah, she sells direct through a B2C site. She sells to wholesalers, which are Yoga studios. Then she sells through Amazon, and Amazon is incredibly proactive. Every month she gets contacted by another Amazon country saying, “Hey, we’re now opening up the marketplace in Saudi Arabia, in Colombia. Would you like to sell there?” In that way, the marketplace allows lots of different companies and producers of different sizes to participate in online commerce. I think that’s the power of the marketplace offering.

Julia Raymond:
Yeah, I think that there’s something to be said here about, there’s a lot of supply chain issues going on because of the changes in supply and demand, especially with our manufacturers over in China and the apparel retailers here based in the US or North America, and is there a benefit on both the supplier and the retailer side to using marketplaces versus traditional models?

Amit Shah:
I think the short answer is yes, absolutely, because if you think of the traditional supply chain, you had either the end manufacturer or the product owner shipping to a warehouse or a distribution center, and from that warehouse or distribution center, either it would go to the physical store, or maybe there would be fulfillment direct to the end customer if it was through an online channel. Certainly we’ve seen in the last months, people like Amazon saying, “Hey, sorry, don’t send us anymore product because we have to focus on these essential categories.”

Amit Shah:
I think a lot of the retail stores are suffering the same issues, where if there was inventory in-store, all of that inventory is kind of stuck to some degree, and in having a third-party marketplace essentially, you have different ways to fulfill to the end customer. Whether that’s the small business that’s sending it directly from their home or sending it from a smaller warehouse, now there’s less dependence on one supply chain to reach the end customer. So, it’s offering a lot more flexibility for retailers, because they’re not just relying on their own infrastructure to service the end customer.

Julia Raymond:
Right. That could be part of the reason Amazon is doing so well right now in addition to the goods it sells that are essential.

Julia Raymond:
If we switch over and chat a little bit about the consumer right now, do you see any categories that are doing particularly well than others or vice versa?

Amit Shah:
Yeah, so I think originally, of course, as everyone has probably gone online themselves to search for toilet paper and hand sanitizer, those were the categories that have been probably sold out for the last month. What we’ve seen now is this shift in psychology away from just the essential goods, because I think a month into this now, Costco and others have caught up, and you can go to Costco and get 64 rolls of toilet paper, right?

Amit Shah:
If you think of the idea of Maslow’s hierarchy of needs, they’ve moved past, “Okay, I know I can still get food. I know I can still get toilet paper. What do I do with the rest of my time and the rest of my family for the next six months?” So, one of our customers is called Erik’s Bikes, and they have 35 bicycle stores and a large online business with us. Last week they had their biggest week outside of Black Friday, so they literally matched their sales from Christmas last week, because I think the entire world, and again, I don’t know if you live in an apartment building or in a house, but you see all your neighbors now. It’s surprising how many people there are that actually live in our neighborhoods, but everyone’s out there now either going for walks or, as we’ve seen with Erik’s Bikes, buying a bike, because, “Hey, I might have six months of this. How do I get exercise? I’m not going to go to the gym, so I need to find other ways to occupy my time and relieve stress and energy.” Erik’s Bikes-

Julia Raymond:
It’s funny you say that, because I just thought about bikes the other day, and I was talking with my husband. I said, “How much do you think a bike costs nowadays?” I haven’t purchased a bike in some many years, and we live in a town home, so we have a little bit of room in the garage, but, yeah, just days ago.

Amit Shah:
Exactly. Erik’s Bikes is doing incredibly well, I think because we’re all a little restless at home. We have another customer called Al’s Sporting Goods. They have two physical stores in Utah, a very large online business, and again, they’re seeing great growth, because I think everyone is thinking, “Summer’s coming and this summer I’m not traveling anywhere,” so you’re not spending it on new bikinis or bathing suits, but you are spending on things like camping equipment and saying, “Okay, what can I do outdoors,” and, “Geez, I have this backyard and my kids are going to be there all summer long. Maybe I need to buy a slack line and a trampoline.”

Amit Shah:
So, all of these ways, the staycation has become very popular this year. That’s another business which is seeing great growth, because everyone’s realizing this year we’re not going to fly anywhere. We’re not going to stay at a hotel. We’re staying home, and we have the next four or five months, hopefully of great weather, and we have to find ways to entertain our kids and our families. Now we’re seeing that growth. I don’t think we’re seeing a lot of growth in people buying fancy handbags, because no one else is going to see them, right? Most of us can do our Zoom calls in sweatpants, right? I think there are certain categories that are not going to get the kind of growth they might be used to. That is difficult, right? Because for everyone who had that summer wardrobe or that summer season in mind, well, unfortunately this year it might be difficult, right?

Julia Raymond:
That’s really great, though, for Erik’s Bikes and Al’s Sporting Goods. Did they do much on eCommerce beforehand, because you said they had significant Black Friday sales, so they were already pretty mature in that area?

Amit Shah:
They were good online businesses. It’s hard to say, but the uplift from the crisis is that now all of a sudden their categories are even more popular. I think probably every spring Erik’s Bikes does well because summer’s coming and everyone’s thinking about what they want to do. This year it’s just a multiplier effect because there’s literally nothing else you can do, right?

Julia Raymond:
Right.

Amit Shah:
If you’re putting off buying that new bike for your kid, all of a sudden that money is available if you’re still fortunate and you’re still employed, right?

Julia Raymond:
Right.

Amit Shah:
It’s the same thing for the sporting goods industry, where you’re not spending money going to the baseball game or the basketball game or the hockey game, so all of this disposable income to some degree will get redirected somewhere else. Even if they had online businesses before, now they’re benefiting even more so, because those dollars are not going to sporting events or concerts or travel. All these categories that overnight have basically gone to zero, that funding, that expenditure is now going into these types of businesses.

Julia Raymond:
Absolutely. I think I saw a news story that actually in India they were re-commentating on really old cricket matches and posting those to keep people entertained as if they were happening in real time but obviously it was 10 years ago.

Amit Shah:
For sure. I grew up in Chicago, and this week ESPN just released a seven-part documentary on the Chicago Bulls and Michael Jordan, that they were going to release it in June during the NBA finals, but we don’t know where the NBA finals will happen, and so they said, “Okay, let’s put it out now,” so for all the basketball fans out there that want new content, for at least a week or two, ESPN has it.

Julia Raymond:
Did you watch it yet? I just watched the first episode the other night.

Amit Shah:
I haven’t watched it yet only because most mornings I wake up at 6 am to start doing phone calls, and so by 9 or 10 I’m ready to go to bed, so I’m saving it for that rainy day.

Julia Raymond:
That sounds good. Speaking of, I have seen a lot of adults actually in my neighborhood using inflatable pools. Kids too but the adults as well, being here in Florida, which looks a little ridiculous, but I think people are starting to really get stir crazy, like you said.

Amit Shah:
It makes sense, right? Because hopefully the community pools are shut, right? So, again, how do you entertain your kids unless you start spending on some of these areas.

Julia Raymond:
I saw a Gartner blog just the other day. They had a nice little graph, and it broke the pandemic into three sections for how retailers are responding, so it’s the respond phase, the recover phase, and the renew phase. In the renew phase they talk about, this is where it’s the long-term view. You can get more strategic. There’s rehabilitative fixes applied to integrate online with physical retail, things like that. What advice would you give to retailers looking at their long-term strategy and how they can minimize risk and do better?

Amit Shah:
Sure. I think by nature I think humans are optimistic and we always want to look around the corner to see, when will we get out of this period, right? I think right now everyone’s talking about reopening the economy, and you can go to the hairdresser again and the gym. I think some of that will happen. I don’t know if we’re all going to feel comfortable going to a shopping mall anytime soon. I don’t know if Christmas this year all the parking lots will be full, because we still don’t know what the, quote, unquote, “second wave” will look like.

Amit Shah:
Germany, which kind of has probably been the most advanced in things like testing and the lowest number of cases and fatalities, they’re opening their stores next week. I sit on the board of a software company in Germany, and they sell to retail. None of the retailers have stopped their digital projects, because they all said, “You know what? If we’re shut for a few months, this gives us a chance to get ahead, because day to day, we would continue looking at our physical stores and saying, ‘This is where our revenue comes from. We have to pay attention to it.’” Now they’ve had a moment to take a breath and say, “Okay, we know the world is shifting online, and we can’t put if off,” right?

Amit Shah:
Even in Germany, where they’re now opening stores, there’s going to be a lot of limitations, right? Everyone has to wear a mask. You have to be socially distancing from each other. If you think about the level of foot fall a retail store needs to have even to break even on the rent and operating costs, it’s not clear that they’re going to have that level of traffic for a long time, right?

Amit Shah:
So, this software company of mine, we’re thinking about, “Well, how many of our retailers are going to have the same number of stores next year,” because retail, especially in America, where every two miles there’s another shopping complex, we know it’s been over retailed. We’ve already seen so many chains close, I think this crisis will only continue to speed that up, right? I don’t think anyone’s going to be opening new stores for a long time, right?

Julia Raymond:
Right.

Amit Shah:
I think we’re in this wave now where a lot of folks that were debating how many of their stores they could keep open, it’s going to be even harder to justify the financial expense, and they’re going to say, “Well, the only avenue where I can reach a large amount of customers is going to be online.” I think, for better or worse, we have this window of time, whether it’s the next three or six months, without some of the distractions of retail operations, to really focus on, “Okay, what’s going to be the digital strategy going forward, because the longer we wait, the further behind we’ll get?”

Julia Raymond:
Absolutely. You said that some of the retailers based in Germany, they’re saying, “We know it’s shifting online and we can’t put it off any longer,” so they’re investing heavily in their digital projects even though the stores are going to reopen?

Amit Shah:
That’s right. I think what we’re seeing in many of our countries, one of the things we track is new versus returning customers, right? It’s a very popular metric even in Google Analytics, and what we’re seeing is this huge growth of first time customers and first time visitors, and I think for a lot of those people, in many different categories, they’re going to say, “Wow, this is really convenient. I didn’t have to leave my house. I didn’t have to get into a car. I don’t have to deal with anyone, and a few days later the product shows up at my front door.”

Amit Shah:
I don’t know that all those people are going to say in a month, “Okay, let’s take a risk and go to a store.” I think there’s a whole new wave of people that are saying, “I’m not coming back. I’m not going back. This is much easier. It’s much more convenient,” and the product is always in stock, right? All of the frustrations and disappointments we’ve had with physical retail largely are eliminated online, and so I think it’s a turning point for our industry if there hasn’t already been one.

Julia Raymond:
Sure. I could definitely see that. I think the focus, like you said, there’s a huge element of convenience that people might enjoy more than they thought they would when it comes to online shopping and not risking going into a physical store.

Julia Raymond:
What’s a positive message maybe you could give some of the retailers who are listening?

Amit Shah:
Sure. I think there’s been a lot of literature online of, are we going to end up with only three retailers, which are Target, Walmart and Amazon. I think the answer there is no in the sense that consumers and, again, I’ll speak for American consumers because I grew up here, right? I think we value choice. We value authenticity. We value even to some degree having the sense of a relationship or a community with the people and the places that we buy from. I think, yes, Target is amazing and their stores are beautiful and there’s lots of choice, but I don’t know that I only want to go to Target or go to Walmart, right? I think we’re seeing lots of small businesses that have grown largely online in the past five or 10 years, and now until the last few months, they’ve started opening physical presences to continue to build and deepen the relationship with the end customers, whether it’s people like Bonobos or Away, that’s doing luggage.

Amit Shah:
They’ve all said, “Hey, we want to have our version of a guide shop or a brand experience that allows us, allows our customers, to learn more about us.” I think it’s just a question of how do you express that retail environment in a way that’s interesting and fun and it doesn’t just feel like online shopping. I think that’s the opportunity for retail, places like NikeTown, which are fun and interesting to go to even if you don’t want to buy a new pair of trainers. So, I think that’s the opportunity that retailers have to create a compelling experience in which shopping might be part of it but not the only reason to go to the store.

Julia Raymond:
Great points, and I agree, so thank you, Amit, for joining today and sharing some of your insights. I really appreciated having you on the show.

Amit Shah:
Thank you very much for your time, and I hope you stay well.