It’s been a big year for online shopping — not just for Amazon.
The live auction site Tophatter, in fact, had a record year. The nine-year-old company saw sales grow 20% year-over-year (and said that were it not for supply chain bottlenecks, that growth would have been even higher). According to the company’s president Andrew Blachman, Tophatter’s focus on entertainment and discovery is what helped its popularity surge.
Blachman joined the Modern Retail Podcast this week and spoke about all things digital commerce. More people are buying online, and customers are increasingly looking for new ways to discover items. Said Blachman, more people are open to entertainment-based commerce. This change has impacted how he’s been building out the marketplace.
Tophatter considers itself somewhat of a fun pastime for customers rather than a utility to buy necessary goods. Users scroll through its app or website (though most people use the app), which features thousands of low-cost auctions for random items. The average item costs around $10, but they go as low $1. It has hundreds of thousands of registered sellers, but only about 5,000 are usually active at a given time.
The focus for the last year has been on perfecting the platform. While Tophatter has been around for over a decade, the company has gone in a few different directions that didn’t work out. A few years ago, for example, the company tried to operate more like a traditional e-commerce platform by having sellers upload items for static prices, rather than risk selling them in an auction format where they could get undercut. “That was a huge mistake,” said Blachman. Why? “While we gained a lot of inventory, or a lot of access to inventory from sellers that were afraid of risk and wanting to just price things at a fixed price, we lost their engagement,” he said.
Now, the company doesn’t offer such a program. Instead, sellers are part of the auctions themselves, and Tophatter keeps them engaged by offering incentives — like better product placement — based on past performance.
According to Blachman, the plan now is to continue growing while ensuring that it can handle all the back-end logistics. He also believes that user interest in the U.S. will only increase, as game-like commerce experiences continue to explode overseas.
Right now, he’s focused on getting more Americans on board. “It’s a complex but a really fun business challenge,” he said.
Here are a few highlights from the conversation, which have been lightly edited for clarity.
Supply chain woes remain
“There was a period this time last year — March, April last year — where acquiring users was relatively simple. The challenge that we had — the big challenge for our business — was on the supply chain side. Everyone remembers trying to buy toilet paper and nothing would show up. We had that same dynamic, but it lasted a lot longer for us. The reason it lasted a long time for us is because our supply chain is mostly cross border: international stuff that’s coming from Asia to the United States … So we had this really challenging year last year where we had record consumer demand, but a real difficult time sourcing product.”
On how to entice sellers
“Most of these sellers on our platform — and on most other platforms — are willing to give anything a try. We know that our sellers will sell on other channels to see if they work. A lot of our sellers are successful on Wish and other platforms. Some of them that have come to us have actually moved most of their business to us. But we don’t ask that or require that from a seller. We know that our sellers are looking to grow as fast as they can, and to be in as many markets as they can. The one thing that we offer that other marketplaces don’t is we offer a lot more control to the seller. Because of this feed format that we have, you can be selling a product that literally nobody on Amazon is searching for — because they don’t even know that it exists. Or [something] that nobody’s going to Google, because they’re not looking for that thing. And we can surface it to the right buyer.”
Looking to Asia as a bellwether
“One of the things that gives us a lot of confidence is that if you look at if you look at other markets — Asia, in particular China, where a lot of our supply is based — there’s tons of these game-like experiences that have just exploded now. It’s almost like a view of what the what the world will look like in ten years; [you] just have to look at what China looks like today in the e-commerce world. So we know that this is happening and that people are looking to spend more and more time on their phones.”
Correction: An earlier version of this story misstated Blachman’s title and how long Tophatter has been around. It has since been updated.