Interview: Cas Paton, Managing Director, OnBuy

RTIH discusses startup life, building a fairer e-commerce marketplace and Amazon fatigue with OnBuy boss Cas Paton.

RTIH: Tell us about yourself and how you came to launch OnBuy. 

CP: I had the idea for OnBuy in 2014. I had been running website development companies since I was 21 (way back in 2006). Since then, I worked with a lot of e-commerce sellers and would always hear how tired they were of the way marketplaces like Amazon operated. 

I realised there was an opportunity to create a marketplace that would provide a fairer e-commerce system. OnBuy was born out of a belief that by being fair and transparent, we could create a better experience for both sellers and customers. We wanted to do things differently and improve the marketplace landscape, and we have. 

We’ve created a marketplace that favours its customers and sellers equally. Our marketplace is more ethical, more transparent and more trustworthy; we don't compete with sellers, hold any of our own stock or sell any of our own products. Instead, all of our resources are invested in creating sales, increasing our exposure and growing our user base - all for the direct benefit of our sellers.

RTIH: What have been the highlights and biggest issues/challenges since launching?

CP: Every startup tech company will go through the main challenge of raising finance. That’s always the hardest part; ideas are nothing without the means to deliver them and that involves money. We have been extremely successful with finding the right backers, firstly with angel investors and now more recently with a £3 million venture capital raise. 

Aside from the money, marketplaces are one of the hardest types of business to launch because you have nothing to sell when you start. You have no products for the customers (so no customer appeal which means no traffic and so on) and you have nothing for online retailers in terms of showcasing the performance of your platform. That’s a very hard sell to an online retailer. It was a tough couple of years.

RTIH: You’ve said that you are giving Amazon a run for its money. What is your own personal take on Amazon? Is it a force for good or bad?

CP: Given that Amazon is now losing customer and seller trust faster than ever, it would be hard for anyone to argue that they’re a force for good. It was once a customer-centric marketplace but has slowly transitioned into an Amazon-centric marketplace, employing the same ethos with customers as it does with sellers, which seems to essentially be “this is our world - put up and shut up”. 

The popular marketplace model of retailing your own products and competing directly with your own sellers is flawed, and the result is that sellers miss out on sales while customers get less choice. Customers are catching on, and combined with mass failed deliveries, pushing paid deliveries at checkout and rising prices (to name just a few things), mistrust of Amazon is starting to spread. 

Maybe the fact that they own a bit of everything - from delivery companies to newspapers - is making them feel indestructible and unstoppable. Maybe by being at the top, they have been unable to show the continued growth they always have done, so they’re trying anything to grow, even if that means recommending the worst products and sneakily adding delivery charges. 

Growth like that comes at a cost, and that cost is a lack of trust from both customers and sellers. 

RTIH: You’ve also said that OnBuy is changing how the world looks at e-commerce. Could you elaborate upon that?

CP: Traditionally, e-commerce marketplaces have been giant corporations shrouded in secrecy. Marketplaces have also always been pretty hard for sellers to deal with, often referred to as “faceless” as they have no personal relationships and impose strict requirements and even harsher punishments. 

Most marketplaces are retailers that realise an opportunity to widen product range and monetise their traffic, and learn what sells so they can buy and sell it.

“Amazon was once a customer-centric marketplace but has slowly transitioned into an Amazon-centric marketplace, employing the same ethos with customers as it does with sellers, which seems to essentially be, this is our world - put up and shut up”

OnBuy operates a completely different model. We are not a retailer and we are not faceless - in fact, we’re extremely transparent and operate fairly with sellers so that they can offer the best deals to customers. 

We believe that having happy sellers creates a better and more long-term viable marketplace for customers. Our sellers love selling with us and as a result they pass great savings on to customers, they want to help customers and they want to improve the services offered with OnBuy. 

Yes, we have metrics, contracts and a standard that we expect from sellers, but we also have personal relationships with sellers that means they’re driven to make the relationship work. We aren’t taking their sales data to buy products in order to compete with them, so sellers don’t need to worry about OnBuy working against them - we are in partnership. 

We attract customers for our sellers, and we’re there to give customers the best all-round experience, so it’s a new approach that both parties are taking to very well.

RTIH: What are the biggest challenges facing the online retail sector right now?

CP: When you look collectively at the online retail sector, everyone sees one major player: Amazon. Dominance of one player and this consensus of a monopoly is not only bad for other sellers (all sellers!) but also the customer - customers are losing choice and product range and being pushed to buy what is not necessarily the best product, but the product that Amazon recommends they buy through “Amazon’s Choice”. 

Factoring in the fact that sellers are leaving Amazon to protect their data - which is another hot topic - the online retail world is concerned about where they can safely sell. After years of loyalty to a marketplace that has used their data to find products to sell through Amazon Retail, a new challenge in this space is trying to grow or even sustain an e-commerce business with such a dominant retail competitor.

As a true marketplace (not a retailer), OnBuy is bringing more opportunity for retailers to see incremental growth to their revenue, without the worry that we will compete with them. This is an educational challenge as retailers are concerned about other marketplaces after the treatment they have faced.

RTIH: Following your recent funding news, what can we expect to see from OnBuy in 2020?

CP: Going into 2020, we’re in the strongest and most exciting position we’ve ever been in. We are one of the fastest-growing marketplaces in the world, we’re the highest-ranked UK-founded marketplace and now, with the backing of Fuel Ventures, we will be able to generate huge growth. 

We plan to launch into more than 20 new countries by the end of 2020 (including the USA, Canada, Australia and the UAE). We’ll be focusing on major marketing activity to increase our brand awareness, introducing stronger social engagement and visibility, and will be developing new solutions, integrations and features across the platform to benefit both our customers and sellers. We intend to double our workforce within the coming months to support this.

We're forecasting another 5x growth and targeting a sales increase of over £100 million this year, so 2020 is going to be an incredible year for us. We encourage all online retailers to get onboard now.