Sustainable, ethical and for sale online: the ambitions of start-up marketplace Azneo
What is Azneo?
Azneo is a marketplace platform for sustainable and ethically produced products, launched in 2019. Starting from a carefully selected base of artisans in Asia, Azneo has a vision to expand its coverage – sourcing and serving markets around the world. Incubated within the We Are Pentagon Group, the platform can benefit from technologies and partnerships that few start up e-commerce firms have access to.
The initial set of brands listed on the platform were sourced from the “One Gateway” app launched by WAP Group in Asia, in partnership with DHL. One Gateway enables small and medium sized e-commerce sellers to build their online inventory, list and manage their transactions from a mobile application. The sellers snap a photo, provide basic product details, then select the international market place they want the products to be listed on. Orders received generate a message through the application and a DHL shipment request. Relationships with and listings on the marketplaces are handled by “Arcade”, another entity within the WAP Group, which takes a commission on sales.
Based on a similar technology platform, sellers on Azneo may be able to benefit from similar functionality and services including, for the largest, managed marketplace services: externally managed inventory, account management and customer relationships.
An interview with Polina Valcheva, Head of Marketplace at Azneo.
ecomConnect: What are you aiming to achieve with Azneo?
Polina Valcheva: Within the “We are Pentagon” group we have more than a decade of experience working with marketplaces across the world, helping large clients manage their inventory on multiple platforms at one time. This has given us a deep insight into how marketplaces work and an understanding of how consumer demand is evolving. Large universal marketplaces are positioned on volume and low priced goods: they will continued to get stronger. But niche marketplaces, offering interesting growth potential and margins will also be important.
We see an opportunity to serve consumers who seek unique and differentiated goods, produced in a sustainable and ethical manner. Responsible production and consumption are motivations which drives us, and will be an increasingly important market segment.
Millennials and Generation Z - collectively the largest generational demographic in the world - engage or disengage with companies for personal reasons, often related to a company’s impact on society. When surveyed, 42% of millennials reported forming or deepening a business relationship because a company’s products or services positively impact society and/or the environment. 36% did so due to a company’s ethical stance. Meanwhile, 37% ended or curtailed a business relationship based on a company’s ethical behavior.
There is a fine line between speaking about sustainability and making everyone feel guilty. For us it's really important to hit the middle ground so the conversation is coming from a perspective of encouragement. When speaking about sustainable fashion we try to make it positive and impactful as fear can drive people away and makes them ignore the issue, whereas encouragement and inspiration makes people want to champion the problem.
In our work in Asia we were able to identify a number of brands – and SMEs – based on sustainable and ethical production, who had the ability to serve a much bigger international market. We believe the same is true in other regions, and we are building the supply base – starting now with small firms in the UK.
e: What makes Azneo different from similarly positioned online marketplaces?
PV: We aim to personalize the shopping experience with a unique ethical algorithm that matches buyers’ values with brand ethics and certifications, trust rating, and transport emissions. This model incentivizes brands to improve their sustainability credentials to match more searches and earn more exposure. Furthermore, we believe that the sellers will be able to benefit from the simplicity of working with Azneo, and the powerful support options which will be available.
Photo: Azneo's Instagram profile @azneo.official
e: What lessons have you learned about e-commerce that are relevant to small sellers?
PV: The quality and attractiveness of product photos is the single biggest investment you can make in selling your products. A good story behind the product is also a powerful motivator to customers – and can partly make up for having less good photos. But multiple, attractive, photos are really key.
In the segment of handicrafts and items which have a unique character shipping times are far less a factor than in the volume marketplaces. This is significantly different from our usual segment working for instance with Amazon and ebay: where market pressure is on continually faster and reliable shipping at a lower price. In the market segment that Azneo is addressing, it is far more important to provide comprehensive information on the product and the producer, and excellent customer service.
Small producers can often improve their skills in inventory management. It’s not just about production planning – it can also be about cash management and their business strategy. It’s not uncommon to have a small producer suddenly have a stock-out if a buyer comes along and purchases all of their stored inventory in one go. The temptation to take the cash may be too strong. That’s OK, as long as the information flows to the marketplace immediately: you don’t want to be in a position of selling stock online that you no longer have.
e: what do you see as the impact of the COVID-19 crisis on e-commerce?
PV: It’s certain that we all have hard times ahead, even if e-commerce is lucky enough to continue in most countries: right now we see a sharp slow-down in most categories with a few exceptions – such as fashion and sportswear (the result of demand from consumers exercising at home).
But e-commerce does have tremendous potential: this was true before the crisis and will be accelerated afterwards. A business which had strong double digit growth rates may actually accelerate when the restrictions to movement are lifted. There is a real change of mind-set taking place: both among consumers and sellers. Brands that were uncertain about their commitment to e-commerce are very likely to switch their priorities toward digital. A whole new segment of consumers will have had an unsolicited crash course in the convenience of e-commerce.
For would-be e-commerce sellers in developing countries there is a great opportunity to elaborate products with unique character, which can be produced sustainably and in an ethical manner and to develop the skills necessary to support sales online.