Dead stock, Chinese speed and AI fatigue: our honest K5 debrief #LTM156

You could hear a pin drop when he said that.

And you felt that everyone was like, oh, shit.

It's like, okay.

Have you never thought about that before?

Has that never occurred to you?

Is that not something that people are discussing?

Let's Talk Marketplace.

The Marketplace podcast with Ingrid Lohmer and van Vridichte.

Hello and welcome back to let's Talk Marketplace.

This is Ingrid and with me again is Valerie.

About time.

Because I think we had several episodes now where we weren't sitting in the same episode.

So that's nice.

Yeah, I guess it's the second or third this year we are together.

Absolutely.

So it's still worth celebrating.

But still, we did see a lot of each other last week, didn't we?

Yes, last week and weeks.

Because we realized two weeks ago when we met accidentally on the 17th of June that we had our second anniversary.

Yes, we did.

And we were like, ah, we should have around this time.

Let's check out documents.

And they were like, oh, it's today.

It's actually today.

Yeah.

So we didn't have champagne, but we did have ice cream.

So that is even better at the moment because it's awfully hot in Germany, so.

Yeah.

And it was also awfully hot in Berlin last week.

Yes, that is just traditional.

It was traditional.

Again, we were in Berlin in the K5 conference.

It's like the most important E commerce conference in Germany.

Yeah, I think you can say that.

And traditionally the one with the hottest weather, like everyone is always melting there.

So that was just the same.

The good thing was the.

No, the air condition was working.

Yeah.

At least that's.

That's something.

Yeah, absolutely.

Yeah.

But still, I mean, that is always.

That is sort of set in our calendars.

You have to go to K5 conference if you are part of the German E commerce.

And so of course we went as well and.

Yeah, and I guess now we have things to say, don't we?

Yeah, I would say, yeah, it was.

I would say a bit overwhelming.

Yeah, Well, I took my family with me, actually spontaneously.

So that was the interesting part from my side and underwhelming at the same time with all the repetition.

Yes.

Because I mean, AI here and AI there and AI everywhere.

Honestly, I think when I came home, I wrote my recap for K5 conference and I wrote it without a single piece of AI because I was so fed up with poor Claude.

I nearly deinstalled him.

I didn't in the end, of course, you know, reasons, but still.

Yeah, you get the drift.

I mean, how many Times can you say we don't know yet on stage?

Yeah, I mean, come on, this is.

We know that this is a revolution going on.

We know that we are in the middle of it and we sort of have to deal with it.

But I think it's just too early to get up on stage and talk about your revelations because it's all in the flow.

So yeah, I don't know.

But still, K5 conference is always good for thought.

Not because of all that AI stuff at the moment, but there's this very special feature that they have which is the five thesis session.

And that's always very inspirational and it's causing a lot of interesting debates.

And that happened this time again, I'd say.

Yeah, and maybe we need to explain that because K5 does something, as you said that most conferences don't.

It has these sessions and actually that was also the only talks I attended.

So you were today giving more feedback about how all the talks were.

I'm usually the one who's like running around and talking with so many people I meet on the floor.

But to be very honest, this year the floor was a bit calmer because I think there were like so many different content sessions.

So the brand people were more in this content sessions and the service partner people were more on the floor.

Yeah, well that's always one of those things at K5 because they always have a big conference program and this time they had I think five stages that were full blown with great talks.

And of course the main stage, that was where the thesis also took part.

Maybe we need to explain that there's like five industry experts come on stage and they take an often controversial position of what may be happening or what may be shaping the future of E commerce in the next months to years.

So that is meant to spark conversations.

So it's always a bit, you know, very strong minded, very strong opinions.

Sometimes maybe a bit too far.

But yeah, always something that sparks conversations throughout the whole two days.

That is something that is always a good conversation opener.

I think if you meet people afterwards you can always.

So what did you think about the thesis?

And then you're directly in the middle of an interesting discussion.

Yeah, the room was so full.

Yeah, so full.

Even like at the end the doors were open and there was still like people and people and people watching and listening.

Yeah, I would say.

And yeah, this year thesis were as you said, strong opinions.

Again a lot about AI, but a lot of like also honest words.

And I think we picked some of the te and yeah, we will Talk about that today.

Yeah, I think that is something that we can do.

Look at what people on stage said.

So German e commerce experts, Stefan Wenzel, Christina Mattens, Alexander Graf, Karl Junker, dinouy and as the guest thesis host there was also Nele Otsuk from TikTok, Germany.

And yeah, we watched all of those and we would like to give you our view on things from our marketplace perspective.

What, what did we think about what those experts had to say?

What do we make of it?

And maybe also what was missing from stage.

Yeah, so I guess that should make for a good episode.

So shall we go into it?

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Okay, so I guess let's get into it and look at the first thesis that I think really made both of us and not just us, I think the whole room.

You know, take a breath because that was Stefan Wenzel.

And maybe to give you some background, he's always the most outspoken of all the e commerce experts in Germany.

I think he's very, very sharp tongue.

He has been on our podcast too for I think twice now and it's always a pleasure to talk with him.

But you have to be fast on your feet because that man really can talk.

And he did that on stage as well.

And his first thesis was sales led e commerce is broken.

So the idea here is that we have been pushing so much for a retail and e commerce that is based on how much you sell and not how much profit you make.

That by now all the numbers that you can bring to the table, ebit, DBI margins, markdowns here, dead stock, whatever, has been turning worse and worse and worse and worse over the last years and now we have an E Commerce that is basically not functioning anymore.

That's what he put there.

And this is why we are getting now steamrolled by the likes of Timo and Shein and TikTok.

Yeah, I mean overall it was like the opinion or like his words were more like the sales led commerce was broken in terms of like we want always like more and growth and growth and growth and growth.

But actually there is like so many pitfalls and so many negative sides which we are just like overseeing.

He gave this example with the fashion industry where he said like, yeah, okay, the EBIT halved, right.

The return rates are rising.

50 To 60% return rate.

We have 70 to $140 billion that stock per year.

And where does it land?

In the Atacama desert.

Yeah, yeah.

And he has shown a satellite picture where you see from the satellite picture like the amount of that clothes, that stock is laying there and rotting.

And I mean this is like to be very honest, like I had this feeling already a few years ago when I still work for a brand.

I was like, okay, I need to push for selling more underwear every year and every year and every year more and more and more.

But like if everyone wants more and more and more, where shall it end?

Right.

So it's like actually pretty.

It was pretty predictable that our numbers are or our margins are getting lower, as I know also from different other topics.

But yeah, we cannot do the sales led commerce again.

It needs to change to an AI first hybrid, for example, based on the example of Zara.

Zara is a fast fashion provider based in Spain.

Yes.

They have everything in their own hands.

The production, the design.

They do everything pretty fast.

They don't have like this overall 168 days of like how long the inventory is laying there, etc was always insanely fast.

In from design to the.

Yeah, the final dress basically in this, in the, in the stores.

And they have like a very, very, very low rate of overstocks because they create on the demand of the products.

And this is also what sheen does.

I know we don't like sheen as much, but it's exactly what they do.

They are pushing, I don't know, let's make it an example.

Five dresses out.

They push it in the stores in a few days to say like, okay, let's check it out.

If it's running for 15 days, if it's working quite well, great.

Then we are producing more and more different colors.

If it's not running, then okay, let's die.

Let it die.

Right.

And then there's like not overproduced stock because we thought, oh yeah, that could be working with this dress.

Yeah.

So that's actually what this is about.

And I think there we could also work very well with AI And I know you're fed up with this topic, but.

Well, nothing's fast out.

Yeah.

Not if it cleans up the desert in South America.

Then I'm all for it actually.

But what I thought when Stefan was talking about that, I was like, yeah, I agree, of course.

But that's not exactly news, is it?

I mean, these numbers that he has shown us, they have been.

That has been.

That trend has been growing for years now.

And actually you could see the fashion desert from space where five years ago.

So that is not something new.

No, so is that.

But.

But still I felt when I was in the room with all these people, you could hear a pin drop when he said that.

And you, you felt that everyone was like, oh shit.

It's like, okay, have you never thought about that before?

Is.

Has that never occurred to you?

Is that not something that people are discussing?

No, because it's all dangerous for our own business.

Right.

It's nothing you want to really see and realize.

Okay.

I think it's at the point it's like we're like just going on and on and on and doing budgets and increasing our growth and want to get our bonus, et cetera, et cetera, that we ignore that.

And how, how he said it, nothing to see here was his main claim because.

Yeah, what do we produce?

Right?

Like this is like you also said like banks are not interested in funding or giving us loan because our business is really getting even more unprofitable.

The E tough, etc.

Not a good investment story anymore.

And that's what we're seeing.

Yeah, absolutely.

And maybe it took some new out of the box thinkers from other countries to put it very, you know, neutrally to just show us how broken the system is.

Yeah, I mean, this is actually something that leads directly to the next thesis that I wanted to debate with you because that again had around about the same effect on the room as Stefans had.

And that came from Alexander Graff and he said made in China now is the new and better made in Germany.

And that is something we might have to explain to our listeners from other countries.

Because made in Germany is something that the whole country is proud of.

That label that we have built civilization basically our country up on manufacturing quality.

And that made in Germany is a sign of quality and that is respected in the whole world.

And that is something that most of us take a lot of pride in.

But it's also, it's an old story.

It comes from the 60s and 70s maybe, and we're still living off that.

And now Alex came or thinking to live about it.

Yes.

Yeah.

And now he came along and said, yeah, you know, that that era is over because we have made China into the factory of the world.

Because we have laid out our.

Pushed all our production to China because it was cheaper there.

And guess what?

They took all that knowledge and that know how and now made.

Made it their own and made it better.

And now they are the new made in Germany and that is made in China.

So that was another one of those where people were sitting in the room.

Like,.

I mean, like 10 years ago I was traveling to China and I remember that at the gate there were like people from China, like those, they had those, those carts for the luggage.

They was full with knives from swilling and with like luggage, etc.

Like.

Like they bought it there or V. Tableware.

Not tableware, but kitchenware.

Right.

So they were like, oh, we need to like the whole on like hand baggage was things they bought at the airplane or at the airport.

And to be very honest, that changed because China makes it not better themselves.

And just I think the car industry, that was also a very good example Alex showed at the slides.

The car industry is the perfect example for that.

When we see like also the.

For Chinese, there were special lines in the car industry.

They were just produced for China and they're now like, okay, but why should I get BMW if I have like a much better, more powerful and cheaper and cheaper electric car, for example, from China myself?

So why.

And I mean, we don't need to discuss how that looks for our car industry right now.

Pretty bad.

Absolutely.

That's not the point here.

The point is that they do it in the meanwhile better than us.

So fantastic.

That's absolutely true.

What I did not like about.

Because I agree with Alex here, what I did not agree on was his.

The conclusion he pulled from that because in a way he said, yeah, you know, that boat has sailed.

We can't do anything about that.

We have made China into the factory of the world.

That's it.

We have to deal with it now because we won't reverse it and we won't catch up to it.

And I was like, okay.

And then he basically said, yeah.

And so we should better, I don't know, help Timushi and Aliexpress, Joy by whatever to pave the way to Europe because they're going to come here anyway and at least we can profit from working with them.

And that is where I was like, I don't know, is that the right solution to you just lay back and say, yeah, kill me already because I don't have any chance here.

Is that really a good idea to just open the doors and say, okay then I guess the new Amazon is now Timushi and whatever and we will work with those or is there still, I don't know, a European way that we could aim for?

Well, I would say there's still a European way even though production is really mainly in Asia, not just in China.

I mean, let's face it, right.

But yeah, I think there is still a way Europeans or European products are sold and not just via Chinese partners.

Might also just depend on the category.

Some in some categories.

Absolutely.

And maybe some categories are really lost, but others are not.

And yeah, just you know, open be a door holder for Joy Buy and Co.

I don't know.

And I think for example there, there are Chinese brands, for example who are pretty interesting enough I have like in look in my household.

I see also some, I don't know, Hand.

Staub, Sauger, Ingrid, Das Saga, I don't know, Hoover.

I guess so for Xiaomi.

Oh, it's like very cool.

Xiaomi.

Right.

So we have two of them.

Right.

So I see that there are products.

There are better.

Our milk foam creator for our coffee.

It's also from China.

It's fucking good.

We bought it actually at Auto Marketplace.

So there are products, by the way.

Yeah.

Because it was cheaper on Auto Marketplace compared to Amazon Marketplace.

Yeah.

And I mean Otto is one of those marketplaces that are dead set on.

You have to have a European or even a German.

Yeah.

That ID and stuff.

So that's true.

But it was a German retailer, I guess.

I see.

Okay.

But yeah, it was really interesting how.

Yeah.

How it is and how slightly Chinese products are also entering our households.

And I still, Yeah, I believe in if you have the better product and the better price, then step by step, this is the process and this is the result which was.

Which will follow.

Interesting.

Well then I guess let's turn to the thesis that made the whole room nice and cozy again in a way because those the.

The two guys were.

Came in like, I don't know, wrecking ball.

Just like coming dead center with a thesis and everyone's like.

And then Christina Mertens came along and you might remember her, she was a guest on our show as well last year, and already last year she talked about how social commerce is bringing a new era of shopping to the world, which had been missing up to that point because it's more about inspiration and connection than our typical E commerce is about.

So that was last year and this year she was again on stage and she said, authenticity is your strongest differentiator.

Because coming back to Alex's thesis where he said, yeah, well, quality can't be your differentiator anymore because China is better in quality.

And then she said, yeah, but we still have authenticity.

That is something that AI cannot generate.

It is a human resource and it will stay human and humanity will become.

The more AI, AI is bleeding into the whole commerce.

Humanity will become a scarce resource and as such a USP and a differentiating factor and we should value that.

And that was a very good example, actually.

If everyone can push out a thousand perfect AI pictures in a second, then why should people look at yours?

Just because it is easier and cheaper to produce all that AI slop won't differentiate you from everyone else because everyone is doing it.

And so her claim was, okay, celebrate your humanity and push that to the forefront of your marketing towards your consumer, because people will still want to connect with humans and give all your processes in the backyard to AI because it's really good at that, but keep that human connection.

That was a nice one, of course, and maybe also the least provocative of all the things that were uttered on stage.

And everyone in the room was like, yes, that's nice.

And I, I think she has a point because it's again, depending on the category, because I liked pretty much her example.

We can watch maybe on TikTok or Instagram, people who are, for example, presenting a new face cream or a makeup, right?

What is my advantage if I watch AI model rubbing some face cream in her face?

It's like, yeah, some digital face cream on her digital face.

I'm very sure that's the best recommendation and the most authentic and honest one.

Because I mean, there are kind of products where you say, like, okay, there's AI, there's, you know, like electrical stuff where you can say like, okay, like this is the quality map, right?

But there are also products who are needed to see on a real life model, like where you get real recommendations and honest ones, for example.

I mean, I'm a mother now, right?

I would rather take an recommendation of an Instagram mom who is like, where I know the values are similar and she's, I don't know, promoting some Baby food.

Just a random example, right.

I would obviously believe more in her recommendation.

Instead of like an AI mom who has an AI baby and says like oh this is great food for my non existing baby.

You know, it's like yeah, okay, I get the point.

But there I have to intercede and say but I mean that Instagram mom influencer is possibly bought by the company.

Of course, I mean, you know, I mean she's.

Because she gets money for that.

So.

So she might recommend whatever if the price is high enough.

So how is that authentic?

I think it's if you are.

I mean that's also where authenticity and also relationship comes from.

I'm not following one person because she's recommending one thing.

I'm following her because I like her lifestyle.

I like how she's like talking about her kids.

I don't know.

If you relate to that person in.

Yeah, I relate to the person to maybe her values or partially about her values or like special things she's standing out for.

And if she then recommends, I believe that she just recommends things which she's also believing in it.

Right.

I mean think about us, right?

We are also speaking out.

I'm speaking out sometimes some recommendations about the e commerce industry but I would also just recommend services or marketplaces or whatever when I truly believe that for the this special person it does make sense because if I recommend it get it gets back to me.

Right.

So and then there people say like yeah, so she promoted like this last time but this was.

So I don't believe her anymore.

So yeah, of course this is also about your reputation.

They are also taken care about and I think that's also what we have with TikTok live commerce etc where you somehow need to be authentic and need to have like this reputation which you take care of and then people believe in you and follow you.

Yeah, that is actually what Kristina sort of went for.

And also Neil Otsuk, the fifth speaker on stage when they were both going for.

Yeah, you need connection still.

The more AI and the more automated our world is, the more connection you need to people.

That is also what Alex once said when he said, well you know, agents buy so you can send out an agentic agent and tell them to buy, I don't know, batteries for you.

No problem there.

But humans shop so they have an experience, they have a connection to the product, to the person selling that.

They have questions that they want answers to and that is a different thing.

So it is not either or, it's just both in a way There are situations where we will absolutely go for efficiency and on demand generation and low prices and all these things and then there will be situations where we go for the human connection.

So yeah, absolutely.

And I think it was good that Christina was on stage to tell to talk about that and give a much needed counterpoint to all this.

Let's go for more efficiency, let's go for better processes, whatever.

So that was a good point.

Yeah, looking a bit at the time, but we have.

It's always the timekeeper.

Yes.

I wanted to add something additional in terms of like authenticity.

Wow.

I mean you can also relate to our business.

Right.

So everyone can can write a LinkedIn post for example and y.

We also have support by that.

But the base is coming from us.

But why are our Marketplace Universe Connect events so successful?

Because people want to connect with people and want to buy from people and yes, we are working the whole day with our laptops but sometimes we are also happy to connect with other people in real life and.

Exactly.

That's for example the reason why we do next week on the 8th of July a Marketplace universe Connect with base in Munich that we have like.

We have like maybe a few, few spots left because we have last minute cancellations.

Yeah, but apart from that.

But apart from that we were pretty fast sold out.

But you have a chance.

On 22 September, the day before the or the night before the DMX go is happening in cologne, we do one event again with Channable 7 learnings and Allegro for example.

We will have another one on 27 October in Munich and we are more planning right now.

So yeah, we would love to see you there.

Lots of opportunities for human connection.

Yes, absolutely.

Yeah, I guess.

Well, let's take that as a final point because our discussion has run its course for now.

I think these were the three main thesis that talk to us mostly we could still go on and on.

There were still many other interesting things.

But maybe over to you, if you listen to us today, why don't you comment us what you liked about the thesis best?

Which thesis talked to you the most?

Where did you not agree at all?

Or maybe even what was missing from stage?

That will also be an interesting topic for maybe another one.

I think also Ingrid, this is also a question I want to ask you because you were as I said, I was like from lunchtime hanging on with walking down the aisles with my baby.

So I think the baby boy was with his six months the youngest attendant at a K5 conference without a ticket.

And that's Actually again, a good point for human connection because I mean, you always turn a lot of heads when you go through a conference room hall because people know you.

But in this time it was just crazy because everyone like, oh baby, you're talking.

This was really cute and I really.

Got many compliments, which was nice.

And I really have a good conference baby.

I have a good travel baby and a good conference baby.

Very professional.

Yes.

Even inside pictures.

Yes.

Sitting there, charming people.

That was great.

That was really great.

But so therefore I was not able to attend so many talks.

But I want to ask you, Ingrid, what did you miss in terms of at the stages and talks?

I thought about that actually, because I got that feeling.

My first feeling was like too much AI.

Like 80% AI is like, come on, there are other things to talk about.

And as I said, we don't know yet.

So duh.

It's not really insightful.

We make a point, right?

We need to work with it, we need to learn it and we need to take into action.

Which was actually actually topic of the K5 conference this year.

Yeah, and that's absolutely.

We're not blaming that, right?

That's true.

Yeah, yeah.

But stop talking about it.

Just do it for a while and then maybe talk about it next year.

But anyway, what I think was absolutely strikingly missing was the whole topic of recommerce and secondhand commerce.

Because I mean, come on, if you just look at the rise of Vinted to the second biggest fashion dealer in, in all of Europe and in many countries it's actually number one fashion destination and with huge growth rates.

And that's not just Vinted, there's also refurbished and back market and then there's lots and lots of marketplaces and retailers who are offering secondhand options.

And that is actually a growing.

And that is very European by the way.

That is something that is not happening in the same scale in America and not at all in Asia.

So that is something that we could actually be proud of and grow and celebrate.

And that was completely missing from the most important E Commerce conference in Germany.

And no one was talking about secondhand.

Well, not no one.

There were a few smaller talks on smaller stages.

For example, there was the CEO of As Good as New, which is a platform for E commerce.

But it was very, very, very small.

And that is what actually really disappointed me because I think this is something that we should do a lot more on in our industry because that is genuinely European.

And it was also sales say, you know, would be a solution to that whole sales lab problem and the mounts of fashion clothes sitting around in the Atacama Desert.

So yeah, that's just me and my green heart.

But that was really missing.

Totally great.

Yeah, maybe next year.

But for now I guess that were our thoughts on the K5 conference and let us know what you thought and if you want to tune in next time, we would be very happy to welcome you back when we will be talking about TikTok shop, which was also one of the main leading topics at K5 conference.

So make sure to be there.

Again, thanks for listening today.

Bye bye Vibe.

You listen to let's Talk Marketplace, the.

Marketplace podcast with Ingrid Lommer and Vanari Dichtel.