Retail Is Detail with Tom Sieger and Timo Weltner of NETFORMIC
Scott Ohsman of Always Off Brand and I recorded our Slightly Off Commerce collaboration at Shoptoberfest in Nashville on September 15, and two of our guests came at the same business from opposite sides of the Atlantic. Timo Weltner co-founded NETFORMIC in Germany, a Shopware partner for years. Tom Sieger runs the United States side.
“And we decided two years ago, two and a half years ago, together with Tom and his partner, Rob, to join the U.S. market,” Timo says.
Scott opened where the other conversations at the event opened, which was AI, and Tom reframed the question before answering it.
“So the question on people’s minds is, you know, how can it help me? What can it do for me?” he says.
“Sometimes the question on people’s minds might also be, how can it hurt me? Because it’s a 10X accelerator, right?” he says.
Scott cut to what he wanted to know, which was where the money is. Tom’s answer put a condition on it.
“So, the thing that we try to bring to the table for folks is, you’ve got to have processes downright and you’ve got to have your data downright if you’re going to deploy AI to make you more money,” he says.
Timo took the same point from the other direction, and less gently.
“You have to say, without AI, you have in the future no chance to get money or to earn money,” he says.
The Complexity Belongs in the Data Model
NETFORMIC works in industries where the rules change at the state line, and Tom argued that this is a data problem well before it is a storefront problem.
“And when you have an industry that’s highly regulated and regulated differently in different states, of course, then you have a whole lot of complexity in your data model that you have to solve,” he says.
“Even before you go to your e-commerce front end and deliver that to the market, you have different rules that apply in different locations, and you have complexity that, quite frankly, needs to be handled up front in order to avoid problems down the road,” he says.
The agency runs a three way partnership, Shopware plus Pimcore for product information, and Tom described the alternative he sees in the market as a slow accumulation of debt.
“Because the other thing that companies do that don’t use these tools is they go out and they custom code all of that complexity into, let’s say, another platform, another e-commerce platform,” he says.
“So, they’re not necessarily not online at all, but they’re definitely creating overhead that’s going to be virtually impossible to manage over time,” he says.
The Pricing Engine at Abilene Machine
Asked for a win they were proud of, Tom named a customer who was presenting at the event, Abilene Machine, and the work is a good illustration of what a product information system is for once the data is trustworthy. NETFORMIC and Abilene Machine built a pricing engine on top of the product information system that watches competitive pricing, and the pricing engine found two different ways the company was losing money.
“One is they’re being underbid and the customer is not buying from them online, right?” he says.
“But the second one, which is a little less well-known, is that they’re underbidding, and they’re leaving margin on the table for some of their customers, right?” he says.
Losing a sale is visible. Winning a sale for less than you could have is not, and it does not show up as a problem.
“So, we created rules around that, and we are now driving that automated system that says, hey, don’t leave money on the table, and don’t lose new business, and revenue’s going up on two sides of the table,” he says.
Timo tied it back to where the conversation started.
“You asked in the beginning what’s the way to earn money with AI. That is the way, based on the data,” he says.
What Germany Sends Over
I asked what has traveled from the European practice to the American one, and Timo’s answer was about who holds the data. The German market did not make software as a service the default.
“In Germany, we have not this software-as-a-service focus in our IT infrastructure projects. Not in the past 20 years, and that’s what we bring here now also on the table, I guess, and that’s a bit of a switch,” he says.
He was direct that the American habit took some getting used to.
“It was for us, in the beginning, difficult to understand that the American market works completely different because it’s completely normal to bring your data to one SaaS provider vendor,” he says.
The regulation his team grew up under turns out to transfer.
“To be sustainable, to be independent from a SaaS provider, for example, to hold your data by your own,” he says.
Tom added a claim about engineering that he clearly means as a competitive position rather than a compliment.
“I would suggest that the best engineered software, and this is why all the products we partner with, even before we connected with Timo and became part of NETFORMIC, were all German products,” he says.
“Europe has been ahead of the curve on us, probably partly because of the regulatory requirements over there, but I think also simply because the engineering mindset in Europe is much stronger,” he says.
Then he described how that changes a sales conversation, which was the most interesting thing either of them said.
“In the U.S., I sell based on relationship. I certainly sell based on the software has to be good, but they don’t, our customers here don’t inspect the purchase decision to the same level that a German company inspects the purchase decision, right?” he says.
Being able to survive that inspection is the advantage.
“So having that knowledge and having that background helps us against competitors that aren’t used to having that kind of rigorous knowledge and understanding of how the software actually works,” he says.
On the cloud question, Tom does not see on premise as a lasting segment.
“Ninety percent of our customers don’t even ask about an on-prem option anymore, right?” he says.
Timo ended it with a line I could not improve on, and did not try to.
“In Germany, we say retail is detail,” he says.
The B2B Commerce Trends and Opportunities Report goes deeper on product data and on selling in regulated markets, with nine experts who advise B2B sellers. It was written and researched by Content Cucumber, presented by Shopware, and it is free at contentcucumber.com.