Accurate search capability essential for successful online retail says NZX debutante SLI Systems. Andrew Patterson talks to founder Shaun Ryan

By Andrew Patterson

If you’ve bought something online at The Warehouse recently then you probably didn’t give much thought to the search process that went on in the background to locate the item you were after.

Chances are your search resulted in the item you were seeking being accurately displayed enabling you to complete your purchase quickly and efficiently.

When you consider The Warehouse now has more than 155,000 items available for purchase online there’s plenty of scope for error when it comes to search. In fact, just a few years ago it’s unlikely the outcome would’ve had a successful outcome.

The improved result is largely due to a NZ business that is hoping to replicate the success of locally listed tech companies Xero and Diligent.

SLI Systems, which became the latest addition to the NZX last week, wants unfavourable online retail search outcomes to become a thing of the past.

Global customer base

The Warehouse has become one of its biggest customers locally, but even New Zealand’s largest retailer pales into significance when stacked up against the likes of UK retail giant Harrods which is another of its growing list of high end international clients.

The Christchurch based company has been quietly honing its software over the last decade to become one of the global leaders in online retail search.

CEO and co-founder Shaun Ryan says SLI Systems grew out of a need for online retailers to have more effective and efficient search capabilities included in their websites.

“To date, many retailers have really struggled to get that function right. We’ve all been to websites where you type in the relevant keyword and the search throws up all kinds of products unrelated to the one you’re actually after. It’s very frustrating not only for the online customer, but also for the retailer because it’s likely that customer gives up, goes somewhere else and the business losses a sale.”

“So our software makes sure that when the customer searches for something online they find exactly what they’re looking for on that particular site.”

The idea

According to Ryan, the idea for the business didn’t come about as a result of hours of frustrated online shopping experiences personally. Instead he credits his brother with asking that all important “what if” question.

“I seem to recall he was lying on the couch somewhat hung over one Sunday morning in the late 90s and stumbled on this idea of improving the way you could improve the functionality of search based on what customers search for and then click on.”

“That became the basis for a system we developed called GlobalBrain that we ended up selling to NBCi which, at the time, was the internet arm of the American broadcasting giant NBC.”

“A couple of years later it was closed down in the aftermath of the dot com meltdown and so a few of us got together, formed SLI Systems and brought the technology back off NBC.”

“It was at that point that we decided to focus our efforts specifically on site search because most sites that we came across didn’t have a proper search facility or if they did it was next to useless.”

When it comes to competitors SLI Systems is up against the behemoth of search itself, though surprisingly for Google, this particular type of search functionality hasn’t been one of their success stories. 

“They brought out a competing product about three years ago for e-commerce called the Google Commerce Server but earlier this year announced they would discontinue it. The system never really gained traction with retailers.”

“If you look at the top one thousand retailers in the U.S. and then have a look at who is using what system for search, we’re the number two player in the category behind Endeca, which was recently acquired by Oracle with Google well down the rankings. That probably has a lot to do with their service levels which weren’t that great.”

Customer focus

Increasingly SAS businesses (software as a service) such as SLI Systems are using sales staff to not only sell the product but also remain fully engaged with the customer to ensure the product fully delivers on all its key attributes. This has led to account manager positions being relabelled as customer success managers (CSMs) which Ryan believes is a clever way of placing the emphasis right where it should be – squarely on the customer.

“I came across this term CSM previously and it really gelled, because to me that’s exactly what the position should be about. We have teams of people based in different parts of the world including the U.S., the UK, Australia as well as here in NZ and they’re responsible for staying fully engaged with our customers, making sure they’re using our products to maximum advantage and responding to them as quickly as possible.”

“I’ve had quite a few customers tell me that they really do love their CSM and that’s great to hear. One of the simple things we do to encourage that relationship is when customers log on to the back end of their console they get a picture of their CSM as well as their direct phone numbers and email contacts. That gives the customer the peace of mind that if ever they have an issue they know they can just pick up the phone and their CSM will be at the other end of the line to deal with them. It really personalises the whole process.”

“As a SAS business, the way we get value from our customers is that we have them for a long time so customer retention is very important for us. So we need to ensure that they’re getting the very best experience from our software which means looking after them properly is absolutely vital.”

With growth rates averaging 30% year on year, SLI Systems is confident that can maintain this rate of growth in the future.

“We’ve largely bootstrapped the business up to this point so we haven’t had a lot of external capital involved. Growing our staff has been very dependent on growing our sales so as our revenues have increased we’ve been able to recruit more sales staff, hire more engineers, more CSMs and we’ve kept to that cycle.”

Remaining in NZ

The decision to IPO has largely been due to the founders belief that they wanted the business to remain based in NZ.

“We have brought some private money on board as well but if we were to go down the venture capital (VC) route the investors who would be most interested in us in the e-commerce sector are likely to be located in the U.S. which would probably involve having to actually relocate the business there.”

“Xero and Diligent have really opened up the SAS model to companies like ours to follow their lead and what we’ve seen is that NZ investors now understand the potential these businesses offer and value them appropriately. So remaining in NZ has now become an attractive option.”

Listing process

Going through the onerous process of listing has in the past turned many businesses off the idea, particularly smaller entities with limited resources.

However, Ryan says that while it’s been a challenging process he’s pleased with the outcome.

“I’d been told that it was going to be hard and I have to admit that it was. There’s a huge amount of work involved to get everything lined up to ensure you’ve ticked all the boxes. I’m fortunate that my management team were able to continue to run the business while I focused on the listing process along with our CFO so it’s been a good outcome.”

Future plans

Having successfully listed on the NZX last week, SLI systems isn’t resting on its laurels.

“Our big focus from here will be to grow the business by pushing into more countries. There are big opportunities for us particularly in Brazil as well as Japan. We also have clients in Turkey, China and Singapore so in time we will begin to focus on those markets as well.”

“As we see it, there is almost unlimited growth in e-commerce. The retail space is changing rapidly and bricks and mortar retailers are having to adapt their thinking to this new world order. Search is obviously a vital element to be successful in this space.”

Is SLI Systems shaping up to be our next Xero? Time will tell, but the company’s founders certainly hope so.