more than 3000 experiences. Matthew Elmas: How do you believe Red Balloon and the experience retailing category have developed over the past 15 years? Nick Baker: We’ve been around since 2001 and have focused on this notion of gifting experiences rather than just products or things. I think we’ve moved on with that now. We’ve got to the point where people aren’t just accumulating stuff anymore, but are really seeking experiences that give the payback of great memories. That notion of memory capital has become very powerful in experience retailing. We also out as a transactional platform and then moved into more of a marketplace where we’ve brought customers and suppliers together. Ultimately, the way we want to move that forward is to build more of a community-based platform. ME: Product is really important in the experience space. What’s underpinning the decisions you make about your product offering? NB: We have a massive commitment to quality. We have 10 product managers who work across 1,000 suppliers. Their job is to go out and find the most unique, often exclusive, experiences for us. Originally when we started, it was about flying and driving experiences, but that has morphed and changed now. Our biggest growth channels are health and wellness, food and wine, and getaways. We’ve evolved as our customer has evolved and part of that evolution has involved user-generated innovation – that is, getting feedback from all of our customers on what they see as good. We value comments such as ‘Hey, wouldn’t it be great if you guys had this?’ or ‘Can’t I do this?’. A big part of how we evolve in the future is not going to be just about us, but also about the people. ME: How are you tackling the user-generated beast? NB: We have about 60,000 reviews that have been done by our customers on experiences. We want to start asking questions that aren’t just about reviews, basically questions such as: What do you think Red Balloon should be looking for? What experiences have you seen that you’d be interested in? What don’t we have? And is a day course for welding going to be exciting for somebody? From that perspective, we’re starting to have people who aren’t just Red Ballooners as customers, but are Red Ballooners as part of our community. ME: Maintaining strong relationships with individual vendors is clearly extremely important to your model. How do your product managers navigate all those working parts? NB: There are a couple of answers to that. The first is we’re very proud of the relationships that we have with our suppliers. They are our products. They are what we do. A lot of them are small operators, so it’s really about how we connect with them and how transparent we are about the things we do. Last month, we built and launched a supplier hub to make it easier for the suppliers to get on and tell their own stories, using their photographs and copy in better ways. It makes it easier to see what the bookings are looking like. It’s still in rollout, but we spent a considerable amount of money building the hub and making it much better for them. We are also trying to involve suppliers so that they know what scores they’re getting. We give them the feedback from customers as well as any of the reviews that are done. And we do reviews constantly so they constantly have a link to what the customer is thinking about them. They can see how they’re doing and can add a lot more autonomy to the way they present themselves on our platform. ME: Your web platform is obviously the heart of your operation. What was the key to making it work for you? NB: Making it good. ME/NB: [Laughs] NB: The first thing was to power it with the Adobe stack which, for a company of our size, was a big investment. We invested in it because we believed it was the best way we could get integration across targeting, search, data and marketing. The second thing we did was to invest in our own back-end to ensure it was right because we couldn’t find anything else that fitted. The third was to ensure the user interface and the user journey were as good as they could be. One focus was on making the utility base very simple and easy to use in order to get transaction. The emotional engagement element of the platform is also evolving quickly. You start having stories and building experiences with content slides, and the way in which we use social media is very much part of that. ME: Red Balloon isn’t alone in the experience retailing category, although you are a pure play case. Brands like Flight Centre are working the physical store angle. Where do you see yourselves in that market? NB: It’s a very good question and it’s part of where we’re going in the future. The future is starting with us now. We want to expand or evolve from just being experiences that we buy for others to being buying experiences for ourselves to have on the weekends or on a holiday. We sit on the largest database of experiences in the country. We’ve got 4,000 of them. They’re all curated and scored, so they aren’t just a list or a catalog. And, of course, they are new experiences. We want to start using those for travel. Where we want to be, for instance, in the future is that if you go on a holiday to Noosa, we want to help you know you can do when you’re in Noosa. We want to really win the battle around what’s happening. Where can you go? What experiences can you do? The Red Balloon platform, the Red Balloon suppliers and the Red Balloon message board will come out as a travel partner. ME: Is there any scope that this will involve any sort of physical store expansion in the future? Traditional experience retailers have found that having a place where people can go and meet with an agent and have their question answered is important. NB: Another good question, and the right one to ask, because right now there’s a lot of people talking about being pure play e-tailers versus going into bricks and mortar and stuff. I actually think we’re going to probably leapfrog bricks and mortar. I don’t think we’re going to find the space there. Though, it may be in pop-ups, in specialised environments like inside shopping malls… things like that. It certainly has potential. The other side will be in the virtual world. ME: Interesting. When you say the virtual world, are you talking about virtual reality experiences or just expanding your web platform? NB: Obviously we’re going to make the platform far richer than it currently is, but we are also looking at VR as a future for us to be able to bring immersive experiences to life in a more physical presence. ME: Would that involve something along the lines of putting someone within an experience as a preview of sorts before the point of purchase? NB: Yes! What would it feel like to stand on the edge of that plane before I jump off? What would it feel like to be in that cellar when I taste those wines? It’s about bringing that closer to the customers to help them in their purchase decisions. ME: You mentioned pop-ups. Given that VR hardware hasn’t penetrated the market that far yet, could pop-ups where Red Balloon provides the hardware and provides that preview be in the pipeline? NB: Yes. We’re talking to some physical entities around bringing that into their places. ME: Lots of pure play retailers signaled that there are a lot of challenges involved in creating a pop-up or permanent physical presence in terms of costs and working with physical partners. From your perspective, what do those challenges look like? NB: As digital gets better, the ability to bring to life the digital experience actually becomes better in an online virtual environment than it does in a physical environment where you’re there pointing at pictures. People now do more around live chats; you still get the chance to be able to ask some of these questions. There are ways of doing it, but still nothing quite the same as the whole notion of having somebody there physically talking to you. That’s why we’re working together with some partners at the moment to find out how we can bring it into a shop front environment. In the most basic form, we’re in three thousand stores already because we’re in Coles, Woolworths, Kmart and post offices with our gift cards. ME: Speaking of expansions, Red Balloon has been talking about expansion for a while now. New Zealand was first up. How’s that expansion looking at the moment? NB: We’re in New Zealand and we’re growing that presence. It’s going to be particularly important as we continue to tap into the Australian market. If people go on holiday to New Zealand and want to have those experiences in New Zealand. That’s the most important one that we’re looking at, but from a wider angle, we’re also looking at other countries in and around Asia. Not today, but certainly for tomorrow. We’re testing some partnerships or looking to test partnerships with China, and we’re already getting people that are coming here from abroad that are looking and using us for holidays anyway, so there’s an organic nature to this and a planned nature. ME: Is there any scope for looking at other Southeast Asian countries like Singapore and Malaysia? A lot of retailers seem to be looking to capitalise on the growing middle class in China and Southeast Asia. NB: The answer again is yes. Singapore is particularly interesting, because it’s such a repeat destination. Rather than a lot of the first timers who come and do the classic holiday in Australia, the Singapore market involves people that’ll come down here two, six, eight, nine times, but want a deeper integration into a place. They’ll want to bring things around to food and wine and they’ll want to go to some of the ultimate winery locations in Australia. ME: Data is showing that Australians are also consuming more and more travel in recent years, even amid economic downturn. Do you believe that will continue and what do you think is underpinning it? NB: Yes, I absolutely believe that. Travel is so important – Australians are naturally wired to travel. That’s always been the case and always will be. I think that sense of discovery only gets deeper. I think what’s going to happen is, instead of just going to places, they’re going to want to see a little more deeply what’s happening here or there. They’re travelling for different reasons. It used to be just sun. Now they’re traveling places to go to an event. They’re travelling places to go to a food and wine experience. They’re traveling places to do some other form of experience. I think that the reasons for travel grow and as the network in the country around car exits and flights keep going and getting better, you’ll see more and more of it, and hopefully some more in some of the remote areas. I think because of that, also, we’re going to be a magnet for the rest of the world to keep coming to Australia, because we have that feeling that we’re safe, we’re clean, we’ve got incredible wild areas and nature, and incredible food and wine experiences. ME: The state of the market is obviously very important for experience retail, what do you think about the state of the Australian market more broadly at the moment? NB: You’re right. I think that the most important thing for us is consumer sentiment. If that’s positive it’s positive for us because they’re feeling healthy and happy about things. It’s interesting that even when the GFC hit business still went well here. People were still traveling, still doing stuff. Whether they’re spending anywhere near as much is a different matter. I think there is positivity to it. It will be interesting to see if the Austrian Currency gets stronger again, because if it does we’ll have that massive outbound push. ME: The Christmas period is the busiest time in your calendar, I suppose you guys are no different to other retailers in that sense, how do you feel about Christmas this year? Better or worse than last year? NB: Yes, it is a very busy time. I think the consumer sentiment is fairly good. I don’t think it’s much better than that. I think there are some issues that are weighing heavy on people, but I think it’s largely … I would say it’s slightly positive. Slight growth over last year.