My ecommerce company was originally hosted on ProStores, and we were one of the merchants that grew to seven-digits while on the ProStores platform. I’d always been impressed with Lin’s focus on merchant success whenever I talked with him.
Lin was involved with every eBay-initiated ecommerce cart solution; most recently Magento. And before being on the technology provider side, he was co-founder of his own ecommerce company. So, he’s the real deal.
I had heard that Lin had recently gone off on his own as a strategy and marketing consultant, and I wanted to reconnect with him. The ensuing conversation is as interesting for ecommerce veterans as it is instructive for newbies.
LIN: Well, Amazon is setting the standard for the entire experience.
But as far as independent retailers’ sites, funny you should mention wine. I really like K&L Wines, have you heard of it? They’re a multiple-location wine store in California, and they’re showing how the online and offline experience needs to converge and they really do that very well. The site is www.klwines.com
And if you’re going to compete with Amazon – where they are going broad – here’s a great example of an e-tailer that is going narrow and deep: www.chewy.com in the pet supplies space – great combo of content and commerce – plus subscription commerce with great prices on regular shipments of pet food – even the big bags. They cracked the nut that pets.com dreamed of 15+ years ago.
One more great site – the poster child for the content–community–commerce trifecta these days of course is www.houzz.com – incidentally co-founded by a former eBayer – Alon Cohen – who I worked with when he was the head of dev for ProStores and eBay Stores. Seems like a no-brainer that all the other service directories and review sites missed to launch a marketplace on top of their service pros directory, design showcase, and design and renovation advice content.
ME: I know some of your background but not the whole picture. What’s everything you’ve done in ecommerce?
LIN: I got started in e-commerce as a co-founder of a home & garden furniture and accessories importer-wholesaler. We built a to-the-trade-only B2B e-commerce site from scratch – complete with account reg and login with password protected tiered wholesale pricing, volume tracking to promote full container direct import buys, drag and drop inventory upload and updates, supplier and customer order management, and an email marketing module. All “in the cloud” – third-party hosted in Canada.
The original vision was to never hold inventory in the US and take less than container load orders from independent retailers – to help them compete with the big box stores with unique hand-crafted items – palletize the orders in China and just cross-dock the orders and ship the pallets direct to the retailers here in the US.
We were just a bit ahead of our time for an industry that likes to touch and see products before committing to a purchase – we were going to turn the whole industry upside-down – do one trade show to kick things off and then just sell online. A year or so in we started doing a full slate of trade-shows – and also slowly but surely got existing customers to use the site to re-order and see and order new offerings, and even managed to land some direct import full-container clients through the site, and from there had a pretty good run.
Hindsight being 20-20, if I knew then what I know now, we would have gotten out of the importing business and started to sell the software-as-a-service.
With this background – having basically spec’ed and designed a full-featured e-commerce site – when eBay came to me at the direct marketing agency I went to after leaving the startup with a new product they planned to launch – ProStores – I knew exactly what they had. Basically much of we had built at the startup from scratch for $30 a month off the shelf!
I helped launch ProStores initially through my role at the agency – and then they asked me to come over and lead marketing for them – and after some deliberation, I took the leap from the agency to eBay that started my nearly 10-year run at eBay – working on every e-commerce platform they owned at one time or another: ProStores – SMB SaaS, Magento – mid-market open source / licensed, and eBay Enterprise – enterprise SaaS.
So, I’ve worked on, helped build, and marketed e-commerce platforms for coming up on 20 years.
ME: As you look at the past decade, are there big surprises that you saw emerge in ecommerce that you wouldn’t have predicted?
As an industry insider, most of what has come about feels to me like it was inevitable – for example, SaaS e-commerce platforms never felt to me like a surprise or breakthrough – for small businesses in particular, my sense has always been “of course they would use a hosted store and not mess around with licensed software.”
But from the outside looking in, SaaS was definitely a revolution – one that is still unfolding with Shopify, BigCommerce, and Ecwid leading the way in the small business space – and Demandware making it viable for mid-market and enterprise merchants.
That said, I suppose the biggest surprise for me was the success and mainstreaming of open source. I saw firsthand the impact of a small e-commerce design and dev agency in Los Angeles who took the nerdy, dev-centric, not-so-great user and developer experience of osCommerce and made it easier to use for both developers and eventually business users. Clearly Varien struck a nerve with the launch of Magento in 2008. I don’t think anyone could have predicted the viral success the product had – and on a truly global scale – the key of course being the passion the developer community and ecosystem had – and through all the ownership changes – amazingly still has.
And now you have Woocommerce coming along – although I think the verdict is out on whether their 1 billion+ sites are transacting at a meaningful level. You would think they would be cutting into Shopify’s growth among small businesses and Magento’s march to domination on the Internet Retailer lists – but that doesn’t seem to be happening – yet.
The other big surprise is that no one has really come along and challenged Amazon’s dominance in mass market e-commerce. Perhaps this shouldn’t be a surprise when the largest traditional retailer – Walmart – still looks at their own e-commerce volume as practically a rounding error. Hard to believe – but that is the attitude I understand Bentonville (Walmart’s HQ in Arkansas) has about their little experiment in Silicon Valley.
Now – taking more of a global view, to be fair, there is one challenger to Amazon – and the actual leader in total e-commerce GMV globally: Alibaba. Even with Amazon’s third party marketplace included – which puts their total estimated annual GMV in the $225B range (http://www.channeladvisor.com/blog/?pn=scot/deep-dive-into-amazons-q4-results-for-sellers-whats-cool-100b-and-200b) – Alibaba did more than twice that volume in 2015 at $466B (http://revenuesandprofits.com/alibaba-vs-ebay-comparing-the-platforms-size-and-growth/)
Things could get very interesting on that front if Alibaba can find a viable way to establish a consumer base in the US and Europe.
ME: With all that evolution of technology available to merchants, and the dominance of a couple large players; is it easier or tougher for an ecommerce entrepreneur to be successful today compared to a decade ago?
From a pure technology and cost standpoint, it’s easier and more affordable than ever to start selling online – you have a lot of choices when it comes to core e-commerce platforms, marketplaces to sell through that can help you jump start sales and start building a client base, and all the tools you need to market, promote, and run your business virtually on demand for very affordable fees.
The hard part is finding a product, niche, or other differentiator in a world where Amazon dominates the top e-commerce product categories. They have invested billions in establishing trust from the online shopper: trust that they have what you’re looking for, trust that they have it at the best price, and trust that they will get it to you for $0 in additional shipping in two days or less.
That’s the baseline e-commerce experience Amazon has conditioned consumers to expect – broad selection, low prices, and fast free shipping.
Now the good news for e-commerce entrepreneurs is that through social media you have the ability to really carve out and target a large enough niche – assuming you have a quality product and can compete on customer experience or some other dimension – higher touch customer service, curated and personalized product selections, for example. If you can do that, there are still opportunities out there to launch a viable e-commerce business.
The poster child for this type of success is www.warbyparker.com. Where Amazon wins with broad selection, Warby went narrow and deep. And they not only found a product niche that had a lot of fat built into the price – they created proprietary designs and offered free shipping both ways on try-ons, overcoming the top objection to buying eyeglasses online: I want to see what they look like on me. They figured out how to make the economics work on this great customer experience and offer high quality, stylish designs at a great price – with still lots of margin for them – to boot.
Another up-and-coming example competing based on a customer experience value-add is www.enjoy.com – they offer same day delivery, setup, and training on gadgets – iPhones, drones, cameras, etc.
At the other end of the spectrum is Wish – http://techcrunch.com/2016/03/01/the-hot-e-commerce-app-wish-has-hundreds-of-millions-of-users-plus-other-fascinating-stats/ – a mobile app that is essentially a dollar store for knick knacks, tools, clothing – that lets you order direct from China with delivery times of a couple weeks – or longer! So, you’re trading off speed of delivery for extremely low cost.
The other positive for e-commerce entrepreneurs in the face of the Amazon challenge is the large and growing ecosystem of technology providers out there who are essentially helping you compete with Amazon – in every functional category – marketing, shipping, taxes, order management, cross-border trade – today’s entrepreneur has access to technology to run super-efficiently and grow super-fast.
To sum up – it’s easier and cheaper than ever from a technology perspective to launch an e-commerce business – the key is finding a combination of product, customer experience, and logistics “hacks” if you will that allow you to differentiate and compete against Amazon’s selection, price, and convenience advantages.
ME: You mentioned a few stand-outs already, I mean examples of ecommerce merchants doing it well. You’ve had the unique chance to interact with hundreds of online merchants and talk with their managers or owners. Among the more successful ones, do you see some common traits or strategies?
From a business strategy perspective, the most successful merchants I’ve seen over the years are the ones that came up with a viable combination of the dimensions we just discussed: they find at least one way to differentiate – and I think it really boils down to having a unique product selection and/or a unique customer experience.
Second, they spend a lot of time on systemizing operations – working out how best source product, package and price it, and how to most efficiently get it to their customers. And then they assemble technology solutions that map to their business and allow them to run their business very efficiently. The good news, again, as I touched on above, all the tools you need to do this are readily available – but you have think through and establish processes for running your business to get the most out of them.
Third, the most successful merchants seem to really love what they do – which is as much about solving the puzzle of product offering, business model, and efficient operations as about the category you sell in. For example, I’m not sure the Warby founders were super passionate about eyeglasses per se – but I’m guessing they were and are very passionate about taking advantage of all the inefficiencies in an essential product category – all in the name of delivering a superior customer experience.
ME: For the new entrepreneur wanting to get on that path towards success, what are three tips you can give them to consider before they start selling online?
If you boil down my last answer about the common strategies and traits of the most successful merchants, there are three main areas.
First, differentiate. You need to find a competitive advantage – based on product selection, customer experience, pricing inefficiencies – if you’re very thorough in your research – or very lucky – based on all three.
Second, operations. Spend time thinking through – ideally documenting and mapping out – your business end-to-end: from sourcing, packaging and pricing your product to how you’re going to handle delivery/shipping, customer service, and returns. And don’t forget promotion: how you are going to drive awareness of your product and brand and drive sales.
Finally, passion. As a foundation, I believe you really have to love the challenge and solving the puzzle of creating a successful business – I suppose it helps if you are passionate about the product category – but more importantly, if your intent is to build a business, you have to be passionate about business-building.
ME: Many established online retailers seem to feel they share the same barrier to success: Amazon. What are your thoughts?
I think I’ve covered the key ways to compete with Amazon in a couple of my answers already – the irony is that once you take a hard look at how you are going to run your business, Amazon may very well be the best provider for some of the technology and services you will need.
All of the infrastructure Amazon built with the investment in securing the consumer’s trust I touched on earlier – their technology and physical distribution infrastructure – they have also been very smart in that they built the components of this infrastructure as internal services – and these components have now been productized, externalized, and made available to the public.
Fulfillment by Amazon may very well be the most efficient, cost-effective way for you to store and pick-pack-and-ship your orders. The hosting and infrastructure-as-a-service offering of Amazon Web Services may very well be the most cost-effective way for you to host and manage your web store. And selling on the Amazon marketplace is an essential sales channel for many merchants – you simply can’t avoid taking advantage of the opportunity to reach 300 million potential customers.
But if you’re very smart about your product niche and other differentiators and your selection of technology and services, there’s no reason you can’t have a healthy “co-opetition” relationship with this behemoth.
ME: So let’s say someone is just starting out in ecommerce. They launch their beautiful website. The products are loaded with great images and content. Everything is hooked up and working. Traffic is building. What are the first few questions you’d ask the owner to determine where they put their resources?
I think the most important thing to ask is “Do you have a data strategy – have you identified the metrics you need to track to understand what is driving growth of your business and understand who your customers are?”
And from there – do you have the tools in place to track and monitor those metrics to identify actionable steps to take to grow your business. You should be able to get insights about a number of things.
One, your traffic sources – ideally through to converted sales so you can identify the most profitable traffic sources.
Next, improving site design. In particular, the main flows from landing pages to cart to checkout.
And, also being able to profile your customers to identify any patterns and particular demographics you are more successful with.
Data is the foundation for understanding what is working and what isn’t from a marketing, conversion and ultimately growth perspective.
As you become more sophisticated, the next phase is to ask “Do you have tools in place – like A/B testing, customer surveying – to optimize your marketing and your site?”
Data and optimization strategies and tools will be the lifeblood of your business.
ME: So, do you regularly see data points that ecommerce business owners don’t monitor but should?
As a follow-on to the questions to ask an early stage e-commerce entrepreneur – it’s crucial that you understand your conversion rate and in particular shopping cart abandonment so that you can plug the holes in your conversion bucket.
In fact, this is one of the first things you want to do as your traffic builds and before you scale any paid marketing efforts like paid search or facebook ads.
There are a few common causes of shopping cart abandonment that you can focus on until you gather your own data – the most common causes of shopping cart abandonment are unexpected shipping charges and forced checkout registration. Given all of your experience, I’m sure you’ve got a list of checkout best practices. (See Eric’s critical checkout issues that may hurt conversion).
In addition to addressing common conversion killers you should also have in place the ability to market to abandoners – through email and / or remarketing. There’s lots of research out there that points to shoppers using the cart as essentially a wish list or to save items for later purchase. So, you’re really missing out on potential sales if you don’t have a way to market to cart abandoners.
ME: And how important is mobile?
It’s essential. Here are a few stats from a recent eMarketer webinar I just caught.
Mobile influences 45% of all US shopping journeys
Mobile ecommerce (mCommerce) will grow at 46% and account for 33% of retail e-commerce sales
And, Smartphone mCommerce will grow at 74%
So, you must have an e-commerce site that is optimized for mobile devices.
The most common way this is being solved is though responsive design – make sure your e-commerce platform offers and supports responsive design templates out of the box – and ideally make sure they are optimized not just for page layout and flows – browse, search, add-to-card, checkout – but also for performance. This should include email templates as well.
ME: Let’s say it’s now 2018. Do you anticipate dramatic differences in how ecommerce will be done two years from now compared to today?
I think we’re going to see the continued blurring of the lines between offline and online commerce – for both retail and B2B selling. This has been talked about for a while – and in the retail context is still talked about as the “store of the future”. The reality is that the technology needed to create seamless online to offline retail – and B2B buying – experiences is here today. And the backbone of this I believe – and the research firm Gartner has also talked about this – is the digital commerce platform.
Basically this is about taking all of the benefits that digital commerce and digital marketing bring to the table – ability to track prospects, drive sales, and drive repeat purchases and to optimize each stage in the customer journey through digital experiences and data – and applying them to physical buying situations.
In the bricks-and-mortar store that means arming the associates or the consumer directly with the product info they’re looking for – or in the case of the consumer are already looking at on their own phone – in ways that streamline the buying experience. For example – kiosks that make all the collected reviews and ratings and inventory availability from the retailer’s e-commerce store available in the physical store. You can do that today very cost-effectively for example with FoyerLive (www.foyerlive.com), a company I’m advising, using your existing e-commerce, retail systems, and data. This can help streamline the entire in-store shopping experience from eliminating the need to wait for an associate to check if they have a particular item in your size and color in stock to checking out and paying in-aisle on your own phone and avoiding the line at the register.
Same thing in B2B selling – every brand or manufacturer will increasingly be selling online through an e-commerce site – and from there it should be a short, cost-effective jump to arming field sales with a tablet-based selling tool – the foundation for which is the e-commerce site.
So, for larger merchants the digital commerce platform is becoming strategic – and, here again, there are technology solutions out there that make a unified online and offline experience a reality – and increasingly a necessity – for SMB retailers as well.
ME: At some point in the future, you’ll be watching ecommerce from a rocking chair in a retirement home. What do you hope will be said about your career achievements?
I hope that anyone I’ve had the honor of working with – customers and colleagues alike – would say that I was truly passionate about arming entrepreneurial-minded merchants with technology that helped them grow their businesses, which in turn created opportunities for them, their families, customers, employees, and colleagues.
A 20-year veteran of B2B marketing and e-commerce technology – from open source and licensed software to SaaS, Lin helps technology companies grow fast with strategy, marketing, and business development consulting and advisory services. You can contact Lin through LinkedIn: https://www.linkedin.com/in/lshearer