RetailWire Discussion: EBay's CEO talks about the 'commerce revolution'

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Photo: Amazon

Photo: Amazon

By George Anderson, RetailWire

EBay CEO John Donahoe took to the stage at this month's 10th annual Internet Retailer Conference & Exhibition in Chicago to discuss what he calls the "commerce revolution".

The term applies to the many ways consumers shop for products today, including going into a store to buy a product, browsing retail sites during work hours, making a purchase from a tablet while watching television at home, etc.

For too long, Mr. Donahoe said, retailers have seen various shopping behaviors through their own eyes — in channel terms — rather than seeing it from the consumer's vantage point. "Consumers," he said, "just want to shop."

To demonstrate that eBay gets it, Mr. Donahoe offered several examples:

  • In the U.K., eBay sellers can offer customers the option of having items delivered or picking their orders up at the local Argos. Argos is a general merchandise chain with stores within a 20-minute drive of 80 percent of the people living in the U.K.
  • Last year, eBay installed touchscreens on the windows of a small number of retailers in the Westfield Mall in San Francisco. A shopper could get information on a product from the screen and have it sent to his or her mobile phone to make a purchase.

Mr. Donahoe predicts the future will bring even more "interesting combinations of online and offline" to meet consumers in the time and place they want to shop. While never mentioning Amazon.com by name, it was clear throughout much of the eBay CEO's speech that he was drawing comparisons between his company and its chief rival. He emphasized the point at least twice during his speech, reminding the audience that eBay is "a partner, not a competitor."

Discussion Questions: Do you agree with eBay's John Donahoe that most retailers see the business in their own terms rather than through the lenses of consumers? Is the eBay model more responsive, as he suggests, to the needs of consumers than Amazon.com?

Comments from the RetailWire BrainTrust:

Ian Percy, President, The Ian Percy Corporation: All of us see everything through our own eyes — our own values, desires, experiences, fears, aspirations, and on and on. Even our attempts to determine "the customer's perspective" are designed through our own eyes, including how we set up surveys, focus groups and the like. They're all skewed to how we see things. For starters, which customer's perspective are you after? Do you think there's one, or even a hundred?

Want to know something else? We're pathetic at it. Ask Eric Cantor's pollsters. 

IMHO, here are two of the best quotes related to considering the perspective of other people: 

"Do unto others as you'd have them do unto you." (Book of Luke)

"We judge others by their behavior and ourselves by our intentions." (This last one is widely attributed to me, but I didn't originate it. Can't find who did.).

Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP: As much as retail is about managing the details and speed in action, those qualities have historically focused on the store. More and more retailers are expanding that view into the digital realm with a subset working on melding the two worlds. An even smaller subset are creating new possibilities in shopping with new use cases that start with the shopper in mind and leverage technology across physical and digital. So, most retailers do recognize the shift to consumers, but that hasn't made it through their organizations (yet).

As to eBay vs. Amazon, the former innovates around new services for both sellers and buyers (call it more exploration strategy) while Amazon focuses on scaling of existing technology investment to gain more of the shoppers' share of wallet (call it more exploitation strategy). 

Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.: Most companies use an inside-out view and think about every activity as a separate area that has to be fit into the organizational chart somewhere. Then it develops as a separate activity, including e-commerce. eBay is an e-commerce company, but it is also a consumer-centric company by constantly analyzing consumer data and making decisions with consumer benefit at the center of their decisions. Other companies, such as Macy's, are also taking a consumer-centric or outside-in approach to shopping by allowing consumers to use digital tools to shop or to shop in-store and have deliveries made from a nearby warehouse or store. Data and operations must be integrated to make that happen. Separate silos cannot achieve this process. 

Ryan Mathews, Founder, ceo, Black Monk Consulting: Absolutely! I've been saying this for — well — decades.

Retailers seem to want to cling to the illusion that they have something customers can only get from them and which can only be purchased on their terms. Maybe that's true if you are a Harry Winston, but if you are selling canned soup, not so much.

As to whether or not eBay is more responsive than Amazon, I'm not entirely sure where I come down on that. In fact, that part of Donahoe's speech sounded more like a retailer's analysis of competition than a customer's analysis of options. For a moment it seemed he was being at least a little guilty of the same sin he was chastising other retailers for practicing. 

Gene Detroyer, Professor, Independent: I don't know if the retailers see their businesses in their own terms rather than the consumers. My sense is even when they understand the consumer lens, they reject it because they refuse to recognize that a sale is a sale is a sale, no matter where you get it. They believe that the more sales that go through an online channel, the fewer sales go through the store. That thinking makes no sense.

The objective is to sell the products, not operate the stores. The P&L doesn't change based on where the product is sold. If $1,000,000 in revenue shifts from in-store to online and the costs of operating my stores remains the same, my bottom line doesn't change at all.

It is the fear of losing brick and mortar sales that prevents retailers from accepting the changing consumer. This is no different than the inventor of digital photography (Kodak) ignoring the obvious to protect their film business. 

Marge Laney, President, Alert Technologies, Inc.: Back in the days before the Internet, retailers could get away with offering their goods and service their way! Were there customer pain points? You bet, but the customer couldn't do much, if anything, about it.

Enter the Internet with its explosion of choices and ways to shop, and suddenly the autocratic way of running the customer isn't working anymore. Not only that, the customer now has visibility into every other customer's thoughts on the subject and feels empowered.

The best part for the customer is that they are now firmly in control of their shopping experience and, if the retailer balks, they are the losers.

For retailers, customer experience investment opportunities are increasing and changing at the speed of light. Keeping up with everything is not only daunting, it can be financial suicide if the wrong investment is made. 

Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC: It is not easy to put the customer in the middle of everything. You can look at companies like Zappos, Starbucks and others that are obviously customer-focused. As a result, the consumer is willing to pay more. There may be your best lesson. Find companies that are successful where the customer is willing to pay more for doing business with them than somewhere else. There's a reason. They think like a customer and give the customer what they want — the way they want it. And they are easy to do business with.

Joan Treistman, President, The Treistman Group LLC: Retailers are human, after all, and we humans tend to see things the way we want to see them. It's challenging to open our eyes and minds wider and process a conflicting perspective.

So John Donahoe's comments are true, but for him the final observation must take into account what lens eBay uses. There is a proverb: "There are none so blind as those that will not see." 

Cathy Hotka, Principal, Cathy Hotka & Associates: Every retailer knows that the landscape is changing rapidly; the question is whether retail companies can evolve fast enough to survive. They're going to need to take a fresh look at their business model (that's you, RadioShack, with a new emphasis on same-day PC repair).

I have dinner with multiple retail CIOs a week, and every one of them believes that there will be many fewer retail stores three years from now. The revolution is upon us! 

Kenneth Leung, Director of Enterprise Industry Marketing, Avaya: Retailers have always been focused on internal processes and optimizing supply chain, employee efficiency, and cost of goods sold in stores because it is manageable and controllable. It is harder to operate from a consumer lens because we as consumers are fickle and can't articulate what we want in process flows that retailers can internalize. The fact that Amazon and eBay have taken market share from traditional retailers indicates that traditional retailers need to change; the fact is, however, that the consumers will want a mix of Amazon (ecommerce), eBay (marketplace and auction), and brick and mortar (instant discovery and gratification) going forward. 

Read the entire RetailWire discussion:
http://www.retailwire.com/discussion/17585

CANADIAN RETAIL NEWS: Thursday, June 26, 2014 (Updated Continuously)

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