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[18 comments]

EBay's CEO talks about the 'commerce revolution'

June 13, 2014

EBay CEO John Donahoe took to the stage of the 10th annual Internet Retailer Conference & Exhibition in Chicago on Wednesday 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?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which business model do you think is more responsive to the needs of consumers?

Comments:

Yes, and channels have been siloed. It's why omni-channel retailing is starting to get the traction it is. Most retailers have been slow to grasp the power of the Internet and mobile, which is why eBay and Amazon have emerged as they have. Amazon has ~5x the revenue that eBay does, so consumers have spoken.

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Bill Davis, Director, MB&G Consulting

All of us see everything through our own eyesour 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's 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.)

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Ian Percy, President, The Ian Percy Corporation

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, for most retailers they 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).

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Mohamed Amer, Vice President, Global Consumer Industries, SAP

I agree that most retailers see only through their eyes. When most retail stores were established way back when, the emphasis was on the needs of the consumers. Yes, there was little competition, but the consumer was the paramount focus. As time moved forward, retailers found ways to make what they supplied the primary focus and attempted to convince consumers to purchase form them only. So the consumer then becomes second to the needs of the retailer. Kind of backwards, don't you think?

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

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 can not achieve this process.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

Absolutely! I've been saying this forwelldecades.

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 soupnot 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.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

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.

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Gene Detroyer, Professor, Independent

All retailers are customers, but not all customers are retailers. Most retail executives look at their businesses through the lens of their own experience as a customer, not their actual customers. Big mistake!

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.

The most important thing retailers can do is listen to their customers and understand their pain points when they are in their stores or on their website, and address those issues. Adding a layer of technology bling to a broken experience might interest the customer for a little while, but in the long run it won't take care of the pain and they'll walk away.

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Marge Laney, President, Alert Technologies, Inc.

Most retailers hope to deliver what the customer wants to buy. However, that doesn't mean that their business model is "seen through the lens of the consumer." 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.

While I can't answer the question of eBay being more responsive to customer needs than Amazon, I can simply say this: they are competitors. Consumers go to both sites to find the best selection of product and pricing. Both models are proving successful. Both companies are experimenting in areas that will make life easier for the consumer. Both companies are great case studies on successful customer-focused businesses.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, 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."

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Joan Treistman, President, The Treistman Group LLC

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!

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Cathy Hotka, Principal, Cathy Hotka & Associates

Retail tries to take the vision of the consumer and make it fit into their model. They don't ignore it or see it as wrong so much as they are constrained by those clunky old systems and architecture that cost a fortune to put in and will cost a fortune to rip out and replace.

Is the eBay model more responsive? Of course! It was designed in the internet 2.0 world and began with a more adaptive architecture from the get go.

Is eBay more responsive than Amazon? In each of their own ways they are both equally responsive.

And that, my friends, is my 2 cents!

Lee Kent, Let's meet share and succeed in Retail, YourRetailAuthority

If you look at the org structures of retailers, it is clear that the companies still think in channel terms. E-commerce is separate from retail in many companies, and the two do not even coordinate email marketing in many places.

It is easy for eBay, which does not have a heavy investment in retail infrastructure, to preach the omni-channel gospel. It is much harder for retailers who have full, channel-specific organizations to unify their communications, based on the specific segments of their customers rather than their channels. This change will also include compensation, making it even more sensitive.

But those changes are still necessary, and critical, when consumers are shopping in a multichannel approach. Retailers must adapt or die.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

Not having actually heard the speech, I'm reluctant to criticize it forcefully, but based on what I see here, no I don't really agree with it. Or more to the point, I find self-serving—to the point of silly—the assertion that eBay is somehow uniquely customer-centric. How does eBay, for example, reach (the dwindling but still significant number of) people who have no online access? Sure, they may try things others don't, but I'm sure the converse is true as well.

'notcom'

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.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

Absolutely. Very few organizations who tout themselves as being customer-centric really are. Companies, especially larger ones, rely on big data analytics that confirm their assumptions rather than getting out and having a dialogue with the customer about what they are doing well and what they can do to improve.

Zappos does a great job of interacting with customers and Amazon's acquisition has made them much more concerned about improving the customer experience. However, Zappos is still the leader by a long shot.

Tom Smith, Principal, Insights From Analytics

Absolutely not! Mr Donahoe may be in a bit of a time warp. While not every retailer truly asks the question "Will this decision be in favor of my customer," at least they ALL mouth it now.

Most retailers actually do understand what customer centric means and try to see and act through that lens.

I believe eBay and Amazon respond to different customer segments, so it is difficult to say which model is overall more responsive. I guess time will tell.

'vgallese'

In the age of over-stored/me-too/bean counting retailing, the industry de-emphasized merchants and retailing became more about real-estate and the supply chain. Then the web came along.

On the web, it became easier to customize assortments and bring information to the point-of-purchase. To help figure out what to design, techniques like human-centered design were borrowed from Industrial Designers. ID relied on design research to tease out what mattered and web centered companies (with designers who were into interaction design) embraced and evolved practices that centered around empathy. We are 20 years into developing tools and techniques that support this area, also known as design thinking. It makes sense that virtual retailers would embrace design thinking; it's much easier to implement findings virtually then physically.

The good news is that customer centricity is more about the heart than the head and no one has a lock on empathy. In fact, most of the major innovations have been around business models and infrastructure. We as an industry have a survival instinct that we should engage. We can start by treating our stores as labs to study and learn from our customers. eBay or Amazon don't have the "advantage" of stores—it's not too late.

Vahe Katros, Consultant, Plan B

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