Gil Levy from Ecommerce Partners – Podcast Transcript

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Shaun Ryan:  [0:12] Hi, I’m Shaun Ryan from SLI Systems and this is the Ecommerce podcast. Today I’m talking to Gil Levy, founder and managing director of Ecommerce Partners. Welcome Gil.

Gil Levy:  [0:22] Thank you. How are you?

Shaun:  [0:24] Very good. Thanks. Traditional question to get us going. What’s the first thing you ever bought online? Can you remember?

Gil:  [0:31] I actually do. The first site that I bought was a domain name. It was my first purchase.

Shaun:  [0:38] What was the domain name?

Gil:  [0:41] I don’t know if I would like to say it in public. [laughs] I still own it. It’s called

Shaun:  [0:48] OK. Oh wow. That’s interesting. That’s the first domain name we’ve had as an answer to that question. What was the most recent thing you bought online?

Gil:  [1:01] I think a watch. Yeah.

Shaun:  [1:04] A watch. OK. Great. Where did you buy that from?

Gil:  [1:07] Actually, it’s funny. I was in Israel on vacation. And I went into a store and I saw a watch that I really liked. I saw the price. It’s a G‑Shock watch. I’m a surfer, so I saw this watch, telling you the type, and it was like 1,000 shekels over there. [1:23] And I was with my Android phone, and I looked it up on the Internet, and I found it on eBay for like 80 bucks instead of paying almost like $300 in a store in Israel. So while I was in the store I took the number and I bought it on the phone on eBay. And paid for that. And when I came back from my trip, it was waiting for me over here.

Shaun:  [1:40] Wow. So within that one transaction you’ve captured a few different trends haven’t you. There’s obviously the whole online shopping. There’s mobile. There’s international roaming. [laughs]

Gil:  [1:52] Yeah. [laughs] Exactly.

Shaun:  [1:55] So obviously you’re a fan of online. Can you give me a little bit of background about yourself? How did you come to be where you are today?

Gil:  [2:03] Background, the long story is as a kid, I got to my bar mitzvah and I asked for a present, I got a Commodore 64. Back then I got it with a tape. And then I got the disk drive which was the latest and the greatest. I don’t know if you remember those big floppy disks?

Shaun:  [2:20] Yeah.

Gil:  [2:21] And I really got into that. I really liked it. When I bought this computer it came with sequence of five books, and I taught myself some BASIC, and I was downloading all kinds of pirated games. Eventually I found my two hobbies for technology and sales on one place. I was getting all kinds of pirated games and selling them in my neighborhood.

Shaun:  [laughs] [2:42]

Gil:  [2:45] I really liked it. Over the years, once I joined the Israeli army, for a lot of different reasons, I found myself in a division that, I was sitting on a computer all day with special software that helped monitor production in a tank recovering. [3:07] I was really doing all kinds of scheduling and forecasting and everything. That totally fit into what I learned there. I came to New York on a trip. One thing led to another. I’m here for the last 18 years. And I end up where I am because a friend of mine was working at an Internet company and he told me, “Hey, you might want to come and check out what I’m doing.

[3:28] I’m selling websites.” And I’m talking here about late 1994. I remember calling people and telling them like, “Do you want to buy a website?” And they tell me, “A website? We just got new fax machine. I don’t what is a website.” Those are the things that I had to deal with.

[3:44] I’m very much into music. Once I came over to his office to see what he does. There was only Yahoo obviously. There wasn’t any Google or anything. There was only Netscape. There wasn’t Internet Explorer. And I went online and I searched.

[3:59] I went on Yahoo and I typed in, “Sonique lyrics.” And I could see all the lyrics for all their songs. I thought, “Whoa, that’s fascinating. That’s really cool.” So that’s how I started. We were working in a company that pretty much was a pioneer in what we were doing.

[4:16] We were doing hosting and Web development in 1994. And later for a company called WBS. And this company, we were working with a top Internet site back then. Back then, everybody is familiar today with the download.

[4:32] But when we’re talking about ’94, ’95, the biggest shareware website on the Internet was Jumbo. It was our client. And was our client. And Quicksilver when they came to America were our client. And Village. And Cable and Wireless. And Marsh and Macmillan.

[4:49] And the Gardner Group. A bunch of different companies we were working with later on we got acquired. So that’s the long story of how did I get to where I am right now.

Shaun:  [5:00] Wow. That was an inspired present that bar mitzvah Commodore computer. So tell me about Ecommerce Partners. How did you guys start? Give me a little bit of your history and let us know what you do here?

Gil:  [5:19] The truth is it’s a little bit funny and I don’t know if I should say it on a podcast. [laughs] The reason I started this company in 1998, the reason for that is, I didn’t think anyone would want to hire me with my personality so I had to do something on my own. [5:37] I was very passionate. I worked for Web Business Services. And in‑between Web Business Services and starting Ecommerce Partners I developed the first online conference for a company that raised a lot of money. This was the first online conference.

[5:57] And we had like virtual booths that people could come in, walk‑in, ask questions, interact. This virtual trade show was broadcasted live from Bloomberg Studio. It was covered by CNN live. I think in ’97. We had probably 800 registered users a minute, which was a crazy, crazy amount if you think about 1997 and how many people were online back then.

[6:24] Then I realized that I really like it, but I really have an opinion, and I wanted to do something else. When I was at WBS and before the company was bought, we were developing an Ecommerce engine. And I’m talking, again, about the end of ’96.

[6:40] That seems to be where the industry is going and what I want to do is the whole like business and technology. So that’s when I started Ecommerce Partners. What we do, from ’98 up until today, we took a lot of different leaps in the business, and we started as a custom application development company that slowly but surely shaped into a pure ecommerce player.

[7:06] Today our specialty is companies come to us, they have a certain size business, and they need to take it to the next level. They need somebody that understands that. What we do is we provide full, I’m going to try to avoid cliches or slogans in this conversation, but we do do a full one stop shop.

[7:29] So we do from strategy, design and development, hosting, maintenance, and what I call post launch services, such as support, monitoring, SEO, SEM, Social, affiliates, and everything like AB testing, multi‑variant testing. What our strength that is from all this long list of services is our strategy and our marketing.

[7:59] We used to own technology, over the years we realized that it’s better to license that rather than to own that, because we would never be able to compete with companies that are pure ecommerce software companies. So our strength is for us to be the architects. If you take the construction world as an architect of this, we have a very strong research team.

[8:22] We develop our own methodology that’s called ERS. That stand for Ecommerce Requirements Specification. Supposed to take between two to five months depending on the size of the business and how many products they have. And pretty much we’re going category by category and developing the user requirements for each one of them.

[8:41] And understand from user requirement to competitive analysis and main value proposition of a business. User persona. Target audience. Everything that goes there. At the end of the day we deliver a document that has executable wire frame and a technical spec that you can hand over to the developer and designer that they can execute on.

Shaun:  [9:00] OK. Wow. Are your customers mainly people that are obviously incapable of doing that strategy themselves. Are they normally regular bricks and mortar retailers rather than pure play online retailers? Or do you find you have a combination?

Gil:  [9:16] We have a combination, though I’ll have to, now that you’re asking the question, the pure play ecom, they have a lot more knowledge than the multi‑channel. And definitely a lot more knowledge than the B2B customer, they are trying to go online. [9:32] They are the novice – the B2B. The multi‑channel retailer, they know just enough to be dangerous. Sometimes it’s very tricky with them to educate them that things are done different online. I believe that is all new economy.

[9:53] People are shopping the same way, but still there is different ways. I’m always trying to explain to a guy who has a store in the mall, if I need black pants for my brother’s wedding, and I’m going to drive to the mall, I might settle for different type of pants because I don’t want drive to the next mall because it’s 30 minutes away, and I have gas, and they might be closed, and I just came after work, and I don’t want to deal with this headache.

[10:18] So I might settle for something that usually I won’t buy. But I just want to get it over with. I need black pants for an event.

[10:24] Online, within like two seconds, within like two minutes, you can be all over the country in like 12, 13 different stores and see all kinds of things like that. Especially if you’re going by Google Products, you can be in a couple of hundred of stores in like 10 minutes. So it’s a completely different game.

[10:41] It’s a challenge to explain it to them and to get them into the mindset. I don’t want to sound like we know everything. I always say also to our customers, “If we do the best job that we can, it is only 50 percent of what needs to be done.”

[11:01] Without their help and without their knowledge, I’m only like 50 percent of what needs to be done in order to grow their business. So their knowledge, their experience is very, very important to the process.

That’s why I called the company Ecommerce Partners because it’s a true partnership. I’m not like a water vendor. It’s not that they’re calling me, and I’m fillng in and just execute for them. We are not that type of company.

[11:20] There are companies like that. But we constantly think for our clients and try to come up with the best approach, unique way of doing things, and educate them so they can educate us back.

Shaun:  [11:30] OK. That sounds very sensible. Can you give me some idea of the scale of the business? How many ecommerce sites have you worked with? How many people do you employ?

Gil:  [11:41] Sites, over the years, we did hundreds of sites. On average we acquire like approximate like 10, maybe 12 new customers a year. We’re trying to keep it boutique. We don’t just take anyone. We have to believe in the business. We have to believe in growth. The numbers need to make sense. [12:00] If you estimate to have a business, and in the best case scenario it’s going to be a two million dollar business, it’s probably not going to be a good fit for you. So, we’re very, very, cherry‑picking our customer, in terms of being able to impact them and to grow the business.

[12:18] Because that’s the most important thing. You can bring them into a position that a competitor says, “Oh, somebody did a great job for them. Where did they show up from?” That’s what we’re looking for. So that’s the most important thing.

[12:30] We’re not in a business of building websites. We’re in a business of building businesses. And that’s a big, big difference. In terms of employees, we have about 50 employees. The top management, marketing, and account executive is done over here. And the programming and the R&D is done in Israel.

Shaun:  [12:51] OK, great. Can you tell me a little bit about, just moving onto your customers, and what’s happening in the market? Can you tell me a little bit about some of the trends you’ve seen over the last year? What’s been changing over the last year?

Gil:  [13:05] First of all, every Monday you get 10 phone calls of people that want to do something like Gilt or Oolala type websites. Everybody wants a Flash sale site. The trends, they are the same trends as always. [13:27] People are talking about for years, unfortunately, you don’t see people executing on that for a lot of different reasons. So if you ask me, “What are the challenges?” I think the challenges are what we see in every type of company.

[13:42] And we work with some big companies that have a lot of resources. Their e‑commerce is not structured right. There’s not enough resources over there. It’s a constant struggle. They need three people before they hire one. I don’t know. You probably see that in Europe when you deal with the SLI product and implement it. You guys have a great product.

[14:10] SLI is a great product but it’s like a gym membership. It can be the best gym in the world, but if you don’t go to the gym then it doesn’t help. So SLI is a great product. It can drive amazing results. Can help you with search engine optimization. Can help you with product recommendation.

[14:23] But if you don’t take the time to configure that correctly, and spend the time to do that, you won’t get the amazing results of somebody else that does that. So that’s the constant struggle. To get a client that consensus on like taking ownership of some of the tasks or get them to do them in order to get the better results.

[14:45] And this is something actually that we came up with a product that we sell to our customer right now, which is called, “Director of Ecommerce.” They don’t want to hire somebody. It’s very hard to find people with a lot of experience. How do we go about that?

[14:58] But they do want to grow their business. So what they do is reach out to us and we give the Director of Ecommerce on an hourly base so they can hire them for like 20, 50 hours a month. And then what we do is we prioritize for them requirements. We might sit with SLI people and just help them to configure the search better.

[15:15] We might go over analytics. The thing is everybody has got analytics. And analytics is a great program. But it’s giving you information after the fact. And if you don’t have the people to go through that and actually understand and make the changes, then it’s not really valuable information. So that’s what we do for them.

[15:35] We go over. If I can think about something that happened very recently. We saw one of our clients getting a lot of Canadian traffic but never addressed it and didn’t let his customers buy from Canada. So opening that. Doing a nice banner. Geo‑targeting. All those things can make a big impact on their business.

Shaun:  [15:53] Right. Interesting. Why do you think Ecommerce is under resourced? Do you think it’s because companies are struggling to find qualified people, or do you think it’s that they don’t prioritize it adequately within their business?

Gil:  [16:12] I’m going to say something. In my experience, people really don’t see the full potential. It’s very hard for them. They’re looking at a number. OK, I had to spend X amount of dollar on PPC. They don’t look at it as a return on investment. They just look at half the part of the equation. [16:31] OK, I need to spend $10,000 a month on something. They don’t understand that this $10,000 very quickly can turn into a half a million in revenue in a couple months. There’s lack of belief I think.

[16:46] And the people that believe more and try more, those are the people that we see are more successful, in our clients anyway. That’s why I think the main reason is they cannot justify it financially and that’s why they’re taking the time.

Shaun:  [16:58] Right. It’s a gradual process rather than a just a steep change as people are slowly becoming educated. But those that do it quicker are going to benefit more.

Gil:  [17:09] Yeah. I don’t know if you see that in your business. But a lot of the answers that you get, there is a threshold. I don’t know. If somebody gives me an SEO budget of like $5,000 or $6,000 a month, it’s not going to have the impact. So it doesn’t matter how much money, or like how long they are going to do that. [17:29] They need to commit to something and want to be successful in that. You can’t start it gradually. Because there’s no impact.

[17:39] Let’s say you want to go and compete in the diamond and jewelry industry for example. And you have a small budget and there’s people who have been playing this game for years. You can’t start small. You have to at least start as big as them or bigger than them in order for you to gain market share for the years you weren’t in the game.

[17:55] But it’s hard for people to understand that especially when we’re talking about their business and their dollars.

Shaun:  [18:02] Yeah, exactly. How do you think things are going to change in the coming year? Do you think it’s going to be more of the same? What else is happening?

Gil:  [18:14] It’s going to be more of the same. You’re going to see a lot more Flash deal sites. We’re going to see people using technology a little bit better. We’re going to see technology improving. Even the site search and recommendation and everything. [18:28] Hopefully also clients will start doing more. They might finish their communication strategy and their newsletter strategy and they’re going to move into segmentation. Segmentation is something that everybody knows about. People are talking about it.

[18:41] But if you’re going to do a survey, and see how many people are doing a true segmentation, the number is in single digits. So a lot of thing like personalization, customization, all those things that people know about for so long are still very, very low in percentage, and the tools are not there.

[19:01] If you take an off the shelf platform, you don’t have those tools right off the bat. Those platforms will have to get smarter. Again, the people that see the results are the people who do those things. The game is still easy in my opinion. It’s very easy. It’s just the people, there is no, just a commitment.

Shaun:  [19:22] Yeah, understand. Tell me Gil, is there a site that you look to that you particularly admire? Maybe one of your customers or maybe someone else?

Gil:  [19:31] A site that I admire is a site called Boomkats.

Shaun:  [19:35] Boomkats.

Gil:  [19:37] Yeah.

Shaun:  [19:37] I’m not familiar with that. What do they do?

Gil:  [19:39] They sell music. I’m a music fanatic.

Shaun:  [19:40] I’m clicking up on that.

Gil:  [19:45] You will see that the recommendation is great is done in three levels. The segmentation, when you want an artist, is ask you, “Do you want to subscribe to Radiohead mailing list?” Boomkat is a very, how you call it, offbeat… The opposite of mainstream music. So it’s a lot of like indie, electronics, not mainstream music. You can subscribe in very easy way. [20:10] You don’t subscribe. How many sites can you tell me from retail, and you saw a bunch of them, that you’re on a category page and its asking you if you want to subscribe to this category or to this brand? Can you tell me any?

Shaun:  [20:21] No. You don’t really see that. But this let’s you subscribe to the category.

Gil:  [20:25] Yeah, it will let you choose to subscribe to a Radiohead or Madonna. Like if you own a Madonna CD, it’s going to ask you if you want to subscribe to a Madonna newsletter.

Shaun:  [20:33] OK, great.

Gil:  [20:34] You don’t see that when you’re going on like, “Do you want to subscribe to Adidas shoes? Or do you want to subscribe to women’s jogging?” That why I am saying, the game… Everything is known. It’s not that complicated. People just don’t commit for a lot of different reasons that’s beyond me, take it very, very slowly.

Shaun:  [20:54] OK, so that’s pretty interesting. So they try and engage the customer. And if you subscribe to the Radiohead category, they’ll send you newsletters about them as well as obviously whenever they bring out a new album or something. When they’re touring.

Gil:  [21:08] Exactly.

Shaun:  [21:09] That’s something that a lot of retailers could do. It’s not restricted to music, is it?

Gil:  [21:15] Exactly. Right now you go on the Zappos site. And we all have brand loyalty. If I wear like New Balance shoes, they’re going to ask me. Even New Balance. I’m wearing right now New Balance that are red and green. [21:29] And New Balance is doing the most conservative ugly shoe in my opinion. So they need to ask me over there on Zappos, “Do you want to subscribe to New Balance Funky Shoes, not funky shoes, but this category has a name. Then right on the same page, I don’t have to go to another page.

[21:46] I don’t have to do any check‑mark. Let’s say you’re on Bloomingdales and you’re on the product page, they’re going to ask you like, “Do you want to subscribe to a men’s product. Because I’m on this page. Then if I’m moving to Paul Smith is going to ask me to join Paul Smith. If I’m on a suit page or the suit category, “Do you want to know about new suits that’s getting into our collection, on sale?”

[22:10] So it’s there but people are not doing that. This whole segmentation and personalization is very, very much behind. The only one that do it like completely automated is Amazon. Because each one of us see a completely different Amazon.

[22:28] But the rest of them can do that in a very easy way, they’re just so behind with a lot of other things that it’s not high on a priority. A lot of them don’t believe it’s going to make a big difference on their business, which is wrong.

Shaun:  [22:38] Interesting. Whenever I do this podcast I always find out at least one really interesting new idea. And for me that’s that idea of subscribing to a particular category so you can then, when someone is doing that, they’re saying, “This is what I’m interested in.” [22:53] They’re giving you their contact details and giving you an opportunity to market to them. That’s a really interesting idea. Our time is just about up here. So I just want to thank you very much for your time today.

[23:05] It’s been really interesting. You’ve done a phenomenal job building up your business to where it is over the years. It sounds like you’ve got some amazing experience there that a lot of retailers can benefit from. So Gil, thank you very much for your time today. And again, well done with your business.

Gil:  [23:19] Thank you very, very much. And thank you very much for having me.

Shaun:  [23:22] Thank you. That was another Ecommerce podcast. I’m Shaun Ryan. Tune in next time.