Kent Allen from The Research Trust – Podcast Transcript

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Shaun Ryan: [00:13] Hi, I am Shaun Ryan from SLI Systems and this is the Ecommerce Podcast. Today I am talking to Kent Allen from The Research Trust. Welcome Kent.

Kent Allen: [00:22 ] Welcome and thank you for having me today, looking forward to chatting.

Shaun: [00:24]  Yeah. You’re welcome. A traditional question to get us started, what was the first thing you ever bought online?

Kent: [00:32]  You know it’s funny, I was looking at the Craigslist the other day, and it occurred to me, I was like, you know, somebody had actually mentioned that and I was like you know I think that the first thing I ever bought online was not something from Amazon or a book or anything like that, it was probably just something you know here locally in the neighborhood. I never really thought about that and I feel like I’ve been doing eCommerce since eCommerce came around and I could not remember but I would guarantee you if it wasn’t something from the neighborhood  it was probably a concert ticket.

Shaun: [01:05]  A concert ticket. Okay. That’s a new one. What was the last thing you bought online?

Kent: [01:09]  You know, oddly enough, I just got a new mountain bike. Although that wasn’t an official online purchase, it was researched to death online, bought over the phone from the local bike shop, never even met the guys until I actually went to pick it up. But the last thing I had purchased online, probably not surprising, was a ticket to the Shop.org Annual Summit so it’s all about travel online for me. Although I would say the most unique thing I’ve gotten recently was a little Groupon offer for one of those bug repellent bracelets that are, I guess, in vogue right now. Unfortunately took me 6 weeks to receive it and pretty much any chance to go play with the bugs is rapidly coming to an end. But that would probably the most recent purchase.

Shaun: [01:56] [Laughter] Funny. Can you give me a little bit of background on yourself.

Kent: [01:59]  Yeah, you know actually, I kind of really had gotten into the online space before I knew anything about the web browsers. I moved out to California from Virginia, had gotten my graduate degree from the University of Virginia, had majored in the liberal arts there, so I had kind of an English History focus, and ended up getting hired into McGraw Hill Publishing. They were very excited about this new phone based information marketing service that they were building for the building supply community and this division of McGraw Hill really focused on architectural engineering construction information so really it was back at the dawn of information services, or at least the dawn of electronic information services. Now it’s interesting, I think we probably burned a couple of them and a hundred million dollars. It really was about as archaic as you could get, but really by that time you know, the early browsers were hitting and internet marketing was just starting to become something people were interested in. I’d been playing in that space, relatively unsuccessfully  I should add, with McGraw so decided it was time to go back to grad school, and ended up getting my MBA and came back banging around San Francisco a bit working for some of the really early startups, including one which was, actually, a product review site called Productopia. And, you know, ended up running actually a friend of mine had met the guy who was running the e-commerce practice at Aberdeen Group who had just lost one of his analysts and he worked down at Broad Vision and the next thing I knew I was covering all the commerce platforms and all the online advertising platforms and pretty much everything in between those, and that was, you know, pretty much when the .com things were getting going and so it was a pretty fascinating way to get involved in this industry and for anyone who was in the .com era it was a pretty wild time to be just living in the Bay Area.

Shaun: [03:57] Yeah, wow that’s an interesting career and you’ve been around in ecommerce for a long time, and having worked for that analyst firm, Aberdeen, you’ve obviously seen ecommerce evolve significantly over that time.

Kent: [04:15] Yeah. No. I mean, it’s been really wild to watch and, I still think back to some of the first research studies and some of the white papers that we’ve done, and at that time we really just were simply making the case for ecommerce in general. It’s all about making the case for social and mobile and local, and all the other you know kind of things that have come along since then, but early on it was kind of like, ecommerce was very much dismissed by many in the retail sector and technology sector as well. So it’s been interesting to kind of watch the industry come as far as it has in the last decade plus.

Shaun: [04:46] So you now have your own firm, The Research Trust, can you tell us a little bit about that please?

Kent: [04:52] Yeah, you know it’s funny when I started it some of my friends in the analyst community called that the ultimate oxymoron, but I really got involved because I did see a lot of the, to be honest, redundancies  and inefficiencies of the way the industry analyst world worked back in those days. And again back then, there were probably 12 different research houses where there’s maybe two or three main ones today. So it was kind of right for consolidation and I thought it just made a lot more sense to create an organization where people can put in their research and, you know, somewhat like a land trust were it wasn’t about creating a lot of different fiefdoms, it was really about just letting the people who understood and had the insights and share their knowledge and, to really break down some of the barriers. Now whether I actually accomplish  that or not I’m not really sure, but I do know that this space has been so busy since then that I’ve continued to spend a lot of time helping technology companies understand the market and really tell their story and I’ve been fortunate to work with a lot of retailers to understand what their digital commerce strategies should be so it’s been a really fascinating way to stay in touch with a lot of the innovators on both the technology side of the fence, and the retail side of the fence as well.

Shaun: [06:12] Cool. So, can you tell me a little bit about your customers, who are your customers and what sort of problems do they have?

Kent: [06:23] Yeah, you know, it’s kind of interesting, when I look at some of the retailers, consumer brands and, increasingly, the wholesalers and distributors on one side I think a lot of their challenges are really just trying to figure out how to separate the wheat from the chaff a little bit. To really, kind of, understand where are the shiny balls, where are the things that are capturing the attention and where are the real important places to invest in my, not only my ecommerce business anymore, but it’s really investing in the customer and understanding  how to treat this ecosystem of service, if you will, and making sure that the right touch points are in the right place the right time. So, I would say that the retailer and consumer’s biggest challenge is just being able to figure out how to spend their precious resources in the digital realm and that’s not easy today and it gets more and more challenging. I think on the other side, in the technology solution community, they’re constantly having to try to rise above the noise and I can’t think of how many small to medium size start ups I worked with that have really been solid technology, ahead of their time and then have faced a lot of challenges with being drowned out by Johnny Come Lately and other folks that they just jump on to the market message or to the real value prop that they presented. And so I think that’s probably one of their biggest challenges is just continuing to be able to get their story in front of people and differentiate their story from others. And I think it’s something that we’re going to continue to see a lot of challenges with the specialist, as we move more into, not only a global area of retail, but in theory of a very integrated cross channel where there is a lot of different technologies that need to power all the different touch points whether it’s stores or mobile or online that we know now.

Shaun: [08:16] So a bunch of interesting points there. It really is an interesting dilemma that the retailers are so busy, there are so many opportunities for them to follow up and there are so many different technology providers who are trying to help out the retailers all vying for the retailer’s attention, the technology providers are struggling to be heard and the retailers are struggling to make sense of all the different messages that are coming through. It’s an interesting dynamic. It just means everyone is extremely busy and I suppose to some extent from the technology providers point of view everyone’s trying to shout louder and louder to be heard above the noise. Do you have some examples of some technology providers you’ve seen who have found a way of effectively getting their message across above that noise?

Kent: [09:09] Yes, you know, I think the ones that do the best job are the ones that really let their customers do the talking for them. I go to most of the industry conferences, and I’ve been fortunate enough to be invited to the ecommerce platform specific and user group shows and things like that and I’ve seen over and over again, really the best way for the technology companies to get their message across is to really let their clients do the talking. I mean, when I’m looking at new ways to help technology companies with some of their marketing or again, just trying to get their story out I am constantly encouraging them to just bring together retailers whether they’re prospects or customers or just interested parties and get them at a table, get them in a room together and just let them talk shop. To be honest, one thing that I find works really well is when the commerce platforms themselves pull together their community,  it’s certainly a lot easier to talk to your fellow industry colleagues when you’re all sharing a lot of the same technology platform, either issues or opportunities and things like that. So that’s one thing that I really encourage. As I talk, a lot of the studies that we do we end up talking to senior leaders, senior VPs of ecommerce and things like that. And, you know, I’m always asking them, what can the supplier community do to make your job easier? And again and again it’s like, hey, you know, love the way papers and the reports that analysts like you guys write, but you know, I don’t always have time to really process all that information but I like nothing better than being able to sit down with 3 or 4 other senior guys or women that are in positions just like myself and to be able to really talk shop and cut to the chase. And so anything you can do to collapse that, collapse any kind of barriers to decision-makers getting around, and really understanding, and feeling the pain of their other industry colleagues and understanding  what they’ve done to get around that. I would say that is the way to do it. I love what you guys did at Internet Retailer where you had the theater and the theater wasn’t about SLI, it was about your clients and it was about their issues, and it was about how site search and merchandising  technologies can really increase conversions. So, I think that did really well. In fact, I thought the whole Internet Retailer crowd that put together the theater concept, whether it was at your booth or other booths, was really a good way to do it. A  lot people have been in this industry for a while and some things just get old. And so being able to bring together new interesting communication venues and again, you’re letting the technology, kind of, take a back seat and letting the retailers talk about their challenges and their opportunities.  That’s really the way to go.

Shaun: [12:05] Yes, it’s always a lot more credible hearing from a peer than just hearing from a vendor. So, I think that’s really good advice I also think from the retailers point of view, going along to these trade shows, it kind of seems a little bit old school in this digital age but it’s just really valuable. There’s nothing like sitting down face to face with people that are in a similar position and talking with them about what’s working for them and what’s not working for them.

Kent: [12:29] Yeah, and the other thing is, the one thing that has been really encouraging is, I kind of sit on the fence and have for ten years between the software/solution providers on one side and retailer on the other. And really in the last three or four years there’s been so many folks interested in hopping on the other side of the fence. And I think that’s really healthy for the industry. I hear from retailers all the time, I kind of think I want to go and work for a hot start up, can you tell me who’s hot? And I’m like, well, maybe I can, maybe I can’t. But I also see the same thing happening, where you’re seeing more and more of folks from technology that are being hired into the e-commerce organizations.  And I think that’s probably one of the healthiest dynamics that I’ve seen in the last couple of years as far as the industry as a whole. So that’s a real positive thing too.

Shaun: [13:15] Yeah, interesting. Now let’s just talk a little bit about trends. You were starting to talk about multi touch points. I mean, what you think is going to be different over the coming twelve months compared to the last year?

Kent: [13:30] Yeah, you know, I can’t really get around mobile being of the social/mobile/local that everybody likes to talk about. Of course I actually look at it differently. I try to lead with global being the biggest opportunity out there but, I understand that global is kind of a macro trend where as people like to look at different sectors or buckets of technology. But you know, I, think mobile is big. If you have to – if you have choose between the three of those – mobile taps into all of them, to be quite honest. Although I guess some of the social networks might be scratching their heads on exactly what role they play on mobile, but I guess that’s a topic for another day. But, yeah, I don’t think it’s any surprise at mobile you know, is big now, it’s getting bigger. And as much as it comes across as yet another hype cycle, we’ve been through three, four, five, probably, mobile hype cycles and this one seems much more real. It doesn’t take an expert, doesn’t take anybody, but someone who’s got two eyes to look around and see that everybody and their brother is walking around the world with their head hunched over. I think what’s going to be big next year is the mobile form factor. When people talk to me about okay, what is mobile commerce is? Is it iPhone? Is it iPad? Is it both? I usually just say, if you can walk and talk and do your mobile thing at the same time, well then that’s fine. But the reality is a lot of people can’t do quite what they want to on an iPhone. I mean, I know that it seems my iPhone battery is just given up its ghost here recently. So, I think as you see, if the rumored mini iPad appears, I think you will see this form factor that sits between the existing iPad as we know it and the iPhone as we know it, I think that will be really something that will have a direct impact. I think there’s no question that we’re seeing tablet commerce, if you want to call it that, really take off. Of course, I’m just like anybody else, if I finally get a chance and sit down and relax on the couch, am I sitting there watching TV? No. The TV is on in the background while I’m banging away on the iPad. So I think getting that shopper off the couch and off the iPhone, and off the iPad, that’ll be something, that’ll be interesting. So, I think that’ll be something fun to watch to see what that form factor has to do with it. I think the other thing that we have to look at is, again you see a lot of the hype around big data these days and I think that’s fine in all, I think personalization is probably about the only other technology cycle other than mobile that’s had more fits and start but again it is now is pretty real and you know you are seeing more of the personalization companies look at big data. But what I like to call this the trend… I think it’ll be interesting the big data for a little guy. So big data isn’t new, there’s always been extremely powerful BI solutions out there and a lot of big leading retailers have invested for years in that. I think that the input side having more people comfortable sharing data, whether that’s sharing location data or sharing more and more personalized information. You know you run in to some of the privacy folks there but I think you’re going to see more people get comfortable sharing this data and the more and more data that gets shared, you’re going to find more and more predictive commerce, if you will, or brand able to better anticipate the customer needs and this proactive selling effort will feel much more like a service than some sort of ad and marketing promotion or a pitch or something like that. You know, again, the privacy people, they have a business to run is the bottom line and they are going to continue to try to make their business go. But I think you’re going to find more and more people, and this is when I said people we’re talking about global shoppers, feeling more secure shopping online from their mobile devices, they’ll be giving up more and more data and so there will be an opportunity for big data to really help retailers of all sizes, instead of the big guys who have predominantly invested in and benefited from business intelligence as we’ve known it. So yeah, I really do think that the next form factor for mobile is going to be what’s different next year and then I think this idea is big data for the little guys will be big as well.

Shaun: [17:45] Yes and lots of interesting stuff there too, I think the big data for the little guys obviously that’s where the cloud comes into its own, as well, where a lot of the service can be delivered via the cloud so the little guys don’t have to have the same sort of infrastructure that previously you would have required to get that functionality you get from big data analysis. On the mobile, it is going to be really interesting to see how the form factor changes and a lot of that is driven by Apple at the moment but obviously Google has brought out its mid-size tablet which could be leading the way, regardless of what Apple does. A lot of opportunities there. Just moving onto the other topic you brought up, you talked about global and how you often lead with that. Could you talk more about the global opportunities you’re seeing?

Kent: [18:36] Yeah, I mean we probably, and by “we” I mean I do work with a handful of other independent analysts, who’ve done a lot of work over recent years with Jim Okamura and Maris Daugherty that are ex-JC Williams folks that are now with Okamura Consulting and we felt, about 4 or 5 years ago, you know, part of our job is to look at what’s next and while certainly user generated was kind of maturing into social media, don’t know if maturing is the right word, I’m not sure it is, we really wouldn’t say, hey, we’ve got to step back and look at the global transformation  of retail and where e- commerce is going to fit into that, and at that time it was very difficult for international online shoppers to buy, even from the biggest brands that are steeped in best practice, if you will, like Macy’s and things like that, it was hard for them to buy across border. I mean it was kind of ironic after we spent much of the last 10 years talking about and investing literally millions if not 100s of millions in improving the customer experience online, but to be honest, that was just for US customers, the online experience, the online shopping experience was pretty tough for anyone outside the US who was trying to buy from US sites. So we’ve started doing some work there and we’ve continued to evangelize international opportunity which we kind of talked about and from a very high level framework we talk about the passive stage which we’re kind of still in and moving out of but that’s just the idea that the US e-commerce sites don’t really do much, they will accept an international order though, they won’t put much time and effort in to improving that shopping. But if you work hard enough, you know, they’ll try to get you something and by the way you’re going to spend a whole lot of money on shipping and you might not be able to track it. So that passive stage is just the idea that, yeah, we’ll capture orders but it’s not a high priority. The good news is most of the leading brands and lot of small and medium sized brands are now kind of what we call more in this participatory stage which is the stage that comes after the passive stage but comes before what we called the active stage which is much more of a traditional, all in that landed retail operation from different countries, again, we’re seeing some folks move into that stage. But this participatory stage, really acknowledges the fact that they are a new breed of very valued intermediaries  that are providing international solutions. And I’ve worked with a lot of these guys, certainly 51 is the leader in this space. I write a lot for Pitney Bowes Global E-Commerce, there are a lot of logistics companies that are singling specialists, that they’re doing a great job at driving down the cost of international shipping. Guys like Access out in Provo, Utah, and I’ve worked with some folks that are really focused down in Central Latin America, I know Border Jump’s one, Global Shop… a bunch of guys are out there that are making it a lot easier for brands and especially mid-market and small and medium sized ecommerce brands whether they’re pure players or not, really make that online shopping experience a lot better, and I think what we’re really seeing at this point is a lot of the retailers that have gotten in and made a commitment to international, they’re moving beyond this, kind of, okay let’s make sure we can deliver this order. So they’re really focused on driving down shipping cost right now. But I think what’s really interesting and what’s going to really be the next driver of retail growth is this focus on, okay we’re pretty comfortable accepting international orders and fulfilling international orders now it’s time to scale this baby. Let’s start doing more international marketing and international demand generation and that’s really something we’ve just started to see in the last 6 to 8 months, you know a year for some of the more advanced guys. Certainly you look at an eBay and an Amazon and those guys have made the case that ecommerce is a global play and a lot of the leading brands now in the US that have been committed to international for 3 or 4 years are finding a lot of opportunity. But at the same time when we do these studies we talk to senior executives and we’re like ‘what’s the number one reason that you’re not investing internationally’  and they’re like ‘well you know, you know people talk about the maturing of the e-commerce market in the US and you know we don’t see it we still got a huge opportunity in the US. We’re still struggling to get as many resources as we think we need for the US market. So it’s hard prioritize other markets when we still don’t feel like we’ve optimized our home market.’ The interesting thing, and this is just something that we’re starting to see now, is that that mentality is starting to change a little bit more and it’s really because we’ve seen a lot of international brands come into the US market – the US ecommerce market – which was something that most ecommerce SVPs would have told you wasn’t going to happen 3 or 4 years ago when we talked to them. But it is happening now, and again it goes back to the whole cloud technology is a lot cheaper and easier for small companies to get up and going. So we’re almost starting to see the US brands go international now and it’s almost like your best defense of your home market is a good offense in other markets. So I think we’re starting to see that. And Shaun I know you guys are looking at Brazil and have obviously been a global company from day 1.

Shaun: [24:01] Yes. Yes. And, I think this could be a topic for a whole podcast, or several podcasts, there are so many different aspects to it both with the US retailers, shipping internationally  or marketing internationally,  and with international retailers looking at the US as a great opportunity, and I know amongst our client base we’re seeing a lot of our US based retailers are shipping internationally,  we are seeing them having international versions of their site – they’ll have a UK version and Australian version. What I’m seeing UK based companies, who have US versions of the websites and also different versions for different European countries, they’re putting them into different languages and are starting to scout out the marketing. So there’s a lot of opportunities – a lot of work there. Obviously a lot of business happens outside of the US so it’s, for US retailers, it’s a matter of deciding when does it makes sense to start investing on this and when am I going to get the biggest bang for my buck? Should I be further optimizing my US site or should I be starting to look at these international opportunities.  Personally I’m amazed when I see my wife buy something from a UK site and get free shipping to New Zealand and that’s right around the world, and if a UK site can get free shipping to the other side of the world, that’s the way things are going. It’s obviously quite a feat to do that sort of thing.

Kent: [25:32] Yeah. Absolutely. This whole lowering of the boarders, when comes to international retail, is something that I think where’re going to continue to see more of. I mean on the one hand you’ve got a country like Brazil where you know the boarders are very challenging, and it’s very expensive to get product in there, but that’s not stopping anyone. And it’s interesting Shaun, your wife and the free shipping piece, I think what we’re going to start is you’re going to start seeing more and more global staging of product, you’re going to see a lot of manufacture/drop ship direct and things like that and none of that is going to necessarily be called out, it’s just going to be this, this kind of a chic UK online boutique that I just bought something from and, oh my god, I got a free shipping. So in your mind you know, somebody’s putting it on the Mayflower and moving it across the oceans or something like that. But you know what’s really happening is that product could be fulfilled 200 yards away from where you are. In fact that’s one of my favorite stories from half dozen or so studies that we’ve done on international recently. I was talking to this small guy, we were  looking at eBay power seller for the study, so this small guy, his company was glasses and goggles or something like that and he’s talking about this order that he got in from this province in China that was like $100 sunglasses, the guy paid, $80 to have them shipped overnight or something like that – so that’s almost a $200 order. It turned out the guy that he was shipping them to was about a mile and a half from the warehouse and in this province of China which like 90% of the optical ware in the world is produced and so here he was, his stuff was coming all the way across and turned around being shipped right back to this guy. I won’t say what the guy probably paid for it but it was certainly nowhere near with the Chinese shopper got it for. So, oh yeah it’s just really fascinating and I think the other element of the whole cross boarder and international expansion piece is that is not just a B2C issue, it’s definitely all sorts of business to business type online transactions going on. In fact that’s probably the other big trend that we’re keeping an eye on is what I’m calling, I hate to call things, you know 2.0 and 3.0 these days but we are kind of calling consumerism 2.0 and this is the idea that a lot of transformation  that we’ve seen in the retail sector of the last 10 to 12 years, a lot of it, at least in our minds, has been driven by digital and commerce and things like that. You’re starting to see that same buying mentality go across all sorts of different verticals. So you know it essentially boils down to small and medium size businesses all around the world and you know corporate buyers at these companies, they want to buy and sell stuff as easy as they can on Amazon.com, and so they’re starting to go to these industrial suppliers and all these other kind of business to business trading partners and they’re saying, can’t we do this a lot of easier? Can’t I buy stuff on my iPhones from a mountain somewhere where I am off on vacation with my family or something like that? Let’s lower some of these traditional kind of boundaries so I think that’s a big mega trend, and you know the reality is a lot of the solution providers in the whole ecommerce space has some huge opportunities to work outside of retail. But again it’s important to focus, but back to you other point about when do I focus on optimizing my existing e-commerce site versus going international. It’s a great question because I’d say the last trend that I’d like to remind people, is it’s an important trend, you can call it e-commerce optimization, you can call it focus on the basics or back to the basic movements. I saw this first probably 5 or 6 years ago with user generated content, essentially, ratings and reviews. It was really kind of the first part, 2.0 scene that really got lags.  I think a lot of some of the other stuff that second life and all has just kind of fallen to the way side. But I do remember when there was this hype over user generated content but there’s also, 8 months in to that cycle there was this big push, back to the basics. Do you know how many people are still dropping off to the shopping cart? Do you know how your site search could be better? Do you know how much smarter your email marketing strategies could be? It’s just really focusing on what works and making sure that it’s tuned, you know, to 11 if you will. I think that makes a whole lot of sense, and again I tried to remind people that are getting distracted by all the shiny balls, and probably Pinterest is the shiniest of the shiny these days. And while there’s a lot there, there’s often a lot to be said for making sure that you’re focusing enough time on making your site easy to navigate, making site search intuitive, any and all that stuff that you guys live and breathe. Shaun, I mean I would argue that you guys are probably one of the best companies that focus people on what really matters when it comes down to conversion and you know it’s really that focus on what works and at the same time there’s all sorts of new enhancements  and new ways to merchandise your site and do site search and things like that. Just kind of keeping that focus on optimization. I would, you know, as much as I like to evangelize the international opportunity, get your basics right regardless of whether the shoppers are coming from the US or other parts of the world.

Shaun: [31:03] Yes I agree with you, you definitely have to get your basics right, but at the same time you’ve got to look at what these other opportunities are, and I suppose for a  lot of the conferences and the publications of the industry, they do focus on the shiny, and by definition it’s news, but you do have to get those basics right. And Kent, I think we probably need to wrap up there, we’re just about hitting our time. We’ve touched on a whole host of things during this conversation from mobile, to big data, to global opportunities, to getting the basics right and a lot of really good stuff there, so Kent, I just want to thank you very much for your time today and I appreciate hearing you speak on the trends in e-commerce.

Kent: [31:44] Well thanks for having me in, it’s always great to spend time with anybody in the industry and you guys have done a great job of really understanding  the importance of getting a message out there, just really providing the information and experience for people. So, yeah, keep up the good work with the podcast and all the other good things you guys are doing.

Shaun: [32:09] Will do. Thank you very much and that was Kent Allen from The Research Trust, and I am Shaun Ryan from SLI Systems and that is another Ecommerce Podcast. Tune in next time.

[32:38]