Brian Walker from Forrester – Podcast Transcript

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Shaun Ryan: [0:02] Hi. I’m Shaun Ryan from SLI Systems, and this is the e-commerce podcast. Today I’m talking to Brian Walker, an analyst from Forrestor. Hi, Brian.

Brian Walker: [0:10] Hello, Shaun. It’s great to be with you.

Shaun: [0:13] Great. Thanks very much. So, Brian, traditional first question, what’s the first thing you ever bought online?

Brian: [0:19] Well, let’s see. It’s kind of a head scratcher. I have to really think back. I think that seeing that I’ve always enjoyed music, I think the first thing I purchased was probably a hard-to-find CD from a band called Drudy Column, and I think I bought it from CD Hall back in the day.

Shaun: [0:38] Right. And when would that have been do you think?

Brian: [0:41] Probably about 1995.

Shaun: [0:44] OK. That’s a while ago.

[0:46] [laughter]

Shaun: [0:48] What sort of music is that?

Brian: [0:51] That is I guess you would call it New Wave Guitar Instrumental.

Shaun: [1:01] OK.

Brian: [1:01] It’s very good. You should check it out.

Shaun: [1:04] Is it still hard to find or can you get it on iTunes now?

Brian: [1:07] I bet you can find it on iTunes.

Shaun: [1:09] Yeah. And what was your most recent purchase?

Brian: [1:14] Well, you may have heard that we’re having a little election taking place in this country, so I don’t know if you could really call it a purchase, but I have been making a donation or two to our Presidential campaigns.

Shaun: [1:25] OK. Very cool. So, Brian, can you give me some background on yourself?

Brian: [1:32] Well, I’m a senior analyst for Forrestor Research, and Forrestor is a global research company. It’s focused on making business and technology leaders successful. We’re role focused, so we focus on individual roles within those different organizations, and we do that by providing forward-looking research analysis and consulting to our clients.

[1:54] My coverage area is focused on what I like to call e-commerce enabling technology and web operations, and I look at that from the e-business and e-commerce leader perspective.

[2:04] So, I talk to many leading and emerging businesses using the web to drive their business, as well as the technology and services companies that serve them. It’s a lot of fun.

Shaun: [2:16] Yeah. It’s fascinating. I’m sure you’ll have some fascinating experience that our listeners will be very interested in. Now, what’s your history? What did you do before you were at Forrestor?

Brian: [2:26] Well, I had the good fortune to be based in Seattle, Washington, and I ended up at Forrestor because I ran out of companies in the Seattle area to work for.

[2:35] [laughter]

Brian: [2:37] My background really goes back to being a part of the team that started, but I’ve also spent time at Classmates Online, Amazon, and Expedia over the last number of years, and I joined Forrestor about six months ago.

[2:53] My time working with e-commerce has been focused on both technology and leadership roles within those companies.

Shaun: [3:02] Great. Now, someone who’s running an e-commerce site who’s interested in your services, how would they use them and what sort of benefit would they expect to see from the Forrestor services?

Brian: [3:12] Well, our research is focused on a few different things that I believe our e-commerce businesses can benefit from. First of all, research and best practices – what is working and why. How our organizations are set up, the technologies and different tactics that are being used within those organizations. What’s working and why.

[3:38] For example, a recent report I did was on how to pitch e-commerce platforming and building a business model for that. So doing research in what’s working within different organizations.

[3:47] Another thing we do and I spend a lot of time on is technology and service evaluations. For example, I’m working on an e-commerce platform wave right now where we compare the different offerings from the leading e-commerce platform providers in the market.

[4:03] Another point would be consumer research and insights. For example, we have a technographics product, which is consumer research. We surveyed 225,000 consumers world-wide. Apparently it was the second largest survey, outside the U.S. Census, and we got a lot of insights into how consumers are using technology and what they’re doing with it.

[4:29] And then I guess the fourth point would be consulting, where we get to deep-dive into client’s goals, challenges, and strategies, and help them solve problems and define strategy.

Shaun: [4:39] So, is it normally larger companies that are using your services or do you find that small to medium e-commerce operators also use your services?

Brian: [4:49] It’s both. We have 2500 different companies using us, and about 20% of those are billion dollar plus companies, but I work with a lot of smaller companies as well, and I know that from working with them, I believe they’re getting a lot of value out of the service.

[5:06] We’re predominately focused in North America with our client base, but about 20% of our clients are outside of North America.

Shaun: [5:15] OK, great. You said a lot of interesting things in those points you raised. I suppose in the e-commerce platforms, just to drill into that one, from my experience, there seems to be a huge variety of them.

[5:29] And it must be an extremely difficult process evaluating the different offerings and trying to work out what is the best fit for a particular company. Do you have some sort of comments on who the leading platforms are or the types of issues people see when they’re selecting an e-commerce platform?

Brian: [5:48] Yeah. I think there are a variety of different models in the market today, everything from companies providing full-service offerings to companies providing traditional licensed software applications to run e-commerce to core service vendors doing on-demand services.

[6:08] Depending on a company’s core competencies, what they are good at, what they are focused at, what their skills sets are, and what their technology environment and capabilities are, that’s really what we focus on as we try to drive into what is the right fit. What are the two or three or four solutions in the market that are appropriate for me to evaluate, based on the kind of products they sell and the markets they are selling in?

[6:39] So, it is a pretty confusing landscape for buyers out there, and when you combine the emerging players, both primarily in the United States and Europe, into that equation, it can be a very confusing landscape to navigate.

Shaun: [6:55] Yeah, and what are some of the trends you’re seeing in e-commerce in the last 12 months or so?

Brian: [7:05] I think, from a trends perspective, we really have to focus in on a couple of key things. First of all, e-commerce, in some ways, is actually picking up steam, even as the economy turned sour in some more traditional channels.

[7:24] Companies relying on traditional retail distributions, such as retailers or brands who sell to those retailers, are actually turning to the web as one of the few opportunities or bright spots within their businesses.

[7:37] So, ironically in some cases, you would say that even though the overall economy is a bit challenged, the research that we’ve done lately has shown that many e-commerce operators and the technology providers that serve them are seeing pretty healthy business. So that’s one key thing.

[7:58] We’ll have to continue to watch how the economy shifts and changes, as it have quite a bit lately, to see if that remains true.

[8:07] And I think the other most significant macro trend is really the shirt, a focus on acquisition to a focus on retention. In the past, you start an ecommerce business, you’re really focused on driving new customers through the home page, so to speak, through the front door.

[8:28] But I think now, in part because of the economy, and part because of the maturing of the channel, we’re really seeing a focus on retention, and so technologies and best practices, and tactics that retain and satisfy customers, instead of just bringing them in the door, are gaining prominence.

[8:47] Just a couple of examples would be things like product reviews, product recommendations, alternative payments, and things of that nature.

Shaun: [8:53] Right, and I was just going to ask you for some examples on the tactics. The product reviews, as something you’re seeing, why does that work as a retention mechanism?

Brian: [9:03] Well, essentially what you’re doing is you’re helping the customer make better buying decisions, and to buy with more confidence, and see your site as a source of information, not just a place to transaction.

[9:19] By the way, that’s not the only way to do that. We certainly advocate that sites focus on product content to an increasing degree, much more so than they probably have in the past.

[9:33] But, product reviews are an additional way of helping customers learn about the product and making the right buying decisions. So in that respect, it’s connected to customer satisfaction and customer education. So in that respect, connections are essential.

Shaun: [9:51] I mean, that makes a lot of sense. We definitely see it across our customers that the majority of them, if they haven’t already got reviews, they’re looking at putting them in, or planning to in the next little while.

[10:05] Do you find that customers are normally using a third party to implement those reviews, from the technology point of view, or are they building something themselves?

Brian: [10:19] Well, from a technology point of view, from my perspective anyway, it’s not exactly a big hurdle to create an application to collect and serve product reviews. Where I think the real trick is and where I think one of the reasons why you see prevalence in third party applications blossoming here is on the moderation, and the services component that needs to go into reviews.

[10:49] So, you know the ability to screen and flag and moderate those reviews, and kind of keep them under control, so to speak. That said, there’s also time to market concerns. So, that’s another reason why third party applications have really grown in prominence in that area.

Shaun: [11:10] So, it can be quicker to get reviews on your site if you use a third party rather than try and develop something yourselves. And the moderation point is an interesting one, because one of the attractive things about reviews is it’s your users that are adding content to your product pages, I suppose, so they’re doing the work.

[11:30] When you embark on adding reviews, you don’t necessarily think of all the work that has to then go on and doing the moderation. So, that’s an interesting point.

Brian: [11:40] Yeah, I think, that’s something people need to be aware of, absolutely. And different brands are going to have different sensitivities and things like that. But, you want to make sure there are obviously not things like profanity. That you don’t have things ranting and raving through that channel, or serving up non-relevant content.

[12:02] For example, they might be complaining about a customer service experience for a product review, and you want to make sure you’re screening those out. I would not recommend that companies try to screen out negative reviews, only because that’s an important reason why a consumer would value them and trust them, so you obviously want to be very careful there.

Shaun: [12:24] Yes, you trust the reviews more if you see some negative ones in there.

Brian: [12:30] Well, I think businesses also need to, and just one final point on that, I just think also businesses need to be considerate of the fact that it reduces returns if customers know there’s a problem with the product.

Shaun: [12:41] Yeah.

Brian: [12:41] Because there’s no hiding from the fact that there’s a problem if there is one.

Shaun: [12:45] They’re going into it with their eyes open.

Brian: [12:48] Right.

Shaun: [12:54] Just to drill into the point you touched on a little bit earlier about the economy, there’s been talk of a recession all year, and then in the last few weeks, obviously, a recession is looking very likely, if not, you know, there’s definitely going to be one.

[13:13] So, what’s your opinion? How is this going to impact on ecommerce in your opinion? Is it going to slow the growth rate down from what we would have had?

Brian: [13:24] Well, I think that all of us are wondering what’s going to happen and I don’t know that anyone knows the answer. I’ve been spending a lot of time talking with retailers and technology providers about what’s been happening, and I referenced that a little bit earlier.

[13:44] Also we’ve been doing some work researching the consumer, and what we can gauge in terms of what will the consumer online is going to do. And my colleague Saturina just released a holiday forecast just earlier this week, in fact. And in that forecast, we’re forecasting as 12% growth over the last year in holiday sales online.

[14:09] So, you know, we’re still seeing growth. It is less than what it would have been, no question, but compared to other channels, you know, that’s still very healthy. Now it’s going to vary by product category, certainly. There’s going to be certain categories that will suffer more than others, and others that might benefit, in large part due to price points and factors.

[14:37] But, you know, we do expect consumer spending online to remain very healthy. In talking with many ecommerce retailers very, very recently, many of them are saying they are on plan and are experiencing fairly healthy business, even if their core businesses are really challenged.

[14:57] So, at least for now, we’re expecting things to be pretty stable and in a healthy state for ecommerce retailers, and for the companies that serve those markets, but it’s obviously hard to predict exactly what will happen.

Shaun: [15:12] Yeah, I mean, 12% growth is going to look great compared to what’s happening in traditional retail, or what may happen.

Brian: [15:20] Yeah, and obviously one other point, if a company is kind of new to this channel, and has not been online for all that long, or has a relatively immature online business, they might see north of that versus a company that’s really mature and developed a very strong business where they might expect more modest growth.

Shaun: [15:41] And just for comparison, what sort of growth did we see in the previous year?

Brian: [15:47] Honestly, I’d have to go back and look. I think we were in the 17, 18% range but I hope your listeners will give me some slack if I’ve got that number wrong.

Shaun: [15:56] [laughs] Yes that sounds right to me. I think it was somewhere around that depending at whose data you’re looking at.

Brian: [16:05] Yes.

Shaun: [16:06] Now, I suppose something that I hope will be of interest is what do you think is one of the most sort of cost effective changes that an online retailer could make to their site that can give them a good return on their money?

Brian: [16:24] Well, you know honestly I think that sort of where money gets money kind of leaks out so to speak. Where I think there’s a big bang for the buck is really focused on usability in key places on your site. How your product pages are constructed, how your search results are organized. Do you have I guess a login or not? Are you requiring registration? If so stop. Is check out process smooth and clean? Is the error handling clear and effective?

[17:03] Many of these kinds of changes are relatively light weight. Some of them you may even be able to effect before holiday of this year. I would recommend that if you have problems or if you’re unsure find out if you do through testing and through other means. You want to make sure that you’re addressing those things. Those are probably your most cost effective, biggest bang for the buck changes.

[17:29] Beyond that you’re starting to look at larger project that will require some investment. That could certainly, if you’re looking at SaaS hosted solution and the recommendations, reviews type spaces you might be able to do something for relatively small cost that could show some real benefit.

Shaun: [17:50] OK, that sounds like great advice. I can see some of those usability [inaudible 17:55] are going to be relatively inexpensive to do and can give you a huge improvement in your conversion rates which then means your advertising’s more effective. Your whole site’s more effective.

Brian: [18:05] Exactly.

Shaun: [18:07] Now you mentioned SaaS. Are you seeing an increase in the vendors that are selling to e-commerce sites? Selling via SaaS?

Brian: [18:19] Absolutely and I think it’s both a combination of the newer players who are coming into the market are going to be SaaS oriented largely. Also a company that sold in a more traditional license type model are developing a SaaS based solutions to compliment their licensed products. Providing choice to their clients in terms of what’s going to work best for their business.

[18:47] I think that e-commerce in some ways I believe is kind of at the forefront of this because are kind of over the hurdle. We’ve got many examples of successful companies providing services through SaaS both client side and server side. I think we’re kind of past the point of concern.

Shaun: [19:09] Yes.

Brian: [19:10] It doesn’t mean there isn’t challenges. Doesn’t mean there won’t be some things to overcome and certainly there are companies who for very legitimate reasons don’t believe it’s right for them but I think we will continue to see that trend.

[19:24] I actually think the economy and what’s it’s doing to people’s equations are at risk as well as their capital that they have to use, their budgets are on capital expenditures, I think that will also accelerate the trend towards SaaS.

Shaun: [19:42] Yes, that makes a lot of sense. Now tell me is there a site that you particularly admire?

Brian: [19:51] Well, I don’t know if you’d really call it a site per say but I really believe that iTunes is an example of a web based application that has really fundamentally changed consumer behavior. I know that’s true in me and my family’s case how we consume audio content and video content. Even this podcast I think, is an example of something that while iTunes didn’t necessarily invent the form I think by providing an easy way for many consumers to consume it has really accelerated and proliferated so to speak podcasting.

[20:30] For me it’s, I don’t know if you really call it a site but I think it represents something that has really significantly changed how products are purchased and used. They’re not the only example out there in their market but I think that that’s a great example for me.

Shaun: [20:52] You know I agree. I’m a big fan of it and you just… it’s hard to think what’d it be like before iTunes.

Brian: [21:01] [laughs] Indeed, indeed. I watch what I watch mad men.

Shaun: [21:10] I suppose another particularly interesting thing is what do you see are the biggest headaches that your customers have at the moment, the clients, the e-commerce sites?

Brian: [21:24] Well, you know I think a persisting headache for the e-business or e-commerce leader continues to just be getting by and putting their broader organizations. Although we talked during this conversation about how that might be changing in part because of the economy, I think it remains. I think the bigger the company is, the bigger the challenge is. The remaining path to resistance to e-commerce and the web and many organizations that channel conflict, protecting business and I think an e-commerce leader is continuously facing that challenge as they try to mature this channel.

Shaun: [22:06] Yes, and I think I’ve seen that with some of our customers. Particularly with the online as a separate business unit and that may be helping to drive and store sales or sales for the catalog and that can struggle to get recognition for those for the benefit that they bring to the other channels.

[22:33] That can cause all sorts of problems in terms of helping to justify various improvements that they’re trying to make.

Brian: [22:40] Exactly.

Shaun: [22:41] Well Brian, I would just like to thank you very much for your time. It’s been very interesting and I’m sure our listeners will have gained some fairly broad tidbits from your time today so thank you.

Brian: [22:54] Well thank you very much, I really enjoyed it. I invite all the listeners to ping me on twitter or LinkedIn. I’d be happy to connect.

Shaun: [23:02] OK so what is your twitter address?

Brian: [23:06] Boy that’s a great question.

[23:08] [laughter]

[23:10] I think it’s briankwalker, all one word.

Shaun: [23:12] OK I’ll be sure to get that off you and include it in the show notes.

Brian: [23:16] OK terrific.

Shaun: [23:17] OK thank you very much Brian.

Brian: [23:19] My pleasure.

Shaun: [23:19] That was Brian Walker, senior analyst at Forrester Research. I’m Shaun Ryan from SLI Systems. Tune in next time for the e-commerce podcast.