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Shaun Ryan: [0:02] Hi, I’m Shaun Ryan from SLI Systems and this is the Ecommerce Podcast. Today, I am talking to Jack Love, CEO and President of Vertical Web Media. Hi, Jack.

Jack Love: [0:11] Hi, Shaun. How are you?

Shaun: [0:12] Very good. Thanks. Thanks for coming on.

Jack: [0:13] Just to start off, most people would know us not by Vertical Web Media, but by our brand name, which is Internet Retailer.

Shaun: [0:21] Yes, thank you. And Jack, traditional first question, what’s the first thing you ever bought online?

Jack: [0:29] God, I think – I’m having trouble remembering that. I know it was about 10 years ago. I think it was a book from Amazon, I’m pretty sure. But I honestly can’t remember the name of the book, but I’m a book buyer. So, it was from Amazon I do know that.

Shaun: [0:45] Yeah, now that’s a very common answer. Now, what was your most recent purchase?

Jack: [0:50] Well, I bought a couple last week. I bought a pair jeans for my wife from lee.com. She had gotten a pair of jeans that she loved and she wanted to get another pair and could no longer find it in the store, so I just went online at lee.com and bought the jeans for her.

[1:11] And then I also bought a Civil War series, I don’t know if you remember The Civil War series on PBS by Ken Burns. It was a terrific series. With all the Lincoln stuff that went on with his 200th anniversary of his birth, I just remembered that series, so I bought it on Amazon. It’s a DVD set that I bought.

[1:39] Both are good examples of why online is so convenient. Here my wife had a perfect pair of jeans, she wanted to get it, couldn’t find it in stores, and I just went to the manufacturer online and bought it, no problem. And the other thing is, there is no place you are going to find in stores a PBS TV series on The Civil War that aired probably I think almost 20 years ago and easy online at of course where else, Amazon.com. So, perfect examples of how e-retailing has changed the whole nature of retailing by making it so convenient.

Shaun: [2:22] Yeah and catering to that long tail where someone’s got an unusual thing they want to buy and they couldn’t find it and purchase it.

Jack: [2:29] Right. And also size, I mean size. The problem that store-based retailers are having today is they are cutting back on inventory of everything because it costs to keep so much inventory in all their local stores around the country. As they cut back on inventory, people can’t find what they want in terms of color and size and style. So, they go online to find it, where it’s easy to find because it is stored in one central place.

Shaun: [3:04] Yeah.

Jack: [3:04] So, it’s more convenient and it’s hassle free.

Shaun: [3:10] Yep, I’m a believer. Now, Jack, can you give me a little bit of background on yourself?

Jack: [3:17] Well, I’m a publisher, but I came up to publishing as a writer. I was a journalist for many years. For about first 20 years in my career, I was a journalist and was a senior editor of BusinessWeek for about 14, 15 years before I started my own publishing company.

[3:40] So, I came up through the ranks of being a journalist and in the early ’80s I got the entrepreneurship. Then I started my newsletter on electronic banking and one thing led to another and I formed a number of publishing companies. This is my third. I think I had small ones; I built one up to about a 100 million and sold and then this last one is, I started in 2000 and it was on e-retailing. And we started the first magazine in e-retailing called Internet Retailer and so, this is my third one at publishing.

Shaun: [4:28] Great. So, tell me about Internet Retailer. It’s primarily the magazine, but you also have the conference?

Jack: [4:34] No, it’s really not primarily the magazine any longer, the magazine is certainly still the flagship. We started the magazine 10 years ago. In fact we started it 10 years ago next month. The March issue is our 10th anniversary issue. So, we started the magazine then and then it got led to an email newsletter called IRNewsLink which is now a daily newsletter.

[5:06] We have a website which is the number one website in all of the e-commerce. It gets about 260,000 unique visitors every month. And then we have two conferences now and we publish for directories, all related to e-retailing and e-commerce. So, we are pretty broad based. The magazine contributes about 30, maybe about a third of our revenues today, but it’s pretty diversified. But all related to one topic and that’s providing retailers and manufacturers with information on how to succeed in selling their products on the web.

Shaun: [5:54] Right. I’m very familiar with it, I read the newsletter everyday and we advertise there are as well.

Jack: [6:03] Yes, I know you do that. Thank you very much.

Shaun: [6:06] It’s a great place.

Jack: [6:08] And I must say of course we use your solutions as well on our website in terms of site search solution, which has been an amazing solution for us on the web.

Shaun: [6:21] That’s great to hear. Now tell me a little bit about the conference, you’ve just had the Miami conference.

Jack: [6:31] We had the Miami conference on website design. It was a successful conference, but it’s a niche conference, only oriented to people who design retail websites. So, it’s a smaller conference. The big conference that we have is the Internet Retailer Conference and Exhibition, or IRCE. And that’s held every June and we will hold the 5th Annual IRCE in June 15th through 18th at the Boston Convention and Exhibition Center.

[7:09] And it’s the largest show in e-retailing, that’s larger than all the other e-commerce shows put together in the US. And it has also been recognized now by Tradeshow week as the fastest growing conference and trade show in North America. And there are 13,000 conferences held annually in North America. So to be called the fastest growing of all those is quite an honor.

[7:36] We expect about 5,000 people to show up and last year we had 5,200 and were our goal is always to equal that or exceed it. It’s going to be a tough year to exceed it greatly, but we are actually on track to grow it again this year, which is rather surprising given the economy. But so far registrations are ahead of last year and so are our exhibit sales; 80 percent of the exhibit hall is sold out.

Shaun: [8:07] Yeah, that’s fantastic. I don’t know if we’ve got a spot and we will be there. And that is amazing in this economy because travel budget seem to be one of the things that get caught first and with the conferences we have at the end of this year seem to be down on attendance.

Jack: [8:24] Yeah, they are and it’s still very early for us to predict what level of attendance we are going to be getting. I can only tell you that as I’m tracking this, our attendance year-to-date compared to the same period away from the show last year is up. Now, I kind of knock wood and say prayers if that’s going to continue, but what we’ve done at the show to try to make that happen is we’ve invested in it greatly.

[9:01] We’ve got 178 speakers. That’s up 30 percent from last year. We’ve got 91 separate sessions which is up from last year. We’ve got four tracks instead of three. And again, we’ve got four workshops. So, we’ve invested in building it and the key thing that we’ve tried to do with this year’s show is as the show gets bigger and bigger, it’s hard to relate to the specific needs of individuals who go to it, because it’s so big.

[9:39] So what we have tried to do is to break it down into segments that are small for the people who want some specific type of information or a specific need or aimed to a specific type of merchant, large or small or manufacturer versus retailer or specialty store versus mass merchant.

[10:07] We have tried to really drill down into this whole concept of success in e-retailing and to come up with very practical sessions that are highly targeted, so as we keep the notion that this is still a show that can be directed to individuals. And we don’t try to go for a mass audience.

[10:35] We get a mass audience by aiming our sessions to a very targeted audience, so that there is a lot of things that people can pick and choose from as they come to this show. So we have really worked hard this year at the agenda to do that because we want to make sure that as we get large, we don’t become irrelevant to people.

Shaun: [11:01] Yeah, you obviously are putting a lot of effort into that and this show appeals to all sizes of online retailers?

Jack: [11:08] Yeah, it does and it appeals to all sizes and all types, but about a third of people who attend the show come from large retailers; I would say from 100 million and up and above, about a third come from mid-size retailers, anywhere from 10 to 100 million or thereabouts and then about a third come from small retailers and that’s about people who are under 10 million.

[11:42] And this year we expect to get quite a few I think small merchants. eBay is not doing their show this year and they always attract the smaller online merchants and we have the head of eBay’s North America operations speaking at the show. So you know we think we are positioned to go after those folks as well. So it is well balanced in terms of size of the companies, but it is also well balanced in terms of types.

[12:27] We get about a third of attendees come from store-based chains, about a third come from pure plays or e-retail only, or maybe even about 40 percent, and then a nice collection of people come from manufacturing companies, consumer brand manufacturing companies who are selling direct increasingly using websites to sell direct to people. So it is very diversified. We try to create an umbrella.

Shaun: [12:58] So the summary is if you are an online retailer, this is the show to go to.

Jack: [13:03] Yeah, this is really the event to go to and of course I would say that from a marketing standpoint, but I would also say that as a journalist. I mean people always tell me this is the show to go to and this is the one they attend first and foremost. So our pitch to them is if you are cutting back your travel to just attend one show, this is the one you want to go to.

[13:28] And one of the things we are doing this year also, the theme of this show is “Rising Above – Not Just Surviving – the Economic Storm.” I mean it is clear, no matter what business you are in, as you look out at the horizon, there is a storm that we are in the middle of and this is going to be a very, very difficult year for everyone including online merchants.

[13:57] So the key is learning how to prosper in that. There are some people who learn how to prosper in a recession. I think e-retailers are well positioned to prosper in a recession because in retailing, while retail sales were down slightly last year or really actually up only one percent, the stores are the ones that took the hit. The sales at stores were down substantially. Fourth quarter store sales numbers were down in the fourth quarter; in the US, fourth quarter were down 8.5 percent.

[14:36] E-retailers grew in the fourth quarters and e-retailers grew about 17 percent all of last year and Forrester expects them to grow 11 percent this year, which is remarkable because there is very little in the economy that is growing at that rate. The economy in the United States and most places around the world is actually declining.

[15:00] So this is a good time for e-merchants, but the growth is not going to be easy the way it was. Before all you had to do was put up a website and you would grow, now you have got to be very good at it, you have got to learn, you have got to learn the right tools, you have got to learn the right marketing, you have got to learn the most efficient way of doing search engine marketing for example.

[15:25] It is very costly to do search engine marketing these days because everybody is doing it. When very few people were doing it, it was easy, it was a no-brainer, but now it requires knowledge and expertise. And that’s what we are trying to tell people is you want to be informed on how to operate efficiently online in all phases of your operation, and that’s what this show is geared to this year.

Shaun: [15:56] Fantastic. Now, just moving on. Jack, you obviously as a publisher following trends that are happening in e-commerce, what trends have you seen over the past year?

Jack: [16:09] Well, the biggest overall trend that we have seen this year is a shocking collapse of store based retailing. That’s the first thing. I mean we can talk about e-commerce till we are blue in the face, but we have seen some major chains go under this year – Linens ‘n Things, Circuit City, Mervyn’s, the department store on the west coast; Fortunoff, the department store on the east coast. It has been some major chains that have gone under.

[16:41] And it is like they are avoiding the Chapter 11 reorganization effort, they are going straight to insolvency because they cannot borrow money even to reorganize in a bankruptcy filing. They are just going straight to insolvency. So the first thing, the first trend that we have seen in e-commerce is really the concept that some major store chains have gone under.

[17:13] That creates a huge opportunity for e-commerce, because it means that e-commerce sites, in the case of Circuit City that sell computers and electronic equipment, they have a huge opportunity here because there is a vacuum, all of that store-based sales volume is suddenly gone.

[17:37] Same is true with house wares, when a chain like Linens ‘n Things goes there is a huge potential market for e-retailers to move into. And it is interesting that both the Linens ‘n Things and Circuit City brands are probably going to survive online. Linens ‘n Things has been purchased and Circuit City we reported today, CircuitCity.com, there are people bidding on CircuityCity.com. So I think that is the first thing that you see is that that there is this opportunity.

[18:11] The other thing that we see online is there is a huge disparity these days between growth rates of various online players. Some are growing at impressive rates and Amazon.com amazes me. They grew 30 percent last year, now what retailer can say they grew 30 percent.

[18:39] When I was an editor with BusinessWeek back in the late ’70s, we all marveled at Wal-Mart because I covered Sears and we all covered stories on Sears and Sears at that point was the king of retailing around the world. It was the largest retailer around the world.

[19:04] And we wrote about how this upstart from Arkansas of all places, Wal-Mart was growing at 30 percent a year and Sears was hardly growing at all or growing at single digit numbers. Those numbers compounded 30 percent a year, 30 percent a year, 30 percent a year until Wal-Mart became the super retailer it is – this colossus. Well, Amazon is now putting those compounded growth rates together. And this is a company that really started only in 1995 and, guess what, it is almost a $20 billion company. It hit 19 billion this last year.

Shaun: [19:54] Yeah.

Jack: [19:55] That’s amazing growth record in such a very short period of time. And the point that I am making is Amazon does everything well. Now it is the only e-retailer that does everything well, but the thing that we have seen here as we get into this period of stress in the economy, the e-retailers that really have their act together and know what they are doing and using the latest technology and using the latest best practices are doing much better than other e-retailers. Lots of e-retailers are growing in the single digits today, but the ones who are doing really well are still growing in the 20+ percent range.

[20:49] We have already identified a whole number of them that had outstanding results last year and are still growing looking for good results this year. So it was like a good market lifted all boats, now the seas are a little bit troubled and the guys that are going to do very, very well and there are going to be many of them that will still do well are those who know what they are doing.

[21:20] And so I think that is the biggest single thing and then of course, as I said, the collapse of so many of these store chains, which by the way we think will continue. I think we are going to see — I am not going to mention who — but I think we are going to see some additional big brand names vanish among store chains.

Shaun: [21:44] Thanks very much for those insights, Jack. And I just want to congratulate you again, we attended your first conference when there were I think thousand retailers, you had limited to just that and only 40 exhibitors and it has been phenomenal to see the growth of that.

Jack: [22:04] Yeah, for the first show we had to shut down registration about three weeks before the show. Goodness me, we sold it out. [laughs] We won’t do that this year.

Shaun: [22:14] No. And I mean it was superb and it has been fantastic to see the growth of the Internet Retailer publishing company sort of reflecting the growth of online commerce. And I think one of the things why you are growing and doing so well is, like the best retailers, you are doing things well.

Jack: [22:37] Thank you. One of the things that I think we are also doing to continue to grow – because this is going to be a challenging year for us. I mean last year we had a great year, we were up again 20 percent, our total volume was up 20 percent, our profits were up 24 percent and we have had that kind of growth rate. This year it is not going to be easy to get that type of growth.

[23:01] We are budgeting for that kind of growth, but it is not going to be easy. It is going to be a tougher year and to do it, we are going to have to learn to do things again even better ourselves and keep reinventing ourselves. And one of the things we want to do, for example, is to take more of our information online, so that people can access it via the web.

[23:24] We have a product called the Top 500 Guide, which is a print directory. It is about 450 pages. We call it the bible of e-retailing because it ranks the top 500 e-retailers and profiles them and provides all kinds of metrics on their performance and their marketing and their customer satisfaction and their vendors, who their vendors are. We are putting all of that data into an online database. It has taken us a year to build this thing.

[23:55] And we are going to launch it next month. It is called the Top500Guide.com and people who subscribe to it and we charge $195 to subscribe to this. They will be able to do custom reports, any report that they want to do. If they want to compare health and beauty aid retailers in terms of what their average tickets are, rank them by average ticket or rank them by conversion rate or rank them anyway you want, they will be able to do those custom reports. You want to find out who provides the most search engine marketing for e-retailers who are in the top 100, you can create that on your own report to do that.

[24:44] So it is something our subscribers have been asking us for a long time and it has taken us a long time to put it together because we wanted to do something that didn’t just take the data in the printed guide and make it an online version, we wanted to make it…

Shaun: [25:06] You make a better by being online, right?

Jack: [25:08] Make it better by being online by making it virtually interactive, so that all of this data can now be accessed in a format in a way that you want, and that’s what the difference between print and online when online has done real well. So we are launching this next month and after that we are going to launch another one called — I hope this fall we are going to take our e-commerce technology guide and do the same thing there.

[25:40] So, one of the things that we are trying to do to weather this economic storm is to keep plugging away at new product, keep pushing the envelope on what we can do. I want to look at mobile commerce. I think mobile commerce is the next new thing. I think retailers that are thinking well they don’t need to do it, are going to be surprised five years from now that mobile commerce has really taken off.

[26:14] And you’ve got to learn how to design not only for the big screen, the monitor on your computer or TV, but you have got to be able to design your site for the small screen that fits in everyone’s pocket in the form of the iPhones and the other phones that are all Internet enabled.

Shaun: [26:41] Yeah. That is very interesting and so your advice to retailers is to start to dabble into the mobile sites and mobile commerce sooner rather than later.

Jack: [26:58] Yeah, absolutely. I mean it is sooner than later. This is a period. This strikes me what we are in here, whether you call it a recession or a depression, we won’t know whether it is a depression until about three or four years from now, but fortunes can be made during this period and certainly the leaders in e-commerce are going to be established. The long-term leaders in e-commerce are going to be established during this rough period.

[27:35] And the reason I say that is when things are easy, it is easy for everyone to grow. When things are tough, only the good guys, only the guys who really know what they are doing grow. And that puts pressure on everybody to be better. And the ones who know that and see that and go for the opportunity that’s obviously here.

[28:00] With e-commerce growing and stores not growing, there is an opportunity and everybody is going to flood into to get that opportunity, because it is the only place in retailing where there is any growth, but it is not the type of growth where everyone can succeed. It is the type of growth where only the really well positioned and forward thinking, forward looking and certainly technologically efficient and innovative are going to succeed.

[28:40] And that’s going to be an interesting thing to watch. You got to be willing to take a risk. And if you don’t take a risk at this point in time, you are going to find out that those who did and moved forward are the leaders of the pack.

Shaun: [28:58] Fantastic advice and very useful information for our listeners. So, Jack, I am going to wrap it up there. I just want to say in this podcast, I asked people how they learn about e-commerce and every time they say they go to the Internet Retailer conference; they follow the Internet Retailer newsletter. And so, if anyone listening is not, I recommend you do that. And I just want to thank you for coming onto the podcast today, Jack.

Jack: [29:23] My pleasure, Shaun.

Shaun: [29:24] Thank you very much, Jack. This is Shaun Ryan for the Ecommerce Podcast. Tune in next time. [29:28] [music]