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Shaun Ryan: [00:01] Hi. I’m Shaun Ryan from SLI Systems, and welcome to the fourth episode of the e-commerce podcast. Today we’re talking to Patrick Colletta from PC Universe. I’ve got this question I’ve been asking other people. What’s the first thing you ever bought online?

Patrick Colletta: [00:15] The first thing that I ever bought online was a used copy of Disney’s "Beauty and the Beast" on VHS.

Shaun: [00:25] And when was that?

Patrick: [00:26] It was many years ago. I think prior to the year 2000. It was definitely rare at the time and was a gift for my wife. We both enjoyed the movie and could no longer find it out on tape. I remember it taking about six weeks to deliver, which I thought was absolutely wonderful at the time.

Shaun: [laughs]

Patrick: [00:47] Kind of amazing how times have changed. I get upset now when I don’t get a tracking number within a day of my online purchase, letting alone waiting more than a week for delivery.

Shaun: [00:58] Yeah, I know what you mean. You want that tracking number almost straight away, don’t you?

Patrick: [01:02] Absolutely.

Shaun: [01:04] Well that’s unique. No one else has said "Beauty and the Beast."

Patrick: [laughs]

Shaun: [01:08] Can you give me a little background on yourself? How did you come to be where you are now?

Patrick: [01:12] Well, electronics has always been a hobby and a passion of mine. It originated mostly from the gaming side, way back in the Atari days. And as a result, I guess that made a transition to programming and database management, something that came very easy to me.

[01:34] I enjoy working, building with computers. Any type of college level classes that involved computer engineering was always easy for me. I hated history, but always loved anything with math and science. So it kind of came easy to me, and that’s how I got into working in the IT kind of arena.

[02:02] I’m based right now in Boca Raton, Florida, and spend most of my time these days working less on the day-to-day responsibilities and more time just managing e-commerce business and growth strategy as a whole.

Shaun: [02:15] Cool. So tell me a little bit about PC Universe, how it got started and what you guys do.

Patrick: [02:22] PC Universe has been in business for almost eight years now. I’m sorry, PC Universe was established in 1995, so that makes it about 13 years.

Shaun: [02:35] Wow.

Patrick: [02:35] I’ve been with the company for about eight years. My current role now is Director of E-commerce. We are, right now, considered to be an online value-added reseller. We sell computer-related hardware, software, and technical services. We do not have a physical store at this time.

Shaun: [02:59] You say at this time. Does that mean that you’re contemplating one?

Patrick: [03:05] There could be. We have talked about, on several occasions; a strategic location maybe is possible in the future. Definitely, we don’t have any delusions of grandeur to opening up a national retail chain to compete with the big boys. However, we feel strategic locations and partnerships, in particular a centralized location close to our headquarters, could prove to be a nice venture. So it’s just something that we’re toying around with.

Shaun: [03:38] Yeah, it’s interesting to see when that happens, when an online store can start to have a physical store or stores. Often it’s the other way. It’s a really interesting trend.

Patrick: [03:51] Yeah, I think the only way that you can really be successful at it these days is to go the opposite of thinking big. You really have to think small when it comes to a retail store. Have a small footprint with high traffic, and maybe a centralized distribution location that can provide inventory and fast delivery.

Shaun: [04:19] Right. So sorry, I interrupted you. You don’t have an online store yet.

Patrick: [04:26] I was just saying that our company was founded in 1995. It’s grown from four founders to over 40 people now.

Shaun: [04:31] Wow.

Patrick: [04:34] We originated as a mail order company that focused on corporate America, and finally decided to take our expertise managing the channel and our corporate relationships and apply that to an online store, which finally was released in 2001. Since then, our online sales and customer base continues to grow year over year, and we continue to put more effort into this e-commerce venture.

Shaun: [04:58] Now you also have a second store, Patriot PC, as well.

Patrick: [04:59] Yes, we do.

Shaun: [04:00] What can you tell me about that?

Patrick: [05:04] Patriot PC is a website that basically stemmed from a contract awarded to PC Universe, specifically to allow us to do business with the Army and Air Force Exchange Service, also known as AAFES. This allows us to cater to military personnel, retired military personnel, and their families.

[05:27] It gets us marketing ability within what’s known as the Mall on the AAFES website, where they direct approved logged in users of the military and provide them with different ways to shop. Patriot PC is very proud to be one of the only resellers on there right now for computer-related products.

[05:53] So it’s a wonderful opportunity to not only try to give back to our country and our military personnel that are serving in all the armed forces, but it’s a wonderful marketing opportunity as well. So it’s a win-win situation.

Shaun: [06:09] So how much do you sell online?

Patrick: [06:11] Right now, our online revenue is just shy of about two million a month.

Shaun: [06:16] And how fast have you grown over the last year?

Patrick: [06:18] We have experienced 22% growth rate over last year.

Shaun: [06:23] So it’s still growing at a reasonable rate.

Patrick: [06:27] Yes, it is still growing. The trend has not grown as fast as previous years, but that can certainly be attributed to larger numbers that we’re doing, which makes the proportionate rate go down, along with the fact that there’s just a lot more competition, and it becomes a very competitive marketplace.

Shaun: [06:46] And how about the general state of the economy? How is that affecting your business at the moment?

Patrick: [06:50] Right now, we’ve still seen month-to-month growth over 2007, which is odd, because we keep hearing from everybody else that business is going down. We’ve certainly heard more from our corporate customers, where we have noticed maybe a delay in projects that they’re working on, or a postponement due to the economy and waiting for budget approvals.

[07:22] So we’ve seen an impact in the corporate business, where we have sales reps working directly with their corporate representatives. But the online business still continues to grow.

Shaun: [07:34] Yeah, that’s impressive. It backs up some of the forecasts that people have been making about online. It’s still forecast to grow this year. I believe there’s a research report that came out estimating it was going to grow 16 to 17%, something like that. So what you’re seeing supports that.

Patrick: [07:52] Yeah, I believe it will grow. I believe that there may be a shift in the type of people that are spending money online. Traditionally over the past few years, it’s been the middle-income families that have spent the majority of the money online.

[08:08] You might see that shift away this year, and people with the higher dollar income families would take care of that responsibility and spend more online this year. At least that’s what I believe.

Shaun: [08:25] Now you talked a little bit about Patriot PC and how you market that. How do you market PC Universe? How do you get new customers to your site?

Patrick: [08:33] PC Universe, we employ all the standard tactics that are out there. We have engaged in a very intense effort to make our site SEO friendly, where we’ve done a lot of investigation of targeting keywords throughout our site, making sure that our site is spider friendly, and that we get indexed properly.

[08:57] We also do search engine marketing. Actually just got into that recently with a partnership with Performics, also known as DoubleClick, recently purchased by Google. We also use the standard email campaigns for customer retention, comparison shopping engines, like PriceGrabber and NexTag, along with revenue sharing partners, like Jellyfish and others to help direct new and existing customers to our site.

Shaun: [09:31] What do you think is the most effective for someone else who’s running an e-commerce site?

Patrick: [09:34] It depends on how you’re going to gauge effectiveness. If you’re going to gauge effectiveness by traffic alone, then SEM and comparison shopping engines have the best ability to drive traffic immediately to you site.

[09:49] If you’re focused too much on traffic, however, you lose sight of profitability, which can be quite dangerous. And if you’re focusing more on a profitability level per customer or per transaction, then the SEO, the search engine optimization and emailing tactics are going to be the best way to keep your overall cost per order down.

Shaun: [10:11] Do you do much to focus on retaining your customers and getting repeat business from them? Is that an important part of your business?

Patrick: [10:19] Absolutely. In the business of reselling IT services and products, we don’t want just that first sale. We want the second sale, the third sale, the fourth sale. Customer loyalty is really the name of the game in this business.

[10:39] If you’re not going to have everything that your customers need on your site in order for them to gain trust, to not only make a purchase, but to come back and remember your site, then you won’t be able to become profitable in this industry.

[10:56] You need to have all of the tools on your site to allow your customers to shop, not just to buy. They need to be able to go to your site, shop, and be able to make an educated decision without, having to leave your site. And if you can retain your customers using those tools and those guidelines, then you’ll get them coming back.

[11:16] They might not make all their purchases at your site for those products, but if you can get just a portion of that and have them keep coming back, then you’ll definitely see a lot of success.

Shaun: [11:24] If you can do that successfully, you get a much better return on investment for your marketing dollar as well.

Patrick: [11:32] Absolutely. I have very strong ties with customer service. I believe we are in business because of our customer, and I want to treat them as best as I can and do whatever I can to not only make the shopping experience the best one they’ve ever had. I want to make buying easy for them.

Shaun: [11:48] That’s a great attitude. Now, do you have an e-commerce site, a competitor, or maybe just another site that you particularly admire and try and replicate some of the things that they do?

Patrick: [11:57] As far as the competition, I’ll just say that I’m sure everybody keeps their eyes on everybody else, no matter how big or how small they are. It’s what I would consider to be due diligence.

Shaun: [12:10] Absolutely.

Patrick: [12:12] It’s very easy to fall behind in this world, when it comes to technologies and trends, with regards to programming, development, and applications. So you must keep your eye on everybody that’s out there and keep your finger on the pulse of the industry.

[12:27] With regards to my competition, there’s not one particular site that I find, or I will mention, does better than the others, because I don’t want to upset any of my peers friends.

Shaun: [laughs]

Patrick: [12:41] I will say that a site that I go to quite often, and mostly because I’m just a huge fan of the NFL, is NFL.com . I admire how fresh their content delivery methods are. News travels extremely fast, and they just have this uncanny ability to keep their website up-to-date with the latest news, along with serving tons of streaming video that loads extremely fast.

[13:07] It’s almost like I’ve got a television at my disposal. I can just watch whatever I want right online. I’m always impressed with the methods that they’re using to deliver fast content.

Shaun: [13:19] Cool. Have you taken any lessons from the way they present this site, and the type of content they have on there, that you’ve been able to translate over to your sites?

Patrick: [13:30] It’s definitely generated some thoughts and ideas with what we can do to accomplish two things. Number one, what methods are out there to help deliver the content faster?

[13:46] And number two, what other content delivery methods are there that can help a user make an educated decision? What do people need? Do they need video? Do they need somebody talking to them as a sales rep would? We’ve always envisioned our website as a virtual sales rep, by intelligently offering products and cross sells and up sells to the end user throughout their shopping experience.

Shaun: [14:14] The technologies that you run on your site, can you tell me what works best for you and what works worst?

Patrick: [14:20] Sure. Our e-commerce platform is custom built from the ground up, which almost makes it the best and worst technology at the same time. It’s great that we can make changes and updates at a short notice, because we’re very comfortable with this application that we designed.

[14:42] But it also means we’re responsible for every little nuance of this application. We don’t offload this effort to third party services. We own our own cart, which can be challenging in some aspects, not being able to offload some of that responsibility.

[15:01] The ultimate best technology that I think we have employed in recent months would be our intelligent cross selling that we have employed throughout our site. Where on any particular product, maybe a larger ticket item, like a printer or a laptop, instead of just listing out a huge list of accessories that could be in the hundreds of items, we are selecting up to five items intelligently to go along with that particular main item, and we’re explaining why we feel these cross sells are important to purchasing.

[15:47] We’re writing custom scripts and custom languages and selling blurbs to help sell these products, just as a sales rep would sell them to the customer if they were in a store. For example, if we’re listing a laptop on our site, and that particular laptop has Bluetooth technology, our system will identify that and cross sell a Bluetooth mouse and explain to the user why using Bluetooth is better than, perhaps let’s say, USB.

Shaun: [16:24] Up selling technology is obviously very important, because you get to increase the average order value. Have you developed this internally, or have you purchased this from someone else?

Patrick: [16:33] This, actually, is a function that is developed outside of PC Universe. So this small piece of our checkout process is one of the only pieces that we are using a third party service for. It’s actually coming from CNET and is readily available for purchase, but they do rely heavily on the data that you provide to them in order to cross sell these items.

[17:03] So it’s a combination of a CNET driven engine, along with smart merchandisers within the company, like PC Universe, to create rules and identify opportunities where shoppers need to have cross sells.

Shaun: [17:20] Oh that sounds great. Is that part of CNET Channel, is it?

Patrick: [17:24] Yes, it is.

Shaun: [17:26] Cool, so what is your a biggest technological headache at the moment or headaches of any sort?

Patrick: [17:31] At the moment, I think our biggest headache is aggregating data and content management. We download numerous price inventory and content files that are used to build our catalog. These files must be aggregated and kept up-to-date and accurate with little or no margin for error on a daily basis.

[17:56] Sometimes we are downloading over a Gig of data every night, just to aggregate our catalog. Then at the same time, we have to take our catalog and create data feeds from marketing opportunities and provide them to as many as 50 different aggregators, like the PriceGrabbers and the NexTag and that also must reflect up to the minute inventory in pricing levels.

[18:20] That type of strain without a very efficient infrastructure or networking architecture can prove to be quite challenging if you do not have the right people and staff to manage that over.

Shaun: [18:33] Now, how many products have in your catalog?

Patrick: [18:36] Our catalog in any given day has about between 250,000-275,000 products.

Shaun: [18:42] Right and a lot of them have a lot of information.

Patrick: [18:45] Any one product can have anywhere from 20 to over 200 attributes.

Shaun: [18:53] Plus you have got images and…

Patrick: [18:56] You have got attributes, plus images, plus marketing, overviews, technical specifications, reviews such that it keeps adding up. And if you do not keep tabs of it every single day, almost every minute, you will wind up of out of date content on your site. And for those of us in this industry, we all know how inventory and pricing can affect revenue and it hurt.

Shaun: [19:24] You said you got 40 people at PC universe, how many of them are on the technical side?

Patrick: [19:27] On the technical side that is assisting us with the e-commerce effort we have nine people.

Shaun: [19:33] OK, so that is good portion of the team.

Patrick: [19:35] Yes, we have four web developers, two database administrators, a project manager, a content engineer, and an e-commerce specialist that helps keep all of the day to day progress on track.

Shaun: [19:49] What are the challenges in attracting and retaining staff?

Patrick: [19:52] Well, that is one of the unique things about PC Universe. I have enjoyed working here for as many years as I have, because the most special quality about our company is the fun, energetic, work environment that we all share. Many of us have worked together for a long time, which makes us a close-knit group, a family if you will. And we really all share the same goals.

[20:19] We want PC universe to be successful. We want our customers to be treated a certain way. And when you have 40 or so people on board sharing that same vision, it makes working fun.

Shaun: [20:31] And that helps keep people there.

Patrick: [20:33] Absolutely, it certainly helps keep people in. And PC Universe does a great job of offering all the benefits and competitive salaries that are in the industry right now. That coupled with a very comfortable, friendly, and productive work environment certainly helps.

Shaun: [20:51] And you are in sunny Florida as well.

Patrick: [20:54] It does not hurt that you can play golf year round. I will say that. [laughing]

Shaun: [21:00] Yes, I can do that. It is just cold in the winter. Now, what are your plans in the coming year? What are the major things coming up for you?

Patrick: [21:08] Well, the major…along. They all focused around that biggest headache. So, we are always looking for a better and faster ways to keep online catalog fresh. We find value in the long tail approach by keeping all of these products available on our site. But ultimately, we continue to focus on the application from a shopping experience level. And always ask ourselves how can we make things easier for the customer. How can we keep our data, more up-to-date, more accurate, and just serve that up as fast as possible.

[21:41] We do that by constantly researching the industry. Like I said doing our due diligence, going to competitors, websites, looking at other websites in the industry that work well at that, like NSL.com does. And partnering with other companies that are investigating what technologies are out there that can assist with that.

Shaun: [22:02] Just on that keeping up with what is happening in the industry, how do you do that apart from looking at your competitor’s sites. Do you go to…I know you go to some conferences; I have seen the Internet Retailer conference. Do you go into that on a couple of week’s time?

Patrick: [22:14] I do not have plans right now only because my wife and I are expecting our third child. So…

Shaun: [22:20] Congratulations!

Patrick: [22:21] Thank you very much. My services these days are required near the home front. As things can pan out, where I can get away for a little bit and I might drop by Internet Retailer next week if I can manage a ticket and accommodation on such short notice.

[22:40] But you really have to keep in touch with conferences like Internet Retailer, Shop.org , things like that. And you have to network with other people in better managing your websites as well. And share ideas and be open about any challenges that you are facing because you never know when a new solution might pop up.

Shaun: [23:05] Finally, how did you found working with SLI? You have been a customer of theirs for…I am not sure how many years but it must be three or four now.

Patrick: [23:11] I have got three or four years, I was going to say, one thing is definite. Working with SLI has been extremely easy. Engineers are responsive to any issues that we have had. They help facilitate new ideas that leverage the power of marketing within the site search.

[23:28] It truly has been a worry-free relationship, which is absolutely key to me in how I conduct business, because it allows me to focus on other improvements within our own application. So it is just one. It is allowing me to take site search out of the equation that I need to follow-up with everyday. I can just set it and forget it. I do not have to worry about it. And we can move on to other site.

Shaun: [23:54] That is great to hear. Now, have you listened to any other e commerce podcasts?

Patrick: [24:00] I look at…let us see. I look the one from Vermont Teddy bear.

Shaun: [24:01] Yes.

Patrick: [24:07] That was online, only because that name was familiar to me because I have heard quite a lot of marketing done on Howard Stern. I am an avid subscriber to Sirius Radio. And I listened to Howard Stern quite religiously. And they are always marketing on there. You can never go through a Valentine’s Day without hearing about Vermont Teddy Bear.

Shaun: [24:30] The reason I ask is, just from your point of view, what sort of things would you like to hear on e-commerce podcast from other retailers?

Patrick: [24:41] My real passion as I have grown into this position has been around the management of data on a day-to-day basis. So, I am always interested and curious to hear the challenges other companies face with regards to managing their own content and serving it up as fast as possible and as accurate as possible.

[25:00] Especially for those e-tailers out there that do not have the luxury of carrying their own inventory in a warehouse, nice, neat, and tidy in the back. We are a drop-shipping company, which means that we do not have access to a physical inventory. We rely on electronic data interchange to keep our inventory up-to-date, which can pose some very severe synchronization issues.

[25:27] I am always interested to hear other companies that work on the same type of business model that PC Universe does and see how they have combated that type of challenge.

Shaun: [25:38] OK, I will be sure to keep an eye for those companies for future podcasts and ask them about that.

Patrick: [25:46] That is something…I always keep an open ear for.

Shaun: [25:49] Patrick, thank you very much for your time. I really appreciate it. And good luck with the new baby coming along. And if all goes well, I hope I will see you in Chicago.

Patrick: [26:00] Wonderful Shaun, it is always a pleasure doing business with you and SLI. Thank you very much.

[music]
Shaun: [26:00] Stay tuned for other interviews with Pete from the e-commerce industry. Thank you.