Shop.org 2009 Strategy and Innovation Forum Day 1 Review

February 3, 2009 by Susan Petracco

The 2009 Shop.org Strategy and Innovation Forum kicked off today at the Gaylord Palms hotel in Orlando. The convention is filled with the top names in ecommerce, a variety of vendors, and a small but fun and elite crowd of attendees.

Avinash Kaushik, Author

Day one of the annual Shop.org Strategy and Innovation Forum was great from many perspectives, not the least of which was the first keynote presentation from Avinash Kaushik, author of Web Analytics in an Hour a Day. Avinash is a popular blogger and speaker whom I've wanted to see for awhile now, and during his presentation, "Moving Beyond Faith Based Initiatives: Lower Risk, Innovate, and Be Great", Avinash displayed his depth of knowledge, generous nature, and humorous wit. His talk described three kinds of innovation: incremental, where one steadily improves over time; incremental with side effect, which is similar to the first but also encompasses an "aha" jump in performance due to some key factor; and transformational, where the model reflects an unnatural and rare, almost immediate skip from low-return to high-return. From there, his talk focused on the second innovation, the incremental with side effect module. Two examples were, in evolution, the benefits provided by opposable thumbs, and online, the development of the Google Adsense program that opened a monetization path to virtually all online content providers.

The subtopic that I found most interesting was the idea that companies need to "Fail Faster". Not all ideas are good ones, and the faster you can recognize the poorly performing initiatives, the faster you can fix or eliminate them. He also said that many websites suck because of the "Hippo" - that decisions are made based on the Highest Paid Person's Opinion, and not on hard, quantifiable test results.

Finally Avinash recommended several tools to ecommerce managers wishing to expand their data reporting, understanding, and knowledge base: 4Q Surveys, Google AdPlanner, and Google Insights, as well as a robust analytics package such as Google Analytics or ClickTracks.

Alfred Lin, Zappos.com

Zappos.com is best known for its reputation when it comes to online customer service. Their COO and CFO, Alfred Lin, gave the second keynote presentation, titled "Building a Brand that Matters One Employee at a Time". In it he described some of the ways that Zappos focuses on building a solid relationship with their customers. All orders receive free shipping, and many are "surprise" upgraded to overnight shipping at no cost to the customer. Zappos also pays for return shipping, and offers a 365-day return policy. However, one of the most revolutionary ideas they implement is that they pay their employees to quit! At the time of this conference, the current payout (during the Zappos 5-week training program) is $2000 to any trainee who doesn't feel like it's the right job for them. No questions asked.

Zappos' figures are outstanding. At over $1 billion in sales in 2008, they carry 900,000 skus, 200,000 styles, and 1200 brands of shoes...and they are expanding into clothing. They currently employee 1500 people, and they foster a corporate culture in the same dedicated manner with which they build customer relationships.

With this kind of success, a discussion by Lin about building a retail brand comes with a lot of experience behind it. Here are his key factors for building your brand:

Vision: It needs to be bigger than yourself. Does it have meaning? Once you have your vision, chase that vision, don't chase the dollar. (Hopefully that implies that the dollar will follow!) Zappos often asks interviewees, "What would you do for 10 years if you didn't make a dime"?
Repeat Customers: In order to attract customers to make a repeat purchase, Zin recommends picking two of the following three factors: great product, great service, and low prices. Then focus on those two. Don't focus on the third one; you can't do them all.
Transparency: Be real and you have nothing to fear. Zappos exposes daily sales data to all customers, including brand data to individual vendors. They also discuss their business and culture on Twitter, Facebook, and via blogs.
Culture: Corporate culture should be based on commitable core values. Some of Zappos? "Deliver WOW through service." and "Be adventurous, creative, and open minded."

(Unfortunately, Zin didn't exactly answer my question during the Q&A session about where smaller businesses can focus on creating stronger customer relationships without cutting too far into their revenue. My thought is to reduce your shipping and packaging costs as much as possible, and pass as much of those savings along to your customer as possible. Someone at my table pointed me in the direction of Mail Express; if you've tried it, please leave a comment about your experiences.)

McKinsey & Co.

After lunch, Josh Leibowitz and Alex Tenessa from McKinsey & Co. talked about "The Multi-Channel Shift: How Consumer Behavior Will Change in the Next Economic Recovery". Unfortunately, this was a presentation that made at least one Twitterer remark, "I think I may need to get under table and suck my thumb now." Their models don't predict a quick turnaround for the recession that began in 2008 and looks to plague us for the foreseeable future. We're all hoping for the "battered but resilient" prediction over the "long freeze" one!

However, they did identify six trends that online retailers should consider:

The shift to value is here to stay.
The aging consumer (over 50 years of age) will capture over 50% of online spending.
The online channel will continue to capture sales
Product and service development is key
Science will replace art
Prepare for a "winner take all" scenario

In 2009 customers will resort to more one-stop shopping, they will wait for sales and discounts to make a purchase, and they will buy more generics over brand names.

Hung Le Hong - Gartner Research

Hung Le Hong from Gartner Research was another of my anticipated talks, though it turned out not to be what I expected. "Disruptive Business Models for Web 2.0" was more about cross-channel selling that social networking, AJAX, or reflective logos. Then again, it's time we talk about something more substantial. Hong discussed online sales for local pickup, and identified a spectrum of implementations, from Wal-Marts 7-10 day-later pickup to higher cost but more efficient and productive models.

Hong also talked about the use of mobile technology for ecommerce and offered the following statistics:

25% of people use mobile technology to check prices
25% check store locations
22% look for promotions and deals
16% actually make a purchase
12% transmit payment

Another tactic Hong discussed was the use of Twitter and related tools for "short shelf life" promotions, the online equivalent of a K-Mart Blue Light Special.

My favorite quote came from this session: "The Web 2.0 customer will use Web 2.0 ways to spend less."

Panel Sessions

The day completed with 3 panel sessions. The first was "The eCommerce Platform of the Future" with Sally McKenzie of Ecommerce Consulting and Brian Walker from Forrester Research. They discussed platforms and the challenges of "re-platforming". Then was a great talk on "Focused Ecommerce Investing: Smartly Stretching Your E-commerce Dollars While Still Innovating for Differentiation" with Lauren Freedman of the e-taining group, Peter Cobb of eBags, Kevin Churchill from Patagonia, and Bradford Matson of Bluefly. The day ended with "How International Expansion Can Help Retailers in a Downturned Economy", moderated by Troy Brown from Demandware and featuring Michael Amar of AGORAD, Jake Bailey from Overstock.com, Jim Okamura of J.C. Williams Group, and Michael Ross from eCommera Limited.