EXCLUSIVE INTERVIEW

Wielding the Technology Sword: Q&A With Overstock.com CEO Patrick Byrne

Overstock.com is a retail site that, similar to Amazon.com, sells products in just about any consumer category, from clothes to electronics to home goods to furniture. Not surprisingly, it hid a major skid last fall when the U.S. economy went into seizure.

“We were growing 27 percent through the first part of the year,” CEO Patrick Byrne told the E-Commerce Times. “By Q4, we had shrunk 13 percent.”

In Q1 2009, the company’s growth contracted another 7 percent to 8 percent, he said.

Then, at the end of June, Overstock.com experienced a turnaround of sorts — positive growth in the range of 3 percent. Bryne could not say how much of that — if any — was due to a general economic change. However, he did say that the company’s steady investment in technology, even during the dark days at the beginning of this year, was surely a significant contributor.

“We have been focusing on continually improving — refining our site, our approach. I would say our new technology investments are 50 to 75 percent of those improvements,” he estimated.

The E-Commerce Times spoke with Bryne about the tech improvements Overstock.com is making — and would like to make — when the industry and his own development staff are ready.

E-Commerce Times: Where have you been spending your IT dollars over the last year?

Patrick Byrne:

We use RightNow, and we have been investing money and resources to fold the homegrown component of our CRM system into RightNow. We’ve been doing that for the last six months. Customer service is very important to us — people tend to overlook it and think of it as a cost center to be minimized. But we are planning an even bigger push in personalization.

Personalization technology being developed now by third parties is getting very good. That wasn’t always the case, you know — too often the integration would prove to be very cumbersome and the results too basic.

But two things have changed — the integration is now happening on the Web page itself with Javascript variables, which makes it much lighter and quicker to do. Also, the algorithms running it have, among some providers, changed dramatically and are now much more intelligent. So, we have been focusing a lot of research and resources in this area.

ECT: For instance?

Byrne:

We’ve tested a lot of suppliers and, while I don’t want to sound like an infomercial, will tell you we found one we like a lot — it’s ChoiceStream in Boston. They have a sophisticated approach to the algorithms. Normal algorithm use in these kinds of deployment is called “collaborative filtering” — in other words, the basic algorithms of recommendation. ChoiceStream, with its mathematically advanced approach, is more sophisticated and powerful — they use Bayesian modeling.

ECT: What is the difference in practical terms?

Byrne:

It is more analogous to, say, a Nordstrom sales rep who knows your tastes already. You go into the store and tell him you want a handbag, and he picks out the bag he thinks you will like the most.

ECT: Isn’t that how personalization technology is supposed to work anyway?

Byrne:

It’s what the industry has held out for five years as the big new thing, but nobody has gotten it right so far. I don’t want to make it sound like ChoiceStream is the only good vendor — there other new players in this field that we are watching too that we think will be pretty big when the time comes.

ECT: Such as?

Byrne:

I don’t want to say until I am sure they will deliver what they are working on right now.

ECT: What other tech developments are you planning?

Byrne:

Content management in the last two to three years has gotten more sophisticated. We are looking at a company called “TouchClarity,” which was purchased by Omniture in 2007. We intend to implement TouchClarity within a year. We just don’t have the resources to get it done this year, but Q1 2010 will be our goal.

ECT: How much do you invest in technology?

Byrne:

About 3 percent to 4 percent of our revenue is invested in technology — more towards the low end, though, of that number.

ECT: Did you pull back when the recession hit?

Byrne:

No, in fact we are getting much more aggressive about it, and that ratio is going up for us. Our problem has been we can’t invest in technology as fast as we would like because we don’t have the in-house resources to deploy it.

ECT: It sounds like you are talking about people, not money.

Byrne:

That is right.

ECT: That is unusual for a recession — you really can’t find enough talented developers to hire?

Byrne:

No, at least not with the right attitude. It’s our biggest bottleneck right now. It is hard to get good developers that can work in a team environment. I have found that maybe one in 20 can do that. In fact, we have more ideas than our developers can possibly get done — we are finding we have to triage our ideas.

ECT: So, you are actually looking to hire developers right now? How many?

Byrne:

We are actively trying to fill 15 slots, but that is just a short-term goal. I would hire 100 tomorrow if they were the right people.

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CRM Buyer Channels

EXPERT ADVICE

Sink or Swim: 5 E-Commerce Pain Points To Address for Success

Cart abandoned! That is the action no e-commerce seller wants to see at their online store.

Many business owners believe they have done their best by releasing a mobile website or online store. However, more goes into creating a riveting online shopping experience that attracts the right customers, converts casual browsing to sales, and engages shoppers long term so they are drawn to an e-commerce store and keep coming back to buy more.

Successful e-commerce operators continually identify and cure potential sources of frustration that diminish the customer’s online shopping experience.

To understand what these issues are, it’s important to examine your e-commerce store from the customer’s point of view.

Following are five major pain points where e-commerce efforts often suffer or fail. Focusing on these can help sellers fix critical mistakes, delight online shoppers, and increase sales.

1. Poor Shopping Experience

A customer’s shopping experience includes everything from the website’s speed to the design, quality of photographs and content, ease of finding information, and navigating the store.

An e-commerce store with high-quality images, engaging text, search features, and all the relevant information a customer needs to make a decision is the gold standard.

If your offline store has a unique aesthetic and brand identity, ensure that your e-commerce store reflects that and goes the extra mile. While many business owners can find it intimidating to recast their retail experience for e-commerce, not doing so is a lost opportunity.

Fortunately, there are several tools and apps now available to create a great online shopping experience without any programming or graphic design skills.

2. Low User Engagement, Retention

An e-commerce website must engage customers from the instant they visit the store online. This involves taking all the possible steps to guide a customer from the browsing stage to the buying stage; not too different from what shopkeepers do offline.

The most potential often lies with customers who have made past purchases. While your brick-and-mortar store may have a friendly policy toward your loyal customers, e-commerce stores can completely overlook existing users who come back to see what’s new.

Offering online-only discount codes, highlighting new products, encouraging users to share their own shopping images, social media feeds, and customer reviews are some basic ways to reward and engage regular visitors.

A dynamic e-commerce store that offers a good mix of familiar and novel content will help retain and upsell regular customers.

3. Mobile Deficiency

Roughly two out of three online orders are made on mobile devices. Clearly, brands cannot afford to ignore the power of a mobile-ready shopping experience.

Using a mobile app results in three times more conversions than a mobile website. An e-commerce site that provides a superior experience on mobile phones immediately gains a competitive advantage.

Today, it is easy, low cost, and low tech to get a mobile app that has a great user experience (UX) and offers all the functionality needed for your store.

Tools like live selling, linking social media content, push notifications and mobile-app-only offers can radically upgrade any e-commerce business.

4. Inadequate Access to Customer Service

An e-commerce store must not become a cold virtual shop front that does not offer a sense of human interaction.

While a clear display of pricing, sizing, information related to shipping and returns, etc. is vital, an e-commerce store must also offer a simple and easy way of connecting the customer with the business, for any kind of query.

Millennials and Gen Z customers are more likely to prefer to chat or text versus making a phone call to customer service. The presence of an active and responsive live chat adds to the credibility of the store and helps in sales conversions.

Including comprehensive product FAQs, an intuitive customer service menu, and setting a service standard for time to respond to customers are a few ways to improve the service experience.

5. Unfriendly Checkout Process

A complicated or inflexible checkout process is one of the major reasons why customers abandon shopping carts just when they were ready to checkout.

Ideally, an e-commerce store must have transparent pricing, not add unexpected taxes or fees, and be as uncomplicated as possible.

Offering various methods of payment is essential so customers can always find a suitable and simple method to pay. Making it easy for customers to make repeat purchases, rewarding customers at the point of checkout, and partnering with trusted payment facilitators are some ways to ensure that your store does not lose customers at the most crucial moment.

Final Thoughts: Social Media, Emerging Tech

In addition to solving these pain points, it’s important to remember that to bring customers to your e-commerce store, you need a social media marketing strategy. It doesn’t need to be complicated. Ensure that you have interesting and fresh social media content and ad campaigns that connect your followers to your online store.

You can also utilize influencer programs and live video across your social media channels to capture the interest of your target audience and bring them to your store.

Today’s customers expect more personalized and interactive experiences online, are interested in integrating technologies like augmented reality (AR) and virtual reality (VR) into their shopping experience and, in general, have high expectations from online sellers.

Luckily, it doesn’t take a technology whiz or even coding skills to create a successful e-commerce store. All you need is a clear vision of what you want to offer your customers and the tools that can help you get there.

Baskar Agneeswaran

Baskar Agneeswaran is the CEO of Vajro. Headquartered in Irving, Texas, Vajro is a mobile app platform that brands use to build native Android and iOS apps.

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Gen Z to Retailers: Sell Us Speed, Simplicity, Touchless Pay Options

Gen Z using smartphone

Retailers, take heed of Generation Z’s desire for convenience in processing payments.

Without offering frictionless payments and a comprehensive set of system tools to meet the demands of this up-and-coming generation born between 1997 and 2012, retailers can say goodbye to Gen Z as customers.

As if catering to ever-changing consumer shopping trends was not already challenging, the Gen Z shopping mindset can be elusive and confusing. If you spend some quality time studying industry reports on what retailers must do to attract Gen Zers’ attention and close transactions, you might well be left scratching your head over how to meet their wants and needs.

For instance, some reports call for providing Gen Z shoppers with unique in-store experiences, relevance, and newness while shopping. The Gen Z population is careful about spending habits, declare other reports.

Much of those strategies are applicable to all shoppers in the new omnichannel landscape. But successful retailers must find clarity to get Gen Zers on board.

Payment Choices Essential

Gen Z shoppers want authenticity. Being young, they do not hurry to build brand loyalties. They expect value in your brand. Not finding any, they will shop elsewhere. Retailers targeting this buying category need to:

  • Focus on social media advertising
  • Truly understand Gen Z culture
  • Take a stance on social issues
  • Offer buy now, pay later (BNPL) purchase options

From that list of what Gen Z shoppers want, perhaps the most necessary is what payment options a retailer provides.

Gen Zers do not balk at paying more for sustainable products or from brands that share their social and political views. But without providing convenient payment methods, retailers are conducting a losing proposition, suggests Greg Cohen, CEO of payments and commerce technology platform Fortis.

“To meet these new demands head-on, retailers must invest and improve their overall checkout experience by providing an all-encompassing set of tools that not only offers frictionless payments but also split payments and a streamlined checkout process to meet Gen Z’s desire for convenience,” he told CRM Buyer.

Payment Part of the Journey

According to a 2020 study by Fiserv, 70% of Gen Z shoppers still planned to choose contactless payments after the pandemic because it is simple. Businesses need to prepare for the new payment demands expected to follow suit.

It is all about customer engagement that leads to making a purchase. That process needs to be embedded in the entire journey, according to Cohen.

Retail is not a one-stop shop. The world of software and payments has become very verticalized, he offered. Take, for example, restaurant software. You might have restaurant software made specifically for pizza parlors, versus Chinese restaurants. You see that same evolution in almost every vertical.

A second trend will be the winners of the core systems that are much more open architecture, added Cohen. This lets retailers plug in some of these value-added pieces to their existing systems to meet the customers where they are.

Plenty of software platforms try to own every piece of an ecosystem. Opening that ecosystem allows for more players to conduct transactions in their specific markets. That is why retailers must research the wide variety of payment tools that are available, he advised.

Simplicity and Convenience

Gen Z consumers differ from other age groups primarily by their insistence on getting speed, contactless, and wallet payment forms, according to Tom Tucker, president of Americas at Till Payments.

“These include Apple Pay/Google Pay and Buy Now buttons. Buy now, pay later is the biggest in this group,” Tucker told CRM Buyer.

The experience is imperative, he added. Security is not their biggest concern. Stored credentials for faster checkout are table stakes.

Fiserv’s study showed that most Gen Z shoppers plan to use contactless payments after the pandemic because it is simple. Businesses need to prepare for the new payment demands expected to follow suit,” he reiterated.

“UIs need to be simple and have minimal interaction required of the consumer,” he added.

How retailers do that preparation is rather straightforward, he suggested. Update all user interfaces for one-click and wallet payment types.

“Gen Z and Gen Y grew up with the internet and have the most need for wallets, BNPL, and mobile technologies. Gen X and boomers are adopting quickly but are slow to move. Covid helped push them forward dramatically by two to three years,” Tucker said.

Zoomers’ Mobile-First Mindset

Marketing to Gen Z is much different than other age groups mainly because they are the first generation to not know life without a screen in their hand, observed Kristin Dorsey, vice president of marketing at CRM software firm Linc.

“As a result, Zoomers expect a mobile-first customer experience and digital ads are not as effective because they have learned to tune them out. Gen Z does not want to feel sold to, which is why more brands are prioritizing educational content, influencer marketing, earned media, and building communities over large ad buys,” she told CRM Buyer.

That scenario is the foundation for how businesses should prepare for new payment demands to meet Gen Z’s unique buying situations, Dorsey continued. This mobile-first mentality means businesses must stay up to date with the latest cashless and contactless payment options to create an ideal customer experience.

“Gen Z favors mobile payment methods over cash — and even debit or credit cards — much more than previous generations. The convenience of touchless digital payments like Apple Pay and Google Pay is one big reason why, along with concerns around spreading germs using cash and cards,” she explained.

Plus, having grown up after The Great Recession, they are more skeptical of traditional financial institutions and their products. That is why businesses need to stay ahead of new alternative financing options like BNPL, she concluded.

Jack M. Germain

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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