Interview

Taking Stock: interview with Michael Kliger, Vice President of International for eBay Enterprise

eBay Enterprise can trace its family tree all the way back to 1999, and the birth of Global Sports Inc, an ecommerce platform developer that notched up an not-at-all-shabby first year turnover of $5.5M. By 2011, when eBay acquired what was then known as GSI Commerce, that figure stood at $509M.

The services that eBay Enterprise offers include order management, fulfillment, customer care, and marketing solutions. It describes itself as enabling brands and retailers of all sizes “to deliver consistent omnichannel experiences across all retail touch points to attract and engage new customers, convert browsers into loyal buyers, and deliver products with speed and quality.”

Its headquarters is in the colourfully-named town of King of Prussia (in Pennsylvania, USA) and it has offices in Austin, Barcelona, London, Los Angeles, New York, and Shanghai. It also owns the Magento ecommerce platform.

Last year it shipped 163 million units, and has more than 3 million square feet of warehouse space across the North America and the UK.

Michael Kliger, eBay Enterprise

 

eBay Enterprise Vice President of International, Michael Kliger, talked to eDelivery about what the future holds in store.

What are your ambitions for Europe, are you actively growing your presence here?

We’re not a shipping / logistics company – we are an ecommerce provider. But fulfillment and logistics is what it takes. Our focus is on those retailers who want to work in multiple geographies and who need help to do that.

We go for global presence, and we operate with our own personnel and warehouses – in Manchester and next year in Leipzig, which means we cover the most important geographies in Europe.

We already serve other clients through a network of partners. Sits on our tech stack – so for client it doesn’t matter. We’re doing that in Italy and France, and we have a partnership that allows us to serve Russia.

We have a European team that can manage shipping contracts for clients, exploiting the volumes we have, making sure invoices are accurate, continuously working on improving rates, shifting volumes for different corridors, that sort of thing. We want to grow massively, in the magnitude of 30% per year over the next three-to-five years. We see ourselves well positioned to outgrown the market.

Looking around at the UK market, who do you think is doing a good job?

There are two ways to look at this. Who’s doing a good omnichannel job, and who is looking for growth opportunities in multiple international markets.

When it comes to omnichannel, perhaps not surprisingly, I think companies like John Lewis and Argos are doing really well. Interestingly, they seem to see themselves as still learning, which I think shows they are very astute and don’t rest on their laurels.

In terms of international market expansion, well in that regard, brands like BooHoo spring to mind. They’re doing a great job of tapping into lots of potential in Germany and in the Scandinavian countries. In fact, there are lots of UK businesses that could take advantage of these kinds of opportunities – there’s a real desire for goods from the UK and the language isn’t as much of a barrier as you might think due to widespread English proficiency.

The ability to go across many markets and to integrate many channels is where the growth is likely to come from, in my opinion.

You can’t have missed some of the problems faced recently some big names in the sector. What do you think is at the heart of problems like that?

One of my colleagues has a saying – “we have to build churches for Easter and Christmas.” The capacity that we need in these systems is driven by what’s happening in the peak times. That puts an enormous pressure on things.

Christmas is getting shorter every year. The time when sales take place is getting condensed, and there are pressures regarding infrastructure, capacity and the availability of labour.

The trick will be in leveraging a broader set of distribution centres. Spreading inventory across multiple locations might once have caused consternation with director of logistics. But a lot of them are actually doing it already – even if they aren’t doing it deliberately. They have multiple channels that they have to leverage as multiple sources of inventory.

It’s not about creating resources – it’s more about making the most of what you’ve got.

In our client population 30% of ecommerce sales are fulfilled by inventory sources other than a central location, whereby the customer picks up, or we ship from stores. That approach might not alleviate the whole problem but it removes some of the pressure.

In 2014, we saw the increasing adoption of a blended approach of hybrid networks of stores, collection points, traditional deliveries. Is this going to become a bandwagon, or is it going to be the distinction between the winners and the losers?

I think it is the latter. Yes, it’s going to be a trend in that everyone will claim they are working on a omnichannel strategy. But it is hard – hard to get it right, at least. There are massive challenges in this. But then that’s why it can give you such a competitive advantage.

There’s an interesting race taking place between traditional retailers and the online pureplays.

You have one group who have these multiple locations but who are often sitting on legacy infrastructures, IT systems that aren’t as up-to-date as they might be, traditional organisational models and so on. So on one hand they lots of things you might want in order to play in that game. But they also face many obstacles.

Then you have the pureplays, who don’t have the infrastructure. But what they do have is more modern systems. What makes it even more interesting is we are now seeing a trend toward some of them opening stores.

In 2001 they would have said “we’ll never open stores – that’s our cost advantage.”

They now recognise a physical footprint, whether it’s a collection point or a store, is something that many customers want.

So there’s a race, and it’s all about who can master this situation the soonest.

What will be some of the other trends emerging in the next 12 months?

Prophecies are very difficult, especially if they relate to the future.

But there are three things that I think will continue to evolve in 2015.

There will be a continued push for omnichannel – multiple ways of collecting, delivering, returning and so on.

You can get a sense of this trend by looking at some interesting differences geographically. In France there is a pickup culture. In Germany there’s already an efficient carrier network and whatever you order you tend to get it the next day.

One onmichannel trend that will be really interesting to watch as it unfolds is the interesting combinations of retailers who come together to create a greater footprint. Again you can see this with Argos who are leading the way by partnering with eBay to allow eBay sellers to use Argos stores as a pickup point.

Mobile is the second big thing. We really believe that the effect this is having on consumer behaviour has really only just begun. It might not always be the device for closing the transaction but its implications are enormous. I think there will be increasing innovation here, this year and beyond.

The third part is international. We’re telling our clients you need to look at it in two ways. It’s an opportunity, of course. But you have to be aware that competitors from other geographies are coming closer to you.

For example, we’ve started supporting email marketing for a Chinese retailer that is selling into Europe. They have a website that is available in 18 different languages.

So while there are opportunities there are also threats. People don’t always realise that.