July 30, 2008

My Keynote Address At The Shop.org Annual Summit

In the tradition of an earlier speech, I bring you My Keynote Address At The Shop.org Annual Summit.


Good morning everybody! Please, please, sit down! What a pleasure it is to be here with you on another glorious September morning in Las Vegas, to see so many familiar faces. If there is one way that this conference changed over the years, it is in the number of familiar faces I see as I look across the room. Six years ago, this was a much smaller group of individuals who were largely creating a new channel. There was a vibe in the room! Today, this is a large group of inter-connected, multichannel individuals. Our websites are now part of a large ecosystem. Online retailing is a mature industry.

I'm seldom asked to speak at industry events. My message is often contrary to the programmed message of best practices that conference organizers want for you to hear. The fact that Shop.org is willing to consider all points of view is refreshing. I thank the organizers of this conference for the opportunity to share a different point of view.

Today, I am going to share a different point of view. We're going to consider the topic of "dependence".

Allow me to ask you a few questions. In the spirit of other sessions at this conference, I'll title my mini-series "ELEVEN QUESTIONS EVERY ONLINE RETAILER MUST EFFECTIVELY ANSWER TO REMAIN RELEVANT".

Question #1: What would happen to online sales if Google were to not be available for customers to use for just one month?

Question #2: What would happen to online sales if Comcast or any cable giant were to not provide high speed internet access for just one month?

Question #3: What would happen to online sales if nobody had access to a television, radio, newspaper, or any other form of traditional media for just one month?

Question #4: What would happen to online sales if the post office could not mail catalogs for just one month due to another anthrax threat?

Question #5: What would happen to online sales if every retail store in the United States were forced to close one day a week to conserve energy?

Question #6: What would happen to online sales if it became too expensive for the USPS, UPS or FedEx to deliver packages to our homes in a timely manner?

Question #7: What would happen to online sales if a worm or computer virus made it impossible for folks to use Microsoft Outlook to receive e-mail marketing messages for just one month?

Question #8: What would happen to online sales if every information technology expert went on strike, refusing to maintain our e-commerce enabled websites for thirty days in protest of our best practice of outsourcing technology labor overseas?

Question #9: What would happen to online sales if we were forced to close our distribution centers, call centers, and live chat centers for one day each week to conserve energy?

Question #10: What would happen to online sales if a vocal minority of social media users decided to try to sink us with negative publicity?

Question #11: What would happen to online sales if eco-friendly organizations decided that online retailing burned too much coal to power too many servers, causing rampant pollution and accelerated global warming?


We've heard an awful lot about best practices over the past two days. We've learned a lot of useful tips that, for the most part, will cause online and offline sales to increase if applied properly.

We didn't talk much about how dependent we are on others for our success. Online retailing is a wonderfully flawed concept, one that demands perfection from innumerable individuals and organizations for the online marketer to experience success.

Back in 2005, I spoke with an individual who told me that he was "so pleased to be part of a three-team person that built an entire e-commerce business". I said "Oh really? Did you not depend on the information technology staff to write the code necessary to enable a website to run properly? Did you not depend on an existing catalog call center to field calls from confused customers who did not understand product because of faulty website creative and imagery? Did you not depend on offline advertising to drive customers to your website? Did you not depend on a person in the Midwest working on a Sunday morning to pick, pack, and ship merchandise to your customer? Did you not depend on a store merchant to pick products that store customers would love, products she thought your online customer would also love? Did you not depend on an inventory manager who knew exactly how many items to buy based on prior customer demand across all channels? Did you not depend on a well executed e-mail marketing program to drive customers online? Did you not depend on inexpensive internet access to even allow a customer to place an order? Did you not depend on a store employee in Richmond telling the customer to visit the website for a broader assortment of merchandise? Did you not depend on a disruptive business model named Google to drive random traffic to your site, traffic that you got credit for even though you did nothing to earn it?"

I observe this style of dependence in my own business. Google sends fifty-six visitors a day to my blog, a blog that is hosted on Google servers, a blog that is generated using software from Google. I analyze my visitors using web analytics software provided by Google. My RSS feed is converted to one that is easier to maintain --- the company that provides this service is owned by Google.

What do you think would happen to my blog, my business, if something happened to Google?

What do you think would happen to your business if something happened to Google, or to any of the individuals, organizations, or offline advertising techniques mentioned earlier?

See, we blindly pursued this multichannel thing with such zeal that we never really asked ourselves fundamental questions about the online retail businesses we were building. Maybe it is the right thing for me, as a leader, to depend on a community of followers on Facebook to evangelize my brand for me. Maybe it is right for me, as a leader, to depend on Google for twenty-five percent of my traffic.

But what if it isn't the right thing for me to outsource every aspect of my online retailing business to somebody else?

Honestly, if you strip away traditional advertising and direct marketing, if you strip away the overbearing influence of Google, if you strip away the sales that a retail store generates for you, if you strip away the social media pap that simply replaces the water cooler conversations of the 1990s, what do you as an online retailing leader actually control from a sales generation standpoint? What percentage of your annual sales are truly generated because of you, because of the strategies you employ? Have you ever gone through this exercise, decomposing your online business, measuring your true impact to the organization?

A true rainmaker is able to generate incremental sales, sales that would not have happened without the unique skills of the rainmaker. Take a moment, and look at the individuals in this room. How many individuals in this room have achieved "rainmaker" status? In how many cases can you find an individual who, if the individual didn't exist, would cause online sales to decrease by maybe ten to forty percent?

This is our challenge. Online sales won't continue to increase forever. In fact, many folks have told me that they are experiencing, for the first time ever, online sales decreases. These individuals want to know what they can do to reverse this trend. They've followed the advice offered at conferences like this one, implementing best practices, becoming "multichannel". And yet online sales are decreasing. Now what? What does the online marketer, the individual who has only known fifteen years of sales increases, do when online sales finally decrease?

Over the next decade, our challenge is to find unique ways to generate demand, methods that are not dependent upon traditional offline advertising, methods that are not dependent upon Google. Our customers and prospects must want to visit our websites without the aid of offline tactics or external traffic sources like MSN or Yahoo!. Our survival depends on providing an experience that gives the customer more than she expected, more than a simple multichannel experience that allows her to place an order in a retail store.

Are we, the folks in this room, ready to provide the customer with this experience? I am optimistic that we can do this as some point in the future. We need to get ready today for the challenges that we'll all face tomorrow.

Thank you for your attention this morning! Are there any questions?

6 comments:

  1. Excellent points, Kevin. Perhaps your best post ever.

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  2. It is, after all, a keynote presentation!

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  3. What, no PPT? Excellent, thought provoking piece.

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  4. Powerpoints are so 1995!!

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  5. Great, and often disturbing points -- thought provoking and relevant, I think, across a number of disciplines beyond online marketing.

    Wanted to pose a question, just to understand the depth of the challenge you're presenting.... Why does the online marketer have to figure out how to live in a non-multichannel world?

    Imagining how to create value without search traffic makes sense -- you don't want a large portion of your business to depend upon people stumbling upon your site.

    But shouldn't the site be interconnected with the brand building that's happening online and offline? Shouldn't the online marketer be generating word-of-mouth via social networks that leads to traffic?

    Or is your point that this is all well and good, but will happen with or without the online marketer?

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  6. I don't think the online marketer has to figure out how to live in a non-multichannel world.

    I do think the online marketer has to figure out what the online marketer contributes to sales and profit, vs. what the multichannel world contributes to sales and profit.

    See, if all of the sales happen anyway because of social media and stores and catalogs and Google, then what value does the online marketer bring to the brand?

    Of course, we all know the value the online marketer brings to the brand, because we're all online marketers. But the online marketer is not good at proving his or her worth. As online sales flatten out or decline, the online marketer must be able to prove that "x" percent is due to failed multichannel initiatives, "y" percent is due to the economy, "z" percent is because of social media, etc.

    This is what I want to challenge folks to become better at. Online marketers will need to be able to separate out external factors from the factors we control, then demonstrate our value.

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