Where Is the Puck Going to Be in 2009?

Last week I was at the Citigroup (C) conference and it was interesting to hear what the CEOs of Verizon (VZ), Interactive Corp (IACI), Sprint (S) and others were talking about. One thing I noticed is that several were using some new business speak. While 2008 was the year of tailwinds (beginning of the year) and headwinds (back of the year), in the first days of 2009, I heard several executives mention that they are 'Skating where the puck is'. For example, Sprint sees their data services growing faster than mobile and fixed voice services so they are skating there.

This is a phrase from a quote from (the great one) Wayne Gretzky, when asked why he's better than other hockey players, his answer was: "I skate to where the puck is going to be, not where it has been." Turns out the phrase is so popular you can get it on a custom T-shirt over at Zazzle.com.

In the business world given the current economic environment this is a great catch phrase because it accurately captures what everyone is trying to figure out right now - where is the puck going in 2009?

The dust has settled on Q4 2008 for ChannelAdvisor and we saw some interesting results that I think will help readers see where the puck is heading.

December 2008 Results

In December, overall the same-store-sales growth rate for our customers came down from the 20's and high teens to the 10-12% y/y growth rate. While not stellar, given that many forecasters were suggesting negative growth, we're excited that our customers did much better than expected.

Peeling the onions on those results down to the channel level is interesting. Here's the year over year same store sales per channel for

• Amazon (merchants@) - 45%
• Search - 40%
• Comparison Shopping Engines (CSE) - 18%
• Stores (organic) 6%
• eBay - -7%

Search and CSE are outside the scope of this blog, but I think the Amazon (AMZN), store and eBay (EBAY) trends are all relevent.

For stores, most of our customers grew up on eBay first and opened their store second. Increasingly the focus and mind-share is moving from eBay, to enhancing the ecommerce site and moving more and more organic traffic there. Customers are leveraging SEO and email marketing to drive more organic (e.g. you don't pay for it!) traffic, convert more and increase the average order value. ChannelAdvisor recently released a higher end store offering called StoreAdvisor Premium and we've been swamped with demand for the platform.

Amazon - really hitting their stride

I could write a ten part series on this, but the reader's digest version is that Amazon has really nailed the consumer experience.

• Selection - Selection on Amazon has never been better. Amazon leverages the merch@ platform to dramatically improve selection. Consumers come to the site, find what they need and don't leave or have to check elsewhere.
• Fast and easy transactions - Buying on Amazon is so easy and frictionless, I find I have to be careful or I'll 'walk out' with 3 things I didn't look for. Amazon remembers my addresses, my credit cards and my shipping preferences.
• Superb merchandising - From the search engine to recommendations to recommended bundles and checkout up-sells, Amazon seems to get the right product in front of the consumer at the right time.
• Great shipping+handling - Amazon has always had the lowest S+H, and with Prime I find not only do I get free S+H on everything, but
• Pricing - Amazon's prices are not only competitive, but they leverage the merch@ seller base to allow for even lower pricing than Amazon is willing to offer. One nuance of this is as a buyer you feel you don't have to search the internet all day looking at prices because Amazon has done it for you. It's kind of like the progressive insurance model. I believe the number one reason for cart abandonment is price shopping and Amazon really very cleverly combats this AND turns it into sales at great margins through the marketplace vs. direct business by being agnostic.
• Trust - Not only do I trust amazon 'direct', but the way I interact with their merch@ sellers is through the same interface so I don't have to worry about a different return mechanism or something like that. I've NEVER had a bad Amazon transaction or not gotten something when promised. The one time I did process a return, it was so fast and easy, I didn't even have to talk to a person.

All of these strategic elements and more are giving Amazon a huge advantage over many other ecommerce experiences today. From a seller's perspective, it's great that Amazon has opened the doors and partners with third parties to help build the selection, compete on pricing in a trusted marketplace.

eBay - fixed price taking over

While eBay continued to face some tough trends in December, there were some interesting trends of note. The biggest trend is the surge in fixed price transactions. Most readers will recall that eBay rolled out the new fp30 listing type with some new economics. They also advantaged the listing type by giving it lots of exposure in finding/bestmatch. All of those elements and more caused fixed-price GMV for our customers to grow 42%. In fact fixed-price is now over 50% of our GMV. Our customers tend to lead the curve, so it will be interesting to see how this number is moving for eBay overall when they report results.

Auctions aren't dead, but they aren't growing. There are definitely situations where they make sense for sellers to leverage, but for the short-term fixed-price is where the growth is.

2009 - where is your puck?

Those are some highlights that we saw for the holiday selling season at ChannelAdvisor.

Based on what we saw and what customers are telling us, at ChannelAdvisor we're going to be putting our resources towards where we think the puck is going to be in 09 and beyond. Of course Amazon is getting a lot of our attention, we have some major work going on here that is going to bring some real innovative thinking to this marketplace. Search and CSE are major growth areas for us and for eBay we're going to be looking at some ideas we have around fp30 and how to optimize that. Auctions aren't dead by any means, so we'll be keeping an eye for ways we can make some improvements there too.

eBay Strategies readers - where do you think the ecommerce puck will be in 2009 for you? Leave your thoughts in comments and I'll chime in as time allows. I look forward to hearing your thoughts.

Disclosure: Author is long Amazon and Google

Comments

[Bob C:]

Scot's question:
"eBay Strategies readers - where do you think the ecommerce puck will be in 2009 for you?"

My answer:
Bonanzle.com

Jan 15 12:09 PM

[Et tu, Brute!:]

Not much to say about ebay anymore. Honostly, ebay is a has been by there own choice. And fixed price wasn't so much a choice for the charts but the charts were flooded with a bazillion big boxers who then court you directly to their own website. And yes, it works.

To be truthful, I am more into the other sites I now work and seldom give ebay a thought. Even the angst has gone -- for me -- from a roaring flame to a simmer. Soon, very, ebay will be completely off my radar.

Jan 15 01:41 PM

[Et tu, Brute!:]

By the way...

Who has checked the site counts found on powersellersunite dot com?

Many of the sites are gaining in absolute leaps and bounds! And Etsy dot com, which is NOT on the PSU site count list, for all things handmade and a flourishing vintage section, is now in the top worldwide 1000 ranking! Not bad, at all.

Remember Pandora's box!

Jan 15 01:47 PM

[contentman:]

eBay is indeed old news. The site just isn't what it used to be and alternative sites look more appealing than ever. I believe Amazon will emerge head and shoulders above eBay and all other marketplaces this year. Everything looks aligned for them, from their business model to the ease of transaction and customer feedback. Another marketplace that follows Amazon's structure is justparts.com. They are a marketplace strictly for auto parts. Part-sellers who are peeved with eBay's policies and are looking to 'hedge' their online exposure with Amazon should give those guys a try. Plus, their customer service is awesome! Overall, I don't think e-commerce will be as gloomy as advertised. On the contrary, there's more options for buyers and sellers, more competition=lower prices, adding for a better shopping experience.

Jan 15 02:21 PM

[squirrelygirl:]

I was a buyer & seller on eBay for 9 years and I used to just be in love with the whole experience. Now, it's like a bitter divorce, and I can't think of any condition under which I'd come back.

I am so much happier away from eBay hell!

Jan 15 04:02 PM

[leapingcat:]

'eBay Strategies readers - where do you think the ecommerce puck will be in 2009 for you? '
I think that for many there will be a number of pucks in a number of places. Amazon does indeed look well placed for some categories, but Ebay's traditional market for antiques and collectables looks up for grabs. I don't think that any one can predict if any one site will make the breakthrough, but there are a number, which no doubt will get a mention here, that could well do so, given the right promotion. It is difficult to predict which one(s) at present, hence my initial comment.
As for me. To use another metaphor, I won't be putting all my eggs in one basket either.

Jan 15 04:32 PM

[Yankee Trader:]

My puck is hanging with Bob C. over at Bonanzle.com. It is by far the fastest growing alternative. It has the transparency that others have never seen. The Bonanzle wave is growing. There is 3 times the number of buyers vs. sellers and 3 times less cost than eBay.

Jan 16 11:40 AM

[Trish:]

If self-mutilation and self-destruction are considered a strategy, then I guess ebay's really got it going on!

Jan 16 04:46 PM

[Patricia013:]

Hey Scott - the time is soon approaching when an article on Ebay brings this......yawn..... Sellers will all be busy elsewhere :-)

bonanzle.com

Jan 19 12:14 AM