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Commerce Conversations: Episode One, Bryan Dove

Logistics
December 20, 2022
24 min read
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Bryan Dove, CEO of CommerceHub, talks with Ware2Go CEO Steve Denton about Black Friday Cyber Monday sales, changing consumer buying habits, and the latest trends in third-party inventory.

Steve Denton:

Hi, welcome to Commerce Conversations. I’m Steve Denton and I’m excited to have Bryan Dove with us today, the CEO of CommerceHub. When you think about Commerce Conversations, you should probably start with the CEO of the CommerceHub. So Bryan, welcome to Commerce Conversations, or as I like to call them, “commercations”. We’re excited to have you. Welcome.

Bryan Dove:

Yeah, thanks for having me. This is great. I’m excited.

Steve Denton:

So a lot going on, right? I mean, first of all, congratulations on the acquisition of ChannelAdvisor. You talk about two market leaders there. Maybe for the folks that don’t know, what does it mean for the market leader of 3P inventory to make an acquisition like that? What are you excited about and what does that bring to the industry?

Bryan Dove:

Sure. I think for starters, CommerceHub has a long history, 25 years plus of serving the largest retailers in the space and helping them power all of their un-owned inventory and all that 3P inventory and get it to their customers so they can expand selection, customers are happy they get the right thing to the doorstep. ChannelAdvisor’s got a 20 plus year history as well, really focused on helping brands connect to customers across all different channels, whether they’re they’re retailers or public marketplaces and doing it in North America, in Europe, in APAC. And so really bringing these two together, we bring this best of breed for retailers and best of breed for brands.

I think what we’re excited about is not only bringing two market leaders together, but it’s the types of things that we can start to light up that only work when you can help this massive network of tens of thousands of companies connect with the largest retail channels anywhere in the world.

Steve Denton:

Yeah, it’s exciting. And what a great acquisition and great merger of companies.

For folks in the audience that 1P inventory, 3P inventory. Maybe to get some jargon out, what is 3P inventory, why does it matter, and who does that?

Bryan Dove:

Yeah. I think if you oversimplify what a retailer’s in the business of, there’s the items that they have laid out their own money for and that they own, let’s just call that 1P. It’s their own inventory, they’ve negotiated with these brands and suppliers to house that and they take on all the risk.

However, then you have this whole other bucket of all of these other manufacturers, all these brands. Sometimes it’s the same brand, it’s just an extended part of their catalog where the brand wants to hold onto that inventory. Maybe they don’t want to commit it to a particular retailer or a particular channel, they want more flexibility, they may want to hold it back to sell directly to the consumer. And all of that all sits out in this third party or 3P bucket.

For the retailers, what they want is they want to be able to offer this infinite aisle, this endless supply for their customers, but they don’t want to have to lay out the cash because they don’t know exactly what’s going to resonate with their customers. Same with the owner, the manufacturer of that item wants to hold onto it because they don’t know if that’s going to sell better through Amazon or it’s going to sell better through eBay or better through Macy’s or through Best Buy and they want that flexibility.

We’re really in the business of connecting all of those manufacturers and brands and sellers who own inventory with the retailers who have the demand and being able to match them up in real time.

Steve Denton:

That’s fantastic. Thinking about the audience a little bit, let’s say I’m watching this Commerce Conversation and I’m a manufacturer of, I don’t know, crushable red hats, I just made that up.

Bryan Dove:

Yep.

Steve Denton:

So I make crushable red hats, pretty awesome. I want to get into this third party, I want to get into that marketplace game. How do I do that? Do I connect with you and you connect me with these retailers? Do I connect with these retailers directly and then they connect me to you? How does somebody get in that game as a manufacturer?

Bryan Dove:

So as a manufacturer, that’s where we’re here to help because for most of these manufacturers, you’re trying to grow, you’re trying to get access to more channels, you’re trying to scale and yet you don’t have an unlimited budget to invest in technology. You can’t yourself be doing your own wiring into Amazon and then into Target Plus and then, oh now you’re Red Hats, you’re going to strike a deal at Kohl’s perhaps or somewhere else. You just can’t do the wiring every time.

What we focus on for our manufacturers is to give them that one stop shop. They wire up with us, whatever system they’re using to manage all their inventory, it’s one connection and we will help them expose that inventory to every channel where they want to list it.

Now some of those channels, they just list it straight on, you go onto Amazon, you create your Seller Central account and we will manage all of that for you. In fact, for, actually quite frankly, most of our newer customers, we even provide a service where they don’t even need their own technology staff. We’ll run it for them. And so if they’re a manufacturer of the Crushed Red Hat company, we’ll help them connect to as many channels as possible. We want to be in the business of empowering our brands to really grow and serve the world’s commerce and do so through relationships and we can help facilitate those relationships, whether it’s to Amazon or Target Plus or Macy’s or Kohl’s wherever the case may be.

Steve Denton:

That’s awesome. Because I think that ecosystem’s not a really well understood ecosystem.

Moving forward, I’m going to advance the conversation a little bit. We’re filming this about a week after Black Friday, Cyber Monday. What’s the story out there maybe that you guys saw? I can tell you what we saw here at Ware2Go. At Ware2Go, for the second straight year, cyber Monday, bigger than Black Friday.

Bryan Dove:

Yep.

Steve Denton:

The weekend, Saturday and Sunday after Black Friday, bigger than Black Friday.

Bryan Dove:

Really?

Steve Denton:

And in fact this past Monday, bigger than Black Friday. So a couple of trends that, one, that we see, and I’m just curious what you guys see because you’ve got a larger footprint.

Bryan Dove:

Yep.

Steve Denton:

But consumers are shopping later. If you think about last year the storyline was supply chain issues. I’m going to buy early because I’m afraid there’s not going to be any large size shirts in blue when it’s time to buy, so people bought early and we saw that last year.

This year, everybody knows that there’s a lot of inventory out there. People were sitting on a ton, they’re expecting a lot of deals, a lot of press around deals and discounts and moving inventory, and that with the economic headwinds of inflation, people were waiting and we’re seeing that. That’s why, like I said, this past Monday, week after Cyber Monday, it was bigger than Black Friday.

I think we’re going to see a late holiday shopping season all the way up to December 22nd versus last year, consumers went early.

Bryan Dove:

Yeah, that’s right.

Steve Denton:

That’s what I’m seeing. What are you seeing or what’s the story, Bryan, nobody’s talking about that you can just tell me and whoever else.

Bryan Dove:

Yeah, just the secret part.

Steve Denton:

Just the other people.

Bryan Dove:

A couple things I think we saw. One, if we look back over the last month or two, we started to see some of these early signs of maybe a little pullback. You saw it in some of the public numbers for some of the public companies. We even started to see it in early November the comps were a little challenging. But like you mentioned, it’s also coming off a strong comp where people were trying to buy earlier and concerned about out of stock and concerned about inventory issues.

So to be honest, we were maybe a little apprehensive heading into that long holiday weekend because we started to see some comps that were less favorable. And then what we saw is even coming into that week of Thanksgiving, then certainly Thanksgiving Day, Black Friday, all the way through Cyber Monday, we just saw this nice ramp up. Really, I think, the strength of consumer demand, we saw it hold back and I think what we saw is maybe similar to what you were seeing is maybe some tendency, but pushing it later and then really saw that growth and really saw that spike pull through.

And we saw that across virtually every sector. I think we’re pretty lucky that we have exposure to almost every sector there is out there in e-commerce. And we saw that pull through really across the board in a real positive way.

Steve Denton:

I mean, I think you guys see what $50 billion of gross merchandise sales across 18,000 merchants.

Bryan Dove:

Yeah.

Steve Denton:

Did I get those stats right?

Bryan Dove:

Good. Good stats.

Steve Denton:

Yeah, you see a pretty big … Were there any categories? For us, categories, obviously electronics and home goods. We’ve just seen home goods just way up year over year.

Bryan Dove:

Wow. Yeah. I think for us, the places that we see, just because we do see every category, we didn’t see any categories, let’s say, against season spike. So if you imagine things like home improvement, there’s not a lot of people in the western hemisphere kicking off home improvement projects as we head into winter.

Steve Denton:

Right.

Bryan Dove:

That’s much more of a spring and summer seasonal. So we didn’t see dramatic corrections or pull forward in those spaces. But we did see, I think when we look on a week on week basis as well as on an annual comp basis, we genuinely saw strength in almost every single sector.

Steve Denton:

Oh, wow.

Bryan Dove:

And then when you start to pick it apart by retailers, some retailers may be a bit more successful with their marketing strategies, some a little less so. But when we zoom out, because we see everything, it’s been healthy all the way across the board.

Steve Denton:

That’s fantastic.

Bryan Dove:

Yeah.

Steve Denton:

That’s a really good recap of how things are looking going into the peak season as we exit 2022. But, Bryan, one of the things that a lot of … Look, you’re a global company, so data, a lot of data rules, like different countries, different rules, but we’ll set that aside for a minute because that could be an entire three hour conversation.

Bryan Dove:

It’s a whole other topic.

Steve Denton:

But I’m just curious, where are the biggest gaps that you see where either merchants or manufacturers could be leveraging data to drive better commerce experiences or better outcomes?

Bryan Dove:

Sure. We’re fortunate we get to work with so many different customers. We see lots and lots of different data flowing through. And then like you asked about some of those gaps that we see pop up. There’s a couple places where we really try to help our customers get smarter about what they’re doing. Even if you think of things like very simple, hey, if I’m selling batteries on Amazon and on Target and on Walmart, are there things that we can help them do just to drive better pricing or more real-time reactive pricing? Something really simple, but ultimately a data problem. We’ve been solving those types of problems for years.

The things that start to get more interesting is when we start to connect some of the commerce data and the demand data and connected in with the shipping and the fulfillment data.

For example, we’ve been helping customers better anticipate if I order something from a site, when’s it going to get to the customer’s doorstep?

Steve Denton:

Right.

Bryan Dove:

What we saw is connecting what we know about our brands and manufacturers and their fulfillment times with what the retailer wants to promise. When we can narrow that window and give them more confidence, more accuracy, we saw it was actually increasing the conversion rate on those products. And so when you start increasing the conversion rate, all of a sudden the consumer’s happier because they’re finding what they’re looking for, they’re getting it on certainty, hey, it’s going to be here on Thursday instead of a seven to 12 day range or something like this, the retailer’s happy because they’re selling more, and the brand’s happy because they’re growing. We’ve started to really connect our fulfillment data and our shopping data and try to pull those back together.

Steve Denton:

Makes sense. Yeah. Predictability, transit times, predictable delivery times. We see a ton of that as well.

The other thing, not necessarily on the data side, but optionality, which is … One of the things we see is green solutions, sustainable.

Bryan Dove:

Interesting, yeah.

Steve Denton:

We see where 60% of the consumers will say, “You might not even be in my consideration set if you don’t have a sustainable option.” We’ve all kind of come into this world where everybody thinks it’s got to be one or two days, but more and more optionality around sustainable options. And that just might be a three day ground delivery.

And to your point, as long as it is predictable and as long as it’s communicated, we see more and more people opting in for that sustainable option. Optionality becomes pretty critical and data drives that.

Bryan Dove:

The word we use internally and that we see resonating with our customers is certainty. And so the interesting thing that, again, there was that big race to same day or one day or two days, and we see one just on the back end of the supply chain problems through ’21. And as that kind of continues to roll through the system in ’22, you see more variability in delivery timings. Where we really see that drive up matching consumer demand is when there’s certainty. It’s not even the absolute number of days, but if it says I’m going to get it on Thursday, I really get it on Thursday.

Steve Denton:

Yeah.

Bryan Dove:

And we see the difference in customer satisfaction, customer experience, repeat purchase rates. There’s a product we brought to market earlier this year for our retailer side to help them give better visibility and transparency to their end customer. And we see when we’re doing that it’s helping them not just decrease customer service asks, but actually increase repeat purchase and increase client retention. Because today’s consumer, we all have phones in our pocket, we’re used to getting all the information, all the data, all the time. We want data, we want transparency even on a consumer level, and that’s helping to breed trust and breed that repeat purchase that ultimately yields a better relationship.

Steve Denton:

100%. I mean, in the pandemic, 60% of consumers reported that they did business with a merchant they’d never done business with before. So think about all those first bites of the apple that marketers desperately try to get when they talk about new customer acquisition costs. But the key is you’ve been given this gift due to either inventory availability or lack of availability to get a bite of the apple. But if you don’t close that loop with transparency, speed, certainty, a seamless returns experience, that’s one and done.

And to your point, delivery certainty is critical in that because if you tell me I’m going to get it on Thursday, then I’m not going to look for it on Wednesday. And oh, by the way, if something happens and I’m not going to get it on Thursday, if you tell me that on Wednesday, it’s probably going to take some of the conflict out of it. And maybe you give me a coupon for the next purchase and I don’t call your call center and you maybe even get another bite of the apple because you turned a negative into a positive. That’s using data to close that loop and connecting commerce and logistics into one experience.

Bryan Dove:

That’s exactly right. We’ve seen a couple of different areas where we’re working with some of our customers to try to tie that delivery data and the tracking and there’s some AI that we use to anticipate if something’s going to miss or, we call it, predicted to miss. The more that you can tie that back in and tie it all the way back to that end shopper experience, ultimately what you’re trying to do is, we all know it’s crazy expensive in this world to acquire a customer to buy something the first time.

Steve Denton:

Yeah.

Bryan Dove:

Our marketing budgets are challenged, marketing costs keep going up or the cost per transaction, and it’s harder to find those incremental customers. Our motivation should be to surprise them, to delight them, and to make sure that they have, even if it’s going to be bad news, we can still deliver it in a great proactive way that really builds their loyalty and makes them want to come back because they know they can trust you as the merchant.

Steve Denton:

Sometimes they see CEOs get paid to see the future or see around the corner. But I tell people, if I could predict the future, honestly, I’d just go to the racetrack today, bet 3000 races-

Bryan Dove:

And be done.

Steve Denton:

… win them all.

Bryan Dove:

Yeah.

Steve Denton:

And then go talk to Elon about partnering at Twitter.

Bryan Dove:

That’s right.

Steve Denton:

I’m not asking you to predict the future, but as you’re talking to your clients, leaning into ’23, obviously the first quarter right around the corner, you see a lot of economic headwinds out there, layoffs, reductions, down forecasts. What are your clients talking to you about? What are you seeing as maybe some of the big themes going into ’23?

Bryan Dove:

Yeah, I think the most common theme that’s coming from our customers is they’re starting from the position of they don’t quite know what’s going to happen. Well, how do you prepare for not knowing what’s going to happen? And you think about how can I react more quickly? How can I be more nimble, more agile? And how can I have more control? And how do I go faster?

So as we’ve been talking with them, a lot of the investments we’ve made, both for our brand and manufacturer side as well as for our retailer side, has really been about giving our customers more tools, more flexibility, and more agility into their business. So we see … There’s one customer I was speaking with a few weeks ago that was looking at possibly switching up their whole model for how they work with some of their best suppliers, where they wanted to change the dynamics of how much inventory sits in the retailer’s warehouse versus how much does the brand hold onto. Sometimes you have lead times of 6, 9, 12 months on some of these orders. But they were looking at, saying, “How do we make a change for Q1 of this year?”

We just see that continual look back on agility and speed and being able to react quickly. And that’s where we’ve been investing in our products and services and that’s where we’ve been partnering with our customers.

Steve Denton:

We’re coming to an end here on Commerce Conversations. Bryan, I want to thank you for making the trip.

Bryan Dove:

Thanks for having me.

Steve Denton:

I know you’ve got a ton going on. Great acquisition. Congrats again.

Bryan Dove:

Thank you.

Steve Denton:

Powerful combination of companies there. Just kind of wrap things up here, I’m just curious if I’m listening to this or watching this and I want to go read something this weekend that will help me get better grounded in commerce or think about it in a different way, is there anything you’d recommend?

Bryan Dove:

One of the things I find is really helpful, as we go into the season of some uncertainty, maybe some different macro factors at play, the best way to succeed is to really understand your customers and be focused on serving them. All of us have customers in this world, how do we do that?

There’s some folks who were pretty early at Amazon for a while and they wrote this book called Working Backwards.

Steve Denton:

Working Backwards.

Bryan Dove:

Working Backwards.

Steve Denton:

Okay.

Bryan Dove:

It’s less about Amazon’s direct e-commerce business and more about how Amazon operates internally. And everything comes down to this fundamental concept of understanding what the customer really needs and then working backwards from there of how do you build it and how do you meet that need.

I think sometimes it sounds so simple, but it’s incredibly powerful and I’ve found it, in our organization, it really transforms the way that we understand what the customer needs that we can build for them, that we can find the best ways to serve them. I find it has a really broad range of applicability. So if somebody’s looking for the Christmas read, I find that one’s pretty powerful.

Steve Denton:

Yeah. Working Backwards.

Bryan Dove:

Working Backwards.

Steve Denton:

Awesome. Well that wraps this session up, this conversation up, that we’ve been able to have here with Bryan Dove, CEO of CommerceHub. We hope you enjoyed our Commerce Conversation and we look forward to seeing you down the road and talking to more guests and educating and sharing in the world of commerce. Take care, everyone.

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