When marketplace sellers get together, the conversation often turns to multichannel management software. Many sellers will talk knowledgeably about different vendors, but others will look on blankly.
After a while, when there is a break in the conversation, one of the sellers “in the know” will notice the vacant stares. How can they explain what they’re talking about? Maybe by saying how this kind of software synchronizes stock levels across marketplaces, creates listings and manages orders? Well they could, but normally they don’t. They just say, “Oh you know, like ChannelAdvisor!” And the blank looks fade instantly.
ChannelAdvisor is pretty much synonymous with “marketplace management software”. They’ve been in this business since 2001, longer than almost anyone else. They have over 2,800 customers globally, and in 2015 managed $6.8 billion in GMV (gross merchandise volume – total sales). ChannelAdvisor supports over sixty sales channels around the world, and the company went public on the New York Stock Exchange in 2013. There’s no-one else like them among the many multichannel software vendors.
I caught up recently with Mike Shapaker, ChannelAdvisor’s Managing Director for the EMEA region (covering Europe, the Middle East and Africa). We talked about how this industry giant came to exist, the features they have been working on recently, and the company’s plans for the future.
Andy: How did ChannelAdvisor get started back in 2001?
Mike: The founders of ChannelAdvisor, Scot Wingo and Aris Buinevicius, sold their second start-up – a company called AuctionRover – to GoTo.com in 2000. GoTo.com was one of those high-flying firms during the dotcom boom back then, and AuctionRover was a search engine for auctions on the internet.
During that time there was a team working on solutions to help companies sell on eBay and other auction sites. So in 2001 they spun that technology back out of GoTo.com to form ChannelAdvisor. GoTo.com went on to develop the first paid search advertising model, then changed their name to Overture and were eventually acquired by Yahoo a couple of years later.
But ChannelAdvisor had already been spun off, and over the years we added many more capabilities.
So did that all start in North Carolina? Where in the world do you have offices today?
Yes, Scot and Aris have always been based in North Carolina. That is where ChannelAdvisor began and still has its headquarters. Around 2004, we opened our first office in London area and we’ve expanded internationally since then.
We have two offices in the US, in North Carolina and in Seattle. Then our European headquarters is here in London, and we have a smaller office in Southend-on-Sea in the United Kingdom. Our office in Ireland is where we do a lot of development and also have some of our support team. We have a sales and services office in Berlin. So there’s pretty good coverage in Europe.
We also have an office in Melbourne, Australia to cover Asia Pacific, a couple of offices in China, and a small sales office in Sao Paulo, Brazil.
From a marketplaces perspective, what does your software do?
We focus on three primary pillars, as we call them. The first is what we call “channel operations”. That’s all the automation technology around the creation and updating of listings and SKU quantities, prices and order processing, and being able to do that at scale for companies with a large number of SKUs and a lot of revenue.
It also includes channel-specific automation, so things like eBay disputes, as well as features that allow our customers to easily customize content for each marketplace in the different formats they require. It’s the operational aspects – the mechanics behind the scenes.
The next pillar is “channel optimization”. This is probably the most important area to us and the major focus of our development over the last several years. Competition is increasing and it makes it more challenging, even for experienced retailers, to get the mindshare and market share they need.
One feature we’ve developed under that pillar is an algorithmic repricing technology that helps our customers to win the Amazon Buy Box at the highest possible price, while remaining price competitive – so trying to maximize the profit on Amazon.
Then for sellers who don’t necessarily compete on price, like branded manufacturers, the competitive landscape makes it more challenging for them to get visibility. So we were first-to-market with integrations to both Amazon’s and eBay’s advertising programs. Those allow our customers to pay for increased visibility so they can capture more demand on the products where it makes financial sense for them to do so.
So that’s the channel optimization pillar. Together with channel operations, it gets sellers on the marketplaces, helps them manage the mechanics at scale, and maximizes their profit and visibility.
The third and final pillar that we focus on is “channel expansion”. We continue to add new marketplaces to our platform, and try to make it as easy as possible for customers to get started on them. Some can be more difficult than others, depending on the marketplace. At last count we supported more than sixty marketplaces globally, and we have hundreds of other destinations we support for sending product feeds. Our customers can customize feeds and send them to destinations that we don’t support as well.
This year, in the second quarter of 2016, we were a launch partner for Walmart as they rolled out and promoted their new marketplace. We’ve also announced expansion into Amazon India, and started working with Otto in Germany and Lazada in Southeast Asia. Those are just a few examples of new global marketplaces we’ve added in 2016.
What else does ChannelAdvisor do, beyond online marketplaces?
We have two other primary areas, one is digital marketing, which we’ve been in for a long time, and the other is branded manufacturers.
Under digital marketing, we help companies manage their Google and Bing campaigns, both AdWords and Product Listing Ads, which are capturing more and more advertising dollars. We’ve expanded that to Facebook and some of the other social media sites. The machine that underlies it all is a big feed-processing engine. We support hundreds of sites but, as I mentioned earlier, our customers can also develop feeds for sites that we don’t support. We have companies using it for anything from retargeting partners to review partners, to internal IT needs – you name it.
The third main area we’re into is branded manufacturers. We have an initiative called ChannelAdvisor for Brands to help manufacturers make sure they’re maximizing their brand online. It includes product intelligence capabilities that allow them to monitor what’s happening online and make sure their brand is being used how they want it to be used. Product Tracker monitors where products are being sold, pricing, and what’s in stock and out of stock. Then Content Tracker allows brands to see how their image, video and text content is being used across the internet by their retailers.
Under ChannelAdvisor for Brands we also have a where-to-buy solution that allows a manufacturer add technology to their website that points customers to retail partners to make a final purchase, either online or locally.
What kind of businesses is your marketplaces solution suitable for? Does it make sense for businesses who only sell on a single marketplace?
Our features are designed for any company to help them generate revenue and profit and do it in an efficient manner, but we’re not really good as a starter package. If you’re just starting up and selling on a marketplace and you don’t have a lot of SKUs, probably ChannelAdvisor is not the right fit for you.
Our system is designed for companies doing this at scale, so established retailers and brands are the typical customers. Not to say we haven’t launched with brand new companies, but typically our customers have some kind of scale so that they need our platform. We’re targeted at people who have the experience and size to invest in a platform such as ours.
We have lots of customers who focus just on a single marketplace. But they’re typically larger, and have a lot of SKUs, and need a system that’s going to be able to process all of their data. If you have just five SKUs in one marketplace, then we’re probably not going to be a great fit. But if you’re looking to grow, we’ve worked with a lot of companies that have started somewhere else, grown their business, and then come to us to expand into other channels.
What are the main milestones in ChannelAdvisor’s history?
The founding in 2001 was probably the biggest event, otherwise the rest of it wouldn’t be here. But over the years we’ve continually added new channels and functionality for our customers, through both internal development and acquisitions. Early on we added Amazon and the technology to handle feeds.
An acquisition more than ten years ago got us into the search marketing business, and another acquisition just a couple of years ago got us some of the technology we use today for our branded manufacturers initiative. Adding all the functionality over time as ecommerce has evolved is really our biggest milestone.
Then going public on the New York Stock Exchange in May 2013 was a big milestone. But internally we measure our success based on the success of our customers. So when our customers are hitting new milestones in terms of GMV or sales, those are the things that we tend to celebrate – because those are the things that make us successful. The other things happen periodically, just as we’re evolving with ecommerce.
For many years ChannelAdvisor has been running annual industry events, under the Catalyst name in the US and UK. What do those events bring to the industry? When will the next ones be held?
I don’t think our thinking has changed at all about these conferences. Ecommerce is a very high-paced, dynamic industry. Trying to stay on top of all those trends and best practices is challenging, even for people that work in ecommerce day-to-day. So the conferences have always been about helping attendees understand the changing landscape so they are positioned for success. What are the new things that are coming out? What should they be trying? They can come and hear that directly from companies like Amazon and eBay and Google and Facebook.
Because of our global footprint and the diverse customer base we have, our conferences have always been designed to cover a wide range of topics, to allow people to connect and share ideas, and talk about ecommerce. That’s really what it’s all about – networking, learning new things, and hearing from some of the bigger companies directly. We put the events on, but they’ve never really been about ChannelAdvisor.
We also run user forums that are more specifically designed for customers to talk about our technology and software, but those are separate from Catalyst. We try to make Catalyst an industry-focused event where people can discuss ecommerce and learn from their peers and the speakers we have.
In 2017, our US Catalyst will be held March 6th through 8th in Nashville, Tennessee. It’s the first year we are doing it there. In the UK, we’re taking Catalyst to Manchester on May 16th. We’re trying to make it a little easier for customers in the North to attend the UK event, but also make some arrangements for people in London and other parts of Europe to come as well.
Our Chinese event is called Insite and runs over one day. The name is different but it’s a similar idea to Catalyst, covering ecommerce trends across Asia and bringing people together in the industry.
You have kept a fast pace of development going through all the years. How do you decide which new features or integrations to build next? How do you make sure they get delivered on time?
We prioritize new features and new marketplaces based on a combination of customer feedback and our own assessment of where the market is going. Feedback is very important to us – what our customers are asking for. Then we have to make sure it fits with our core competency, and if we think we can add value going forward. There’s really not a lot of magic behind it. It’s just taking all that feedback, doing an assessment, and making bets on areas where the customers want it and we think it’s where the market’s going.
To keep to the delivery schedule, we have internal processes in place. We have a product management team and a development team, and processes to ensure we deliver on a fairly tight schedule. We try to be aggressive with our development, but if something’s not quite ready we don’t have a problem waiting a little longer to ensure we get it right.
Maybe we’ll set a goal to release ten things and if eight of them are done and ready, we’ll put those eight out there and push the other two onto the next plan. In 2015 we had $6.8 billion of transactions coming through our systems, so we have to be very careful about making changes. In many cases our customers’ livelihoods are depending on the sales that go through our platform, so we certainly don’t want to impact that.
It takes a lot of people thinking about it every day, and doing it in such a way that we’re not making huge bets that take many, many years to come to fruition. We make a lot of small bets that over time add up to progress.
ChannelAdvisor works with smaller companies selling only online, as well as large international brands. How do you accommodate the different needs of those businesses?
We have retailers and branded manufacturers as customers, so yes – there’s a lot of different sizes. We have some internal processes in place to ensure we’re providing solutions for customers that are the right fit, not only based on size, but also things like them having the right data to be on certain marketplaces. We want to make sure we can add value to their situation, and filter out the ones that aren’t going to be a good fit. It’s not always an easy thing to do, but that’s the first step.
The competitive landscape on the marketplaces is the same for everybody. The things we build to help with channel operations, optimization and expansion that I talked about earlier, are a good fit for most of our customers, regardless of their size, because all sellers have to live by the rules of those channels.
When you look outside the channel aspects, to the back office and the operational sides, we try to make our platform flexible. Some of our sellers use the management capabilities that are built into ChannelAdvisor. Other sellers – typically the larger scale companies – may say, “We actually use a dedicated ERP platform and order management system.” Those customers can take our output and integrate it into other systems, if they need to do something beyond what we offer in that area.
Our job is really to ensure that we help our customers win within the channels. The Amazons, eBays and Googles make the rules and you have to follow them, so our job is to do everything within those rules to help our customers win.
We also have a managed services team, typically for larger businesses who don’t want to manage the channels themselves. They are a team of people who have been doing this for a long time, selling on eBay, Amazon and other marketplaces. We actually take over that part of their business – they outsource it to us – and we just run their marketplace operations for them.
For the small to mid-sized businesses, what kind of onboarding and ongoing support should they expect?
Well, we have a launch process. As soon as the sale is done we put them in touch with our launch team, and they work with the customer to get them live, looking at their data, getting them setup on the system and putting some listings live. There are training elements to that too, to help the customer get up to speed on how to use everything within the platform.
We also have a global support team to answer more technical questions, and help and documentation resources available online. We try to cover all aspects of what somebody might need in order to get up and running on the software. For the larger customers we also provide account management.
Each marketplace has its own nuances. To sell on a marketplace seems easy enough, but when you’re doing it at scale you can’t come in and press a button and everything just works within five minutes. You need to know a little bit about how each marketplace works, and make sure the technology is all set up to do what you want it to do. We try to provide that help upfront and then on an ongoing basis.
What new features or integrations has ChannelAdvisor added to the platform recently?
Algorithmic repricing is a highlight, and we’ve seen some very good success with customers using that, in terms of winning the Buy Box on Amazon. Then there’s the eBay promotions manager system, which allows customers to create and manage eBay promotional offers at the order level through our platform.
I mentioned some of the marketplaces we’ve added earlier, so Walmart in the US, Amazon India, Otto in Germany, and Lazada in Southeast Asia. Then there’s others like Flubit in the UK and ManoMano in Europe. We’re continuously working on adding more marketplaces.
We’ve revamped some of our performance dashboards. We now have more than fifty analytical widgets you can add to your dashboard to choose which metrics you want to look at on a day-to-day basis. We’ve made our order exports more flexible to allow people to better work with drop ship partners and third party logistics companies.
We’ve added benchmarking, so you can compare your business to your peers. It’s all anonymized, so we’re not giving away anybody’s secrets, but you can see how you’re doing in terms of what marketplaces you’re on and other key metrics compared to other businesses using ChannelAdvisor.
On the digital marketing front we’ve done some things to enhance the management of Google Product Listing Ads (PLAs). The product group generator allows advertisers to take a more dynamic approach to campaign management, saving a lot of time. We’ve added some benchmarking there too.
What’s next in the pipeline for ChannelAdvisor?
We’ll continue to focus on the high level areas I mentioned before. How do we make the general operations piece more efficient? How do we continue to offer new marketplaces for channel expansion? But our bias is mostly towards optimization: how do we give our customers the right data and the right tools to win in an environment where there’s more and more competition?
We have a ton of data, and a lot of experience in this space, so we’ll continue to develop features that will hopefully allow our sellers to outpace their competition. We’ll also continue working on our solutions for branded manufacturers. It’s really just focusing on how we can help our customers sell more of their products as efficiently and profitably as possible. That’s really all we think about and that’s what drives our pipeline.
What motivates you most about working at ChannelAdvisor? What gets you up in the morning?
One thing about ChannelAdvisor that has really kept me there, motivates me to come to work, and makes it fun is the people. We’ve always had a great team at ChannelAdvisor. We’ve always had great customers at ChannelAdvisor. From some of the bigger manufacturers and retailers, all the way down to guys starting up their business from scratch. They’re very fun and interesting people, and pretty much everybody you interact with is on the leading edge of ecommerce.
It’s an exciting industry, an ever-changing industry – nothing stays the same for long. When you’re in an industry that’s exciting, and working with a great team and great customers then it makes the job fun.
The marketplaces, particularly Amazon and Alibaba, seem to be getting stronger and stronger. What do you think is most interesting in ecommerce now, and what does the future hold?
Amazon is fascinating – what they’re doing with fulfillment and logistics, and how big they’re becoming. Google are doing some interesting things with product advertising, and Facebook are getting into product-based advertising too, and starting a marketplace. Companies like Walmart, who have been around a long time as traditional retailers, are now building out their marketplaces. More and more manufacturers are looking to sell direct. There’s a never-ending list of things that are interesting and changing.
When you look at a place like China, you see that marketplaces dominate there. I think Tmall touches a majority of the transactions in China in one way, shape or form. People there are used to buying on marketplaces, whereas in the West we grew up with traditional retail and marketplaces are a fairly recent phenomenon.
As more and more companies are building marketplaces into their platforms, it’s becoming a stronger business model for the retailers. Consumers are getting used to the idea that if they go to Walmart, for example, they will see things being sold that Walmart doesn’t sell itself. When the web first came out, that might have been a shocking idea. Now everybody is used to Amazon and eBay, so the whole concept of third parties selling on somebody else’s platform is well accepted by consumers.
The big players like Amazon and eBay have had mobile apps for a long time, so they’ve taken advantage of the growth in smartphones, and people using their phones more and more to shop. I think that’s also given consumers a comfort level with marketplaces, because they were some of the first businesses to have apps that made it really easy to buy something on your phone.
What do you see as the biggest challenges for businesses selling on marketplaces today?
Trying to maintain growth of revenue and profit is one of the biggest challenges. Increasing competition is a big challenge too. In the early days of eBay, and even Amazon as a marketplace, not everybody sold on it. You could get on there and have a wide open playing field with maybe not a ton of competition.
But Amazon has grown bigger, and more companies have become familiar with the third-party selling model. eBay has shifted over to a fixed-price new item catalogue type of business, versus the old auctions, and there’s more and more competition everywhere. Trying to get visibility with a growing product catalogue, trying to get yourself at the top of the list with consumers, that’s probably the biggest challenge. That’s really why we’re focused on the channel optimization piece. How can you get the right price? How can you get the visibility on your products to bring you to the top of the list?
The internal operations of a company have to be good in order to succeed, and that can be a big challenge too. With the marketplaces there is an element of, “Did you ship on time? Did you meet the promises that you made to the customer?” The companies that can’t fulfill their obligations aren’t going to last too long no matter how good their prices are.
Shipping and logistics is an area where we expect to see more innovation and competition moving forward, especially with Amazon getting into it. Consumers have very, very high expectations on the price of delivery (free), and the speed of delivery. Even five years ago, telling me I could get something for free in two days would have been shocking. But now that’s expected. If you don’t get something in two days for free, or one day for free in the UK, that’s almost unacceptable customer service.
I think there may be some disruption happening in that area in the future. Sellers will have to navigate those changes as they come.
Mike, a big thank you from me and the readers for sharing your insights about ChannelAdvisor and ecommerce. I hope your success continues.
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ChannelAdvisor’s Mike Shapaker on Operations, Optimization and Expansion