What’s next? (Local) online retail and corona - eBay podcast for sellers
It’s one of the biggest questions for all sellers: How does COVID-19 affect commerce? What can we expect from “post-Corona e-commerce”? We provide insights into current developments and talk with expert Boris Hedde, Managing Director of the Institute for Retail Research (IFH) in Cologne. How does he see shopper development, purchasing power, and shopping behavior?
Feedback on the episode? Send us an email at podcast@ebay.de.
To the Podcast Overview
Institute for Retail Research: https://www.ifh.de
Competence Center Retail: https://kompetenzzentrumhandel.de
Isabell: Hello, dear listeners, and welcome to our brand-new podcast for sellers and for everyone who wants to become one. We’re very happy that you’re joining us today. From now on, there will be a new episode of our podcast every 2 weeks, and you can listen to it through your preferred podcast provider. The podcast is available on all platforms, and we’d be delighted if you’d subscribe right away. A quick intro to me: I’m Isabell Butterwegge, I’ve been working at eBay for a few years in the global product marketing team and am basically responsible for the seller experience on our platform.
David: I’ll jump in as the second voice now: Hello from my side, I’m David and I’m Seller Engagement Manager in the global team and I take care of connecting with you sellers. The focus here is of course on the eBay Community, but also on all the other channels. You can also find all further information about the podcast in its new look on our landing page, which is linked in the description. So you don’t have to write anything down, but can focus fully on the conversation.
Tino: Yes hello, I’m the third one here in the group and we’re basically the three eBay musketeers. I’m Tino, I’ve been with eBay for eight years and I’m responsible for the wonderful categories toys and model building. I’m super happy that today we’re sitting together here in the eBay podcast studio and recording the first episode. We’ll probably take turns in the future too, but it’s just nice again to be able to sit together with two such wonderful colleagues. But now to today’s topic, not only highly topical, but also very interesting for all our sellers. Today we’re going to talk about what happens next with brick-and-mortar local retail and with online retail, after Corona or right now with Corona.
Isabell: Exactly, and we’re especially happy today to have invited an expert for this topic, and I’d like to warmly welcome Boris Hedde from IFH Cologne: Hello Boris.
Boris Hedde: Hello Isabell, hello David, hello Tino, I’m very happy to be part of your first episode. Great honor! I’m excited about our talk on the future.
David: Yes, very nice. Boris, for everyone who doesn’t know you, just a quick explanation. Boris Hedde is Managing Director of the Institute for Retail Research in Cologne and has been focusing for years mainly on the prospects for future retail practice. And that’s why you’re the perfect guest for today’s topic, because today we especially want to look into the future.
Isabell: Exactly, we’ve prepared a few questions and I’d say we’ll get started right away. Boris, for brick-and-mortar retailers, online retail is now basically indispensable after the lockdowns we’ve had over the last years and months. In your opinion: what role will multi-channel play in the future, meaning selling through various channels?
Boris Hedde: Yes, that’s interesting, I think that’s been on our minds since the first IFH multi-channel study, which came out in 1999, so we have a really long history of analyzing it. At first we always said: multi-channel is differentiation. Today we say: multi-channel is a hygiene factor. So anyone who can’t support it will certainly have a hard time, and now in Corona times even more so. Because if I can’t support the channel, I lack a very, very important lever to simply close the gap.
Isabell: What’s your assessment of this? What were the biggest challenges for sellers over the past months?
Boris Hedde: The biggest challenge was simply maintaining closeness to the customer despite stores being closed. How do I actually manage to stay connected to my customers? How do I manage to maintain that bond? That really required creativity, that required entrepreneurship, because suddenly the shutters were down and many sellers no longer knew how to deal with the issues, and those who had started early to collect their customer data were certainly at an advantage, because then they could also write to those people, their customers. There’s a nice example from Cologne that we saw, and this case really really grew on me, because I also have children and I can relate to it quite well. It’s about a shoe retailer for children’s shoes. Self-employed, single parent, with the whole business hanging on her, and the shutters go down and she can no longer do any business because of the Corona crisis, and what she did was she really wrote to all her customers, said, folks, put your children on a sheet of paper, trace the feet and write down what color the child wants to go into the Corona crisis with, and this campaign that emerged from that didn’t lead to people feeling compelled to buy shoes, but instead created such reach that she suddenly won new customers she didn’t have before. And I think it’s a good example that shows how entrepreneurship, when lived out creatively, can also be a lever in such challenging times. But the condition for that was that she had collected those customer data beforehand.
Isabell: Yes, that’s a really nice example, that’s true. You just talked about shoes; the fashion sector hasn’t been doing so well in recent months. Were there products or certain areas that were particularly in demand?
Boris Hedde: That was really exciting, also for us as analysts looking at the market from the outside. We had never seen such a wide spread in retail growth rates. You could say it was 60%. The big winner of last year was the bicycle market and bicycle accessories, which certainly also benefited from the development of e-bikes and the like and from holidays disappearing and so on, and were able to absorb a lot of budget. Of course grocery retail and similar sectors too, but the big challenge was fashion or consumer electronics or similar areas, which had clearly negative growth rates. And this spread of 60%, which I just mentioned, we’ve never seen in 20 years, and normally it would be 15% in a year. That shows there were a whole number of winners and losers in this development, and of course it somehow has to do with the assortments. I think many substitute purchases were made, which may also have been higher priced at times. I think there were also some good developments in the furniture sector for some retailers. In sports it was a bit more balanced: individual sports were certainly more in focus than team sports, because they couldn’t be practiced, and so there were many categories that were simply influenced by the Corona development and the possibility of living out something, so the products were more or less strongly in focus.
Isabell: And did you make forecasts about how this will develop over the next months, so this discrepancy, or yes, this strong demand, this weak demand?
Boris Hedde: That’s the core question we get every week from several large retailers too: where is this all heading? Incredibly hard to calculate, because the variables seem to change every day. We’re obviously looking at the Delta variant with great concern. We’re looking with great concern at the frequencies that are not where you might have expected them. The rush back to the cities hasn’t materialized. And so our forecasts are certainly not good, and to put a valid quantitative number on the table here would not be honest. But we are in the process of calculating the current pace, and the fact is we have downward trends.
Isabell: You just mentioned the rush back to the cities, so you had actually expected the cities to boom again in summer?
Boris Hedde: Boom is of course a relative term, but I at least hoped there would be catch-up potential, a chance to simply get out of this social distancing again, come into the cities and then actually enjoy shopping again. That was only partly confirmed, because frequencies did actually go up again, but people unfortunately didn’t visit the stores in the way you would expect from the number of visitors to the city center increasing, and in that discrepancy it then led to revenue not happening as many retailers had hoped, not as planned.
Tino: Boris, you already mentioned customer loyalty, and I think that’s very interesting for all those who have newly entered online retail. How do I, as a seller, keep my online customers in the long term and build good customer loyalty?
Boris Hedde: So I think what’s very important, what’s central, is that I first have to be findable. We can also see that multi-channel behavior is not just a major issue on the retailer side, as mentioned earlier, but is everyday life on the consumer side. Every purchase that isn’t food, or not every one, but a large share of purchases that aren’t food, start in the online channel. That means if I’m not visible online, I have no chance of securing that loyalty. That’s one thing: I need to make sure I have a certain presence. The other thing is maintaining communication, because when it comes to loyalty, it’s about having regular contact. Of course this can be through newsletters, which many do and many do successfully. But it can also be social media, it can also be other levers, where you perhaps join forces with card systems, with loyalty systems, and act together to simply provide regular exchange or input. For the relevant customers so you don’t just fade into oblivion. In a crisis, of course, that’s absolutely essential.
Tino: And how do I reorganize my processes and make my business ready for the new online retail in the long term?
Boris Hedde: I think you have to start where it’s most important: with the customers. So what am I ultimately doing there to have the security of being in regular exchange with my customers? Also being able to provide regular offers and so on. Once I have that, once I’ve got all these digital channels on the platforms under control as part of advertising, as part of external communication, then in the second step I can perhaps also turn to the issue of internal processes. Having better information with product data for procurement, in the context of information about products online, when it comes to delivery services, generally services, I think then that ultimately also helps to simply make my internal work better and more successful and thus more efficient, and that’s the second step, if I first even have customer contact, I need that first.
David: Do you also offer any kind of help for retailers who are newly entering this whole online business?
Boris Hedde: No, I don’t think we have 52,000 retailers out there, that would be presumptuous, but we still have a good lever for them, namely the Competence Center Retail, which can also be found online under that name. A ministry-funded project. It has many consulting offers, many workshops, guides and all sorts of things available online, especially for small and medium-sized businesses. That’s the “Mittelstand 4.0 Competence Center for Retail,” as it is officially called. Funded by the Federal Ministry for Economic Affairs, and I think that has already been an interesting lever for many, many small and medium-sized businesses to obtain information.
David: We’ve talked a lot about brick-and-mortar retail entering online retail. Now, many eBay sellers have of course already been online for a long time and also sell online. What could online retailers learn from brick-and-mortar retail? Especially with regard to customer loyalty?
Boris Hedde: David, that’s a very good question, because in the past the question was usually the other way around when it came to asking what brick-and-mortar retail can learn from online retail? I think online retail has shown us very, very successfully how process efficiency works. How to optimize the purchase “to the max,” I was almost about to say, has led to us having a comparatively comfortable, if not lazy, customer today. That’s, I think, what goes in that direction. In the other direction, you’d have to think about it. I think emotions are the big issue. Successful retailers manage to give us a good feeling when we’re there and also make us want to come back, and this emotional aspect also goes through interaction, through involvement, through experiential themes. And through good staff. Of course we don’t always have that in brick-and-mortar retail, but I think these are levers where, in principle, online retail can also benefit from and learn from brick-and-mortar retail, because in the end maybe it’s about the heart, and there it helps if you find a personal level. I think one or another brick-and-mortar retailer does that better than online retail, where it’s about the head when it comes to logic and process efficiency.
Isabell: You already briefly touched on the topic of loyalty programs. Is there anything you’d like to recommend to an online retailer as advice?
Boris Hedde: Yes, so I think: stick together, pool your efforts, you’d like to tell people. There are customer cards coming out of your ears, to put it a bit bluntly. It would probably be desirable, also in the interests of the customers, to simply go for shared solutions. And when it comes to loyalty systems online, I naturally have many more options, because I can also send pushes more easily and similar things. We’ve also seen many concepts, including retail concepts based on platforms, and they’ve also proven very successful in the furniture market, in fashion and similar sectors, where regular exchange, very close loyalty and such registration also offers the chance to always receive interesting offers and information through regular contact. I think that’s something online retail can play very well, and where ultimately, especially with platforms, brick-and-mortar retail can perhaps also benefit, because it’s comparatively difficult for them when it comes to customer cards and similar things. Especially for small and medium-sized businesses.
David: Boris, we’ve just talked a lot about different sales channels, marketing strategies, loyalty programs, social media. Which sales channels and marketing strategies does a retailer need in your opinion more or less indispensably, and what is definitely no longer a "nice to have"?
Boris Hedde: So I think we used to say you definitely need your own online shop, but I don’t think that’s absolutely necessary anymore; the question is that I need a digital strategy, and that is essential. Of course an online shop can be a good solution, and I think many have been successful with it, but it is not the only solution I must have, but I think, and this is really essential, that I have thought about my business model, my target group and my assortment. With my offering, which I also want to provide, and with my positioning: what does my digital strategy look like? It starts with visibility. But it also involves the environments in which I want to position myself, how I want to set myself up? Anyone who hasn’t found a clear answer and a clear strategy for their company simply has a hard time, because then they run it relatively arbitrarily.
David: So by digital strategy you don’t just mean putting up a shop and saying "Hey, I’m now reachable online," but that’s not where it ends, it’s where it begins. Right?
Boris Hedde: Right, yes, or perhaps you shouldn’t start then, because it gets expensive. That’s a good question, many retailers started that way and were then perhaps disappointed that they didn’t have the success they had hoped for, and that’s exactly the point: if you just start, maybe acting a bit actionistically without a plan, then it just becomes difficult, but if I think about what I actually want to achieve and by when? In terms of reach, in terms of possible positioning? Maybe I want to test certain product categories online first to see whether it works or not - all of that, I think, are topics that go along with a clear process. I always like to say “first understand, then plan, then do” and not just start when you don’t know what the actual goal is, and I think that’s an important point. And I hope that especially coming out of the Corona crisis, a new understanding has emerged, because then some people are now proceeding in a more reflective way. It’s also more difficult, because of course there is less money available for investments now, so it’s all the more important to make the right decision.
David: And if you imagine you run your own online shop or work in online retail? What would be the tip you’d wish for that you give every online retailer at the start?
Boris Hedde: That’s a good point, I think people naturally want to avoid many mistakes, and I think many mistakes were made because the accuracy was somewhat lacking. I think you have to deal with the details very, very early and very strongly, because we’ve seen many examples where doing a shop on the side just doesn’t work, and that applies to collecting customer data, reporting, using product data and all these topics where, of course, precision matters. Not paying absolute priority to that from the outset is, I think, a mistake that later becomes a very costly boomerang, and that’s why I’d probably say: dear retailers, be aware that this is work, but all the work you put in at the beginning will benefit you later on.
David: Which was also shown by your example: the shoe retailer collected the data, was able to use it and only then could write to all those people, their customers, and without this accurate data collection at the beginning, of course always GDPR-compliant, that wouldn’t have been possible?
Boris Hedde: Absolutely, and if she hadn’t had the right email address for me, they would never have reached me. So that means: that’s absolutely essential, so make the effort at the start, and you’ll benefit later on.
Isabell: Boris, how do you feel about a shop on a marketplace? Sellers can create shops with us too and can customize them. How do you see that? Because I think we’ve mostly been talking about separate shops on separate websites.
Boris Hedde: Yes, I think that’s a very big topic that has actually been with me massively since 2014. That’s when we saw the first online marketplace on a regional level in a city, and everyone had high hopes that it would be the big lever and game changer. At the same time, we also had the big platforms in parallel, including of course eBay. Then there were Amazon, Zalando, or whatever with unbelievably high growth rates and huge successes - and the regional online marketplaces just don’t really work. And I asked myself: what’s the right way? And I think when we deal with marketplaces, we have to go for the ones that have a certain reach. Just last fall, in September of the Corona year, we asked 60,000 people in the city center about this. How do they shop now, how has their shopping behavior changed? Of course they buy less, they came into the city less often, and we asked, “Where did you buy your stuff then?” And then it became very clear very quickly: A - through marketplaces, but B - you also have to say, only through the big marketplaces. The many small regional online marketplaces were struggling, and I would have thought they might actually have been able to benefit especially during Corona. That didn’t happen in that form, so for me the quintessence is: if I go through marketplaces, I need really large reach, and of course it’s exciting if I can rely on big names, perhaps also with eBay. You now also have a marketplace solution that you’ll then be offering nationwide.
Tino: Boris, I also have to ask you something now, and I’m looking at this with some concern: here in Germany we have lots of bargain blogs and bargain sites where goods are offered every day or deals are shown with big discounts? I can see that especially with some great A-brands in categories like toys, for example. There we’re basically back to a pre-Corona discount policy, so suddenly “New in Season Items” are being offered with 20% OFF again. How do you see that nowadays? Is the way it’s being handled healthy? And I think that’s also a bit difficult for brick-and-mortar retail right now.
Boris Hedde: Honestly, a huge, huge, huge trap. Of course we also have to state that all the warehouses were full when people didn’t buy for a year. Fashion retail didn’t know what to do with its products, because of course the next collection is waiting and the other one wasn’t sold, and that ties up capital, and I think it’s understandable that you then try to act in a capital-binding way by selling the goods quickly. But of course it’s a boomerang, because it weakens positioning and because it also trains customers in a direction that isn’t beneficial, because it becomes increasingly difficult to maintain a functioning business model that way. So if discounting is about optimization, we also have a discount country here in Germany. In grocery retail, many people and many, many nations look to Germany with complete fascination, because it shows that you can also operate successfully with discount concepts. But that’s a different focus than simply trying to push products out. I think that’s a different model, because it’s about physically experienced process efficiency that led to simply being able to offer lower prices. But we’ve also seen in discounters in grocery retail the upgrading in terms of appearance, the upgrading in terms of the store’s positioning - that was all there, which of course is all better if you sell with quality. And therefore... As I said, I have great understanding, especially out there for the small retailers who are now also very afraid of what to do with all the products in stock, that they then try to quickly free up capital or make capital available again. But it’s really a balancing act and can really become a nasty trap.
Tino: Yes, Boris, thank you very much for these exciting and interesting, inspiring insights that you shared with us here. So we’ve talked with you about the future of multi-channel as well as the challenges, but also very much about the many opportunities for sellers, so there is definitely a light at the end of the tunnel. At this point, though, we’d like to always ask our guests one very last question in the future. Dear Boris, what was the last thing you bought on eBay?
Boris Hedde: What was the last thing I bought on eBay? Yes, it’s not really fitting for a podcast, but it was actually a greenscreen. So after we were all working from home, I’ve now set up my basement completely so that I can do all video conferences in the basement. All my walls are green, and this green came from eBay, so if you see me in any talks or similar, you’ll always see me in front of the green eBay wall, which then isn’t green because an image has of course been placed over it, but in fact the greenscreen was my last purchase on eBay.
Isabell: Yes, great, and with that we’d also like to say goodbye for this week. I personally got a lot out of this. Thank you very much, Boris. I hope our listeners also got a lot out of it and can perhaps be inspired for their own business strategy in one place or another? And yes, I’m already looking forward to the next episode, because it’ll be in 2 weeks.
David: Thank you very much, Boris, I’m really glad you were here for the first episode. We’d also love to hear your feedback on our podcast! Feel free to write everything in the eBay Community and tell us how your business has changed through Corona or maybe you even got into online business because of Corona, or has your buying behavior changed? We’re curious and look forward to your comments or questions. And if you’re listening to us on your favorite podcast platform right now, feel free to leave us a like or subscribe, and we look forward to being back with you in the next episode.
Tino: Yes, and from my side too, a heartfelt thank-you again Boris, you were a super first guest for our first podcast, you’re very welcome to come back, and I’ll just say bye to everyone for now.
Boris Hedde: Thank you very much, I’d also like to say thanks, it was really a lot of fun for me, hopefully see you again soon.
David: I’ll jump in as the second voice now: Hello from my side, I’m David and I’m Seller Engagement Manager in the global team and I take care of connecting with you sellers. The focus here is of course on the eBay Community, but also on all the other channels. You can also find all further information about the podcast in its new look on our landing page, which is linked in the description. So you don’t have to write anything down, but can focus fully on the conversation.
Tino: Yes hello, I’m the third one here in the group and we’re basically the three eBay musketeers. I’m Tino, I’ve been with eBay for eight years and I’m responsible for the wonderful categories toys and model building. I’m super happy that today we’re sitting together here in the eBay podcast studio and recording the first episode. We’ll probably take turns in the future too, but it’s just nice again to be able to sit together with two such wonderful colleagues. But now to today’s topic, not only highly topical, but also very interesting for all our sellers. Today we’re going to talk about what happens next with brick-and-mortar local retail and with online retail, after Corona or right now with Corona.
Isabell: Exactly, and we’re especially happy today to have invited an expert for this topic, and I’d like to warmly welcome Boris Hedde from IFH Cologne: Hello Boris.
Boris Hedde: Hello Isabell, hello David, hello Tino, I’m very happy to be part of your first episode. Great honor! I’m excited about our talk on the future.
David: Yes, very nice. Boris, for everyone who doesn’t know you, just a quick explanation. Boris Hedde is Managing Director of the Institute for Retail Research in Cologne and has been focusing for years mainly on the prospects for future retail practice. And that’s why you’re the perfect guest for today’s topic, because today we especially want to look into the future.
Isabell: Exactly, we’ve prepared a few questions and I’d say we’ll get started right away. Boris, for brick-and-mortar retailers, online retail is now basically indispensable after the lockdowns we’ve had over the last years and months. In your opinion: what role will multi-channel play in the future, meaning selling through various channels?
Boris Hedde: Yes, that’s interesting, I think that’s been on our minds since the first IFH multi-channel study, which came out in 1999, so we have a really long history of analyzing it. At first we always said: multi-channel is differentiation. Today we say: multi-channel is a hygiene factor. So anyone who can’t support it will certainly have a hard time, and now in Corona times even more so. Because if I can’t support the channel, I lack a very, very important lever to simply close the gap.
Isabell: What’s your assessment of this? What were the biggest challenges for sellers over the past months?
Boris Hedde: The biggest challenge was simply maintaining closeness to the customer despite stores being closed. How do I actually manage to stay connected to my customers? How do I manage to maintain that bond? That really required creativity, that required entrepreneurship, because suddenly the shutters were down and many sellers no longer knew how to deal with the issues, and those who had started early to collect their customer data were certainly at an advantage, because then they could also write to those people, their customers. There’s a nice example from Cologne that we saw, and this case really really grew on me, because I also have children and I can relate to it quite well. It’s about a shoe retailer for children’s shoes. Self-employed, single parent, with the whole business hanging on her, and the shutters go down and she can no longer do any business because of the Corona crisis, and what she did was she really wrote to all her customers, said, folks, put your children on a sheet of paper, trace the feet and write down what color the child wants to go into the Corona crisis with, and this campaign that emerged from that didn’t lead to people feeling compelled to buy shoes, but instead created such reach that she suddenly won new customers she didn’t have before. And I think it’s a good example that shows how entrepreneurship, when lived out creatively, can also be a lever in such challenging times. But the condition for that was that she had collected those customer data beforehand.
Isabell: Yes, that’s a really nice example, that’s true. You just talked about shoes; the fashion sector hasn’t been doing so well in recent months. Were there products or certain areas that were particularly in demand?
Boris Hedde: That was really exciting, also for us as analysts looking at the market from the outside. We had never seen such a wide spread in retail growth rates. You could say it was 60%. The big winner of last year was the bicycle market and bicycle accessories, which certainly also benefited from the development of e-bikes and the like and from holidays disappearing and so on, and were able to absorb a lot of budget. Of course grocery retail and similar sectors too, but the big challenge was fashion or consumer electronics or similar areas, which had clearly negative growth rates. And this spread of 60%, which I just mentioned, we’ve never seen in 20 years, and normally it would be 15% in a year. That shows there were a whole number of winners and losers in this development, and of course it somehow has to do with the assortments. I think many substitute purchases were made, which may also have been higher priced at times. I think there were also some good developments in the furniture sector for some retailers. In sports it was a bit more balanced: individual sports were certainly more in focus than team sports, because they couldn’t be practiced, and so there were many categories that were simply influenced by the Corona development and the possibility of living out something, so the products were more or less strongly in focus.
Isabell: And did you make forecasts about how this will develop over the next months, so this discrepancy, or yes, this strong demand, this weak demand?
Boris Hedde: That’s the core question we get every week from several large retailers too: where is this all heading? Incredibly hard to calculate, because the variables seem to change every day. We’re obviously looking at the Delta variant with great concern. We’re looking with great concern at the frequencies that are not where you might have expected them. The rush back to the cities hasn’t materialized. And so our forecasts are certainly not good, and to put a valid quantitative number on the table here would not be honest. But we are in the process of calculating the current pace, and the fact is we have downward trends.
Isabell: You just mentioned the rush back to the cities, so you had actually expected the cities to boom again in summer?
Boris Hedde: Boom is of course a relative term, but I at least hoped there would be catch-up potential, a chance to simply get out of this social distancing again, come into the cities and then actually enjoy shopping again. That was only partly confirmed, because frequencies did actually go up again, but people unfortunately didn’t visit the stores in the way you would expect from the number of visitors to the city center increasing, and in that discrepancy it then led to revenue not happening as many retailers had hoped, not as planned.
Tino: Boris, you already mentioned customer loyalty, and I think that’s very interesting for all those who have newly entered online retail. How do I, as a seller, keep my online customers in the long term and build good customer loyalty?
Boris Hedde: So I think what’s very important, what’s central, is that I first have to be findable. We can also see that multi-channel behavior is not just a major issue on the retailer side, as mentioned earlier, but is everyday life on the consumer side. Every purchase that isn’t food, or not every one, but a large share of purchases that aren’t food, start in the online channel. That means if I’m not visible online, I have no chance of securing that loyalty. That’s one thing: I need to make sure I have a certain presence. The other thing is maintaining communication, because when it comes to loyalty, it’s about having regular contact. Of course this can be through newsletters, which many do and many do successfully. But it can also be social media, it can also be other levers, where you perhaps join forces with card systems, with loyalty systems, and act together to simply provide regular exchange or input. For the relevant customers so you don’t just fade into oblivion. In a crisis, of course, that’s absolutely essential.
Tino: And how do I reorganize my processes and make my business ready for the new online retail in the long term?
Boris Hedde: I think you have to start where it’s most important: with the customers. So what am I ultimately doing there to have the security of being in regular exchange with my customers? Also being able to provide regular offers and so on. Once I have that, once I’ve got all these digital channels on the platforms under control as part of advertising, as part of external communication, then in the second step I can perhaps also turn to the issue of internal processes. Having better information with product data for procurement, in the context of information about products online, when it comes to delivery services, generally services, I think then that ultimately also helps to simply make my internal work better and more successful and thus more efficient, and that’s the second step, if I first even have customer contact, I need that first.
David: Do you also offer any kind of help for retailers who are newly entering this whole online business?
Boris Hedde: No, I don’t think we have 52,000 retailers out there, that would be presumptuous, but we still have a good lever for them, namely the Competence Center Retail, which can also be found online under that name. A ministry-funded project. It has many consulting offers, many workshops, guides and all sorts of things available online, especially for small and medium-sized businesses. That’s the “Mittelstand 4.0 Competence Center for Retail,” as it is officially called. Funded by the Federal Ministry for Economic Affairs, and I think that has already been an interesting lever for many, many small and medium-sized businesses to obtain information.
David: We’ve talked a lot about brick-and-mortar retail entering online retail. Now, many eBay sellers have of course already been online for a long time and also sell online. What could online retailers learn from brick-and-mortar retail? Especially with regard to customer loyalty?
Boris Hedde: David, that’s a very good question, because in the past the question was usually the other way around when it came to asking what brick-and-mortar retail can learn from online retail? I think online retail has shown us very, very successfully how process efficiency works. How to optimize the purchase “to the max,” I was almost about to say, has led to us having a comparatively comfortable, if not lazy, customer today. That’s, I think, what goes in that direction. In the other direction, you’d have to think about it. I think emotions are the big issue. Successful retailers manage to give us a good feeling when we’re there and also make us want to come back, and this emotional aspect also goes through interaction, through involvement, through experiential themes. And through good staff. Of course we don’t always have that in brick-and-mortar retail, but I think these are levers where, in principle, online retail can also benefit from and learn from brick-and-mortar retail, because in the end maybe it’s about the heart, and there it helps if you find a personal level. I think one or another brick-and-mortar retailer does that better than online retail, where it’s about the head when it comes to logic and process efficiency.
Isabell: You already briefly touched on the topic of loyalty programs. Is there anything you’d like to recommend to an online retailer as advice?
Boris Hedde: Yes, so I think: stick together, pool your efforts, you’d like to tell people. There are customer cards coming out of your ears, to put it a bit bluntly. It would probably be desirable, also in the interests of the customers, to simply go for shared solutions. And when it comes to loyalty systems online, I naturally have many more options, because I can also send pushes more easily and similar things. We’ve also seen many concepts, including retail concepts based on platforms, and they’ve also proven very successful in the furniture market, in fashion and similar sectors, where regular exchange, very close loyalty and such registration also offers the chance to always receive interesting offers and information through regular contact. I think that’s something online retail can play very well, and where ultimately, especially with platforms, brick-and-mortar retail can perhaps also benefit, because it’s comparatively difficult for them when it comes to customer cards and similar things. Especially for small and medium-sized businesses.
David: Boris, we’ve just talked a lot about different sales channels, marketing strategies, loyalty programs, social media. Which sales channels and marketing strategies does a retailer need in your opinion more or less indispensably, and what is definitely no longer a "nice to have"?
Boris Hedde: So I think we used to say you definitely need your own online shop, but I don’t think that’s absolutely necessary anymore; the question is that I need a digital strategy, and that is essential. Of course an online shop can be a good solution, and I think many have been successful with it, but it is not the only solution I must have, but I think, and this is really essential, that I have thought about my business model, my target group and my assortment. With my offering, which I also want to provide, and with my positioning: what does my digital strategy look like? It starts with visibility. But it also involves the environments in which I want to position myself, how I want to set myself up? Anyone who hasn’t found a clear answer and a clear strategy for their company simply has a hard time, because then they run it relatively arbitrarily.
David: So by digital strategy you don’t just mean putting up a shop and saying "Hey, I’m now reachable online," but that’s not where it ends, it’s where it begins. Right?
Boris Hedde: Right, yes, or perhaps you shouldn’t start then, because it gets expensive. That’s a good question, many retailers started that way and were then perhaps disappointed that they didn’t have the success they had hoped for, and that’s exactly the point: if you just start, maybe acting a bit actionistically without a plan, then it just becomes difficult, but if I think about what I actually want to achieve and by when? In terms of reach, in terms of possible positioning? Maybe I want to test certain product categories online first to see whether it works or not - all of that, I think, are topics that go along with a clear process. I always like to say “first understand, then plan, then do” and not just start when you don’t know what the actual goal is, and I think that’s an important point. And I hope that especially coming out of the Corona crisis, a new understanding has emerged, because then some people are now proceeding in a more reflective way. It’s also more difficult, because of course there is less money available for investments now, so it’s all the more important to make the right decision.
David: And if you imagine you run your own online shop or work in online retail? What would be the tip you’d wish for that you give every online retailer at the start?
Boris Hedde: That’s a good point, I think people naturally want to avoid many mistakes, and I think many mistakes were made because the accuracy was somewhat lacking. I think you have to deal with the details very, very early and very strongly, because we’ve seen many examples where doing a shop on the side just doesn’t work, and that applies to collecting customer data, reporting, using product data and all these topics where, of course, precision matters. Not paying absolute priority to that from the outset is, I think, a mistake that later becomes a very costly boomerang, and that’s why I’d probably say: dear retailers, be aware that this is work, but all the work you put in at the beginning will benefit you later on.
David: Which was also shown by your example: the shoe retailer collected the data, was able to use it and only then could write to all those people, their customers, and without this accurate data collection at the beginning, of course always GDPR-compliant, that wouldn’t have been possible?
Boris Hedde: Absolutely, and if she hadn’t had the right email address for me, they would never have reached me. So that means: that’s absolutely essential, so make the effort at the start, and you’ll benefit later on.
Isabell: Boris, how do you feel about a shop on a marketplace? Sellers can create shops with us too and can customize them. How do you see that? Because I think we’ve mostly been talking about separate shops on separate websites.
Boris Hedde: Yes, I think that’s a very big topic that has actually been with me massively since 2014. That’s when we saw the first online marketplace on a regional level in a city, and everyone had high hopes that it would be the big lever and game changer. At the same time, we also had the big platforms in parallel, including of course eBay. Then there were Amazon, Zalando, or whatever with unbelievably high growth rates and huge successes - and the regional online marketplaces just don’t really work. And I asked myself: what’s the right way? And I think when we deal with marketplaces, we have to go for the ones that have a certain reach. Just last fall, in September of the Corona year, we asked 60,000 people in the city center about this. How do they shop now, how has their shopping behavior changed? Of course they buy less, they came into the city less often, and we asked, “Where did you buy your stuff then?” And then it became very clear very quickly: A - through marketplaces, but B - you also have to say, only through the big marketplaces. The many small regional online marketplaces were struggling, and I would have thought they might actually have been able to benefit especially during Corona. That didn’t happen in that form, so for me the quintessence is: if I go through marketplaces, I need really large reach, and of course it’s exciting if I can rely on big names, perhaps also with eBay. You now also have a marketplace solution that you’ll then be offering nationwide.
Tino: Boris, I also have to ask you something now, and I’m looking at this with some concern: here in Germany we have lots of bargain blogs and bargain sites where goods are offered every day or deals are shown with big discounts? I can see that especially with some great A-brands in categories like toys, for example. There we’re basically back to a pre-Corona discount policy, so suddenly “New in Season Items” are being offered with 20% OFF again. How do you see that nowadays? Is the way it’s being handled healthy? And I think that’s also a bit difficult for brick-and-mortar retail right now.
Boris Hedde: Honestly, a huge, huge, huge trap. Of course we also have to state that all the warehouses were full when people didn’t buy for a year. Fashion retail didn’t know what to do with its products, because of course the next collection is waiting and the other one wasn’t sold, and that ties up capital, and I think it’s understandable that you then try to act in a capital-binding way by selling the goods quickly. But of course it’s a boomerang, because it weakens positioning and because it also trains customers in a direction that isn’t beneficial, because it becomes increasingly difficult to maintain a functioning business model that way. So if discounting is about optimization, we also have a discount country here in Germany. In grocery retail, many people and many, many nations look to Germany with complete fascination, because it shows that you can also operate successfully with discount concepts. But that’s a different focus than simply trying to push products out. I think that’s a different model, because it’s about physically experienced process efficiency that led to simply being able to offer lower prices. But we’ve also seen in discounters in grocery retail the upgrading in terms of appearance, the upgrading in terms of the store’s positioning - that was all there, which of course is all better if you sell with quality. And therefore... As I said, I have great understanding, especially out there for the small retailers who are now also very afraid of what to do with all the products in stock, that they then try to quickly free up capital or make capital available again. But it’s really a balancing act and can really become a nasty trap.
Tino: Yes, Boris, thank you very much for these exciting and interesting, inspiring insights that you shared with us here. So we’ve talked with you about the future of multi-channel as well as the challenges, but also very much about the many opportunities for sellers, so there is definitely a light at the end of the tunnel. At this point, though, we’d like to always ask our guests one very last question in the future. Dear Boris, what was the last thing you bought on eBay?
Boris Hedde: What was the last thing I bought on eBay? Yes, it’s not really fitting for a podcast, but it was actually a greenscreen. So after we were all working from home, I’ve now set up my basement completely so that I can do all video conferences in the basement. All my walls are green, and this green came from eBay, so if you see me in any talks or similar, you’ll always see me in front of the green eBay wall, which then isn’t green because an image has of course been placed over it, but in fact the greenscreen was my last purchase on eBay.
Isabell: Yes, great, and with that we’d also like to say goodbye for this week. I personally got a lot out of this. Thank you very much, Boris. I hope our listeners also got a lot out of it and can perhaps be inspired for their own business strategy in one place or another? And yes, I’m already looking forward to the next episode, because it’ll be in 2 weeks.
David: Thank you very much, Boris, I’m really glad you were here for the first episode. We’d also love to hear your feedback on our podcast! Feel free to write everything in the eBay Community and tell us how your business has changed through Corona or maybe you even got into online business because of Corona, or has your buying behavior changed? We’re curious and look forward to your comments or questions. And if you’re listening to us on your favorite podcast platform right now, feel free to leave us a like or subscribe, and we look forward to being back with you in the next episode.
Tino: Yes, and from my side too, a heartfelt thank-you again Boris, you were a super first guest for our first podcast, you’re very welcome to come back, and I’ll just say bye to everyone for now.
Boris Hedde: Thank you very much, I’d also like to say thanks, it was really a lot of fun for me, hopefully see you again soon.
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3 comments
hausratprofi
·4 years agoHello everyone,
thanks for the interesting and informative event. I'm already looking forward to the next podcast !
fliesnatur
·4 years agoVery informative - many thanks.
I think things will get tighter for almost everyone in the future - we'll see where the journey goes.
masawi2018
·4 years agoThank you very much, it was already very helpful to learn about important things regarding the new trade in this way. Our way of thinking is shaped by almost 40 years of professional experience, and now once again we have to completely rethink everything in a very short time.