Frank Poore, Co-founder, President and CEO, CommerceHub
Frank Poore and Richard Jones, now chief technology officer, founded CommerceHub in 1997 as a data logistics company, making it a veritable elder in online retail. Since then, the company has added a merchandising and fulfillment platform and now counts Walmart, Costco, QVC and The Home Depot among its key clients.
The company’s cloud-based platform helps retailers substantially increase the number of products they offer without the inventory risk of drop-ship fulfillment. After a customer makes a purchase with a CommerceHub retailer, the order is routed to one of thousands of suppliers that can ship purchases directly to the buyer.
CommerceHub’s software platform makes integration seamless, facilitating more efficient transactions between retailers, suppliers and their other trading partners, while also providing access to online marketplaces, search engines, social and product advertising and other digital marketing channels. The system also integrates with third-party logistics providers, including fulfillment and delivery.
Tell us about CommerceHub.
We’re looking for the win-win-win. Not everyone is Amazon selling everything from A to Z, and we’re looking to level the playing field where the brand or supplier is able to gain greater exposure for its products and the retailer gets the incremental sale and margin without having to outlay capital for inventory.
It’s a win for everyone, because if you’re a brand most retailers don’t carry your entire line. In fact, in almost all cases they carry a very small subset of it. For retailers who want to expand their assortment, whether they’re a niche retailer or a mass merchant like a Walmart or Amazon where they can carry everything, they want to have the stock availability online.
Retailers can be curators, but they need to be [sensitive]to their demographic. They also need good search results so they can serve up the right stuff to the right people. So we offer shipping optimization, one-stop integration into all third-party marketplaces, product ad programs, paid search and social commerce plans needed to acquire new customers.
How does it work?
CommerceHub has a lot of data. We have a lot of know-how, and we basically know through the data where inventory is by location in the industry. That’s significant because the same product may exist in multiple locations. [We have] the ability to be able to optimally route not only from a fulfillment perspective, meaning the closest location to do this fulfillment, but also … the optimum delivery method. Is it UPS, is if FedEx, is it DHL, is it USPS?
CommerceHub is well-positioned for working with the proliferation of marketplaces. Is that the future of retail you see?
The future is going to be an interconnected one. It’s where the lines are blurred between retailers, brands and buyers. In the not so far-off future, you could go into a local apparel store and they don’t have the item you’re looking for in your size. But they say, “Hey, I can get that for you,” and it actually gets fulfilled by some competitor store and shipped directly to you.
We’re seeing examples of this now. Kohl’s is taking back Amazon’s products, so Kohl’s is now a return drop-off point for Amazon. And at some point in the future, that Kohl’s store will become a fulfillment point for one of the brands they carry. Here’s another example, using Levi’s and Macy’s, that’s interesting: The customer can order on the Levi’s site, and if it’s available for pickup that day, the customer can pick it up in-store at Macy’s.
Will that affect what it means to be a retail brand?
I don’t think so, because it’s about getting the goods into the customers’ hands. My grandfather came to this country in the 1800s. When I was 12, he told me: “Retail is really simple. It’s all about getting people to your store, having what they’re looking for and having the right price.”
I don’t think that’s changed. What has changed is how we’re getting them to the store. Today the front door might be Google, Facebook or Pinterest taking you to Walmart’s site or to Amazon, for instance. And loyalty programs will keep those customers coming back.
Amazon knows this well. Amazon Prime is very powerful and valuable to its customers. Amazon has the assortment and the service that keeps customers coming back, but that’s not the case in physical stores. One reason stores are failing isn’t because people don’t like going into stores, it’s because they don’t have what you want: If everything they have for sale is on the floor but they don’t have your size in the shirt you like, then you’re leaving empty-handed. Online that’s not the case — you’re going to get exactly what you’re looking for.
What does that mean for stores as we know them?
I see key players getting stronger. We all know Amazon has a lot of products, but we’re watching Walmart buy specialty brands such as Moosejaw, or Bonobos and Jet.com, plus they’re deep in marketplace retailing.
Let’s say your online search whisked you off to Walmart’s site and you’re not a Walmart customer. Maybe you wouldn’t have gone in the past, but you went there, and maybe it says, “You can have this tomorrow for free,” and it changes your mind, so you click the button. You buy it and you have a good experience.
That could convert you to a Walmart shopper. You can order some really high-end product through Jet and use Walmart as a pickup point. Easy returns are also playing a role. So that thing you just bought didn’t work out, but you don’t want to repack it and return it to some UPS store, because there’s a Walmart on your way to work. You just drop it off. You don’t even get out of your car, maybe.
Does price have a role to play?
Yes, of course price is an important part of the equation, but delivery speed and convenience is also a big deal. You want to have the option of picking it up in the store. You want to have the option of getting it same day, the next day. As a consumer, you want to have the option of all kinds of options.
Artificial intelligence, virtual reality and mixed reality are getting big buzz. Do you see them affecting the store of the future?
Absolutely, and soon. Some of it’s already at play. You’re getting ready to go somewhere, and you have an experience where you’re sharing with your friends on Facebook, Snapchat or whatever in real time. You’re in the store: “Hey, what do you think of these?” They can thumbs-up, thumbs-down.
I don’t expect most retailers to abandon their physical stores. I think they’ll fight back by offering unique experiences. Meanwhile, Amazon will keep innovating to the next level.
Janet Groeber has covered all aspects of the retail industry for more than 20 years. Her reporting has appeared in AdWeek and DDI Magazine, among others.