Overstock.com CEO Patrick Byrne tells DMNews that changes in consumer behavior, driven by the recession, will be a boon for online shopping.
Q: What was the biggest e-commerce trend in 2009?
A: In times of stress and downturn, consumers reexamine their habits. People sat on their wallets for a long time, but as they started spending, a lot of old habits were broken. I think we’ll see that the surge is going to be much bigger online when we see the fourth quarter numbers.
Q: What does this change in consumer behavior mean for traditional, bricks-and-mortar retailers?
A: Some of the good, strong retail brands are going to become less and less valuable. Ultimately, if what the consumer wants are certain manufacturers and brands, it’s hard to see how you add value if all you have [to differentiate from online] are pretty teenagers standing in the store greeting people. That loses its value the more directly consumers can be connected to the manufacturer. But some of the retailers have developed really good sites. Their sites are now just as good as any of the pure plays.
Q: Why do you think e-commerce is superior to the in-store experience?
A: You get more value, better pricing, better information, better comparison shopping. It’s cheaper not only for the product, but saves you the time and the drive to the store.
Q: Does e-commerce offer advantages for the retailer as well?
A: Yes. You can really find out much more about people’s purchasing patterns and it turns out that that’s very valuable information. Knowledge about people is valuable because you can use it to recommend the right products at the right price and the right time. For us, the value is that we can generate lift and engagement and attachment. The more that you make customers aware that you understand them, the more they’ll develop a loyalty to you. The whole question of loyalty is driven by the customer information you can gather.
Q: How do advancements in e-commerce technology affect the market?
A: New technology is available from third-party vendors and it’s easy to implement. That means smaller retailers have a chance to compete and not have to have dazzling technology built themselves in house. Recommendation engines are available that can be installed on your site. These additions are very powerful. You can’t develop all that in house. Implementing with the right third parties is the way to go.
Q: How has e-commerce evolved to better handle heavy retail consumer spending periods, like the holidays?
A: We get a big hit on Black Friday, Cyber Monday, and throughout December, very much like traditional retail. It used to be that we stopped around the 11th or 13th of December, but now we’re playing to the late shopping crowd. People have gotten their logistic systems figured out. There was a site that folded under the demand one Christmas, but that doesn’t happen now. People are dialed in.