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Posted by Brian Walker on August 3, 2010
GSI Commerce has been making a lot of news of late with acquisitions and a reshaping on their business from a full-service eCommerce provider to an eCommerce and marketing services company. I had the pleasure recently of asking Michael Rubin, founder and CEO of GSI, a series of questions in order to better understand how the company is changing and what we can look for in the future from the company.
1) FORRESTER: From the outside it appears that GSI has changed a lot over the last few years, from a full-service eCommerce solution provider to a company with many different offerings. How do you explain what GSI is today? How do you see that continuing to evolve?
Mr. Rubin: It’s true that GSI has changed a lot over the past few years. We started out 11 years ago providing an end-to-end full-service eCommerce solution for sporting goods retailers and rapidly expanded into most other categories like apparel, electronics, toys and general merchandise. We’ve also expanded by acquisition and through organic product and service development. During this time we’ve seen major shifts in consumer behavior, with people buying more online now than ever before. We’ve built a company that really understands the needs of merchants and consumers — from a first-hand perspective. I’m not sure how other technology vendors are able to satisfy their clients without this experience.
GSI remains committed to providing a broad suite of robust, scalable eCommerce and digital marketing products and services that enable our clients to provide a superior consumer experience while maximizing their sales. We provide the platform and services so our clients can deliver to their consumers a seamless brand experience — from marketing messages and promotion, through visiting the web, mobile, or retail store to purchasing and delivery of goods.
To support our clients’ growth strategies we formed a global marketing services division to help them reach their consumers through existing and emerging digital marketing channels. As more and more of traditional marketing dollars are shifting online, GSI is uniquely positioned to help our clients by offering cutting-edge, effective and measurable marketing solutions — whether it’s email, affiliate, social or mobile. Last year, we entered the private sale business with the acquisition of Rue La La. Consumers find Rue La La entertaining, engaging and sometimes addictive. While it’s a completely new way to shop, it’s also proven to be an effective solution for brands and retailers to sell merchandise in a short time period — so everyone benefits.
Another one of our strategies has been to expand globally. We are actively rolling out GSI's products and services in Europe and Asia. We are supporting our clients worldwide as they expand and in the coming years, GSI will operate in almost every significant international market.
So yes, GSI has been growing rapidly over the last several years. We want to be known as the only company that can provide global digital marketing and enterprise class, on-demand, end-to-end eCommerce products and services.
2) FORRESTER: What role do you see mobile playing in your business and your clients’ businesses?
Mr. Rubin: The impact of mobile will be huge. While many thought mobile would take a while to arrive — it’s no longer coming — it’s here and it’s being driven by rapidly changing consumer behavior. Mobile phones go everywhere today so there’s a greater need for location-based services and consumers also have a need for instant gratification — the ability to download apps instantly. Mobile is going to revolutionize commerce — not just eCommerce — but overall commerce, especially as more and more people start using the Internet from their mobile devices than their desktops. What this means for our clients is that consumers using a mobile device are even more linked to their online and offline stores.
Mobile is a significant part of GSI’s integrated strategy. It’s another way for us to connect and extend the services we provide. For example, Rue La La just launched native applications for the iPhone and iPad and compatibility with BlackBerry and Android. They’ve already seen a meaningful increase in the amount of sales from mobile devices — including well over 10% of sales on the weekends.
With the acquisition of M3 Mobile, a leading mobile marketing company focused on the retail segment, we can offer our clients mobile marketing programs that include mobile couponing, mobile news alerts and mobile sweepstakes, to name a few. These programs generate revenue and have proven to be a benefit to the retailers’ stores.
3) FORRESTER: GSI has made a number of acquisitions and investments over the last year, including Intershop, Rue La La and VendorNet. How do these various acquisitions tie together into an overall strategy for GSI?
Mr. Rubin: We’ve always pursued acquisitions or strategic investments as a way to expand the breadth and depth of products and services that we can provide to our clients to help them grow their businesses. Our goal is to offer our clients and their consumers a best-in-class suite of products and services that can individually stand alone as leaders or be combined and optimized. All of these acquisitions support our key growth initiatives: investing in and strengthening our technology offering; providing mobile strategies and solutions; enhancing our multichannel offering; going global; providing value-added services to our clients that help them grow and growing our digital marketing services business.
4) FORRESTER: Specifically how do you plan to integrate Intershop into the overall GSI offering? Was this acquisition a way to mitigate some of the challenges in advancing GSI’s current technology platform?
Mr. Rubin: This year, we’ve made some significant changes in our Global Ecommerce Services division, including our investment in Intershop, the acquisition of VendorNet and the addition of Jim MacIntyre to lead our eCommerce technology business. All of these changes relate to a strategic initiative which involves unbundling of the GSI Platform into three core product areas: GSI Webstore, GSI Commerce Exchange and GSI Multichannel, with each area having multiple products within it. Our goal is to give clients the greatest amount of choice in how they want to utilize our products and services. From a technology perspective, this means letting clients choose between SaaS, licensed software, outsourced or multiple hybrid models.
A lot of what we are doing with this new, highly flexible platform will leverage and combine components of what Intershop has built in the past and is building today in conjunction with our own development efforts. We believe these changes will drive growth, enhance our competitive position and expand our overall market opportunity.
5) FORRESTER: Some in the eCommerce industry would suggest that there is a point at which eCommerce businesses will outgrow the full-service model, and that your diversification of GSI is an acknowledgement that is true. Do you agree with that, and if not, how do you see the full-service solution maintaining relevance to maturing eCommerce and multichannel businesses?
Mr. Rubin: No, I don’t exactly agree with that. I believe that the full-service option will always be right for some clients, but I also know that it is not right for all clients. We expanded beyond the full-service model many years ago when we began offering eCommerce technology, fulfillment and customer care — as standalone services. Some clients have selected us for technology only, while others have selected us purely for our fulfillment or customer care capabilities. Some have started with one and added another later.
As I mentioned earlier, we are now beginning to offer more granular parts of our technology offering as independent products and services as well. The right answer for GSI is to offer our clients and the market either option, a full-service solution OR a-la-carte which gives them the ability to choose a solution that best meets their business needs. We believe that we are the only provider in eCommerce that can provide retailers and brands with that choice.
6) FORRESTER: As a full-service provider, it seems your business model can at times come into conflict with your clients' multichannel goals. What is you view on that, and your vision for GSI as a service provider as we move into a new phase of multichannel retailing?
Mr. Rubin: GSI is all about serving brands and retailers. I started my first retail business when I was thirteen, and as a long-standing retailer, I am a huge believer that brands and retailers will be the ultimate winners in eCommerce. Our solutions are perfectly positioned to help them achieve this goal.
GSI Multichannel is just one of the three core areas of our unbundled technology platform solution. GSI Multichannel is designed to help our clients better integrate and leverage their stores — online, offline and mobile. Today, we are either providing or developing solutions for ship-from-store, ship-to-store, store-to-store ordering, sales associate ordering and in-store pick-up. These products and services are not in conflict with our business model. Our vision is to provide the most robust suite of multichannel products and services in the industry, making it easy for brands and retailers to provide a seamless cross-channel experience to consumers.
7) FORRESTER: What are your top priorities for GSI over the next year?
Mr. Rubin: We will continue to strengthen our eCommerce technology offerings to support our enhanced product strategy and our clients’ desires to expand their eCommerce presence around the world. Our unbundling initiative and our focus on offering more modular and flexible products and services will give our clients and prospects more options while expanding the market opportunity for GSI.
With the addition of Chris Saridakis as CEO of our global Marketing Services division, we’ll also continue to expand our digital marketing product portfolio. We believe there is an opportunity to fill the void that exists in the market for an end-to-end marketing services company.
We will explore opportunities to bring value to our network of clients like introducing innovative consumer engagement products and services like Rue La La and ShopRunner, a consumer subscription service where consumers in exchange for an annual subscription fee, will get access to a great offer from many of the web’s best merchants. So far, 34 retailers and brands have signed up, with many more on the way.
8) FORRESTER: What are a few key trends we may not be very focused on now that you think may be top of mind in the near future? What do you expect your clients to be hounding GSI for in a few years?
Mr. Rubin: Consumers are also going to drive retailers to provide more relevant, personal and local solutions. One trend that we’re following closely is the localization of services, providing consumers interesting products and services in their local area. Later this year, we’ll be launching Rue La La local to capitalize on this consumer need.
On the flip side, the world is becoming a much smaller place, with consumers in Europe and Asia wanting access to North American brands, and vice versa. Our clients desire a global eCommerce presence, and we’re investing around the world especially in Europe and Asia-Pacific regions. I see a time when any consumer anywhere in the world will have the same level of online satisfaction that U.S. consumers have today.
We definitely believe that consumers and our clients will continue to want more rapid and lower cost delivery and return of products. That’s where the intersection of offline and online will become even more important. Retailers will need to leverage their stores, distribution centers and in transit inventory to get consumers the product they want as quickly and cheaply as possible. We are spending a great deal of time and effort to provide innovation in this area.
9) FORRESTER: How would you characterize the state of eCommerce today? In your view where are we on the eCommerce growth trajectory?
Mr. Rubin: It’s like we’re in the first inning of a baseball game. There is a ton of growth ahead of us as offline sales increasingly move online and to mobile devices. Technology has advanced to the point that we are able to provide a truly empowering consumer experience that integrates eCommerce and stores. We are now entering into the phase of market development where nearly everyone, not only the technophiles, will be using eCommerce technologies almost every day to find value, optimize their time while shopping and locate available inventory. As we and others provide consumers a seamless multichannel eCommerce experience we will see further growth and it will become harder to distinguish eCommerce from commerce in general.
10) FORRESTER: And now for the hard one, what was it like to see yourself on broadcast television from the episode in “Undercover Boss” you were featured in? What was that experience like?
Mr. Rubin: As founder of GSI, I know our business inside and out. But as we’ve grown larger, I’ve missed the opportunity to be close to the daily activities that are at the heart of what we do and the things that enable us to deliver value to our clients. It was an interesting experience from start to finish. I really enjoyed connecting with other GSI employees on a one-to-one level as a colleague and not the CEO. I met some incredible people who have faced some difficult challenges in their lives but come to work every day with an extremely positive attitude.
Since the episode aired, we have piloted and implemented a program called “A Day in the Life.” Many of our key corporate employees have spent about a week in our customer contact centers learning and observing. The employees return to their jobs more educated and inspired with ideas on how to make our technologies and consumers experiences even better — all from their actual hands-on experiences.
Undercover Boss made me really appreciate how much GSI has grown. I am not sure how any company today — especially technology companies that don't have this kind of first-hand experience — can manage to satisfy their clients. This experience reminded me just how important this kind of first-hand experience really is.
This is the first in a series of executive interviews I have planned with eCommerce, multichannel, and technology leaders. I really appreciate Michael being the first to participate, and look forward to bringing more of these to you. If you are interested in participating in this series or have ideas for people you would like to see us include please email me at email@example.com. Feedback on the format and this type of blog post is also always welcome.