A Serial Entrepreneur’s Playbook: ChannelAdvisor CEO Scot Wingo (Part 6)

SM: Essentially you are simplifying the detailed tactics of auction management and allowing companies to just focus on liquidating inventory?

SW: We do. By packaging strategies which we can deliver as packages which enterprises can pull off the shelf, we allow the market to think about strategy versus worry about the detailed tactics of each channel.

SM: What other channels do you support besides eBay?

SW: Another page out of our entrepreneur playbook is to have a suite of offerings. Over the past nine years we expanded our offerings significantly. After eBay we added Amazon and then expanded into comparison shopping engines.

SM: What prompted your move into comparison shopping engines?

SW: We had a customer that wanted to sell on eBay but their project with us to do that was delayed by six months because their IT shop was messing with data feeds from all the comparison shopping engines. This very large retailer had five people working on data feeds all-time. We decided to go build a product around comparative shopping engines and all those data feeds. Now that we have built a shopping comparison engine product it is one of our more popular products. Eventually we got back in the search world as well and we now have a search offering.

SM: Is your search offering as SEO or PPC?

SW: We offer either SCM or PPC.

SM: Does most of your business focus on large retailers?

SW: We have 3000 customers of which 300 are name brands such as Radio Shack and Motorola. The other 2,700 are SMBs. We split SMBs into two subgroups. A lot of them are eBay only and they are carving off a little e-commerce niche. Then there is a mid tier of companies who’ve taken advantage of consumer adoption of search.

The mid tier companies have grown into healthy e-commerce businesses. These are folks like CafePress, eBags, RockBottomGolf, and ShoeMetro. They are very entrepreneurial businesses which have grown up on the trends we cater to. They are able to get ahead of larger retailers and in front of larger groups of consumers by leveraging search comparison shopping. By our estimation, 80% of e-commerce begins through one of three channels. If you’re a small business, you have a good shot at getting in front of consumers if you can be aggressive on eBay, search engines, or comparison shopping engines. If you’re larger retail you’re starting to wake up and realize that you need to leverage those channels to drive traffic to your site. If you’re not on search engines, comparative shopping engines, or eBay then you are missing 80% of the opportunity.

SM: What is your business model? Is it a subscription fee?

SW: It’s a hybrid. We do have a subscription component which is on the order of $500 a month. We also receive a percentage of sales which varies from 1% to 3%.

SM: So your compensation model has a volume component?

SW: Yes. We like that because it aligns us with our customer. It is really a pay-for-performance volume model. If we are not developing sales growth, then our revenue will not grow either.

SM: How do you sell?

SW: It is all direct for us. We have attempted sub channels but that is very hard with our SaaS business because our software changes significantly every five weeks. We have had to architect our entire company around that dynamic. Finding channel partners that can identify with that is very difficult.

This segment is part 6 in the series : A Serial Entrepreneur’s Playbook: ChannelAdvisor CEO Scot Wingo
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