Thought Leaders in E-Commerce: Mark Lavelle, CEO of Magento Commerce (Part 3)

Sramana Mitra: How does your audience compete, especially on the logistics end of the spectrum where Amazon is just delivering unbelievable levels of service?

Mark Lavelle: The A-word is a big deal. Amazon has changed forever what consumer expectation is in terms of getting a product.

Sramana Mitra: Totally.

Mark Lavelle: We can all go hide from that or follow and realize what’s happened and figure out how we can compete. I would say that if you look at what Amazon has done, they have been able to leverage these big macro-trends of broadband ubiquity, connected devices, cloud computing, and connect it to a very sophisticated physical fulfillment system that is just a juggernaut.

For every action, there’s an equal and opposite reaction. You’re seeing all the other fulfillment players from airlines to shippers, to even places like Uber realizing that there’s a lot of capacity that they have that if they open it up and make it more available, their businesses will thrive as well. There are still challenges, and Amazon is certainly destroying the traditional retail store that sold merchandise that is very easy to ship.

For well-differentiated items and brands, we see B2B companies using digital leveraging 24/7 ordering, on-demand fulfillment. We see B2B as a huge growth area for us. The world isn’t all Amazon. There’s a huge opportunity out there. We see a lot of people grabbing it.

Sramana Mitra: We are immersed in little companies. As a result, I’ve had to formulate a point of view on how small companies and retailers compete with Amazon. Amazon, mainly, is the biggest threat. My point of view is that you have to compete with merchandising. Your product offering needs to be unique. In some cases, we’re seeing people manufacturing their own product and coming up with unique differentiated products.

We’ve got case studies around a very interesting mattress company and a very interesting bean bag line. These are sizable companies. Then the other piece of it is in software and user experience. It’s really about understanding the customer well and being able to merchandise to that customer and configure the website to that customer’s needs. That’s the second way to differentiate.

The one where it’s a lot harder to compete with Amazon is in delivery. The other two pieces must be compelling enough. Merchandising needs to be compelling enough to make up for the fact that these small retailers just cannot compete with Amazon on logistics.

Mark Lavelle: It’s scary. I saw a statistics where of the total growth of e-commerce, Amazon was over half of it. They’re taking half of it of everybody’s growth. If you separate that out, there are companies that have to be net declining that were e-commerce players who did not have anything else other than a product and price to sell. You have to have more than that. You have to have a complete experience.

This segment is part 3 in the series : Thought Leaders in E-Commerce: Mark Lavelle, CEO of Magento Commerce
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