Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 7)

Bob Dufour: It’s having someone who can start understanding the psychology of that consumer and the opportunities presented to digital retailers. At least in my experience, that’s a big missing gap for somebody who really understands those needs during that journey, especially as millennials start taking hold and as their purchasing power gets bigger. I think they’re used to 99 cents. Trying to sell something for $30 is going to be a real shock to them. These microproducts with microprices is going to be important. Technology integration, cross-device integration, and digital enablement of suppliers—those are the things that I would say are opportunities that jump out based on our business.

Sramana Mitra: Listening to you, I’m thinking about this article that I wrote a long time ago in 2007 for the first time. It’s a definition of Web 3.0 that I came up with, which is a formula: 4C + P + VS. The four Cs are content, community, commerce, context, with personalization and vertical search. You may want to look up some of that writing because a lot of what you’re saying is the commerce elements driving off any context.
>>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 6)

Bob Dufour: Another one that we see a lot is the ability to easily connect partners. I think there’s a technical integration opportunity out there for showing how people can connect. Those are all tied together. Having the products in this ancillary space, having the product suppliers, being digitally enabled, and having technical connections that can be universally plugged in or unplugged. That will make all those transactions work a little bit easier.

There are two other things that I think are opportunities. One of them is cross-device. >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 5)

Sramana Mitra: In terms of trends, is there anything else that you want to share?

Bob Dufour: I think for me, it’s digitalization driving price transparency accelerated by these aggregators, and the importance of having ancillary strategy.

Sramana Mitra: What are some of the open opportunities in the general space that you would encourage entrepreneurs who are starting out to look at?

Bob Dufour: There’s a corollary to this. Think iTunes. So many of these ancillary products that people are trying to sell are analog products that they’re trying to digitize and sell in a digital environment. Our experience is that there’s this huge need for a lot of micro products. You don’t need to maybe sell this highly bundled ancillary product. Maybe, there’s just a component of it. Let me take an example of a travel insurance product that we’re familiar with. Maybe you don’t need to sell this bundled product. Maybe what somebody wants is just protection for their >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 4)

Sramana Mitra: Very interesting. The insight that is interesting here is the core versus non-core products and optimizing margins selling non-core products while people are shopping on the core.

Bob Dufour: One of the things that I would say, as far as my overall position goes, would be if you’re getting into digital marketing and if you don’t have an ancillary strategy figured out, I think you’re screwed. You’re just going to watch your margins get eroded and you don’t have anything to move them back up. People who are really good at this are going to make more money. If I’m selling a Sony television and I know that Best Buy and Amazon are out there, I know that I can only get away with offering that product at a certain price. What if I’m really good at selling warranties or financing? Both of those bring in additional profits to me. There are a couple of things I can do with that. One is, I can just take it in as profit. I’ll really look good at Wall Street for a while. The other thing I can do is, I can discount my price even more. Now, I look even better. I’m cutting the price but I’m still going to be as profitable as the other one. It gives me a lot of flexibility when I’m in a digital selling mode by having these profits that come from being really good at selling these ancillary or supplemental products. >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 3)

Bob Dufour: The outcome for the digital distributor is that because of the transparency, their margins are getting compressed severely. A lot of times, people use the analogy of the grocery store. You may be very aware of what you’re paying for certain big-ticket items but when you come to the checkout counter, no one really checks the cost of the magazine, gum, or soda because they’re impulse buys. The margins on those are usually very high. These ancillary products that we focus on have very high margins. Even though the purchase rate may not be as high as the core product, their margins more than make up for that. It’s a way in which, as the margins on the core product get compressed, sellers can improve their margins through being very good at selling these ancillary products.

The same thing would hold true for healthcare. Because of the Affordable Care Act in the US, the margins on core healthcare policies are shrinking. You also have the advent of the exchanges that came about as a result of the Affordable Care Act. You have a lot of people buying >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 2)

Sramana Mitra: Let’s take maybe a couple of your customers from different sectors and walk us through the use cases of how they use your product.

Bob Dufour: One of the things that’s common to all of our customers is that as they go online and as their business becomes more digital, price transparency increases for consumers. It’s accelerated by the presence of aggregator or comparison websites. It pushes their core margin down. Then they all have a very strong need for ancillary products. If we think of the airline industry, it would be a seat on an airplane. If you think of the healthcare industry, it would be the core health insurance product. If you think about auto insurance, it would be the core auto insurance product.

Let me take those three industries. Our role, again, is to take information that somebody has left behind—their digital footprint. That could be a referring site or information that they left on a form. It could be CRM information. We take that information on a real-time basis. If you take the >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 1)

This interview delves into a somewhat obscure aspect of e-commerce: margin optimization through non-core product recommendations. Quite an interesting subject in its own right.

Sramana Mitra: Let’s start with some context about yourself as well as the company.

Bob Dufour: My background is in a couple of different disciplines—statistics and analytics, direct marketing, and psychology. That’s my background and that’s how I put these all together in a company like Fusion, which was started in 2007. Our go-to market strategy is in digital optimization. What do I mean by that? We were formed in 2007 and had our launch with our first client in November of 2007. What we did at that point was we were this intermediary company that sat in between companies that had products to sell through a digital media and distributors that had customers interacting through a digital media. We sat in the middle and did real-time recommendations and real-time optimization. That was how we got started. >>>

Thought Leaders in E-Commerce: Brian Dhatt, CTO of Borderfree (Part 7)

Sramana Mitra: It’s still a whole lot of cans right now because the delivery rates are going down. The spam volumes are going up. The inbox is becoming a total nightmare.

Brian Dhatt: It depends on your approach. I think there are emails that consumers value and still want to look at every single day. I think it depends a lot on if you’re pushing personalized and relevant content to the consumer. If so, they’re going to open up your email. I do agree with you. There are many folks out there that still take the approach of sending daily emails. It’s got this generic marketing message or generic merchandising. As a consumer, if you think you’re going to see things that are pertinent to you, you’re going to open that mail everyday.

Sramana Mitra: Honestly, it’s really not viable for people to keep on top of emails anymore given the level of spam. I just look at my inbox and the number of people who are adding me to their mailing list and I have to sit there and unsubscribe from the mailing list all the time. That is an uncontrollable volume of trash that comes over. This is true about everybody these days. That is really taking away from the effectiveness of email marketing.
>>>