Skating where the puck is going.... 2008 wrap up and 2009 preview...

Last week I was at the Citigroup conference and it was interesting to hear what the CEOs of Verizon, Interactive Corp, Sprint and others were talking about.  One thing I noticed is that several were using some new business speak.  While 2008 was the year of tailwinds (beginning of the year) and headwinds (back of the year), in the first days of 2009, I heard several executives mention that they are 'Skating where the puck is'.  For example, Sprint sees their data services growing faster than mobile and fixed voice services so they are skating there.

This is a phrase from a quote from (the great one) Wayne Gretzky, when asked why he's better than other hockey players, his answer was: "I skate to where the puck is going to be, not where it has been."  Turns out the phrase is so popular you can get it on a custom T-shirt over at Zazzle.com. 

In the business world given the current economic environment this is a great catch phrase because it accurately captures what everyone is trying to figure out right now -  where is the puck going in 2009?  

The dust has settled on Q4 2008 for ChannelAdvisor and we saw some interesting results that I think will help readers see where the puck is heading.

December 2008 Results

In December,  overall the same-store-sales growth rate for our customers came down from the 20's and high teens to the 10-12% y/y growth rate.  While not stellar, given that many forecasters were suggesting negative growth, we're excited that our customers did much better than expected.

Peeling the onions on those results down to the channel level is interesting.  Here's the year over year same store sales per channel for

• Amazon (merchants@) - 45%
• Search - 40%
• Comparison Shopping Engines (CSE) - 18%
• Stores (organic) 6%
• eBay - -7%

Search and CSE are outside the scope of this blog, but I think the Amazon, store and eBay trends are all relevent.

For stores, most of our customers grew up on eBay first and opened their store second.  Increasingly the focus and mind-share is moving from eBay, to enhancing the ecommerce site and moving more and more organic traffic there. Customers are leveraging SEO and email marketing to drive more organic (e.g. you don't pay for it!) traffic, convert more and increase the average order value.  ChannelAdvisor recently released a higher end store offering called StoreAdvisor Premium and we've been swamped with demand for the platform.

Amazon - really hitting their stride

I could write a ten part series on this, but the reader's digest version is that Amazon has really nailed the consumer experience.

• Selection - Selection on Amazon has never been better. Amazon leverages the merch@ platform to dramatically improve selection.  Consumers come to the site, find what they need and don't leave or have to check elsewhere.
• Fast and easy transactions - Buying on Amazon is so easy and frictionless, I find I have to be careful or I'll 'walk out' with 3 things I didn't look for.  Amazon remembers my addresses, my credit cards and my shipping preferences. 
• Superb merchandising -  From the search engine to recommendations to recommended bundles and checkout up-sells, Amazon seems to get the right product in front of the consumer at the right time.
• Great shipping+handling - Amazon's always had the lowest S+H, and with Prime I find not only do I get free S+H on everything, but  
• Pricing - Amazon's prices are not only competitive, but they leverage the merch@ seller base to allow for even lower pricing than Amazon is willing to offer.  One nuance of this is as a buyer you feel you don't have to search the internet all day looking at prices because Amazon has done it for you.  It's kind of like the progressive insurance model.  I believe the number one reason for cart abandonment is price shopping and Amazon really very cleverly combats this AND turns it into sales at great margins through the marketplace vs. direct business by being agnostic.
• Trust -  Not only do I trust amazon 'direct', but the way I interact with their merch@ sellers is through the same interface so I don't have to worry about a different return mechanism or something like that.  I've NEVER had a bad Amazon transaction or not gotten something when promised.  The one time I did process a return, it was so fast and easy, I didn't even have to talk to a person.

All of these strategic elements and more are giving Amazon a huge advantage over many other ecommerce experiences today. From a seller's perspective, it's great that Amazon has opened the doors and partners with third parties to help build the selection, compete on pricing in a trusted marketplace.

eBay - fixed price taking over

While eBay continued to face some tough trends in December, there were some interesting trends of note.  The biggest trend is the surge in fixed price transactions.  Most readers will recall that eBay rolled out the new fp30 listing type with some new economics.  They also advantaged the listing type by giving it lots of exposure in finding/bestmatch.  All of those elements and more caused fixed-price GMV for our customers to grow 42%.  In fact fixed-price is now over 50% of our GMV.  Our customers tend to lead the curve, so it will be interesting to see how this number is moving for eBay overall when they report results.

Auctions aren't dead, but they aren't growing.  There are definitely situations where they make sense for sellers to leverage, but for the short-term fixed-price is where the growth is.

2009 - where is your puck?

Those are some highlights that we saw for the holiday selling season at ChannelAdvisor.

Based on what we saw and what customers are telling us, at ChannelAdvisor we're going to be putting our resources towards where we think the puck is going to be in 09 and beyond.  Of course Amazon is getting a lot of our attention, we have some major work going on here that is going to bring some real innovative thinking to this marketplace.  Search and CSE are major growth areas for us and for eBay we're going to be looking at some ideas we have around fp30 and how to optimize that.  Auctions aren't dead by any means, so we'll be keeping an eye for ways we can make some improvements there too.

eBay Strategies readers - where do you think the ecommerce puck will be in 2009 for you? Leave your thoughts in comments and I'll chime in as time allows. I look forward to hearing your thoughts.

SeekingAlpha Disclosure - I am long Amazon and Google