eBay has moved to the forefront of retail innovation and is making headlines partnering with mall operators and retailers. We spoke to Steve Yankovich, Vice President of Innovation and New Ventures at eBay, to learn more about how eBay is digitizing the physical world.
Talmage Advisors: Why did eBay decide to play in the physical store space?
Steve Yankovich: The most basic thing is the market size. All of commerce is valued at $10+ trillion while e-commerce is valued at about $1 trillion. We asked ourselves, ‘how do you value the firm’. The answer relates to the addressable market and most commerce happens offline. The second part is that what we are doing is a natural extension and evolution of our expertise and what is happening in the world. Before 2008 (before the iPhone) touch screens were not very good. Now touchscreens have become really good. That evolution alone creates opportunity because people are happy to engage with touch screens. It is a natural evolution to use our software, e-commerce, and mobile expertise to bring the best parts of e-commerce, like search, into the offline shopping experience. Most offline shopping starts with search, but they are starting at home. Some customers are migrating to buy online pick up in stores. What eBay is doing moves that interaction to where most of the volume is happening and makes it efficient and convenient in the physical space.
TA: Tell us about your partnership with Rebecca Minkoff.
SY: The Minkoff example is the one that shows the overall strategy to completely obliterate the lines between online and offline shopping. It has what we think are going to be the main elements that stores will have and that consumers will come to expect in the future. We want to “Uberfy” the store experience. Uber has changed the way consumers expect to get a car service. We are changing the way consumers expect to engage in commerce. Consumer adoption of technology is off the charts. They expect efficiency and functionality.
In the Rebecca Minkoff store we have created two connected surfaces – the wall and the mirror. Those are connected to the retail associate platform (or RAP) and the CRM system. There is a very high likelihood that the connected wall will be the first touch point in the Minkoff store. That wall drives the customer into the fitting room and then to download the app. While all this is happening, the associate is aware of how the customer is interacting with the store and the merchandise. If the customer decides to save their fitting room session, the retailer has a view into who they are, what they bought, and what they did not buy.
TA: What are you working on with Simon Properties?
SY: With Simon we are working on traffic shaping. Our connected directories at the Stanford Shopping Center in Palo Alto help the consumer have a more useful interaction than a static directory. These directories give you information beyond just which stores carry men’s or women’s wear. They can help you find which stores specifically carry sport coats or cocktail dresses, which stores are having a sale or an event, and give you a route to get to these specific stores. Over time these will be a template for even greater merchandise specificity, more information, and more efficiency for the consumer.
TA: You recently announced a partnership with Nordstrom on fitting rooms. Tell us about that.
SY: Nordstrom is a toe dip for us. We are addressing the main value proposition for the fitting room, which is to make sure the customer does not abandon their purchase because of size and color. They are a large retailer and an important partnership. But Nordstrom is starting in a more cautious way than what we are doing with the Minkoff store.
TA: How are you using the data collected through connected technologies?
SY: We are tracking consumer interactions but what the data means is yet to be deciphered. We are learning from how the consumer interacts with products and stores, what they buy, and what they leave behind. We can equate those items to a basket and look specifically at conversion. Over time we will be able to tell which elements drive higher conversion. In the case of Rebecca Minkoff, if the customer saves the basket, the brand can contact that customer later with reminders or offers. Bringing something into the dressing room is a huge buy-signal versus just picking it up and we help retailers capitalize on that interaction.
TA: What is the future of retail and what are the next developments we should expect from eBay?
SY: The wall and mirror are just two examples of surfaces that we can work with in a physical space. Imagine a table top or a shelf that is actually aware of the activity around it. Someone looking for a size 6 sweater could touch the area next to the stack and know what sizes were there. In other instances, infrared sensors will be used to evaluate whether people are engaging with product. Maybe certain product does better on a rounder versus a t-stand fixture. Connected surfaces will help retailers capture that information.
The connected directories will become more sophisticated. Perhaps you are not just looking for a sport coat, but you are looking for a size 44. The directory will be able to tell you which stores have size 44 sport coats in stock or which are carrying Nike Free’s in size 13. In the future, the directory will tell you that 3 stores are having a sale on these items or even allow the retailer to send a direct, time-sensitive, promotional offer for the item you are looking for. If we move further down the funnel, consumers will be able to access information before visiting the mall to find all this information plus help find one of the three empty spots in the parking lot.