ChannelAdvisor Cuts 19% of Staff

January 29, 2009

As reported by AuctionBytes, ChannelAdvisor laid off around 50 employees, or 19% of its workforce, earlier this week.  This is CA’s second cut in the last 5 months, the first one being back in September when CA laid off 70 employees, 20% of its workforce at the time.  With these new layoffs, the company is now down to around 225 employees, after having cut 123 or about 35% of its staff in total.

You can find out a little more from Jeff Buechler and definitely read Ina’s post as it contains some comments from Scott Wingo.

In this completely crappy economy, cuts don’t surprise me.  Every player in the data feed management space – CA, CI, Mercent, and SingleFeed – has had layoffs, and I’d expect more to come.  And if you look at the retail carnage, you’ll know why.

The interesting question to ask is where ChannelAdvisor goes from here.   CA’s last round of $20m came right before the shit really hit the fan for the economy and CA has raised over $80m in venture capital, which means it has a fairly lofty valuation and will need an incredible exit to make its investors happy.  Vator TV, with Erik Stuart (eBay’s Director of Corporate Strategy) as a guest, ponders what an exit might look like.

I think that at one point, ChannelAdvisor might have looked like an attractive acquisition opportunity to eBay, and that explains why eBay has participated in CA’s rounds of financing.  eBay has a ton of sellers who need help selling their products across multiple channels in order to grow their businesses, especially when their businesses on eBay are under pressure. ChannelAdvisor has a platform that can help merchants do this.  eBay has shifted some resources/made acquisitions to help sellers extend beyond eBay (ProStores, Shopping.com), so CA could be a natural extension.

However, I think the talk about an acquisition has come and gone.  I’m sure it’ll come again, but 2009 is a buyers market, not a sellers market.  eBay can take its pretty little time, continuing to develop its strategic partnership with CA at the same time it continues to develop its own tools. No one is going to jump on CA right now because no one is buying.  And CA will not be able to go public anytime soon.

So what’s CA to do?  Well, with all the cuts and the significant war chest, the company now has time.  That’s a great thing in this economy.  And the company recognizes a strong opportunity with Amazon.  It’s where merchants want to be right now.  As Scot Wingo says “I don’t think it makes sense for anyone to try and innovate on a platform that’s decreasing the way eBay is. Now, on Amazon, we are going to shift a lot of resources…” (from the AuctionBytes post).

My main recommendation for CA (not that they want to hear anything from this ‘blogger’) is to focus.  It’s extremely hard to be all things to all merchants.  I strongly believe that a successful company needs to focus focus focus.  And with all the acquisitions CA has made, the focus has become too broad or has been too erratic.  CA has done a good job of listening to its merchants and changing direction as needed, but I hope these layoffs are a way of tightening the focus of the company.  Yes, there are going to be attractive acquisition targets in other areas of online marketing where CA is not yet an expert (email, affiliates, multivariate testing, reviews, etc.), but I hope the VCs are demanding discipline to continue tech innovations in core areas of the business.

The overarching goal of CA has always been to be the one stop shop for the merchant – there are many channels for merchants to participate in and going through one source is an extremely attractive value proposition. But it’s also a huge challenge.  ChannelAdvisor allows a merchant to get up on eBay, create a real store, buy PPC ads on Google, accept Google Checkout and PayPal, sell through Amazon, market on the shopping engines, make use of rich media, and more.

While all those channels are tied together in lots of ways and should be looked at in conjunction with one another (heard of Omniture?), just tying them together is not good enough. CA needs to continue to focus on innovation. Many merchants will flock to ChannelAdvisor, but many merchants are going to demand the best of breed solutions, not just the one stop shop.


60,000+ Job Cuts in One Day – What’s a Merchant to Do?

January 27, 2009

Yesterday was scary.  Over 60,000 job cuts…75,000, according to the NYTimes.

Catepillar = 20,000, Home Depot = 7,000, Sprint = 8,000, Texas Instruments = 3,400, Pfizer = 19,000, GM = 2,000

Layoffs –> Consumers spending less –> Companies making less money –> More layoffs.  Could be a viscious cycle.

In the retail sector alone, since January 6 of this year, I’ve tracked at least 53,000 layoffs and 1102 store closings.*  Circuit City & Home Depot obviously make up a majority of those layoffs (41,000), but don’t forget about Saks, Williams Sonoma, and Goody’s.  And the layoffs/closings are reaching the other side of the pond, with Pro Cook and Fortnum & Mason announcing layoffs and store closings in the last couple days.  See Retail Carnage for a more complete picture.

So why is all this happening? Yes, it does come down to consumers spending less and retailers not having any transparency into how bad the recession will get, but this is also due to the credit crunch.  When credit was easy to come by, many retailers went on a spending spree, opening up another store on every corner.  Now they are left with lots of stores, few buyers, and no prospect of borrowing money to get through the next 9 months (the slow non-holiday shopping season).

So what’s a merchant to do? There are no easy answers.  And while online is not THE answer – look, if everyone is spending less, ecommerce sales are going to be hit hard as well – it is part of the answer.  Now is the time for retailers to beef up their online marketing teams.

While some of the best retailers grok ecommerce, there are still at lest 100,000 online retailers who can improve their potential for success by working smarter, not harder.  By going back to basics.  That starts with being on the right ecommerce platform (ECP) and making proper use of an analytics package.  It still confounds me how many merchants can’t do simple tasks on their ECP or don’t know what success metrics to be tracking.  Creating an online presence is now easy.  Getting up on Google AdWords is a snap.  But just getting up and running is never enough.

I obviously think the shopping engines should be part of most merchants’ online marketing arsenal, but SingleFeed is not shy about turning merchants away because they’re not ready for the channel (and some changes we’re implementing soon reflect this position).

I personally always recommend that an online retailer start their online marketing activities with, email, SEO, and PPC.  Many times, affiliate programs should be next.

Because the shopping engines aren’t at the top of most merchants’ online marketing lists (not even mine!), there’s a chance that they will be first on the chopping block when etailers begin to cut spend.  Running SingleFeed and being the analyst for the industy, I’m obviously fairly biased, but I beleive that merchants need to make sure they’re not being trigger happy, cutting a marketing channel which is producing great results or has that potential.

The shopping engines are definitely partly to blame if merchants cut the channel quickly (everything from not providing APIs to increasing minimum click rates and deposits to non-existent daily spend limits to everything that ChannelAdvisor laid out in their Wish List series – this list could go on and on and on), but merchants also need to make sure they make an informed decision.

So before you stop listing on PriceGrabber, Shopzilla, and Become.com, I’d recommend that you really dig into your shopping engine campaigns.  For a couple days, put the same effort into the shopping engines that you put into SEO or PPC Management.  Lean on your data feed management partner a bit if you’re on a full service program – yes, some data feed providers have cut back their account management teams as part of larger layoffs, but that means that they are going to work harder to keep their existing clients happy.

And do the same thing for all your online marketing activities, basically reviewing your entire ecommerce practice piece by piece.  Put together a crack team of your best and brightest from different departments to uncover inefficiencies, recommend improvements, and then get out of their way so they can make the improvements.  There are a ton of moving parts to every ecommerce business. When was the last time you did a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of billing flexibility (Paypal, Google Checkout), marketing communications, product reviews and ratings, loyalty, etc?

Assuming that you have a good understanding of your success metrics and are making strong use of an analytics platform (which hopefully isn’t failing you), I know you’ll uncover some incredible opportunities to profitably grow your ecommerce business.

*”at least” because some announcements contained just store closing numbers or just layoff numbers.


December Same Store Sales Data

January 8, 2009

I’ve started a page to track the retail sales bloodbath. Still figuring out presentation/format, but December same store sales data is up.

Will get the store closings tracker up soon. Store Closing and Retail Layoff tracker is up.


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