Embed Size (px)
Citation preview
October 15, 2014 Companies: AMZN, BABA, EBAY, ECOM, EXPGY, GOOG/GOOGL, JD, MELI, MRIN, N, ORCL, OSTK, SAP,
SHLD, TYO:4755, W, WMT
1
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
ChannelAdvisor’s Agile Tools Fill a Pivotal Need for Bigger Retailers
REPORT Seth Agulnick, [email protected]
Summary of Findings
ChannelAdvisor Corp.’s (ECOM) channel management software
plays a vital role for larger retailers in managing a fragmented
online landscape, according to 15 of 18 sources across all silos.
ChannelAdvisor’s tools deliver a strong ROI, as high as 400% in
some channels, according to eight retailers using its software as
well as six other sources. Three small retailers not using
ChannelAdvisor said the software is not worth the cost for them.
ChannelAdvisor could be hurt by a trend toward more
comprehensive software that combines channel management with
fulfillment, supply chain and other operations, according to five
sources.
Two retailers are willing to expand their ChannelAdvisor usage
when connecting to new marketplaces but not when selling
through Google Inc.’s (GOOG/GOOGL) Product Listing Ads or
comparison-shopping engines.
Channel management software tends to be “sticky” and not
something larger retailers can easily switch out, according to six
sources. Two sources disagreed, with one saying such solutions
often are replaced except in the most complex deployments.
ChannelAdvisor’s best chances for growth might be outside of the
United States, according to three sources, because of the explosion
of marketplaces worldwide and because most big U.S. retailers
already have a channel management solution in place. Two other
sources said ChannelAdvisor’s international opportunities are
overstated because of the cost of connecting to marketplaces like
Alibaba Group Holding Ltd.’s (BABA) Tmall as well as the
proprietary software used outside the United States.
ECOM Fills
Important
Need
Delivers
Strong ROI
Stickiness of
Software
Online Retailers Using
ECOM
Small Online Retailers
Not Using ECOM
Ecommerce Software
Vendors
Industry Specialists
Research Question:
Does ChannelAdvisor’s software fill a key gap for online retailers and deliver a
meaningful ROI?
Silo Summaries
1) Online Retailers Using ChannelAdvisor All eight source said ChannelAdvisor’s tools are a key
part of managing sales across multiple online channels
and are worth the investment. Two said they would not
consider any other software for connecting to new
marketplaces, but would use other solutions for selling
through Google Product Listing Ads (PLAs), comparison-
shopping engines and paid search. Three sources said
ChannelAdvisor’s software is difficult to replace once up
and running.
2) Small Online Retailers Not Using ChannelAdvisor Two small retailers who use other channel management
solutions said they were former ChannelAdvisor
customers but were displeased with a combination of
performance, cost and customer service. A third said he
considered ChannelAdvisor but chose Mercent because
it was sufficient for his needs and half the cost. All three
think ChannelAdvisor is poorly suited to small retailers.
One said channel management software can be difficult
to replace once deployed, but thinks ChannelAdvisor
will see churn from smaller retailers that go into and out
of online selling.
3) Ecommerce Software Vendors All three sources, including two who compete with
ChannelAdvisor on some level, said channel
management tools fill an important void for online
retailers. All three also agree that ChannelAdvisor’s
tools work well. However, they added that retailers may
start to outgrow ChannelAdvisor’s solutions and opt for
more comprehensive tools that combine marketplace
connections with back-end operations. One source said
retailers fairly often swap ecommerce software except
in very complex situations.
4) Industry Specialists Channel management software like ChannelAdvisor’s is
a key piece of selling online in today’s multiple
marketplace landscape, according to three of four
sources. All three sources who commented on the
quality of ChannelAdvisor’s software said it is as good
as or better than other available options, though one
noted it is better suited to larger retailers. Three expect
online sales channels to become more fragmented,
spurring demand for channel management software.
One source thinks ChannelAdvisor’s best growth
opportunities are outside the United States, but another
said the company’s international expansion efforts will
be hindered by proprietary marketplace software. One
source said ChannelAdvisor should not be concerned
about churn.
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
2
ChannelAdvisor Corp.
Background
ChannelAdvisor provides software that helps retailers manage merchandise sales across hundreds of online channels,
including Amazon.com Inc. (AMZN) and eBay Inc. (EBAY). The company, whose tools support retail efforts on roughly 150
shopping engines, 37 marketplaces worldwide, and all of the major search engines, hopes to benefit as Internet retailing
becomes more complex with new channels and marketplaces.
ChannelAdvisor has reported losses since it went public in May 2013 as it continues to invest heavily in its sales force to
recruit new customers. The company reported a 25% increase in core customer growth during the second quarter, bringing its
total customer count to 2,673, including 31% of the top 500 U.S. Internet retailers. However, ChannelAdvisor added far fewer
customers during the second quarter than anticipated—108 customers compared with the prior year’s 138 net adds and
analysts’ estimates of 198. Company executives blamed significant churn among smaller retailers.
ChannelAdvisor may have a significant opportunity for growth as online retailing matures outside the United States. The
company jumped on the China bandwagon by recently adding Alibaba’s Tmall as a channel for which its software is
compatible. Brazil is another large market into which ChannelAdvisor recently expanded, adding Brazilian ecommerce giant
MercadoLibre Inc. (MELI) to its marketplaces.
ChannelAdvisor faces competition on several fronts, including other standalone solutions for managing multiple online
channels. The marketplaces themselves often offer tools to help retailers. Broader ecommerce platforms from software giants
like Oracle Corp. (ORCL) and SAP SE (SAP) are increasingly adding channel management functions, and some large
companies have developed in-house solutions. Investors are wondering whether ChannelAdvisor’s solutions fill a fundamental
need for retailers, how well its software works, and whether customers will expand their relationships with the company.
Blueshift’s Feb. 25 report found ChannelAdvisor in a strong position to defend its market-leading position against various
threats. However, sources said the company faced a challenge in adding large ecommerce retailers to its customer base as
many big vendors already had some type of channel management solution in place.
Current Research In this next study, Blueshift Research explored the level of demand for ChannelAdvisor’s software and the return that
customers are seeing on their investment. We employed our pattern mining approach to establish five independent silos,
comprising 18 primary interviews (including three repeat sources) and three relevant secondary sources focused on user
reviews of ChannelAdvisor:
1) Online retailers using ChannelAdvisor (8)
2) Small online retailers not using ChannelAdvisor (3)
3) Ecommerce software vendors (3)
4) Industry specialists (4)
5) Secondary sources (3)
Next Steps
Blueshift Research will focus on large retailers’ willingness to use ChannelAdvisor’s software or to expand their relationship
with the company. We also will further probe disparate comments from sources about ChannelAdvisor’s international
opportunities as new marketplaces like Tmall gain steam.
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
3
ChannelAdvisor Corp.
Silos
1) Online Retailers Using ChannelAdvisor All eight sources, including five who represent large retailers, said ChannelAdvisor’s tools are a key part of managing sales
across multiple online channels and are worth the investment. Two said they would not consider any other software for
connecting to new marketplaces, but would use other solutions for selling through Google Product Listing Ads (PLAs),
comparison-shopping engines and paid search. Three sources expect Internet retailing to become more complex and filled
with even more highly specialized marketplaces, which will drive demand for channel management software. Three others
said ChannelAdvisor’s software is difficult to replace once up and running.
KEY SILO FINDINGS ChannelAdvisor’s Solutions
- 8 of 8 sources think ChannelAdvisor fills a key need for retailers selling on multiple online marketplaces.
- 8 said ChannelAdvisor has provided strong results in terms of traffic, sales growth and overall ROI.
Expansion Opportunities
- 4 think online selling will become more fragmented with more channels and niche marketplaces.
- 2 said they would expand their use of ChannelAdvisor to connect with new marketplaces but not for other functions
like comparison-shopping engines or Google PLAs.
- 2 have already expanded their use of ChannelAdvisor to Facebook Inc. (FB) and Pinterest.
- 1 said ChannelAdvisor’s best hope for growth is internationally.
Challenges
- 3 said replacing ChannelAdvisor with a competitor’s software would be difficult.
- 2 listed broad platforms like SAP’s and Oracle’s as competitive threats.
- 1 believes most retailers have some type of channel management solution in place.
1. Ecommerce manager for a top-100 Internet retailer
Channel management software is vital for multichannel retailers, according to this source, whose company uses
ChannelAdvisor to feed inventory into comparison-shopping engines, Google’s PLAs and other online channels. He does
not plan to expand his use of ChannelAdvisor but said the software has no real weaknesses. Switching to another vendor
would be easy, but he does not think he would get any meaningful ROI advantage from doing so. Having PLAs managed
by the same agency that handles paid search would be useful, but he has not
made that switch because ChannelAdvisor is less expensive.
ChannelAdvisor’s Solutions
“Whether it is ChannelAdvisor or a competitor of theirs, this software fills an
important and unmet need. It helps deal with the multiple taxonomies that
exist on differing comparison-shopping engines, and/or meets the need of
easy integration with marketplaces that need data feeds from vendors in
order to function.”
“The strengths of ChannelAdvisor’s software are the ease of use for the
retailer; bid management by product and product category; and simple and
easy-to-sort reporting. There are no weaknesses in my view.”
“We use ChannelAdvisor for several online channels [including] Shopzilla,
[Shopzilla’s] Bizrate, Google Shopping.”
“[The effect of using ChannelAdvisor has been] a solid monthly sales
expectation that includes new customer acquisition.”
Expansion Opportunities
“Not at this point [do we have plans to expand use of ChannelAdvisor].”
Challenges
Whether it is ChannelAdvisor or
a competitor of theirs, this
software fills an important and
unmet need. It helps deal with
the multiple taxonomies that
exist on differing comparison-
shopping engines, and/or
meets the need of easy
integration with marketplaces
that need data feeds from
vendors in order to function.
Ecommerce Manager
Top-100 Internet Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
4
ChannelAdvisor Corp.
“It would be easy [to switch to another vendor]. Just send a data feed to the new provider and give them the log-ins
to our accounts.”
“The key thing is to get our products in front of people. [Google’s] Channel Intelligence does that well too. The ROI
difference with another data feed provider would be negligible [when compared with ChannelAdvisor].”
“The key isn’t so much ROI, although that is included. The key is new customer acquisition. Comparison-shopping
engines and PLAs are a great source for acquiring new customers.”
“[Using ChannelAdvisor for Google PLAs] is fine, but there may be advantages to having PLAs managed by the same
agency that manages paid search so that there is a cohesive bidding strategy. I haven’t switched over PLAs to the
paid search agency I work with, simply because it is less expensive to have them managed by ChannelAdvisor.”
2. Direct marketing executive for a top-200 Internet retailer
Channel management tools are essential for any sizable online retailer, according to this source, whose company has
been using ChannelAdvisor for more than five years. The retailer has reported an average ROI of 350% across all sales
channels for the last two years, and uses ChannelAdvisor with comparison-shopping engines, Google AdWords, Amazon,
Facebook and Pinterest. Competitors like Mercent may be a better choice for smaller operations that do not require
ChannelAdvisor’s functionality. Comprehensive solutions such as Oracle’s are a potential threat, depending on the fee
structure. The source noted little churn with this type of specialized software.
ChannelAdvisor’s Solutions
“The company started using ChannelAdvisor before I came here. It was at least five years ago.”
“I believe this is our first and only channel management vendor.”
“We use it with comparison-shopping engines and the data feed management for them.”
“It’s easy to pull data into reports for our strategic planning. Most of our business was seasonal during the last two
months of the year, so that’s a very narrow window.”
“We’ve seen an average ROI of 350% for the last two years across all
channels. [ROI through ChannelAdvisor has] been higher on Vitacost and
Amazon—closer to 400%.”
“We do use it for Google Ads and Google Shopping. We’re running some
very effective Google Ads campaigns using Google Analytics and data pulled
from ChannelAdvisor. We’re very pleased with the conversion rates.”
Expansion Opportunities
“We’re using [ChannelAdvisor] on Facebook and Pinterest right now.”
“We have a strong international business with shipping to more than 60
countries as well as U.S. military bases abroad.”
“We’re always evaluating new sales channels to identify the sites that make
the most sense for our business. We can use ChannelAdvisor on any of
these platforms. I have not come across any compatibility issue.”
Challenges
“Some kind of channel management tool is absolutely needed by large retailers selling their goods online.
ChannelAdvisor is working for us.”
“Maybe some of the big retailers use their own software. The costs to design and code a scalable channel
management system and then to hire people to manage it are probably greater than partnering with a vendor that
already has the experience.”
“Mercent might be more cost-effective for smaller retailers who don’t need as much functionality as you can get with
ChannelAdvisor.”
“Oracle has a comprehensive ecommerce solution that can compete with ChannelAdvisor’s capabilities. I don’t know
what their fee structure is, though.”
“More marketplaces are coming online all the time. We sell on Amazon because of the traffic, but we also want to be
on the minds of our customers wherever they happen to browse. That’s where Google Ads comes into play.”
“When you do a search for the [types of products] we offer, Amazon isn’t necessarily going to pop up first in the
search results. I think with most online sellers, the more places you can be seen, the better.”
We’ve seen an average ROI of
350% for the last two years
across all channels. [ROI
through ChannelAdvisor has]
been higher on Vitacost and
Amazon—closer to 400%.
Direct Marketing Executive
Top-200 Internet Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
5
ChannelAdvisor Corp.
“I doubt there are many online retailers who switch out their software to try different solutions. If you have a tool
that’s driving more business and helping you sell more efficiently, there’s no reason to change to another
management tool.”
“If the software isn’t helping sales, then, yes, I can see the need to shop around. Even if another channel
management provider approached us with a less expensive solution, we would still have to vet that company and try
to determine if we could get better results with them.”
3. Marketing and development manager for a top-500 Internet retailer
In using ChannelAdvisor during the past three years, this online retailer reported a 250% annual ROI averaged across all
sales channels. Scalability and ease of use were the deciding factors in an evaluation that included ChannelNet, Channel
IQ and Mercent. ChannelAdvisor helps the retailer create Google AdWords campaigns, and integrates with Google
Shopping. The retailer also uses the software for channel management on Facebook, Pinterest and specialty sites. Oracle
and SAP pose challenges to ChannelAdvisor, but churn is minimal for these software tools. The online marketplace is
expected to become more fragmented because retailers desire a mix of heavy-traffic sites such as Amazon, as well as
specialty sites that attract their desired customers.
ChannelAdvisor’s Solutions
“We started with ChannelAdvisor around 2011. Scalability and ease of use were important in our evaluations.”
“We looked at ChannelNet, Channel IQ, Mercent and a couple of others.”
“We’re running [ChannelAdvisor] on several dozen sales channels. The biggest are probably Amazon and Google
Shopping.”
“ChannelAdvisor is pretty intuitive once you’ve worked with it a few times. We’re able to capture and evaluate sales
and shopping data, identify trends and plan inventory very efficiently.”
“There are no weaknesses [with ChannelAdvisor’s software] that we’ve
encountered.”
“Our ROI has been averaging about 250% every year. If we break out
specialty sites, it’s higher—more like 300% per channel.”
“We use ChannelAdvisor for Google Shopping and Google Ads. It works
great. ChannelAdvisor is also very proactive about coming to us with ad
ideas.”
Expansion Opportunities
“We’ve been using ChannelAdvisor on Facebook and Pinterest for a while
now.”
“We ship internationally although most of those orders are placed as gifts
from people in the United States. As the company grows, we may look at
international online markets. It’s not something we’re ready to do just yet. If
we do, we would definitely use our channel management software.”
Challenges
“The software is a major timesaver. By automating a lot of our processes, we can devote more time to analyzing
sales data in a useful way rather than just fulfilling sales.”
“If ChannelAdvisor can show their solutions work better than a company’s own systems—or at least as well—and they
can come in with a good price relative to that value, I can see companies switching to ChannelAdvisor.”
“It’s a very specialized type of software. I would much rather use their tools than bring in an IT company to design
something from the ground up.”
“Oracle and SAP bring powerful solutions to the table. A lot of the other companies tend to have strengths in serving
certain industries, like manufacturing, but not many offer a lot of customization or scalability when you want to get
on more channels.”
“I have come across complaints from some retailers about ChannelAdvisor’s pricing structure, but I don’t know their
particular situation. We feel that so long as we’re getting back almost three times what we’ve invested in the
software, that’s a pretty good return.”
“There’s always a lot of online speculation about which channel is going to dominate the marketplace, but I don’t see
it. There are probably thousands of specialty channels on the web.”
ChannelAdvisor is pretty
intuitive once you’ve worked
with it a few times. We’re able
to capture and evaluate sales
and shopping data, identify
trends and plan inventory very
efficiently.
Marketing & Development Manager
Top-500 Internet Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
6
ChannelAdvisor Corp.
“We’re on Amazon—almost everybody is—but we’re also on Pinterest, which draws more of our target customers. I
think most online retailers would rather list across numerous channels than stick with one or two major sites like
Amazon or eBay.”
“The other thing we’ve discovered in using this software is the amount of comparison shopping that goes on. You
don’t want to limit your sales channels.”
“It’s easy enough to change software since the new vendor will do most of the work. I think there’s no point to it if the
software you have is getting the job done. I haven’t seen anything come out that you’d call a game changer.”
4. Ecommerce director for a top-1,000 Internet retailer
This source’s company has been using ChannelAdvisor for more than six years to manage sales on marketplaces like
Amazon and eBay, and he believes the software is well worth the cost, which is about 2% of sales. Switching vendors
would be difficult, and he would not consider using anyone other than ChannelAdvisor when launching sales on a new
marketplace. However, his company uses other agencies for functions such as paid search, comparison shopping and its
own web platform because of cost and logistical issues. ChannelAdvisor’s customer support is generally good, though
resolving issues can take time.
ChannelAdvisor’s Solutions
“We use [ChannelAdvisor] for our marketplaces—Amazon, eBay and Buy.com [now Rakuten [Inc./TYO:4755]—and
we’re working on getting launched on Walmart [Stores Inc./WMT] and Sears [Holding Corp./SHLD].”
“I don’t find it that expensive overall. On the revenue we’re generating through Amazon—which is a lot—and to a
lesser extent eBay and other marketplaces, [the cost of using ChannelAdvisor] only works out to 1% to 2% of sales.”
“When I started at the company, we weren’t on Amazon at all and only had a few listings on eBay, so we weren’t
using ChannelAdvisor for much. When I got here and started using it
optimally, we saw a huge lift. Just on eBay for the first year or so, we were
getting at least 10% lift [in sales] every month, usually more than that. eBay
has since declined for us, as it has for a lot of people. “
“When we moved Amazon over [to ChannelAdvisor], that saved us a lot of
money because we were using another agency to manage it and also do the
customer service. We moved the customer service in-house and started
using ChannelAdvisor’s software, and that saved a lot of money. That was
probably the biggest benefit.”
“Amazon sales didn’t go up right away, but this year we’ve gotten a huge lift.
Our Amazon sales have been up 70% over the same month last year. I think
ChannelAdvisor enables it and makes it easy to manage. I wouldn’t attribute
a huge percentage [of that sales increase] to them, but they make it so it’s
easier and effective.”
“I’m actually having some problems with [ChannelAdvisor] right now, trying to get something to work with Fulfillment
by Amazon. Their customer service is good. Sometimes it takes a couple of hours for their support team to get back
to you, but they’re very knowledgeable. They’re always able to get to the bottom of the issue eventually.”
“Switching everything over [to another vendor] would be difficult. There’s a lot of things we’ve built up over the years
with ChannelAdvisor—templates, business rules, how we juggle inventory, our feeds with them, and the setup to bring
orders in. Starting from scratch with somebody else would be a daunting task. It’s not something I’ve explored
recently.”
“They’re definitely the industry leader there, and it is lacking [a lot of direct competition] with marketplaces. A lot of
their other solutions, a bunch of other people do, but they definitely have a leg up in marketplace management.”
“Their inventory management, that whole interface is great. It makes it really easy for things like making bulk
changes. Sometimes we have to make big changes on our website, and it’s not nearly as easy as making those same
changes on ChannelAdvisor.”
“Marketplaces are going to thrive and explode as more and more shoppers go to Amazon and more [marketplaces]
are trying to copy their model. You would think competitors [to ChannelAdvisor] would crop up in their space, but as
of yet I haven’t seen anybody match their technology.”
“ChannelAdvisor really makes launching a new marketplace relatively easy.”
Switching everything over [to
another vendor] would be
difficult. There’s a lot of things
we’ve built up over the years
with ChannelAdvisor. … Starting
from scratch with somebody
else would be a daunting task.
Ecommerce Director
Ttop-1,000 Internet Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
7
ChannelAdvisor Corp.
Expansion Opportunities
“We got an invitation to join Walmart’s Marketplace, a limited release for third-party sellers. They extended that
[invitation] through ChannelAdvisor, so just being on ChannelAdvisor made this opportunity available, which is good.
To be honest, it was a little bit of extortion in that it was a forced launched through ChannelAdvisor, which was not
that great of a deal, but it wouldn’t have happened without them, so it’s an overall positive.”
“They forced me to do their assisted launch program and charge $3,500 for it. It’s good to have somebody hold your
hand—it’s not that there’s no value in that—but it’s not that hard. It’s something we could’ve done ourselves. But they
have a deal with Walmart where everybody is launching through ChannelAdvisor, and they make you pay for the
assisted launch.”
“We’re also looking to launch on Sears [with ChannelAdvisor], but I haven’t
pushed it that hard because I don’t think the revenue is going to be huge
and it’ll be another thing to support.”
“They make launching a marketplace fairly easy.”
“We’re on the big [marketplaces] with ChannelAdvisor, so for every
additional one, they just charge a percentage of revenue on top of our
existing deal [with no new subscription fees]. I wouldn’t even think about
[using another vendor].”
“I went to ChannelAdvisor about possibly adding comparison shopping. I
have a pretty good deal with them in terms of our contract for
marketplaces, and they tried to tear it up and make that worse in order to
add comparison shopping. Revenues on shopping engines are like one-
tenth of what they are on marketplaces, so it didn’t make sense to touch
the marketplaces to add that. Their sales team I don’t think totally gets
what we want.”
Challenges
“We used to use [ChannelAdvisor] for feed management—before PLAs came
around—but I moved that to another agency. It was really just a cost issue. I was able to get someone else to manage
it for cheaper than what ChannelAdvisor was charging me to map the feeds.”
“I use other [vendors] for paid search and comparison-shopping engines, and we have our own web platform. I know
these are all services that ChannelAdvisor offers. I don’t think they’re bad by any means, but it makes more sense for
us to do that with somebody else.”
“Their web store didn’t seem like it was a good, fitting solution.”
“We work with certain agencies for other channels, and [ChannelAdvisor] makes it harder. They don’t allow agencies
to log into your account to manage it. My paid search agency [works] on other platforms, but they don’t have the
same deal with ChannelAdvisor. I use Marin [Software Inc./MRIN] for paid search. It’s a cost issue and also a
familiarity issue with my agency.”
5. Business improvement officer for a leading retailer of home furnishings
This large retailer uses ChannelAdvisor to manage its online catalog and handle digital marketing campaigns after cutting
ties with another software provider. The company is pleased with the switch because ChannelAdvisor measures up well in
conversion rates and traffic. Switching vendors for this type of software can be a difficult task. Growth opportunities for
ChannelAdvisor are mainly international, as virtually every major U.S. retailer with an online presence already has some
sort of channel management solution.
ChannelAdvisor’s Solutions
“We’ve been using [ChannelAdvisor’s] Rich Media for about four years for our online catalog. It wasn’t long after that
when we cut ties with another software vendor that was handling online marketing. We added the digital marketing
service from ChannelAdvisor. Now they manage multiple campaigns for us across more than 50 feeds.”
“Scalability was important to us because we have such a broad range of products that we want to promote on the
best sites for those products. ChannelAdvisor is also set up so we can manage as much as we want in-house, while
they handle the digital marketing side. It saves time and the cost of hiring an entire team of experienced online
marketing strategists.”
I use other [vendors] for paid
search and comparison-
shopping engines, and we have
our own web platform. I know
these are all services that
ChannelAdvisor offers. I don’t
think they’re bad by any
means, but it makes more
sense for us to do that with
somebody else.
Ecommerce Director
Ttop-1,000 Internet Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
8
ChannelAdvisor Corp.
“Conversion rates and traffic are our key metrics for gauging success.
We’ve been pleased [with ChannelAdvisor’s results].”
“We have no reason not to continue with ChannelAdvisor. They are punctual
with reports and very proactive in coming to us with marketing
recommendations.”
Expansion Opportunities
“We use eBay and Amazon in a limited capacity, mostly for top-selling and
seasonal merchandise.”
“I believe there is some integration of channel management with cloud-
based marketing solutions, but I don’t know that it’s coming at
ChannelAdvisor’s expense.”
“Large online retailers will continue to need effective channel management,
whether it’s ChannelAdvisor or another vendor. Amazon delivers the traffic, but you don’t want to put all your eggs in
Amazon’s basket. Ideally you want to have high visibility on every storefront where it makes sense to offer your
products. We’ll use all the tools available to get on every channel that could benefit us.”
Challenges
“Most mid- to large-scale online retailers probably have channel management in place. There are so many markets,
and the landscape is so segmented that it’s essential to use some application that can organize and make sense of
it all and provide meaningful data for analysis.”
“In the United States, I suspect ChannelAdvisor’s greater challenge will be
signing new retailers of any significant size. I would think that the largest
online retailers already have channel management tools they are using. I
don’t think ChannelAdvisor is at risk of losing their existing client base.”
“The number of specialty and generalist online retailers is still growing
worldwide. That’s probably ChannelAdvisor’s best path for growth—to serve
those companies.”
“I’m not sure if what we’re seeing is actually consolidation on big sites like
eBay and Amazon, or just more online retailers trying to set up shop. There
are still an awful lot of channels where consumers can purchase goods
online.”
“This is sticky software. Once you’re on board with it and it’s working for
you, switching to another vendor would be time-consuming. It would
probably come down to price or maybe a radical change in the quality of
support from your existing vendor.”
6. General manager of an automotive parts retailer
This online retailer credits ChannelAdvisor’s solutions with helping his company post a 400% sales increase since
deploying the software in 2009. By automating tedious processes such as inventory tracking and fulfilling listing
requirements on different sales channels, the software has freed staff to focus on other business aspects. Increasing
channel specialization to serve specific markets bodes well for ChannelAdvisor’s growth opportunities. Companies buying
a channel management solution tend to stick with it if the price is fair and the ROI meets or exceeds expectations.
ChannelAdvisor’s Solutions
“We set up with ChannelAdvisor in 2009. I think maybe we looked at a couple of other vendors, but ChannelAdvisor
had the answers we were looking for.”
“Automation is just a huge benefit. We were spending so much time updating inventory and trying to meet eBay’s
listing requirements. ChannelAdvisor does that automatically once it’s set up.”
“I’m not aware of any weaknesses that would affect us.”
“I measure success by the 400% increase we’ve seen in sales over the last five years.”
“Its scalability was one of the reasons we chose ChannelAdvisor. We were primed for growth and needed to manage
that growth effectively to build our customer base and create those ongoing relationships. It’s much easier to do that
We have no reason not to
continue with ChannelAdvisor.
They are punctual with reports
and very proactive in coming to
us with marketing
recommendations.
Business Improvement Officer
Leading Retailer of Home Furnishings
This is sticky software. Once
you’re on board with it and it’s
working for you, switching to
another vendor would be time-
consuming. It would probably
come down to price or maybe a
radical change in the quality of
support from your existing
vendor.
Business Improvement Officer
Leading Retailer of Home Furnishings
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
9
ChannelAdvisor Corp.
if you can minimize the risk of overselling and running out of an item because someone didn’t catch it in time. An
automated system tracks this for us.”
“We integrate ChannelAdvisor with our eBay storefront.”
“Right now we only use ChannelAdvisor.”
“The thing we like about ChannelAdvisor is it works across multiple retail sites. We gather a lot of data that shows
conversion rates on different sites, which products are selling on those sites, and this information helps us make
better decisions about what we promote on different sales channels.”
Expansion Opportunities
N/A
Challenges
“As companies grow and want to accelerate that growth, adding a channel
management solution to the arsenal will save an enormous amount of time
doing the tedious data entry tasks that are important, but will distract from
your focus on planning and looking at the big picture.”
“The need for a channel management solution will be there for online
retailers even as Amazon grows. There is a lot of specialization on sites that
focus on a pretty narrow market segment. You want to sell on Amazon and
eBay because of the traffic those sites get every day, but you cannot
overlook the specialty sites.”
“Online retail and venues for selling just keep on growing. What we might
call small or midsized retailers could explode into large operations with
deep and varied inventories.”
“Retailers that are just looking at the cost of channel management as a
basis for choosing a vendor can probably find less-expensive solutions than
ChannelAdvisor. We were also looking at improved efficiencies and sales
potential. ChannelAdvisor helps us meet those goals as well. So for me, cost
is important but it isn’t the only factor.”
“Sales channels are becoming more focused to serve consumers looking for very specific products. These specialty
markets will proliferate.”
“Name awareness of an online retail channel does not necessarily mean the best price for the products on that
channel. If anything, the largest sites can charge a premium on sales through their platform because they deliver
huge traffic volume. As consumers get more and more sophisticated and price-conscious, that will be an opportunity
for smaller channels to draw them in and flourish.”
“If you buy a solution that works, people tend to stick with it. Pricing is always something to consider, but if the ROI is
there and your people are comfortable using the software, then change for the sake of change isn’t necessary or
even a good idea.”
7. Managing director of a UK retailer
This online retailer has been using ChannelAdvisor since 2008 and has seen annual revenue grow close to 25% for the
past three years. ChannelAdvisor’s highly automated and customizable solutions have enabled the retailer to expand
beyond eBay to Amazon and eventually to multiple niche marketplaces. The company has been so pleased that it has no
interest in exploring other options. Amazon and eBay should continue growing as general marketplaces, but the
proliferation of niche sites makes being on as many relevant channels as possible extremely important.
ChannelAdvisor’s Solutions
“We signed with ChannelAdvisor about six years ago. Every time we went online to look at business solutions, their
name kept popping up. We did not contact anyone else.”
“Their systems are highly automated, which has saved us a lot of time. We have also been able to customize what
we sell in different marketplaces so our merchandise aligns with the people shopping on those channels.”
“We haven’t encountered anything you could call a weakness [in ChannelAdvisor’s software]. We’ve been very
pleased.”
“Annual sales growth has been almost 25% for the last three years. Most of our sales are still on eBay.”
Retailers that are just looking
at the cost of channel
management as a basis for
choosing a vendor can probably
find less-expensive solutions
than ChannelAdvisor. We were
also looking at improved
efficiencies and sales potential.
ChannelAdvisor helps us meet
those goals as well. So for me,
cost is important but it isn’t the
only factor.
General Manager
Automotive Parts Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
10
ChannelAdvisor Corp.
“We plan to continue with [ChannelAdvisor]. Since we started using ChannelAdvisor’s Marketplaces [software], we’ve
expanded from eBay to Amazon and into several markets outside the UK in Europe.”
“Marketplaces can scale up to any level we need.”
“ChannelAdvisor works with eBay and Amazon so we can sell in those markets without having to learn every tiny
thing that’s unique to each of them.”
“ChannelAdvisor has been sufficient for our needs. Right now I don’t see the need for additional channel
management.”
Expansion Opportunities
“I should think any online retailer of significant size would have or would be looking actively for channel
management. The markets are just so diverse that one really needs a tool to manage orders across these different
sites without spending all of one’s time focused on just that one task.”
“Amazon and eBay can continue to grow as generalized marketplaces. However, there are many niche markets that
serve dedicated markets, and these can grow too. Comparison shopping online is quite easy, and customers will buy
at the best price they can find. That makes it important to be on as many relevant sites as possible.”
Challenges
“If a business is seeing results on the investment in this type of software, I think people tend to be content. It is
probably easy enough to try different software solutions, but if one is happy with the current software at an
acceptable cost, why invest the time testing out other software products?”
8. Executive with a retailer of animal and pet products
This source has used ChannelAdvisor for more than a year for inventory and channel management and to help build a
website. The company has seen a 25% sales increase since using ChannelAdvisor. The e-tailer previously managed
channels through Solid Commerce, but views ChannelAdvisor as a better fit, in part because it allows the use of a
separate supply chain tool. ChannelAdvisor fills an important need for online retailers that require inventory management
and channel listings beyond eBay and Amazon. She would expand her use of ChannelAdvisor if the company were to
connect to additional marketplaces, but she uses an agency for Google PLAs.
ChannelAdvisor’s Solutions
“We have used ChannelAdvisor for well over a year. Prior to that we were with Solid Commerce, but we felt that
ChannelAdvisor was more cost-effective and had more things useful to us.”
“We mostly use ChannelAdvisor as an inventory management system and to sell on different platforms. They have
helped keep our inventory numbers in line, and they also have a price function that monitors the base range on
various sites so that you are never too low or too high compared to other listings.”
“When we originally looked for a solution, it was between Solid Commerce and ChannelAdvisor. I think Solid
Commerce was less expensive and promised a little more, so we went with them. We moved away from them
because we have a lot of different types of products but within our industry segment. Solid Commerce [clients] sell a
lot of electronics and clothing, and they seem to do better with Solid Commerce because there is so much industry
variation.”
“Solid Commerce also offered its own shipping system, whereas
ChannelAdvisor links in with ShipStation, which we had been using. ...
ChannelAdvisor pulls our orders and sends them to ShipStation, and then
ShipStation alerts our system. ChannelAdvisor keeps all of the information
for our customers.”
“You can put kits or bundles of products together, and we are able to sell
without having a negative impact on our inventory.”
“They were good with training our people on the system, and they have been
good with updates.”
“Since moving to ChannelAdvisor, we have brought on our own website and
seen a 25% increase in business and sales.”
“ChannelAdvisor does fill a need. If we did not have someone like
ChannelAdvisor, we would have to sell and track our products one by one
and track inventory on each site used.”
We have used ChannelAdvisor
for well over a year. Prior to
that we were with Solid
Commerce, but we felt that
ChannelAdvisor was more cost-
effective and had more things
useful to us.
Executive
Animal & Pet Products Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
11
ChannelAdvisor Corp.
“ChannelAdvisor satisfies a large need for us. If a vendor only sold on eBay or Amazon, then ChannelAdvisor probably
would not be the best choice for the seller.”
“ChannelAdvisor has helped us with Amazon’s ASIN [Amazon System Identification Number], which is a code to put
your SKUs in an ideal multiseller channel. We would try to match up the right ASINs for our SKUs, but you can’t
always tell which ASIN is best for your product to go under. If we don’t know what ASIN to us, ChannelAdvisor can
come back with choices so you don’t post under the under the wrong ad.”
“I don’t believe Solid Commerce did that. They just matched you up with the first compatible ad, and you would not
know you were in the wrong place unless a customer complained.”
Expansion Opportunities
“We use ChannelAdvisor for 98% of our marketplace functions. We are on five channels that work for us directly
through ChannelAdvisor. We also use one other marketplace, Houzz.com. So far Houzz is the only marketplace of
interest to us that is not available through ChannelAdvisor. I don’t know where they are in linking with Houzz, if at all,
but Houzz is a very specific marketplace mostly used by contract workers who do jobs in and around homes.”
“If ChannelAdvisor brought in more specialty marketplaces and especially if they made them easier for us to use, we
would probably go through ChannelAdvisor. If ChannelAdvisor were to bring in Houzz, we would be ready to move and
work just with ChannelAdvisor because they handle our inventory.”
“We work with a third party for our Google [PLAs] rather than ChannelAdvisor. It is called Madwire Media.”
“We do see more marketplaces like Newegg [Inc.], Overstock[.com Inc./OSTK] and with these types of sites, I could
see the benefit to linking to their channels. There also are places like Sears, which has a place for sellers to sell, but
they have not done a good job of letting buyers know that the items on the seller site do not come from Sears.”
“We have seen some benefit from listing on Sears, although we usually post and then forget about it until we get an
order. We give them a floor and a ceiling for prices. We have seen some benefit, and we have seen orders come from
their marketplace that we had never seen before. But what we have sold with Sears is all because of
ChannelAdvisor.”
“We are not looking at international marketplaces right now because we ... have only so much time and so many
people on staff. As we continue to grow, I could see reaching out more to international markets.”
Challenges
“ChannelAdvisor’s weakness is that when we have a technological issue, it’s up to us to fix it. We could submit a
problem ticket, but often we would get a three-word response or an email request to fill out a form. Issues don’t
come up often, but they do happen.”
2) Small Online Retailers Not Using ChannelAdvisor Two of these three small retailers who use other channel management solutions said they were former ChannelAdvisor
customers but were displeased with a combination of performance, cost and customer service. A third said he considered
ChannelAdvisor but chose Mercent because it was sufficient for his needs and half the cost. All three think ChannelAdvisor is
poorly suited to small retailers. One said channel management software can be difficult to replace once deployed, but thinks
ChannelAdvisor will see churn from smaller retailers that go into and out of online selling.
KEY SILO FINDINGS ChannelAdvisor’s Solutions
- 2 of 3 sources used to use ChannelAdvisor software but were unhappy with the ROI.
- 1 said ChannelAdvisor’s tools were more comprehensive than his business needed.
- 3 think ChannelAdvisor is too expensive.
Expansion Opportunities
- 1 sees growth opportunities for ChannelAdvisor outside the U.S.
Challenges
- 3 think ChannelAdvisor is a poor fit for smaller retailers.
- 1 said channel management software is fairly sticky but cited some churn as smaller retailers dip in and out of
online selling.
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
12
ChannelAdvisor Corp.
1. Owner of a web-based retail music store
This source was a ChannelAdvisor customer several years ago but cut ties based on functionality, customer service and
fees. ChannelAdvisor’s offerings are a poor fit for small business owners with revenue under $1 million. ChannelAdvisor
may have some expansion opportunities outside the United States. Replacing this type of software can be difficult, but
the source noted a lot of churn because many small sellers move in and out of online retailing.
ChannelAdvisor’s Solutions
“We had been with ChannelAdvisor four years ago, but it was not for us. They may not be as bad now although a lot
of people I know no longer use them. We originally decided to go with ChannelAdvisor because we were looking for
an ecommerce solution that would help us synchronize inventory across market channels.”
“The strength of ChannelAdvisor is that the system does work. Without them I would not have gotten integrated with
Amazon because [Amazon’s] system is not very good at helping retailers list.”
“The weakness of ChannelAdvisor is that they have no API [application programming interface] management, and
there are no updates. The website stuff is really bad, the synchronization is bad, and the company websites are bad.
They just did not work well, and the SEO [search engine optimization] was horrible.”
“The interface for the user also was hard to change. If you were a big company, they probably have some good
options. Then again, the service was horrible and you could not get anyone on the phone. If you left a voicemail, no
one called back and it took days to get email responses.”
“They decided to redo all of their eBay listings [several years ago], and at that time it messed up our search on eBay.
We were hurt financially as a result. Our eBay sales took a big revenue drop. We fell by about 15% to 20% that
[month].”
“You can’t really talk to anyone or get tech help because there’s no phone number made available to clients. Even if
you had a real problem like a system shutdown, you needed to put together an incident report and email it and wait
for response.”
“When we were with ChannelAdvisor, you had to give 20-day notice to
terminate, and the procedures to follow to end the contract were very
specific. If you didn’t follow them precisely, it delayed termination. I believe
they now have a one-year notice.”
“ChannelAdvisor’s scalability is OK, but it didn’t matter because you were
paying more and more to them as we scaled. We paid them $1,500 one
December, and that was on top of the minimum fee of $300. Their take
from us was always close to $1,000 a month.”
“The company has changed the percentage of revenue it takes. It’s good for
them but not good for their customers.”
“We knew upfront about the percent-per-sale [fee], but it doesn’t really cost
them anything to put you on one channel vs. many channels. And still we
had to keep spending money.”
“We never saw an increase in revenue with ChannelAdvisor, but then they
really don’t provide any value to a company like ours to help them grow.”
“We eventually decided to write our own software for inventory synchronization. We get our listings on eBay through
Sixbit [Software]. We are listed on eBay, Amazon, Newegg, and they have also put us into 11 Main, which is part of
Alibaba.”
“We use Volusion for our shopping cart and host platform, and it has good API. ... We have had them for three years. I
do not believe they compete with ChannelAdvisor. Vendio does our synchronization, and they do compete with
ChannelAdvisor.”
“We have ended up stringing together different tools. We use Shipworks for shipping in the U.S. and a third party
called Globegistics for our mail consolidation. Endicia does our packaging.”
“With our existing tools, we are up 30% with Amazon. Our levels with eBay have been the same for about two years.”
“We did try Zoovy [software] once, but it wasn’t right for us. eBay doesn’t really provide tools or access to other
marketplaces. They have a listing tool, but it is not very good. If you sell only a few products, it’s OK. In my view, eBay
really is not for professional retail sellers.”
Expansion Opportunities
The weakness of
ChannelAdvisor is that they
have no API management, and
there are no updates. The
website stuff is really bad, the
synchronization is bad, and the
company websites are bad.
They just did not work well, and
the SEO was horrible.
Owner, Web-based Retail Music Store
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
13
ChannelAdvisor Corp.
“ChannelAdvisor has opportunities to expand. I don’t know how I would get
onto a Chinese platform like Tmall without someone like ChannelAdvisor.”
“We do have a lot of people buying from us in Japan and Korea. We recently
had a big order from Asia for $600 worth of picks.”
“People are trying to grow internationally, but we do not have the money.”
Challenges
“From what I’ve seen and heard, ChannelAdvisor is stuck. Their tools have
not improved a lot over the years, and they are expensive.”
“I don’t know what ChannelAdvisor’s core market is. They do not cater to
the smaller professional retailers. If your revenue is under $1 million, they
are not very good. They are more difficult to work with and use. They are
expensive and very Eurocentric.”
“I don’t think ChannelAdvisor fills an [unmet] need because there are many
other options out there. They help if you want to sell exclusively on eBay.
While they help with Amazon, I think that is more because Amazon is
growing.”
“There are a lot of specialty marketplaces out there. I am a big user of them personally. I don’t know if Amazon will
grow much more in this space although they will always be big. My gut tells me there will be a lot of consolidation of
the specialty markets in the next couple of years.”
“It is hard to switch [software providers], but there also is a lot of churn because there are a lot of people that go in
and then out of online retailing.”
2. Business manager for a UK-based retailer of games and puzzles
This source’s company used ChannelAdvisor for three years as a result of ChannelAdvisor’s acquisition of MarketWorks.
ChannelAdvisor failed to make good on promises to build his company’s business and client base. Poor website
functionality created user complications. The source stopped using ChannelAdvisor and instead worked with a small
developer to build a website and integrate with eBay and Amazon, an approach that saved money. His company is too
small to need channel management software, but such tools could be important for larger retailers.
ChannelAdvisor’s Solutions
“We used ChannelAdvisor for three years, and they promised us help with building our site, our business and
customer base. We did not get the help promised, and somewhere in the first year they started changing things,
which did not benefit us.”
“We came to ChannelAdvisor through MarketWorks which was bought by ChannelAdvisor, forcing our hand.”
“We did use Amazon when we were with ChannelAdvisor, but in very short order it got really complicated.
ChannelAdvisor kept changing templates, and we never got up to speed. They also failed to keep us informed and in
the loop. I’m pretty sure it was not unique to our business, and it affected
everyone.”
“Our first year with ChannelAdvisor ... eBay made changes as well, and I
think that created a problem for ChannelAdvisor. But our problem was
strictly with ChannelAdvisor.”
“We were paying a lot of money to ChannelAdvisor. There was a 1% [of
sales] fee and £300 a year [U.S. $486.46], plus £8,000 [$12,972] for the
website. We were paying them about £450 [$729.69] a month in fees. It
didn’t pay.”
“We ended up working with a local web person to design our site and
integrate us with Amazon and eBay. The setup cost for Amazon and eBay
combined was £450 plus the fee per sale. It’s much more economical.”
“During this period [of using ChannelAdvisor] we lost a number of
customers. They also changed the client contract, requiring that we give a
year’s lead time for termination. When we started out, you only had to give
60 days’ notice.”
I don’t know what
ChannelAdvisor’s core market
is. They do not cater to the
smaller professional retailers. If
your revenue is under $1
million, they are not very good.
They are more difficult to work
with and use. They are
expensive and very Eurocentric.
Owner, Web-based Retail Music Store
We used ChannelAdvisor for
three years, and they promised
us help with building our site,
our business and customer
base. We did not get the help
promised, and somewhere in
the first year they started
changing things, which did not
benefit us.
Business Manager
UK-based Games & Puzzles Retailer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
14
ChannelAdvisor Corp.
“Once we did leave them, they kept taking money from our account because we were on autopay. It took some doing
to resolve.”
“We currently only have 12 products. If we had more products, we might look for another channel management
solution. I think if you have 50 products or more, then it’s worth [paying for channel management software], but at
this point we can measure our sales and inventory ourselves.”
Expansion Opportunities
“Online retailers may want to sell internationally, but there are a lot of problems with selling in different countries.
Even if you want to work with Amazon Canada, it is difficult because you must pay taxes to all of the different
provinces, and when you ship to Canada, you pay an import tax. There is no flat fee like you have in America.”
“I don’t know much about ChannelAdvisor’s international expansion. I do know they signed up to sell on an Irish
marketplace but then dropped it after three months. There’s not a big market in Ireland.”
Challenges
“The biggest threat to ChannelAdvisor is Amazon. There are a lot of ecommerce companies in the UK that go through
Amazon. I would say Amazon and eBay have a foothold and may have sewn up the market in the UK.”
“There may eventually be a backlash against Amazon because people may resent that they pay no taxes. Amazon is
based in Luxembourg, along with Starbucks and others, and that means they pay no UK tax. For us, the UK takes
20% straight off the top, and it might eventually cause resentment or perhaps prompt a change in the laws.”
“The need for channel management really depends on the size of the company and the number of SKUs. Once you
expand to 100 or more products, you need channel management.”
“I think some of the larger companies use ChannelAdvisor. We went to a meeting for ChannelAdvisor customers
about four years ago, and other attendees included Vodafone ... and Grainger.”
3. Vice president of an online retailer using Mercent; repeat source
Mercent is an effective and more affordable solution than ChannelAdvisor for this source, for which Mercent manages
nearly 6,000 SKUs across a group of niche sites. ChannelAdvisor could easily handle the same job but at nearly twice the
cost. It is best suited for the biggest online retailers that are trying to produce sales across as many channels as possible.
ChannelAdvisor’s Solutions
“ChannelAdvisor has much more management functionality than we really need. We are fairly focused on a specific
group of niche sites for our business, and the Mercent package fit the bill. ChannelAdvisor wanted to charge almost
twice as much for more than we actually needed, so it didn’t make sense for us to go with them.”
“We’ve been using Mercent since 2008.”
“Using Mercent has been a good decision. We’ve been able to scale up and present our merchandise on more
websites, add more SKUs and do all the tracking that’s necessary. Right now there’s no reason to look for another
vendor.”
“Our margins are pretty tight, so any vendor we use has got to help us
maximize our sales volume at the lowest price. I haven’t looked at it in a
while, but I believe most of these software providers charge a basic price on
sales volume to a certain goal and a performance fee on top of that if sales
are higher than the goal.”
Expansion Opportunities
“We do some selling on eBay but much more on Amazon, in addition to our
niche sites.”
“Retailers work with Amazon because there’s a lot of traffic to the site, but
not all of that traffic is relevant to the retailer. We want our products to be
available online wherever people shop, but it’s more profitable to maintain
storefronts on the sites our customers know to visit.”
Challenges
“I can’t imagine there are any large retailers who don’t use some sort of
software to manage their sales channels. Each one is a little different in the
setup and listings, and automating the process saves so much time.”
ChannelAdvisor has much more
management functionality than
we really need. We are fairly
focused on a specific group of
niche sites for our business,
and the Mercent package fit
the bill. ChannelAdvisor wanted
to charge almost twice as much
for more than we actually
needed, so it didn’t make
sense for us to go with them.
Vice President
Online Retailer Using Mercent
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
15
ChannelAdvisor Corp.
“Amazon and eBay want to offer one-stop shopping, and to a large extent they already do. We’re a specialty retailer
so we need to be on specialty channels. Online retail is diversifying, becoming more segmented, and I think sales
channels will continue to come online to serve those diverse markets.”
“We haven’t changed software vendors in years. The only reason to shop around would be for price or if you had a
bad experience, like a long and unexpected downtime in the software. That hasn’t been a problem for us.”
3) Ecommerce Software Vendors All three sources, including two who compete with ChannelAdvisor on some level, said channel management tools fill an
important void for online retailers. All three also agree that ChannelAdvisor’s tools work well. However, they added that
retailers may start to outgrow ChannelAdvisor’s solutions and opt for more comprehensive tools that combined marketplace
connections with back-end operations such as fulfillment, supply chain and vendor management. One source noted the high
cost for retailers to sell on sites like Alibaba’s Tmall, and said ChannelAdvisor’s international growth may be limited as a
result. One source said retailers fairly often swap ecommerce software except in very complex situations.
KEY SILO FINDINGS ChannelAdvisor’s Solutions
- 3 of 3 sources said channel management tools like ChannelAdvisor’s are a key need for retailers to connect to
multiple marketplaces.
- 3 said ChannelAdvisor’s software works well.
Expansion Opportunities
- 1 thinks ChannelAdvisor’s international growth may be limited by the high cost of selling on sites like Tmall.
Challenges
- 3 said ChannelAdvisor may be hurt by a trend toward more comprehensive solutions than what it offers.
- 1 called ChannelAdvisor too expensive for smaller retailers
- 1 thinks software like ChannelAdvisor’s is not very sticky except in the most complex deployments.
1. Business development executive for an international provider of ecommerce software
ChannelAdvisor has a necessary and useful solution for connecting retailers to marketplaces. However, the source cited
a possible trend toward more comprehensive solutions that integrate front-end marketplace connections with fulfillment
operations, something that ChannelAdvisor does not do. SAP is a significant threat to ChannelAdvisor as it tries to add
functions like channel management to its platform. Ecommerce software does not tend to be sticky except in the most
complex deployments.
ChannelAdvisor’s Solutions
“We’ve got a number of customers that are using the ChannelAdvisor integration. I think it’s a good solution that
makes a lot of sense. I think it can do a lot for [retailers]. But I don’t know whether the solution alone will offer
everything they need in the future.”
“If you want to sell on Amazon, ChannelAdvisor can get you on there. But if you do not have a fulfillment model that
lives up to the consumers’ expectations, you’re going to be hurt.”
“Simply connecting to a marketplace, that’s not rocket science anymore. You have to be smart, and you have to
manage those marketplaces and that is far more complicated than using a ChannelAdvisor integration.”
“The biggest trend is taking it one step further [than what ChannelAdvisor offers]. The trend is towards trying to
overcome the fulfillment barriers behind each channel and using every option that I have to deliver to the consumer
as quickly as possible.”
“Let’s say you are in New York and you want to buy a [designer] suit online. You want it fast, so we can’t ship it from
our warehouse [in another state]. ... We can ship it from one of [the designer’s] stores in Manhattan, but what if all
those stores in Manhattan are out of that item? Where we want to get to is to combine the merchandise levels on
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
16
ChannelAdvisor Corp.
Macy’s, Neiman Marcus and other retailers with the [designer’s own] stock levels. Then we can forward the order to
Macy’s and let them get it to you.”
“Retail is changing into a situation where every channel is just an affiliate aimed at driving traffic to your brand. [Our
company] wants to match the omnichannel part—getting customers from wherever possible whether it’s eBay,
Amazon or wherever—with the back-end fulfillment part.”
“I’m perfectly happy if our customers use ChannelAdvisor from a front-end perspective, but I believe from a back-end
perspective, when it really comes to merchandise levels from different locations and bringing them together, our
omnichannel solution is more powerful and will be more important in the future.”
“In the end, it will depend on the maturity of the retailer that determines
which solution makes sense for them. There will be customers who want to
go with a ChannelAdvisor solution at some stage, but perhaps they outgrow
it and use our solution or go to something where they use both together.”
“When you talk about the classic channels like Amazon and eBay or Tmall
in China, obviously retailers want to be represented in each of them. Each
offers incremental revenue, and it would be stupid to miss out on one.
However, when you look at our clientele, some of the channels are really
not the right channels for them. You won’t find [high-end fashion retailers]
on eBay, for example. The channel has to match with the product and the
prestige you want to convey.”
“There is a need for retailers and brands to be present on every channel,
but a lot of it is exploratory. They want to see how the channel performs for
them and whether there are conflicts. What if a brand sells on Amazon, and
their retailers also sell on Amazon but at a cheaper price?”
“The hottest thing right now is Tmall. We have one client who is going live
on Tmall, and we will be doing the integration for them, something that in
the U.S. might be done by ChannelAdvisor. We want to have a good model
that brings that front-end channel, the marketplace, and integrates it with
the back end, the fulfillment. We want to bring that together in a way that
works.”
“What I’m sometimes confused about is [ChannelAdvisor’s] focus. When
you’re talking about the IR 500, is that their main focus? Or is it the
thousands of other smaller retailers?”
Expansion Opportunities
N/A
Challenges
“ChannelAdvisor has to be concerned [about competition from SAP and Oracle]. ... If you look at the acquisition of
Hybris by SAP, that was simply because they realized they have reached a certain level of saturation with their ERP
system and were wondering how they could add to that. Oracle is thinking the same way, trying to defend their
position.”
“If somebody uses the product of a competitor [like ChannelAdvisor] on the front end, then SAP or Oracle becomes
much more easily disintermediated. That’s why they’re trying to make their platforms more comprehensive in that
omnichannel approach. I believe the market power of SAP, more than Oracle ... is very strong and very dangerous to
someone like ChannelAdvisor.”
“Retailers are loyal [to software solutions] only as long as the contract runs, and then they start looking into options,
whether it’s for negotiating purposes or for switching platforms.”
“I have seen a number of major platform switches recently. PVH [Corp./PVH] was spread over different platforms but
consolidated everything onto IBM’s WebSphere. That’s pretty common in the market.”
“Obviously brands are evolving with the level of growth we’re seeing in online sales. Some are seeing 200% or 300%
growth year over year. They quickly outgrow their solutions.”
Simply connecting to a
marketplace, that’s not rocket
science anymore. You have to
be smart, and you have to
manage those marketplaces
and that is far more
complicated than using a
ChannelAdvisor integration. …
The biggest trend is taking it
one step further [than what
ChannelAdvisor offers]. The
trend is towards trying to
overcome the fulfillment
barriers behind each channel
and using every option that I
have to deliver to the consumer
as quickly as possible.
Business Development Executive
Intl. Ecommerce Software Provider
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
17
ChannelAdvisor Corp.
2. Founder of a warehouse management software developer
Channel management is critical for retailers selling on multiple sites, and the number of companies challenging
ChannelAdvisor has increased, offering similar tools while adding supply chain and vendor management solutions.
ChannelAdvisor is strong on the backend and best for midsize companies, but its cost is prohibitive for small online
retailers. The source, whose company partners with ChannelAdvisor as well as its key competitors, said an increasing
number of customers are sidestepping ChannelAdvisor and moving to Circle Commerce Inc. or NetSuite Inc. (N), two
competitors that he believes threaten ChannelAdvisor’s survival.
ChannelAdvisor’s Solutions
“We interface with ChannelAdvisor and a number of other solutions such as [Monsoon Commerce Inc.’s] Stone Edge
and Solid Commerce to offer our solution, which involves warehouse management. Most of the people that use
ChannelAdvisor do need some kind of channel management solution because they are strictly online stores and sell
at multiple sites. ChannelAdvisor is good for that. The problem is they are just the back end of the solution.”
“When our customers and other people call us for advice, we do have to say that ChannelAdvisor does not do
purchase orders or vendor management and they have no receiving system. ChannelAdvisor just offers half of the
pie.”
“We recommend ChannelAdvisor depending on the nature of the company. Basically, there are two types of online
retailers: those with chaotic inventory and those with non-chaotic inventory. The question is whether they need
vendor management. If you sell the same thing over and over again, you need ChannelAdvisor or something like it to
list on eBay and Amazon. But once that order is filled, you still need vendor management and inventory
management.”
“ChannelAdvisor’s weaknesses include not doing vendor management or accounting and financial management,
and they do not offer solutions to manage the full supply chain. Customers that need other services are looking
beyond ChannelAdvisor.”
“Channel management is critical, but a lot of companies that offer
additional solutions are now catching up to ChannelAdvisor.”
“ChannelAdvisor is good for chaotic inventory and small to midsize
companies. They also are very expensive, and most small companies are
priced out or scared away by the high cost. Eventually [ChannelAdvisor] will
have a problem with midsize companies that start to grow and need vendor
management. The amount ChannelAdvisor takes compared to what the
customer gets ultimately makes people look elsewhere.”
“More and more, I see people looking for a turnkey solution. They want what
ChannelAdvisor has, plus other supply chain management solutions.
Eventually, companies like NetSuite and Circle Commerce will obsolete
ChannelAdvisor.”
“Monsoon bought Stone Edge because it handles chaotic inventory really
well. If you sell pool toys and a customer needs a 5-foot alligator, after you
enter the order data you still need some sort of wholesale management
system. People typically turn to NetSuite or Monsoon if they need vendor
management, receiving and shipping.”
“As retailers grow, they need solutions for the whole supply chain
management system. ChannelAdvisor does the backend really well but they
simply don’t offer supply chain management.”
“A competitor like [eBay’s] Magento is trying to do what ChannelAdvisor
does, but they also do a lot of other things. They also don’t do some things
ChannelAdvisor does.”
Expansion Opportunities
“ChannelAdvisor’s move into international markets doesn’t necessarily mean much to customers already on the web.
When you think about it, as soon as you put up a website or online retail store, you are international.”
“The real problem is how to fulfill orders when you expand internationally. You are already international online, but
how do you get your product to the consumer? I had one customer based in Indiana that shipped a lot of product to
ChannelAdvisor is good for
chaotic inventory and small to
midsize companies. They also
are very expensive, and most
small companies are priced out
or scared away by the high
cost. Eventually
[ChannelAdvisor] will have a
problem with midsize
companies that start to grow
and need vendor management.
The amount ChannelAdvisor
takes compared to what the
customer gets ultimately
makes people look elsewhere.
Founder, Warehouse Management
Software Developer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
18
ChannelAdvisor Corp.
South America. After a certain amount of time, the real question was, do I ship from Indiana or do I open a
warehouse in South America to ship more quickly and cheaply?”
“Most of my customers are U.S.-based, and most ship internationally. But there are caveats to international shipping.
Do you continue to ship or do what Amazon has done, building a warehouse in every state? Originally, they had one
warehouse in Washington. As they grew, it took awhile for packages to get from point A to point B. With warehouses
in every state, you can get your package in a day or sometimes less. They have resolved the problem of shipping.”
Challenges
“A lot of companies out there threaten ChannelAdvisor, including NetSuite, which is building a channel management
solution, and Solid Commerce, which was small but has built a solution similar to ChannelAdvisor. Any number of
companies could make ChannelAdvisor obsolete.”
“I had one customer that was on the Internet Retail Top 500 list with annual sales of about $80 million. They were
with Stone Edge, before they were bought by Monsoon, but got too big for them. They ended up going with Circle
Commerce.”
“Many use Stone Edge with ChannelAdvisor because they can buy Stone Edge for a one-time cost without ongoing
fees. ChannelAdvisor takes a percent of sales. Monsoon now owns Stone Edge and has developed Monsoon Pro,
which does the same thing as ChannelAdvisor. They charge a fee as well, but the point is people are catching up to
ChannelAdvisor and have more to offer.”
“We see people moving away from standalone solutions. They are looking for the equivalent of an enterprise solution
for a midsize to small company. When companies in the $50,000 to $100,000 range start to grow, they tend to go to
someone like Circle Commerce.”
3. Executive with a developer of channel management and supply chain software
ChannelAdvisor is a key player in the channel management space but faces increasing competition from scores of
vendors that offer more comprehensive tools. A closer look at ChannelAdvisor’s move into China and Brazil suggests its
international opportunities may be overstated. To list on Alibaba’s Tmall, for example, ChannelAdvisor clients must pay a
$35,000 setup cost, an annual fee of $10,000 and 3% to 6% commission per sale. Such terms would be unacceptable
to U.S. retailers.
ChannelAdvisor’s Solutions
“ChannelAdvisor has done a great job of telling everyone they are an enterprise solution at the top of their segment.
There are a few others in the category including [our company], Monsoon and Mercent. [Our company] and Monsoon
serve midlevel companies and enterprise. Mercent and ChannelAdvisor exclusively do enterprise. ChannelAdvisor is
not equipped to serve SMB clients.”
“ChannelAdvisor has promoted itself as being strong in the international marketplaces. They claim to have an awful
lot of them under their belt. We have not been able to get specific
information, but if ChannelAdvisor only links to Alibaba’s Tmall in China and
MercadoLibre in Brazil, it is not terribly impressive. There are hundreds of
marketplaces in the world. If you are not in India, Russia and other key
markets, you are not international.”
“ChannelAdvisor is best suited for eBay, Amazon and Newegg listings. They
are dead center on all three. ChannelAdvisor, Mercent and [our company]
all have good relationships with eBay, but ChannelAdvisor has a stronger
relationship.”
“There are already at least 40 companies in the United States that have
channel management software offerings. ChannelAdvisor may still be viable
and necessary now, but in a few years it won’t be. A lot of larger [software]
companies also are adding channel management tools.”
“I don’t really know if scale matters with regard to ChannelAdvisor. All
ChannelAdvisor really is, is a listing tool.”
“Monsoon and [our company] offer inventory management but also have a
listing function comparable to ChannelAdvisor. Others do much more.”
Expansion Opportunities
There are already at least 40
companies in the United States
that have channel
management software
offerings. ChannelAdvisor may
still be viable and necessary
now, but in a few years it won’t
be. A lot of larger [software]
companies also are adding
channel management tools.
Executive, Channel Management &
Supply Chain Software Developer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
19
ChannelAdvisor Corp.
“The only way for U.S. companies to do business with Alibaba is to work through its new Global solution, and your
customers need to pay a lot of money to do that. Tmall approached us about being on their site. They are wooing
everyone right now. When we heard the specifics and what was required, we were puzzled why anyone would want to
connect.”
“The annual fee is $10,000 a year. An upfront deposit of $25,000 is required and held in escrow. They get a 3% to
6% commission on every sale. ChannelAdvisor does not pay that money. The fees pertain to each customer that
wants to use the Tmall channel. Every client has to cough up that money.”
“Most of our customers just looked at us and laughed. One large electronic manufacturer we work with is interested
in selling on Tmall, but the price put them off. If you want to be on Tmall Global, each one of your customers has to
make good on those prices.”
“The rules for selling on Brazil’s MercadoLibre require charging three times more than normal for your products. It’s
the way business is done in Brazil. Brazil is all about buying on credit from the shop, more so than the U.S. Rakuten
of Japan is almost as expensive as Tmall and has a 60-day waiting period to clear customer credit. Americans are
used to eBay, putting their information into a form and buying or selling moments later. Even if you want to integrate
with eBay China, it doesn’t do anything for customers. It’s just an onramp for the seller.”
“Many want to do business through marketplaces around the world until they realize how hard and expensive it is.
Who among the midsize ecommerce retailers has the ability to pay the $35,000 fee to get started and an additional
$10,000 a year, each year? If you’re new to a marketplace, you don’t really want to buy the whole cow; you just want
to buy a piece of meat to try it out.”
“Whether retailers use ChannelAdvisor for all online sales or expand use [of ChannelAdvisor’s software] will depend
on how well ChannelAdvisor stays on the cutting edge for new marketplaces. The majority of growth in the
marketplace sector is in the area of special niche marketplaces like Houzz for home furnishings and Etsy for
handcrafted goods. There are places like One Stop Plus for plus-size women’s clothing and [Amazon’s] Zappos,
which is a closed marketplace. Wayfair [Inc./W] has not yet decided whether it’s a retailer or a marketplace. Walmart
also is in an in-between space; it uses EDI [electronic data exchange], which is old-school and super expensive.”
“Unless ChannelAdvisor starts including these [niche marketplace] clients in
their channel offerings, they really can’t grow. ChannelAdvisor does not
even have access to 11 Main, Alibaba’s offering in the U.S.”
“I don’t know whether retailers will use ChannelAdvisor for new channels
that pop up. If it’s just another feed, they may. If it’s a new marketplace, not
so much unless ChannelAdvisor changes its business model.”
“There are hundreds of international marketplaces, and you can’t really say
that you’re the leader internationally unless you are using marketplaces in
Brazil, Russia, India and China.”
Challenges
“ChannelAdvisor customers may be able to get onto Tmall for a fee, but it
will be costly. A lot of companies already have direct connect in Asia and
can get onto Tmall without going through ChannelAdvisor. If you have an
office in China and your business is incorporated in China, you do not have
to pay Tmall to list.”
“Guitar Center, for example, is a client of ChannelAdvisor; they already have
an office in China, so they would not have go through ChannelAdvisor for Tmall access. Companies like Coca-Cola
and Panasonic probably have direct API and have had a presence in Asia for years.”
“Bigger retailers’ use of ChannelAdvisor would depend on the size of their IT department. Some might still use
ChannelAdvisor as a listing tool, but if they have a robust IT department, probably not. Midsized players like Drs.
Foster and Smith probably do not have very robust IT departments so they might outsource.”
“There are many competitive threats. There are the direct competitors like [our company] and Mercent. If a company
like SAP or Oracle decided to do what ChannelAdvisor does, it’s possible that it would be all over for them.”
“The landscape will become more fragmented in the next 12 to 14 months, and some of the niche marketplaces will
gain traction. In a year to 18 months, or once they are established, I think we will see eBay and Amazon just gobble
up these marketplaces.”
“There are other barriers to entry in most countries. Alibaba owns 15 about different companies in the marketplace
space, but the APIs are all different. Rakuten is the best example of what’s happening. They have five different
properties in the world; while all of them have open APIs, they are completely different APIs. Rakuten U.S. was
There are many competitive
threats. There are the direct
competitors like [our company]
and Mercent. If a company like
SAP or Oracle decided to do
what ChannelAdvisor does, it’s
possible that it would be all
over for them.
Executive, Channel Management &
Supply Chain Software Developer
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
20
ChannelAdvisor Corp.
originally known as Buy.com until the Japanese marketplace bought them. But the APIs were different, and they
never connected them. Rakuten U.S. still has its original API, which is completely different from the company’s other
properties.”
“The level of churn depends on the length of the contract. ChannelAdvisor’s current contract is one year, so you see
churn after that year. Most [software vendors] have monthly contract, so you might see a monthly churn unless the
customer has invested a lot of money to integrate. If they spent $100,000 to $200,000 to integrate, you are not
going anywhere. I would say normal churn is 2% a year.”
4) Industry Specialists Channel management software like ChannelAdvisor’s is a key piece of selling online in today’s multiple marketplace
landscape, according to three of four sources. All three sources who commented on the quality of ChannelAdvisor’s software
said it is as good as or better than other available options, though one noted it is better suited to larger retailers. Three expect
online sales channels to become more fragmented, spurring demand for channel management software. One source thinks
ChannelAdvisor’s best growth opportunities are outside the United States, but another said the company’s international
expansion efforts will be hindered by proprietary marketplace software. One source said ChannelAdvisor should not be
concerned about churn.
KEY SILO FINDINGS ChannelAdvisor’s Solutions
- 3 of 4 sources believe channel management software like ChannelAdvisor’s is necessary for retailers.
- 3 said ChannelAdvisor’s software is as good or better than anything on the market.
- 1 said ChannelAdvisor provides a good ROI but is better suited to larger retailers.
Expansion Opportunities
- 3 said the number of online sales channels and marketplaces will continue to grow.
- 1 thinks ChannelAdvisor’s best growth opportunities are outside the U.S.
- 1 expects retailers to use ChannelAdvisor as social media sites like Facebook add buying functions.
Challenges
- 1 contends ChannelAdvisor will have trouble growing internationally because of proprietary marketplace software.
- 1 does not think ChannelAdvisor will suffer from churn.
1. Vice president for an ecommerce consulting and web development company; repeat source
ChannelAdvisor has the best-in-class channel management tools. Although sometimes criticized for its high price, the
software delivers ROI that meets or beats customer expectations. An increase in specialty channels would spur demand
for channel management software as selling on as many channels as possible is the preferred retailer strategy.
ChannelAdvisor’s growth opportunities are mainly in China, Southeast Asia and emerging markets like Mexico and South
America.
ChannelAdvisor’s Solutions
“ChannelAdvisor has great software for tracking sales data and managing online sales for companies with large
inventories selling across multiple channels. It’s scalable.”
“I don’t know there are any weaknesses in ChannelAdvisor’s tools. They are probably a better fit for large online
sellers. Smaller retailers with only a few core product lines probably don’t need this type of software, so the market
for it is really midsize to large retailers, and companies that have diverse product lines and expect rapid growth.”
“One of ChannelAdvisor’s investors is eBay, which tells me eBay has confidence in them.”
“ChannelAdvisor sometimes catches flak online due to their pricing, but they also deliver an ROI that their customers
find satisfactory. So there’s that cost to benefit consideration again.”
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
21
ChannelAdvisor Corp.
“[ChannelAdvisor’s] software can track your sales data to a granular level,
which is a huge benefit in terms of analysis. A lot of these software systems
are fairly basic. They can track inventories and compare stock on hand with
customer orders, but ChannelAdvisor provides reporting capabilities, online
marketing services, back-office integration with the retailer’s own sales
channel—a lot of different functionality that brings value to their offering.”
“In-house solutions are expensive. This is one of those areas of commerce
where it can be less costly to outsource channel management tools. It’s not
just saving on cost but time as well.”
“Its software is definitely important for managing large inventories and
selling across numerous sites.”
Expansion Opportunities
“I’m seeing a lot of third-party marketplaces coming online, especially in
other countries. Amazon might be one of the preferred places to showcase
products, but it’s not the only place, and I don’t think any ambitious retailer
is going to settle for Amazon alone. It’s good to have a presence on one of
the big storefront windows on Main Street, but why not have a presence in
every window?”
“I believe we will see more and more specialty channels just as eBay and
Amazon continue to add sellers. I don’t think we’re seeing any one company
getting a bigger slice of pie, but that the pie itself is getting bigger.”
“Many online retailers already use ChannelAdvisor on sites in other countries. There is real growth opportunity
there.”
“ChannelAdvisor has great opportunities in foreign markets, which are starting to take off. Their deal with Alibaba is
proof of that.”
Challenges
“The U.S. demand for this type of software is probably minimal at this stage.
All the giant [retailers] are taken, many of them by ChannelAdvisor, so their
best bet is to sell internationally: China and Southeast Asia, Mexico, South
America.”
“Oracle is getting some attention, but that’s because they’re Oracle. These
solutions look about as good as ChannelAdvisor, but I haven’t seen anything
that you could call better. The success of some of these tools will probably
depend on the price they charge retailers, how the pricing is set up on sales
volume or reaching targets or some other metric.”
“The only reason to change channel management software is if your
software isn’t producing results and you’re wasting money.”
“ChannelAdvisor puts a lot of resources into its sales department. I don’t
know their costs, but I suspect their cost per sale is probably high because
in the United States they’re going after midsize retailers.”
2. Managing partner for a digital media services firm
ChannelAdvisor’s tools are at the top of the industry, possibly the best, and its pricing is a reflection of that reputation. As
more social media sites start offering buy options, retailers will use ChannelAdvisor to get in front of those audiences.
Domestically, the company’s best chance for growth would be to lure large retailers that already have channel
management solutions, through a combination of competitive pricing and sharing ROI success stories. Selling channels
continue to come online worldwide, creating international growth opportunities for ChannelAdvisor.
ChannelAdvisor’s Solutions
“[ChannelAdvisor’s] software can take the largest retailers and set them up to operate efficiently on as many
channels as the retailer wants to use. It cuts down on the risk of losing sales because of overselling, and helps
retailers identify opportunities they can exploit. Their data collection is also top-notch.”
In-house solutions are
expensive. This is one of those
areas of commerce where it
can be less costly to outsource
channel management tools. It’s
not just saving on cost but time
as well.
VP, Ecommerce Consulting & Web
Development Company
I don’t know there are any
weaknesses in
ChannelAdvisor’s tools. They
are probably a better fit for
large online sellers. Smaller
retailers with only a few core
product lines probably don’t
need this type of software, so
the market for it is really
midsize to large retailers, and
companies that have diverse
product lines and expect rapid
growth.
VP, Ecommerce Consulting & Web
Development Company
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
22
ChannelAdvisor Corp.
“I’d say ChannelAdvisor is as good as anything available, if not the best.”
“ChannelAdvisor has tools and add-on services for online marketing, including Google Ads. They also support sites
like [Experian plc’s/EXPGY] PriceGrabber and [eBay’s] Shopping.com.”
Expansion Opportunities
“The thing that’s interesting about Facebook is it brings a social dimension to the purchase. If you see your friends
on Facebook buying something or talking about it, you tend to look. So yes, I think retailers are going to use
ChannelAdvisor to manage their Facebook offerings.”
“ChannelAdvisor integrates with Amazon and eBay, and [ChannelAdvisor’s] tools are superior. I don’t see eBay or
Amazon’s offerings as a replacement at this time.”
“The fact that a lot of software companies are looking to get into this specialty area tells me there is widespread
anticipation for growth. Retailers operate on pretty tight profit margins, so the cost of these software tools is a major
consideration when buying a solution. ChannelAdvisor charges premium prices for its tools, but it has the results to
justify that pricing.”
“There will be more international selling. It’s growing. Online retail is one of
the most cost-effective ways of selling to that international market. But it’s
going to depend on the retailer, the right mix of products, because there’s
the issue of fulfillment and shipping. ”
“The real growth [for channel management tools] at this point will come
from overseas channels.”
“Chinese retailers are the market I would be concentrating on.”
Challenges
“All the major retailers have solutions in place for managing sales across
multiple sites. ChannelAdvisor could come in and try to pick off some of
those big companies with special pricing offers and presentations on how
their tools deliver ROI in terms of greater sales, more efficient operations,
time savings—any number of factors that would help them make their case.
But I think most of the opportunity is international at this stage in the
game.”
“We’re seeing an increase in online channels worldwide. That suggests sellers are not abandoning sales channels to
concentrate only on the largest channels.”
“Just as Amazon and eBay get bigger, we are seeing more and more channels becoming available. The market is
actually expanding worldwide, not consolidating around a few major players.”
“There’s not a lot of churn with this specialty software. If it produces results and the cost of using it doesn’t get out of
line, then retailers tend to stay with what’s working for them.”
“There’s also forward thinking. You want to go with a solution that can expand as your business grows, which implies
a long relationship with the chosen vendor.”
3. Ecommerce consultant and publisher
ChannelAdvisor’s software is as good as or better than anything else on the market and can fill all of an online retailer’s
key needs. The software works easily and effectively, giving customers little reason to look at other options. The number
of niche marketplaces will continue to grow, which should boost demand for channel management software.
ChannelAdvisor’s Solutions
“While customer/visitor acquisition is the perennial obsession, having the right stock to mop up the interest is a
never-ending source of concern for multichannel retailers. Give me traffic, stock and a way to take money.”
“ChannelAdvisor gives you access to almost everything you care about as an incremental freebie, more or less, once
you’re on the platform.”
“ChannelAdvisor is easy, helpful and works.”
“SAP is difficult, expensive and sometimes works.”
“My view is that if you already have ChannelAdvisor, you wouldn’t look at others, really. If you don’t have
ChannelAdvisor and do a procurement, you’d choose them over Mercent, et al. If you already have another [solution],
you’ll be looking at ChannelAdvisor.”
Retailers operate on pretty tight
profit margins, so the cost of
these software tools is a major
consideration when buying a
solution. ChannelAdvisor
charges premium prices for its
tools, but it has the results to
justify that pricing.
Managing Partner
Digital Media Services Firm
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
23
ChannelAdvisor Corp.
“ChannelAdvisor is easier to implement initially than making changes in-house. ChannelAdvisor can start with just
the existing Google feeds, so there’s an easy start.”
“ChannelAdvisor is as good or better than the market. Even if there’s a niche player that’s better, they can still work
alongside—or take feeds from—ChannelAdvisor.”
Expansion Opportunities
N/A
Challenges
“I’m not sure that anyone thinks about [ChannelAdvisor’s software] once it’s in place. There’s no stickiness per se
since it just largely works quietly and effectively.”
“There’d be no reason to pull it out. Why would one want to reduce capability? Since it just works, someone else
would have to make a very radical offering to get you to even think about replacing it.”
“[Third-party marketplace sales] are cyclical and relate to the tension between broad coverage and niche focus.
Amazon and eBay are giants and will remain so for the foreseeable. However, the question for me is about additional
marketplaces in parallel with eBay and Amazon. ChannelAdvisor helps with this.”
“When you look across Europe, you see more marketplaces rather than fewer. There’s also a growth in category-
specific markets, so I don’t think that Amazon will have the world to themselves quite yet.”
4. CEO of a retail consultancy helping Fortune 500 companies build ecommerce markets; repeat source
The rapidly growing ecommerce sector overseas poses roadblocks for ChannelAdvisor because most international
marketplaces use proprietary platforms that bar outside access. If ChannelAdvisor’s recent partnership with Alibaba
signals a strategy for international growth, the company may have to make individual deals with each marketplace, which
could slow its global expansion. ChannelAdvisor could access foreign markets through NetSuite, which the source
characterized as the leading ERP and dominant international solution.
ChannelAdvisor’s Solutions
N/A
Expansion Opportunities
“NetSuite developed its technology with cross-border applications in mind.
They were developed around an open architecture and ecosystem. They
have tools in every language and dominate the international markets. They
also have lots of resources. NetSuite is miles ahead of the major ERPs like
SAP and Oracle, both still trying to design products in the cloud.”
“ChannelAdvisor is cloud-based, and they could use NetSuite as their ERP
system. NetSuite is everywhere in international markets.”
Challenges
“Most of the companies in international markets like Alibaba and JD.com
[JD] rely on proprietary technology with closed APIs, making it difficult for
U.S. companies like ChannelAdvisor to interface. This could be a barrier to
rapid entry.”
“It does sound like ChannelAdvisor has established connectivity at least
with Alibaba’s Tmall. If [ChannelAdvisor’s] model depends on working with
major companies like Alibaba or JD.com to expand internationally, then there would have to be open APIs at some
point. Most [foreign] platforms are closed, and I do not know what arrangement ChannelAdvisor made to connect.”
“The company I currently work with is Coupang, Korea’s largest ecommerce marketplace and often referred to as
South Korea’s Amazon. ChannelAdvisor would not be able to add Coupang as a channel because the South Korean
company has all proprietary technology.”
“Coupang is a $2 billion company, and 70% of the manufactured goods sold on the site come from established
sources and distributors. ChannelAdvisor would not be compatible with this marketplace, so they would have to
establish compatibility with Coupang specifically, and potentially with each marketplace as they go along since most
in the international markets are proprietary.”
Most of the companies in
international markets like
Alibaba and JD.com [JD] rely on
proprietary technology with
closed APIs, making it difficult
for U.S. companies like
ChannelAdvisor to interface.
This could be a barrier to rapid
entry.
CEO, Retail Consultancy
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
24
ChannelAdvisor Corp.
Secondary Sources
The following three secondary sources offered opposing reviews of ChannelAdvisor services, suggestions of ChannelAdvisor
being too simple, and discussion of Alibaba becoming ChannelAdvisor’s next big-name client.
May 3 Trust Radius review site
Two opposing reviews of ChannelAdvisor indicate that the company needs some technical support and to fix bugs in its
systems. One user appreciated the ROI and having a centralized and automated management of inventories over
multiple platforms. The other said ChannelAdvisor was overpriced, with multiple service charges and high prices for
upgrades that eat into the software’s overall ROI. Still, this reviewer’s client ROI from ChannelAdvisor was positive.
Matthew Mitchell—1-year experience with the product—review comments: “ChannelAdvisor provides centralized and
automated management of large inventories across multiple [channels]. It has an intuitive user interface and we can
re-price products on Amazon on the fly to stay competitive. The company also has great expertise in the field which
they are happy to share. Technical support could be a little more responsive.”
“Overall ChannelAdvisor Rating: 9 of 10—It is well suited for anyone trying to sell their products across multiple
marketplaces and websites. It helps cut down on employees and automate tasks that could take a person hours. It is
not well suited if you are only selling on your own website as it is really intended to be used for marketplaces.”
ChannelAdvisor Pros—“Centralized and automated management of large inventories across multiple channels. On
the fly repricing of products on Amazon to help keep us competitive. Intuitive feeds for Google shopping helping keep
our products more visible. Simple, easy to use interface. Knowledge and expertise in the field of online retail that
they help all their users to understand.”
ChannelAdvisor Cons—“Faster repricing on Amazon. Better technical support. Tickets often take far [too] long to be
closed. Fix bugs and glitches that often cause slowness using the software.”
ROI on ChannelAdvisor purchase—“I can’t speak for the exact numbers as I do not have my hands on them, but I
would certainly say it has had a positive impact on ROI. Employees are definitely more efficient by allowing all
changes to happen on one platform. It also gives us a platform to do process returns in one place, making customer
service more efficient.”
“Without ChannelAdvisor, our business wouldn’t be where it is today so the idea of NOT renewing is out of the
question. By not renewing we would have to hire more employees and have more of a workload for existing
employees. By keeping costs low and employees [efficient] we have been able to grow exponentially.”
IT Executive—1-year experience with the product—review comments: “ChannelAdvisor is effective for organizing
inventory and distributing the products to multiple websites (ebay, Amazon.com, Google, etc). It creates a catalog of
inventory that updates quantity as items are sold. However, there is a lack of customization, documentation, and
support for the premium web store. It’s also quite expensive.”
“Overall ChannelAdvisor Rating : 1 of 10—Shopify would be a better alternative. Why should you pay ChannelAdvisor
and Shopify? I don’t think ChannelAdvisor can deliver on their promise to be a complete ecommerce solution.
ChannelAdvisor is best to stay focused on just distributing product on different channels (and not have your own web
store at all).”
“ChannelAdvisor Pros—Organized complete inventory and distributed the products to multiple websites (eBay,
amazon.com, google, etc.). Automatically created a catalog of inventory with nice looking theme that updates
quantity as items are sold.”
“ChannelAdvisor Cons—Lack of customization, documentation, tutorials, support for the premium web store. Lack of
innovation. My client was told that the basic web store was being replace by the premium web store so they needed
to upgrade. In my opinion the basic web store was actually much more flexible and robust than the premium web
store. Now (it has been less than 2 years) they are making my client switch from the premium web store to ‘Shopify’
and they are charging more money for this. My client was charged to upgrade each time and the process to upgrade
was expensive, time consuming, and very convoluted. ChannelAdvisor needs to invest in their technology and
migrate data for ChannelAdvisor changes technology. But the experience as an end user is very frustrating since the
way of doing things keep changing and not always for the better result for the customer. ChannelAdvisor needs
better support. Help Desk, knowledge base, etc. there are a lot of things you can do with ChannelAdvisor but it is my
experience that nothing is very straight forward and there are many different potential problems you will run into and
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
25
ChannelAdvisor Corp.
ChannelAdvisor points the finger at ‘Google’ or ‘Amazon’ or ‘eBay’ instead of helping solve a problem from end to
end. It is quite expensive for what it does. I would not have advised my customer to use their product but they were
so entrenched that they had no other choice.”
“ROI on ChannelAdvisor purchase—Since my client has used ChannelAdvisor from the beginning, he has been
satisfied with his ROI. The fees ChannelAdvisor costs him are quite confusing because it is a monthly fee, plus a
percentage of each transaction, plus the fees from Amazon, Ebay, etc. and then he has the cost of the product and
the cost of shipping. My client struggled to understand bottom line ROI but that is not the fault of ChannelAdvisor. I
was shocked to see the kind of revenue he was able to generate but it appeared to me to be high volumes of
transaction and lots of work and fees for very little ROI.”
“Only reason I would renew is because everything is live and working on the system. If I were the company owner I
would build my own ecommerce site as a stand-alone site and migrate away from ChannelAdvisor ASAP.”
WebRetailer profile
Recent reviews revealed a distaste for ChannelAdvisor, describing it as too simple, too expensive, and having bad
customer service. One comment discussed ChannelAdvisor’s rate of £600 per month and a set-up fee of £1000.
Sept. 12 bjr comment: “We started using CA and was very happy with the simplicity of the interface. After some time
we realized that we needed a more robust program and we switched away from CA 9 months into our year contract. I
then cancelled more than 30 days before my contract was to renew. They did not allow me to cancel and continue to
charge my credit card every month. They won’t even talk to me on the phone. JUST A HORRIBLE COMPANY!!”
June 2 cjpalcazar comment: “I am not too sure if they are charlatans or just plain incompetent whichever it is I would
not recommend anyone going anywhere near these people. I was contacted by their sales person at the end of
February who did an excellent pitch and persuaded me to join up. On the 27th Nick contacted me asking me to
upload my ebay site. I said no I couldn’t do it as I was off on holiday, and would do it when I returned. When I agreed
to sign up I understood that the cost was £600 a month, with a set up fee of £1000. I assumed this included vat
because no mention of vat was made. All payments were to be taken on the 15th of the month. I was therefore
surprised to log in to my online bank on the 2nd of April and find that an attempt made been made to take
£1664.52. I didn’t have the money available in my current account because I was away on holiday and no payments
were expected and it was declined I then checked my emails to find another invoice for £720 for the 15Th of the
month April. Please bear in mind at this stage they have not published my site or done any work for me except take a
couple of phone calls. I cancelled my contract on the on 10th April. I got no acknowledgment of my cancelling the
contract. At this point I started receiving threatening emails demanding payment although no work had been
published. When I signed up was given the impression I would receive help 24/7. It is an expensive service, you do
not expect to get a call or email back a week later particularly when you are on a tight schedule. I would not
recommend this service to anyone.”
June 27 angoni1 comment: “The worst and most expensive platform. Solid Commerce does the same thing and even
better for close to nothing, and no yearly contract like [ChannelAdvisor]. DON’T WASTE YOUR MONEY WITH
CHANNELADVOSOR.”
June 1 ecustomhitch comment: “First, you can tell that these ‘stellar reviews’ are the usual attempt at steamrolling
real feedback and reviewers. Caveat emptor. ChannelAdvisor’s marketing team knows only one answer, ‘Yes.’
Whatever your question is, they will promise you that it can be done ... until you pay them. Then you find out from
their technical department and engineers if your request is truly viable or not. So you think you’d receive a refund, an
apology and move on to another provider, but I assure you that once they have their hands on your money, you won’t
see it again. Getting a written contract which specifically details the elements of the proposed site is not going to
protect you. During the kick-off call, within the first five minutes, I was told that CA doesn’t have the technical
capabilities to make it work. I’ve been waiting for my money ever since. 7 months and running.”
March 20 FashInvest article
Alibaba is one of ChannelAdvisor’s newest customers and is set to grow 18% per year through 2018.
“China is dominating the ecommerce market, which is why it’s no surprise that Alibaba ... [Tmall] Global Solution is
ChannelAdvisor Platform’s newest addition, as recently announced by ChannelAdvisor Corporation, cloud-based
ecommerce solutions provider.”
1 Ferry Building, Suite 255, San Francisco, CA 94111 | www.blueshiftideas.com
26
ChannelAdvisor Corp.
“‘China is one of the largest and fastest-growing ecommerce markets in the world and Alibaba is leading the way,’
ChannelAdvisor president and chief operating officer David Spit, says. ‘Integrating with Tmall.com opens up new
avenues of growth for our customers.’”
“Tmall.com is an open platform marketplace that provides the infrastructure to host online storefronts and access to
hundreds of millions of shoppers, and is said to be similar to operating your own B2C website. In-country businesses
can apply to join the platform and companies with overseas business licenses can join via Tmall Global.”
“Now, with Tmall.com, one of the biggest business-to-consumer marketplaces in China and part of the Alibaba
Group, retailers and manufacturers have an easier way to sell directly to Chinese consumers and extend their
businesses across borders.”
“The Chinese ecommerce market is doing so well that Forrester Research Inc. predicts that, by 2018, it could be as
large as $672 billion, growing at 18 percent per year, and will continue to grow beyond that.”
“‘We are impressed with ChannelAdvisor’s understanding of the China market and the growth opportunities it
presents to the rest of the world,’ Lynn Dong, director of Tmall Global business development, says. ‘Ultimately, this is
a win-win situation for foreign businesses who want to enter China and for Chinese consumers who want to access a
wider selection of products that were previously unavailable.’”
Additional research by Carolyn Marshall and Steve Evans
The Author(s) of this research report certify that all of the views expressed in the report accurately reflect their personal views about any and all of the subject securities
and that no part of the Author(s) compensation was, is or will be, directly or indirectly, related to the specific recommendations or views in this report. The Author does not
own securities in any of the aforementioned companies.
OTA Financial Group LP has a membership interest in Blueshift Research LLC. OTA LLC, an SEC registered broker dealer subsidiary of OTA Financial Group LP, has both
market making and proprietary trading operations on several exchanges and alternative trading systems. The affiliated companies of the OTA Financial Group LP, including
OTA LLC, its principals, employees or clients may have an interest in the securities discussed herein, in securities of other issuers in other industries, may provide bids and
offers of the subject companies and may act as principal in connection with such transactions. Craig Gordon, the founder of Blueshift, has an investment in OTA Financial
Group LP.
© 2014 Blueshift Research LLC. All rights reserved. This transmission was produced for the exclusive use of Blueshift Research LLC, and may not be reproduced or relied
upon, in whole or in part, without Blueshift’s written consent. The information herein is not intended to be a complete analysis of every material fact in respect to any
company or industry discussed. Blueshift Research is a trademark owned by Blueshift Research LLC.
![[PPT]PowerPoint Presentation - FP&M SETA · Web viewDifferent Funding Types PIVOTAL - Fixed DG Funding Funding Type 2 NON-PIVOTAL & Special Projects PIVOTAL -Fixed DG Funding PIVOTAL](https://img.pdfslide.us/doc/110x75/5ad11a0c7f8b9aff738b54bc/pptpowerpoint-presentation-fpm-viewdifferent-funding-types-pivotal-fixed-dg.jpg)
