Jody Ford Live at Net Prophet 2014

Good morning everyone and thank you so much for the opportunity to speak here at Net Profit. First time I speak here in South Africa. I'm going to be talking about the future of shopping and the change I see coming here. Before I do that, just 30 seconds about myself. I've been involved in technology and mobile for coming up to 20 years now, and the last 10 at eBay. Started off in Australia and then spent many years in the UK working across Europe, and about two and a half years ago moved over to San Francisco and the Bay Area, and have been working in eBay on all things marketing. Before we get going, most people have an understanding of what eBay is and what we do, but it's generally a little bit outdated. So I thought we'd play a quick video to give you some context, show you some of our customers and where we think we're going in the next couple of years. Then I'll come back and talk a little bit about shopping and where it's going.

Garrett Morris spent most of his youth playing for a punk band. Then it was time to get a real job. So he hung up his drumsticks, sold records from his living room on eBay, and finally opened his own record store. From the time Dimitri Nashinko launched American Graffiti at 15, he's been obsessed with three things: rock and roll, cars, and pomade. He's been collecting rare 50s singles ever since, but there's one record he could never get his hands on. Till now. After being caught taking a joy ride as a teenager, Alvaro Flores was banned from touching his dad's 61 Ford Falcon ever again. It sat in the garage collecting dust until his dad gave him the keys for his 23rd birthday.

It builds to a really fantastic ending. I would love to act it out for you, but I'm not sure I will today. The cool thing is we do have a few vans now actually in Florida, turns out. So what the video would have got to in the end talks about how we connect our sellers, our consumer sellers, our small businesses and our large businesses, to help them find the things that they need and that they love. So today I want to talk about retail, and I believe there's a new retail emerging. We're going to see more change in retail in the next three years than we've seen in the last 10 years. And this change is enabled by technology, but ultimately it will be the consumer that drives it and decides how that change happens. And what does that statement mean? Maybe it's a little bit too much consultancy. Thanks, sir. Thanks Don for the intro there. Can I do a quick poll? I can just about see the audience. If you're at the top, you're going to have to really wave. Can I check? I know that Uber has arrived here in Cape Town. How many people have used Uber since it's arrived? Just want to do a poll. That's pretty good. Wave harder if you're at the top, please. It's really difficult to see you up there. Okay, thank you. I think we're about a third of this group have in some way engaged with it. But I assume that most of you here have heard about it and are aware of what it is. And my take on that is we're probably where we were in San Francisco two years ago. Probably about a third of a group like this would have used Uber. And so what's interesting there? Uber's about a technology platform that connects you to professional drivers that will take you where you want to go quickly, and they come to you, and it's relatively simple technology once you've got the mobile. So what happened in San Francisco after this moment two years ago? Well, two other startups arrived called Sidecar and Lyft, and they said, 'You know what, the professional driver thing's good, but we could make that more interesting. We could create a consumer service where people like you and I get in our cars and drive people around. We get called, same technology platform. Only difference is that they're not professional drivers. They do a little, I don't know if you've seen this, but do a little bit of fist bumping as you get in, you get offered candy, and you get to plug your phone in and choose the music. It's a kind of cool experience.' So Sidecar and Lyft entered the market and it took off. Customers loved it. They loved the refreshing part. It was much cheaper than the professional service. So what did Uber do? How did they respond? Well, they launched something called UberX alongside their professional driver service. They launched the consumer service, going, 'Hey, we want to kind of be part of this.' And that's what this statement means. The technology is the same, but ultimately the consumer is deciding how that technology is embraced and how it is used. We don't get to decide that. The customer gets to decide that.

So as we think about what's impacting retail, there's one change which I think is more significant than any other, and that's about the mobile phone. Without props, I'm going to use my own props now. There we go. So the mobile. 15 years ago, back in 99, I was part of a company called Orange, a large European network player. And what we did differently to start with was we didn't name our company Cell or Net or Voice or Data or any sort of function of those words. We named it Orange, we named it after a color, which was refreshing, and we spent a lot of time talking about the future. And I remember putting together a video in 99 that was set in 2004, and it was set in New York, and it was about this woman and how the mobile had become her remote control for life. And the video started with this kind of picture of her reading a newspaper, 2004, Clinton elected president. And we clearly got that part wrong. It was maybe a very clever pun on Hillary, but totally missed that. And then we built this vision around her using the mobile, and it was amazing. We were all very excited. I even think the share price went up off the back of it. But I don't know if you remember 2004. Like, what really did not deliver the remote control for life. But about 18 months ago, I was on a train in the US, and for about 10 minutes I'd been just sorting all of this stuff out. I bought tickets, I bought some shares, I had a faultless video chat with my brother in another country for free. I had checked the weather and I'd uploaded some photos to Facebook. And I kind of sat back and I was like, 'Wow, actually this thing is now my remote control for life. I control just about everything I do.' And sometimes when I'm speaking in less grand theaters such as this, I move towards the front and I ask one of the front line here if they will give me their phone. And I normally have to ask about six people before someone will give me their phone. And I take it from them and I begin to walk away, and I see the apprehension on their face as I move back. And it turns out people really don't like being disconnected from their phone. It's an incredibly intimate object. It turns out people would rather give you their wallet than their phone, which is kind of bizarre, right? Who would have thought that a little bit of technology? So that's the technology arrived, and that's us using it for everything.

But what do we understand about how users use their phone? So we spent quite a bit of time looking at this. And what you find is that your average user checks in or uses or connects with their device 40 times a day. 40 times you'll probably look at your phone and engage on average for about two minutes. And what are you doing when you do that? Well, the first thing you do is you check in. It's like, 'Hey, is anyone? Am I popular? Has anyone tried to connect with me? What's going on?' Text messages, Facebook notifications, emails, what's happening. That's the first thing everyone does, just about. Second is check in, reach out to other people. You need to connect with other people. You want them to feel popular so you feel popular. Third, it's about news. Whatever your news source is, whether it be celebrity gossip, sports news, world affairs, you want to get your news feed in. Then the final three things kind of depends on what type of customer or consumer you are. You can do gaming. That's a big area, and actually gaming is not really about guys who are 14, it's about women who are 35 generally. You shop, retail, big area. And finally, management. It's about managing your life, so it would be about your calendar, checking the weather, forward planning things like that. So those are the things that you're doing during the day with your phone. And so what does that mean for retail? So retail used to be about once every week or two weeks you'd go to the local mall or wherever, and retailers would try to sell to you at that moment that you walked in, in the frame of mind to shop. You'd already got your credit card out. 'Okay, we'll try and tell you something.' We then had the era of the desktop, and it was about trying to sell people at their lunch break if they were allowed on at work, at seven, eight o'clock in the evening as they kind of sat back and had a look around what was going on. In this world, you have to try and retail to people 40 times a day, and you're not just competing against other retailers, you're competing against all of those other needs. It could be against games, it could be against a social site, or it could be against the weather channel, right? And the challenge for retailers here is how are you going to produce content that's engaging, that grabs you, that means when you're at the school gate, on your commute to work, or in the kitchen, how are you going to be relevant? And that's a fundamentally different challenge for retail as we know it. So that's mobile and the technology that we've got there.

I think as I thought about this presentation, I thought it'd be helpful just to go back, think about the evolution of shopping and e-commerce and what's happened here before showing you some examples of where we think it will go. So this is my one slide, 15 years of e-commerce. So it starts all the way up there. What happened in 99? It was about early adopters, niche categories. At eBay, we sold a lot of cuckoo clocks back in 99. That was the type of thing that worked, right? Very niche product that you couldn't find elsewhere, and you were prepared to overcome some hurdles to get there. It was expensive to get online, it was painfully slow, and when you got there, the experience was pretty clunky. You roll forward five years, actually the internet kind of got good. Selection and availability meant there was lots of choice in a number of different areas, particularly media and electronics. On-site experience dramatically improved, and there was value competition, meaning you expected to get things cheaper on the internet than if you went down to the local shops. Then we moved forward another five years, and this is more recent memory, what I call end-to-end service. Five years ago, when I would stand on stage and talk about things like this, people were thinking that they expected better service in their local store and shops than they did from the internet. But now I honestly believe that they expect better service online than they do offline. And that's as a result of great money-back guarantees, fantastic customer service, and really good shipping and tracking of items that you buy. There's probably one other piece here which is not on this slide, which I think is relevant. I was in Australia a few weeks ago, and I think it's relevant to South Africa, which is the advent of better international services where retailers have just thought much more broadly, not just about how do I sell to the UK, how do I sell globally into the Middle East, into Australia, into South Africa, how do I make that really easy experience for international buyers. But the area that I want to talk about today is what I call the online-offline crossover. What does that mean? Well, essentially it's saying it doesn't really exist anymore: online shopping, offline shopping. If I'm in a store and I see something that I like and I decide to buy it on my phone, is that online or offline? If I'm at home and I buy something but I decide to pick it up in a store, is that online or offline? And I think this trend is fundamentally shaping how retail will emerge over the coming three to five years.

And what we're saying is that people now want to get what they want, when they want it, wherever they are. And the 'wherever they are' is the new bit here. So I've got a couple of data points for you which I think help put this in some context. So this is a US stat, and I appreciate this is very UK and US centric. 75% of total retail spending occurs 15 miles from the home. So while it's been fantastic, the growth of the internet and e-commerce, we're really still in the early stages here. And actually, if you think about this the other way around, that means that 75% of the inventory of the items that people want to buy are already within 15 miles of them. And when you think about it like that, the challenge becomes how do you better connect the customer with the things that we know to be only 15 miles away from them? And that raises all sorts of interesting questions that we can talk about and help to make the proposition fundamentally better for the customer. So what I'm going to do is give you three examples of what we're doing at eBay to bring that to life. So the only other stat that I'll share today, and I know it's a US one but I understand it's taking off as well in South Africa but not to this level, is that about 40% of US customers paid online and picked up in store. In the UK we call this click and collect, which I think is a far better name. And actually some retailers are seeing up to 50-55% of what is bought at home on their website is picked up in store. And I do not believe retailers saw this coming. I think they had no idea this was going to be so big. So why is it? You may be wondering why do customers choose to do this? It comes down to two things. First one is about control. Customers love the idea that they can go on first thing in the morning, decide they want to buy this item, and then pick it up that afternoon. So control. Second one, it's about value, getting things cheaper. So they avoid the five dollar shipping charge, postage, unpacking, and they feel like not only are they getting it cheaper, but they're kind of gaming the system by fitting it into their natural routine during the day. So what are we doing about that? From eBay's point of view, clearly that's not our business model. We have traditionally worked on a kind of point-to-point basis with sellers sending stuff to our buyers. So the first thing we did is work with our larger buyers who have a retail footprint across whichever country it might be. This is Best Buy, large electronics retailer in the US, and we now offer free in-store pickup. That's great for the seller, drives people into their store, and it's great for the buyers so they can have that control and save on shipping. But we took that a step further in the UK. So Argos, Argos is a large UK national retailer with a wonderful footprint in most towns and cities across the UK. So not only can you buy Argos stuff on eBay and pick it up in Argos stores, you can actually buy from other sellers and then pick that up in Argos. And so that works really well for those other sellers because more distribution, more options for pickup. It also works well for Argos because we're driving these new people into their store. And it works for the customer because again we're giving them control and another option that fits into their life. So that's the in-store pickup part.

The next part is about again connecting customers with things that are around them in that 15 mile radius. And to illustrate this, I'll tell you a little story about what happened to me, I think it's about six weeks ago now, and it involves a skateboard. So for my friend's son's birthday, he was turning 12. I'd come up with this idea that I was going to get him a skateboard, which I thought was a great idea. I took a chat with the friend, he's like, 'Yeah, I think he'll like it.' So I said I'd got this covered. And we got to the point where it was 90 minutes before we were about to leave as a family to head over, and I suddenly realized that I had had a busy week and had completely forgotten to buy the skateboard. And I don't know about you, but if you had to this moment go and buy a skateboard, I have absolutely no idea where you would buy a skateboard. So I was kind of panicking a little bit. Then I remembered, we have this new thing called eBay Now in various cities across the US, and it works where I live. So I was like, 'Okay, let's try it out. Let's see what happens. Can eBay Now deliver here?' And I thought, I don't think there's something like this yet within the Cape Town area. A skateboard. And you can, there's a few different options come up, and eventually you'll find one. So this one here, I found this skateboard, it was from Urban Outfitters, which is a chain of stores in the UK and the US. And I put that I want it to be brought to me, so I clicked it. And at that point, it's got my address, knows where it's bringing it to. And this is the clever bit, and for those of you, the reference to Uber is kind of relevant here. So at that point, it goes out to a series of couriers, or valets as we call them. In this case, they're eBay employed, but you can imagine this model working with a kind of marketplace of independent couriers. And so this lady here, Sarah, goes, 'You know what, I can get that skateboard and I can bring it to you. I'm free now.' So she accepts this job. And then she goes to the store. When she's at the store, she clicks the button, and we're watching what she's doing on the app on the right hand side here. She says that she's in the store, she confirms pick up, and she uploads the receipt. And then she says that she's on her way to come to me with the skateboard. From my point of view as a user, I can follow her. So I can see that the valet's been assigned, that she's at the store, and that she's here. And then I can track her as she brings the skateboard towards me, which is really cool, right? I mean, you get to see the skateboard coming towards me, and you kind of want to go out and meet them at the gate. So it arrived. I had the skateboard. It arrived, and I timed it in 43 minutes, which I thought was fantastic. And so we went off. I delivered the skateboard. The boy was extremely happy with the skateboard. Dad seemed like, 'Okay, so it was the right idea, it was a good present, well done.' And I explained the eBay thing, and it was a really nice moment. And I kid you not, the second time he used it, he has now broken his leg in three places, and he's hobbling around on crutches. And I feel terrible, even though I'm very excited to have used the eBay service to do that. So that is a premium service, right?

It's for a segment, a certain type of customer and a certain type of user's occasion, but it's a very interesting way to think about bringing together people with the stuff that surrounds them. So I've got a couple more things I want to share, which is more about going into offline retail. And so Kate Spade is a, I had never heard of Kate Spade until I got to the US. It's a premium, really great premium fashion brand. And so what we did with Kate Spade in New York, we created these interactive storefronts. So what you can see here is not actually a store, it's a storefront. And we did four of these across New York. And you can see the items are physically on display in the storefront, and you can see there's some customers there. So what you do is you go up to the storefront any time of day or night, you can look at them, you get to look around them, and then you can order them. And once you've ordered them, this kind of cool guy at the bottom here with the shirt on, he flies around the corner with those items and gives them to you, and you pay, and it's all great. Or you can go off to a cafe or you can continue shopping, and those items are brought to where you are in the location. So that's an exciting, innovative customer experience. But think about it from a retailer experience. They get to test different locations in this case around New York, see the sort of footfall they're getting, see the type of items that are being bought, and to check the customer engagement. And actually off the back of this, Kate Spade made a decision about where they wanted to open a full store. So it's a great way to dip your toe into the market. We can then take that one level further, which is all about rather than a sort of physical storefront, it's about a digital storefront. So this is something that we opened in San Francisco in a Westfield mall there for Toms, the shoe brand. And it's the same idea again. You can digitally have pictures of items, and people can click and buy and purchase those, and those items can be brought round to you as you're shopping, or they can be mailed to you at your home if you choose, if you'd rather have it that way round. And so again, when you think about it from a retailer or a mall point of view, kind of exciting, right? You can change stores almost every day, or you can think about it seasonally. During Halloween, you need a Halloween pop-up shop, or during spring fashions, there are brands that want to be there for that moment of the year or different holidays. Equally, from a store point of view, it kind of becomes a very great crossover almost between advertising and selling, to be able to be present while people are very much in the mode of buying in a mall. So that's a series of examples that I think are kind of helpful to bring to life what's happening at the forefront and what we're doing in regards to retail and how that's changing.

I mean, just what have we learned so far as we've done this innovation across the different categories? So from a customer point of view, this control thing is really interesting. Customers love the ability to control how they get the things. The challenge is to present it to them in a way that doesn't become overwhelming. Clearly you could see there's a lot of different choices of a way an item could come to you. From a retailer point of view, actually the most interesting thing is the technology partnership. Small and medium-sized retailers, they don't have that level of innovation, so they're really looking at how can we partner to do this. And from a technology point of view, it's great and the front end works fantastically. The challenge is always how do you bring the back office and offline systems to work such that when you do have that experience of buying and then going to a store, it's seamless. You arrive in the store, there's not a long line, and the item is there for you, so you're ready to go. So with that, I hope that what I've been able to do is kind of demonstrate this: there's a lot of change happening right now, and really we do see a new retail coming, and I think there's going to be very significant change coming over the next three years. So thank you very much for the attention. I've really enjoyed being here.