This week, I sat down with cleverbridge co-founder Craig Vodnik to discuss his insights on ecommerce opportunities and challenges, the latest industry trends, and how digital businesses need to prepare for the forthcoming GDPR enforcement date. Read our conversation below:
Kyle Shamorian: What challenges do you foresee for ecommerce companies in the coming year?
Craig Vodnik: I think there are three. There’s compliance and GDPR, financial management, and maintaining renewals.
So in terms of compliance, each country has its own set of rules and regulations around privacy and personal data protection, with the right to be forgotten and the forthcoming GDPR being the most vital of those regulations. As a company grows globally, managing the complexities of each country’s rules becomes increasingly difficult if you decide to be your own merchant of record through that process.
And there’s a similar issue from the financial side of things, specifically around payment contracts, where selling into other countries becomes more difficult. Brazil is a good example of this, because it’s effectively put up tariffs that require a customer to pay an additional tax if a non-Brazilian company wants to sell into the country. So as it becomes harder to do business outside borders, it’s vital for companies to be aware of these changes and make sound decisions.
And the third challenge is around renewing subscriptions, especially for SaaS businesses. Optimizing monthly or yearly renewals can affect profit curves substantially, even if the renewal rate is increased by even a little. The challenge is to retain those customers, which is far less expensive than acquiring new ones.
KS: What opportunities do you see for digital businesses to overcome those challenges?
CV: When ecommerce companies reach a certain size, they have the ability to invest internal resources in developing a platform that supports global growth – Apple or Adobe, for example.
But companies that bring in less than a couple hundred million per year may not have the resources, or want to invest the resources, in developing these tools in-house. So for smaller companies who want to focus primarily on the quality of their product, there’s a real opportunity in partnering with a solutions company like cleverbridge.
Also, education is a critical part of this process, in terms of whether it makes sense to build internally or outsource. My advice is to identify your core competency, whether it’s service, customer success, technology, etc., and build your business model around it. Think in terms of “less is more.” Do fewer things, better, and the “more” part will take care of itself.
KS: What would you say are the main issues that keep ecommerce companies up at night as they go global?
CV: In addition to GDPR and other compliance topics, going global requires a keen sense of local laws, specifically as they apply to consumer protections, taxes, etc.
If you’re a digital product or services company and under 50 or 100 people, there’s almost zero chance you can grow globally without outsourcing these tasks. If you get to 5,000 people, you can probably do it yourself, but it’s up to you if that’s something you want to do. Even if you build the initial solution, there are constantly upgrades that need to happen, so the commitment needs to be for the long haul.
Consider the metaphor of swimming from one island to another. If you only go a little ways, you can go back. But if you’re going to do it, you have to go all the way, and it’s a long, dangerous swim.
KS: As companies grow into new markets, and billing, renewals, tax remittance, etc., become a greater issue, can you talk about the key differences between an ongoing partnership – versus a simple service provider – regarding ecommerce solutions for digital businesses?
CV: The key factor here is that companies need to decide what they want to be, whether it’s simply building a product, or taking on the full slate of responsibilities.
Every company has the ability to develop their own subscription model, but it really comes down to whether or not it makes sense to do that in terms of bandwidth and allocation of resources.
Partnering with cleverbridge allows us to essentially be the canary in the coal mine for growing businesses. If we see something like a lower conversion rate or an unusual revenue day, we can be looking at the data with a larger perspective and identify opportunities, challenges and other trends to support that company’s success.
KS: What are you most excited about as you move into 2018 and beyond.
CV: I’m excited about the renewal enhancements that we’re putting in place, including machine learning designed to achieve the highest renewal rates.
I’m also looking forward to the possibilities of predictive analytics, which use data to identify not just what’s happened, but what will happen. This allows companies to mitigate issues before they occur, as opposed to simply reacting to issues that have already occurred.
Also the opportunities we’re seeing in B2B. Companies that sell to businesses are experiencing the same awakening that B2C companies did about 10-15 years ago. We have the opportunity to allow businesses to self-serve which in turn allows them to achieve higher yield on every order. That’s going to be a big opportunity going forward.
Kyle Shamorian is the content marketer for cleverbridge.