Interview with Pablo Renaud | eCommerce Expert
Certain contents are so valuable that they deserve to be shared on different channels and formats.
This is definitely the case with the interview we had with eCommerce expert Pablo Renaud, for our Shiptimize on the Record podcast.
Through his vast experience running and advising online stores for over 17 years, Pablo gives important insights to those who are just starting out and also to those who already have an eCommerce and are looking to make it more profitable. The tips go through subjects as marketing, product choice and, of course, the best decisions involving logistics.
Below, you can hear the original episode in Spanish or if you prefer, you can read the full translated transcript of this interesting conversation.
Interviewer: Hello, good afternoon. Today we are talking with Pablo Renaud. My name is João Santos Pereira from Shiptimize. Pablo who is a person with more than 17 years of experience in eCommerce and digital strategy. Good afternoon, Pablo. A pleasure talking to you. How do you feel?
Pablo: Good afternoon, João. Thank you very much for having me here. I am delighted to chat with you for a while.
Interviewer: Perfect, perfect. The pleasure is ours, Pablo. One question. We want you to talk a little about yourself, your experience and how, in the end, you came to this eCommerce sector. Your story until you arrive … What led you to eCommerce, in general?
Pablo: Of course. Well, this goes back to the year 2000. In the year 2000, I started working for a pharmaceutical laboratory. It was a very interesting year the year 2000, because it was when people started talking about the “internet for commercial purposes” (this is when the famous bubble of “.com” happened). That stage was very interesting because many people wanted to try this eCommerce thing, many companies, and nobody knew how it was done. There were none of the features available today.
When I started, I was hired precisely to make a first online store, which at that time we called it “virtual store”. It was the term used then. Of course, there were none of the things that are now very normal. There was no PayPal for example, there were no logistic platforms, there was no carrier like UPS or others, they were not used to dealing with small orders from eCommerce. Then, everything was much more difficult and, of course, there were no content management systems like there are now. There was no WordPress, there was no Magento, PrestaShop, Shopify. Everything had to be done by hand, everything was crafted. So, it was a beautiful time.
There I started, and I fell in love with the possibilities because I saw that, with initial effort (that is clear), a system that worked almost alone and gave money by itself was launched: it was a money-making machine, and that attracted me a lot. Then I started trying everything. I worked for several years, in different companies; Then I started to set up my companies, first a consulting company, that is, to tell people what they had to do in eCommerce, and little by little to companies that were selling. And to this day, the company where I am sitting right now talking to you is called Ebolution and we are about 30 people who do that: eCommerce projects, all day. It has been more than 17 years already, dedicated night and day to this world that I find exciting and that still has a great journey ahead.
Interviewer: Yes. In fact, Ebolution that you are co-founder, right?
Pablo: Exactly, yes. Already in the year 2012, I met with some great partners and friends and we said, “we are going to create a company that really helps others, to sell online and that functions for them“. We did what it took. Initially, we were all programmers and we programmed online stores. Little by little, we discover that to succeed in eCommerce it is not enough to master technology: you have to do a very good marketing, you have to understand the operations behind it, and, above all, you have to have a clear strategy. That is something fundamental. In fact, now that the company is operating in a fairly solid way and I have more time, for two or three years I dedicate myself, and with great pleasure, to disseminate these ideas. I write a lot; I go to events as a speaker and I tell people what I have learned in these 17 years of slapping myself to see what the keys are to sell online.
In fact, lately, I am quite excited about a training project called “eCommerce University”, where people can access online courses, very short, very fast and to the point, about what it really takes to succeed in a project eCommerce. Whenever I have time, I dedicate effort and energy to this because I think it is important to give back a little to the society that has allowed you to grow, tell what you have learned.
Interviewer: Well, here is a point for those who listen to us, which Pablo just mentioned. For those who are attentive and want to cultivate more and learn, here is a good opportunity. Pablo, a question. After working with so many clients on your journey, what are the three most common challenges, would you say, for an eCommerce?
Pablo: Very well, there are many challenges, and it is true that you find many difficulties and unexpected things along the way; but it is true that I always face the same three.
The first: every eCommerce project today has to have a worthy value proposition. This may seem very theoretical, but I mentor many projects each year, I am in many business schools, and groups of entrepreneurs seek my advice and I always stop them at this first point: “why would anyone want to buy from your online store, in your eCommerce project?” That is why it has to be very solid because you have to face all the other options. If the competition is the store just around the corner, it is very difficult to win that battle, because that store offers great convenience; If your competition is a giant, if you are going to sell the same thing that Amazon sells, or that Walmart sells, or that El Corte Inglés sells, it will be very difficult to reach those prices, because they are giants. So, you really have to take a long time, all the necessary, to answer that question well: Why would someone want to buy from you instead of all the options they have today? If you answer that question well, let’s continue with the project; but we must keep thinking until that answer appears. So, the first challenge is to put together the value proposition.
When people have already found an interesting reason, there are beautiful projects, as I say, I’m shown exciting projects every month, the second point comes. It is, unfortunately, hard and this is where 90% that have reached this stage falls, which is: How are they going to get customers? Getting customers is the most difficult thing today in eCommerce, the cost of acquiring a customer is a very complicated thing to stop and it is increasingly expensive. This is what many entrepreneurial teams have not discovered when they reach me, they think that eCommerce is a great channel where buying a product and putting a small margin, it can be sold. I did that in 2003 and 2004, it was very simple: if you knew how to make an online store and buy some advertising and banners, you got infinite customers and it was a delight, but today you compete against all brands that are making noise in digital, and competing against them and appearing in front of your potential customer is very expensive. Normally, it is more expensive than the product you sell. With this, of course, entrepreneurs get choked when I tell them that the most expensive cost can be to capture a customer, and then I tell them that when they buy a shoe in a mall or a store, and it is a shoe of a renowned brand, they are paying much more for marketing than for the materials and cost of manufacturing that shoe, and much more than the margin of the channel. That retailer that is selling you that shoe has a very large margin because it has to pay a building, to pay people, to pay marketing campaigns and all that is expensive. The same happens in eCommerce: you have to pay the cost of customer acquisition.
And the third point, when they have already overcome this, when they are able to create an interesting value proposition and see how to pay to get customers, have their customers margin, to which the product they sell really solve a problem, that people want to pay, it comes to grows properly. If you get to this point it is nice, because it is a matter of getting investment, getting people with a lot of talent to help you grow if you need investment, etc. Here the key is the operation. Doing things very well, because if you do not do it well you will make it more expensive or the client will go somewhere else. So, you have to have impeccable logistics that also has reasonable costs. Here you have to rely on technology, on partners that help you, like you guys (Shiptimize). This is fundamental. The same goes for the customer service: it must be done with excellence, and that is expensive; and everything is related to the fact that when the customer makes an order you are making a promise, which is that you will deliver what he has requested, at the time he has asked for and at a fair price. This, of course, is difficult when you grow up. But if that challenge is overcome, it is already achieved. You just have to do those three things well.
Interviewer: What you answered us was very objective and very fascinating in my opinion. In the end, sometimes we ask ourselves much more complicated things than it really is. That is, if we really focus on what we are doing about eCommerce, these three questions or these three challenges are really simple things, without being that simple at the same time.
Pablo: Exactly. The rest, everything else, can be hired. It is not necessary to know how to make a magnificent campaign on Facebook. If you have that knowledge, phenomenal; but what you have to do is look for that talent outside. If you build a project that really offers your target customer a solution to a problem he has and that will make him pay a price that allows you to have a margin, there you go; the rest is to get that talent. Another recommendation that I have been giving for 17 years is: get the most expensive help you can. By more expensive I mean the best.
Interviewer: That brings more value.
Pablo: That brings more value, exactly. Even if you have to give up a large part of your benefits, that help will give you a signal, it will allow you to make an excellent product, it will allow you to later, when the time comes, grow much faster or directly survive. So, do not skimp on looking for people who can help you.
Interviewer: Perfect. Thank you, Pablo. With the experience you have of working with companies that are growing and others that are more developed, say, what practical examples that an online store that is in the early stages can apply taking the most developed companies as an example?
Pablo: That is an interesting question. Indeed, I work now for large clients, businessmen who already sell millions (at least) of euros a year, or millions of millions online. That is a lot of learning that is there. Some of that learning can be used from the beginning. For example, something that is difficult to understand at first but then with time is seen is related to everything that is logistics, repetitive processes in general. In an eCommerce, when you start, you must try not to spend time and energy on repetitive processes, and there are many repetitive processes because that takes time away from the important thing, which is to continue working on the value proposition, continue working on marketing, continue working to satisfy your client. If you are preparing orders, receiving products, taking a picture of the products or composing Facebook campaigns, you are not doing the important thing, you are doing the urgent thing.
So, the first advice, that the big ones have it very clear, is: outsource what doesn’t add value. Nowadays, having products in a warehouse does not add value. All entrepreneurs who physically sell a product always start by telling that their uncle has a warehouse and they will start working from there, or on a floor, or they will rent a tiny warehouse. Well, I also did it, when I started I too made those mistakes, because there were no options like now. Now, if one is going to start, the ideal is that you do not even see the product, that the manufacturer sends it to an integrated logistics operator, or to an operator that does everything from receiving the products, storage, picking and that later puts it in the hands of professionals so that it arrives in perfect condition, in the shortest possible time and at the best cost to your client, and you should not waste time with that.
So, it’s very scary to talk to a supplier like FedEx, like UPS, or like any logistics group; but it can be perfectly done, and if not, there are smaller ones. You have to sit with them and look for a variable cost model. That is, charge me only when I sell, and that’s it, that’s what needs to be done. That is something that the big ones have very clear. When I go to a big project, they ask me “but how many people are we going to have to hire for this?” Zero. “Perfect. How much will it cost per month? 15 thousand euros per month? We don’t care, because as long as it works we pay it, but the day it doesn’t work we stop paying it and that’s it”, so to speak. “I am not going to invest in building a warehouse, I am not going to invest in hiring gigantic equipment. I prefer to have equipment in the hands of a supplier to help me, and I am regulating its cost.” This is a learning that the smaller stores could use.
More ideas? One that I really like is that, when I work with small businesses, I say: are you able to create your own brand? Creating a brand is hard, but it always comes to mind in the end. So, if someone, for example, has a family member in the shoe industry, let’s say something like that, and plans to open an online shoe store and will sell shoes of many brands, that is very hard for it to work.
So, I usually tell them: create your shoe brand, look for a customer pain, a reason, and create a brand that solves that pain. From there you can sell the same shoe that you sold yesterday, but you put another brand on it, you give it those differentiating attributes, that is very important; that is, it really solves something and from that moment on every effort you make serves to sell today, to sell tomorrow and allows you to fully control the product. This is something interesting, and we are living that. Now we see that every week new brands arise, it is wonderful. Brands of sunglasses, bracelets, shoes. It is an interesting path. The big ones, again, have that clear because normally what they do is even take out whole divisions or new product lines when they want to try online so that it does not conflict with their current channel. It is another learning.
Interviewer: It’s very interesting. And again, what you said before trying to make life simpler than it is when you look for this outsourcing. That is, from the store and all that, goes very well.
Interviewer: It is to make operations easier. This answer you gave us is very interesting, Pablo. Here we at Shiptimize are dedicated to optimizing the shipping from online stores so that entrepreneurs, can use their time and resources, say, in other areas of their stores, their businesses. Today in Spain, Pablo, what would you say are the biggest logistical challenges that younger online stores need to overcome to succeed?
Pablo: Very good. Well, the main challenge, of course, is Amazon. Amazon is setting the standards, for 2-3 years in Spain they are taking for granted that what they do is what the entire industry has to do. So, here are two alternatives: either follow that path or differentiate. What did Amazon say? As it began selling in Spain they delivered in 2 days (in 48 hours); then it started saying “I will deliver in 48 hours for free”, and the “prime” program (which was called “premio” at the beginning) was born in Spain, and then the whole world got used to that if it was delivered in 2 days it also was free; and if you were in a little hurry, then you can get 1 day delivery. I remember that I did a lot of eCommerce for people at home and then the standard was that, a few years ago: shipping in 48h is free or very cheap, shipping in 24 hours is paid. If you want it faster, pay for it.
But then we saw that Amazon continued to evolve and said “no, well, now I ship in 1 day. This is normal, standard; and I also ship in 1 day for free if you pay me an annual subscription to my loyalty program” and now all stores are copying that. And then “delivery on Saturday“, and then “delivery in hours.” This is how it will continue to advance along the best path of the best service for the final consumer until eCommerce and commerce have no difference: you want one thing and you will have it on that day for sure, and if possible in the next few hours. This road is very hard for the projects that are starting because this has a lot of costs. My advice is: if you have to follow that path, you have to sell a product that really solves a problem beyond what you can find in a generalist like Amazon, which costs a little more and people are willing to pay for that service. It costs more to smaller stores than it does to Amazon. Amazon, in fact, loses money with the shipping costs it has, but they create loyalty among its customers, which is their main plan.
So, if you follow that path you have to have room; If you do not have enough room to do this, you can compete in the other way, that is: “Yes, we do not deliver in 24 hours” and there is a clear example, as you have seen in recent years, that makes this work. In fact, two models: the model of the private buying club, where what you were looking for is to buy a branded product (high price) at a very convenient price, but that product will arrive in 15-20 days, when the campaign is closed and all the shipping of that product will be organized. That model worked for a while, and now we are seeing the subscription model, which is very interesting, which is: I not only send you what you need today but as it is a perishable product, I will send it to you every month; As I send it to you every month, I know at what time I will send it to you and I have time to organize the logistics of this. So, it can also be a way to investigate why a customer might be interested in slower shipping methods but one that solves the problem of not having to remember to buy this product. Well, it’s another idea.
In any case, right now, today, logistics costs in Spain are a challenge, because they are still more expensive than in other countries. You have to try to optimize them anyway you can, so that eCommerce is profitable.
Interviewer: Perfect, Pablo. Thanks for your answer. You are now going to enter a couple of questions on a more personal level if that’s ok with you. We would like to ask you: What was the last article, video or something that caught your attention lately about eCommerce?
Pablo: Fascinating. 3 or 4 days ago I read an article that is long to read, it is in Medium which is a publishing platform that I love, they write very interesting things. I read an article that read the following: Jeff Bezos, from Amazon, had bought 20,000 delivery vans to test. So, that is something that I started to take into account, the cost of 20,000 delivery vans Thinking and having in my head the typical UPS van, red; Amazon had bought them but in white, 20 thousand in a row. The space 20 thousand vans occupy is indescribable, in football fields is crazy. So, the article explained what that could mean for the industry and why Amazon did it. It was an exciting read of what really matters today in eCommerce, it is a wonderful thing. So, if someone wants to look for it, then go to medium.com and have to look for the title of the article, which was something like “Watch out UPS and FedEx, Amazon is coming for you.” It was an exciting read of the challenges of big eCommerce today.
Interviewer: Perfect. I’m going to read it for sure because just that image of seeing 20,000 vans on soccer fields, the logistics that that implies that has intrigued me a lot. Pablo, to finish it off we wanted an opinion of what would be the one thing an eCommerce should never do.
Pablo: Ok. This is important. I will recommend the following. I wrote a decalogue these days, the ten commandments, the ten things to do to make an eCommerce work. That is, it is not what you should not do, but the ten things you have to do well. I called it this: “the ten keys to eCommerce success”. It was so interesting, I liked it so much because I composed it based on listening to hundreds of projects that were always mistaken about the same things. I composed this list and even got to create a course, an online course that is also completely free because I think this is important. So, I propose to listeners to go to Universidad eCommerce and look for the free welcome course that this: the ten secrets of a profitable eCommerce. What I want to say here is that these ten commandments, in the end, are grouped into 4 blocks and are nothing, really: ten very simple ideas that come to say “work your brand, work your client, work your operations and work your profitability“. If these rules are followed, which are perfectly easy to understand, the difficult thing is to fit them into all projects, I can almost guarantee that the project will work, from what I have seen and my experience.
So, the advice would be for those who are interested in succeeding in your project to take a look at these 10 commandments.
Interviewer: Yes, thank you very much, Pablo. I tell our listeners that everyone who wants to learn more with Pablo Renaud to go to his website: www.renaud.es to have more inspirations. Perhaps in the near future, Pablo, we will be talking again. It would be a pleasure to exchange a couple more ideas, a couple of your input on eCommerce. This conversation was very pleasant, I thank you very much, me and all our Shiptimize team. If you want to add something, please do Pablo.
Pablo: Well, thank you very much, the truth is that I will be delighted. Whenever you want, I will be happy to spend a few minutes chatting with you. I think that what you are doing is very beautiful, I think that what needs to be done is less stating “eCommerce grows to 25%” or “eCommerce has died because Amazon has loaded it”, or “trade has died because eCommerce has taken it all.” No, that does not contribute. What I think matters is to share with people the real successes and failures of eCommerce projects and real learning that we can use so that they decide if they want to do eCommerce or not.
eCommerce is difficult. When I started it wasn’t easy either, but now it is difficult because many people want to do it, but it is also something that will continue to grow. So, there is nothing more beautiful than being in a sector that will continue to grow. In Spain it grows at 25% annually; that is, there is room for 25% more companies that sell the same amount. That’s wonderful. As soon as the basic things are done well, you can grow.
So, I encourage people to keep listening to what you are spreading which I think is a precious action and to train as much as possible to try to succeed in their projects.