When Rakuten bought the e-commerce upstart Buy.com in 2010, the site had already begun positioning itself as an alternative to Amazon. As you can read in our overview of Rakuten Buy.com, in the past two years, the company has further embraced Rakuten’s “merchant-centric” approach to e-commerce.
We recently interviewed Rakuten Buy.com’s Bernard Luthi to discuss what this merchant-centric model means for both consumers as well as manufacturers and brands that sell products online. Currently Rakuten Buy.com’s chief marketing officer and chief operating officer, Luthi previously held executive roles at Ingram Micro and Newegg.com.
Rakuten’s Buy.com Ready to Take on Amazon & Co.
Content Ping: What sets Rakuten Buy.com apart from other e-tailers?
Bernard Luthi: We empower the merchants on our site to connect with customers and merchandise and sell products via our platform. This change in our philosophy started a couple of years ago after being acquired by Rakuten. We’re trying to replicate the successes Rakuten has had in Japan’s merchant-centric marketplace.
Most other e-tailers such as Newegg, Sears, or Amazon take a vending machine approach. These companies are very first-party focused. For example, Sears will have a one-on-one relationship with Sony or HP. In a first-party model, Sears sources the product through distribution or the manufacturer, lists it on their website, sells it, and then ships it. That approach is not merchant focused but manufacturer focused.
Our approach is very much about empowering our merchants. It’s about developing a platform to connect a merchant to a consumer looking for something unique.
Buy.com still stocks and sells consumer electronics items, but a few years ago over 95 percent of our marketable value was first-party business. Now, I would say that over 50 percent is merchant-driven.
Buy.com is offering manufacturers something unique because it’s putting consumers in touch with the merchants who are advocates for the brand. At the end of the day, people that sell my product are my most important asset. I think many manufacturers see that.
Content Ping: How are sellers responding to this merchant-centric approach?
Bernard Luthi: I think we’ve gotten an incredible response. Unlike our competitors, we don’t compete with our merchants, we give them the tools to market and sell. Our entire objective is to create a profitable revenue stream for them. Merchants respond very favorably to that.
Content Ping: This sounds great for small-store owners. But how does this make Buy.com attractive to manufacturers?
Bernard Luthi: From our perspective, merchants and brands coexist very well.
Manufacturers have relationships with many different marketplaces. If you’re HP, you have many selling channels for your products. Buy.com is offering manufacturers something unique because it’s putting consumers in touch with the merchants who are advocates for the brand. At the end of the day, people that sell my product are my most important asset. I think many manufacturers see that.
Buy.com lets manufacturers set up brand stores to direct consumers to individual merchants that sell their products. I really think our approach has helped us crack the code on how to create a very amicable relationship that benefits both merchant and manufacturer.
Buy.com has the good prices and the convenience of other marketplaces, but we also make it easy to discover products by personalizing the shopping experience.
Content Ping: What advantages do online shoppers get out of this merchant-centric approach?
Bernard Luthi: For many years e-commerce has been about convenience and price. You go online to get a product for $1 cheaper and for the convenience of not having to go to the store. Buy.com has the good prices and the convenience of other marketplaces, but we also make it easy to discover products by personalizing the shopping experience.
We don’t throw a cloak over the merchant but instead introduce you to shop owner. You’re not just buying from some vending machine. We want you to discover who that merchant is. And with 14 million products, there’s plenty to discover.
That merchant-centric approach is what truly separates us from any other e-tailer in the US.
Content Ping: What type of audience are you trying to reach with Buy.com?
Bernard Luthi: I think we’re doing a pretty good job of providing something for everyone. If you look at the beginnings of Buy.com, there’s certainly a focus on the 17- to 35-year-old male who is interested in technology.
But now our male to female ratio has evened out. As we’ve expanded the product line, we’ve also expanded the net income level we’re selling to. It’s no longer only tech enthusiasts. Our customers tend to come from metropolitan areas and are comfortable shopping online. They’re not necessarily in a hurry and enjoy the process of discovering products. They’re looking for products that are typically a little more expensive and of higher quality than those offered by daily deal sites.
Content Ping: At the product page level, what types of content do you feel best serve this audience? Are they looking for quick overviews? Technical specs? In-depth information?
Bernard Luthi: Actually, one week ago we rolled out the first phase of a product page redesign that emphasizes large images incorporated within the text.
We tried to lay it out in a way that you get your essentials first, and then, based on what type of shopper you are, you can find all the information you need.
We’ve incorporated the long-page approach because if you’re a consumer that wants to do a lot of research, we provide everything you would want to know about the product. You’ll find large images incorporated into the product page, you’ll find technical specs, merchant reviews.
We’re really taking a modular approach to the product page. We’re testing which parts our customers are most interested in. Maybe for technical items, the specs need to go higher on the page, while in another category, consumers are more interested in user reviews. This modular approach allows us to change what is where on the product page according to category.
Content Ping: How important is mobile commerce to Buy.com?
Bernard Luthi: We’ve put an awful lot of emphasis on our mobile platform and we’ve seen really nice results. It’s set up to be very search-centric. You can search for products by typing in the name, scanning a product, doing a photo search, or even a voice search. We’ve made it as easy as we possibly can to find a product.
Mobile is growing rapidly for us. Right now it’s probably 10 to 15 percent of our traffic but is increasing at a significant amount YOY [year-over-year]. I’m not ready to make a specific prediction, but I can say it will become increasingly important to us. It’s an incredible channel that we are putting a lot of resources into. Our mobile strategy is one of the most important ones to us as an organization.
An accomplished, dynamic executive, Bernard Luthi’s experience spans diverse end-user segments within both the consumer and B2B channels. Mr. Luthi has held executives roles with some of the industry’s largest entities, including a 10-year term with Ingram Micro, the world’s largest global technology distributor. He also served as Senior Vice President responsible for Marketing, Merchandising, Web and Customer Service for Newegg.com, the second largest pure play e-commerce company in the United States.
Currently, Mr. Luthi holds the position CMO/COO for Rakuten Buy.com with responsibilities for the overall Buy.com user experience.