As a thought leader in search and a host of other technologies, Stefan Weitz has a 17-year Microsoft pedigree that’s impressive enough to cause even the most grizzled among us to do a double-take. So when he left Microsoft earlier this year to join an e-commerce outfit that was born out of the dissolution of eBay Enterprise, the double-taking was doubled.
Today, Weitz is chief product and strategy officer at Radial, an omnichannel order management system provider in King of Prussia, Pa. Radial has its roots in GSI Commerce, an e-commerce outfit that eBay purchased in 2011 and renamed eBay Enterprise. It was split up and sold off in 2015, and Radial was conceived in April of this year, when the enterprise services division of eBay Enterprise hooked up with Innotrac, an order processing and fulfillment services provider.
In an interview earlier this week, I spoke at length with Weitz about the challenges retailers face as they develop omnichannel strategies to compete against the sky-high customer-experience expectations set by Amazon. But before I got into any of that, I had to ask him what on earth compelled him to leave Microsoft after 17 years to join Radial. He said a lot of what he wanted to do, he had done:
I was blessed with so many opportunities there — I learned so much and got to do so much. But frankly, that’s a long time. It was either double down and stay there until I was done-done, or try something else. I talked to [Microsoft CEO] Satya [Nadella] and all the folks that I worked with there, and said I really want to go do this. They said, ‘Go do it. If you hate it, you can always come back.’
It was the opportunity to dig in on this space, which is just so complex — you’re dealing not only with data, but with logistics, and people, and objects, and airplanes, and trying to help retailers figure out a path forward, when Amazon is doing such a great job delighting customers. It’s trying to show retailers how they can compete with the expectations that Amazon has raised with customers regarding e-commerce overall. That was just too much fun to pass up.
Given that Microsoft isn’t a significant player in omnichannel order management systems, I asked Weitz if he thinks his former company is missing out on an opportunity there. He said Microsoft will be just fine without it:
They have some stuff with Dynamics — Patagonia adopted one of their products. But the entire addressable market for this software is $700 million, and you’ve got a bunch of people like IBM and Manhattan [Associates] and SAP trying to get in there and compete for it. So if you have four behemoths competing for the enterprise deals at that level of market addressability, you can kind of do the math on Microsoft’s scale and say it probably doesn’t work investing a ton of money to build a product out.
Radial will do north of $1 billion this year, so we’re not a small company. But certainly, if I can go get 20 percent of that [addressable] market, that’s $150 million a year. That’s interesting to me from a business standpoint, so there’s plenty of upside for us.
Microsoft has an interesting point-of-sale play, obviously, with Dynamics. But as far as the investment needed to really get good at omnichannel, you need that retail DNA. And that’s what Radial has in spades — we’ve been doing this now for 15 years, so we understand retail at a very granular level, more so than really anybody out there who’s competing with us does.
I raised the fact that Dick’s Sporting Goods, which was one of eBay Enterprise’s biggest customers, is migrating to its own omnichannel order management platform, and I asked Weitz what the best argument is for choosing insourcing over outsourcing, the way Dick’s has. He said he struggles to understand it:
Maybe for the top 40 or 50 companies in the IR [Internet Retailer] 1000, maybe it makes sense for them, because they have the scale required to go negotiate great contracts with shippers, and have access to the level of data they need to make smart routing decisions. But the reality is, anybody below, say, No. 50 on the IR 1000 list doesn’t really have the scale necessary to compete effectively with, say, an Amazon — they just don’t have it. And just the logistics — there aren’t enough planes or buildings or people for most retailers doing $200 million a year to think they can be competitive in that space. It just isn’t going to happen — that’s the first thing.
The second thing is, unless you’re a huge company, like maybe a Dick’s for example, you’re never going to have the network-level data that I have. I know that I’m shipping out 300 million packages a year; I know when there’s a disruption in New York City. If you’re a retailer with 50 or 80 or 100 or even 500 stores, you’re not going to have that level of IT expertise, that level of data science, that level of analytics to make smart decisions on things like omnichannel routing.
So it’s really tough for me to see how it makes sense for a lot of retailers to say they’re going to take this in-house. I think there are some arguments retailers can make around wanting to own their own data — they want to have more flexibility with their data. Do I think companies like mine can facilitate that, and make that happen for them without having to go fully insourced? Yeah, I think we can. But that’s probably the biggest reason that I’ve heard — they want to have more flexibility with their systems.
With respect to Amazon, Weitz had been quoted as saying that the upcoming holiday season is a prime time “for discovering the extent to which Amazon has shrunk the remaining share of the consumer’s wallet, that all other retailers have to fight over. It’s a reminder that the rise in consumer demand is surpassed only by the risk of retailers failing against Amazon.” In response to that, I expressed my own view that smaller retailers without a lot of brand recognition and a nationwide presence would be far better off partnering with Amazon than with companies like Radial. I asked Weitz what I was missing, and he was happy to tell me:
If you’re a small business, and you want to build a brand, and build customer loyalty and engagement, going to Amazon isn’t the way to go. Because Amazon then owns that transaction; they own the payment; they own the customer; they own remarketing; they can target competitive products against you in the future; they can make their own version of your product, which has been done, now, 4,000 times with AmazonBasics. Honestly, if I were a small retailer, I’d be terrified to go to Amazon. A lot of them do it, don’t get me wrong. But if I were a small retailer trying to build a durable, consumer-facing brand, where I engender loyalty and repeat visits, Amazon is not the way to go. It’s just not.
On the flip side, if you come to Radial, you have to do more work, obviously, on demand generation. So if you’re literally a no-name brand that no one’s ever heard of, and you just want to get traction in the market, is Amazon a good way to go to jump-start that? Maybe. But again, you have to be willing to balance the risk of them taking your product idea and making an AmazonBasics version of it, or just marketing competitive products to your customer, which is kind of scary. So once you achieve any level of market acceptance or brand recognition, I really don’t know why you would go to Amazon.
Weitz has written a book titled, “Search: How the Data Explosion Makes Us Smarter,” and like all authors, he relies heavily on Amazon to generate sales. I asked him how hard it is for him to wrap his head around that reliance, when Amazon is the dragon that needs to be slayed. He said his book isn’t going to make him wealthy, in any case:
I live in Seattle — half of my friends are at Amazon. I’m going over to Bezos’s No. 2’s house this weekend for a party, so I have a lot of fun with Amazon. I actually don’t think it needs to be slayed at all — I don’t think that’s the point. I think it’s more about the fact that they have done such a great job operating at a near-zero margin, which you could argue is a bit unfair for the rest of the planet that has to operate on a profit margin. But whatever—that’s what they’ve done. And they’ve done a really good job training consumers to expect a certain level of excellence when it comes to ordering online.
So do I blame Amazon for doing that? No way — I love that. But the challenge is that retailers, especially in the last three years, as Amazon has just come on fire with a lot of their new offerings, have been caught off-guard. They thought it would be good enough to just have seven-day shipping that they charge six dollars for; they thought it would be OK to have inventory that was not real-time. They found that wasn’t the case.
The interview also delved into a recent Forrester report that raised some significant issues that warranted a response from Radial. I’ll cover that portion in a forthcoming post.
A contributing writer on IT management and career topics with IT Business Edge since 2009, Don Tennant began his technology journalism career in 1990 in Hong Kong, where he served as editor of the Hong Kong edition of Computerworld. After returning to the U.S. in 2000, he became Editor in Chief of the U.S. edition of Computerworld, and later assumed the editorial directorship of Computerworld and InfoWorld. Don was presented with the 2007 Timothy White Award for Editorial Integrity by American Business Media, and he is a recipient of the Jesse H. Neal National Business Journalism Award for editorial excellence in news coverage. Follow him on Twitter @dontennant.
