ChannelAdvisorBrad Vetter

VP & GM, Ecommerce & Direct to Consumer

ChannelAdvisorAgenda

Background – Brad Vetter

ChannelAdvisor

• Selection Process

• Why ChannelAdvisor?

• How we use ChannelAdvisor

• The Good and the Bad

Pricing & ROI

Competitive Environment

• Mercent

• Amazon

• The Platforms

• Systems Integrators & Others

Opportunities & Growth

• Global Commerce

• Fulfillment

Q&A

BRAD VETTER

BACKGROUND – BRAD VETTERECOMMERCE EXEC – 15 YEARS

1999 to 2005 – Dell.com• Bigger than Amazon - #1• Profitable – Maybe the only one

2005 to 2009 – Independent Consultant• Platforms – Demandware, ATG, WebSphere,

Magento, Hybris• Agencies – Razorfish, Critical Mass, Lyons,

Guidance, Sapient, Acquity• Vendors – ChannelAdvisor, Certona…• Companies – Lifetime Brands, J. Hilburn,

Hyatt, Orbitz, United Airlines, Trek Bicycles…

2009 to 2010 – VP – Business Development, Invodo• Partnerships – Demandware, ATG, Razorfish,

Hybris, Rich Relevance, PFSWeb…

2010 to 2012 – General Manager for a Top 100 Internet Retailer, Zones

2012 to Present – VP & GM, Ecommerce, Kraco• Building a new business for a SUN Capital

Partners portfolio company

Selection Process

KRACO ENTERPRISES – SELECTION PROCESS

What did we need to do?Integrated Marketing Plan

Channel Strategy / Tactic

Paid SearchTransactional marketing. Bottom of the sales funnel engagement.

Display Ads Awareness campaigns. Top of the sales funnel engagement.

MarketplacesTransactional marketing. Bottom of the sales funnel engagement.

Comparison ShoppingTransactional marketing. Bottom of the sales funnel engagement.

Affiliate ProgramTransactional and Awareness campaigns to facilitate current and future sales.

SocialListen and engage consumers looking for floor liners or unhappy with what they have.

EmailTransactional and Awareness campaigns to facilitate current and future sales.

Video Ads Awareness campaigns. Top of the sales funnel engagement.

KRACO ENTERPRISES – SELECTION PROCESS

Mercent vs. ChannelAdvisor

• Pricing

• IR 500 – ChannelAdvisor had 50% more - Experience

• Automotive Experiencehttp://www.channeladvisor.com/press/channeladvisor-signs-26-new-automotive-retailers-seeking-e-commerce-success/

Why ChannelAdvisor?ChannelAdvisor Mercent Magento

Marketplace Integration YES YES NO

CSE Feeds YES YES Limited

Paid Search and PLA management YES YES Limited

Managed Services YES YES NO

KRACO ENTERPRISES – SELECTION PROCESS

Model - Current

Source: ChannelAdvisor.com

KRACO ENTERPRISES – SELECTION PROCESS

How is it going?

Marketplaces - Amazon & EBay Excellent knowledge of the Channel

Comparison Shopping Hands Free, No hassle

Paid Search and Google PLA Not completely satisfied.

Channel Knowledge vs. Customer/Product Knowledge• Marketplaces & CSE’s – Channel• Paid Search – Customer/Product

GMV Incentives correct for the GDN and Video Ads• Awareness campaigns – All work, no money?

Pricing and ROI

GMV

PRICING AND ROI

GMV - Monthly

Feb March April May June July Aug Sept Oct Nov Dec Jan Feb March0

5000

10000

15000

20000

25000

30000

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

GMV Min GMV Actual Unit Cost

PRICING AND ROI

Unit Economics - Amazon

Category 1 Category 2 Category 3 CustomSale Price $23.34 $10.18 $31.08 $165.24Net Sales Price $22.23 $9.98 $29.60 $162.00Units 32,000 156,000 41,000 2,500 Sales $711,360 $1,556,880 $1,213,600 $405,000COGS $590,429 83% $965,266 62% $849,520 70% $162,000 40%Marketing $92,477 13% $202,394 13% $157,768 13% $52,650 13%ChannelAdvisor $32,011 4.5% $70,060 4.5% $54,612 4.5% $18,225 4.5%

Adj Gross Margin ($3,557) 0% $319,160 21% $151,700 13% $172,125 43%

How do I increase my contribution?

Competitive Environment

COMPETITIVE ENVIRONMENT

Mercent

• Marketplace Integration• CSE’s• PLA’s• Paid Search• Price Optimization• Managed Services

Source: Mercent - http://www.mercent.com/why-mercent/differentiated-technology

1.Pricing2.Industry Experience

COMPETITIVE ENVIRONMENT

Amazon - Automation

1. Product Feed2. Relationship Feed3. Product Images Feed4. Pricing Feed5. Inventory Feed6. Shipping override feed7. Order Acknowledgment Feed8. Order Fulfillment Feed

Amazon.com Google All other channels

% of Total ChannelAdvisor GMV

64% 18% 18%

Average Order Value $24 $73 $41

Cost of Sales % 17.5% 21% 22%

Do you need ChannelAdvisor?

COMPETITIVE ENVIRONMENT

Ecommerce Platforms

Platform Differentiation

Will it kill or consume ChannelAdvisor?

Opportunities and Growth

OPPORTUNITIES AND GROWTH

International

Q&AChannelAdvisor – Brad Vetter