EXCLUSIVE INTERVIEW

Wielding the Technology Sword: Q&A With Overstock.com CEO Patrick Byrne

Overstock.com is a retail site that, similar to Amazon.com, sells products in just about any consumer category, from clothes to electronics to home goods to furniture. Not surprisingly, it hid a major skid last fall when the U.S. economy went into seizure.

“We were growing 27 percent through the first part of the year,” CEO Patrick Byrne told the E-Commerce Times. “By Q4, we had shrunk 13 percent.”

In Q1 2009, the company’s growth contracted another 7 percent to 8 percent, he said.

Then, at the end of June, Overstock.com experienced a turnaround of sorts — positive growth in the range of 3 percent. Bryne could not say how much of that — if any — was due to a general economic change. However, he did say that the company’s steady investment in technology, even during the dark days at the beginning of this year, was surely a significant contributor.

“We have been focusing on continually improving — refining our site, our approach. I would say our new technology investments are 50 to 75 percent of those improvements,” he estimated.

The E-Commerce Times spoke with Bryne about the tech improvements Overstock.com is making — and would like to make — when the industry and his own development staff are ready.

E-Commerce Times: Where have you been spending your IT dollars over the last year?

Patrick Byrne:

We use RightNow, and we have been investing money and resources to fold the homegrown component of our CRM system into RightNow. We’ve been doing that for the last six months. Customer service is very important to us — people tend to overlook it and think of it as a cost center to be minimized. But we are planning an even bigger push in personalization.

Personalization technology being developed now by third parties is getting very good. That wasn’t always the case, you know — too often the integration would prove to be very cumbersome and the results too basic.

But two things have changed — the integration is now happening on the Web page itself with Javascript variables, which makes it much lighter and quicker to do. Also, the algorithms running it have, among some providers, changed dramatically and are now much more intelligent. So, we have been focusing a lot of research and resources in this area.

ECT: For instance?

Byrne:

We’ve tested a lot of suppliers and, while I don’t want to sound like an infomercial, will tell you we found one we like a lot — it’s ChoiceStream in Boston. They have a sophisticated approach to the algorithms. Normal algorithm use in these kinds of deployment is called “collaborative filtering” — in other words, the basic algorithms of recommendation. ChoiceStream, with its mathematically advanced approach, is more sophisticated and powerful — they use Bayesian modeling.

ECT: What is the difference in practical terms?

Byrne:

It is more analogous to, say, a Nordstrom sales rep who knows your tastes already. You go into the store and tell him you want a handbag, and he picks out the bag he thinks you will like the most.

ECT: Isn’t that how personalization technology is supposed to work anyway?

Byrne:

It’s what the industry has held out for five years as the big new thing, but nobody has gotten it right so far. I don’t want to make it sound like ChoiceStream is the only good vendor — there other new players in this field that we are watching too that we think will be pretty big when the time comes.

ECT: Such as?

Byrne:

I don’t want to say until I am sure they will deliver what they are working on right now.

ECT: What other tech developments are you planning?

Byrne:

Content management in the last two to three years has gotten more sophisticated. We are looking at a company called “TouchClarity,” which was purchased by Omniture in 2007. We intend to implement TouchClarity within a year. We just don’t have the resources to get it done this year, but Q1 2010 will be our goal.

ECT: How much do you invest in technology?

Byrne:

About 3 percent to 4 percent of our revenue is invested in technology — more towards the low end, though, of that number.

ECT: Did you pull back when the recession hit?

Byrne:

No, in fact we are getting much more aggressive about it, and that ratio is going up for us. Our problem has been we can’t invest in technology as fast as we would like because we don’t have the in-house resources to deploy it.

ECT: It sounds like you are talking about people, not money.

Byrne:

That is right.

ECT: That is unusual for a recession — you really can’t find enough talented developers to hire?

Byrne:

No, at least not with the right attitude. It’s our biggest bottleneck right now. It is hard to get good developers that can work in a team environment. I have found that maybe one in 20 can do that. In fact, we have more ideas than our developers can possibly get done — we are finding we have to triage our ideas.

ECT: So, you are actually looking to hire developers right now? How many?

Byrne:

We are actively trying to fill 15 slots, but that is just a short-term goal. I would hire 100 tomorrow if they were the right people.

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Sports Betting Platforms Gambling With Substandard CX

Online gambling is at an all-time high in accessibility and popularity. But many betting app developers are rolling the dice blindly without addressing users’ customer experience (CX) concerns.

More states in the U.S. are legalizing sports betting with legislation pending in many others. Major sports leagues such as the NFL and the PGA Tour are adding legitimacy to the organized sports betting space by securing high-profile gambling partners. Sportsbooks like FanDuel, DraftKings, BetMGM, and Caesars are expanding in concert.

With money on the line, literally, with betting apps, these companies have a heightened burden to provide customer support. That could well be a survival requirement since many of their online bettors have never previously gambled on sports, let alone placed bets via mobile apps.

Appeasing Regulators

So far, sports betting platform rollouts in new states have been relatively seamless. Yet some obvious CX issues must be addressed before watchdogs and regulators step in.

Sports betting companies need to tackle four potential stumbling blocks:

  1. The product is still new to many customers. Gambling companies need to clear up confusion on the legal methods of sports betting and drive confidence that bets will be paid out.
  2. Most sports betting companies are pushing mobile apps for daily usage and interaction, leaving a strong need for tech support to help with logins and payment issues.
  3. Geolocation issues are a major factor. If users are near bordering states where sports betting is illegal, their phones might mistake them for being in the wrong location and their bets will not go through.
  4. Seasonality. Major sporting events such as the Super Bowl, March Madness, The Masters, FIFA World Cup, and the World Series amplify betting activity. As a result, gambling companies must have robust CX infrastructures in place to handle increased seasonal demand.

One of the biggest challenges is volume projection and staffing due to the sector’s rapid growth and lack of historical data, according to Chris Crowley, chief commercial officer for CX provider Alorica. A significant and continuous increase in users is coming from existing states, as well as new states legalizing sports betting apps.

“As the user base increases there is an increase in transactions across voice, chat, and email — especially from new users and novice users of sports betting apps. The ability to develop the appropriate staffing models and to train the staff effectively is crucial to delivering an exceptional customer experience,” he told CRM Buyer.

Betting on Digital-First Stability

Another big test for the sportsbooks, noted Crowley, will be finding the bandwidth to handle peak seasons when major sporting events drive a flurry of betting activity.

To withstand scrutiny from regulators and watchdogs, these companies require trained staff who can work with customers across voice, chat, text, and email.

“Like other digital-first companies that are born highly focused on product, sports betting companies may not yet fully appreciate the need for tech support and account management,” he cautioned.

For example, most sportsbooks rely on website FAQs to support their customers. Many of the new customers are gambling on sports for the very first time.

CX is critical to handle these concerns because money is involved. Customers rightly want access to a support person when they spend money to get something in return, such as a bet to win or deposit to get a bonus or free bet.

App Speed Risky Business

Logistically, the speed of the app interface makes betting easier. But it also increases the risk of mistakes, warned Crowley. That is why it is crucial to have knowledgeable and readily-available support offerings from live agents and automated channels.

Fierce competition to develop repeat customers makes CX crucial to this emerging market. Companies such as DraftKings, Caesars, BetMGM, and others are currently spending tremendous amounts of money to rapidly grow their user bases through aggressive marketing.

“To get the necessary return on this investment, they must develop user loyalty as it is so easy for users to jump to another app. One poor service experience can turn a novice bettor off forever,” said Crowley.

Another reason CX is important is sports betting has its own community and lingo. It can be unkind to newcomers who do not have a firm understanding of betting odds and how promotions work.

“A big issue surrounds where ‘free’ does not always mean free. Having a customer service team backed by a real CX strategy gives new users a lifeline to figure out the nuts and bolts of sports betting,” he explained.

Driving Factors

Social acceptance of sports betting is now common. State governments increasingly are becoming supportive of the industry.

Additionally, with the rise of second screens, sports fans have found new online communities that share their love of the game, Crowley noted. Fans today are often on Twitter and Reddit while watching their teams play, reading and reacting to what other people have to say about the game.

This further encourages fan engagement. Online sports betting has benefited from the influence of social media and, to an extent, cord-cutting, which has evolved the way we consume sports, Crowley observed.

“As sports betting gains wider social acceptance and state legalization continues, the industry will rapidly grow. For many, sports betting has become synonymous with watching and attending sports events,” he said.

In a short period of time, this will be an ingrained part of our social norms. The number of American adults betting on sports doubled in the last year alone. It is crucial that companies in this sector invest in a robust CX operation and explore strategic partnerships with vendors that can keep customer engagement impactful, secure, and scalable, urged Crowley.

Morphing World of Rules and Regs

The regulatory environment is rapidly changing in the mobile sports betting industry and online gambling.

Overall, online sports betting platforms are progressing with new functionality at breakneck speeds due to the fast changes in state regulations and requirements. Most of the major sportsbooks and online sites are still in the process of obtaining required licenses in recently-legalized states.

The Supreme Court decision in Murphy v. NCAA gave states the ability to pass their own sports betting legislation. Some 30 states — plus D.C. — have legalized sports betting with 22 legalized for mobile and online sports betting. Twelve states have active or pre-filed legislation on the ballot for 2022.

State laws vary greatly. Regulations range from betting in onsite casinos versus mobile/online to the age of bettors. Restrictions cover the types of bets, such as collegiate sports versus pro contests. Tax rates vary by state also.

Some states allow tribal and commercial casinos. Others like Oregon, New Hampshire, and Rhode Island only allow one or the other, or a state lottery commission runs the betting.

“Like any consumer-facing industry, there are also protections around personally identifiable information,” Crowley said. “As sports betting and mobile/online wagering become more common across different state jurisdictions, the landscape will only continue to evolve.”

On Deck, Real-Time Customer Service

Online sports betting requires unambiguous fairness and transparency. The entire customer journey should be shepherded by a customer support offering that can resolve issues in real time.

The typical response time so far is 24 to 48 hours later for some betting companies, according to Crowley. This process includes accessing relevant information, placing bets, and collecting the winnings.

“The industry would be wise to establish a new CX standard, one that will give confidence in the integrity of this emerging business model,” he recommended.

Plenty of disclosures, FAQs and robust “help” systems with omnichannel functionality will become the norm in the mobile and online sports betting experience, he concluded.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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Finding the Fun in Non-Fungible E-Commerce

NFTs in a virtual museum metaverse display.

Non-fungible tokens, or NFTs, are still a relatively new movement in digital consumerism. However, their impact has already created a long-lasting effect that will transform the e-commerce market in the years to come.

NFTs are individually authenticated, verifiable, and non-interchangeable items. Complete with unique identification and metadata, they are genuine one-of-a-kind objects with only one official owner at any given time.

Well-known brands are willing to invest in NFTs, even at this early stage, because they help boost the user experience, increase brand awareness, and expand opportunities for brand engagement, according to Vinod Varma, founder and CEO of Creator.co.

The NFT market has experienced 10-times growth over past last two years and market watchers expect the momentum to continue.

New Revenue Stream

With the adoption of NFTs, both brands and influencers can now create unique content capable of being monetized and enable followers to own a unique collectible piece.

“NFTs can aid a brand’s equity, create publicity for a product launch or brand event, or be used as a form of customer appreciation, serving as a unique custom gift or coupon,” Varma told The E-Commerce Times.

As this trend persists, brands will begin to see that an entirely new form of revenue is opening up with NFTs, as goods can now be sold in a completely digital format instead of a physical product.

“Brands and influencers who partner together to create innovative content will be able to leverage numerous benefits and only strengthen the relationship with each other and their audiences,” he added.

Different From Crypto Money

NFTs and cryptocurrencies are both based on blockchain that uses similar innovations and standards. Both draw on a similar target market. But they are not the same.

Think of NFTs as a subsidiary of crypto, meaning they can be traded and sold but with a cryptographic form of money. In their most basic context, NFTs are a unit of data stored on the blockchain in the form of a digital ledger that can be sold and traded, explained Varma.

The main distinction between the two is indicated in the name. Cryptocurrency is a currency, and that means, just like other currencies, it is fungible and only has monetary value, he clarified.

Essentially this means that with crypto, it does not matter which tokens an owner has. It will ultimately have the same value as the next one, and so forth. An NFT’s value comes from its uniqueness and the fact that it cannot be equally replaced with something else.

Non-fungible tokens are not a type of currency that serves as an equal exchange among all holders. Instead, each NFT is unique to each individual who owns it.

What’s the Difference?

That difference may lack a distinction to some people. Consider this comparison, suggested Varma. Cryptocurrency, like bitcoin, is fungible. An individual can trade one bitcoin for another and will still have the same coin.

However, NFTs are a one-of-a-kind trade that is non-fungible. So if you traded one NFT for another, it would be completely different.

Still not finding that difference to have a distinction? Perhaps a rundown on how NFTs actually work in transactions will blow away the fogginess.

How NFTs Work

At a very high level, most NFTs exist on the Ethereum blockchain. Other blockchains can also implement Ethereum’s versions of NFTs, but for the most part, Ethereum is where most of them live, according to Varma.

Ethereum is a cryptocurrency but supports NFTs by storing extra data that allows them to work differently than an ETH coin, he noted. NFTs are individually authenticated, verifiable, and non-interchangeable digital items.

Complete with unique identification and metadata, they are genuine one-of-a-kind objects with only one official owner at any given time. They are bought, sold, and traded with this at play, Varma added.

Understanding the difference now? Let’s dig deeper.

Driving Factors

Brands and influencers are willing to invest in NFTs, even at this early stage, because they help boost the user experience, increase brand awareness, and expand opportunities for brand engagement. Why the adoption has picked up so much speed takes a few reasons to answer.

Brands can utilize NFTs in mobile advertising campaigns, which can be distributed strategically across different digital outlets, and monetized numerous times, noted Varma.

The ultimate usefulness is giving both brands and influencers the ability to create unique content that is capable of being monetized. This, in turn, enables followers to own a unique collectible piece.

“The NFT market is not just an option for those who are internet-savvy. NFTs hold the key to creating a widely accessible and transformative market for all individual creators. Even though the accessibility is high, the awareness and relevance of NFTs are still relatively low for the everyday consumer,” Varma offered.

One way to ensure widespread adoption is to have the NFT market be saturated with content that provides relative value to the market itself.

After the pandemic, and with the digital transformation, individuals are now ready to participate in the types of technology that allow for instant, easily accessible, peer-to-peer sharing, he said.

So that is the point of NFTs.

Point Taken, But Why Do We Need Them?

That answer, suggested Varma, depends ultimately on whether you are a creator or a consumer.

Follow along to understand better Varma’s reasoning on this point.

For creators, NFTs serve as an option to sell unique work to a market that has never existed before. It also allows for more awareness and visibility of the corresponding product than ever before.

“NFTs also have a feature that creators can enable which pays them a percentage every time the NFT is sold or traded, ensuring that if the creator’s design becomes popular, they will reap some of the benefits,” explained Varma.

Consumers want NFTs for several reasons. First and most apparent, buying art allows you to financially support artists and own designs you like while retaining fundamental and unique usage rights.

Plus, you get the fantastic bragging rights of owning your unique NFT. However, suppose consumers wish to take the investment route.

“In that case, NFTs can also work like any other art asset. The consumer purchases the piece with the hopes that the value will continue to increase, and one day it can be traded or sold for a profit,” he said.

Wait, There’s More

NFTs are starting to usher in a new form of social commerce that empowers creators, consumers, and brands, added Varma. They allow small businesses to harness public blockchains for producing digital goods.

This ability can be delivered instantly to a crypto wallet. An NFT is a one-of-a-kind digital object that serves as an authentic way for customers to make a profit from the retail platform.

Here is how NFTs empower brand and influencer relationships, according to Varma, it comes down to possibilities.

“The possibility of what an NFT can be is always growing and has already enabled many creators to flesh out their own innovative ideas. This creates an opportunity for brands and influencers to work together like never before,” he said.

From videos to virtual houses, music, artwork, online races, and digital collectibles, NFTs continue to grow in originality and type. Additionally, the number of marketplaces that sell NFTs is only increasing, meaning all of this is just the beginning, he predicted.

“The most significant takeaway for brands and influencers is that NFTs are not simply a recent trend or the latest fad. They are impressive digital entities that exist solely in the digital ecosystem but supply value in the real world.”

As our culture becomes more and more focused on digital, NFTs will increase as organizations and people use them as investment opportunities for the new virtual climate. While most people may still favor physical assets the most, NFTs are the way of the future, he added.

Whether a virtual collectible, music selection, or digital piece of art, NFTs allow both brands and influencers to join together in a unique way to leverage both digital content and intellectual properties.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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