This first installment of the e-Commerce Champions series features Eric Best, CEO and founder of Mercent. Eric Best is an entrepreneur and experienced manager of strategy, people, and process. Founding MindCorps in 1996, Best created a profitable, high-growth software consultancy that served the Internet and Fortune 500 markets. MindCorps customers included Microsoft, Universal Studios, Kodak Polychrome Graphics, Hasbro, and Network Associates. In 1999, Best and his partners at MindCorps created a spin-off software product firm, Emercis Corporation, to provide e-commerce infrastructure tools to enterprise businesses. Best orchestrated the sale of MindCorps to Amazon.com in 1999 and the sale of Emercis to Impressa Inc. in 2000. Joining Amazon.com, he managed business development for the Amazon.com Commerce Network, working on the deal team for Amazon's first major brick-and-mortar partnership with Toys "R" Us. Serving as Director of Ubarter.com, Best helped facilitate the sale of the business to Network Commerce in 2000 for $45 million.

Prior to Best's work in the software industry, he performed immunology research at Bristol-Myers Squibb's Pharmaceutical Research Institute in Seattle. Best holds degrees in Business Administration and Biology from Seattle Pacific University (SPU), currently serves on the SPU Entrepreneurial Studies Council, and is a member of the SPU Society of Fellows.

In our interview, Best discusses innovative ways to make e-commerce ventures successful, as well as how to connect with customers and drive your revenue.

eCommerceIQ: Briefly tell us a little bit about your background and how you came to form Mercent.

Eric Best: During the 90's, I founded and ran an e-commerce consultancy in Seattle called MindCorps. We were a Microsoft partner, and built some of the first online stores and auctions for companies like Universal Studios, Wizards of the Coast, and PhotoDisc. In 1999, MindCorps was acquired by Amazon.com and my partners and I went to work on internal initiatives there. I helped Amazon establish relationships with companies like NextCard and Toys "R" Us.

In early 2001, I felt it was time to jump into a new entrepreneurial pursuit. I started a marketing consultancy that helps customers like Microsoft, Amazon.com, Lexmark, and other technology firms demonstrate the business value of their products. One of our first projects was helping Amazon create the technical documentation for its third-party seller platform known as the Merchants@Amazon.com Program

Based on the technical insight we gained through this engagement, and our history as employees of Amazon, we saw an opportunity to serve retailers, catalogers, and direct marketers interested in selling through Amazon.com. Mercent is a new business unit, product line, and brand focused on the online retailing market. Our flagship software is called Mercent Commerce System. Based on our early success, we've recently extended the technology to help retailers advertise through leading online shopping portals such as Shopping.com and BizRate. We've signed over 25 leading national retailers in the last 18 months, including Lucky Brand Jeans, Proflowers, The Shane Company, and Fortunoff.

eCommerceIQ: What is unique about what Mercent offers to retailers who want to have a strong e-commerce presence?

EB: Our mission is to provide our customers with maximum marketing reach through channels that offer maximum merchandising control at the product level. This means focusing on online shopping environments that allow merchants to provide deep product information and a better end-customer experience than typical online advertising tools such as e-mail, banner ads, and paid inclusion.

Mercent Commerce System makes it easy to connect with and manage selling platforms like Amazon.com and shopping portals like AOL Shopping and Pricegrabber.com. Amazon.com has established an active base of over 42 million customers -- and is unique in its ability to offer retailers a turnkey transactional environment for selling online. There are over 60 million buyers visiting the leading shopping portals each month. Mercent Commerce System provides retailers with a single point of integration for connecting with these customers, and advanced technology to help retailers maximize the value and ROI of these channels over time.

eCommerceIQ: What insight can you provide to any e-commerce retailer in regard to managing and connecting with customers online?

EB: There are a few trends worth noting that are driving technology innovation. The first is the important role of marketplaces like Amazon.com in brand development and merchandising. Although growing your top line revenue is an important driver in a merchant relationship, it's only part of the story. Merchants benefit when customers associate their positive shopping experience with the sellers' brands, elevating the third-party retailer in the eyes of the consumer.

Second, we see a trend toward SKU-level or item-specific merchandising. Your brand image is critical, but if you're not thinking about merchandising in terms of the most detailed product attributes and variables - pricing, title, description, keywords -- you're not fully leveraging available merchandising control.

eCommerceIQ: By all accounts, there is a growing evolution of online marketing and multi-channel retailing. How does this evolution impact managing brand, sales and customer experience?

EB: An expansion is definitely occurring in the way that brands and products are reaching consumers -- not just in the number of channels, but in the number of value-added intermediaries involved in each promotion or transaction. Retailers, catalogers, and direct marketers are connecting with customers where they shop and buy through partner-enabled channels combining services from merchandisers such as Amazon.com, advertising portals, and affiliate networks. Mercent calls these channels "Distributed Merchandising Networks."

Also, online shoppers are becoming savvier at evaluating competing product offerings and merchants on the Web. Whether they purchase online or offline, shoppers increasingly base their perceptions of a retailer's selection, service level, and brand image on the online experience. The depth and quality of information that retailers provide through online marketplaces and shopping portals exceeds that of other promotional tools such as search engine marketing. So, we see these channels as critical for establishing credibility with consumers.

There's a timing element to this as well. To be competitive, you have to present the most current information in terms of inventory and pricing to your customer, whether they are on your own e-commerce site or within a remote channel. With the advent of more structured tools based on XML Web services, it's possible to greatly improve the timeliness of data presented to customers through third-party channels.

eCommerceIQ: What do you think have been the biggest changes in online retailing over the past two years?

EB: It's funny how things have changed in the last two years. Instead of worrying about survival due to limited market potential, online retailers are now concerned with maintaining market share in light of massive market growth. E-commerce and online advertising have blown away the offline alternatives in terms of revenue growth and marketing, operational, and IT investment. While the offline retailing market is growing in low single digits, online retailing has doubled in size in the last 24 months to become a $144 billion dollar market. The online advertising dollars that companies allocate in their budget are today the largest that have ever been reported. In Q1 of 2004, $2.3 billion was spent on online advertising. That was a 40% increase over the previous year, and it was the largest amount spent on record. The analysts who reported these results had started tracking the expansion in 1996. It's safe to say that it was the biggest quarter for online advertising in history.

e-CommerceIQ: Of your most recent projects, which one stands out and why?

EB: Altrec.com is a successful "outdoor lifestyle destination Web site that brings together everything necessary for individuals to satisfy their passion for the outdoors." Altrec was selling through a limited number of shopping portals that direct customers to Altrec.com, in most cases manually connecting with each portal to be able to routinely update merchandise displays and pricing.

About a year ago, Altrec began using Mercent Commerce System to manage and expand its presence on leading online marketplaces. Mercent helps Altrec manage data formats requested by each of its portal partners. With Mercent, Altrec was connected to the expanded network of shopping portals in only one week. Since its adoption of Mercent Commerce System, Altrec.com has saved 50% managing these marketplace relationships while boosting overall sales 8%, according to Altrec.com CEO Mike Morford.

eCommerceIQ: What are some integral parts that make an online storefront successful?

EB: As buyers become more informed, with more options for where and how to buy, merchants have to understand how and where they engender or lose customer trust. You can drive traffic to your online store all day, but if it's hard for customers to find the right product, if items are out of stock, if returns are difficult, you're wasting your budget. Retailers that expect a high ROI on their merchandising dollars have typically established and are meeting a published service level defining their fulfillment terms, customer service level, and so on. You can't fight bad service and a bad reputation with more ad spending for long.

Once you've addressed the service level issue, then it becomes a question of creativity in reaching your customers -- both in the sense of getting your message in front of them, and then in establishing that emotional connection. That can be hard to do in a comparison shopping environment where more and more sellers are meeting more and more customers on what you might call "neutral ground." Again, it gets back to offering the most complete and timely information about your products -- and at the same time, communicating your unique value proposition, whether it's price, service, or domain expertise through the merchandising medium. Knowing what sets you apart from your competitors -- ideally a combination of all of these benefits -- makes it easier to create consistent messaging across channels.

eCommerceIQ: Looking at impacting the bottom line in cost cutting initiatives, what are the top three things online retailers can do to keep their costs low?

EB: Leverage new channels: Look for ways to leverage additional channels to reduce inventory and increase inventory turns.

Reduce integration costs: Minimize technical integration costs across partners and channels by taking advantage of the latest online technologies like XML Web services.

Rely on analytics: Most direct marketers would agree that there's always an opportunity to better measure the performance of their merchandising budget and partnerships -- to better understand them and improve them.

eCommerceIQ: What do you foresee in the future in regard to the growth of distributed merchandising networks and their long-term impact on e-commerce?

EB: Distributed merchandising networks imply a growing "distance" between the customer point of sale and the seller, and an increase in the number of intermediaries involved in merchandising and selling. The ability to manage these intermediaries becomes a key driver of sales performance, brand stewardship and customer experience. Retailers, catalogers, and direct marketers should approach these distributed partner relationships with the same level of intelligence and discipline that they have applied to their direct sales operation.