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HEALEY CYPHER: Hey, how's it going? How's the day been so far? Pretty good? All right, good. I'm the last speaker. I see a bunch of people leaving. Makes me feel really good. Cool. I'm going to show you a video.
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All right. That one always twists my noodle. Can you believe that one? Every single day, more iPhones than babies-- it's crazy, totally crazy. So as I was about to say before I interrupted myself with my own video, I head up the retail television team for eBay Inc. And I'm really excited to be here. First shot, first try, swear to God.
And so what our team does I think is pretty cool. I think I have the best job in the company, maybe the world, which is trying to find the best technology around the world and infuse it into the physical environment. My story, in case you're wondering, is I was part of an acquisition that eBay made in 2010. It was called Milo.
And in about a year and a half in, I made a pitch to our CTO. I said, we have the most amazing portfolio technology for e-com in the world. But it's only about 8% of a lot of our retail clients' sales. He was like, that's a really good point. What to start a team? I was like, yes. So we started.
And retail to me is a passion, because I don't know if you guys knew this, but one out of every four people in the country are employed by retail. Did you guys know that? Anybody in retail? Anyone interested in retail? I know how fast you go through some of this stuff.
And so things our team has done in the past-- so Kate Spade Saturday was a project of ours. It was here. And they approached us. And they said, this is Kate Spade. And they said, we want to open up our first store in the US. What should we do? I was like, huh, let's do something crazy. Let's make your first store the entire island of Manhattan.
And so we took over these four storefronts in the city. Anyone see this, play with it? Five people. All right, thanks. And we just rented out the first six feet of every store, so it was totally empty. No associates no inventory. And you can see here on the right side there's this kind of a touchscreen.
So it was existing glass. We put products in the storefront, and the glass, the existing glass, we turned into a touchscreen using this stuff called touch foil, which is an adhesive skin you put on the back of glass and in turns the front of it into a touch screen.
Anything you saw in this window you could have delivered to you for free within an hour, 24 hours a day, seven days a week. It's pretty cool. Got a lot of orders, to really random places like, 3:00 AM Lower East Side. It was like, OK, we get it. We're going to bars.
But what was so cool about this-- and this gets to a bit of the metaphor that I'm going to introduce you, which is the online versus offline session, is see in the top right here, that little black window? Can you guys see that? So that was actually infrared web that I had shooting out in the sidewalk.
And so we knew for the first time ever exactly how many people were walking by every storefront, and then how many of them stopped and looked at it, and out of them, how many went and touched it. So we helped Kate Spade Saturday figure out where to open up their first store, pre-capital investment using real data. It was pretty cool.
We also did this thing with Westfield in San Francisco where we opened up the first stores ever for Toms and for Rebecca Minkoff and also a big storefront for Sony, which I can tell you about later. And what we realized is that, as I'm sure you guys know, customer expectation is changing rapidly, rapidly. Anyone seen a version of this slide at some point in their life?
It's the most common slide in the universe. So I don't know if you guys knew this. When the iPhone 4S came out, it had more computing power than the first space shuttle. Actually, I think Apollo 11-- I was reading this last night-- had only 64 kilobytes of memory.
And it landed in the friggin moon. So this is fundamentally changing the way we expect to engage in the physical world. And I'll talk a bit about the pervasiveness of this. I'm sure you guys know this, but in the US, we all have smartphones. A lot of us have tablets. Actually, this is pretty interesting. I was actually surprised by this.
For the first time in the second quarter of 2013, more smartphones were sold globally than feature phones. It's incredible. And a lot of this is actually thanks to Google, to Android. Who here wakes up with their phone? Anyone? See, real stat. 2/3 of people use this as their alarm. It's crazy.
And people generally use phones from 12:00 to 5:00 PM. Like around now, when you're a little bored, I'm just throwing hot air at you, you're doing Facebook or whatever. Meetings is my personal favorite. But we found that tablet usage is a little later, 6:00 to 10 PM.
So when you're thinking about designing for the form factors, you think about where they are. Is it a lay back in bed? Is it in a meeting, so a little faster? [LAUGHTER] You could say maybe all this tells you is 25% people are liars. But we know on average, and this is average, so including millennials and Generation Z, that people are using their phones 150 times a day, which is insane.
There's an app called Checky. Put it on your phone. It'll tell you how many times you use it. I was embarrassed. And often, when retail thinks about the three most important screens, they think about your tablet or your desktop or your phone. And they're forgetting, often, the most important thing, which is their store.
So when you walk into a store, there is nothing that's going to get in your way. You're seeing this beautiful visual merchandise. You see the product. And your desire there is to connect with the brand. And in fact, today, 75% of all purchases still happen within 15 miles of someone's home, so it's big. I mentioned showrooming. Anyone know what showrooming is?
Everyone do it? Yeah? Well, a lot of people showroom, get into a store, check the price, buy it online and leave. But the thing is, there's actually something happening that's much more common now, which is called web rooming.
So web rooming is kind of the reverse of that. It's, I've done a bunch of research online or on the phone in the store. And then I buy it in the store, which is tough for associates, by the way, because maybe you become an expert in, like, three products. And they've got, what, 5000 products to cover? It's tough.
But here's some stats that blew my mind. So this is a little bit complicated. I'll explain it to you. So this is, from left to right, how many people are doing some sort of research online ahead of time, and then some sort of research on their mobile phone or something in the store. So if you look at the bottom line here, it's insane.
If someone does research ahead of time and is on their mobile phone doing research in the store, the chance they convert is 86%. And the average lift in AOV, Average Order Value-- sorry, I'm a retail nerd-- 40% lift. It's insane. When I saw this, I was kind of like that guy. So we know the future of retail is going to be different.
And here's a bit of the evolution that at least I've seen in retail over the last couple years, because they're trying. We're trying. So first was digital signage. Anyone been to the Burberry Store on Regent Street in London? One person, or was that an itch? So it has 120 screens on this store. They have a full time staff of, like, 10 people just developing content.
And this middle one-- you can see the really big one there-- it's laser phosphorus display, so it's a missive. So to run this entire thing, which is I think is, like, 20 by 10 meters, takes as little electricity as a hair dryer. It's cool to the touch-- totally nuts. But I think a question that we need to ask is, what does this solve for the customer? Is it solving a pain point?
Empowered associates-- everyone here, I'm sure, has been to an Apple store. They can do anything, right in the power of their hand. And it's amazing. And when you look at Apple's success-- they have, I think they sell like $6,000 per square foot-- highest in retail, in the history of retail. The next closest is Tiffany's at 3,000, which is still pretty rad. So obviously, it helps if you empower your associates.
You seen tools for customers, so apps that work in the store. Starbucks has been destroying this. We'll see what Apple Pay does. But last year it was actually 14% or 15% of all of Starbucks purchases happen on their app. That's $1.5 billion on items that have nothing to do with web, but it's all digital transactions, which is crazy.
Actually, this is one of my favorite examples of a cool customer app. So Ikea has a problem, which I'm sure you guys can-- if you've been to Ikea recently, where if you're in your room or whatever room you're trying to put this furniture in, you have no idea what the size of the furniture is. But when you're in Ikea, you see the furniture and you're like, shit. How big is my room? This is a crazy fact. They have more Ikea catalogs printed in the world than the Bible, only book on the planet.
So everyone's got one of these things. They're like oh, I don't need you. You set it down. You back up, use your phone. And it will create a life-size image of this in your room, so you can see what it looks like. It's pretty cool. So here's part of the challenge of consumer expectation is that people now don't want to talk to other people in stores.
This is a graph of on the left, people who would rather use their own device for these things, so looking at an item price, getting product info, making a payment. And on the bottom right is how much they'd like to talk to someone to do these things. It's really tough. In fact, half of people now think they know more about products than the associate does.
So what you're starting to see more of now is digital interactivity. And if you've been to the Adidas store, I think it's the one here, in 14 of their best stores around the country, they put up these big touchscreens. Not transactional, just big touchscreens.
And the results were pretty amazing. It was pretty simple, just kind of like play with a product. If an item was in here it had twice the throughput, twice the sales, just by being in the touchscreen. And there was a halo effect, so all the items around the little digital thing, 22% lift just by being in proximity.
I think the stat is that 54% of people today would like some sort of digital interactivity in a store. So people want this. And I think millennials are-- my pants are really tight. I keep pulling them. My wife says I'm getting too skinny. I'll show her. Millennials are 213% more likely to be influenced by instore digital, which is pretty interesting.
So finally now, we're seeing a smarter store. This is kind of the internet of things. Anyone heard of Hointer up in Seattle? Yeah, OK. I'll tell the rest of you. It's crazy. You walk in and you have their app. And they only have one of every single item on the floor, just one. So you say, I like this pair of pants, this pair of pants. And then it shows a list in a cart.
You tell it the size, OK, I want to try these on. And it goes, boop, go to fitting room four. And as you walk into fitting room four, I swear to God, when you walk into the fitting room, there's two chutes, an in chute and an out chute. In the in chute, the pants will start piling up.
Try the stuff on. And when you're done with it, you put it in the out chute, and it just disappears from your phone. And then to finish, you say Pay, and it's, OK, ready to go. You just walk out. Like, that's it. That's the entire thing. It's crazy. So a bit of an extreme example, but we do know that stores are getting more intelligent in a lot of ways.
You've all heard of Beacon, which is very overused, but it is interesting. There's things like LED pulsing, which I'll tell you a little bit about later. But basically, you can have LED lights in the ceiling now that pulse at a rate your eye can't see but your phone can, so you know exactly where you are. It's kind of nuts.
Hypersonic geolocation, where your phone can hear but you can't. There's a lot of things coming down the road. And so the metaphor that I want you guys to leave with, if you're interested in retail, is that a physical session is actually no different than an online session. And there's a bunch of stuff here. I'll have this presentation for you afterwards if you like.
But basically when you are doing e-com stuff and you're trying to assess how good your website is, essentially what you do as you think about the dropoff points. How many people go from the home page to search, search to results, results to product, product to cart, cart to buy? And every single dropoff, you try to limit.
So basically you're going to decrease the friction, maybe improve the design system, maybe just make it a little faster. And that's how you increase sales. Well, a physical session is identical to that. When you cross the threshold of a store, your session is kind of a gun.
And there's a series of moments where either you're going to browse or you're going to search. And you're going to determine what it is you want to do and if you're going to leave. And so what we've done as a team is essentially trying to figure out what are those acute moments in the physical world that you can put technology in and remove all the friction.
So there are a bunch of examples here. Again, I will give this you guys if you want it. Because I'm seeing that I'm running out of time, big time. So a fun example, I was talking about hyperlocation. So there's this company called Indoor Atlas. Has anyone heard of Indoor Atlas? It's amazing.
Basically, they were studying Arctic foxes. And they found that Arctic foxes will do this thing where they run around a field, and then they'll run in the middle and they'll just dive. And I think it's 80% of the time, they'll get a mouse. And they're like, how the f did they do that? So they found that they essentially had this-- it was almost like a magnetic map they'd build of the field, and then they'd find a deviance of it and they'd jump in.
And so they do this thing called magnetic fingerprinting, where they use the-- I don't know the word for it-- the magnetometer or something in your phone, the compass. They'll walk around the store, they get a mapping of it, and then they make that into an API, which, when you walk around the store, they know exactly where you are, just based on that fingerprint of that square foot area, which is pretty cool.
Anyone see the new connect? This is crazy. So a big theme here is you can capture all this data you'd normally lose. So when you're in a physical store today-- and I may or may not be doing this in a lab somewhere-- I can have two connects, two new connects on the ceiling that would essentially be making a 3D environment, a replica of that store, in any given millisecond.
And so with a new connect, which is 15,000 distinguished points of detection, I could know exactly what you did when you walked around, all the products you touched. But get this-- I could know your heart rate the whole time. You know how I'd know it? See the vein moving in your neck? Yeah, be creeped out.
So we talked about some of that stuff. We did a project with Toys R Us, which I thought was pretty cool. This is another example of something my team's done where we found that people in Toys R Us often know who they're buying for, not what to buy. So we made a big gift finder, right in front of the store in Redwood City, which is Silicon Valley. We found that if someone touched this, 95% chance all the way down to maps. We show products listed by how important they were, and then show a map of how to find it in the aisles as well.
And so again, I'll give you all the stuff because I think my presentation's a little too long for the time I had. Oh, is it cool? OK, well, I'm already kind of blasting through it. So here's an example of as you're going through that session, a moment where maybe there's a lot of friction today and you'd want to reboot.
So anyone try on makeup in stores? I was looking for a funny-- and so it's kind of a pain. You walk into the store and you have to try and stuff and then you take it off and try another. It's a pain.
It's really annoying. And so this company called FaceCake built this thing which I think is amazing, where you look into a camera-- and I think it's maybe the Sephoras, actually-- and it would just augment actual colors on your face, but match to your pigmentation, which is pretty cool. I don't know that I totally believe in 3D clothing quite yet.
But there is definitely a universe where you can remove friction using some of this augmented reality, and it's a part of the store. And then finally, you've all heard about paying, right? How do you make paying invisible? And part of the way we're thinking about retail is, if someone spends 25 minutes in a store on average, and 30% of it's doing stuff they don't want to do, how do you remove that?
So if a line, for example, is over seven minutes long, there's a 79% abandonment rate. So how do you make payments a little faster? And you guys all know this is a crazy, crazy space and there's a lot of people coming into it, including Paypal and Apple.
So the real takeaway for this-- and then let's get into questions-- is I think the future of retail is not going to be tech for the sake of tech. You're not going want to walk in and see crazy holographs, and there's a thing called Displayer which shoots a stream of steam into the air and projects on it. Like, come on.
You don't really want to do that. You'd like it to be a store. You want to deal with the people and the products. You want to be immersed in that. And I think people don't truly want to be heads down in their phone in the store.
So part of it's about challenging the definition of mobility, realizing that this thing will sit there. It's not really mobile. Probably won't move unless I grab it. Just happens to be on our bodies. How do you make your body part of mobility? And the natural surfaces, the honest wood and metal and glass come alive in the moments that you'd like it.
And so what I will say as a little teaser, which is we have a big launch coming up on the 12th. That's part of the reason I'm here besides this, which is going to be our-- I don't want to call it the store of the future, because I think it's the store of today.
It will be down in Soho, and it's literally going to be our team's vision of what retail should be. So I totally invite you guys all of to watch out for it and come down and visit. I'll be there doing customer studies and stuff, and I think you're going to like it a lot. So with that, thanks.
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SPEAKER 1: Thanks, Healey. Let's dive into some questions here. So let's start with the first one, because there was some kind of cool and creepy stuff you covered in your presentation. Have you encountered customer backlash around how they're tracked or monitored and buying habits are also personal habits? How do you think about the balance between privacy and also providing a more seamless experience?
Totally. So privacy is a really delicate issue. And what we've found through studies is if you collect someone's data that you can guarantee it's just for them, then they actually like it. OK, I know you're not going to share this. This is just for me.
Then it makes my life easier. If I walk into a store and it knows all my sizes and what I bought before and what my favorite shoe is, whatever it is, or that I don't wear socks, great, don't sell me socks. So that can be nice. But when it comes to things that are kind of being gathered anonymously, it's a very, very thin line. And what we're making sure to do is if we are gathering stuff about you, we always get your permission, 100%
And if not, then we're not going to ever connect what's happening to your ID. It's just going to be part of the aggregate data amount so we know, for example, we can tell a product designer, hey, this product, 80% of it goes into the fitting room, but no one buys it, so they can do some research. Why didn't they buy this product? There was initial interest, but is there something wrong with the fit?
Let me ask two questions here. So customers still need to do the retail research, a good question about, will we ever get to standardization across brands and stores where we can just find what looking for without the brand noise, I guess, is the question?
Customers still need to do the retail research-- you mean research standardization?
It struck me as this idea that right now we go to a different website for everything, or a different store for everything. Will there be aggregation, and will it be more about just, I want this and here are all my options in front of me. You think about that at all in your role?
There could be a universe where that happens. Right now, you'd be amazed. So there's a couple fun facts for you. Right now, most retailers don't actually have exact parity of what's sold online and in the store. And in fact, it's a very, very thin Venn diagram. And so it means when they want to show the stuff they have in the store online, they don't have all the digital assets they need, like the photos, romance copy, or even price accessible.
It's really hard to get that stuff. So there's a ton of catalog work. In fact, if you wanted to start a startup that just made catalogs better, you'd probably make a lot of money really fast, if you can pull it off.
But also, retail today is very, very nervous about sharing data, especially with one another, even prices by zip code. For example, Wal-mart has different prices by store. They don't want to show it that to competitors. They don't even know. They also don't want to share preferences.
MCX is potentially changing this, but if Wal-mart has an exact idea of everything you've ever bought for your house and you walk into a Target and then you can use that data to make the Target experience better, they've lost some of their competitive edge. So could it exist in the future? Yes. Will customers have to demand it? Absolutely.
I do think that there's a future of the world where you have an offline cookie, which is your ID that's tied to you and your preferences are kind of shared with every retailer, and it could even be a blind [? indice ?], like can't tell you what they bought, but from 1 to 10, 10 being the most, 10 is likely they're going to be a really good customer for jewelry. But we'll see.
Another question here about the work your team is doing and how it fits into eBay's core competencies and goals, and a question-- and I think
HEALEY CYPHER: Sound like my CEO.
SPEAKER 1: A lot of us who are doing innovation or leading innovative teams within large companies, it's always the question about, is there a culture clash? A lot of people know eBay as the auction site. And obviously, the company's evolved so much. Let's talk a bit about that.
HEALEY CYPHER: Yes, absolutely. So it's funny you mention that. Most people, when you say you work for eBay, they're like, are you going to auction stuff? So just so you guys know, auctions are only 20% of eBay business today. And 80% of the things are also new that are sold on eBay. So eBay is a tremendously different company and has been doing crazy things in mobile. I don't know if you guys knew this, but seven years ago we had a zero dollar mobile business.
This last year was $22 billion dollar business. Some crazy growth. We sell-- it's 213 pieces of clothing, shoes and accessories every single minute on mobile. And this one is crazy. 14,000 vehicles on mobile every single week. Yeah, some a-hole bought a $1.4 million Ferrari on Enzo on his iPhone app. And I was like, come on, man. Oh yeah, bought a line and a Ferrari.
So sorry, I digress. The company overall, though, is eBay.com. It's also eBay Enterprise, which is a company that you may not have heard of. Used to be GSI Magento. So when you go to RalphLauren.com or Estee Lauder or Bonobos, [INAUDIBLE], Parker, you name it, we're usually powering their website, often their customer service, and even their fulfillment.
We have 6 and 1/2 million square feet of fulfillment space. And then we had PayPal. It's now breaking off. So when you think about the eBay Enterprise business of powering their e-com, we're doing a very similar thing in powering their store. And that's kind of where the fit is, if it makes sense.
SPEAKER 1: And along those same lines, do you think that eBay has an advantage over startups to really think about the future of retail, or does size sometimes kill speed?
HEALEY CYPHER: That's a good question. Really lucky. So we have a 17 person crew in a secret-- not any more-- off-campus lab. And we are able to run. So we've been really lucky. We essentially are a startup. And one of the benefits is that we get funding with no strings attached, which I know money is cheap right now, but it's still nice.
It's also nice to take all that risk up front too and then be able to figure out the business model. Because if I sell someone on something that I'm doing and get them into more of the core competencies of eBay Inc., well, then I've paid for my team, because they're going to be on marketplaces and they're going to be on PayPal and it works out.
But yeah, size is always tough. And it's always a balance. You have to choose essentially when you join the beast. And we've been lucky that we've got some kind of executive air cover. But I have known moments where it has definitely killed products.
SPEAKER 1: And the experimental store opens when again?
HEALEY CYPHER: Running back and legal [INAUDIBLE]. So I think the announcement will come the-- [INAUDIBLE] experimental store, by the way. It's a real store. It's not eBay branded, by the way. It's another brand store. We're just helping with the tech. I think the announcement will be the morning of the 12th. And then you can go and check it out on the 15th.
We'll all stay tuned. Just wanted to plug it.
HEALEY CYPHER: Thanks.
SPEAKER 1: Just hang out for it. Thank you, Healey.
HEALEY CYPHER: Thanks, guys.
Healey Cypher, head of Retail Innovation at eBay, speaks at the third annual Cornell Entrepreneurship Summit Nov. 7, 2014 in New York City.
Business leaders talked about the strategies and vision that helped make their companies successful at the daylong conference, "Beyond the Horizon," hosted by Entrepreneurship at Cornell.
