eBags CEO Packs a Tech-Powered Punch
Reinvention is a constant in retail. Only those retailers that are able to adjust to meet continually changing customer demand and market conditions can stand the test of time. eBags has grown and evolved over the past 17 years from an online startup to a recognized leader in the luggage space. Despite nearly two decades of advancement, the retailer has found its greatest success to date by turning back the clock and returning to its roots.
Four of the five founders of the online travel accessories retailer were former Samsonite Luggage employees who leveraged their strong segment expertise to build a market-leading luggage-focused assortment. However, as the retailer grew over the years it lost its luggage-first mentality expanding into hyper-competitive verticals, like fashion handbags, that stymied its growth instead of spurring it.
When Mike Edwards took over as CEO a little more than a year ago he quickly implemented a new strategic vision to focus and grow the retailer’s core offerings and divest from its non-travel merchandise.
“We had some research reports that had been done the past couple of years with really strong analytics that suggested that the customer that was coming here was really travel based,” Edwards says. “As a brand attribute they looked to us as an expert in luggage and travel accessories first. We got very low credit for anything beyond that. Even just on an intuitive perspective before I joined the company I thought the company was trying to be a handbag fashion resource and sell luggage and travel accessories and the two just never mixed in my mind in terms of how to connect with the customer.”
By downplaying its handbag offerings and positioning itself as the authority for all things travel eBags has found new life and is enjoying soaring sales since Edwards took the helm. For the past three years the retailer averaged a pedestrian 1.5% growth, but for 2016 eBags is trending in plus-20% territory, with an increase in margin of more than 23%. The gaudy numbers are thanks to Edwards’ decision to retreat from the crowded handbag market and fortify the brand’s travel-based assortment. In fact, in the past year the retailer has increased the number of brands it carries to more than 800, a bump of nearly 45%.
While the retailer has the capacity to “out assort anyone” according to Edwards, its ability to create an engaging customer experience is the true lynchpin of its revival. “There is so much content out there on travel ideas, products, destinations, etc., and it is coming from a lot of different sources,” Edwards says. “No one has done a really good job connecting the product to the experience. We have more data about how shoppers use our products and about what they like or don’t like than anyone in the world. We are using our content to show domain expertise around travel and are expanding upon that to have a digital relationship with the customer.”
Tech Investment Spurs Growth
Edwards’ strategic vision to reinvent eBags and focus on its core strengths and create a digital relationship with the consumer has proven to be an overwhelming success, but it would not have been possible without the implementation of some key technologies. In just over a year Edwards and his team have deployed a host of game-changing technologies that have simultaneously improved operations and the user experience. The key implementations include:
Pricing optimization. eBags leverages a hybrid pricing model that combines everyday pricing on high visibility items, personalized rewards, targeted promotions and coupons to attract shoppers. The retailer partnered with the consulting firm Oliver Wyman on a massive data analysis project to redefine its pricing strategy and then augmented its formulas and algorithms with price optimization solution provider Revionics. eBags and Revionics worked together to optimize its next-gen pricing capabilities for its 80,000 strong product array and has seen a significant increase in margins since deploying the pricing solution.
“We are managing a large number of SKUs and need the technology to find the opportunities for margin growth as well as where we are not as competitive so we can win the buy box,” Edwards says. “We have worked with Revionics pretty aggressively over the past year on this. Now we have a winning hand. Our sales are going up and our margins are going up faster than our sales.”
Like many specialty retailers eBags does not have the economic firepower to compete with the likes of Amazon on price alone. Instead the retailer is super-competitive on a small number of highly visible products to help draw visitors to the site. Once on the site eBags’ strategy is to build long-term shopper loyalty and conversions with its unique and massive travel related product offerings. “We are not trying to be Amazon, Walmart or Target,” Edwards says. “We are not going to win at that game, we are going to win on the product exclusivity game.”
Site optimization. Retailers can spend millions of dollars and countless hours refining the shopping experience, but the investment can be for naught if shoppers never see it. Over time malware and adware can affect how the end user sees and experiences a retailer’s website, altering the intended experience with additional ads and pop-up distractions that were never intended.
To help ensure that visitors experience eBags in its unadulterated form the retailer partnered with Brandlock to keep the malware and adware intrusions to a minimum. “This technology has been a homerun of us,” Edwards says. “We have seen some dramatic conversion uplift. Most people don’t realize how much malware and adware they have on their sites and on their own PCs. We have been able to keep the site clean and the shopping experience pure. It has been really, really key."
A whopping 46% of eBags’ traffic is coming from mobile and the retailer needed to ensure that its mobile infrastructure was fortified with the firepower to seamlessly handle the increase in traffic. eBags partnered with Yottaa, a solution provider committed to accelerating and optimizing websites across devices, to enhance the speed of its mobile offering. “We are seeing an improvement in our mobile site since we rolled it out,” Edwards says. “Given where the traffic is going it is strategically very important to us to have a powerful mobile offering.” While mobile sales are just 18% of total revenue for eBags it signifies a 110% increase over last year.
Customer engagement. eBags has a very engaged and loyal consumer base, in fact 70% of shoppers are repeat customers. Not only are shoppers returning whenever they need to make a travel-related purchase, they are actively giving their feedback and contributing to the eBags’ community. The retailer has more than 50 million shoppers coming to its site every year, three million of which leave product reviews to help like-minded shoppers make an informed decision.
Traditionally, product reviews are submitted by a consumer after they have received their product, interacted with it, and formed a strong opinion about its worth. While eBags customers provide plenty of reviews this way, the retailer has also introduced a real-time review solution from TurnTo that allows shoppers to provide feedback as to why they are buying a particular product during the check out process.
“Customers can do a product review at any time,” Edwards says. “Typically they do it after they get the product. But by asking shoppers as they are checking out why they bought today gives us two different views on the product.”
In addition to providing shoppers with an immense amount of product data — both retailer and consumer generated — eBags has brought some of its couponing efforts in house to help spur the sale. The technology, provided by Thrive Commerce, integrates with eBags’ e-commerce site to distribute coupons to shoppers, lowering customer acquisition costs and commissions.
Popular coupon sites like RetailMeNot and Groupon do a great job distributing retailer offers and driving traffic and conversions, but they are also a costly way to acquire customers. In addition to honoring the promotional offer, retailers must pay a commission to the third-party coupon distributor, cutting into margins. By equipping the site with the ability to provide consumers with conversion-inducing coupons in-house eBags is reducing customer acquisition costs while simultaneously increasing conversions.
Internet of Things. Luggage and travel related accessories lend themselves perfectly to the IoT world. As customers travel the globe with their eBags’ purchases the opportunities are limitless to track how consumers use them throughout the product’s life and to gather end-user feedback. The retailer has introduced two new IoT-equipped product offerings that are not only designed to aid the traveler on their journey but position eBags as a leader in the IoT space.
In a partnership with Twist, the retailer has developed a connected backpack that features embedded RFID technology to connect the bag to the eBags’ mobile app. The devices share information with each other and can alert the traveler if something is left behind. For instance if the traveler is walking out of their hotel room with their bag on their back but forgot to pack their headphones they will receive an alert on their mobile device informing them they have left them behind.
To complement the Twist partnership, this fall eBags launched its connected luggage tag. The new tag can be attached to any bag and tracks the luggage’s location through the eBags mobile app. The device can make lost luggage a thing of the past and help alleviate some of the terror travelers experience when their bag is not waiting for them on the airport baggage carousel.
While eBags has introduced some cutting-edge IoT technology, it is also working diligently to prepare its back-end systems and infrastructure to handle whatever next-gen advancements become the industry standard. “For us the pressure is that there is so much coming out in the market in terms of virtual reality, IoT, voice activation, bots, etc. We are working to build our mobile capabilities so that whatever ultimately becomes accepted by the customer we will have an infrastructure to support it.”
Planning for Continued Growth
After a little more than a year on the job Edwards has made a significant impact on both the direction of the company and the bottom line. Thanks to his commitment to reinvention and innovation eBags has positioning itself as a travel and technology leader — but the retailer’s work is only just beginning.
The second phase of Edwards’ plan is focused on expanding eBags already impressive international presence. Currently the online retailer sells in 200 countries, with the majority of its international sales coming from English speaking countries like Canada, Australia and the UK. While around 10% of its online traffic comes from outside of the U.S., less than 2% of sales originate internationally — marking a development opportunity and one Edwards plans to seize. By developing the brand’s international sites and increasing its digital marketing efforts overseas, Edwards intends to significantly increase international sales in a big way over the next five years. His plan is to grow international revenue to 35% of total company sales by 2022.
The innovative and novel use of technology is the key to Edwards’ strategy both at home and abroad. If early returns are any indication, the new CEO’s willingness to reposition eBags and invest in the brand’s digital capabilities should provide the framework upon which his aggressive expansion goals are reached.