E-retailing veteran Michael Rubin says exactly what he thinks

Photo: http://www.internetretailer.com

In a long-ranging discussion, Kynetic CEO Michael Rubin explained how being aggressive and adaptable is essential to e-commerce success.

Michael Rubin has founded and run some of the biggest e-commerce ventures in North American e-retailing, and has earned the right to his opinions. He shared seemingly all of them this morning in a keynote session at the Shop.org Summit in Seattle.

Rubin is the former CEO of GSI Commerce, which he sold to eBay Inc. in 2011 for $2.4 billion, and currently is CEO of Kynetic Inc., a company he founded that includes flash-sale retailer Rue La La, sports apparel retailer Fanatics Inc., and the fulfillment services company ShopRunner, the multi-retailer two-day shipping program that competes with Amazon Prime. Rue La La is No. 81 in Internet Retailer's Top 500 and Fanatics is No. 42.

Forrester Research Inc. analyst and conference emcee Sucharita Mulpuru walked Rubin through the hot-button topics concerning online retailers today, including same-day delivery's prospects, the counterfeiting threat, the just-announced split of eBay and PayPal into two companies. She also asked him about Alibaba Holding Group Ltd., the Chinese e-commerce giant that last year invested more than $200 million in ShopRunner and now owns 35% of that business. Alibaba went public on the New York Stock Exchange last month in a record $25 billion IPO.

On Alibaba: "They are not remotely satisfied owning e-commerce in China," and must be included in any discussion of global retailing right next to Amazon.com and eBay, Rubin said. "It's an Amazon, eBay and Alibaba world, with Alibaba being the most aggressive of them all. They are going to be very aggressive here."

Rubin also said it was Alibaba's investment in ShopRunner, and the cross-border opportunity working with Alibaba represented, that convinced ShopRunner to effectively abandon its Pickup Points program with retailers in the United States. ShopRunner was working with store retailers to develop dedicated spaces within stores where consumers could pick up their online orders at their convenience. ShopRunner instead has refocused on developing with Alibaba cross-border fulfillment programs for ShopRunner merchants to allow them to more easily sell and fulfill orders to consumers in China. Rubin said that is the bigger business opportunity. He said he doesn't think ShopRunner will try developing Pickup Points again.

He also held forth on same-day delivery, saying the economics of offering it will keep it from mainstream adoption by retailers and consumers. "I don't think that same-day is ever going to come to be," he said, adding that there has been over-investment in the concept. "The cost will never make it a good long-term business."

Rubin has been vocal about wanting to quickly grow Fanatics into a $5 to $10 billion business. He says one way he's going to do that is to convince e-commerce players to come down hard on counterfeiters. He estimates that for every one legitimate NFL jersey sold online today, one counterfeit jersey is sold. "Counterfeit is a gigantic problem online," he said, but noted that "all the players in marketplaces and advertising are not going to stop it. We've asked nicely and they've said 'Sure, we'll help you,' and then they do nothing. You have to push for it." He pointed, for instance, to search engines where sellers of fake merchandise are allowed to buy paid search ads. In 2015 Fanatics will put an "unrelenting focus" on how to eliminate counterfeiting online. "If you can cut off search results and cut off payment processors [from processing transactions of sales of counterfeit merchandise] you can cut counterfeiting off," Rubin said.

Finally, on the split of eBay and PayPal: "I thought it was great," he said on his reaction to hearing the news yesterday. Rubin said it was okay that eBay Inc. CEO John Donahoe reversed his long-held position that eBay had no interest in splitting the companies apart. "I've done a lot of 180s in my life," Rubin said. "If you get it wrong, recognize that as quickly as possible and change it." He is bullish on eBay and PayPal's prospects operating as separate companies. "To be super-competitive is to be super-focused. It is going to be hard and it is going to be messy [to separate the companies.] But ultimately, both companies will be more successful in the long run."

By Allison Enright.
Source: "InternetRetail".
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