Ecommerce Moneyball: Chasing the Market Leader

Texas Rangers Championship RingA couple of weeks ago, I had the honor to speak at the exclusive Acceller Summit in Miami. Some readers may remember Acceller from the case study I wrote about them and their CEO Steve McKean in my book Always Be Testing. Steve is the CEO who explained:

“A culture of testing and optimization cannot happen in a vacuum, nor can it be mandated. You need a team that understands and believes in the principles. You need to communicate a strategic execution plan, and you need to create an atmosphere that encourages and enables the ongoing changes dictated by applying this strategy.”

There were several amazing speakers at the conference but I wanted to share what Matt Vinola, Director of Baseball Operations for the Texas Rangers, illuminated in his insider’s view presentation on Moneyball and how this applies to online marketing. Moneyball: The Art of Winning an Unfair Game is the popular book/movie about Oakland A’s manager Billy Beane and how he took a new look at the data in front of him, created new analytics and the processes to create a winning baseball organization even when the financial situation of the team was in crisis.

The Texas Rangers have also created an amazing baseball organization over the last several years, even appearing in the World Series the last couple of years. They’ve done it by developing their own metrics, that are simple for the whole organization to use, that have gone beyond the simple Sabermetrics first explained in MoneyBall. They needed to find a way to compete with the like of the New York Yankees with the largest payroll in baseball when they were losing their home developed talents because they couldn’t pay the salaries that a team like the Yankees could.

This won’t be a column about baseball though, and I can’t share all the details he shared during this exclusive summit. However, let me show you how this was done in front of your eyes in the online marketing space and continues to happen on a regular basis.

The company went live with it’s website in 1995. Throughout the dot com bubble of the late 90s, the company struggled to make a profit. By 2001, it generated a small profit proving its business model and has never looked back. They managed to pile up $3 billion in losses between 1995 and 2003. Of course, I am talking about Amazon.com. What right did this small, struggling business have to dominate ecommerce today when it had to battle retail behemoths such Walmart and Barnes and Noble in their early days.? How did Amazon apply Moneyball principles to win this unfair game?

Amazon built a true data driven organization served by great execution and innovation. They optimize for everything but not at the expense of customer experience. They optimized their supply chain making sure the products customers demanded were available, were shipped quickly and as inexpensively as possible. They were the first to leverage social commerce with reviews but they continuously optimized how they were gathered, displayed and used where others just had reviews lying around as a site feature. They optimized the site experience endlessly; having around 200 tests going on at any given time. They even optimized how they deliver customer service and that is one part of why people love Amazon. All these efficiencies helped them offer the lowest price on products while optimizing for margin as well. They are masters of leveraging their Big Data and enhancing and personalizing the customer experience. They didn’t start off that way but they built it into their organization. They had to build and learn how to use all these tools themselves.

Today, you don’t have that challenge. Many of the tools that Amazon built for their personal use have been developed by others, many leverage Big Data and use advanced algorithms so that you don’t have to figure it out yourself.  In the near future I’ll deconstruct the Amazon experience and show you how to catch up and compete with Amazon.com with some of the tools that are available today.

Are you willing to play by a different set of rules?

Please share if you think others would benefit.