High-Impact Entrepreneurship

Diego Piacentini (SVP, Int’l Retail, Amazon) on designing an e-commerce strategy [Transcript]

Endeavor is pleased to make public the following transcript from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.

Overview: In part 1 Diego Piacentini discusses the strategies and future of e-commerce and how it can change your business. In part 2 Mr. Piacentini discusses the challenges if e-commerce, and how to best use it to your advantage.

Bio: Diego Piacentini has served as Senior Vice President International at Amazon since joining the company in February 2000, and is a member of the Amazon executive team. He is responsible for all International retail operations: Amazon.co.uk, Amazon.de, Amazon.fr, Amazon.co.jp, Amazon.cn and Amazon.it. Prior to joining Amazon.com, Diego was Vice President and General Manager of Apple Computer Europe. He joined Apple Computer in 1987 and was promoted to the post of general manager for Apple Europe in 1997. Before joining Apple Computer, he held a financial management position at Fiatimpresit in Italy. Diego serves on the advisory boards of the Foster School of Business at theUniversity of Washington and of Endeavor, a global non-profit organization helping entrepreneurs in developing countries. Diego is also on the board of the Maasai Association (www.maasai-association.org) supporting their education and health initiatives in Kenya. Diego holds a degree in economics from Bocconi University of Milan. An Italian national, he has traveled and worked across Europe, Asia, Africa and the Americas.

Full Transcript:

Part 1:

If you have a product, you love the product, you will sell it online. One of the first recommendations is always consider having multiple channels. Make your website as good as you can, but also put your product in existing marketplaces if they do exist. There are many marketplaces in the world that are global. One is Amazon.

One of the great things about Amazon is that we are investing a lot in technology that allows sellers from one country to list on Amazon and display the product in all the 8 countries on Amazon.

What does that mean? If you want, we can manage logistics. We can have your company focus at what they’re good at, which is designing, selling, manufacturing your products, and then Amazon can focus on what it is good at, which is how to bring in commerce, customer relations, shipping products, and receiving products.

Webstore
One of the technologies Amazon has recently developed is called Webstore by Amazon which is literally technology that lets you build a website for e-commerce. Customers can sign into your website with their Amazon password. You get all the payment right away. All those 160 million customers Amazon has worldwide can sign into your website. This is only available in the US and the UK, but we are going to build it in other countries. If you want to start approaching the US market or British market, this product is one of the best for that.

E-commerce tips

Obviously, with Google and other search engines you can build traffic to your website, but at the end of the day when customers come to your website they need to fall in love with your product. This is why more and more, you have to be really good at using images and video to describe your product. You go on Amazon and buy shoes, you see eight different angles of that shoe. The customer is very used to that. You can transmit with video images the passion of that product.

Another thing the customers hate is slow websites. If it takes 30 seconds to load the page, you’ve lost the customer. Nobody has the patience to wait 30 seconds. You always want to make sure you have at least one technologist in your company who understands how it works. Even if you want to outsource everything, you need to have someone in your company who understands everything. This is very important.

Try to make it as simple as possible. I still go to websites that by the time I buy the product, I have to click eight times. As a rule of thumb, with every click you are losing 50% of your customers. Every additional click, you lose 50% of the customers. Making sure it is as simple as possible is very important.

It is also important to develop this concept of trust. Customers should know that their credit cards are being stored appropriately. And this is the hardest part because there are lots of bad guys out there. Our rule of thumb is that 99% of people are good and 1% is bad. 1% of millions of customers is a lot of people. Make it easy. Make tracking the product easy. When customers place an order, you need to be active. If it takes six days to ship your product, say eight. Then please them and ship it in six. Never over-promise.

Invest in the customer. What does this mean? It means even if the customer changes his or her mind and says, “Yeah I ordered the product, but I didn’t really like it,” take it back. It’s about building customer trust. This is the way Amazon was built. How many of you have ever seen an Amazon advertisement on TV? We built the Amazon brand without spending anything on advertising on TV.

Customers love appreciation. In 2002, Amazon stopped spending money on advertising because we couldn’t track it. It’s hard to assess, it costs a lot of money. We decided it’s better to spend it on appreciation.

Also, this is our little suggestion. Trying using two different shipping methods. One is fast and you can charge for it. If you want it tomorrow, you can pay. You always want to give customers the choice.

One of the things Amazon has not done, and many companies do this, is the print advertising and loyalty programs. There are many companies that build there business for loyalty programs. You get points in a month, and you can spend those points. It’s very complicated and at the end of the day you charge more for your products and most of these companies built loyalty programs 20 years ago and now they all wish they didn’t because they are a big liability now. So based on that, we thought about what the customer really likes. We thought why don’t we create a program which is called Prime which is basically customer paid, in the US it’s $79 a year, and every time they order, it comes free in two days. In the US it works perfectly. The US is a huge country so receiving something for free in two days is really important.

Mobile

The other thing is mobile. Mobile commerce is going to be half of consumer transactions at some point in the future. Especially in online shopping, the shopping behavior is a whole different category. We saw this in every single country. In China today the majority of our online shopping happens Monday through Friday during work hours. That is this same thing as Latin American countries, places where the Internet is just starting. In the US, it’s now pervasive Monday through Sunday. Now with this mobile commerce, it’s even more pervasive. You’ll see that even more. This is what is called “couch shopping.” You are laying watching TV and you have the urge and desire to buy something and you do it.

I was in Chile last year visiting a museum and wanted to buy the book of the museum. It was 50% cheaper on Amazon than in the museum, I placed the order on my smart phone and it was waiting for me when I flew back home. Right now 99% of shopping happens through typing. But it is going to change. You can already do this on Amazon with your iPhone today. You can scan a bar code, which retailers hate. When you see customers walking into a store with this thing they know someone is checking prices on Amazon. So it’s either scan the bar code or take a picture of a product. The picture is sent to Amazon, there are people in the cloud that actually go on different websites, including Amazon, and they search what is the closest thing to that. The other thing is going to be through voice. You are going to be driving somewhere, you won’t have time to type it in, someone will ask you what kind flowers you want and you will tell them. The interaction with the Internet is going to be completely different. Five years from now, we will look back and think wow, we were primitives by today’s standards. This is why there are countries with 3G and 4G networks more than broadband and in some countries mobile commerce will leapfrog the personal computer. This is something you need to take into consideration. This is just investment in the future. This is going to take time before it happens.

Customer Reviews

One of the things I mentioned in the previous session is that the new way for customers to shop is to read customer reviews. You can’t fake a customer review. People understand genuine customer reviews. We also have people look for non-genuine customer reviews. We actually have manufacturers sometimes faking customer reviews. Even well known brands. We usually catch them right away. Know why? Because marketing people write marketing. It’s very easy to catch. “This is a fabulous product which is totally great.”

Question: Before, you mentioned one way you got people to write very good customer reviews on Amazon is through a ranking system. Can you talk about that?

Diego: In the last session, someone from Brazil said that he noticed there were not many customer reviews. My theory is that it is not about culture. I am speculating that the websites don’t make it easy for customers to do this. It has to be very easy. On Amazon, a customer writes a review and it gets automatically published. You generate an ecosystem that makes it pleasant for customers to do this. We are in 8different countries and in every single country customers like writing reviews.

Question: So there is no limit for what and who can publish?

Diego: No, there are some limits. We don’t publish a review unless it has a certain amount of words. The review needs to be relevant, it needs to be about the product, not about the shipping or the seller. If you want to talk about the seller you just review the seller in the seller review part of the site. Then we also have a filter and if the filter kicks it out we have human beings read it. Computers can do only so much. Not even WATSON.

Question: What kinds of incentives?

Diego: In the past we would give the person with the first thousand reviews an iPod or something like that. But what we noted was that when companies use these incentives they generate a high quantity of reviews with very low quality. People just do it for the money. That’s not really helpful.

To the point of cultural differences, when we launched Amazon Japan in August 2000, the team in Japan at that time was saying, “Oh, we don’t want customer reviews.” I asked them why not. They said it’s because the Japanese are not used to writing reviews. I said, “great point, but guess what, no one in America was writing reviews before we started doing it.” This is why it’s inventing for the future. Don’t get stuck with what you hear is cultural. It’s cultural is such an abstract statement. It usually means you don’t know what it means.

Question: Does that mean the Amazon website is completely universal across all countries?

Diego: I would say it’s 98% universal. Because there is that 2%. People in different countries have some basic differences which is mainly in the way products get delivered and paid. In some country e-commerce has not taken place because the local logistics services suck, not because customer don’t want it. People ask me, “You are Italian, but you only launched Amazon.it only in 2010. Why is that?” My answer is because I am Italian and know how it works. The logistics system in Italy wasn’t good enough for us, or let’s put it this way, in order for us to invest and make it better, the cost was too high. We don’t use a local service, we use private services. The answer was not cultural, it’s just that logistics sucked. E-commerce is taking off in Italy. People love to buy online. You walk into any of our many distribution centers in Germany, the US, wherever, and you won’t know where you are. In Asia, people generally browse more than search, but this is not for cultural reasons. It is just because the technology was never there to give good search results with those Asian characters. Now with better technology, people are beginning to search more.

The other thing about online is that you can test. If you want to present a product, you can test what you will see. You offer 50% of the customers one presentation, you offer the others another presentation and you see which one converts more based on data and not based on guesses. Doing this in stores is really hard. They change the composition of the store, but it’s expensive. Online, it’s much easier. The great thing about selling online is that you have data with which you can optimize.

Question: I am doing e-learning and am beginning to sell subscriptions. Any advice?

Diego: Selling subscription is definitely important and you need to do it if you don’t want to just live out of advertising. If you monetize a service, you have two ways to divide it. Subscriptions and advertising. Usually it’s a combination of the two. You just have to try it. If you have one level subscription, you are rapidly going to find out that not everybody wants to pay that amount of money. You might want to offer less service for less money. It could be a basic level subscription where you pay $10 and then a more sophisticated service where you pay more money, like $20. Now if you offer four subscriptions and you have a level usage, you hit bingo. Make it easy to cancel. If customers know they can immediately get their money back they will be much more likely to make the purchase. You might lose some very temporary customers that way, but in the end it will be more profitable. That is my advice. If you do that, you will be one of the few to do that.

If you are a vendor and you sell products on Amazon, what I usually tell the vendors is to look at the customer reviews. That is the best way for you to learn if your product is good or bad. The other thing is we had a systematic way to asses this which is if customer service receives more than one complaint about the same exact product, the first thing we do is we kill, we cancel the page of that product until the defect is identified and fixed. This is something we did not invent. We copied it from Toyota. Then we communicate back to the manufacturers and tell them that if they want to sell on Amazon they have to fix these defects. You have to have customer service reps use judgment, not just follow rules.

Question: We sell virtual goods so for us pricing is really arbitrary. Is there a golden rule for price testing?

Diego: Testing prices can be very dangerous. The best way to do it is just sell the same product at two, three different prices to two or three different customers. That is the best way to do that. The issue is if you do that the other customer that paid more is going to be angry. Magazine subscriptions have been doing that forever. If you are selling a service, this might be something you might do. The other thing is to use promotional pricing. The thing is that it needs to be real. Customers are tired of fake promotions. You have to be honest with your customers.

Part 2:

Challenges of E-Commerce

Diego: My role at Amazon is to round up the international business, so we launched websites outside of the U.S. For those who don’t know, roughly half of the Amazon business is through websites outside North America. So we have websites like Amazon UK, Amazon Germany, Amazon France, Amazon Italy, Amazon Canada, Amazon Japan and Amazon China.

The first thing I want to talk about in e-commerce is that now the technology to build a website is relatively easy. Actually, I will show you something about the Amazon web store which is it allows people to build an e-commerce website in hours. The very hard part is to make the customers happy. The second hardest is to let the world know that your website exists. Especially if you are talking about selling to consumers, like selling furniture or selling retail products, those are very hard things.

The other thing that comes to my mind when people ask me what is one of the most important things about building a website is patience. It takes a lot of time and a lot of failures and a lot of frustration before really creating the right formula for your customers, making sure you understand how to optimize the pages of your website, or Google search, or whatever search engine is relevant in your countries. Besides understanding what the customer really wants, the hardest thing of all is to make the shopping experience easy. There are many websites where before you start buying something and by the time you go to the check-out page, it takes too many clicks.

And by the way, two clicks is already too many. It’s one too many. So there are many websites where it takes like seven, eight, nine clicks before you actually end up buying something. And for every click, imagine you lose fifty percent of the customers. If you start with a hundred, with the second click you lose fifty, and with the next click you lose twenty-five. Then you lose another 12.5, and you keep going this way. Obviously those are just high level numbers to give you an idea of how important it is.

The other thing that is very important, especially for companies that are starting and don’t have a very well-known brand, is how to reach out. If you want to get your product known, most likely you want to be on a well-known marketplace with a lot of traffic. In the world there are not many well-known marketplaces with a lot of traffic. Those that do exist are usually very famous.

From an optimal standpoint, you need to be organized to be on different marketplaces. Then you are going to find out along the way that one marketplace is more relevant than others. I don’t know if you are familiar with the Amazon model, but Amazon basically has seventy percent of the volume through our own retail where we store in our own warehouses and the remaining thirty percent is through thousands of sellers. What marketplaces have developed is this very sophisticated way to basically intercept the demand of customers, with the offer from the sellers, like you could be. But also, one of the things that Amazon does for example is to do a relentless job making sure that all of the sellers offer the same level of customer experience that Amazon itself offers. Although we don’t own the products we want to make sure that our customers, when they buy from Amazon, have the same experience whether we ship the product, or someone else is shipping the product.

Importance of Logistics

One of the things that Amazon has also started is the logistical. Many companies are really good at designing products, sourcing products, selling products, but when it is about managing inventory turns, taking returns, shipping products, it becomes a completely different business. It’s doable, and many companies do it well. But then there are marketplaces where the logistics are handled by companies that do it professionally. One of the greatest things is not just about the fact that the logistics is handled by someone else, but the fact that the customer can order different products. If he ordered an iPod, and he ordered a table, and they placed the order together, then we ship everything together. And if Amazon offers free shipping, then you get the benefit of it being shipped for free. Free shipping, by the way, is also one of the biggest game changers. Something really simple, like free shipping, is one of the biggest game changers that has happened to e-commerce.

Back in 2002 we decided at Amazon that rather than spend money on advertising, we’re spending money in getting shipping for free. That was actually in 2002. We did some T.V. advertising at that time, but we completely stopped doing it. And we did create a company worth forty billion dollars with basically no T.V. advertising in the last ten years. We started last year again with the Kindle, just for the Kindle. And free shipping was one of the barriers to e-commerce. People were just thinking psychologically, that I have to pay for shipping so it’s more expensive than buying something at the store. Ninety percent of the people don’t do the math right. It’s just our psychology is impacted by “free” or “paid.” If it’s about free and paid, they would rather have free. Obviously, since you don’t want to lose too much money, you need to make sure that in your business model, there is enough margin to be able to absorb the cost of shipping into the cost of the product. And then customers have said they don’t do the math right, but they’re not overall stupid so they know that you don’t want to overcharge the product to make shipping free. Because especially if you are listing in the marketplace, you’re going to be competing with many other sellers that have understood that format.

Working with Multiple Countries

One of the great things about listing on Amazon platforms is that you can reach out to markets in countries that you would not normally be able to reach out to with your own website. Not because the Internet is not known outside of your country but it is simply because customers have built a daily habit to shop in places where they trust. So, if they want to buy a piece of furniture they go on Amazon, and if they find your products most likely they already have their credit card entered in, they already have their experience with Amazon, and they buy directly there. By the time they start knowing you as a seller, to build the trust takes a lot of time. But again, within your own country probably it’s easier for you to build that brand awareness that attracts people to your company, before expanding into different countries.

Here’s one of the things at Amazon we think is a huge business opportunity: we’re spending a lot of time developing technology and services that allow sellers to list in multiple countries at the same time. We’re taking care of the logistics; we’re taking care of the overall package. So you will see more and more, easier access for your product to other geographies…

As you well know, trying to get into the U.S. market is quite complicated because you are entering this huge jungle where it is very hard to find all of the right solutions. This is why we are developing those services that would enable you, as a marketplace seller, to list with Amazon, and at the same time start selling in the U.S., in Germany, in Japan, France and many different countries where you can generate additional revenue. And we move the products for you across the globe.

What we see now is still an embryonic situation of what is going to be happening a few years from now. A few years from now, what now is still rather complex is going to become really easy. My recommendation is to start looking at how can you excel, with the existing platform, into countries that otherwise are going to be out of the picture.
So this is again to say, yes, building a website is very important. But if you want to reach out to different countries, use a strategy of being on multiple platforms.

In terms of your own website, the key is making it easy. Of course anything that from a user standpoint is easy, from an architecture or software standpoint is usually hard. The easier to make it for the customer, the harder it is to develop from a software standpoint.

Things to Make Easy

The other thing is, make payments easy. Payment is another variable. People, they either don’t trust storing their credit card, in some countries – for example in Turkey, it’s illegal for companies to store their credit card numbers. I’m sure those legislations will change over time… But every time that I go buy on a website where I have never bought before, and need to put the whole credit card numbers in, I’m already dissuaded from buying. Again, this is the value of being on an established Amazon marketplace and making payments easy. There are great solutions to this. There are many entrepreneurs at Endeavor that have developed great technological solutions.

Make tracking your products easy. Customers, when they place the order, obviously would like to have it as fast as possible but, being accurate is also very important. If you say it’s going to take you seven days to receive the product – you need to be sure the customers know where the product is within the seven days. So this is why connecting to the tracking services or whatever distribution companies you are using is very important. And usually – and again those are all technologies that exist, but companies when they look at all of their priorities and think I’m not going to be able to build a tracking system because I don’t have enough time, I don’t have enough resources to do it – usually those are pretty important mistakes that need to be avoided. So, payment, and tracking functionality.

E-commerce is a ballgame. Video and images are becoming incredibly important to show your product. You have heard many times the myth that people don’t buy that product because they want to touch and feel it. This is usually a myth. I can tell you that, for example, apparel and shoes – which people would think, why would people buy shoes online, they can’t try them on – are actually among the biggest and fastest growing categories online today. And for example with shoes, we offer free returns. They order two or three pairs of shoes, they try size 41 and size 42, and they ship one back and they keep one. Obviously there is the loss of that return, but you’re building customer loyalty for the future. So making returns easy is also killing a lot of the barriers.

So free shipping, making returns easy, and I go back to the point, you have the opportunity to show your products better than even in a physical store because the level of information that you can get using the websites. Taking different angles of your products. Pictures, images, rotations, videos. Using videos of how your product is being used is incredibly important.

Question and Answer Session

Question: Do you think that there is the opportunity to create a virtual 3D store? That you could walk into a bag shop and you could actually see the bags and pick them up and open them?

Diego: Yes, there are many experiments in that area. Either augmented reality or just the use of 3D images. I am very skeptical about the fact that trying to replicate the physical retail shopping experience makes much sense because if you want to choose between the replication of a store, or walking in a store, you’d just walk in a store. That’s why you need to make better what you are good at, rather than trying to copy experiences. But, yes, the technology does exist; there are lots of experiments that are going to be tried. I saw a website in the UK that uses augmented reality to sell sunglasses. And basically you have this face of a person that tries all of the sunglasses on, which is repeating the experience when you are in an optical store where you try several glasses on to see how they fit on your face. Those are all technologies that will be developed at their own pace. For the time being they are still pretty new. But they will be evolving in that direction.

Question: Can you talk about the future of e-commerce on mobile devices?

Diego: At Amazon, we put a lot of effort to develop mobile applications, mobile browsing, apps for iPhones, apps for Androids, for Blackberries. If you focus on iPhones and Androids you pretty much focus on what matters, depending on the country. What today is three, four, five percent of e-commerce transactions is going to become probably half of e-commerce. I wouldn’t be surprised if in five years half of e-commerce transactions are not happening on a mobile device of some sort.

This is what we call “couch shopping.” And I think I heard in some editions, the e-commerce behavior changes based on the device. We see peaks in the using of the smart phones, Friday evenings, during the weekend, on holiday periods, Christmas Day. Christmas Day is when people shop mobile more than any other day because they received the product and they want to check it, or they want to return it, and they are away from their original computer. Depending on the country, more developed countries have far more shopping from home. Less developed countries have much more shopping from the office, which was exactly what happened in the U.S. and in Europe at the beginning of e-commerce. People were shopping from the office because they have broadband, and they were using lunchtime, and they were making deliveries to people.

We still see today — for example in Amazon China — a huge percentage of our deliveries go to office locations, because people don’t trust having someone drop of the package at the doorstep or somewhere else. So those are all little details that are very important to understand about customer behavior. That is why it is very important to also have good metrics, to understand when you have volume, the shopping habits of your customers.

Two other things. Number one is, you need to understand technology. Obviously you can decide to use great external technology companies, but you always need to have within your company someone who understands e-commerce technology pretty well. And also when you have to use a platform like Amazon, especially when you do big volumes, there are always going to be some integration issues. Your inventory system sometimes doesn’t talk to the software carrier, for example. So you always need to have a very good tech person within your organization that understands how to keep that in order.

And number two: you need to be organized to test a lot. One of the great things about e-commerce is that you don’t have to guess because you can test. One of the things that at Amazon we have always done is testing. Checking, for example, do we like an image on the left, or do we like an image on the right. So one of the great advantages of being online is testing is very easy. Think about a physical store. They have to change the display – i.e., should I put this product up or should I put this product below. It requires a lot of testing and a lot of time. It’s very time intensive, but online you can do it pretty quickly, and there are a lot of software tools that will allow you to test.

Question:There’s a lot of components to running an e-commerce operation. Which one is the most important?

Diego: Companies sell products. It’s a lot about the way you present the products, the way you explain the products to the customers. Just think about watches. Watches online. This is something that people like online, especially if you are not talking about a fifty dollar Swatch, you’re talking about a five hundred dollar watch. I’ve met many entrepreneurs who are really good at design. What is your core competency? The product. So the display of the product gives value, and transmits passion about your product. It is something that you want to completely focus on. You want the customer to fall in love with the way you present your product.

What is also very important, although very hard, is the review of the customers. One of the new behaviors of the last ten years is that for many customers buying products, the first thing they do is read the customer reviews. Yesterday I was in a place where they sell lemon squeezers, and I put “lemon squeezers” in Amazon and I just stopped at the first screen. I had twelve, from twelve dollars to thirty-five dollars and I chose based on the color I wanted and the customer reviews. And this is why it’s very important to create a community of people who are very passionate about the product and provide reviews, either professional reviews or just reviews of users, because that’s where more customers reach out.

Question: I think one of the limits of e-commerce strategy is the check out, the payment, the cart. What does Amazon offer?

Diego: Depending on the countries, we offer different payment methods. Just to give you an idea, in China and Japan, we still offer cash on delivery, which is usually a nightmare from a transaction standpoint. We do it because we have huge volumes of cash on delivery. But you have two problems. Number one, you need to find the customer at home. And number two, the customer has not paid yet, and it happens that ten percent of people change their mind, so the product gets sent back to you. I say ten percent, it’s a pretty magic number. With a transaction where the customer does not order with a credit card, ten percent of the time, by the time the product reaches the customer, he changes his mind.

So we offer cash on delivery. We do offer, for example, automated bank transfer, especially in Germany, where it’s called direct debit. It’s basically just a way to draw funds directly from your bank account, and it works, when the customer has the funds in the bank account.

And we offer automated payment. I do think that there’s going to be a big evolution in mobile payments. So the integration of payments and the mobile carriers – something that’s being developed in Africa for different reasons — is going to be a big thing. Payments is going to be another area where, especially with micro payments, there’s going to be a big evolution in terms of the way customers pay.

However, let’s not forget, the credit card system works incredibly well — for the people that have a credit card, and the people who have enough funds in their credit card — which is usually ninety percent of the people. So I can tell you just from customer behavior, credits cards work perfectly well in the U.S. and obviously in France and the UK, and in Japan.

But another evolution is going to be — as we’re already doing in Japan — payment at a physical location. Convenience stores like 7-Eleven are part of people’s daily habits. The people go to convenience stores and they pay their bill, and they put in their Amazon order, and they also pick up the Amazon order. So one of the evolutions of e-commerce is going to be the fact they are going to be places where you can ship to where the customers will pick up the product. And this is going to go on a lot in countries like Turkey and in Latin America. There are countries where the logistics services are less efficient than others. Why we launched Italy ten years after France relates to this issue. And I know in some Latin American countries, it’s not much better than the Italian postal service.

Question: Customer reviews aren’t popular in Brazil. Why do you think that is?

Diego: Without knowing the details, I would say that it’s not cultural. Maybe it’s not easy. Maybe the review doesn’t get published right away, or people don’t read it. We tried also with incentives. The result of the incentives is that you get a large quantity of reviews but they are poor quality. And if you have poor quality reviews customers stop reading right away.

I have an interesting anecdote about Amazon in Japan. The Japanese said you shouldn’t launch your customer reviews in Japan, and I said why? And they said because the customers in Japan don’t write reviews. And I told him that in the U.S. they didn’t write reviews before we created customer reviews. So, it’s very seldom that something like this is cultural. It’s more that people are not used to it, and it’s not simple and easy to do it. When the two things combine, then you see a viral effect. On Amazon.com there are people that professionally write reviews. Not for money — it’s more for the pleasure of writing reviews, for the pleasure of getting the social networking, of getting the icon of the top one hundred Amazon reviewers. And that you’re in the community. We do have software that filters offensive reviews. We even catch manufacturers faking that they are customers.

Question: My question is about technology. If we want an e-commerce website, what technology would you suggest: should we use a platform, should we outsource it, should we use something like Magenta, or should we just hire good engineers and design and develop our own e-commerce concept?

Diego: Unfortunately there’s not a one size fits all answer. As I said you are also talking to the company that when they started e-commerce there was nothing, so we had to write C++ and everything from scratch. That’s why we have thousands of developers. I do understand that not everybody can hire software developers. I would suggest you start with an existing platform, and work on it. This is especially if you have a mixed approach, as I told you before. Your own website and listing on Amazon or listing on other platforms. It is always advisable to have a mixed strategy. Your own website, and a listing on an existing platform with a lot of traffic.­­­

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