shmula

σ business, technology, and stuff in between

Shmula Now at eBay

I resigned from my previous position with Ancestry.com; after considering 3 offers, I accepted a position with eBay.  Our family will still be in Utah (eBay has a large office here), but I’ll most likely travel to other offices also.  I’m very, very excited to be at eBay.  From a high level, I’ll be leading the efforts to improve the customer experience by implementing Lean, Six Sigma, and Service Operations best practices.  I’m really looking forward to the challenge and opportunity.

My former company, Ancestry.com, personally wasn’t a good fit for me in many ways — from a growth, product, and direction perspective.  I’m very happy to have moved on to a much better and interesting opportunity.

An article published in the New York Times today is relevant to this post: the article explains the "Fulfillment by Amazon" service and how many eBay sellers might want to use that service.  It’s a personally relevant article because I was formerly with Amazon and am intimately familiar with Fulfillment by Amazon and I am now with eBay.  Here are some details from the article:

Wall Street has never liked Amazon’s 10 million square feet of shipping space, far preferring eBay’s frictionless role as a meeting place for buyers and sellers. But Mr. Bezos is now doubling down on his company’s gritty infrastructure. He thinks that one day Amazon could do the dirty work of storing products and fulfilling online orders for many of the e-commerce companies on the Web.

“We have this beautiful, elegant, high-I.Q. part of our business that we have been working hard on for many years,” he said. “We’ve gotten good at it. Why not make money off it another way?”

In a conference call with Wall Street analysts on Tuesday, Mr. Bezos said that the overall Amazon Web Services initiative was growing rapidly, but was not yet profitable. Another Web services program, Amazon Simple Storage Service, or S3, allows businesses to store their data on Amazon’s own computer servers. Mr. Bezos said S3 now held 5 billion “objects,” or pieces of data, up from 800 million last July.

Fulfillment by Amazon, in development for the last three years, is one of the oldest efforts in the company’s stable of Web services. Unlike S3 and other recent initiatives, Fulfillment by Amazon involves the movement of physical goods instead of digital information.

Participants in the program, which is still in the experimental phase, can sign up on Amazon’s Web site and print out stickers that they put on their goods. They then send their products to Amazon, which stores the items commingled with its own. Amazon ultimately ships them to customers when they are ordered online (and charges the seller a variable fee based partly on the weight of the item and the shipping cost).

Sellers are effectively paying to ship their goods twice. But the program is aimed at small online retailers who have filled up the space in their basements and attics but want to avoid buying and managing their own warehouses.

It also can increase revenues: using Fulfillment by Amazon to sell on Amazon’s third-party marketplace qualifies products for the shipping discounts the company offers buyers, which typically improves sales. But the program’s biggest benefit, Amazon says, is to relieve sellers of one of the most laborious parts of their business — packaging products and getting them to customers promptly.

“This is the dirty secret of e-commerce,” said Joe Walowski, a senior product manager who manages Fulfillment by Amazon. “It’s not just bits and bytes. You have to figure out this part of it.”

The program has some enthusiastic early customers. Barry Mark, who runs Treebeard Books from his home in Palm Beach County, Fla., buys surplus books and sells them on Amazon and other sites. Since he signed up for Fulfillment by Amazon last September, he says that his sales have jumped more than 30 percent, and a third of the orders that come in are from members of Amazon Prime, the company’s premium discount shipping program.

But he says he sees the biggest benefit in the reduction of his workload, on peak days when 200 packages have to go out the door. “Usually there’s not enough hours in the week to ship everything,” he said.

Mr. Mark is so enthusiastic, he says he bought stock in Amazon after it announced the program last year.

But not every online retailer is as excited. For two and a half years, John Brown of Lafayette, Ind., has sold rare books and educational audio and video programs on sites like Amazon, eBay’s Half.com and his own site, Shelfmasters.com. To handle orders, he rents a 4,400-square-foot warehouse and employs two full-time workers.

Shifting fulfillment to Amazon’s warehouses would save him $2,000 a month in rent and utilities for his warehouse, he estimates. But Mr. Brown has held back so far, in part because Amazon does not yet let Fulfillment by Amazon’s customers in the United States ship their products internationally, or by overnight delivery.

eBay has such a unique model, because the lion’s share of the supply chain is not in eBay’s control.  Control, from a supply chain perspective, typically means that you also control the customer experience from a timeliness and quality perspective.  This means, then, that influence or closely-partnering with tier-x suppliers to eBay may have a significant lever in improving the customer experience: providing the the answer to "Where’s My Stuff" can make a big difference to both buyer and seller.

There are also opportunities around the area of Trust.  eBay already has a stellar reputation for trust and safety, but there are also opportunities.  I define "Trust" to mean the acceptance of vulnerability in respect to other humans.  Arguably, Trust is a function of repeated "good experiences", producing a psychologically-high enough level of trust to transact again with an individual, agent, or firm.  I think there are practical and systematic things that can be done to build trust in communities by working some of the things I discuss above and below. 

Often in Lean Consumption and Lean Provisioning, Traceability and Visibility up-and-down the supply chain is a big challenge.  Another challenge and opportunity will be to walk the Gemba and identify value-added activities and waste.  Then, systematically work to eliminate waste to improve the customer experience.  Since this Gemba Walk may include tier-x suppliers, an Obeya approach might an appropriate way of tackling that opportunity.     

I don’t have an opinion either way as of the moment, but if services like fulfillment can be handled by firm with historically-high service levels for fulfillment and it makes sense financially for the seller and buyer, then it’s worth a second look.  Click-to-Ship is the really the dirty, back-end secret of ecommerce AND, it’s also the most challenging.  The front-end store, I believe, is significantly much simpler than what actually happens after the "click". 

Since resigning from Ancestry.com 2.5 weeks ago and beginning with eBay next week, I’ve been doing a lot of gardening with the kids.  I’ve planted over 20 bushes, 1 tree, and have installed sprinkler heads for all of them.  It’s been fun spending time with my wife and kids before beginnining work again.  

I’m very excited to be part of the eBay team.  I see it as an exciting and challenging opportunity to really make a difference.

Note: I won’t be blogging about anything confidential related to my work at eBay.  Posts on Shmula.com will continue to be on Lean, Six Sigma, Queueing Theory, and various business, technology, software, and Operations topics.

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For articles on queueing theory, time-traps, operations, lean and six sigma, please visit the links below:

• Root Cause Analysis

• Managing Constraints Under Peak Volumes

• Order Pipeline of Events

• Variation for Dummies

• On Game Theory

• Series on Queueing Theory

• Applied Regression Analysis

• 5S

• Click-to-Ship Processes

• Kanban Sizing and "Pull"

• Lean at Krispy Kreme

• Theory of Constraints and Camping

• Lean for Software Development

• Don’t Waste the Customer’s Time

• Featuritis and the Focus on the Customer

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