Honesty is the best policy- what gets people to convert (after product market fit) is trust. You don’t have to have the shortest ship window, but it does need to arrive when you say it will, and you need to have given them that information immediately. The lowest price isn’t what they care about; it’s the value of the product to the price. Did you explain how it would work; did you listen and take their reviews to heart? Then they’ll trust you. Show yourself to be a good partner and they will be loyal.
As part of my series about the “5 Things You Need To Know To Create A Highly Successful E-Commerce Business”, I had the pleasure of interviewing Katharine McKee.
After a 13 year career building out digital commerce capability across pillars such as CPG, FMCG, Luxury, Beauty and Apparel, Katharine McKee founded Morphology Consulting, a digital commerce consultancy that uses algorithmic structure to optimize a company’s strategy to gain them profitable, exponential growth. Katharine is a leader in ecommerce and an expert on systems who focuses on building clean processes and organizations. To date, Katharine has overhauled the digital go-to-market for more than 50 brands and has sustainably increased client’s revenue up to 600% YoY.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I’d love to, thank you. My backstory is kind of funny, I have a background in finance and was working as a sales analyst for a small luxury beauty company in 2010 or so and in a revenue meeting I asked why we didn’t focus on online sales. The channel was logically built and our products had a great fan base that weren’t getting what they needed at retail, and in my analysis, we could nail forecasting down to the single unit, which would improve margins tremendously and give us a platform to expand reach, improve MOQs, reduce inventory issues and let us reach customers who shopped at places other than Sephora. The CFO told me to do it and report back and a deep love of ecommerce systems was born. I set us up on Amazon and built out plans for go live at all of our eretail locations and opened up accounts with a couple of pure plays and business exploded. I was able to set up congruent marketing campaigns with our retailers and eventually took over management of our branded sites. Turns out that a lifetime of being hyper focused on patterns and systems are a great match skill-wise for digital commerce systems. That first year created such a love that I haven’t looked back. I’m lucky that it was with a company small enough, that they let me do it, and had me wear all of the hats, I was our procurement team, trade and performance marketing team, online branding, media rep, sales rep, supply chain, operations and sales analyst. And when I took over our branded sites, I became a UX specialist, an email marketer, our CRM specialist, and social media manager. I am so thankful, because without the ability to see the whole universe, I wouldn’t be where I am today. Backend systems came naturally and I had been trained in finance, but to see every piece, how supply chain effects demand and how that impacts sales and where customers tell you what they want and how to pivot to get them what they need was an incredible education. It also made me hyper aware of when tools or agencies don’t see the bigger picture and how easy it is to miss the forest for the trees. Digital is a world in which there is plenty of rope to hang yourself.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
My current company is a product of all the previous roles before it. I have been incredibly lucky to be employee one for eretail or ecommerce at several companies and have had the joy of building out digital commerce capability from the ground up in CPG, Luxury, Beauty and Apparel. While it was an amazing experience, and I was lucky to be so well supported, I learned that the building was what I loved and what a lot of companies need. It is something that takes outside help to do right, a consultant who can avoid a lot of the ingrained behaviors and red tape can make much quicker work of a strategy and it has been amazing to be able to do this for such and array of brands.
Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?
I have been very lucky to be in a position where the market wants what I am able to offer it at this time. Covid meant pivoting more to tools and video, but it also opened up a world of smaller clients who I wouldn’t have been able to help.
So, how are things going today? How did your grit and resilience lead to your eventual success?
Today things are wonderful! I am lucky to have incredible clients who are ready to see this kind of growth and are ready to transform!
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?
When I first started, I worked for a luxury beauty company and to say I was a fish out of water was an understatement. Like a lot of high end beauty, everyone who worked there was chic and beautiful and almost all of the sales team were makeup artists, and then there I was, with air dried red hair and sneakers and a leather jacket and glasses (not in the cool way, in the nerd way) with my laptop. One of the women sales leads took me under her wing, to show me how to sell, and brought me with her to a chic meeting in soho, where they talked about the cool trends they saw coming for their peer group and that was the sales pitch. Super effective. Then she came with me to one of mine. I sat down with my spreadsheets and profit margin analysis and the VP I was speaking to just laughed and said I set up the weirdest sales meetings but she didn’t care because I made them money. I think that’s true now. I am not a great sales person, but I am an amazing systems person and in digital commerce those are the rules of the game. That is the point of differentiation with Morphology. We aren’t going to pitch you. We explain the system and the inputs and point out which ones you’re missing and set them up for you. It isn’t flashy or exciting, but it is incredibly profitable
What do you think makes your company stand out? Can you share a story?
We focus on systems, so rather than doing x or y tactic well, we work deep within the structure of the platforms to get you the rules of engagement and get your teams built and trained to win within them. This has to be done as the base from which roadmaps are built as we are working with algorithms rather than relationship management and there isn’t leeway for mistakes that a human could step in and help right after the fact. Training teams and companies to think this way is incredibly rewarding, both for them, in terms of long term profits and for their partnerships as the systems, when run correctly are efficient and easy to use.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Manage your stress, in whatever form that takes for you. Block your time, ignore your competition and focus on your strategy. But mostly, take care of yourself, it is very true that you cannot pour from an empty cup.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I have been lucky to have some great bosses along the way. My first boss, at a beauty company, said I could do whatever I wanted (open an Amazon storefront and start getting digital assets made for eretail listings) if I wasn’t going to ask him for budget. He then asked me how much budget I wanted as I was bringing in incremental sales at high margin. That sounds small, but is a big deal in a company, to get credit and support of an idea that took you out on a limb. The second super supportive boss had a similar mentality, but he took it a step further and brought me with him to all of the meetings that were above my pay grade and consistently referred to me as a subject matter expert. He taught me lot about office politics and how to manage large corporate structures, but he also went way out of his way to elevate me and the work I was doing. They both paved the way for big changes within their respective companies and supported me when I was employee one in these pillars.
Ok thank you for all that. Now let’s shift to the main focus of this interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that eCommerce businesses are implementing to adapt to the new realities created by the Pandemic?
The pivot many businesses took towards ecommerce during the pandemic was a great step in getting them to see that it was a viable market. The changes we hope to see companies make, is the shift from a push to a pull marketing model. Right now, they are still getting the benefit from online being the only place that people feel comfortable shopping (depending on area), so bad websites with poor load times and weak product pages are still getting traffic. This is going to stop (we have seen a marked fall off already) when other options open up. The smart companies will invest in process changes and software updates now, so they can take advantage of the new traffic. Once people don’t HAVE to shop online, they will still WANT to, but they will go where the user experience is best. A strong UX includes product pages that are informational and answer questions, websites that load quickly and are mobile responsive, products that ship when they say they will and are offered in a wide variety of sizes and shades. Companies need to create trust and value, but ecommerce can help them do it, now they have access to real time customer data that can help inform their forecasting, their product development and their go to market strategy.
Amazon, and even Walmart are going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise retail companies and eCommerce companies, for them to be successful in the face of such strong competition?
“Customers want the lowest price” is one of those things that is oft-repeated yet measurably untrue. Brands will often buy survey data that will have a question like “Does price matter to you?” And the overwhelming response is yes. Brands and retailers often take that to mean, “the lowest price is what they want” when it actually means “Price for value matters to me, I wouldn’t spend 1000 dollars on toilet paper”
Customers are “value” driven rather than “price” driven, they aren’t buying the least expensive headphones, they are buying what they can afford and think will perform well for the price. So to win at this game, you don’t play it. Make sure your products are good, first and foremost and price them fairly within the market. Skip the old retail rules, like marking something up to mark it down, those will backfire. And know your client. Your good isn’t for everyone, nor should it be. Who are you helping with what exact problem? Focus there. There is couch for every home; you don’t need to be the sole purveyor of couches to get your fair share.
What are the most common mistakes you have seen CEOs & founders make when they start an eCommerce business? What can be done to avoid those errors?
The most impactful mistakes we see are: engaging the wrong partners and being taken in by flashy presentations that are more fluff than substance. There is a lot of misinformation out there and a lot of rope with which to hang yourself, as the saying goes. There are a lot of things you “can” do but should not do. The internet is predicated on a rigid structure of indexing data, there are no quick fixes or cheat codes, but there also isn’t an angry buyer who is going to slap your hand if you are doing something inappropriate. The general stance of the internet is that it is a tool, that they will explain how to use, but you can do with it what you want. This trips up a lot of business owners, who will be sold a bill of goods like getting their product on the first results page within 30 days of launch, that has no value but has some serious long term repercussions. In that example, the way you would do this is to buy up or fake demand. The first page of results is for the most quality and relevant answer to the query; can you fake that with black hat tricks? Sure. Once. What happens after you have done that though is that to the search engine, you are a cheater, so while your good may have eventually been the most quality answer, you faked it, which means that you’re a liar, and your data can’t be trusted. You’ll have to fake that demand via media forever and the prices will just keep rising because, to the system, you’re the wrong answer. I see this constantly with clients and the message is always the same. It’s a system, just follow the rules and do each task to completion and you will succeed. But, you do have to do all of them, in order, all the way.
Setting up an online business isn’t hard, but it can be a little tedious and boring. I find that startups that didn’t have retail experience fare better than traditional retail trying to add in ecommerce, as it is a different mindset. They are more focused on how the system works than trying to adapt an old practice to fit into a new model. It feels counterintuitive, but traditional retailers and brands make a lot more profit a lot faster when they skip the small changes and go straight into overhaul.
The other mistake a lot of CEOs make, which is similar, but not the same, is getting talked into tools or services that aren’t a good fit for them specifically. In this instance it isn’t services that are bad, but ones that aren’t appropriate for that specific brand or retailer’s model. We see this a lot with agencies and SaaS products. These are products or tactics that work in a vacuum or with a specific kind of set up but not in the reality that brand x is in, so when they buy it or implement it, it doesn’t work and they think the whole system doesn’t. In this case, it isn’t true that the tool doesn’t work; it is usually that their website was set up incorrectly or ranks poorly or they don’t have the internal systems set up to be able to feed into the SaaS product they bought. This second one is harder, because someone needs to be the systems expert that knows which tools or tactics will work. That onus isn’t really on the agency or SaaS product; they can’t know the ins and outs of the business, so the business owner needs to be trained to know what to look for.
In your experience, which aspect of running an eCommerce brand tends to be most underestimated? Can you explain or give an example?
Supply chain. It is the most crucial and the hardest to get right. Some of this is legacy issues eg you can often just pay a fine for a late or incomplete shipment to a store, but for an online business there are cascading effects to demand signals that disrupt the whole process. In traditional retail, if your launch is late to store, that stinks and will probably get you a fine, but once it’s paid, you can kind of move along. When something launches late online, all of the traffic that is heading there is now getting a null, which lowers both the quality and relevancy score from search engines which impacts your organic rank, which impacts future marketing costs and in the case of an e-retailer like Amazon, also labels you as a poor partner and can cause them to source product elsewhere. If it’s your own DTC, you will face traffic throttling back due to people showing up to your site and bouncing, a high bounce rate is an issue in terms of a search engine being able to tell if you are giving the searcher what they need. This circles back to it being a closed system with specific rules. If you aren’t following them, no amount of media spend will make up for it.
Can you share a few examples of tools or software that you think can dramatically empower emerging eCommerce brands to be more effective and more successful?
Work flow systems- tools that can assign steps in a project and let everyone know who completed what and who approved what save hours a day and keep teams happy and motivated. Transparency is key
Content syndication- tools that can take one change and pass it across all 30 of your platforms (brand sites, retailer sites, marketplaces) are a game changer, free your teams from being tied down by admin minutia and free your retail partners from having to do updates on their ends.
Digital OKR tools-transparency again, what are our goals, are we hitting them? Are we on the way to them? Is everyone aligned to them? Saves so much time and makes goals crystal clear.
As you know, “conversion” means to convert a visit into a sale. In your experience what are the best strategies an eCommerce business should use to increase conversion rates?
Good user experience. Are items merchandised well and easy to find? Does your search bar give good results? Do pages load quickly without popups, do they look good? Is there useful information on the page? Can you read and shop easily from both desktop and mobile? Mobile responsivity is huge one, it is the fastest growing pillar for digital sales and the one customers find the most frustrating. A frictionless experience is what we should all be striving for.
Of course, the main way to increase conversion rates is to create a trusted and beloved brand. Can you share a few ways that an eCommerce business can earn a reputation as a trusted and beloved brand?
The same way you create trust anywhere else. Do what you say you’re going to do. Ship on time, honor returns or discounts as you have communicated, be in communication with your customers and be proactive with them. If there are concerns, address them, celebrate wins with everyone and try to be a force for good in whatever way you can.
One of the main benefits of shopping online is the ability to read reviews. Consumers love it! While good reviews are of course positive for a brand, poor reviews can be very damaging. In your experience what are a few things a brand should do to properly and effectively respond to poor reviews? How about other unfair things said online about a brand?
Feedback is a gift. It is very rare that truly unfair things will be said about your brand, if there is a misunderstanding it is incredibly important to review the item page and see what went wrong. If one person wrote the complaint, easily 10 more had it and didn’t say anything. So shift your mindset to gratitude that they are helping you trouble shoot. Is the copy confusing? Are there assumptions you’re making about the use of the product that needs to be spelled out? Are things like ship times well communicated?
Always respond! It is incredibly important for the consumer to feel heard and again, they’re just the one that told you, you need everyone else who may have had that issue to see the answer. Apologize and try to solve the problem. Showing you care is a huge part of brand equity.
If you are treating your customers well in full view of the public, and someone with an axe to grind shows up, it is seen for the obvious outlier that it is.
Ok super. Here is the main question of our interview. Based on your experience and success, what are the five most important things one should know in order to create a very successful e-commerce business? Please share a story or an example for each.
1. Know the system you are in and play by those rules- the internet is built up of systems and rules that are there as directions on how to use them. If you follow the rules of, say, Amazon, it is pretty easy to get the flywheel effect. It is also just as easy, if not more so, to miss a step (or choose to skip it) and find yourself spending more and more money for very little return and never realizing it is because some data is missing and your pages can’t be ranked properly. It is fundamentally different than a traditional retail model and it takes great attention to detail.
2. Data is your friend- data is incredibly helpful. Can it be too much and feel like you’re drinking from a fire hose? Yes. Is that a reason to limit it? No. It is going to help inform all of your decisions and processes down the line, in every aspect of your business. Do the work now to reap the rewards later.
3. Feedback is a gift- don’t take reviews or performance personally, take them for what they are, data. What could be better or different is a problem every brand runs in to. If you have people willing to tell you to your face, treat that as the gift that it is.
4. Customer experience trumps everything except product- your website matters. How you merchandise matters, what information you share, the images you use, the way your pages are set up, all matter. That is how the customer sees you. Don’t make checkout a nightmare, don’t skimp on content, but don’t make it so heavy a page won’t open. You have seconds to get that customer what they need. Set up your site to be as frictionless as possible. But bear in mind, the slickest site in the world won’t make up for a product they don’t want. Use data and pay attention.
5. Honesty is the best policy- what gets people to convert (after product market fit) is trust. You don’t have to have the shortest ship window, but it does need to arrive when you say it will, and you need to have given them that information immediately. The lowest price isn’t what they care about; it’s the value of the product to the price. Did you explain how it would work; did you listen and take their reviews to heart? Then they’ll trust you. Show yourself to be a good partner and they will be loyal.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Honesty and transparency are what matter in all things. Pull back the marketing and the sales (of anything) and be realistic about what it is. More trust and communication.
How can our readers further follow you online?
This was very inspiring. Thank you so much for the time you spent with this!