This interview originally broadcast on Sirius XM111 Business Radio from the Wharton School on November 3, 2014.
Dave Reibstein (DR): Welcome to Measured Thoughts on Sirius XM111 Business Radio from the Wharton School. I’m Dave Reibstein and I’m here with Bruce Brownstein and today’s guest, Harish Abbott, CEO and Co-Founder of Symphony Commerce.
Harish, tell me a little about your background.
Harish Abbott (HA): Thanks for having me, Dave.
My background is in commerce. I was at Amazon from the very early days when we only shipped books. I helped build a lot of the fulfillment and storefront capabilities of Amazon. I was instrumental in getting the first Harry Potter book out to millions of users before it showed up on B&N stores. And I have been an entrepreneur. This is my second business – I also started a company around recommendation engines.
DR: Where did the idea for Symphony come from?
HA: Symphony Commerce is a “Commerce as a Service” platform. The idea really came from one of my last businesses where we worked with a lot of small and growing brands. We discovered that the majority of these brands were spending a lot of their time on commerce infrastructure: like how to get the site up, how to power a cart, how to fight fraud, how to ship things out on time, how to offer 2 day delivery, how to pull data so they can market more effectively.
That was time consuming and distracting, so the brands were spending less time on their core business: the product, the marketing, the branding. In our opinion, this is what controls the destiny of the business.
Critical aspects of the business, like infrastructure, needs to be done – and done well – but by itself doesn’t make you successful as a commerce company.
Symphony was started so we that could partner with brands who are growing and allow them the freedom they need to focus on their core business while Symphony’s Commerce as a Service platform handles all the critical stuff that brands need to run their commerce business across wholesale and retail.
DR: I could probably do all of my own tax forms, but I hire an accountant because I can outsource it. What I find is that a large number of companies end up outsourcing their accounting, so they can focus on the things that are really important to their business. I guess it’s with that same spirit, right?
HA: It is.
DR: OK. How big is Symphony Commerce?
HA: We are at 75 people. The company was started about 2 years ago, and we now power now hundreds of millions of dollars through the platform.
DR: Describe for us what Symphony really does: I heard you say all the things small and medium and growing brands have to struggle through. What parts of that do you pick up, and what are the responsibilities that you assume from your clients?
HA: Let’s say you are a jeans company. So the core for you is the jeans, the product, the branding.
Symphony handles your store creation: your website, your website for (possibly) wholesalers, and gives you the tools to both manage and maintain the website in a very easy way.
DR: So wait. Do you manage the website, or do you give them the tools to manage the website?
HA: We give the brands tools which are very easy to manage the website. The website runs on our servers, so we handle the traffic spikes, the load, we maintain responsiveness of the website across different form factors. We give brands the tools (if they need to change the home page image, for example), so they can log in and change it themselves.
DR: So when you say, “you manage the website,” what does that mean?
HA: There are different website components. You have the branding aspect, which is the color, the images, the merchandising, which we believe the brand knows best.
Then there are all of the technical aspects: how many servers is it running? Is it secure from attack? Is fraud prevention on? When Cyber Monday hits and you need ten times the bandwidth, do you need to be worrying about your servers?
We manage all those aspects, so brands don’t need to worry about these things when working with us. That’s why we call ourselves Commerce as a Service, you’re truly getting a service no matter what day it is. Your site is up 24/7, the response times are super fast, and our engineering, product and client success teams are behind the scenes making all that happen for the brand. On top of that, we are making incredibly easy tools, which run on mobile, tablets and web, to make it easy for you to manage and maintain your site.
DR: Do you help them structure that website? Every website has an “about us,” a “product” tab, a “contact us”: do you help them with that or do you leave that up to them?
HA: No, we help them structure their shopping experience based on the best practices we have learned over time helping hundreds of brands.
DR: OK that’s great. Obviously you are managing the website, and it sounds like you’re doing the infrastructure, too.
HA: We provide the core infrastructure for Commerce as a Service.
After the website – which is only a small part of running commerce – the next piece is: How do you manage your promotions? How do you manage your pricing across different channels? What kind of tools and data do you need to set your margins or your shipping policies?
So we give brands the infrastructure so businesses can manage that across retail as well as wholesale channels.
The final piece that we do is fulfillment. Once you have the website up and running, and your pricing is under control, then you need a single view of all your orders coming in. Plus, you need a single view of inventory across all of your warehouses, so you can manage your orders – as well as your inventory – in the most optimal way. So we provide the infrastructure for businesses to be able to do that.
Our system also comes pre-integrated with about 15 warehouses in the country, so if brands choose to use any of our pre-integrated warehouses, they can get the entire commerce solution on an almost turnkey basis with the tools to manage it.
DR: So is the warehouse a Symphony warehouse or, in the example, a jeans warehouse?
HA: If the brand chooses to use our warehouses then they can get the entire turnkey solution. They have the option to use their own warehouse, but the majority of small and growing brands do not want to invest in the CapEx needed for physical infrastructure.
All of our customers use our network of warehouses: the jeans are delivered from our warehouse.
DR: Are those 15 warehouses all located in downtown Palo Alto?
HA: Haha. No – they are all over the country from South Dakota to Ohio to Los Angeles, Reno, etc. They are spread around the country so we can give massive distribution to the brands, so they can reach customers very fast.
DR: The Palo Alto warehouse is running out of inventory. Do you ship from South Dakota to Northern California?
HA: Yes. Those are the services that we provide where we will do multi-warehouse optimization on every order that comes in.
So we’ll try to ship it from the nearest location, but if that is not available we’ll go to the next best, and the next best and so on. That is where our expertise comes in: Do we split an order? Where do we ship it from? What’s the best way to save money for the brand and meet customer expectations?
DR: Does Symphony coordinate with brick and mortar? Do any of your clients have brick and mortar stores?
HA: Yes, we help with the coordination. For our clients that have orders coming in from Macy’s or Barnes and Noble or Bloomingdales, we are able to take their EDI orders and combine them with the rest of the orders.
DR: Ok, the holidays are coming up, and I want to get a pair of jeans for my good friend Bruce – but they don’t arrive in time. Am I talking with Symphony or the jeans company?
HA: Your customer service is with the jeans company, but they have the tools we provided to give them end-to-end visibility on what happened during the entire commerce journey. The jeans company will decide to refund the customer, or cancel the order, or comp the customer for another pair of jeans. We provide the tools to help brands run their customer service more efficiently and profitably.
And the jean company will hold us accountable if Symphony has not met our service level agreement (SLA).
DR: In 99% of the time I’m sure the product arrives on time. But for that 1% of the time, how do I ask for a refund? How do I negotiate that between Symphony and the brand?
HA: We have our SLA published with the brand, and if we miss our SLA it is our fault. And we actually go and refund the brand on the damages.
But if we met our SLA, then the brand has to take care of it. For example, they sent some jeans to the warehouse. But some of the jeans were torn, so we couldn’t ship them out. That’s not really Symphony’s fault: it was a supplier mistake.
We track every single piece of data, so we can attribute any cause and action to each other. We can get to that level of granularity on an order-by-order basis.
DR: Who does the forecasting? Does the business do all that, or does Symphony take some of that on?
HA: The brands do the forecasting.
Our platform provides the data to make informed decisions, such as understanding the velocity or the seasonally adjusted sales volume over the last 12 months. Based on that, they have to make the call on what they expect to sell.
We think about it this way. There are core aspects to the business: Who is my customer? What are my products? What is my new product line? We believe that the brand knows this best.
The infrastructure that you need to run your business around commerce is where Symphony comes in as a partner so the brands are not reinventing the wheel. Also, Symphony brands get access to an enterprise level infrastructure. This means they can solve forecasting level problems very well with the right amount of data with easy to use tools.
DR: One of your clients, Diamond Candles, grew from $4.5M in revenue to a $16M run rate after a year on Symphony’s platform. How did that happen, and what part of that can you take credit for?
HA: It happened because the company had a good product and understood the customers who wanted to buy the product. Diamond Candles spent their attention on the right marketing channels to attract the right customers. A lot of the credit goes to the brand because the product, the brand, and the ability to go and market to those people, was executed by the brand.
Where we come in is when the business grows 400%. We are able to deliver infrastructure that scales with them. What this means is that they are not distracted by spending time and energy in scaling infrastructure while their business is growing.
The second area we can take credit is that we are able to deliver an enterprise level commerce to a $4M business. With Symphony, the infrastructure was supporting them to scale instead of creating obstacles, which is what we see in a lot of small businesses. Their “cobbled together” infrastructure gets in the way of their growth. We are really a behind the scenes infrastructure company. We can take credit for being a good partner to help them grow so quickly.
Read more from Harish Abbott in , read The Most Important Commerce Metrics.