Ricardo - overcoming the "Swiss e-commerce paradox

The CEO of the Ricardo Group Dr. Christian Kunz.I meet Christian Kunz in the bright offices of the new Uptown building on the outskirts of Zug. The outfit alone shows that I'm not dealing with the CEO of a bank today - but it won't stop there.Lucrative marketplace businessFirst, I ask Mr. Kunz about the key features of the ricardo Group's business model. "At the core of our business model are marketplaces, so we are in e-commerce light," says Kunz. By light, he means that ricardo only provides the link between buyers and sellers and does not cover any supply chain elements itself.As unspectacular as that sounds, the margins in this business are spectacular and attractive. Marketplace business models have the highest margins worldwide, which also applies to giants such as Amazon - even though we consumers perceive Amazon primarily as a classic e-commerce business. The so-called "first-party retailer business" (direct distribution of own products) is basically a low-margin business, which will further increase the pressure on companies with this approach in the future.E-commerce: Switzerland lags behindAt ricardo Group, we are therefore talking about a purely digital business model that is essentially driven by the elements of marketplace, advertising, data management and organic traffic (through the established brand). For Kunz, e-commerce in Switzerland is a paradox: on the one hand, Switzerland offers good framework conditions for this business approach, and yet, with a 5% share of the total business volume, we lag massively behind in a European comparison.Next, I want to know from the CEO how, for him, running a digital company differs from running a traditional company. After pausing for a moment, Kunz concludes that there are no differences in the essential disciplines such as strategy, employee recruitment and partner management. But when it comes to the skillset of the CEO of a company like Ricardo, Kunz sees very different requirements.Data management and analytics in demandInstead of supply chain knowledge, strong skills in data management and data analytics are required, as well as experience in agile development methods or website optimization. When I ask him in which management course he learned these skills, he answers non-verbally with a question mark on his face. This offer is simply missing in Switzerland today. The situation is very similar for specialists who have to meet digital marketing and data management requirements. That's why Ricardo recruits some of these people from nearby countries.Digitization as a growth driverThen I ask Christian Kunz whether he sees digitization more as a growth driver or as a way to cut costs. "In our business, growing digitization is clearly a growth driver - we invested years ago in a platform that can be scaled. The danger, as I see it, is that with the resource-saving scaling, people forget that they also have to invest in renewal," says Kunz.He adds that the answer would be different in an analog/digital hybrid business model. There, the trade-off between growth, cost savings and investment in the analog or digital part of the business is much more complex.To ensure that Ricardo does not miss out on renewal, various approaches have been established: Observing international players such as Zalando or Amazon, targeted recruitment of international talent, customer monitoring (Voice of the Customer), and surveying global trends. Of course, Naspers, Ricardo's international parent company, helps here - but at the end of the day, the selection of the few trends relevant to Ricardo still has to be made by the company's own management and they have to take responsibility for it."Nothing is set in stone"And can a purely digital business model like Ricardo be threatened by disruptive innovation? "Yes, of course - nothing is set in stone in the digital world" is the CEO's clear answer.Kunz explains the need for transformation using the example of smartphone penetration and the associated user habits. Ricardo mobile traffic has skyrocketed from 8% in 2011 to over 50% today. It goes without saying that transformation is the order of the day. Today, every three minutes an item is purchased via a mobile device and the "mobile share" continues to grow briskly. In addition, more and more commercial sellers are using ricardo.ch: the platform has thus also become an important distribution channel for professional traders and is no longer a pure C2C channel.Consumers as beneficiaries of digitizationAnd who are the primary beneficiaries of digitization? "Consumers are clearly the beneficiaries of this development - digitization makes everyday life much easier. This can also be seen from the fact that the majority of applications are currently B-to-C cases.Kunz adds that the range of offers is overwhelming - so comprehensive that filters are already necessary to block out the "noise". At the same time, the CEO is convinced that on the business side, the margins are divided among a few (The Winner takes it all). In the digital world, a team in Silicon Valley or anywhere in the world can develop something clever and roll it out globally at virtually no marginal cost. That doesn't exist in the analog world."Boarding please!"At the end of the conversation, I ask Christian Kunz what he would like to add. "The paradox why e-commerce Switzerland does not take off, although the framework conditions are good, concerns me. With ricardo.ch as a partner for SMEs and the new platform ricardoshops.ch for larger merchants, companies no longer have to invest in expensive webshops first, but they can upgrade their offer to a professional and robust platform with a high reach.As part of the digital series in Marketing&Kommunikation by Christoph Oggenfuss (markITing ag), the first season was entitled "Digital - not trivial". The articles are available here.