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The Jason & Scot Show - E-Commerce And Retail News

Join hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder & Executive Chairman at Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Apr 18, 2018

EP128 - TopHatter CEO Ashvin Kumar

We caught up with Ashvin Kumar at the ShopTalk 2018. Ashvin is the co-founder and CEO at Tophatter an innovative live action site for mobile shoppers.  With the engagement and psychology of a game and the economics of a marketplace, Tophatter generated over $300 million of GMV in 2017 (100% up on 2016) and sells 100,000+ items every single day.  We talked with Ashvin about his background, including his previous start-up Blippy.  The pros and cons of various auction format and how Tophatter appeals to it's entertainment seeking value oriented shoppers.

Episode 128 of the Jason & Scot show was recorded on Tuesday, March 20, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature, Google Transcription:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Tuesday March 20th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:37] Hey Jason and welcome back Jason Scott show listeners we are live live live from shoptalk and Las Vegas excited to have on the show.
Ashvin is the top Hatter co-founder and CEO and tophatter is the world's most entertaining Marketplace they've raised over 35 million in venture capital and we're really excited to hear your story hear about tophatter and talk about,
marketplaces machine learning in a variety of other topics welcome to the show action.

Ashvin:
[1:06] Thank you and thanks for having me Jason Scott have to be here.

Jason:
[1:10] We are thrilled to have you so one of the ways we almost always start out the show is get a little bit of the background of our. So can you tell us sort of how you started your career and found your way to this.

Ashvin:
[1:23] Sure so I'll let I'll start at the at the very very top so I was born and raised in in Silicon Valley.
Local kid that that that never left the Bay Area basically there's there's not too many of us a lot of lot of folks descending on the Bay Area these days so I got to grow up in Palo Alto.
Went to Palo Alto High School I was in I was in the valley and that the.com.
Bubble and I remember I'm there is just remember there was a big there just weren't enough programmers and like the in hanging like the 99 2000 time and I remember getting your coffee.
When your programmers you know how to write Java and I was like.
Yes and I had no idea when got a book studied about the week before got in there and started learning job at up the I make great money that sell rather this is awesome and so that's where the bug started for me.

Jason:
[2:23] Will assume job I was like a required freshman class at Palo Alto High School now.

Ashvin:
[2:27] You know what's interesting at we we did do a little a little programming it at pellets high school so we had a little bit of that there but not a ton it wasn't quite as in Vogue as it is now.
I know I think computer science is like Stanford's largest major by far and certainly the flavor of play for the decade.
Yeah so after Polly Went to went to Stanford computer science Stanford actually while I was there I was interned at Amazon.
That's where that's where my co-founder and I first spent a lot of time together he was an internet.
At Microsoft and I was an intern at Amazon and so we decided to split the difference in.
And find a place to live in between the two so we lived in the University District in Seattle.
And every every night we come back and talk about the differences between Microsoft and Amazon which is awesome and I had a fantastic 2003.
Does neutering there for a few months and it was it was already felt like a fairly big company with a lot of but still plenty of opportunity ahead of them and I remember.
I want one thing I'm a Jeff Bezos would talk to the entire episode that has been.
Like one of the treats was he come and talk to all the entrance and we talked about some some the company values and that there's two that I'm a really well as a frugality and Trust.
And an enzyme I'm ever just wanted to hit like a soda need to go pay for stuff.

Jason:
[3:55] Obviously like I'm imagining you comparing notes with your roommate and like the cafeteria on the Microsoft campus was a little fancier than the free bananas at Apple at Amazon.

Ashvin:
[4:04] Do it what about that but what I found fascinating was that they were proud of that fact and so it just it just.
You got me so it got me excited.
Three different perspective than one person's proud of their reality and Microsoft obviously was touting there free food and free soda just two companies with very very different mindsets obviously.
So after I graduated from Stanford where I worked at a small startup Enterprise social networking startup for for 3 years I would some of the so my friends from Stanford is the 3rd engineer.
When I join we had about 7 people.
I reread the series day we spend three years building the company in about.
3 years 23 years and my co-founder and my current co-founder and I decide to leave our job he went to.
You went to a different start up use also 3rd engineer there so between us we had seen a couple we felt like we were the ground for a couple companies.

Scot:
[5:07] Is this the same guy that was also a Microsoft intern.

Ashvin:
[5:09] Single room the other after after college to and so after.

Scot:
[5:13] This is like Millennials like this.

Ashvin:
[5:16] Under that bastard us.

Scot:
[5:17] Best friends for life come on get with the lingo your conversation.

Ashvin:
[5:25] Do we have till we die.
After after work it out of respect of guys to come back and jam on ideas together and eventually about two and a half years and we decided that we we want to.
Tried on a run so we are we just started working hacking on various different projects and all all we knew is that we wanted to work together and that we wanted to build something fun.
I interesting that people are going to like those sort of but that was a starting point but we didn't really know what that look like.
And so we just are working on stuff we build stuff and we just put it in front of anybody that would it would see for feedback.
We that weed weed send users to it and all sorts of ways that we can find a post on Facebook and post on Twitter viral things to try and get user to user experience.
In the process of that was like right around $2,000 this is like the financial crisis.

Scot:
[6:18] Great time to start compass.

Ashvin:
[6:19] Yeah.

Scot:
[6:21] Just leave her jobs and start a company in early 2000s.

Jason:
[6:24] Frugality.

Ashvin:
[6:27] Actually move back in with my with my parents my co-founder you move back here.
You also trying to save money on on rent so he moved in with his girlfriend at the time.
Way too early to move in with a girlfriend and they're married now so everything worked out but.
Be trying to be frugal a hack on stuff share with anybody that would see it in the process we met if you see it at CRV and they weren't like they were doing a lot of deals at the time of the crisis.
So things are a little slow there and they had a spare office in at the their office is on Sandhill and so is he invited us to come work out of their office.

Scot:
[7:16] Sweet and nice.

Ashvin:
[7:18] CBS on basic being in Resident entrepreneur I don't like to say I don't like say unfriend resident because that's like a fancy title where you actually get paid we were at in Resident on foreigners.

Jason:
[7:27] That's like the difference between a country club and a club in the.

Ashvin:
[7:29] Exactly.
I got a big chunk of our day was figuring out which coffee shops wife I wasn't going to cut out so having like condition Wi-Fi and free lunch actually was really helpful.

Scot:
[7:46] I spent a lot of time at the Starbucks in Palo Alto on I'm picturing you guys when I go in there it's like funny it's like all these startup books just kind of like you know you can see the founders and they're just like you know.
Hey they have big red circles on it.

Jason:
[8:07] And now everyone has to be in the official Patagonia down vest.

Ashvin:
[8:11] But siding I stack that standard BC attire.

Scot:
[8:14] Yeah that's a b c.

Ashvin:
[8:15] Tina Turner wearing the Patagonia vest.

Scot:
[8:17] Depth of funny humorous t-shirts yes I write Piper.

Ashvin:
[8:22] So much of products in 2000 and in 2008.
And when the benefits was being a b c Verma said we could we just walked down the hallway and showed us these.
The folks there in got their feedback and eventually we found we we built something that they got really excited about that's why if we actually ended up raising money for it so it's probably called blippi,
and it was a it was a social network for the type for the things that people are buying so the idea there was that we would.
We would Connect into your your Amazon account your iTunes account and we basically passed we published your friends the stuff that you were buying so if you download something about the man so I'm kind of out your friends way of discovering what your friends are by.
As I was going by first foray into Discovery shopping and we got really excited about that and and CRV got really excited about that and they wrote us a check to see if from the company and that's how we got started so they put.

Scot:
[9:25] Serbia's Charles River Ventures for those of you that aren't in that VCU Palo Alto.

Ashvin:
[9:30] So what we raise money for that and and actually we got a lot of traction initial traction a lot of hype around that product.
And 6 months later we raise another round for that sweet we actually ended up raising $12 additional for that.
Unfortunately six months after that after spending so this one year into the journey with blippi like we realize it but the product wasn't really going to work.
So the retention numbers weren't there the engagement just wasn't there when we tried a bunch of things so by the end of that year we had a we had a lot of money in the bank but filled product.
And so we have to figure out what we're going to do next and Mike O'Connor and I we just kind of went back to what we were doing before it was hacking on all sorts of different projects.

Scot:
[10:16] It's a blippi was a consumer, thing did you try pivoting till like retailers integrating with their platform to do a staring contest.

Ashvin:
[10:23] Yeah could question so there were a few different ways we could have hit it I think that at that time we we still felt really strongly that we wanted to be if your consumer experience and we didn't want to have a component where we were doing an Enterprise Integrations or working closely with.
With folks without us having restaurant user base.

Scot:
[10:42] Did was of oxidation like to an affiliate program. I think so Jason shares of cool GadgetEase bought I buy it you guys have been coded in the affiliate link.

Ashvin:
[10:51] That would be one possible promise at scale and then we it was such a treasure Trove of information.

Jason:
[10:56] I can say there's probably a data play where you're quick.

Ashvin:
[10:59] It was it was.
Is really fun products only only first build it and then other things that we buy every single day at the amount of like apps I download on the Play Store things that I just go on Amazon buy.
Based on a recommendation from a friend or you know somebody recognizes me a book I'll just go buy it on the Kindle right now and have so I can have it there with one when I'm on the plane to like you're buying things all the time and are.
Product would pull all that information in Niagara that information published in a structured way to other people could benefit from it.

Scot:
[11:34] Remember Facebook Beacon where they tried this and then a people to buy gifts for their wives or wife's.

Ashvin:
[11:42] Storage associate with it too but but all in all it was really fun product with a lot of information associate with it and there were a lot of different directions we could take it,
the reason why we like there's a guy that had the fun engaging element that also had fantastic quantization potential.
If you want use a product then so I can work and then that's where but we found we found it we can get people to initially engaged to the product but we couldn't get them to retain overtime.
And so at the end of the year we've had some decisions to make when we decided to have basically Sunset the product and work on other things but we were really excited about probably really excited about the space of Discovery Commerce.
I'm just at this the area that we stayed in and we started working on other ideas in an e-commerce so the next idea we tried we tried a bunch of things in between the next thing that we got a little bit of traction was we we we took the idea of Groupon and.
Combined it with base e tried to build a Groupon like experience for Etsy sellers because he's at the sellers have fantastic.
Merchandise they can make me a sandwich. But I have no distribution so we that will look spell the distribution list.
For people that want to be introduced to new types of Pepsi products and so that actually was awesome we lost that in 2011.
And I had really great traction for a few months but then a few months in we realize that this is actually hitting a ceiling that we just we can't.
We can't attract enough Sellers and we can't get enough people on the distribution list to make this a scale at at a meeting for 8.

[13:12] I've been so 6 months after that we realize I can't wait this business or the tapped out even though it had some initial traction and we work and we went back to the drawing board works on a bunch of other consumer.
Consumer products all in all in Discovery shopping and then 2012 is when we launched tophatter.
And I'm we launched tophatter I had to lift head like a consumer heads consumer attraction in a list that we had not seen before.
And then we'd work to my way to work then we work on so many different projects up to this point that when we when we initially launch shop in and saw the numbers were like wow there is something special here,
I wouldn't know exactly what about it is Piggly special but there's something really special here that we want to that we want to make sure that we capture in Foster.

Scot:
[13:53] And so as a as a function or in the consumer space What are the numbers you're looking at so you've talked about you.
Retention stuff are you looking at KLTV are you looking at cohort analysis helplessness can't understand how someone building.

Ashvin:
[14:08] So these days as a as a business scales at those are all really important numbers for us or we look at court we look at when we say chords for provokes international.
We look at when a person signs up in month 1 how do they perform in 1 2 3 4 5 6 7 so we look at how that how,
how to progress over time.
We also look at tactile TVs we look at all that stuff but it's mainly like numbers as rescaled up initially When You're Building Products it's it's a little bit more like trying to find love.

Scot:
[14:42] Just some Mau movement.

Ashvin:
[14:43] Yeah you look at you looking for you looking for something special in the product trying to capture trying to capture Magic In A Bottle.
And I think if you don't have that initial magic in the model of then all that other stuff doesn't really all that other stuff doesn't really make sense. It's hard to optimize for that other stuff.
And so I think the thing that was special. Tophatters at it did have magic in the bottle really early on and and then as we scaled up we use all of you know we look at CAC LTV we look.
All that fancy Jazz figure out if we're doing work on the right things.

Jason:
[15:19] Tell her what's my little bit about tophatter and sore what the value prop is and what what makes you guys doing.

Ashvin:
[15:24] Yeah so tophatter is a I just got to shopping app I always encourage people to to take to go download the app to get the full experience because it's a it's a it's a very differentiate experience we sell things in an in an option where I'm at.
So we're on live auctions 24/7 I think the average eBay auction takes 2 weeks to complete our average auction takes 90 seconds and get us some other price so it's real time is fast.
How are average price points 10 to 15 bucks so it's in like an Impulse impulse purchase.
I don't feel they can make a decision within 90 second see if they want something.
And we sell across the a variety of categories from jewelry to electronics to accessories.

Scot:
[16:07] It seems like it's raining towards of value kind of consumer, like that wish kind of a Marketplace and you'll see some of that wants to have something cool for like under 20 bucks or something.

Ashvin:
[16:16] So are consumers also shop at Walmart and Kohl's and and QVC and HSN and yeah it's it's at the dollar store TJ Maxx when these are all these are all of her consumers so they say it's about you wanting to customer.

Scot:
[16:30] Never while they're there is he's really weird auction sites where you would like by kind of a currency to go to bed and you know I think they gave options are really bad name kind of there.

Ashvin:
[16:38] And we're constantly kind of fighting yeah so we're like we we had to fight that kind of band brand misperception.
Lots of people see that we're not inside that's the first place that's what one of the first question that we get his ass a penny auction sites with a pay for my beds and doing a lot of them are can we make make really clear. Beds are free.
Only pay if you win so it's just an old-fashioned auction but it's not it's not an option for.
For the reasons of price discovery on most items that we sell their free commodity items it's an option because it's engaging and we find that again we think about how we build an engaging experience that's what we started.
It's just fun everything starts at a dollar and so you pick the price they want to pay you know so you like something at a dollar there's no reason why you won't like it at 2 and then if you like it at 3 instead.

Scot:
[17:26] Is it a 1 winner wins got a thing or is it more of a Dutch auction so if Jason did six and I bid 7 we both kind of win or.

Ashvin:
[17:32] Right now it's one winner of the challenge too is that is that if there has to be losers in the auction for you to feel free to feel good when you actually win something.

Scot:
[17:44] That that hurts the you know the pack because she got to go acquiring up cat x x yeah and then it could hurt LTV cuz if I'm a loser lose so many times year.

Ashvin:
[17:54] Better interest in their data shows that the folks that compete for items are the ones that are there are more likely to come back so if you if you try and win something you win something with no competition less likely to come back and if you competed for anyone,
cuz there's a little bit of social validation in the fact that somebody else wanted to sing.

Scot:
[18:11] I saw an article that said you're you guys had over 300 million in DMV in 2017 it was an idea the sky.

Ashvin:
[18:18] Jessica sent a scale so we're going to do so last year we did over 300 million in Top by in this year right now like we're focused on doing a billion dollars in 2019 this year will do at least a half a billion dollars.
It's a no it's not it's not like an Amazon CEO business but it's not like a small business either so.

Scot:
[18:39] And your business model is typical take rate kind of a random.

Ashvin:
[18:43] It's a it's a Marketplace business model we take roughly 25% depending on the category.

Scot:
[18:49] So then I can figure out your revenues by multiplying GMB by 25% just making sure I understand.

Jason:
[18:59] That would assume that Scott can do math.

Scot:
[19:01] Yes and then are you guys a mix of first party and third-party entirely third party.

Ashvin:
[19:11] It's an entirely third-party give me like our sellers do we sell things ourselves.

Scot:
[19:13] Yeah yeah.

Ashvin:
[19:15] So we don't take any inventory your Marketplace we just connect buyers and sellers so we asked her sellers to give us all their inventory so we tell sellers.
Give us a spreadsheet everything you got and then destroy those into how we use data.
Do we have it we have a big pool of them in Torrey millions and millions of items that we can potentially share with their buyers and then from that we Whittle it down to a small set of a relatively small so excuse that we show fires when they open.

Jason:
[19:45] So how are you soliciting sellers.

Ashvin:
[19:50] Are sellers are Swedish settlers faced in the you asked me if sellers we also have a team in China to work with our sellers in China today,
about 70% of our sales come from sellers that are based in China and leave it to you in there that helps find and work with our sellers. They're actually found is just.
Just looking at the broader internet.
And selling like as a as a third-party sell on the Internet it's just very challenging to find places to sell on the internet there just aren't enough places to sell.
There's some when we go and talk to our sellers in China they're always looking to diversify where they're selling and nobody wants to just be on Amazon.
I prefer for obvious reasons but if you look but you look down unless there's actually not a lot of options Beyond Amazon you got the Amazon you got eBay.
You got a Bye Baby I wish the list rise up pretty quickly and so when we come in there and say that we have no we're going to have to I know ours this year and we've got reasonable volume every two years.
Because a that good volume and be that they wanted they don't want to be wholly dependent on on their Amazon sales.

Jason:
[20:58] So when is Big trans here at shop talk has been Ai and machine learning.
And you guys are like getting a significant amount of data now so that I imagine within an able the possibility of you ever drink some of those techniques.

Ashvin:
[21:15] Death till we have it we have a fantastic day it is at and we have a dataset that's that's different and bigger than a lot of e-commerce.
Players are size because we've got people spinning history to so not only do we have people buying things we have people expressing interest at various different price points along the way.
We have a really expect all data said they're only be getting this to leverage as we get better and better at at machine learning.
But for us via the business is only improved as its scale.
And I attribute that to obviously improvements in logistics and operations that you get his knee Converse business scaling but just as much to to being able to leverage or data in more intelligent.

Jason:
[22:01] When are you likely using that for merchandising as well I cute like so you mentioned like there's a big inventory of potential stuff to offer to your buyers.

Ashvin:
[22:11] Yeah so like internal in our in our company we have nobody we have Noah merchandisers so I think this is one of the one of the Hallmarks as I see it if I can modern.
The modern retail company is it is one that's going to use data my data is the new merchandiser us for one of our internal mottos so.
And we can we learned this the hard way we actually it a few years ago we we did hire some folks with more traditional retail backgrounds and we had a hard time internally reconciling.
The air intuition was laughing right we just had a hard time reconciling that with with the day that we were seeing.
And so it's trying to get these Two Worlds 2 that's it come together as challenging but I think just are we got nowhere we're engineer's by training and that sort of our DNA.
And out we we like to call the numbers and and and only talk about you comes and retail merchandising is like the core piece of that where we do spend a lot of time.

Jason:
[23:09] So have you guys developed any of your own models are you using any of the commercial or Open Source Tax like what's the jewels that you're using.

Ashvin:
[23:17] We use while he's a lot of Open Source.
We do use a lot of open source code to take glue iron machine together but we're not using any off-the-shelf solutions for Ray I so we we build their own data model as we've got Folks at experience machine learning.
I bet spend time tuning the models and then also thinking about how do we like what what types of data would make this model even better,
and how do we go capture that data so a lot of what we talked about internally is Howard data structure and how can we structure it better to make it more effective writing everything.
A lot of people ask me about about data and about a I and I always tell them that it just starts with structured data you got to have a data set and you got to have a schema that's easy to work with.

Jason:
[24:04] We have lots of the sort of more old-world clients in the the starting points for a machine learning isn't even doing any machine.

Ashvin:
[24:12] That can you get the data.

Jason:
[24:13] Just about getting a.

[24:14] Attributes for your data and another thing we talked a lot about because it's a coming problem is it a government so I can just making sure you have the the right rights to leverage that date on all the way she.

Scot:
[24:26] She mentioned can I join in on this so you mentioned you get this did data,
do you actually didn't go and and go to like the manufacturer and say hey your price is too low if you know you're at $12 and if we did 899 you are model tells us we could sell twice the volume is that is that a example to use case.

Ashvin:
[24:45] Yes so we have got me so that is like an example of division we haven't actually gotten it we haven't actually done that just yet but yeah if the core piece of our technology is that we can look at it and I didn't estimate the price that were going to get for it so.
We like to have a good sense of what we're going to sell something for before we even put it up for auction before I buy or even sees it.
And so we can look at our in our million just using save this these are the things that are going to perform well,
I'm can we go get them for for better prices or can we how do we make this how we make these price-points works and they're there two ways that we can figure out how to how to make advertise ask you to sell it at a higher.
Price that we think we can get a better price for or how do we lower the cost on the supply side.

Scot:
[25:28] I'm convinced this is what drives a lot of Amazon private label you know the,
the brands would tell you that they're just stealing their data and stuff but I think what happens is you know I think Amazon looks at like khaki pants and they see there's this conversion gap down at you know X dollars and then they will go and recruit Chinese sellers to fill that Gap and then.
And we're like lahren you know some private label at that price point in there and I think they're looking more of conversion day that you kept getting data with sexy little bit.

Ashvin:
[25:54] What's interesting about Amazon so like we we get compared to when we talk to investors obviously Amazon's the Shelf in the room and they want to talk about how we are different from Amazon Amazon everything is Sartorius on Amazon.
Amazon has his wealth of kind of search oriented conversion day that somebody types in khaki pants and they can see what percentage of the khaki pants search volume has been fulfilled.
We don't have that meeting we just have people open up the app and it's almost like a news feed of products and so we have to clean and we have to clean and make inferences in in in different Amazon.

Scot:
[26:32] So just to change topics little bit so a lot of people contact me cuz I'm known in the marketplace world marketplace.
That's great it's going to be harder than you think it is because unlike you know what say you were going to build like a Dollar Shave Club or something like that what's nice about that business is you you you control one side of the equation right you control the supply Dave's go to bring demand.
You chose the what I would say is at least twice as hard if not for ex's heart of building Marketplace you have to not only do have to go build the buyer side if you could build the seller side so it's kind of like simultaneously building to businesses and you. There's probably some.
Scot rule of the square of the number of sides to marketplaces you know that the exponent of the equation has that been your experience that is kind of getting to the school you're at.
Arrow on one side of the boat too hard and they end up going in a circle to acquire all these fires the bars I have a terrible experience cuz there's not enough Supply logo acquire Ali suppliers they won't sell anything till at RIT because I didn't.
Selling a product you have some scar tissue to share with us.

Ashvin:
[27:37] I absolutely I mean this is like this is what working on all the time so try not trying to climb the ladder on demand and Supply at the same at a similar rate.
On the challenging and visit this is why it's really hard to grow a Marketplace faster than it is very hard to grow,
American pit playset and I can exponential rate it takes time to grow marketplaces until we've been fortunate enough to,
the mostly double the business year of the year and even as we try and double the business of feels like the wheels are about to fall off either on the supply side or on the demand side.
And interrupt you to see some of the conversations that go on internally it's always will be one channel screaming about not enough buyers in another slack Channel screaming about like not enough to use for a certain type of visors just like,
constantly it is it feels like a battle everyday and then when you take a step back and look at the business we actually like.
We actually got some stuff done and we grew even though that every single day feels like it feels like a dog fight.

Scot:
[28:39] Is that the hardest thing about building tophatter or have you been surprised by the back end scale it's taken or the customer Discovery what's been the hardest problem in hindsight that the kind of surprise you.

Ashvin:
[28:56] I made a promise to be changed your every year right now one of my biggest challenges around is trying to understand or Supply better and if so can I go to the data model we see that are 21 a big challenge is this your process.
Dish Network Network routing with this this year is that we are our customers tell us that they want to see more things in the marketplace.
When we first launched in 2012 and keep my everything we do is real time so when you open up that app everything that you're seeing is is available right now in this moment is going to sell the 90 seconds or anybody in the world named in the world that opens up the apps in the sea.

Scot:
[29:29] Just have a QVC as kind of a model.

Ashvin:
[29:32] It's like QVC.
And in a when we first launched in 2012 because we had such a small demand days we can offer that much to fly so if you open up the app in Primetime you know if you open up the app there might be like 5 things for sale.
Because that's all that our demand could so bored and that year,
going to see more than these five things available and then in 2013 or demand a screw and we can put our supply base also and they said the same thing we want to see little bit more so every year it's it's kind of the same thing this year if you'll stick.
because we we see the we see the option to break into all these different categories of issue with this deal that we do have and so,
a lot of what we spoke Asana is trying to understand what categories do art buyers want to see,
how do we get them how we brought in our category how do we go deeper into categories that we do have to sell better and better things so it's it's,
trying to trying to build that Insight while then why like I'll mark while I system is is evolving is it super challenging and we have a pretty big.
You're pretty big team of of analyst that.
Are there looking at data all the time trying to trying to understand how the system is functioning and build more insight into what we should do tomorrow.

Scot:
[30:47] We have a lot of entrepreneurial type sellers that sell on eBay and other platforms give us like the Quick 90-second Pitch like how do you pitch a seller to be on your platform.

Ashvin:
[30:57] Yeah we say jeezy I use give us all your montuori and will we we we we connected with our bye week we look at what are bars in Taiwan.
I'm willing to stop everything is going to do on you can tell us also if you've got a floor for the the things that you want to be like that price that you expect to sell it at and we won't listen unless our production models are telling us that it's and it's all about that rice.

Scot:
[31:19] Set a three hundred million kind of run rate at a lower aov do you have like 30 million to buyers and sellers how many buyers like I kind of wanted to 30 minutes.

Ashvin:
[31:32] Papyrus like last year we had I mean an exact numbers but last year we had over 2 million buyers on the.

Scot:
[31:40] Are the churches buying for a minister.

Ashvin:
[31:42] Did buy a lot of stuff.

Scot:
[31:43] That's awesome yeah that's cool yeah.

Ashvin:
[31:45] Dad and Elvia to get to the point like a 10 lb of 10 bucks I got 10 to 15 hours every transaction size to make this business work they better be buying a lot of things,
and remember the classic thing about e-commerce businesses,
1015 years ago is the first question to ask you what's your HIV and if you're able V is like in the ten to $20 range like.

Scot:
[32:07] Does the seller I would ask one thing that scares me is you know I give you all my inventory and I see all the stuff going on there for a dollar can I have a reserve or or do you guarantee if I want 10 bucks you'll deliver 10 bucks.

Ashvin:
[32:19] Yeah so today on today I currently back a lot of the risk is taken by the sellers but we just Asher sellers that we're not going to run unless we think you're going to get a.
We are prediction models think that you're going to get a price above the price that you want but I want to go rolling.

Scot:
[32:35] Give you a desired price point.

Ashvin:
[32:36] Writes about wanting a rolling out this year is for us to take the risk and so were you know we got all the data we're confident are predictions into at some point in time we feel really comfortable taking the rest and so from.
From from a perspective a seller can treat our platform just like they treat any other.
Marketplace so just like you work with eBay just like you were Vans I just give it everything at the best price that you have and what will sell it and will give you the price for it.
We also have the option to take apps out on it too so.

Scot:
[33:05] So if I'm if I've got a like a great price on this widget and we we,
do this I know when a lot of sellers are working with like the Amazon and eBay deals team there's a certain kind of death what what kind of depth would you ask a seller to provide do you want like 10 of a widget a hundred a thousand and one.

Ashvin:
[33:22] So today we don't work with our Salvage closely for volume commitments that's another opportunity we can have so we we anticipate that as we start to take as we start to give sellers commitment and we're trying to get better prices from seller anticipated volume of famous will go.
Along with it today we do today we get more volume to the sellers that are willing to take more risks.
And they don't have to take that rest me like we're happy to take that risk and so it's a little bit of a kind of value proposition mismatched right now they were excited to address this year.

Scot:
[33:51] The last one is one of the knocks on some of these folks like an AliExpress or a wish is you in this thing and you you're all excited and then like it takes 6 months for the.
How to get to do something you've got that feedback on in and have you work with your sellers on how fast you expect them to ship these things and get them to a consumer.

Ashvin:
[34:10] So we expect the sellers to ship right away doesn't necessarily mean they're going to get it right away the customers that we have.
Longer for value and so we haven't seen the shipping times be a huge problem and I really think there's a Class A customer that wants to get their item right away but those are nicer of those aren't really our customers broadly speed.
Our customers though want value one thing that we we sound is that our Logistics are going to improve what scale.
And so as we scale up we found that are sellers are willing to open up warehouses closer to the man.
And we're willing to give them more volume if they open up their warehouse closer to man into labor faster different ways to get the products to the customers faster and are using a Marketplace model are sellers are willing to,
I'm investing that are averaged it just be clear are average time delivery times are in a couple weeks if it's coming from from China and if it's coming from the US with a bunch of our inventory comes from the u.s. to is Justina today.

Jason:
[35:13] And does the buyers see that delivery time before they did.

Ashvin:
[35:17] And it's an important component so if we tell our sellers that if you can ship faster you're going to do something more to man on your products.

Jason:
[35:25] Cuz I feel like that's an incremental fly in the wish model is like you're off and pretty far in the purchase funnel before you find out.

Ashvin:
[35:33] Yeah you know I think they experimented both ways so I think that take a fairly similar mindset. Some terms of trying to figure out where it where to break this news to the customer quote on quote,
and obviously it's it's pretty bad experience if you break it too late in the funnel but I'm sure they're trying to learn to an experiment with where's the right place though.
Frostburg to share it right up front so people so we set expectations right away.

Jason:
[35:58] So you mention in the beginning I always encourage people to download the app so I'm assuming that's just the sort of preferred iteration of the experiences the mobile app.

Ashvin:
[36:11] Yeah so most of our business is done I mean the real time experience and so we saw things we sell things that are only available for 90 seconds.
And so we do have experience but most are web expenses primarily for our seller so all of our seller tools are on the web and that's how sellers access it and our our website works just the same way that are at this.
Vast majority of our business is done on our apps on on our Android app Android or iOS.

Jason:
[36:40] So almost everybody that has a strong mobile experience I get the metrics are.

[36:45] They're on the mobile app experience the challenge usually is maintaining that that high active user base on the mobile app it sounds like.

[36:57] In your case it kind of matches pretty well to the demographic because he's.

[37:02] People that are that are going to want to be frequent purchase orders are you seeing like significant turn like what are you doing and try to maintain.

Ashvin:
[37:11] Yeah I mean we got a liver specialist Discovery shopping experience together.
We focus on engagement I think this is a big difference between us and Amazon we like to ourselves as the anti Amazon.
And anyways Amazon focus on making things Amazon focus on the buying experience we focus on the shopping experience.
Games on focus on efficiency they want to get you in the app and out of the act like my could you and find something quickly get it boom you're out where the opposite where did we help custom we help our.

Jason:
[37:41] I want to go lighter.

Ashvin:
[37:42] Yep we want we.
Amazon helps you save time tophatter helps you spend time we want to go for us like we want our customers to be in the eyeball time we want them to be discovering great things even if they're not buying and I were constantly iterating on on that experience.
The primary feedback from our customers that they end up turning out is the fact that we don't have the breakfast apply that they're looking for.
And every year that challenge every year like we're able to offer more and more Supply obviously we want to have it overnight love love to have it happen tomorrow but it's it's it's just a process of building outdoor supply this.

Jason:
[38:16] It's interesting the VC's are comparing you to Amazon they may be should be comparing you to like Clash Royale or some.

Ashvin:
[38:21] Maybe there's a there's a game like experience to us.

Scot:
[38:27] Chef fortnite wear like everyone's on an island at the Battle for the deal.

Ashvin:
[38:30] There's a will there's a.

Scot:
[38:32] Fortnite Meats products.

Ashvin:
[38:33] People love the competition.

Jason:
[38:34] Gamification for sure.

Scot:
[38:36] A quick disclaimer Jason Scott show takes 10% of any ideas that utilize from the show that are lawyers make the same things.

Jason:
[38:42] Do you disclose like roughly like what the active monthly users are on the mobile app is it like just I'm just trying idea border magnitude vs. Traditional shopping site.

Ashvin:
[38:54] Yeah I don't want to get there like that monthly numbers.

Scot:
[38:58] Denis Entre Nos RMA you there. You and you you probably know like time of day.

Ashvin:
[39:07] They're absolutely is in and where it where are part of our business is making clever matching the right amount of Supply with the right amount of man so we have two man models that tell us.
How much how many buyers we expect to be showing up,
at this very moment and then what Supply we should be showing in this 90 second time frame so we have these models that tell us how much we should be listening to get that information so we have to know.
We had an all the stator in terms of sharing though we sell over a hundred thousand items today and I just give you a sense.

Scot:
[39:42] Are you limited by the time of anything since 90 seconds there's only so many things you like so many slow.

Ashvin:
[39:50] One the middle the night there's less people on the side there's like less people on the app.

Scot:
[39:53] Like let's say there's 10 people on at anyone given second do they they all see the same thing going for 9 year to you now start just going to say there's some point where it starts to make sense to show some audience maybe a ring and another people at electronic item.

Ashvin:
[40:07] Right so ever so there's there's a everybody has a different sort experience so you can sort down and see you could do that access to everything.
But it was me different place in this world so it's personalized to the person the information we have they said about the person based on what's available at this very moment.

Scot:
[40:25] So you can go broader category and get more personalized and leverage those 90 seconds it seems like.
I going deeper would be good too because you know a lot of sellers I've talked to you the kind of have these fees opportunities to.
They don't see no volume come in there from you which is like where these deal platforms gets these really crazy great prices.

Ashvin:
[40:46] We can sell things in volume to it just won't part of the Beauty from my buyer respective is that if you don't win right now you don't know when that's going to come up again.
And people in by arbovirus and set reminders on certain items so even if they don't win it right now will send the notification the next time it comes up and sometimes the next time it comes up is in the next hour sometimes it.

Scot:
[41:05] Never lose our kind of you know to notify them cuz I've expressed interest yeah for the show it the first thing.

Ashvin:
[41:10] Exactly exactly so so we do we are able to sell things in volume but it isn't this really happen like in the same 90 seconds.

Scot:
[41:17] What what categories do you want to add the most.

Ashvin:
[41:20] Your work cited going to break into apparel for us like we find that.
We think that the experience that we have or what we're trying to cater to a broad mass-market audience but our audience today is limited by the supply that we do sell so a few years ago we were only selling jewelry,
and our audience is 90% women.
I'm now we're selling a lot of electronics in her audience is closer to 6040 male female because there is something for guys to buy and sell.
I'm excited like break into apparel and a bunch of other categories shoes.

Scot:
[41:56] Pro tip hair extensions so hair.

Ashvin:
[42:00] 10% for you guys.

Scot:
[42:01] Go to hair extensions of the number one seller on AliExpress and it's like crazy volumes there's something about the price point in quality of imported from China hair extensions Jason's more of an expert than I am.

Ashvin:
[42:13] I got high.

Scot:
[42:16] It's all about the weave I think you should definitely look at this hair extensions.

Ashvin:
[42:24] We saw a lot of drunks video.

Scot:
[42:24] So drones are second only to two hair extensions.

Ashvin:
[42:30] And I also tried to break in international markets so today were were 85% based in the US we think in many ways the business and be a lot more interesting outside the US.

Jason:
[42:45] Very interesting is a trance personalized at all I can like do you use what you know about the user to decide what gets merchandise on that home page.

Ashvin:
[42:54] Yeah we so so there's there's a set of items is available to everybody that's that is on the app at this given moment but we stored it based on the information that we have about you.
I didn't know if it's you bid on a lot of electronics items you're probably see Electronics items do kind of times that are available you probably see sword at the top so we do our best to personalize it in that way.
We make decisions about the demand that we're seeing today in the supply that we have available we're also.
At Ross magnesia know what from that pool we should be listening to sell at this given moment in time.

Jason:
[43:31] Well this is been super fascinating as men we really appreciate you coming on and talking to us,
but it does happen again we've used up all that a lot of time so blisters want to continue the conversation we encourage you to jump over to our Facebook page and if you enjoy Today Show please jump on the iTunes give us that 5-star review and then you can download,
tophatter from there.

Scot:
[43:53] Yeah and obviously people should go in and try the platform do you do you publish stuff online where can people find you online if they're interested in learning more.

Ashvin:
[44:01] Yeah you can that you can find us on our Facebook page fault on Twitter.
Where are we have a were active on medium so we're publishing content everywhere we're also we're also watching it national TV campaign also so we're about to roll out a pretty big TV ad campaigns of silver,
TV channel near you too.

Scot:
[44:21] Congrats I'll be fun I look forward to.

Jason:
[44:23] Going to star in the first.

Ashvin:
[44:25] Yes absolutely.

Scot:
[44:27] Just can you give listeners a little preview of a little little sneak peek.

Ashvin:
[44:33] Yeah I think the world were appealing to the folks that want to have a fun experience shopping and so.

Scot:
[44:41] Awesome watching NBA jerseys.

Ashvin:
[44:43] Not yet.

Scot:
[44:44] Okay well we really appreciate you joining us I know you've been really busy here at the show out recruiting sellers for the platform so we really appreciate take your time.

Ashvin:
[44:53] Thank you Jason thanks God.

Jason:
[44:55] Until next time happy Commercing.

Apr 16, 2018

Episode 127 is an interview with Katya Ermak, Director of E-Commerce and Digital Marketing at Sabon NYC.   We caught up with Katya Ermak at the ShopTalk 2018. Katya is the director of E-commerce at Sabon NYC.  We talked with her about how Vertically integrated brands think of Amazon.  How they leverage their omni-channel tactics and the future of malls.  How Sabon is approaching e-commerce including their Magento platform, and some of their current tools such as Dynamic Yield.

Episode 127 of the Jason & Scot show was recorded on Monday, March 19, 2018.

New beta feature, Google Transcription:

Transcript

 Jason: 
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Monday March 19th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Wingo.

Scot: 
[0:38] Hey Jason welcome back Jason Scott show listeners we are podcasting live from the shock talk show here in sunny Las Vegas and we're excited to have on the show today Katja or Mac.
Katya is director of e-commerce and digital marketing at sabon NYC she has also spent time with Brands such as rainbow Century 21 and isobar welcome to the show.

Jason: 
[1:02] Thanks for joining us it's a little known fact but Scott exclusive.

Scot: 
[1:06] Did we use it as your.

Jason: 
[1:07] FedEx in his own bath so.

Katya: 
[1:09] That's great to hear.

Scot: 
[1:11] Yeah I'm going to have the bath bombs.

Jason: 
[1:13] So he's very excited about having you here when the things we always like to do on the show is talk to her guest.

Scot: 
[1:20] About their backgrounds and how they came to the control so could you.

Jason: 
[1:20] And how they came to their current role so could you tell us a little bit about as you got into the industry and and what your current role is.

Katya: 
[1:28] Wright's Okerlund director of e-commerce and just the market at sabon started there about.
Two and a half years ago before that I decided I was with isobars.
Worked on their engagement seem he ran out of states and before that I did a Content management for Rainbow shops.

[1:51] E-commerce was definitely something that,
I was interested in when I was in college I have a fashion business degree and I was just thinking of where can I go with that degrade dad would make the most value out of my account.
And I got a couple and their shapes e-commerce internship especially one with Century 21 which really to cough.
And I love my job love what I do eCommerce is fantastic and it's such a growing animal and there's so many different things that you can do with us.

Scot: 
[2:26] Did you go to the fitt isn't that the big fashion School in New York.

Katya: 
[2:30] Right now I went to Berkeley College which is Elsa in New York.

Scot: 
[2:33] Okay cool awesome yeah I mean a lot of young ladies that are studying fashion and there's a lot of different ways it go to nursing you chose e-commerce you feel like it's still scratches your fashion itch or.

Katya: 
[2:44] Absolutely that was like a business degree with a fashion flavor to it and as a side like.
I was interested to see I came to the Barclay because I wanted to be a buyer but while I'm studying there was.
Digital start taking off at that time and people start talking more and more about it and how did brick-and-mortar it will be going away and at some point it was very scary for fashion students because there was not a lot of job available and them.
I was looking for something that's going to be very up and come in and which I think I did a very right turn.

Scot: 
[3:24] Do they have chai have classes on how to do some digital marketing in that kind of thing or did you have to come pick it up on your own.

Katya: 
[3:30] Pick it up on my own I think we had maybe social media class or something like that.

Jason: 
[3:38] And can you tell us a little bit about like what the scope of your role is now so are you you responsible for operating the website and digital marketing.

Scot: 
[3:44] Responsible for operating the website and digital marketing and.

Katya: 
[3:49] The right I usually have I go about this the question like that as Dad to company currently has three ways of doing business so we have brick-and-mortar stores and in New York and we have wholesale Channel and we help outside so.
Each channel is has its own Department.
So my department and I'm head of the eCommerce department is responsible of running the website all the maintenance all the development all the digital marketing aspects.
Currently we doing things with be social with Google with your panel ads what do Google shopping ads email marketing.
Merchandising of the website the only thing that I'm not touching bases inventory and their warehouse relationship.

Jason: 
[4:39] Can you tell us a little bit about subbing for our Wizards I might not know I think of you is a vertically integrated brands.

Scot: 
[4:43] Think of you vertically integrated Brandt to you you guys make your own.

Jason: 
[4:47] Products in you sell them direct as well as through wholesale channels is that right or.

Katya: 
[4:52] Sabon at the bath and body products to reproduce by describes different moisturizing moisturizing lotions where electro brand,
originally we're from Israel.
So our products and natural in the based on that sea salts and minerals and that seemed muds original or the company was billed as the,
franchise which country was its own franchise had at the store it's only Commerce about a year-and-a-half ago we got bought out by grouper shop.
And older franchises for kind of put together and now we're. Like its own company we.
Getting our products from Israel from our Global office and then we end up here you missed it then floss with your wholesale as well.

Jason: 
[5:46] Got you and you have a number of stores as well.

Katya: 
[5:49] So in New York with have down stores.
Which primarily in the Hat and one in Brooklyn One Long Island around the world we have about I want to stay 200 stores.
I'm waiting when country is when France England New Orleans Japan Korea.

Jason: 
[6:12] Don't you very cool that's one of the questions I'm always interested in when there's a brand selling online that also own stores.
Is some of the omni-channel aspects but you know so like.

[6:27] Any attribution and figure out how the website is potentially driving people to your store or any any sort of digital experiences in the store those sorts of things.

Katya: 
[6:39] It's always has been an ongoing chat challenge for us.
Because the company was a franchise so originally it was just about driving Revenue we didn't talk about how,
what the customer experiences are what are they experiencing the stores,
with the expansion of Commerce and how it's all blending together how we can drive traffic for both and support each other so.
This is currently changing and though we talked with talking about it was talking about different experiences that we can create one of the projects the wave.
Working on right now is offer and we start War friends.
So glad classes and understand our stores and just set it up like serve booking and the schedule and through the website,
set of creating the tide out therapy, the experience with,
tile store experiences but it's an ongoing challenge will always talk about it right now and will always thinking of how can we restore the very beautiful and we have this personal experiences when you get.
Hand treatment there is a big whale when you can start a product if people owe people doesn't know customer doesn't know our brand and they're the coming to the website that getting.
Very slightly different experience rather than to the store so it's always a conversation how do we get that will experience the very personal that spends on the website and.
It's an ongoing conversation ongoing challenge for us which I'm hoping to grab more answers on the shop.

Scot: 
[8:15] It would be a Jason Scott show if we didn't talk a little bit about Amazon and you talked about wholesale is Amazon so when you guys wholesale with and how would you describe your your kind of Amazon strategy and I'm thinking around them is up,
partner slash competitors which is always a very much a friend of me with for everybody.

Katya: 
[8:34] So that the company has a partnership at wholesale partnership with Amazon I think it was started about 3 year 3 years ago it took off and.
Brought us Revenue brought us some sales and brought the brand recognition but we experience on the challenge of that it's very hard for us to manage and change the prices and change.
Kind of given that experience that we have.
On our Ecommerce outside or in the stores so with that being said but decided to launch Amazon is a Marketplace.
With a felon buy on Amazon and we.
Got a partner Channel advisor which is helping us kind of guiding us through and helping us set it up that channel is currently rolling out so I think we should be good to go I started selling there in about couple weeks.

Scot: 
[9:26] Thanks for being a great that and then are you guys going to do hybrid we still do some wholesale and some third-party.

Katya: 
[9:35] So we think when we going to go out there Amazon Marketplace looking to see what's out of traction and we getting it sad is going to be different products.
That wholesale had done from with Amazon Marketplace we're going to be doing and we'll see how it's going to go if it's going to be,
very successful we're going to slowly over allowed their wholesale piece off the table or,
maybe it's going to be a bad idea to keep them in a conjunction working so it depends like really wanted to see and learn first to make it in time decisions.

Scot: 
[10:07] Brickell conditioner at the path to purchase showing you had to head out and I wouldn't get a chance to talk about it but I'm in the queue today it was interesting,
as Brands brought up to the challenges with with Amazon more and more of them were being sought for this hybrid model so for example one brand was complaining Amazon wouldn't order their product fast enough and one of the panelists,
because most actually recommended you know you can actually have your you could you can you do Marketplace for that same item and then if Amazon sales your item,
you can at least have some guarantee that your product will be there there some other examples like that were in the early days of hybrid it was just selection you know Amazon has ex and I want them to have x + y and now there's like some more advanced strategies there for.

Katya: 
[10:48] Marriage Style.

Jason: 
[10:52] What are things that was interesting to me about any on the show is that I have this right you were one.

Scot: 
[10:58] Very early.

Jason: 
[10:59] Hours of dynamic yield.
Is a software tool for doing personalization based on some some AI deep learning your chop talk those are the big buzzwords is personalization and Nai in so I was I was just curious.

Scot: 
[11:10] I was just curious what kind of experiences you were you were in able.

Jason: 
[11:19] You are enabling for your Shoppers with Dynamic yield and is it just email is it on your site and.

Katya: 
[11:27] Sabon was the very early adopter robbed and I make you up and it just started out.
And Esteban will love Dynamic yield and we pretty much do everything with them. Potentially.
Did done utilizing their platform we just roll out and I think in August.
Product recommendation on our homepage on the mobile on our product pages on in the car.

[11:59] We also serve banners all over Bennett's in the website was served through the night make you all them would do it be testing reason Infinity.
And we starting up looking about 30% of them would just roll them out in conversion rate and customer satisfaction.

[12:22] I think there's so many things that you can do is then I make your old and strategies that we can Implement and you see it like I constantly seeing their case study that they're releasing or how they communicate with their how they work.
There are other clients on the smaller scale of what the what weekend do mechanics executor so many things.
Execution part where smallest unit sabon so it's a little bit harder.
I think they doing an event in April in New York and it's going to be talking about more proficiency how different strategies for product personalization.
We started with the product personalization on a homepage was started with a B test and soda personalized ended by customer who did its website and then we'll switch they were committed the resistance in today.
Animation that learning in the recommended products that way and we'll see.
Tremendous increases and sales in conversion other things in there and Genesis.
So interesting and it's.
Why don't those things that blowing my mind do you put in a smoke JavaScript X all on your website and you can.
Change in the real time you can you can test,
different with the with Dustin different pages would destined for muscle ache if you have how many different fields you can have and which one converts bad or so before before releasing anything pretty much on the website experience-wise for.

[13:54] Customers were always faster always create 3/4 in Arizona with Dustin which one performs better same goes for all of our batteries all the copy that would do for the.
Banners and difficult to actions and different images and different backgrounds and it's open it up so.

[14:14] It's open. So many opportunities to learn who your customers and what they like and kind of a learning curve you constantly it's not it's not a platform that you just kind of.
Started doing the things for you to constantly need to learn.
Your phone those tests but it's open it up in a big door in personalization and making you a customer experience very personal for them.

Scot: 
[14:39] I'm not a personalization experts maybe you guys can answer this so so does it kind of learn,
okay this particular customer loves the flavian of the lavender or something then it'll show them more of that kind of thing I know it sounds like you got some maybe optimization kind of testing stuff,
but then the personalization does it kind of like learn what people like and then it changes the website based on those earnings.

Katya: 
[15:01] Right so it's obviously a quickie that every single person who comes in they said they cook it and we can sell what.
What Journey did they had enough said what kind of batter the cloak on,
what kind of products they looked at since they looked at the exfoliating products are monosaccharides and products,
did they make a purchase at the after the cards post was there about cars value in Basin that information.
The next time to come back we're going to serve them a different experience which could be anything we can recover the products if they were added something to the car is that the dead purchase.
And then they come back maybe it will show them that product with the potential deal that they can get for that or if they weren't.
Product page and then the added something else of the cards will show them assume all products in the car this wall there's a lot of different scenarios they can think about is how to personalize.

Scot: 
[15:59] This is some married to Magento or is it a it's at Works within him.

Jason: 
[16:03] That's a space tool you can Implement in NY Bridal platforms I think you guys impact are running it on Magento though what's was cool to me.

Scot: 
[16:13] We had personalization for a long time.

Jason: 
[16:17] What are the better you get to know the.

Scot: 
[16:18] Where the better you get to know the customer over multiple sessions you you can stay.

Jason: 
[16:22] D'Amore.

Scot: 
[16:24] I've been to that customer in that that's still really important.

Jason: 
[16:27] I still really important for monocytes though the majority of visitors are first-time visitors and so.

Scot: 
[16:33] So where a lot of personalization is a Scorpion falling down.

Jason: 
[16:35] Falling Down is.

Scot: 
[16:39] Every customer is unknown so they get the same generic experience and.

Jason: 
[16:40] So they get the same generic experience and you know you.

Scot: 
[16:43] Come back over and over again get this great personalized.

Jason: 
[16:45] But they are small percentage of the.

Scot: 
[16:46] Small percentage of the total traffic better now is what I'll call.
Incontact in session personalization where they like in Forever explicit and implicit signals.

Jason: 
[16:54] Concession personalization where they like in fur explicit and implicit signals from.

Scot: 
[17:02] The browsing you're doing in the single session.

Jason: 
[17:04] 10 + *.

Scot: 
[17:05] Dynamically personalizing for those unknown first-time visitor.

Katya: 
[17:09] Describe Viking Camper for I'm sort of some sort of actually writing this scenario would the customer perform some sort of action like this subscribe to newsletter click to the body scrub at it since the car we're going to start time at the front experience based on what they see in.

Scot: 
[17:23] Do you start to so sounds like it'll also work with display ads which is cool how about like your email marketing Ken can I personalize your email marketing so you know some lady likes a certain sent you can send her,
Fort Worth jet something in her cart watch pie easy with cart abandonment emails but any personalization keep personalized like the emails you send out to.

Katya: 
[17:42] Within Emma Guild you can upload the back so that we can put their dinner,
your vagina inside of your email and you can serve them to like you have your content of the email like a promotion your content and down on the bottom you can show.
Products specific was looking for that customer.

Scot: 
[18:03] That's the first way that these.

Jason: 
[18:06] This way that these tools.

[18:10] Well then it is for the whole platforms of.

Scot: 
[18:12] In the cool new feature that these guys are all.

Jason: 
[18:16] Starting to roll out now is personalization.

Scot: 
[18:17] Right now is personalization at open.

Jason: 
[18:21] You can imagine like you send.

Scot: 
[18:23] Email and if you have some personalized content in there it may be.

Jason: 
[18:25] Personalize content in there that maybe is.

Scot: 
[18:30] Has been personalized to the weather or something you buy.

Jason: 
[18:31] Whether or something you browse for.

Katya: 
[18:33] Based on time,
for example if if we're running a promotion or some sort of dro sale so while the promotion promotion is running you going to see a clock down so you open,
you open up your email and see if you can see it back down that says like,
this promotion going to add in one hour if you open it at 30 minutes is going to say the promotions going to end 30 minutes and when the promotion ends in from simple to say I miss that and I open it up email after a week is going to show me something.

Scot: 
[19:01] Buckeye Jail.

Jason: 
[19:05] And its tail when the person oppa.

Scot: 
[19:07] Awesome so it sounds like you have a relatively small e-commerce operation guys are dog doing a lot of pretty cutting-edge things what was kind of next on the road map where do you see e-commerce going.
I with you guys then we'll talk Bradley about where your overall you so you can respond.

Katya: 
[19:23] So another says so I was talking about.
Sorry about that was talking about experiences Brandon to gather their stores and online we're working for another big project for us is the CRM.
And we have a little to program and how how do we.
Like the date of the week coming from magenta from our e-commerce platform is very clean the date of that we getting for people who signed out in the stores for loyalty program is not that clean so right now we're working on how do we combine,
dos2 Joseph data points and create that.
Loyalty emails and loyalty programs campaign so we talked with our loyal to customers at the same.
But you can start at them the same it doesn't matter where they shop and where they saying up because we don't know but we think there is a lot of Gap and there's a lot of them.
Cross reference of the people shopping at the shop in the stores and the shop online I feel like it's Crossing each other this year,
we talkin in the company lied about CRM and loyalty and how do we bring this together what kind of campaigns were created and what kind of software we using one of their things why we came to the shop talk and like they do is mine,
what is to find a CRM solution that we can use all of the data sort of segments that other than Kinect.

Jason: 
[20:54] Very cool and there are several of them there so I suspect you'll you'll be successful in that mission you mentioned loyalty programs and that's been interesting to me cuz.

Scot: 
[21:00] You mentioned loyalty programs and that's been interesting to me cuz that.

Jason: 
[21:04] Feels a little bit like one of the themes of this year's show in.

Scot: 
[21:08] Ulta Keynotes.

Jason: 
[21:08] Ulta keynote they they mention that like the wealthy members represented something I want to say 90 or 95% of their total revenue which is.

Scot: 
[21:20] I mean astronomical the Nike Chief digital officer talked about.

Jason: 
[21:21] Michael the Nike Chief digital officer talked about how how successful their their Nike Plus loyalty program had been.

Scot: 
[21:28] Nike Plus royalty program it been it sounds like you've had a loyalty.

Jason: 
[21:33] You had a loyalty program for a while is it like a straight points for purchase program or how does it work.

Katya: 
[21:39] So
Historical we had to separate program Swan was the e-commerce little to program when you collect points for every purchase to do you make and then you released and then you redeem it for purchase online and we had a loyalty program in the stores.
I'd same idea it was a little bit different so e-commerce it was once a once-a-month going on dollar stores with tiered I think it was five tiers,
so this summer when we just launched the new upside in August and will I see the new pair of system in July.
2027 able to pick you up for a lot of different changes and we'll launch our new loyalty program the idea was this to combine their loyalty program in the stores and and online,
kind of make it more sing with experience so it's currently is the same program you Wednesday for every dollar you spend.
And then you can redeem at there's no cap and Redemption you also is a part of the Lord's apart of me also get welcome coupons and will be found as Dad.
There's two coupons when is set up but you can use the next month.
And the next next month so that's something that we actually got from overcome our parent company in Israel this is how they do it and they saw a lot more traction with just given a 10% sign up coupon,
people people people coming back to redeem it more often and it works pretty well for us but we have a birthday.

[23:17] Coupon that we said that the birthday gift that was on for the people to read them during their birthday month.
And will do a lot of activities for our world passport will call them roll past board members would do events in the stores where are we.
Do different treatments or different parties and we have I would do like new collection previews for them.
It's another big thing that would Jordan like one of them stuck in before about CRM and how do we connect them it's still a little bit separated in terms of the promotions and like.
I feel like in the store part would do much better much better job for the Loyalty rather than on the website so we talkin about how we can come by and make that experience more seamless.

Jason: 
[24:04] Since you mentioned that you were going to look for some CRM Solutions it shoptalk we're sort of one day another show a day and a half in the show.
Have you seen anything or or setting on a sessions that would be interesting to you.

Katya: 
[24:20] Not yet.

Scot: 
[24:23] Did she the Ulta keynote the kind of edger talk about experiences in a store,
she's saying they're going to add a lot more experience than I already have like a salon in the story but I think they're going to add you almost more like taking it to a spa level of so it's kind of reminds me of some of the things you talked about that you guys doing your store I don't know if you saw it or not.

Katya: 
[24:39] I saw something the Sephora was talking about it and they were showing all this experience as they did they create it's for their Shopper and this is it was very inspiring conversation the presentation that she had.
She was talking about all of this this is exactly what we're looking for and I think that's exactly what the industry needs and like,
the eve what the economist is moving Taurus is to like for example somebody get a notification that they forgot things in their cards and they're walking by the Sea for the,
that they put a sample in there Carlin Dave it's there so this is why I would email them or send them a notification from there uh.
Dad there's a store and the samples of all been there so you can come and pick it up.
And you're passing by the store you come over talking to the sale associate to give any of that sample while they're doing that the same oh we also do all this experience is in the store treatments would you like to set up this and you know.
Right there and then they perform the treatment on you and all the product of what he's doing the truth then you will receive the samples and then to send you an e-mail.
Where is all this products and how do use them and the price point so then you can come back and either purchase them in the app.
In the under your desktop in the Commerce website or you can come back back to the store to the store so I feel like they're doing great job in tiny tiny and those experiences in this something that.
I really wanted some time and think about it if so I'll come back from the shop.

Scot: 
[26:14] You kicked off what kind of Go full circle you talk about when you started your career,
you were at heard in the stores are closing you want to get me Commerce how do you feel about stores now, they've been in the industry for a while if you think you think the small again and Retail apocalypse thing is over done or do you think it is tough for store what's the future stores.

Katya: 
[26:32] It's interesting that's what the a lot of feel like a lot of things on top soccer talking about exactly like is the freaking word dad or.
As odd involving the different way I personally think and a lot of people in the industry as wild that.
Brick-and-mortar is not that bad but there was people who doing a ride and people who are not quite there yet and depending on how fast they can get there.
What could it mean if they're going to keep their stores or not people definitely looking for some personalized experience as what we can do in a store to make it more relevant the more exciting.
What are those experiences and I feel like this is where the industry going.

[27:14] And I feel like they're at the seam of everything that I said today is about those experiences like what can we make so exciting for the customer.
For them to come back obviously they're interacting with their sales associate interacting with the product when you see can't touch them smell them it's so much different from you, so I feel like.
There's the stores going to definitely stay there not going anywhere but it's going to be involved into something completely different then we'll just have to buckle up.
The bump it right and see where it takes us.

Scot: 
[27:48] Buckle up buttercup a perfect.

Jason: 
[27:51] Place to end it because it has happened again we've used up all our a lot of.

Scot: 
[27:56] The time.

Jason: 
[27:57] But we certainly want to thank you for.

Scot: 
[27:58] I want to thank you for taking time off.

Jason: 
[28:01] Join us.

Scot: 
[28:02] Other folks have questions you're welcome to jump on a.

Jason: 
[28:03] Questions are welcome to jump on the Facebook and continue the conversation there is always if you enjoy Today Show we'd love it if you jump on the iTunes and give us that 5-star review and until you do that we will be buckled up here.

Scot: 
[28:17] Thanks Ryan Scott you're really appreciate you taking time.

Jason: 
[28:21] Until next time happy commercing.

Apr 9, 2018

EP126 - American Eagle former CDO Joe Megibow

We caught up with Joe Megibow at the RetailNext party at ShopTalk this year. Joe is the former chief digital officer at American Eagle Outfitters, he's also served as President at Joyous.com and General Manager for Expedia.com.  We talked with Joe about his impression of ShopTalk this year, his early experiences in the e-commerce industry (including at TeaLeaf which was acquired by IBM), how American Eagle thinks about Omni-Channel.

About RetailNext Conference:

Retailers and brands at scale can apply for a complimentary pass for the CommerceNext conference - The Summit for Next Level Customer Acquisition - Jul 25/26 2018 NYC.  This show is a combination of strategic keynotes from the likes of (Amit Shah – CMO 1800flowers; Sid Jatia – VP, Global Commerce at Under Armour; Charlie Cole, Global Chief Ecommerce Officer and Chief Digital Officer, Samsonite/TUMI, etc.); and tactical ‘how-to’ speakers like Amy Africa (CEO, Eight by Eight) and Facebook expert Emily Hickey.

Announcing the CommerceNext "Nexty's": A new peer-reviewed award program identifying and rewarding the best marketing performances among retail and eCommerce professionals. Awards include “Marketing Innovator of the Year” and “Highest ROI with the Least Resources”. Visit commercenext.com to nominate a fellow retailer for an award and to apply for your free conference pass.

Episode 126 of the Jason & Scot show was recorded on Monday, March 19, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature, Google Transcription:

Transcript

Jason: 
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Monday March 19th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Scott Wingo.

Scot: 
[0:39] Hey Jason I'm walking back Jason Scott show listeners we are here live from the shop talk show in Las Vegas and are one of the hottest parties at shop.
Scott Silverman in Allen Dick's Commerce next party this party is a who's who of the digital Commerce crowd.
A couple of housekeeping things before we jump into a visit with one of our guest here who we plucked out of the party so.
Little thank you for the folks at Commerce Max they wanted to let you know that retailers and brands that scale can apply for a complimentary pass for the Commerce next conference.
That's going to be the summit for Next Level customer acquisition held July 25th and 26th in New York City.
The shows a combination of strategic Keynotes from the lights of 1-800 Flowers and Under Armour and then also tactical information from Amy Africa and Facebook.
Facebook expert Emily hickey there also starting something called the next these which is a peer-reviewed award program if you're interested in learning more about that go to Commerce next.com.
Jason were excited to have on the show Joe megibow Joe has had a story 20 year history and Retail and e-commerce including on the retail side American Eagle Outfitters Expedia and hotels.com.
Then he has been on the vendor side like you and I are today over a tea leaf IBM and is currently operations advisor with Advent International that's a private Equity Firm that has a portfolio of retailers including Lululemon welcome to the show Joe.

Joe: 
[2:04] Thank you I appreciate you plucking me out of the party.

Jason: 
[2:07] We were thrilled to get you.

[2:10] Usually we start at the show by kind of getting a quick rundown on guest background and how you came into the e-commerce industry in your case this could be the start of a long answer.

Joe: 
[2:24] Okay I'll try not to make it too long.
I've been in been in the internet or really webspace since since it began actually started as a.
Engineer so I I find some of us in e-commerce based came up from war of the traditional retail merchandising route others came up the technical route II came up the technical route.
And I was in the web early days good friend of mine and I worked in a Advanced Technology Group for a manufacturer actually in Upstate New York.
And those days we we still coming to work every day with one question we asked each other.
Have you found any new websites because we've been to all of them.
And wished we literally had a noun or a little modems at the time hitting the early days of the web so I.
Yeah I've been fighting the fight on trying to educate companies and organizations on what this thing is about and how to how to embrace it as something other than a sideshow novelty since since it began.

[3:27] But I am.
Ended up in management consulting for number years help launching e-commerce practice for one of the big Big 5 consulting firms ended up at interesting little start up a company called Tea Leaf technology.
Tea Leaf back in the day was way ahead of its time but we we realized early on that just basic.
Numerical tracking of what pages you had been on what was often called his web logs just wasn't enough for a truly understanding.
The ladies are experience a customer experience and we had come up with some novel technology to allow you to see everything that was happening with the customer and it in retail it's not that different than say.
Going into the store and Walking the Floor something any good retail executive does they go in and watch the customers and see what's going on and see what's working and what's not and speak with them.
And there really wasn't an analog for that online so we we built some initial technology to do that.
For me personally what was amazing about it is 4 years working with hundreds of a transactional companies.
I got kind of a front row seat on seeing what really work.
And what really didn't whether we're talk to human factors human psychology understanding why is it that.
So many websites at the time just kind of shocked and head was just really hard to get things done friction issues getting in the way that's a lot of the stuff was built by engineer is not.
By people who understand human so I did that for a lot of years ended up an Expedia for 6 years running a number of things ultimately running the expedia.com us business.

[5:02] American Eagle Outfitters for 3 years running digital there really at their transition tree. Of being.
A great brick-and-mortar store but understanding not only getting e-commerce right but truly leaning into an Amish handle experience should I happy to chat with you guys about and.
Stood up for about a year did an interesting start up with a joyous a video based e-commerce retailer and what I loved about that was the focus was bringing the Humanity online just how do you control a.
Help understand what makes a product great outside of the traditional just grid and content view of a products which we ended up.
Selling the company hand doing advising and Consulting now.

Jason: 
[5:45] That's awesome nice concise recap of an amazingly Rich career.

[5:54] TV this is super exciting to me cuz for the Wizards.
I'm familiar it was a real game-changer like I sent you yet records sessions so that site team can watch Shopper behavior for.

[6:09] Learning about conversion optimization and an opportunity to improve things and also for troubleshooting problems so before that like.

[6:17] Your sales would be way down on a promotion day and you really had no way to know if you look at the metrics and see that nothing converted but you really have no I didn't see that like.

[6:27] You are losing customers at this form or at the.

Joe: 
[6:30] Yeah we and it was interesting we,
like I stumbled onto some insights just again trying to figure out why did conversion not hit the numbers we wanted like one of the early observations we had we ended up creating a kpi around this week all the PSR purchase success rate.
And it turned out we were looking at this was in my in my travel days but it's it works in in retail as well.
We knew what the fall off was on the traditional funnel I mean when you attack of conversion rate in the in the funnel.
We knew that they were getting to the last step in the process but the Fallout you expect if someone's going all the way through the checkout process that you have a very high percentage of people who then complete the transaction and it was it was not it the high-percentage we thought.
So why are people dropping out and with no one had figured out at the time and what we stumbled into by looking at this more complete view of the data is a ton of people were in fact trying to.
We just weren't letting them and whether it would means that the transaction was failing.
It was for a whole lot of reasons account failure where the credit card not being processed or incorrect information on doing the verification on the credit card and it needed you know somewhere between 1 and 5 + 1 + 4.
20 and 25% of the people may think about this you walked into a store you browse around you found something you want to buy.
You've actually gone through the process you gone up to the POS you've gone through this and I'm online it's much more challenging.

[8:00] My home address and my information my credit how you typed all this and you've actually clicked the button complete transaction the please take my money I want to do business with you.
And the response was no you no soup for you tonight and it's it's it's crazy in the end the.
Recovery rate on this was very low as well and you don't step 1 and in fixing things is acknowledging the problem and we were measuring the wrong thing we didn't even realize that was a failure to measure and.
Yeah we've we turned out you never get to 100% purchase success rate some people always have credit to clients.
But the ideas how do you actually look at that make sure anyone who should be complaining a transaction.
Let him complete it and get that up to the high 9 days which took months of work to fix but no one again it's like turning a light on in a closet it's been dark with never even seen that.

Scot: 
[8:52] Then I'll wear your Expedia when they were part of interactive Corp or was this.

Joe: 
[8:56] This was shortly after I see spun out all the the travel properties which was a collection at the time of Expedia hotels.com Hotwire TripAdvisor,
since I laughed the acquired orbits Travelocity and then the number of the other players.

Scot: 
[9:13] Some ways to travel world even then but even today was kind of a couple Generations ahead of us and e-commerce World about.
Current traffic monetizing it always amazes me how they're they're totally friendly with each other and always routing traffic through each other in a much different world than we would it and e-commerce.
You'll see Amazon cycle traffic over to Walmart or something like that.

Joe: 
[9:33] I know and I think that's actually how I ended up in retail is.
One thing about travel for sure it's a great experiences and it's not about the transaction I mean it's ultimately about the trip and the places you're going and,
I I think some of the players are realizing what I think travel is crossed over into retail lives that yet travel was.
It from A disruption standpoint 10 years ahead of retail but was still deeply consumer-focused.
What was interesting to me going from travel to retailer really from Marketplace two or more vertically two-player as a lot of the tricks that I expected would work didn't work at all in retail.
And it was some some fascinating learning so you one example is the funnel.
I'm in bed the oldest trick in the book if you want to like make them more quickly it started the bottom of the funnel and start working up and find the people who are the most qualified most committed and what's not working find that friction rooted and it's free money.
And in a fashion apparel retailer American Eagle didn't work.
I am going I mean he joined a new company and you pull out your playbook that always works and it doesn't work it's sort of this oh crap moment of what have I gotten myself into.
And the internet turned out in a in a fashion business it's an upside-down funnel.
The consideration where they fall out is at the top of the funnel it's discretionary spend I'm trying to decide.

[11:04] I need a new pair of pants I need a new top what am I going to buy at you you hope you have loyal fashion brand followers.
The reality is even your most loyal customers still don't exclusively shop with you so when you're in that consideration said you're at the top of the funnel.
They're deciding hey what's new with trash was out there that's when the Fallout occurs by the time they're at the last step of check out.
Big decided I'm giving you my money this is the the transaction I want it if it doesn't work it turns out though actually that is a different elasticity will try again or go to the store.
The call the call center there's a much higher probability you'll get this a lot but then the flipside happens which is at the top of the funnel.
If you are not getting a ride especially if your vertical integrated if you're the only place where can I buy the product that's where it really matters and we ended up switching everything around and then how do we make sure we're educating on the brain.
I can give you the right information without relying and Associates in stores because that's where the Fallout was occurring fascinating difference.

Scot: 
[12:09] Search more detailed product pages more serendipitous Discovery stuck at the top tell people at self-educate.

Joe: 
[12:16] Yeah I hardly I am I looked the stores a lot for inspiration and it's kind of a digital guy I think it's easy to fall into hey we don't need stores or.
But there's a lot about stores that work really really well and have for decades that I have yet to see online replicate.

Scot: 
[12:33] The bigger shopping cart.

Joe: 
[12:35] Other interesting Lee there I was fascinated when I joined that but a lot of the apparel companies use the notion bag and not shopping cart and I was frustrated by this.
I actually sat down to prove that we were getting a wrong and then I discovered every apparel company use bag which.
I think it's all just a bunch of silliness it doesn't really matter but but if you walk into a retail store.
There are people there there are Associates their customers and you get a vibe from this within seconds you know if you walk into a restaurant or store if you're in the right place how hit me up if you're a straight-laced person and you walked in and saw a bunch of.
Bikers wearing leather and whatever you feel like this is not my scene where you walk into a place that supposedly popular and it's empty.
And you see this what are people shopping what are they buying what are the associates doing how are they engaging is it is it a heavy cell is an inclusive is an exclusive and you pick this up almost free.
Online it's kind of like saying find me my flagship store.
Perfect inventory position perfectly assorted perfect graphics and displays but you walk in at 2 a.m. on a Sunday when nobody's there you're on your own.
And that's that's most shopping online and this is a huge gap and helping people discover and the Serendipity of shopping this is just not been figured out.

Jason: 
[14:02] Said you feel like you have you run into any tactics that you think partly address that cuz it's.

Joe: 
[14:07] For sure I think and it's all just little Windows into the human psychology to try to solve these things and then sometimes it can be a very subtle ways one of the biggest lips we got back of my travel days.
Wait we called it a sense of urgency messaging but the idea was you're not allowed in part of the inside came from the number one call to the call center.
Was a simple question that needed to be answered was just is this hotel room going to be okay just it's a big expense it's going to be a bad Hotel it's kind of ruins your vacation.
And we we put these little pop ups on the screen which were just 10 people are viewing this hotel right now.
15 people have booked this hotel in the last 24 hours the last hour.

Scot: 
[14:50] One room left.

Joe: 
[14:51] One room left which is sense of urgency but one more popular people are here right now and it was just anything to give that same replication of that store experience.
It's popular you walk into a store and there's a popular item on the ground or at the front door on display and there's only one left in your size and your smile what do you do.
You grabbed it off the rack and you hold it you may not buy it but it is my option to choose I'm going to hang on to this thing until I decide I don't want it so how do you create that same sense.
Requires being there and seeing other people around and knowing the scarcity of the item how do you create that same sense online send me that just one example of like a digital proxy for creating that that we've done.

Jason: 
[15:34] Yeah it is interesting I call that the sort of first Shopper problem cuz everyone that comes with e-commerce side feels like the first shopper.

[15:42] It's ever been on that site like there's your point there's no footsteps of those previous customers.
I started my career in brick-and-mortar retail and I was looking up to work with this legendary visual Merchant this guy named Joe was sheer and he used to.

[15:59] Do the most amazing product displays all would like way higher conversion than any of his peers.

[16:07] And the coolest thing he ever taught me is like you do this beautiful visual display and then the last thing you do before you open the store.
Is you randomly take three scuse off that display.

[16:19] Cuz no one wants to walk in and buy you know how to take that first SKU out the pyramid and feel like they're the first one to make this risky purchase they want to feel like.

[16:28] Man that was just a customer here ahead of me and grabbed it.

[16:33] There's this they're out of business now on Saturday but that jackthreads these type of my favorite features that used to.

[16:40] Expose their there like high-level analytics on the product detail pages so I can you could literally see like five thousand people looked at these trousers and a thousand of them.

Joe: 
[16:53] I ate an educated just trying to replicate I eat you talk about product displays I think another interesting test we did that worked out rather well so we.
Is there very tight control especially from the merchants in the product owners on how you display product online.
Yummy you want this to be the best presentation of the product and lizards lay down or lifestyle shots are on body but how do you really bring this product life and make it be true to the Brandon to the product.
The challenges it's in at 8 that off in 3 aspirational it's reaching people want to know how's it going to be.
I need a store again you get that for free because other people are in the store wearing the product whether it's real humans were Associates or whether it's other customers you can get a sense of how the product.
So am I in where you often have is your social feeds that you're getting photos posted Instagram information based marketing.
Tag my brand include me in the conversation get it up there but this stuff is off and relegated to a blog or style board or somewhere off on the side where if you true to be that brand customer to look it's interesting.
But it's very disjointed from the shopping experience so the idea was how could we make this part of the product experience twins on the product detail page not only do I see the grade.
Produce Merchant LED photography but let me see the real user photographs as well.
Which man tagging them flowing through so they came into the product detail page but it created tension inside of retailers because it now I'm giving up control on house.

[18:25] It's not you and not everyone do consumer truly represents that idealistic brand standard and and how do you reconcile that but what was interesting is.
It kind of credit just in these are my words become a book end.
Approachability you've got the very perfect on point brand beautiful people who show the product and the aspirational luck you know I want to look more like that.
But then you saw a real world people who showed you this was approachable achievable I can do that.
If they can wear that I can wear that I'm going to look good and enjoy giving it that grounding and they're the real you know that this is real people wearing real product alongside having sort of what the division of what you want to look like.
Turn up work really well and you know and then to change how we approach things and then the idea was truly let's get this real user.
On as many product pages as we could and do that in an automated systematic way but again to me it's just it's just tapping into that human psychology of bringing the real world experience.

Scot: 
[19:29] You guys were very early on mobile to because your audience being Millennials was like really pushing that are any interesting insights that you learned kind of.

Joe: 
[19:38] We we did a many many many and I've been I've been passion about mobile so I Expedia we had the first Transit.

[19:49] Psych on which we launched on the iPhone when it came out we had one of the first.

[19:56] Best for Bravada years.

[20:03] But I would have never guessed so we've got this at American Eagle we have an app it does pretty well it's it's our loyalty program.

Scot: 
[20:09] I need the address.

Joe: 
[20:11] Customers and Maya my head of mobile at the time who's been in the mobile space since since the old.
Days he he's hammering me for let's put radio in a rap music.

Scot: 
[20:24] What am I cramping.

Joe: 
[20:26] Brand experience.

Scot: 
[20:28] Stores.

Joe: 
[20:29] We had a partner who could be relatively low.
Classic basic.

[20:36] Free.

Scot: 
[20:37] A lot of my life playlist.

Joe: 
[20:41] It just didn't seem that important to me.
Finally thanks Jeremy he he just wore me down and he's like I got it I've actually already.

Scot: 
[20:49] Actually already done.

Joe: 
[20:52] Due diligence you just got to say yes and it's going to be.
Any apps and we put in a nap and some amazing things happen.

Scot: 
[21:01] Customer.

Joe: 
[21:07] They hated it but for reasons that were more comical to me they love the music as well and they said and they turned out they were good customers of ours,
and they using.
Like I can never leave this.

Jason: 
[21:20] Score now yeah.

Joe: 
[21:23] Store and I'm like oh that's that's actually when you know that's just kind of hidden in a complaint but he was the interesting thing when we started getting into the.
And we were very religious I'm looking.
At the metrics and how all the opolis Performing the uninstall rate.

Scot: 
[21:39] So we would look at my coworker.

Joe: 
[21:40] So we would look at my cohorts of 7 days out how many people still have the app installed dropped in half we had twice.

Scot: 
[21:47] Install.

Joe: 
[21:50] The average session duration everything we were saying massive Improvement which also meant are rank improved and in.
Because the number of downloads weren't changing and yeah there's always been sort of thoughts on hey is a.

Scot: 
[22:05] Engagement uninstall Ray.

Joe: 
[22:11] You're busy chat just it was a better app.

Scot: 
[22:13] And we were not only were born.

Joe: 
[22:20] Former warden in range and guess what rank is more download the engagement and there's a virtuous cycle there so yeah it's a stick.

Scot: 
[22:28] Traffic getting into tonight.

Joe: 
[22:31] Before and giving them what they need.

Scot: 
[22:34] We have some beginning marketers on the show talking about cohort analysis and I think that's an interesting topic and you probably have done enough of this year I have like your favorite view of that.
So maybe it's a pretend you're talking to someone that you know is just getting an e-commerce.
Somewhat technical on the marketing explain cowardin Alice's we can use the app. I know there's a lot of nice ones explain that and then maybe talk about some best practices using.

Joe: 
[22:58] Sure I may take it up a level I just say.

Scot: 
[23:01] How to say how do you say before eating.

Joe: 
[23:04] Analysis it means to have clean data to understand who my customer is and how can I start.

[23:11] It's a fancy way of just looking at groups of people and comparing them typically overtime so you can.

Scot: 
[23:15] So you can understand it's something worth.

Jason: 
[23:19] You can charge more for a cohort then you can for a.

Joe: 
[23:23] But I ate nothing scares me more than making really good decisions on bad data and I think part of the challenge and I think this is getting harder not easier is how do you actually.

[23:41] User Axe and I've got Bob or Susie out there and who is.

Scot: 
[23:44] Who is Bob Mackie what have they done so I can come over.

Joe: 
[23:51] In a world where.

Scot: 
[23:54] I got more people going.

Joe: 
[23:56] But still transacting a desktop may I mean think about this most people's mobile conversion of 1/2 to 1/4 of what their desktop site is and if I were.

Scot: 
[24:04] Basic now and oh by the way mobile sound 50% the majority of my business is going to be.

Joe: 
[24:13] A half or a quarter of my traditional business.

Scot: 
[24:17] My business.

Joe: 
[24:21] So there's a paradox here which is.

Scot: 
[24:23] I am I not getting my business completely call Omar.

Joe: 
[24:27] Where the basic metrics are true and really what it is.

Scot: 
[24:31] If people are coming your side 3 times.

Joe: 
[24:35] Purchase now they're going twice on mobile and once on desktop and oh by the way my desktop conversion you know which I attribute.

Scot: 
[24:42] So glad of that stalking her for not being able to.

Joe: 
[24:53] Because the way most of these.

Scot: 
[24:54] Looking.

Joe: 
[24:56] Where did I see you first and where the transaction occur and if you can't connect the dots and say hey I saw you on.

Scot: 
[25:00] Can't connect the dots and say hey I saw you on mobile but I don't know who you are.

Joe: 
[25:05] Find ways to tag remark you but then you.

Scot: 
[25:06] But then you transact.

Joe: 
[25:16] Stop channel it's digital to store it it's a challenge.

[25:27] Good am I think it was an accident.

Scot: 
[25:30] How do I increase my customer identifier.

Joe: 
[25:37] Be getting them to log in or getting to engage with a promotion so long before you get into cohort guidance make sure.

[25:47] How am I getting consistent measurement how am I attacking some of the consumer data problems which is a really big deal if you can get there and you know.

Scot: 
[25:55] Tricks that you can do.

Joe: 
[26:00] What you can do on testing thing.

Scot: 
[26:02] Two different audiences information variation sometimes.

Joe: 
[26:13] Can be great on hey if I give someone.

Scot: 
[26:15] How often do I see one.

Joe: 
[26:21] 2 Days Later 60 days later and tell her it's going to be in a very.

[26:26] Way to look at that.

Jason: 
[26:29] Very cool and you you touch on another topic is very near and dear to my heart.

[26:34] Talking about attribution omni-channel attribution American Eagle owns a lot of drone stores that website I presume was sort of the flagship store.

[26:48] The front door too many of those physical sores often like did you guys Implement any kind of omni-channel attribution or headed you think about.

Joe: 
[26:56] We we did a lot around on the channel That the marketing attribution was trickier for us and it's some of it was just reframing the question I am like to say round numbers that we were doing.

[27:12] Which means oh by the way 75%.
Wasn't online and if I'm the CIA.
Company and I'm looking at how I'm really thinking about what's really in a driving my.

[27:27] It sure looks like stores no matter a lot more and on.
Basis certainly that was mathematically true but I refrained the discussion we had cameras and all their stores and we could.
Into the stores in at the mall level what if we looked at this differently and said look at this from a consumer engagement standpoint how many people said put into our stores everyday and how many people set foot in our digital.
One thing is.
What stores are not buying the product and then I tried to Apples.
It's us us brand brand stores don't know no uniques it just no sanity.

[28:10] Let's take not unique's just total visits and you don't find a way to do it.

[28:15] And the interesting thing was it wasn't 75/25 now it actually flipped and it was more.

Scot: 
[28:20] 73rd Avenue.

Joe: 
[28:23] Depending on where and how we were looking at it with the majority of our daily.

Scot: 
[28:26] What actually is.

Joe: 
[28:34] Which means you can see.
The people walking into the store where already online the majority.

[28:45] Putting it in information on non offense.

[28:53] And that actually was a profound shift Ross's beginning.

Scot: 
[28:55] Beginning of recognize.

Joe: 
[28:58] Point isn't still years away when we're 50% of transactions the Tipping Point already occurred this is the primary channel for us to reach and engage with the customer.
Do you want to give it because if I would.
And online fully was realized by the person coming to the store that also means that store isn't as important as we think it is.

Scot: 
[29:20] Crediting on sale.

Joe: 
[29:22] And it starts to get very very tricky in understanding how I'm going to really be.

Scot: 
[29:27] How am I really do that with you no more.

Joe: 
[29:30] Credit and entering.

[29:34] So I ate it becomes a bit of a soft skill I think for now and connecting the dots that way where we could measure things in a single-use coupon codes and showing where the activation actually occurred or even if the inventory management I mean for us the biggest win on the channel.
It was how we exposed inventory with things like buy online ship from store which.

[29:57] But I'm in that was massive massive winter for.

Jason: 
[30:02] So like what were the big omni-channel experiences go to Wings for you you mentioned ship from the store.

Joe: 
[30:07] Is it shipping store for sure was a lot of it and if you think about it we we had a couple DC's.

[30:15] Popular but it's always a limited Supply so the idea that hey we have an item that's no longer our current sets you can get.

[30:26] Not right it's still a great product and still relatively recent but it's only available in extra extra large.

[30:34] But the idea that we actually have a unit.

Scot: 
[30:36] Somewhere are awesome store.

Joe: 
[30:38] Of that item is pretty high and at the local store level which is just very very Atomic view of managing inventory whatever assortment they have.

Scot: 
[30:47] They're just.

Joe: 
[30:49] Down 10 off 25 off move it to the back and then ultimately if they can't get it they're going to liquidate it out of the store so the idea was just simple it was how do we.

Scot: 
[30:58] Can anybody any.

Joe: 
[31:01] Existing inventory roofing supply against existing demand and it turned out to be way bigger.
When we began we didn't even know what we do this in all stores we only pick a couple hundred stores and by the time we were done it was fleet-wide every single store became it.
And it was a win-win we were given.

Scot: 
[31:19] Give me the.

Joe: 
[31:21] Customer demand.

[31:25] Our margins were actually dramatically better because we were able to move stuff much earlier in the in the in the mall.
And by the way just even you can talk about with your.
May I have a foundational belief that the notion of e-commerce as a p&l will be gone within 5 years ndia like to do this on a channel exercise we did with buy online ship from store so what if you look.

[31:51] In order to make sure the stores were truly giving a pro.
Disorders we gave the stores credit for the sale we won.

[32:02] Really great job which they did on for the like that so they're going.

Scot: 
[32:06] What is 5 *.

Joe: 
[32:09] Clearance merchandise.
Eroding because we're increasing the frequency of sales I had a clearance item that's operating cost for increasing split you.
Shipping more out of stores in general which does the the shipping an operating cost of shipping out of stores is more expensive expensive than what we could do at the distribution center and I had to manage a whole new order management system and.

[32:34] My product more guns are all getting worse.

Scot: 
[32:35] Chris sails.

Joe: 
[32:38] Credit in stores are looking good and you know how you can just took an e-commerce piano of you you'd say this isn't work.
Company level me if you think what's the definition of omni-channel with all channels we were saying increase sales we were saying higher transactions were improving on margins the lowest liquidation rates and even.

[33:03] And it just come Sunday if I'm standing in a store and they don't have.

Scot: 
[33:04] And they don't have to talk on my mobile phone.

Joe: 
[33:08] 70 Commerce a list or sell if I'm if I'm at the store if I'm on the.

Scot: 
[33:16] Very very boring day at work.

Joe: 
[33:19] And I think it's missing the point cuz the notion of trying to create a channel is Disney on.

[33:28] They don't care they're just engaging with.

Jason: 
[33:30] American Eagle sale.

Joe: 
[33:33] I think it's the wrong question and I think brands are slowly coming to grips with a chop block here it's one of the most.

Scot: 
[33:37] Hookah Bowl think I'm hearing.

Joe: 
[33:42] I think brands are finally recognizing this isn't about a different Channel or different approach or different tea and that's how do we really start to take this consumer-centric View.

Scot: 
[33:52] Could you think stores last long enough to get to this point where they rationalize the piano at Toys R Us didn't make it in the players and a lot of these guys are filing for bankruptcy now.

Joe: 
[34:00] Yeah I I don't think stores are dead I'm very bullish on stores I just think stores are going to be different and they're no longer just about convenient places to store inventory.

[34:12] I think the square footage will change I think the purpose of Discovery and and the serendipity.

Scot: 
[34:19] Experience.

Joe: 
[34:20] Brands will change but we're social beasts were looking for that human connection will look.
And I think Associates do a great job in the same day and I'd say online is going to become less mechanistic and we're going to bring more humans then I am a big fan of things like chat.

Scot: 
[34:38] About ARB Rd to Goldfield storage Grove totally virtual reality.

Joe: 
[34:42] I am yeah you know I I I think there's going to be opportunities and their categories like furniture that I think I'm very interesting where where a RV are already starting to take hold it's very interesting companies are going.
I need the idea fit and feel.

[35:01] Content and it's going to be a lot harder in the immediate future to truly do an ARB our approach for that to me.
Shannon and we keep running the math problems and to me a rvr as its a math solution.

Scot: 
[35:19] I'd much rather.

Joe: 
[35:20] Solution I'd much rather invest in most call centers have conversion rates of 30 40%.
You're nowhere near that if I can get people to call and I can understand how to staff them.
For service and get a ton of opportunity and sandwich at when as you get it in the Millennials in the youngers the younger customers they're very comfortable chat that's no different than a phone call to them and if I can engage to them.

Scot: 
[35:46] How to make silent.

Joe: 
[35:49] Commendations where use it works and if it's the same conversations you have in a store but it requires human beings to know that customer which means good CRM but date about.
10 in training in the associates you can do that digitally at scale it's just it's learning and it's it's it again it's blurry.

Scot: 
[36:09] Who am I.

Jason: 
[36:16] Joe that's great advice and it's going to be a great place to end it because it's happening again we've used up all at a lot.

[36:24] I was super grateful for you taking time to sit down and chat with us and as always is westerns want to continue the conversation they're welcome to jump on it.

[36:33] Page if you enjoyed this episode it's a great time to jump on iTunes and give us that 5-star review.

Scot: 
[36:40] Joe people want to follow you online do you have a Twitter or LinkedIn or.

Joe: 
[36:46] You can find me LinkedIn it both megibow and Twitter is megibow m e g i b o w.

Scot: 
[36:51] Cool thanks we appreciate you taking time out of the parking and you can go have a drink on us.

Jason: 
[36:57] Until next time happy commercing.

Apr 4, 2018

EP125 - Johnson & Johnson E-Com VP Sri Rajagopalan and Samir Bhavnani of 1010data 

We caught up with Samir Bhavnani of 1010data (previous appeared on Amazon Private Label Deep Dive Episode 103) at ShopTalk this year and he brought Sri Rajagopalan, VP of E-Commerce at Johnson & Johnson with him.  We cover a variety of topics including brands going direct to consumer, brands working with Marketplaces, Amazon's entry into Healthcare, and Amazon Private Label OTC.

Episode 125 of the Jason & Scot show was recorded on Tuesday, March 20, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature, Google Transcription:

Transcript

Jason: 
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Tuesday March 20th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot: 
[0:37] We are live live live and beautiful Las Vegas here for the shop talk show.
We're really excited to have to guest on the show too rare time we actually were able to Loop into people crazy enough to be on the show.

Jason: 
[0:52] Our listeners are getting twice their money.

Scot: 
[0:53] Yeah they are for you but double the bang-for-the-buck excited to have on the show Samir bhavnani and SRI Raja Goblin.
Samir is area vice-president of Tintin wife asking what area he covers and.
1010 data and this is his second time on the show that he was super helpful in episode 103 where we did the Deep dive on Amazon private label and he was kind enough to share some really interesting day that they have on that.
So looking forward to getting an update on that in any other interesting data topics he brings back welcome back sooner.
You're the rear Elite status of a two-timer club so there is not a three times will what will see how it goes today.

Jason: 
[1:34] Petition to be the first three.

Scot: 
[1:37] And severe was kind enough to bring along some when he found downstairs heat,
SRI who is the VP of e-commerce at this small kind of entrepreneurial brand shop called Johnson & Johnson Street has had a story career at Brand call J&J but Frito-Lay PepsiCo,
it's great to have you on the show SRI.

Sri: 
[1:57] Thank you so much that's me man that's my middle name all Style no substance but thank you for knowing that you're doing your homework in it.

Jason: 
[2:04] It's a little known fact that 100% of Scots calories come from those three branches.

Sri: 
[2:10] If previous life out of said thank you for putting my paychecks in the mail so.

Samir: 
[2:17] Drove to have you on the show one of the ways we always start the show is.

Jason: 
[2:18] On the show one of the ways we always start the show is to tell the listeners a little bit about how you started your career and kind of walk us through your matriculation to your.

Sri: 
[2:30] And some believe it or not I'm living proof that anybody can work in digital in e-commerce and let me tell you why fairly straightforward so I came to this country 25 years ago to go to school at Virginia Tech.
Dishwashing was my first job even even drove a truck for a living thank you very much hopefully this year will go to the SEC Championship.
I'm talking football not basketball to be clear so once I graduated got recruited by a market research from Ira Nielsen competitor.
Maybe someday 10 times competitor and then eventually.

Jason: 
[3:03] Daddy are they just don't know it yet.

Sri: 
[3:05] They just don't know it yet that's how the digital industry works most people don't know and so wild spending time at.
One of the leaders at Pepsi came to me a VP of sales and said dude why are you working till I die you should be working for Pepsi and I said why not give it a shot so I spend many years at PepsiCo a decade and change.
In all different functions divisions of Ben in it and sales sales leadership sales account leadership.
Last job before getting into digital retail was actually a dollar drug convenience business.
Owning the John business plan with the customers everything from the little guys like QuikTrip the gas station.
Do Dollar General then one day while having one some displays at one of my customers when I was returning as a career leadership opportunity.
I was offered why don't you start up Ecommerce for Frito-Lay and I thought it was a demotion what the heck is going on and that's 6 years ago.
And 6 years later I haven't look back and I will probably say publicly never return to a full-time brick-and-mortar retail job ever no chance no one's going to get me there.
So in the six years I've had the 49ers starting up he come for free oh what is things I realize is when you see you ask you.
I was registering having doing the truck once about that when you see you ask you figure out a way we had 30 days we had to figure out a strategy lo and behold we started scripting it driving it.
And I got to do that for you I get to do it all over again it down sitting down too and it's been 3 quick years I got 11 days left to complete three years magical three years that's my private life of an entrepreneur got a record label it solve all your records.

[4:42] I'm also in real estate development in Texas and also another business that's my middle name.

[4:50] Hang out with you guys a lot more.

Scot: 
[4:54] I'm a big fan of Indra nooyi.

Sri: 
[4:58] Many times here's a funny story for the listeners her daughter that actually learn dance from my wife a couple times.

Scot: 
[5:08] Yeah. One of my favorite podcast other than Jason Scott shows Freakonomics they just did a whole series of out and what does CEO and they're really highlighted her and she was just very well spoken about you know how how she thinks about being a CEO and ended up being a woman CEO and all that stuff is very she's very awesome.
Leader.

Sri: 
[5:25] So let me give you a another story out there and enjoy please don't kill me or listeners don't kill me for giving this up humility.
Indoor practice in humidity right so I think before I got promoted from a director to a senior director we had a rule back then she was a CFO CEO and we had to interview with her,
so I know you would tell her she don't ask me about my background and I casually mentioned that that. My wife was running a classical Indian dance school so I mentioned,
she starts asking me questions of course I had no clue and I don't knows the truth I have no clue but I made something up she said give me your wife's phone number like that here to here it is.
Two weeks later my wife calls me and says hey do you know who was at our house today I'm like who.
Should lay in there and we was at the house and I'm like why and she said hey she was sitting here sitting on the floor with a daughter watching her daughter actually dance because she wanted her to learn classical.
In and that was in the afternoon on a weekday and I'm like Mom humility business leader.
Mobile one of the most powerful 1400 leaders in the one of the most powerful women leaders in the world that's what life's about.

Scot: 
[6:29] Your your record label I assume does it have some to do with Indian music seems like that's.

Sri: 
[6:37] Although maybe I shouldn't say that because my we start a record label solve all your records because my daughter was an American Idol finalist years ago the name is Rhea Raj and she works or with DJs all over the world collab Integra going to Belgium.
Next Wednesday to do a music video so she's got her own channel YouTube falling things of that nature so it's and she sings Poppin EDM.
So she actually doesn't know the Indian language came a lot but although now with her Regional field Indian DJs of started to reach out.
And I have a project on my hand a text message from my wife this morning then ask me for 4 lines in Hindi.

Scot: 
[7:17] Nice.

Sri: 
[7:18] Indian DJ.

Scot: 
[7:19] Deathrhyme.

Sri: 
[7:20] I hope I can figure that out although I did tell you all Style no substance rhyme is about style I can make this work.

Scot: 
[7:23] All Style no substance.

Sri: 
[7:28] Hey guys if I didn't think so mean for having me on the show it wouldn't be right so thank you for connecting me with Jason Scott.

Samir: 
[7:34] Got her all doing this.

Scot: 
[7:35] Yeah you could that take over my job the showrunner here so so I can so tough one.

Samir: 
[7:39] The bar is very very well.

Scot: 
[7:41] Show me a better job already cool so let's talk a little bit about J&J so you've been 3 years on the job when they started did they already have an e-commerce initiative or are you kind of got it from Ground Zero.

Sri: 
[7:55] So when I when they started looking for somebody to come and start this up change it stop ship that Amazon that was the only real business if it a lot of issues with quality things of that nature is the mutual decision to not have the relationship so we were.
Really experimenting in DTC.
Truly practicing on TVC Omni was too tiny to kinda really count so the goal was to start up all pieces of you come so that's Omni that's the walmart.com.
Target.com truly put and then obviously Amazon.
That and B2B b2c with lady. She out now pretty well you should check out neutrogena.com and rogaine.com through Commerce and action not just the website.
We've managed to upgrade those platforms to demandware for the plug-in they don't pay me to endorse him but it actually works and it's pretty cool.

Scot: 
[8:46] That sells horse e-commerce Club.

Sri: 
[8:48] Thank you for being technically at.

Samir: 
[8:51] You don't know how I rock.

Jason: 
[8:52] It is that you now have the entire body of knowledge that Scott has of e-commerce platform.

Sri: 
[8:59] All substance lifestyle.
So be ready to start it up while it's going to offend people if I take from scratch but the reality is that we had to do wait to put together a team really get going in all directions.
We're fortunate business is gone consumers have responded retailers of partnered we found amazing vendors to partner of it and let me just put out an honest truth out there in the journey and e-com.
You can't do it yourself you're going to have to partner with vendors and in this case unlike popular belief and Roi and all that stuff more is better.
I'm literally here for 24 hours I flew in last night I flattened that I all I'm doing other than that shows me to vendor.

Scot: 
[9:39] Go to Silver folks that aren't familiar with J&J and even I have limited knowledge I know health and beauty is a big category for you guys and then.
You guys and I think there's a huge drug division but that's more like a prescription there some over-the-counter what other are you guys in the pet category what other and snacks I don't know what all categories are in the.

Sri: 
[10:01] When you think of Jace J&J list three parts today and one is Pharma so that's your classic prescription medication you go to a CVS or Walgreens or Rite Aid any retailer deals in prescriptions in You by JJ products.
Then you have the medical devices section so everything from.
Instead of putting the heart to Diabetic Care which of course we announced for sale recently it's publicly announced and then there's the consumer sector I'm in the consumer sector.
If you depend if you start dissecting the consumer sector think of it as three different pieces.
Does the beauty care piece popular bands are clean and clear of course the big Neutrogena Aveeno is another one getting a lot of popularity especially good baby I'm second pieces to self care.
Area which is I'm sure you've heard of allergy relief which is Zyrtec.

Scot: 
[10:50] Big fan.

Sri: 
[10:51] Pain medication Tylenol Band-Aid for wound care.
Listerine for oral care and of course the legendary famous every mom wants to have it in her kind of in her bathroom for her child daughter or son whatever it might be Johnson's Baby.
What forms the portfolio of Johnson & Johnson.

Scot: 
[11:10] No More Tears.

Sri: 
[11:11] No More Tears hey good morning.

Samir: 
[11:13] And pictures bottle.

Scot: 
[11:16] It's a strong band when they just like pops right in your head like that.

Sri: 
[11:18] If you come by and visit us sometime I'll walk you through the baby Hall of Fame but does the advertising which started 9 I think somewhere Midway through this last century No More Tears and we got a whole Hall of Fame picture story on it.

Scot: 
[11:30] The interrupted you Siri going to the 3 I got so excited about the baby stuff.

Sri: 
[11:36] Mega brands of course there are many other brands outside of the mega band as well.
So the change that's really happened is all of these man's scale in store due to the consumer shipping habits.
Many of them almost all of them about online now they're not just bought an Amazon although Amazon is a big piece of it consumers want a choice Mom want to charge battery shop.
And I truly living in the where to buy in ready shop which is not just one retailer one place but we can order as well as Omni as well as Amazon well as deals.

Jason: 
[12:11] Obviously all those brands are sold Wholesale in store and online a few of those Brands you're now selling d2c online.

Sri: 
[12:23] Neutrogena.
Of course under Neutrogena that many subcategories there's acne cleansers there's acne care that facial moisturizer therapy that body lotions and and body care.
I'm so when you think of the brand it's all label Neutrogena but it's many multiple subcategories and then there's the I would say hair restoration Rogaine.
We're doing do you see on that one as well but don't think.

Jason: 
[12:48] Why is everyone looking at me when they say Rogaine.

Scot: 
[12:50] Women women need their sponsorship on the show.

Sri: 
[12:53] Let me tell you guys something Rogaine actually works when people ask me that but the key to using and winning with Rogaine is using it before someone goes completely bald because the formula needs something to work on not just dead skin.

Jason: 
[13:06] Now they're even looking to Me Harder.
The end of things interesting to me about your role as a lot of cpgs when they have e-commerce.

[13:16] I'm always curious what they mean because sometimes what they mean is help our wholesale brand sell stuff on their e-commerce Ides better sometimes they mean like launch are direct-to-consumer in your exclusively want responsible for the direct to consumer.
My perception is that you have sort of both sides of that is at.

Sri: 
[13:34] To touch everything and I think it's by Design so when we started this up three years we made a conscious Choice we'll touch everything because we had to influence and build an ecosystem.
Ecosystem is not just the numbers and sales right it's the content piece of it so yes I do part of it it's the sem part of it you go back to yours and Israelis were not common household words.
Now they are so different place and Diamond I'm sitting with experts over here Tree Experts so all of this makes sense I still sit inside in an hour.
External parties Etc with these words don't make sense right Soviet attacks the entire ecosystem of my belief is over the course of time though the only way any cpg company will be truly successful.
Content needs to be on that the Innovation cycle so when a product is born.
A brand needs your own content from scratch so they get just like this focus on mailing packaging and store digital is just a piece of it the digital content and that way I see it was used in packaging how about that.

Jason: 
[14:33] I mean arguably like packaging was in original form of SEO.
One more level sending question about J&J misses super.
The sum of your Brand's you guys wholesale through Amazon is that correct so you have you sell some some Brands 1p and are you doing any 3-piece sales on Amazon.

Sri: 
[14:53] Yeah what a partner with the pharmapacks I think it's a known fact.
We're not the only ones pharmapacks is a scale TP on Amazon I think even Amazon if you heard egg Broussard today.
I'm actually suggesting that manufacturers should be on FBI platforms things of that nature my belief is an e-commerce strategies a little bit of everything just as Amazon is a piece of the strategy.
Amazon call to the one. Nation trip we're very similar to brick-and-mortar retailers funny as it may be for you guys to believe.
It's the relationship management is not very different right buying products in bulk.
Putting truckloads of products in Amazon warehouses and then working with Amazon in the right promotional levers for the consumer right 3p I'm also looking into being an API Subs if it's appropriate because.
Sometimes a given skew or a brand or a product.
May not be a fit for the 1p business we might choose to launch in the different way different fashion things of that nature same thing. But my Amazon sometimes that may be the best platform then they're developing the criteria now but I believe.
To win the space and be a leader in the space you got to touch everything it can't be a one-and-done story.

Jason: 
[16:02] For sure we talked a lot about that on the show that you need a portfolio that there's not a.

[16:08] That's all any of these problems and I increasingly worsening brand sort of had that hybrid relationship with with Amazon in particular where there's a 1p and 3p component.

Samir: 
[16:19] It's also important right to not have all your eggs in the Amazon basket and having some kind of X Amazon outside of Amazon strategy something and I'm starting to see a lot more.
Perfect segue so that we can have a good foundation on understanding of where J&J is on their digital.

Jason: 
[16:37] Journey.

Samir: 
[16:39] I want to go back to Samir who introduced 1010data last time you're on the show but just as a super quick Refresher.
Ginormous panel of consumers you get to see all of their digital spending behavior and so you have this super rich source of data that you charge way too much money to J&J and us.
You nailed it,
so we just stopped we just looked at last year's gross of 2017 numbers compared to 2016 and we came and Tim and I came on.
Last year we talked about Amazon private label was happening there that's certainly been one of the hottest topics I would save the last couple years.
And what the data shows is that.
Private label over alright friends like Kirkland and Amazon elements and we're up over 100% over the over the prior-year.
Which is an astounding amount right and that has a very big impact on not only disruptive Brands but also on establish Perez.

Scot: 
[17:48] Yeah there's a backdrop where retail is growing three to 4% e-commerce 15 to 20 and then you have Amazon 30 so something going hundred percent is really you know if your 3 accessing Amazon that that's pretty darn.

Samir: 
[18:01] It's it's incredible we haven't seen growth so down to do to see you know just massive growth in the online Channel I think I sent you we were talking earlier and.
We break things out into categories and subcategories right you can get as fine as you know like.
Dry dog food versus wet dog food rats type of Branding Iron you can also me start looking at but if you look at Petcare was up 57% Billion Dollar industry industry and it's just continuing.

Scot: 
[18:30] Just private label Are All That Girl.

Samir: 
[18:31] All pet care all pet care I didn't I didn't break out or something.

Sri: 
[18:39] How about this the guy knows his number is.

Samir: 
[18:40] And then the other 50% categories food and beverage writes online grocery is is something that.
1010 is a reputation for short of being the innovators and tracking online grocery and then your category baby 48% growth last year so that's that's very impressive.
And then running out personal cares 42% General Health is 26% in the Cosmetics was actually pretty slow at 15%.

Scot: 
[19:09] Awesome and then so this is kind of interesting so private label growing a hundred percent you're obviously you know in the world of Brands how how do you guys think about this private label thing does not worry you or your kind of like this is a little worrisome what what should we do about it.

Sri: 
[19:24] The honest answer to that is personally I don't worry at all then they'll give you I think that's two pieces of the story.
Please number one is straightforward private label is existed for a few decades nothing you and you look at private labels role in the category it's very clear to me why retailers have.
Private label and scale to a certain extent right I think the industry is panicking a lot kind of looking at Amazon private label and saying oh my gosh.
It is going to do something to my brand equity in my question to Brand marketers is very straightforward one.
You build equity over 20-30 years and if you're going to lose confidence over one announcement then are you sure you're doing the right things to build equity in the first place.
I have the Supreme confidence that even Amazon private label is a brand at the end of the day they're going to depend on a brand new salad that's one piece of the story,
I think bands with all these have equity in Amazon private label the wall Toby equity-based II pieces.
Manufacturers are such over the course of the time haven't really spent a lot of time in a looking at should they be partnering with Radeon actually developing private label I don't mean just.
A manufacturing a product in a factory and putting it on truck but only marketing elements off it actually cleaning that kitty for the brand.
The Experience manufacturers having brand Equity wouldn't retailers want to partner with manufacturers in the marketing arm of it as well so I see it as.
Play this is awesome why Panic it's an opportunity for every manufacturer to leverage the good ones on figure it out.

Samir: 
[20:53] I do I think it's interesting like I totally agree like.

Jason: 
[20:57] Gables been around a long time and I'm not sure that it's dramatically more threatening now than it ever was.

[21:04] Threatening is the second thing you mentioned is that retailers are now shipping a focus from Pride.

Samir: 
[21:07] Retail Focus from private label owned brands in.

Jason: 
[21:11] Brands in me that's a more direct competitor with you in that wide example I was like to use cuz its most extreme is Alexa is not a private label Sony Bluetooth speaker it's the mar.

Samir: 
[21:19] Alexa is not a private label Sony Bluetooth speaker it's the market-leading best product in the category that's wrinkly.

Jason: 
[21:25] In the category that frankly kicks on.

Samir: 
[21:28] If that becomes the truancy Walmart watching grown.

Jason: 
[21:31] Quincy Walmart launching their own mattress brand in like they're investing in March.

Samir: 
[21:35] Marketing and landing pages and you know their own unique attributes.

Jason: 
[21:41] Trend continues.

Samir: 
[21:43] And Amazon says what are the gaps in baby care and where should we eat you know build our own brand that potentially is a new threat that.

Jason: 
[21:46] Where should we eat unit build our own brand that potentially is a new threat that puts the the traditional National brands in the retailers that at all more at odds in that used to be.

Sri: 
[21:58] It's actually an opportunity to fly.
I'm at before we started the show we were discussing advertising over here right and how did you know this completely changed advertising and morphed retail over the course of time and the survivors and the ones are actually flashing of the Wonder don't confirm.
In a basically marked and mended ways and said here's how I'm going to play it out I don't see this as any different if we walked in and said there's only one way to build brand equity.
Good luck if we want to confirm good luck they'll be rules to confirm they'll be places to confirm.
But they'll be places to seek the opportunity goat cheese blade Out Create unique new Partnerships do things if I ask you guys you go back 10 years in history.
Weed for one to be sitting here at a suite in Las Vegas watching the mountains and actually recording a podcast about private label you guys would have left but here we are we're doing.
Because you decided tomorrow and do it I see it as an exact same YouTube it's a huge opportunity the ones who are going to exploited or going to fly.

Scot: 
[23:00] Little bit so we talk a little bit about Amazon but it wouldn't be a Jason Scott show if we didn't go into a little bit more one thing that happened about 3 months ago is it was revealed that Amazon has filed to be a drugstore essentially in like 20 to 30 States,
you know these days we'll never ever something Amazon happens like CVS and Walgreens Rite Aid in all the stocks crater 20% you know you guys are a really large Drug Company,
what would you think about Amazon becoming effectively of Next Generation online drugstore.

Sri: 
[23:29] So if you thought about the actual.
Industry of healthcare Healthcare is a lot more than just the medication element of it that Healthcare Providers involved because they made CP is that hospitals involved.
The ecosystem of healthcare is very complex highly regulated in this country.
It's not something that'll Morphin 3 days but neither CPT more than 3 days so I actually welcome.
New players coming in trying to change Healthcare you got to take the winner is at the end of the day I'd all of us are doing things in our lives today to deliver a win for the ultimate person that you're all touch with the car.

Jason: 
[24:07] I thought you were talking about my wife. You okay.

Sri: 
[24:12] At home that's what you deliver.

Samir: 
[24:14] My main focus.

Sri: 
[24:17] Now I have an excuse to get to be there to listen to the show.
Remember she's in record label entertainment Property Management so I got to get around that you can respect but now you give me a tease and thank you sir far to client so.
Have back on Healthcare right back on Healthcare so I welcome the digitization of healthcare.
Honest truth be told letting very few people realize that there's a lot of Health Care advertising already taking place to delete a lot of programmatic already taken place.
Digitally as long as the ecosystem is delivering a win for the consumer I think I'll roll.
All of our roles is to find a way to participate make it better for the consumer so I welcome all those opportunities.

Samir: 
[24:59] I totally agree asked me like one of the funnest part of the whole.

Jason: 
[25:00] I totally agree I talk to me like one of the funniest part of the whole industries that we can't just follow the Playbook that people in falling for the last 10 years so I am now.

Samir: 
[25:06] But I'm buying for the last 10 years so I imagine since Samir brought you here that you are.

Jason: 
[25:13] 1010 data.

Sri: 
[25:14] Yes so so mien and I are looking at creative ways on Parklane looking at not just Amazon's data but also looking at me Channel and we'll have we had a chat today standing outside the door waiting for you all about DTC.
And looking at not just a POS data and sales and things of that nature without Denton could also getting in getting to share.
And actually help manufacturers try and understand their role in the category if you listen to some me earlier you talked about 42% growth 58% growth.
48%. These are no ordinary numbers guys I mean the last time CPD in retail solve 42 + 48% it's been awhile.
So somebody can have some real fun here if he chooses to and I have a strong suspicion he does if you don't.

Scot: 
[25:58] How to say it just come here the Jason Scott show takes 10% of every deal kind of consummated before after or during the podcast.

Sri: 
[26:07] How many minutes before so somebody's going to check in if its 8 minutes before I think he's going over here but 12 minutes I'd be worried if I was some here.

Scot: 
[26:15] We might live a very long cookies.

Sri: 
[26:18] It Last Forever.

Jason: 
[26:19] 30-day attribution window.

Sri: 
[26:21] Buy actually clean up my cookies every time it's automated now so.

Jason: 
[26:24] It's cute that you think we're still using cookies.

Sri: 
[26:29] Sometimes better than cpg I told you also have no substance you guys weren't listening.
Sometimes it gets exposed but back on the partnership right I truly believe there's a place for a.
Data vendor and I shouldn't say they don't like morphing into an lyrics inside things of that nature.
Category growth basket level transaction I'm short and turned it over the course of time of play to all the strengths and actually bring that level of relevancy.
2D cpg industry.

Scot: 
[27:02] Sedated what was kind of rough on that for a minute so you know you're,
you're kind of second generation on this what's your dashboard so you know you guys have Brazilian skews you're on all these Channel summer 153p you have like a dashboard that you look at this, how you're doing at how do you think about that.

Sri: 
[27:21] I look at it all and probably not not your best Benchmark because remember I'm also brick and mortar train.
And so I'm no longer interested in the dashboard. Just give me data and says yes what sales was.
And just what it was percent change your logo and here's a Cheddar's percent change you to go to in my eyes that's the old school way of measuring which still works in other places it doesn't work in this space in this space.
Cher alone is not enough because you're measuring share of an unlimited shelf anyway so that changes and if you know the Amazon platform you know that.
Number of products that show up changes on a minute-by-minute basis depending on who launched who got killed things of that nature. So for me it's all about the inciting LX base to me I'll rest when I can find out why she's buying it as in the consumer.
What's transaction-level understanding what prompted to buy it what the behavioral drivers are.
As well as a Jason categories opportunities what kind of promotional offer she's looking for what would drive her to want to make a purchase when they should come online just to learn is it an innovation she wants to learn about is good more than that for example in the baby category.
A lot of these are Chick-fil-A's today Beauty care Lottery search requested a wound care does less.
So getting to that level of detail I call it like drivers of the business truly getting to the causal factors yesterday's Marley was display was featured in store here it's like a complete swing it's called SEO Base Montana.
I see him we talk about Royce on our way it's really decomposing and getting to that level that's the dashboard I look at.

Scot: 
[28:53] I can cook some more forward-looking versus the the the so so when you first started your career at Frito-Lay,
imagine e-commerce looks like the sidebar kind of wacky hobby you experiment and now at at mini Brands I don't know about J&J but you know I'm a big CNBC nut and you know you see things like Dollar Shave Club being acquired,
P&G has an activist in there that's like disrupting the board and he claims that they're not doing enough to be direct and that kind of thing so you probably went from being in a.
Running this kind of cool little thing on the side that no one really.
Focused on so now I'm ajan is pretty bright Spotlight on it does does the major role at a company like JJ get a fair amount of his ability up into the board level or is it still kind of a you know an interesting hobbies out how to.
Where where is that in the spectrum of those things.

Sri: 
[29:38] What a great question right I can promise you e-commerce is on the radar of our CEO.
Off of regional Chairman's off a cross-functional leadership I'm lucky that I work in a company that I get all their support to make this happen and I think you all know better than I do that it's not about Johnson & Johnson any large public company Wall Street analysts are asking about e-commerce.
So we do have those conversations with investors and it's the right thing to do because it's a part of business that's growing and it's the future of retail in many ways.
I want to see the only way to tell what shape the future it's a big place and I'm sure investors are very well aware that.
And I'm fortunate that my leadership support me in this journey and we've been able to build a good business model that works for everybody.

Scot: 
[30:23] Another kind of questions are there the the cost to create a new brand is going to lay down so you're at chop talk you know we're talking like Jason had kind of are on the program we've seen,
baywater and all these branches can I get born in this new digital age,
and it used to cost you a millions millions of dollars to create a brand and companies like yours would go and do the $59 ad campaign and all that now that causes come down as a House of brands do you guys does that.
Did you find yourself looking at those things going to maybe acquire them or does it give you now the flexibility entrepreneur or intrapreneurial and start Brands inside or.
Where are both of you guys think about that.

Sri: 
[31:00] It's a bit of both to be honest.
I'm better this reason why Dollar Shave Club was acquired it wasn't just a product it wasn't the dollar razor on it was capabilities then you start thinking about jet.com it's not very different right after I've spent a lot of time but jet.com,
Executives folks over there I mean you're talking about some of the people who know e-commerce inside out.
So I think talent and expertise is still growing in the industry.
And cpg companies will have to lean on buying some of that talent and expertise and that's why some of these Acquisitions happen but the wonderful thing that's happened about Brandon koobatian is.
If you go back to the brick-and-mortar world.
To incubate a new brand you're going to have to trade something on the planogram and 5 out of 10 times it's a brand that isn't doing so well that you own.
And what change in this world is you don't have to make that trade you can launch it you can do true test and learns that you can and I was listening to I believe it was again. From Amazon you can fail fast you can fail cheap.
And you can make decisions in record time and you can fix things.

Scot: 
[32:03] Exploding kittens Lee.

Sri: 
[32:06] Since I didn't go by the way I didn't know what exploding can.

Jason: 
[32:09] No I was little I was a little afraid to find out.

Sri: 
[32:12] So was I so was I.

Scot: 
[32:12] You guys got your your family love it's really fun it's kinda like to know.

Sri: 
[32:18] I don't ever play that very often my twelve-year-old Laura and I.

Samir: 
[32:22] I'm really good at you know.

Sri: 
[32:25] Have you ever tried a double stack two concerts at the same time.

Jason: 
[32:29] My family are big card sheets so it's like you constantly have to watch text make sure that someone is not slipping other cards under the car they play it's very sad.

Sri: 
[32:37] I wonder if he'll what happens on the family table but I assume there's a little bit of element of that at every table.

Scot: 
[32:42] Yes brings out the competition in the family.
Sweetheart, curveball for you. So we had to listen or question come in and it was really interesting where if I could summarize the listener kind of said all right.
Everyone says Amazon's like 60% of e-commerce they're growing 30% Walmart's growing you know.
Between 25 and 60% of another quarter eBay is growing 10%. Where would you add all that up you get to kind of like.
25 or 30% and then we always say we always rely on like, Square data the Forester data that says e-commerce is going 15 to 18%.
I come to the conclusion that that they're probably wrong and when I talk to some people today the industry you know they.
The what the devil's argument is they say that a lot of that data is keyed off of the US Census Data that comes out that they kind of they didn't take their data and correlate to that.
And then there's a lot of people that believe that that Census Data just fundamentally wrong and effectively understating e-commerce you have a point of view on that order.

Samir: 
[33:45] Is it on the data I don't know I can't look at the data just sort of quote any sort of specific numbers but generally speaking in a few look at whoever is putting up numbers with her, score.
Whoever any panel data has strengths and weaknesses it's a reality right that you deal with within the space me and my contention based on what we've seen is that stuff. That sounds low to me.
The end.

Scot: 
[34:09] What do you think Ecommerce is growing like a range is.

Samir: 
[34:11] I mean I I still think it's it's got to be God be grown in the thirty 40% range Head Soccer.
Every major category is moving online more and more the asps of the products that sell online are higher than the ESPYs that you see in the store.
There's a sticky Factor there's Discovery Factor whether whether it's a DDC like looking at neutrogena.com or whether it's something classic like just going to Amazon.
More and more of my purchases are happening there when I think you know probably have one of the stable is the same scenario.

Scot: 
[34:46] SRI does that freak you out you're kind of in a pie in a world where you're worried about 15% e-commerce growth and making sure your your efforts grow that faster faster and what if the bar really is 20 to 30%.

Sri: 
[34:57] Get to Wild swing by category I think the overall notion that e-commerce is going fast if any of us are debating.
Statically Pharmacy so it doesn't scare me at all I think if you start looking at what.

Samir: 
[35:10] Looking at what a role is to the consumer we need to go at that.

Sri: 
[35:13] We need to go at that place so we can deliver value for the consumer and delivered Brands the daily.

Samir: 
[35:17] And I and keep Pace with their needs and demand so I don't get it at all I ask.

Sri: 
[35:19] In the hands keep face with their needs and demands so I don't feel it at all. I see all of this as a giant opportunity for a cpg companies to take leadership and do what's right for the time.

Samir: 
[35:31] Cilantro.

Scot: 
[35:32] What was the future of cpgs is it is it like half direct half wholesale no he's really kind of you know you haven't experienced any brand at Costco that's different than the Amazon that's different than the rogaine.com.
If you would what's your and even outside of J&J if you know I don't want you to give us any secrets we could do that so I'd appreciate it.
It would switch your vision for like 3 years were sitting here again gazing at the beautiful mountains with what we talkin about.

Sri: 
[35:58] In the last 3 years right in any comp the strategy for today doesn't apply 6 months from now and business planning that I kind of plan down and thought just yesterday I was kind of talking to.
Star Chief customer officer in terms of what's the next evolution of e-commerce that we need to focus on right and we both can card.

Samir: 
[36:18] Any strategy.

Sri: 
[36:19] But you were kind of buildings got about a 6 month old.
I'm and if I look at a few years down the line where is business going to be done I think I'd be fooling you and your listeners if I said.
It's going to be only one way versus anything else it's going to be a mix of it all it's going to be vacant lot is not going away first of all make a big him or is here to stay it's going to have it.

Samir: 
[36:34] Vicki Lawrence is here to stay it's going to have a distinct gold.

Sri: 
[36:41] Fulfilling a distinct Mission depending on the category I see.

Samir: 
[36:45] Did you see me.

Sri: 
[36:46] I see your milk runs some of the girls that aren't being preserved even in the long run in a bacon.
Those that have no touch feel.

Samir: 
[36:55] Probably going more online.

Sri: 
[36:56] Doing more online over the course of action they probably I think they will go online over the course of time and then when you think of distribution method.
Companies are going to have to learn that we talked about the one p3p FBA you know being part of all these models when the retailer selling.

Samir: 
[37:10] Part of all these models when the retailers are here. They want you to be part of it experiment learn and I see the future.

Sri: 
[37:15] Learn and I see the future starting many things not just one.

Samir: 
[37:20] SRI it sounds like you've been in partner meetings most of your time here vendor meetings so I'm guessing you haven't had a chance to do I consume a lot of the content for or walk the show for trying my best.

Sri: 
[37:32] I actually spent trying my best not to do vendor meetings in restaurants and bars actually go to.
The vendors to throw truly trying to understand who they are not meet with one person like classically a business development person truly but truly get into the meat of what product they have things of that nature my belief is on.

Samir: 
[37:50] My belief is on that timer.

Sri: 
[37:52] Belief is always been.
Hunger and appetite and curiosity for the spaces the way we will be able to skip history in the space and its conferences like this that you find that a median that comes in.
People holding the next thing you know there's an opportunity.

Samir: 
[38:10] Are there any key takeaways or themes that have kind of emerged in your mind from the show.

Sri: 
[38:17] So I think there's good news and bad news over there I think the bad news is.

Samir: 
[38:21] I think a lot of.

Sri: 
[38:22] The stuff that I saw is still econ 101 content.

Samir: 
[38:26] Blackboard.

Sri: 
[38:27] Basics of Commerce SEO sem the good news is I still think there's a ton of opportunity and all those faces so I've definitely.

Samir: 
[38:31] Good news is I still think there's a ton of opportunity in all of those faces so I'm definitely met with.

Sri: 
[38:40] The show where does geeking out and what the next set of data needs and insights needs are and where we need to go and things of that nature. This is the place where stuff like that happens so I've seen plenty of.

Samir: 
[38:52] Samir have you seen any other trends of the show that are not jump out of you everyone has been talking it just seems it's been such an Amazon centered focus and.
I'm waiting I'm waiting to hear some of the outside of Amazon things.
It really reminds me to Amazon today is like Walmart was in the 90s right everybody everybody scared of them they're putting the screws to all the vendors it's it's a difficult you know it's a difficult spot they're trying to they're trying to grab as much as they can.
And.
I'm very eager to see Innovation from companies outside of Amazon so freedom for example for the things you know if anyone saw the.
Mark Laurie interview today you know some of the things at Walmart trying to do our.
Pretty significant right in there they're placing their placing big bats to show that they're serious.
About going toe-to-toe and they've got a lot of assets disposals lot of smart people as you were saying sure you know your hiring people some of these Acquisitions are just to get the get the development Allen.
And so those are some of the things that I'm saying.
I think that is a good wrap up and that's actually going to be a good place to rap because it's happen again we've used up all our a lot of time but if you want to continue the conversation we encourage you to meet us over,
on our Facebook page and we love to chat more if you enjoy this show if you're sure appreciate if you jump on iTunes and give us that 5-star review.

Scot: 
[40:18] In Sri how can people find you online you were talking about blogging earlier.

Sri: 
[40:22] Evereve social platform mankind can conceive so the easiest way is LinkedIn I actually block a lot about e-commerce and Amazon.

Samir: 
[40:28] Got some great stuff.

Scot: 
[40:31] Company mostly publishing LinkedIn.

Samir: 
[40:34] So I have my own bed.

Sri: 
[40:35] So I have my own website but I'm not ready.

Samir: 
[40:38] But it won't turn on.

Sri: 
[40:39] Facebook Instagram Tweed the whole gamut and now I will make sure to go to Json NDSU.

Scot: 
[40:47] And we will put links to your LinkedIn and on our show notes to come out with podcast with folks want to go there you're going to make a lot of LinkedIn friends that will help your numbers there.

Samir: 
[40:56] Samir are you still at me on Tinder is that still that's what.

Scot: 
[41:03] Seriously you got you publish lot of great stuff to you prefer people go to.

Samir: 
[41:05] Yeah I link to LinkedIn LinkedIn is this is the easiest easiest one for me.

[41:13] Kazakh feeling me.

Scot: 
[41:18] Goalie really appreciate guys taking time out of your busy schedule to be on the show.

Sri: 
[41:23] Hey thank you so much for having me in the first place always fun I think I might get my strong belief we're going to shape the industry together one can't do it alone so genuinely thank you thank you so much for connecting me.

Samir: 
[41:33] Thank you so much for connecting you Jason.

Jason: 
[41:36] I'll give that a amen and until next time happy commercing.

Mar 30, 2018

Bob Kupbens is the VP of B2C and seller experience at eBay.  He's has previously been responsible for E-Commerce at Target, Delta Airlines, and Apple.  We covered a variety of topics including the latest innovations at eBay, as well as if and how brands should use Marketplaces and eBay.

Episode 124 of the Jason & Scot show was recorded on Monday, March 12, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature, Google Transcription:

Transcript

Jason: 
[0:25] Welcome to the Jason and Scott show this episode is being recorded it on Tuesday March 20th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your toes Scott Wingo.

Scot: 
[0:39] Hey Jason and welcome back Jason Jason and Scott show listeners we are still recording live here from shop talk show and sunny Las Vegas,
ahayah top of the Venetian where we have a beautiful view of the mountains and work cited have a really special guest on the show Bob cuppins he is the VP of b2c and seller experience at eBay welcome to Showbox.

Bob: 
[0:58] Hey thanks guys for having me really appreciate it.

Jason: 
[1:00] Yeah that's what a consonants in your title.

Bob: 
[1:02] Yeah I'm trying to abbreviate it down I'm working on a really cool acronym so I'll get back to you on that one.

Jason: 
[1:06] Awesome maybe Wesner could suggest something in a week.

Bob: 
[1:08] Yeah I think absolutely I'm definitely open to suggestions always feedback is welcome.

Jason: 
[1:12] Call Sababa one of the ways we always start the show and it's going to be putting your phone in your case is just get a quick recap of how you came into the industry and what the what years were the Korean turkey.

Bob: 
[1:24] Well I feel like I've been in the industry for ever I started at Target to have back in the day and I was a part of the other lots of different piece of the business on the film inside.
I mean i t e n e Commerce and so-so had a great experience at Target and and love retail from the from the start at work at Delta Airlines for a long time running brand.
And digital and and then I've been I was at Apple for two and a half years on the on the online retail side.

Jason: 
[1:47] And there would you like a pot of manufacture.

Bob: 
[1:49] You've heard of Apple yeah I know it's it's a small company based in now in Cupertino they but they built a little that little building you might have you might have seen it from the highway.
Exactly and then and I've been at eBay for the last stuff for the last year-and-a-half so I feel like I'm at this industry from a lot of different perspectives you know from manufacturer from retailer enough from the marketplace which is obviously marketplaces a very exciting place to be right now.

Jason: 
[2:13] Absolutely and can you tell us a little bit about what being responsible for the BBC seller experience adeeb and Tails.

Bob: 
[2:19] Yeah I mean our job is to make sellers successful on the platform so it's as simple as that so across our large business sellers great brands that we have on the platform,
to you and all of our cohort of small and medium businesses on corner of the Cross across the country who have been in a growing businesses and been very successful all the way to our consumer Sellers and how to wean able consumer Cellular's to make sure that they've got the tools they need,
you know when your consumer seller you want to put some on there,
on the side on eBay and you want to sell and so how do we make sure that all that happens so my team also looks after a policy so all of our returns and and shipping,
and so we're doing everything we can to try to allow a Subway to be successful and provide the right to ultimately the right by her experience on a sign.

Scot: 
[2:59] When when I hear things in Channel visors going to go see some dr. Sellers it's his mind blowing you know you you see like I don't know if you've met the folks it like bhfo Express.

[3:09] Play CDs selling on eBay how to do that you go visit these people and they've got the supply chain and the other like.
Outpacing the targets the world until this mess is pretty amazing some of the books on eBay platform.

Bob: 
[3:19] For sure and I think they know we used to we see varying levels of sophistication obviously be a typo and then the Like You Know Jack Chinese guys are like the absolute to the top end of sophistication you don't on the other end we've got,
small one person shops entrepreneurs like people who are like really really working hard to create an incredible business on eBay and we feel so great about the ability to empower,
some of these small businesses and individuals and the jobs that work rating I don't know it seems like it's at the Peace of the mission of eBay is really help,
small businesses be successful in and create a platform on which they can they can grow something and I think it adds to the specialness of of eBay in addition to us being at the end of the day a great retailer.

Scot: 
[3:57] Jackson listen to showing you be agitated by that point out he's mine odds only saw that has his own conference room.

Bob: 
[4:02] He is actually the only seller that has his own car.

Scot: 
[4:04] I was requesting meeting the Jackson remind others, tribute.

Bob: 
[4:07] We let it. We're really to dilapidated now we just put all this like a closet I'm skinny.

Scot: 
[4:11] Small HDMI cable.

Bob: 
[4:12] Exactly the server room.

Scot: 
[4:14] We're here at the shop talk so and you guys had some interesting you guys release some interesting functionality I've seen Devin talk a lot about machine learning and want to get into.
And they are and how you guys are dropping these new technologies to the the massive eBay platform you know there was a really cool augmented reality and how you guys will eat us little bit about that.

Bob: 
[4:34] Well I mean we've done a lot of things lately one of the advantages of being eBay and having resources is that you can invest in some of these.
Technologies like augmented reality and you were looking at virtual reality machine learning we apply them sometimes behind the scenes to our business you know when we try to optimize things and use machine learning and AI to do that another time to make it more fun center so we had launched a.
Attack technology called image search which is native in our in our mobile apps and it's really cool that one check for you if you're interested remember there's a meme where you take a picture of yourself and you see which art you look like.
You can also do the image search selfie so if you do a selfie of yourself an image search and see what eBay product you look the most like like that's an interesting one as well but more practically.
If you see something that you want to buy whether it's a chair or jacket or whatever pair glasses like you can use image search and get really really reliable results in.

Scot: 
[5:24] My wife is up for shoes you'll see some shoes in a magazine that aren't attribute and she she really loves the eBay.

Bob: 
[5:29] Yeah I think that's okay. That's how you say that it really well cuz things that there's some things in the catalog they really will attribute in you know exactly what they are and you can type in the search box and get the answer other things you sent him to call him.
And we know our buyers aren't experts in every category and so the image search value is I don't have to know what it is I can just.
Take a picture of it and then I'll let you know when we use that extensively another another third-party Channels with find it on eBay and other pieces that,
Batavia we want the little piece of augmented reality that we love which is what's up what shipping box should you choose and Willis item fit in the Box until you can use the camera to take a picture or scan and real 10 the.

Marker 01

[6:03] Now the item that you're trying to send in that old Ben augmented reality put the Box around and allow you to choose the best box size so we know for ourselves that's one of the things we don't know we don't want to.
We should be able to bear and you know for them like how you pick the right box I just one of those things that sometimes can get in a seller's way and we want to make sure that we take as much friction out of that is possible.

Jason: 
[6:21] Especially the carriers are charging as more and more for that error so it's because it's.

Bob: 
[6:25] Absolutely absolutely.

Scot: 
[6:26] Volume matters one of the big trends we talked a lot about on her show that you guys are kind of right in the middle of the the tornado on is Bran's going Direct.
So you have to tough retail environment out there every Brands reevaluating their direct strategy we,
you know if we talk a lot to Brands and their always thinking about their website and should they had transactions and then Amazon's you how do they relate with Amazon for the party third party in that kind of thing.
I've been a big advocate of Branson on eBay for very long time and it's good side of your on-board kind of.
Think about the experiences that don't experience which is which is smart what are some of the weather trends you guys are seeing as a platform with with the brands coming in and wanting to use eBay to go Direct.

Bob: 
[7:06] Yeah I mean I think for me to do with the starting places that buyers want to search for brands on eBay mean that's we have more searches for brand terms on eBay than anywhere else and so I think,
yeah the dependent demand for people to see brands on the side is really really clear and so for Brands you know my we had a panel yesterday where we had Crocs,
on the side which is one of our which is one of our big Sellers and they have a great Brand store on on eBay,
yeah the message that we were trying to deliver there is like look at your brand and you know the marketplace strategy you should you should get one you know and it doesn't mean that you have to participate it means that you have to understand how marketplaces fit in your overall channel strategy and we found that brand to come on eBay.
Tend to find new customers tend to find different customers and so it fits well within a branch channel strategy without a lot of really great,
success stories around Brands coming coming direct or their authorized resellers being unable to to sell directly to be identified as either the brand or not authorized reseller on the site so we're doing actual out of work and will release here over the next next couple of quarters some things that,
absolutely are going to cement this as Brands need to come on eBay so we've got a,
bespoke brand experience so people will be able to direct traffic at a branded experience now we're not going to kick everybody else off the site who's selling that brand but we're going to basically allow the brand to step in front,
of all the demands he knows he'll be certain person lying and when you tell a brand you know this is how much.
Volume your brand is doing on eBay and don't you want a big piece of that I mean normally the answer to that is yes until I think it's Last of Us.

[8:41] It's less of an if a brand is going to come one of marketplace anybody specifically and it's more and more when but we're trying to create the right conditions for those Brands to be successful so we're trying to create a great learning experience.
We're trying to to allow Brands and authorized resellers to show up and be prominent in all of our experiences in search results,
in a few item pages in the new product pages that we can come back to that one but we're creating these new product pages,
as a part of the new search result experience and so whether you're on a product page review item research results.
Authorized reseller in the brand themselves are going to show up in a really really prominent way so that gives the brand the opportunity like I said they're kind of step in front of all that demanded all that search volume at there and really get their fair share.

Scot: 
[9:23] Yeah and water brands you know they may have a little bit more names on eBay they get really frustrated by some of the third party seller especially out there one of my my big advice to them is b a t Berry Amazon is the best way to solve that is to be the brand on there and.
Give the consumer on authentic experience will choose that every time over you know Bob's sneaker store.

Bob: 
[9:43] I think that's right and you know me we talked a lot about authentication and we have a programmer on a thumb acacian for handbags if you love I'm going to continue to expand that program what's more authentic than actually buying from the brand or buying from an authorized Channel you know and I think that that for me is the way to get.
Truly descale on authentication is to have the brand selling directly authorized reseller selling directly you can describe the benefits.
A buying from an authorized reseller of the brand right it's like manufacturer warranty.
Better customer service you know truly out you know you know what you're getting right all those things in it and it makes the marketplace better we create stress in the marketplace reduces returns and and you know all the things that people worry about when they buy from Marketplace you buy from a brand there's no,
Bates no doubts you know.

Jason: 
[10:25] We run in and out all the time that.

[10:28] You know Brands want to sell direct but ironically there often the worst place to buy their own product cuz they're like the only ones that can fly with man up and that they have smaller storm and all these things and yet there's a huge amount of unfulfilled Demand by consumers.

[10:42] Still want to buy from those Brands and when you dig under the covers it almost always comes down to this truss Gap.

[10:48] And Trust being like one of the biggest impediments to purchases and so you know just having that authentic Trust of knowing that this is the actual brand provider.

[10:58] Is it seems like it's been very successful.

Bob: 
[11:00] Yeah there's a lot of drivers that the trust got them and that's one of them for sure I think another thing that we're spending a lot of time on his is trying to drive retail standards,
so when people shop on eBay we want to make sure that they it's pretty transparent what kind of shipping service they're going to get you nowhere pushing folks to provide,
guaranteed delivery which is one of our big programs this year we're going to make that a bigger and more important to program as a part of the overall Marketplace,
creating incentives around around 30 day returns and 30 day free returns,
because we feel like that's something that is going to drive conversion and and and helping us so you can look across the Spectrum in and we're trying to address that Gap that you're describing on on many fronts you know and I think the brand piece of it is.
Yeah it's really it is really important part of it and again we we should Brent brands have to get to that point where they feel confident in having Marketplace as part of the channel strategy.
We have to create the conditions that allow Brands to be successful and so we're headed in that direction and and we'd love friends to come to come with us.

Scot: 
[11:56] My my playbook for pitching brands on eBay is probably just like Circa 2015 but but what we found at Elmo's.

Bob: 
[12:03] That was so long ago.

Scot: 
[12:03] It in the internet years.

Bob: 
[12:05] Absolutely.

Scot: 
[12:07] So we would always kind of lead with going on eBay with like an outlet or reefer because eBay consumers really love that value orientation and then you can kind of like use that is the center of the strategy and then then put the rest of your product.

[12:19] When you're pitching a brand today is that what you lead with or are you guys going all-in like do the full enchilada put everything out there.

Bob: 
[12:26] I think it depends on the brand strategy at me we're going to be very consultative and talk about what they need and where they want to fit in we have brands have done number of.
Different things you know it one example that I was going to talk about was Tyson you know it's a great brand on the site,
if you see them they're featured in the number of our campaigns you know he go on the side and you see that top Banner,
how you'll see Dyson in there quite a bit because they've been participating in a lot of our programs are Deal's programs you know there are other ways to drive traffic on the day started with a refurb side and they've done very very well with with dice and refer back roster deerberry product lines.
Then I moved into.
Big now moved into the full the full line of products there's going to be some exclusives you know so we're starting to see them grow in that direction and I think you know as they get more confident in their ability to address this customer.
And then get data I mean that's the other thing that's important is we have a brand new site.
Like we're not competing with no one p m 3 p right for us it's all 3p and so we're not going to jump in front of that we're not going to get between a brand in their customer Rena provide the data in the inside and allow that relationship with the customer to be very transparent for brands.
But anyway if they learn more about that they get more more confident in this being a court channel for them you know and I think the weather is like it is one of my great friends on the site.
They started by kind of all and you know I'm a taken advantage of again like the deal's programs but they're also selling globally they've got.
In a business now in in in multiple of our eBay regions and so they've been very successful so I think it depends a little bit on.
On the brand and their objectives and in and we would make that picture a little bit differently now we say haters different flavors.

[13:56] And I and if you need if you're looking for an outlet channeling a crock started as ironically if they're there their tag on their seller ID on eBay is Crocs outlet.
Right and then it started as an outlet but in fact now they got their product line and then,
sorry. Guess you have single-handedly driven the crock business exactly but I think you know so so we can say you know Outlet can be in the end of season.
I could be refurb or could be full line and we have ways to support your objectives you're very subjective on the on the platform or however you want to come at it.

Scot: 
[14:32] The thing I love about it such an easy decision to move if they if they aren't already doing some kind of Outlet or or refurb on their site moving that to eBay is a no-brainer because when it's on your site you're guaranteed some candles Asian it's hard to measure what that is.
But I would argue almost like you're a hundred percent because most people are trading off if you move it to eBay your.
You're not going to have near the Campbell Station cuz you know it's much different audience and then you know we we have a ton of data that shows to your point we've seen like 80 90 percent of people are new to the brand so not only are you.
Getting rid of cancellation you're flipping over and you're turning it into a new customer and kind of experience but they're on your website to Priority a customer sometime.

Bob: 
[15:12] Yeah I mean let's not forget me 270 million active fires were a hundred 90 Marcus there's a lot of global vision invisibility for that inventory and,
and then we got you don't want to take a search engines in the in the world you know until you put all that together forever for an existing brand it makes a ton of sense,
emerging brand it also makes a ton of sense somebody who's trying to build their brand like what a great opportunity to create this bespoke,
destination on eBay that allows people to to come and see your brand and highlight all the attributes of that brand I think we you know Denver,
building some of those experiences summer like today and in very soon we'll have some more of those live.
So the brand can feel really confident when you come to eBay and what you're seeing is a is the most positive expression of that brand,
and and you know what I came from a brand you know from the Packer and I built my team built the team all store for Apple in China,
and so we know what it means to represent the brand well and I feel very strongly that Brands need to have that on eBay that's not going to be quite the same. I think you know for sure we need to provide.
Something that feels brand right and and then everybody has a slightly different definition but work in that direction and then we love again you know I said even feedback on the acronym certainly welcome but also.
Feedback on feedback on on what we should do to to further enhance our are you know the.
Landing Pad basically that we provided for Brann's on the platform is so I really welcome.

Scot: 
[16:30] Yep you ever see a day so so can you bring up Alibaba so they have taobao which is kind of like the P2P or the sea the sea and then they have tomorrow which is B2B b2c and then they have different search experiences on your your entry Gateway.
So it's almost like if I if a consumer goes to Team all they want to Brand experience and they kind of sea front end only Brands and then they backfill with the consumer and then it flips over if there.
You guys ever see a day went with eBay whatever to that or.

Bob: 
[16:55] Yeah I don't I don't I mean I don't and it's interesting I mean I'm not an extra I might be like Circa 2015 with with with T-Mobile and how about as well but but I think like part of the Magic in the joy of eBay seeing the spectrum of value,
you know that's what I love about eBay that's why it's well honestly one of the reasons here you can put Brandon inventory and if somebody chooses and they believe in though in in buying from a brand that's great but if somebody wants the the the the used one you know,
that somebody's that somebody you know used in love for a year and then they want to give it to you had a slight at a discount like great like that's there too and then if you want that thing that you couldn't find anywhere else like that's on eBay to answer for me that's,
the Magic in the end in the joy of eBay and I would hate to think that we would start to bifurcate that experience you know I think we done something recently launched under $10.
Piece of the site you know and so we we think there may be experiences or events are places where customers are looking for something very specific and we might be able to.
Direct them to two events and similar to what we do for Holiday Inn similar to what we do for the deals program folks were like looking for specific value but I think in general I would be.
I know I can speak for the virus. Sketch of my personal opinion is seeing b2c C2C you know.
P2P auctions fixed-price like together if it's done in a way that gets a great buyer experience then it creates did Chris positive value I love to continue to see that together.

Jason: 
[18:15] Do you find do you have to have a very different conversation with I'll call them sort of traditional wholesale brands that maybe don't have a legacy of selling direct then you do with the sort of vertically-integrated brands that are used to selling their own products.

Bob: 
[18:29] I don't know I got some X I think folks are used to selling their own products sometimes they.
Yeah they have more emphasis on the channel than they do on their own side I mean to your point like they're out there on their own site selling map.
I got very limited in a quantity is because it's been you know that the allocation of that inventory is based on historical sale performance you know and so by definition you will end up with.
Some me a very small percentage of your inventory in your own channel and a very significant part of the authorized Channel you know so we you know we would say to a lot of these Brands like maybe you don't sell the rack.
Maybe this point of set your authorized resellers and they become the mechanism by which assign direct maybe there's an opportunity for bigger.
You have a bigger and bigger volume in math in that model but again we work with each brand a little bit differently and try to help them achieve their objectives.

Jason: 
[19:09] Not so you say you could imagine a brand experience on eBay that isn't necessarily tied directly to a selling experience that support sellers of that brand.

Bob: 
[19:18] Toy yeah Anatolian we want the brand to contribute content we want the brand to contribute the catalog so we would get you know we get to the attributes right.
But you know you'd come to a brand experience and what you'd see either you see the brand or you would see the brand content that supported than a series of model that showed authorized resellers of that of that product and again very specifically to finding what.
Value proposition is for buying from those authorized through that authorized Channel now look I mean I'll be fully transparent like.
Blow that below the fold and maybe even a little bit farther below the fold you'll still see other sellers of those products and that's what I was talking about, the joy in the end the end the likes of the Elegance of putting all that together but again we want to Brandon the authorized resellers to step in front of.
Of all that demands and and have the opportunity to tell the story why is selling white white buying from the brand direct make sense.

Jason: 
[20:08] To the brand stuff sounds super exciting I'm also curious about what else is new at eBay and you you the one that's always a personal interest in me a little bit in the new product detail pages.

Bob: 
[20:21] Yeah yeah I mean look where we've talked about structured data for a very long time because of her on eBay how much longer than I have and start your day. Probably better.

Jason: 
[20:30] Circa 2015 still would cover at your ass.

Bob: 
[20:32] Yeah I think if we actually might be it might be reminded a couple years before that but I think the value of structured data in one of the reasons to do that is because of you Kelly attributes right you can create a very different buyer experience and so you know this year we said we're just going to get it right this year I'm going to start.
Category a category of Novi, mail to us but like the level below that like really you know what product basely by-product and and make sure we got the catalog right.
So we we we just announced in our latest seller update a series of of categories that are going to be basically right we're going to we're going to make sure that they're perfect.
And as we launch those onto the site will start having now search results default into a grouped into into a group set of search results that allow you to click into a product page.
And the value that product page is you can sort of see either in one screen both on desktop and mobile all of the different options.
For that product and you know that all of the sellers that are selling that product are ours are compressed and captured in that one experience.
And so we think for a lot of products in for a lot of buyers not having to Wade through in 02 pages and pages of listings and for us to give the ability to say like hey here's,
here's our best pic.
I hear the lowest price here's the manager the best used packing out here's the best auction and have it kind of all sitting in one experience where you can truly understand.
The trade-off is a buyer that you want to make her on that product we think that's a really really great elevated experience and it doesn't work for everything you know for.
Percent that's hard to attribute we may never we may never get there he know you can imagine compressing around attributes at some point but but like look that's like graduate-level I let start on the things that we can get the catalog perfect.

[22:08] And and compress in a way that gets a great buyer experience.
Then for you know just like since when the brand topic you know when you have those multiple top picks one of them if if we have a brand or authorized reseller he's going to be that brand an authorized reseller and and it's cool boy put down a lot of the prototyping in.
The click on the brand authorized reseller product and you see content-rich content making a lot of hand gestures right now it does it doesn't come visit it's not a video podcast.

Jason: 
[22:35] But whenever your hand gesture hits the table I wasn't hers will know you did that.

Bob: 
[22:38] Excellent good while sod. That's for that for you everyone out there some sound editor named named Jason will edit that out.

Jason: 
[22:47] It went the intern do it.

Bob: 
[22:49] Yeah okay good anyway so when you when you click on that brands,
best pic it'll show enhanced content it could be video can be the attributes of you know why it makes sense to buy from a brand when you click on,
that one next would all that ad that rich contact goes away and you got basic content so you know what the product is and so you will really show even in that product page very different experience between bronze and,
and and everyone else.

Scot: 
[23:13] I think so too a lot of small one of the fun things about being a TBM troops covered is you it's hard sometimes you're like the mayor and always.
Admire what Devin s go to you to make you know you make one set of sellers happy another one agitated some of the product stuff in a lot of the small kind of old-school tells your actions you're making eBay Amazon.
What's your standard answer to that objection.

Bob: 
[23:33] Yeah I mean for some categories you know people want a more specific buyers want a specific product base experience look for not preventing people from looking through the the,
you know the feelings and I need the listings for those products that are there is one click away you got the entire set of historical search results but the other thing is like we know that people want great value,
and for products that are easy to compare that are easily attributed they're going to be looking at all kinds of different places to buy you know to buy that product like if you think about her,
I don't know a phone or a thermostat or you know if they can things that are that are easily comparable.
You can have three tabs open and even look at once I going to look at some other side you can look at eBay and so we want to make sure that we've got the most competitive offering.
Right there in front of the in front of the buyer and we think that drive conversion,
so what I would say is you know sometimes yeah we are going to going to have the best one front-and-center we're creating a programmer on price guidance and so we're going to tell sellers what we think the best price is and what is going to take to be to be featured in that in that backpack.
And and you know we really hope that that helps Drive.
The competitiveness of the marketplace overall so that eBay is seen is that place that you can get grape value in the same way that you can another side so don't think we want to be you say Amazon I want to say Amazon,
do you have what do we don't want to be too many Amazon we don't want to turn into that eBay has a unique differentiated value proposition it's about Spectrum value it's about great opportunities to see,
the new product that used one you know that they auction version you know and I think virus appreciate that and value the difference between eBay and Amazon for the same time.

[25:03] There are some folks were going to come to eBay and want to see a comparable competitive price for a very specific product and we want to create an experience that that facilitates both of those things.

Scot: 
[25:13] I talked about that for a long time but I never typed time-constrained.

Bob: 
[25:17] What's feedback.

Scot: 
[25:18] What I would say to the sellers is you know hey we're all raw in the marketplace to make buyers happy right in a buyer coming and seeing 80,000 things you know possible to buy on eBay when you have to pick them up.

Bob: 
[25:32] But you know what I think it's interesting you say that made some buyers do want that let me some buyers enjoy,
the searching the treasure hunt you know so it's like hey I'm on I'm on page 14 of the search results and I found that thing from a seller who had that you know it's like it's awesome I like I love I love that about.

Scot: 
[25:47] That's be a balance.

Bob: 
[25:47] And so yeah so so but you know you're always one click away from that experience even in a product-based compressor twirled and and so I don't I don't think we want to take that away but we want to.
Together and make it more efficient for those buyers who are interested in something very different.

Scot: 
[26:02] Another big theme in the world of e-commerce in addition to Brands going direct and whatnot is in a shipping is getting faster faster.
What does the bar is always being raised there and you guys have had a long history of interesting programs for sellers you've had asthma caught Fast and Furious but as fast and free.

Bob: 
[26:18] I wish you were Fast and Furious.

Scot: 
[26:18] Yeah Vin Diesel would make a nickel for every package and then.

Jason: 
[26:26] If you deliver to me would be totally awesome.

Bob: 
[26:28] What happened that maybe you can have eliminate of those right so we got to ask 9 maybe as I could.

Scot: 
[26:32] And then you guys have you know you mentioned earlier tell us tell us, where is eBay on that and where you going.

Bob: 
[26:41] Yeah I mean guaranteed delivery is a key program process uses you say I like people want to know.
When they're getting their saying Amazon has his program it's just giving me what it's called I'm just teasing but expectations are clearly being set by other programs related to to chipping and specifically fast shipping.
I'm so fast and furious been a great program for us we see that address conversion.
Will see you at that it you know to the trust of the question you know it enhances trust in the marketplace when you see that something's going to be delivered.
I'm certain day and and you know that it's free shipping like that that really makes buyers feel confident in those Ben those purchases and so.
We launched TGT it's been a successful program we wanted to be way more penetrated than it is.
And I in so we're doing a lot of things this year to make sure that that EGD gets the traction that we know that it did it needs to have you know we're doing.

Scot: 
[27:28] The sellers often is an hour.

Bob: 
[27:30] So what you up to in yet we're removing some of the limitations that we had put on the on the program so for example we had.
Required initially for EGD sellers to be using the eBay labels platform.
We know that not everybody wants to use the eBay slate labels platform and while we think it's a great platform and have great rates and you know commercial insert commercial for eBay labels platform here we do know that that other sellers have no other operations and so relaxed that requirement for example.
We've always relax the transaction volume requirement down to it like basically to the point where every business seller should be able to to qualify an opt-in to to guarantee delivery and then we feel like.
We want to create the in-center of Mostly because we can get drive conversion.
For sellers to opt into that anymore accelerated rate in so we're building our proven or Epi so that we can work through platforms like Channel advisor and and Shopify and just try to make the program easier to opt-in and not an easier to be a part of.

Scot: 
[28:25] Can people control at the school level in this user in there.

Bob: 
[28:28] Yeah they have I mean I have a fairly detailed rate table and that's part of been part of the challenge but we've got a Transit table that were that was built.
That sellers can that's how it can upload and then give them pretty fine at control,
Avaya because you know it like it's cute suits for bigger sellers like some skis are in different locations and and so you need to be able to understand for each individual item like where you know where they can get to and what pretty time.

Jason: 
[28:53] Down on the floor here chop talk one of the big themes is machine learning and Ai and in fact I feel like in order to have a booster you actually had to buy the letters Ai and attach them to whatever College you're offering.

Bob: 
[29:05] Yeah you're offering.

[29:09] A machine designed a booth actually today.

Jason: 
[29:12] Ours would have been much better if we had a machine.

[29:15] The one of the problems with machine Learning Center obviously be a huge component of future of all these experiences in it but one of the big challenges as you out of data to really Leverage.

[29:29] And it occurred to me that you guys are in a unique position of of having like a shooting on the date are you guys thinking about ways to leverage that and like anything you'd.

[29:39] You care to share in terms of the future of AI on the eBay platform.

Bob: 
[29:42] Yeah I mean look there a lot of things that we try to do behind the scenes machine learning AI sits behind a lot of the analytics work that we do you know you can do a lot with models,
but models get better as you apply machine learning and AI to them right I mean it's like so there's a good like soundbite but when you think about,
trying to track by her abuse and understand you know how we protect sellers in that way,
we start looking at Trends around around claims or brought me. Like there's a lot of ways that behind the scenes were applying machine learning and AI to try to make our predictive models better,
the one thing that stays visible to Sellers and it's not perfect yet or called but we do we do price guidance.
And we talked a lot about hey I both on the CDC in the b2c business we think your item will sell better if it's priced in this range,
and you know we're starting out a path is this is a complicated problem the machine learning they are going to help us get down that path faster so that our guidance will get more accurate and in better and be more connected with you really want to be able to say,
especially to a consumer seller look at the price of here on average is going to be 6 days and nothing will tell in 6 days and we want to get more and more and more,
accurate about those predictions and make that quality better and better.

Jason: 
[30:56] Bob.
Is probably a good place to wrap it because it is happen again we've used up all at a lot of time if you want to continue the conversation we didn't charge you to jump on our,
page if you predict enjoy this episode we love you to jump on one of Bob's old platforms and give us a 5-star review on iTunes.

Scot: 
[31:18] Bob if people are interested in learning more have a say in at the thousands of Brands listen to the show want to call you immediately and get song on eBay is there a what's your preferred way for them to reach.

Bob: 
[31:28] Honestly I've been super transparent my email my email is just Bob at ebay.com and I'm happy to take any any sort of questions or input at that at that email address or we've got ebay.com seller center.
Until feel free to to dilate a seller center we've just updated a ton of the content there so I can find anything they want about selling on eBay or you know how how Brands can be successful and so yeah let me know.
By far away let's say let's have a conversation.

Scot: 
[31:54] Cool thanks I appreciate you taking time out your busy schedule and I really look forward to seeing what else comes out of eBay this year.

Bob: 
[32:00] Awesome thank you guys so much.

Jason: 
[32:01] Until next time happy commercing.

 

Mar 27, 2018

Luke Rauch is the Sr. Director of Insights at Walgeens.  We caught up with Luke at the PathtoPurchase Summit, where he gave a key-note about how to success in the Age of Amazon..  We covered a variety of topics including:

  • Unique assortments and customer expereince
  • Loyalty Programs
  • Omni-Channel
  • Future of E-Commerce

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 123 of the Jason & Scot show was recorded on Monday, March 12, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature, Google Transcription:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Monday March 12th 2018 I'm your host Jason retailgeek.

Scot:
[0:37] Hey Jason and welcome back Jason Scott show listeners we are Live From the Past purchase Summit here so apologies are going to a lot more background noise and listen to it used to because we were literally in the spacious exhibit hall where they're setting up and talking and everything.

[0:52] So think of it as super high-energy.

[0:54] We're really excited we we're here to pre-conference all about Amazon and different strategies there and one of the Keynotes was Luke broke he is the senior director of it us insights for Walgreens Andrew excited to have him on the show.

Luke:
[1:09] Thanks for having me.

Scot:
[1:10] Absolutely what would like to kind of using to this list start with kind of career paths and where how do you end up in this exciting world of insights.

Luke:
[1:20] Yeah so after.
A brief Tour of Duty out in the west coast where I surfed and did some other things fun in my life I went to business school and post business school got serious and joined Consulting,
I work for Deloitte Consulting in their strategy practice for about four and a half years where I focused on everything that I would consider Revenue accretion,
so I always tell people if you ask me to help you fix your supply chain I'm not the right guy but if you need,
growth I was the person that you could come and talk to did that again for about four and a half years and for a Litany of reasons both personal professional decide to make the jump over into,
Harvey industry side where I joined Walgreens.
I'm at Walgreens I am currently responsible for pricing for all eight thousand plus of our stores as well as format inside so all of the work that we do it around different you two formats does the insights work related to that,
and then more broadly R-value insights value strategy.

Scot:
[2:18] Brickell enjoy your talk you mentioned you had a brief stint at Amazon tell us more about that.

Luke:
[2:23] Yeah when I was in getting my MBA at Michigan I did my internship at Amazon so I spent a summer working and the Fulfillment side.
Helping them to build models to better predict utilization within their distribution centers as well as to look at product throughput and be able to make,
active analytics to pick what was going to flow in and out the fastest and ensure that we were moving that as close as we could to the Fulfillment centers.

Scot:
[2:51] Sounds like a pretty meaty 3-month engagement.

Luke:
[2:54] Yeah it was it was it was a fun project and you get to see how Amazon operated from the inside which some of the things I learned back then for example how they run meetings I've taken with me in my career center.

Scot:
[3:06] 6 pages of typed Pros no PowerPoint one pizza.

Jason:
[3:11] Going over very well at the Y.
The no power point rule.

Luke:
[3:14] No no I didn't there many days where I wish that there was a no power point rule the funny thing though about about Amazon has a lot of folks still use PowerPoint to create Graphics in one night and then pasted them into their Word document.

[3:29] PowerPoint still exist just it's a secondary tool there than a primary.

Scot:
[3:33] Awesome.

Jason:
[3:36] Yep so talk to you just gave today I really enjoyed it by the way but you kind of started things off with those.
Three big strategic pillars you can test me my my listening comprehension you talk a lot about assortment.
The value of oil tea program and overall omni-channel strategies where can you tell us a little bit about like what we would have taken away from those three if they had a chance to.

[4:03] Jonas today.

Luke:
[4:04] Yeah I mean from a Walgreens perspective we we are very focused on our missions to be at the the world's most loved Health and Beauty retailer so we're spending a lot of time energy enough for ensuring that we've got.
The right products in the right stores at the right prices for our customers a good example that I talked a lot about as a point of differentiation is,
the brands that we own so people forget we're part of the Walgreens boots Alliance and it's part of that where is cpg in addition to being a retailer,
and we saw a lot of high-end beauty products number 7 I'm sure you've seen before we don't only sell it at Walgreens Victory sell at Target and other retailers as well so how do we take advantage of.
Product differentiation that we have in those areas to place up our stores the right stores to give a differentiated stuff to our customers.
Again in this market place particular where convenience is continuing to feel pressure and comedians is certainly an area that we still pray play really well we're looking for other ways to differentiate with our customers and drive growth with the customers that we want to grow with.

Jason:
[5:07] And that was for taking you and dear to my heart because I talk a lot like when was common strategies brands have against Amazon is what I called the owned.
Product strategy and I always try to differentiate that from what people call private label cuz to me in private label was.
Exact same formulation is the national brand new marketing customer stumble across the the Walgreens brand of Ibuprofen when they come looking for the Advil.
But it feels like more and more all retailers are like designing differentiated products with their own formulation their own value prop for consumers.
Marketing the heck out of them and in your case even using alternative channels of distribution in addition to your own stores.

Luke:
[5:53] Yeah that's right and I think you mentioned ibuprofen for us one of the concert is Cushing's is you as a pharmacy,
think we have unique position in those areas even on the on the pharmacy side and an OTC medicine to have differentiation from a known brand so we're continuing to look at that,
and number 7 and soap and glory and some of the beauty stuff that we've done our what I would say are the starting points for that domestically,
I will continue to be a focus and I agree with you a lot of other retailers are using the same thing is trying to compete with Amazon Walmart directly on price for the same product,
is a bit of an uphill battle but if you can create differentiated offerings that speak specifically to the customers that you want to engage with it could be a more viable path to growth.

Scot:
[6:38] Did.

[6:39] The title of your talk here is start with your reason for being kind of existential kind of a thing and Walgreens your you're here today.
The gist of your talk was really helping people think through in today's world is just so overwhelming when you've got Walmart and Amazon all these things happening you can't beat them.

[7:00] Either this companies at their own game so you had some pretty good advice there maybe could summarize that for us and I'm sure every listeners struggles of that so kind of How to Think Through the strategy. I thought it was a good good piece.

Luke:
[7:12] It's almost basic.

[7:14] Alex got business school blocking and tackling but making sure that everything you do is grounded in your corporate strategy your customer strategy your brand strategy and that,
as you're making conscious decisions to invest in value in certain areas to invest in research and development other areas you're doing it with an ion overall is a company who you are and who you want to be,
Austin what I see is retailers trying to compete on every single Dimension pick the dimensions with which you are differentiated.
And plus up on those as long as they're lying to who you want to be and what you want to stand for and we know customers.
Well the way they engage with retailers continues to evolve and continues to be truly omni-channel they do build relationships with retailers and how do you build those relationships in a unique way that only you can do.
Rather than just trying to build the exact same relationship that Walmart has a Walmart has a very distinctive relationship with their customers and they stand for a very certain.
Why they stand for Value customers know they got a great price that's the pillar,
that's the product with a relationship is predicated upon that everybody can build that relationship off price and value so what are the dimensions that you can build a differentiated relationship with customers on.

Scot:
[8:32] Yet it seems like more and more of the people that are winning against the Walmart and Amazon service is one of them cuz it's hard to Value stop cuz scale.

[8:41] Great Value so just looking recently it's not fun because Amazon is a biologic things like diapers.com had a better service and kind of kicked off the subscription thing.
Zappa's had better service returns one that's kind of work more current is chewy where you know.
They really get to know people's pets and would write handwritten notes and give her a call or if you had any interaction with them you know they knew you had a cat that was 8 years old kind of a thing.
You're not going to get that from a company like Amazon.

[9:09] Car guys are talking about you know they want more and more machines interacting with humans and less people any other examples for both you guys you can think of books using those competitive lovers.

Luke:
[9:20] That tree one is such an interesting example of a building a deep relationship with your customer I saw as you an article the other day where someone had ordered food for a pet that passed away,
and not only did they refund the person's cost with who but then then donated the food on behalf of the deceased animals,
I think that there are ways that you can build a deep relationship like that even in store so if you think about when someone walks into a Walgreens store.
The beauty advisors that we have in certain areas of the store can really be helpful in understanding the unique needs that you have that it's hard to understand if you can't look touch and feel and try the product.
And if you look at where some of the growth has been in Beauty for example it's those High touch.
You can come in and have a makeover down and try and touch and feel that the product for yourself I think that that will continue to be a focal point for a lot of retailers Best Buy I mentioned in my presentation is another one that is completely differentiated on service so,
don't sell you the product at a competitive price and in most cases there they're priced to Amazon on the big-ticket items and then they'll make their money on the setup.
And make their money on the service and I'll bring someone into your house that makes it really easy for you to install that TV and have it look great that's an area that only.
Best Buy can uniquely deliver on today.

Jason:
[10:43] Yeah and I I mean I think there's some examples you think of like Stitch fix and it's really about customer intimacy and knowing their customers better than anyone else another.
Amazon Amazon acquisition it smell like 8 years ago was you know they bought this flash daily deals.
I say boots and you know today we think of flash as kind of a little bit of a joke because you know most of them have been successful woot is still a successful profitable ongoing thing that Amazon's been running for 8 years and what.

[11:16] What is the difference between woot and a lot of the now-defunct by cells is.
The really figured out who's their core audience was and developed the right voice and curation for that audience and and likes or Discord.
A personal relationship with a particular Target segment and so I think that.

[11:37] That notion of getting to know the customer being the competitive differentiators being closer to the customer and being able to serve that you need customer.
That feels like all these other times we talked about really roll up to that.

Luke:
[11:50] Removing friction in pain points for customers I hate to use the old examples of uber and Tesla but you think about the pain points that were within those Industries,
it might not be building an intimate relationship in those cases but streamlining the process and streamline in the communications and taking the haggling out,
there are number of ways that folds continue to to differentiate and I think that builds a relationship with a customer if within that area Uber's a great example making the transaction easier,
build a relationship with a customer it doesn't have to be a deep personalized letter to the customer if there's other ways that you can reduce friction and build a relationship.

Scot:
[12:31] And in your talk you gave folk kind of a little bit of a roadmap for developing a strategy I don't know if you call it that but it was for D's in there if I maybe talk to you a little bit of that.

Luke:
[12:41] He goes back to what I was saying earlier I think the first thing is just making sure you understand who you are and what you want to stand for and kind of defining the the.
Objectives that you have is a company from a customer and brand perspective and it's making sure that you develop the capabilities that you need to support those,
that you think about as you want to go into the market and deploy that you've got the right operational configurations that you've got,
the right tools and Technologies to be able to support its it's really mean it it sounds so General and generic I think what often happens as we get.

[13:15] 20 years into running a business 5 years into running a business and we can we forget about the bass.

[13:21] If you have permission to play in a certain area and you have a unique proposition within that certain area.
Then your investment should disproportionately funnel towards that area rather than having to worry about competing with Amazon at Walmart on price for example on every single thing that you sell.

Jason:
[13:38] When the topics that came up in your your talk today was omni-channel and you mentioned you have 8000 stores in the portfolio.
You want to talk a little bit about like where you see the stores being a true competitive advantage or differentiator.

Luke:
[13:54] If we we have some great Partnerships right now for example with FedEx where for folks that live in urban environments as an example where package theft is a real issue being able to have your package sent to the,
38 the local Walgreens and pick it up on your way home from work quick in and out you go to the photo desk and grab it and you're out I think our location.
There's there's nobody that is closer to the customer from a physical location standpoint and Walgreens we are we are at 5,
minute walk or 10 minute drive from just about everyone in the United States and certainly as we could cheetah move forward on the Rite-Aid acquisition that will that gaple close close even more so how do we continue to take advantage of of that.
But give them a reason to come into the store with the products that we sell so you will will continue to look for Partnerships FedEx as an example will continue to look for other ways to get,
products to customers faster and more efficiently but will also look for ways to give them a reason to come into the store and reason for differentiation I think.
You know I talked about this on my on my chat earlier today but.
Convenience has been redefined Sabine close to everybody in and of itself is not enough anymore.
I'll meet you around 5 to 7 years ago that wasn't the case but now you've got Amazon Prime now delivering under 2 hours.
To enter north of 80 million people in the country that makes it really hard to compete solely on convenience.
Frost that goes back to how do you differentiate which was a big part of the the Ford easy you mentioned what are you differentiated on and then what are the products and services that you can build out that will cause somebody to make that extra trip to your store.

Jason:
[15:37] Yeah and I feel like that.

[15:41] A lot of people talk about the surprise quality and convenience trade off and it is interesting to me how the definition of all three of those is dramatically changing in the in the minds of the consumer.
There I still feel like a retailer that when I'm convenient convenience just can't mean.

[15:58] Exclusively fast delivery anymore and that that brings me to the next topic I want to ask you about which is a little bit of grocery right like grocery one of the big convenience plays is.
Start a list management and saving your time shopping for all those those things is sort of redefining what convenience means.
I don't think of Walgreens as a pure grocery retailer but I do have a.
Like a core part of your assortment that overlaps or are you guys thinking about.

[16:29] Sort of Auto replenishment than and you know how is consumers start to embrace digital grocery that might affect the customer experience at Walgreens.

Luke:
[16:37] Yes and we do we do have Auto replenishment not on the grocery side but it certainly it's something that that were looking into.

[16:45] I see in and I should have Charter earlier today that show growth trajectories kind of across Health Beauty and,
and food and the reason everybody's going after food is it hasn't been as explosive on the growth but it's just exploding so it'll be something that will get you to look at again you asked a question earlier of,
are seen around our strategic advantage in our Geographic proximity so we're always looking at are there ways to leverage that Geographic proximity,
in two categories that we already in existence and plus up or into a Json category so Groceries on the road map it's something that we're looking at there's nothing.
Concrete that's going to Market in the next month but it's something they could choose to be on the road map that were looking at.

Scot:
[17:27] Another CB kind of woven to your your conversation was around loyalty.

[17:31] And it's a listeners know that Jason has the most stars of all in the Starbucks loyalty program I hate project 8000 Stars.

[17:42] That's when we're all familiar with because you going to collect your stars and get your double star days in that kind of thing what are you.

[17:48] Where some does the spectrums of loyalty that you think about it and is a Fool's errand or should people be investing in loyalty programs.

Luke:
[17:54] I think loyalty as a tool to better know your customer is going to continue to be an area that folks need to invest heavily in I mentioned earlier today if you were around.
Five seven years ago people find a kind of creepy when they get personalized recommendations personalized emails when their Facebook feed would pop up with an item that they just purchased a month ago now I think by March customers like that and expect.
And the only way that you're going to learn that deep knowledge about your customers is to incentivize them to share their information with you and to be able to.
In a way that lets you build that personalized relationship so that you'll continue to see loyalty as a.
As a as a vehicle that folks will double down on and you're going to see more and more.

[18:41] Retailers using loyalty to personalize value some are doing it today but I would say,
and there's a lot of Runway there and even depersonalize assortment so there's a ton of Runway I think still for loyalty and lots of different ways that,
folks are going at the rewards and incentives side your Walgreens we use points some used dollars back others use stars as you mentioned there's a number of ways to get at that I think you do need to figure out how,
your loyalty program is going back to the point where they're unique.
From other loyalty programs and gives people an incentive to sign up and participate as an example I think value will continue to be based,
more on loyalty and personalization unless I'm Mass which makes loyalty programs critical in Port.

Jason:
[19:28] Yeah I might just curious about loyalty cuz it to me it feels like there's this big Paradox like the.
The folks that have loyalty programs and do really well like it's a huge competitive advantage and it goes directly to that goal of customer intimacy that we talked about earlier.

[19:46] Starbucks is very successful I think you might have the the like highest participation oil to Prague.

Luke:
[19:51] By numbers.

Jason:
[19:52] Yeah and all of retail so you're certainly winning their.
But then there is also like all of these sort of negative stories that like consumers have loyalty fatigue and they won't carry all these these cards with him and that uniform.

[20:08] The average wealthy program isn't very effective and so I'm curious.

[20:12] Did you guys win a bunch of other people not win and loyalty because you you did execute better or added more value or was there something about just your core brand promise that made you more attracted to oil to use.
How do we decide who wins in dozen in loyalty.

Luke:
[20:29] The first thing is I think we're moving away from an environment where you need to have a card to be in a loyalty program,
so I agree with you that there was fatigue around having to carry around a card we now know based on your credit card based on a number of other ways you transact Who You Are,
we don't necessarily need you and I think in the future retailers are going to necessarily need you to type in a number.
To get your loyalty information you see some really interesting loyalty programs like spring and others who will just do it all on the basis of your credit card,
there is no number,
you link it to your credit card and when you use that credit card you accrue loyalty points will be big wins for loyalty in that the other thing I didn't think of loyalty.
In a in a box which is its a number the unique number assigned to you that you accrue points for I would contend many ways Amazon Prime is a loyalty program.
It is.
Probably not by Common definition of a loyalty program what people think of because you aren't accruing points but there are other benefits perks and things that you accrue,
as part of that program so part of it to will be,
how do you differentiate on service with your loyalty and it might not be the future floating might not be dollars back and might be serviced I might be speed of delivery and might be a number of other things but it will still be there and I think we will.

[21:53] Pretty quickly get away from an environment where you need to remember your number and remember your login we know who people are based on cookies we know people are based on the credit cards with which they transact.
Will get a lot more frictionless.

Jason:
[22:06] Yeah I know I'd I totally agree and in fact it's Amazon absolutely I think is excellent welting.
We sometimes lose track of like what oil to even means like it doesn't mean you earn points that means you're more loyal and have a higher customer lifetime value one of my favorite loyalty features in Amazon is.
The dynamic card notification so you you put an item in in the car for five bucks you were willing to pay $5 you put it in the car to $5 the price drops before you check out an Amazon messages that price change to you and gives you.

[22:40] The the savings right in that they did that like especially knowing they're losing money on that transaction that was pure gross margin they're giving up.
In exchange for earning more trust in Oakley having more lifetime value in so I feel like those kinds of experiences that maybe aren't even link to point it all are are part of the new definition of loyalty.

Luke:
[23:00] Definitely an in and it doesn't mean you have to give the richest reward all the time or have the lowest price all the time you just have to be there in those moments that matter for the customer and make an impression on the customer to drive engineering a gender loyalty.

Jason:
[23:15] I just like having all those Starbucks Stars I usually forget to even redeem them for drinks.

Luke:
[23:19] I went to decaf coffee a year ago so I used to be big on the Starbucks program but unfortunately now I don't get as much bang for the buck buying decaf.

Jason:
[23:27] Literally and figuratively.
The future of e-commerce it's always interesting to me,
you know you've been on the Consulting side of fence we got to work with a wide variety of different clients now you're in your actual practitioner and you have to take responsibility for the results which gives me a little bit of a rash to think about,
the weird do you think all this is going I give you if you were to put your Consulting hat back on are there are there like.
Particular changes that are coming down the pipe that you think everyone would be thinking about.

Luke:
[24:04] That's a great question from my vantage point we're already were already pretty far down the path of where at where at I think things are going you will see.
I believe continued blur lines between brick and mortar and digital and I think you're going to see.
And you're seeing some of this already an example would be more personalization where based off geolocation you walk into a store,
you can offer that's unique to you for that very specific moment in time you'll continue to see folks try to play on how do I use location and behavior.
To drive digital engagements that will be a way that I think will will continue to see plus. But your mobile isn't going anywhere.
Online isn't going anywhere I think brick and mortar will still play its role but the lines between them will continue to blur.

Jason:
[25:00] I want to touch on the mobile for a second cuz that's another one where.
The stats are overwhelmed by whelming Lee favorable to mobile app so I can use mobile apps there's much higher spending much better mobile conversion all these good things happen,

[25:16] It's really hard to get users to use your Mobile app to the overwhelming majority of retailers that have a mobile app like.

[25:24] Doesn't get downloaded or it only gets used once and so it feels like another one of these paradoxes if you can get it it's really powerful but for a lot of people it's not a good.
Good play in once again you guys are on the side of like having a lot of of loyal app users.

[25:41] Do you like do you think that's going to continue to be a.

[25:45] I think we're the biggest retailers are going to have that apps and no one else is going to failed you see me like blending of the web and app experiences.

Luke:
[25:52] I think some folks will back away from apps and just invest in pure mobile the only way that you're going to,
driving option of an app is it is if you have a differentiated offer within the application so for us we've got skin refill by scan with an AR app,
so for all of our Pharmacy customers you pull up an app you scan your prescription couple clicks ready to go pick it up at the store that's unique to the app that would be hard for us to duplicate.
On even a mobile website if you don't have things like that I think you will see more more folks say.
I'm not going to invest in having an app people are coming to invest that in my mobile web infrastructure.
Which is where really the purchase finals going to flow through so I do think you'll see traditional brick-and-mortar retailers who don't have a point of differentiation within their app.
It's your daddy and vest and apps and funnel all of that investment towards mobile just not from an application basis.

Scot:
[26:47] One follow-up on future of e-commerce so you sit.

[26:51] I'm in. Doing pricing you guys have 8000 stores and on how many skus that's a big Matrix of things to price Jason talks a lot about Ai and machine learning do you think some point.

[27:01] Machine will do your job effectively or or do you think that there's just a lot of hype around that and and you still need that human touch.

Luke:
[27:08] You and you always need everything is a bit bit of Art and Science but I do believe.
We have tools and most if not all retailer have tools that I would say border on artificial intelligence already machine based learning tools that help help help us companies make better decisions.
Yes I think you'll continue to see a scaling down of the number of people required to your question to ask a cute pricing for example but you always need.
The art to Lairon on top of the science tonight from a value perspective I don't foresee a scenario where where we fully replace,
the human element with artificial intelligence,
where I do think you'll see artificial intelligence play a bigger role is things like hyper localization where we may say for a set of items across our stores we're going to let the machines manager.
Because we know that we can drive a lot of efficiency out of pricing that a differential way across the stores and doing that on her own will cost way too much labor to do it so you I think you'll see people plus up on.
I'm a I in in examples like that like how you hyper localized but it a macro level you still need the human touch and you still need the years of insights and Merchandising to be able to.
The broader strategy and make the bigger pricing and value decision.

Jason:
[28:31] We're running up on time one last question I wanted to squeeze in there going back to Omni channel for second dimension part of your scope was customer insights and data I've always had this perception that.

[28:44] Traditional brick-and-mortar grew up without a lot of data like there's point-of-sale data sales data.
Very little data about customer behavior in the store and then digital shopping grew up with highly instrumented granular data about those consumer Behavior so you know the digital marketers agonizing over things like conversion rate.
Most brick-and-mortar retailers you talk to him about their store conversion rate and they they they would look at you with.
A blank expression we're now in at Euro when it is totally possible to collect all kinds of really insightful data about consumer behavior in the store.
Are you starting to see the business users take advantage of that and behave differently or we are most Broken Window guys still stuck in the soda old pair.

Luke:
[29:29] Yes I think people are starting to behave differently and take advantage of that and because we now can trace a customer all the way through their Journey from when they,
look at Walgreens on their mobile to an actually walk into the store and they ultimately make a purchase I think it's impossible and foolish to not look at that data,
to make better decisions and as you figure out you know how you want to cost you your assortment I even set your stores being largest and the consumer Behavior,
the drives those decisions I would say all retailers all big successful retailers are using,
data now in-store the same way that data was used and has been used from The Last Five Years online.
And a lot of that is getting the technologies that we now have to understand customer Behavior through things like credit cards.
Things like website cookies Etc being able to trace that through you don't have to back your questions early on low T have.
Have someone entering and punching their code to know what they're doing and how they're shopping there other ways to get at that.
And that will I think allow people to use that information to make better decisions and businesses are doing that.

Jason:
[30:31] Well that's encouraging for the future and that's going to be a great place to leave it because it's happening again we've used up all our a lot of time.
But Lucas super grateful to you for taking the time to sit down with us today and share in the POV if folks have questions or want to continue the conversation or.
Welcome to jump on our Facebook page and will continue it there as always if you enjoy the show we sure appreciate you jumping on iTunes and giving us that 5-star review.

Scot:
[30:58] Thanks.

Luke:
[30:59] Thanks I appreciate it.

Jason:
[31:00] Until next time happy commercing.

Mar 24, 2018

ShopTalk is an annual trade show held in Las Vegas focused on retail and e-commerce innovation.  In it's third year, it has become the fastest growing can't miss event in our industry.  This year 8,400 industry professionals attended the event (up from 5,400 last year).  The 2018 version took place March 18-21, 2018 at the Venetian in Las Vegas.

There is so much content at the show, that we've divided our recap into two parts.  You can get part 1 here, in Part 2 we cover:

  • Grocery Track - Catering to new consumer - Narayan Iyengar, Senior VP of Digital at Albertsons
  • Glossier Keynote - Emily Weiss, CEO+Founder
  • Amazon Keynote - Eric Broussard - VP of International Marketplaces and Retail
  • Coach Keynote - Joshua Schulman
  • Walmart Keynote - Mark Lore and Andy Dunn
  • Houzz Keynote - Alon Cohen president and co-founder
  • Google Keynote - Daniel Alegere, President, Retail and Shopping
  • Code Commerce - Erik Nordstrom  (President of Nordstrom) and  Don Kingsborough (CEO One market)
  • Code Commerce - Doordash - Tony Xu, CEO
  • Code Commerce - Jennifer Hyman, CEO, Rent the Runway
  • eBay Keynote - AI eBay Keynote Jan Pedersen, Chief Scientist and Scott Cutler, SVP, Americas
  • Ascena Keynote - Ascena Keynote - David Jaffe, Chairman & CEO
  • Boxed Keynote - Chieh Huang, CEO

We've been honored to be included on a few lists of top e-commerce podcasts this week.

DisruptorDaily Top 10 Retail Industry Podcasts

BoldCommerce 16 Best E-commerce Podcasts of 2018

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 122 of the Jason & Scot show was recorded on Thursday, March 22, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Thursday March 22nd 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:38] Hey Jason and welcome back Jason Scott show listeners episode wanted to take a rare pause on the show and Pat ourselves on the back.

Jason:
[0:52] Let's do it my arm is breaking as I'm doing it.

Scot:
[0:54] Awesome,
T-Rex help Pizza patting himself on the back of fun fun dinosaur fact so we have received a couple accolades on the show much to our surprise so first of all there is a site called disruptor daily and they rank podcast and different,
Industries and they put the Jason Scott show on their top 10 retail industry podcast so that was exciting.
And then another company called bold Commerce they put out 16 of the top e-commerce podcast books are pretty intense cuz you can tell they actually listen to all the different podcast out there,
we can even put forth on that one so our goal next year is to move up the list or real happy to be placed in the top quartile there and they took three of their favorite episodes.
And one of them was episode 74 with our good friend Melissa Burdick so thanks to Melissa for helping us make the list next up was.
Episode 89 which was our hot take on the Whole Foods Amazon acquisition and last but not least Andrea.
Like episode 83 so it's good that we before we even saw this we had have them both back on the show for a second appearance so it's good that we since those were quite popular that we've had those books back on.

Jason:
[2:13] Yeah you know there's a little inside baseball on the Jason Scott show there's a lot of.
Jogging for the first guest to get a third appearance on the show I know it's very competitive and I'm a little worried that some violence could come into play.

Scot:
[2:30] The knives are out for sure really kind of trying to figure out what's going to happen there so this this is a good.

Jason:
[2:38] Sorry one of the important side note about the Bold Commerce list number 10 on that list was our friend Eric you didn't at ecommercefuel who's been doing a great podcast for a very long time and what was cool about that is their favorite episode of of of Andrews was an interview with me,
so basically I'm the most powerful person on the list.

Scot:
[2:59] Absolutely I don't think anyone would disagree that.
We'd like to thank our listeners for a we could not be receiving these accolades if it weren't for you guys. We always talk about it in the show so I'll put in a plug here,
it definitely helps us to continue to get listeners and receive factly it's like this if you subscribe to the show so whatever your favorite podcast listening technology is be at the iTunes iOS podcast app or whatever,
please make sure you subscribe that helps us with our podcast SEO rankings and definitely tell your friends.

[3:37] Poop so jumping right in here and episode 122 this is so we we continued.
We concluded Shock Talk yesterday and while it's still fresh in our minds we wanted update everyone on the highlights from the show so the second part of a two-part series,
back and we back in episode 121 we covered the first half is kind of halftime report of what happened at shoptalk so that covered the Sunday and Monday of the four days and then here in episode 122 we're going to cover the back half for the second half of shop talk and really dive into what happened Tuesday and Wednesday.
Jason why don't you kick it off with some of the first things that you attended Tuesday morning.

Jason:
[4:18] So I have to start with some hearsay news we were recording a podcast so I didn't get a chance to attend this,
but there was a the grocery track was going on Tuesday morning and at least to me a piece of news broke in the grocery track of the VP of digital at Albertson's announced that,
Albertsons would be launching a third-party Marketplace in the grocery space on their site later this year so they were they were soliciting,
applications from sellers interested in being on the marketplace.

Scot:
[4:53] Sprinkle and dumb,
I read the news report and it said something like is almost a dig at Amazon Whole Foods at there's something about those guys are some brands are leaving and Albertsons was building this Marketplace almost as a home for this works is that is that kind of.

Jason:
[5:11] At least partially in again I wasn't at the session so I'm kind of putting some pieces together you know as we've covered on the show little bit like there.
There has been some blowback in the Whole Foods acquisition.
And it's not clear whether this was driven by Amazon or this was a change that,
Whole Foods was in the process of making sort of in parallel with the Amazon acquisition Whole Foods used to have a very sort of local orientation with their suppliers and so individual.

[5:42] Stores could buy from suppliers suppliers could have autonomy to do their own merchandise in the store and they're welcome to come into the store and set up their own displays and do sampling and things like that.
And coincidental with the Amazon acquisition.
Whole Foods has moved to a much more National management of vendors are some of the small vendors have gotten kicked out some of the vendors have less control over their own stuff in the stores and as you can imagine some of the vendor community.
Is a little disgruntled with that so I think weather.
Weather that's you know actual discontent or whether you know that's just a mild annoyance it it certainly makes sense that a competitor like Albertsons would try to make some hey there and I think they.
They mention that's one of the reasons that they that they wanted to offer a a.
Marketplace alternative to Amazon in the groceries based I would also say in some ways Albertsons has been one of the more digitally aggressive.
Traditional Grocers so that you know that they brought out a lot of the.
Expected program GNC like expect to see like curbside pickup but you know they also made the.
The hugest acquisition in the traditional grocery space they they even spent over a billion dollars on plated to have their own did you admit native meal kit service since I know you know this is.
You. There's a lot of questions in my mind about how a market place for fresh would work but the.

[7:15] You know I I will certainly be watching it and will cover it on the show.

Scot:
[7:19] Grateful I'm just excited to have more marketplaces out there this is going to be a theme of today show Ms is Mo marketplaces so,
that's exciting and it'll be interesting to see you know they're what their vision of a grocery market place looks like sometimes we find retailers use the language Marketplace but really what they mean is just kind of Dropship so you know they,
they use EDI and curated kind of a thing and kind of old-school mechanisms to expand their selection versus when I think of marketplace it's usually much more you know of an Amazon Marketplace, model or even an eBay where you know any brand could go to Albertsons and say Hey I want to join this Marketplace I've got this cool hip new that are no energy drink or something and want to make it available to your audience so,
well I'll be eagerly watching to see what you learn about what it looks like.

Jason:
[8:08] Yeah yeah and I assume your strength is much deeper than mine in this bed. I suspect you agree it's not uncommon for a retailer to underestimate the complexities of running a Marketplace.

Scot:
[8:22] Yes absolutely.

Jason:
[8:23] Yep so then we wrapped up the podcast we were recording and we made it to the first keynote in the morning which was Emily Weiss who's the CEO and founder of glass CA.
Garcia is a cool digitally native brand in the beauty space that has been experiencing rapid growth and gets a lot of Buzz and Emily you know strictly talked about is one of the sword.
Next Generation female leaders of successful company so it was interesting to hear from her.
And she talked a lot about sort of what she called the new definition of a brand.
And you know this is a theme that continued with some of the other speakers and that.
I've been continuing to have with some folks on Twitter you know right up to Showtime today.
But there's that you know this notion of of another company no longer being in charge in the consumer being in charge and so you know Emily describe glassy a as a brand that was really designed.
Around listening to the customer instead of talking to the customer until she talked a lot about how traditional.
Brands when they when they you know want to be more customer-centric there their real goal is to make the customer feel like they're heard and you know she was making the point that.
Making customers feel like their hood is heard is a far cry from actually hearing customers.

[9:55] Answer sheet you know she thinks a lot of their you know what their goals are disingenuous and then it's much harder to build a company that's really responsive to things are hearing from customers.
And that the way this manifest itself is she's like you know the days when a customer turns to an expert be that a spokesperson or brand.
For product Discovery are sort of over in her mind and she thinks that you know today,
with the Advent of digital in 1 to 100 and all this transparency that consumers are much more likely to turn to the their peers for product Discovery than they are to,
decentralized experts and and her proofpoint for that is the 80% of all of her customers came to Glass EA based on a peer recommendation and so,
that was interesting to me because it's a it's a thing that that comes up in a couple of the other presentations on on Wednesday about the role of,
a brand and how important brand is in the role of of sort of spokespersons and celebrity endorsers in those sorts of things so so more to come on that.

Scot:
[11:01] Close confused for most of this one because where I come from we call it glossier and I was like where is the glossier person and never could find them.

Jason:
[11:12] Yep when you work for a French company you learn to make everything sound a little more pompous.

Scot:
[11:21] Then I after the glossier keynote we had Amazon and this exciting as they had to Amazon Keynotes at the show which is pretty unusual usually pretty.
Turtle wish they didn't like to come to these events and really say much but at if your member in the first half we talked about the Amazon go execs they're talking about that and then here we had Eric Broussard. He is a VP of international,
International marketplaces and Retail at Amazon.

[11:49] And it's really interesting because you know what what Amazon has done is built over a hundred 75 Global fulfillment centers but they were very country-specific so you could load balance.

[12:04] Products made in the USA Fountain Centers let's say you.
You were a third party and you're using a PA and you were selling widgets and you would send those widgets in the Amazon list they saw a thousand Amazon what kind of load balance those across is fulfillment centers based on where anticipates the the local points of demand.
That's really cool.

[12:25] But Amazon historically hasn't had a way for you to really leverage that week we've had several customers really but their heads up against this where they wanted to expand to the UK for example and leverage app,
Amazon Local UK people were like well you have to have an entity and you have to have a bank account and you have to have a tax document and you have to have insurance document and you know you have to,
do you all these different things so.
So really this is a program it was on spin working on for a while and you know I don't know if formally announce it here but they are,
they're kind of getting a lot of details so so so see what they can do now is your product can be seamlessly sold globally across the all the hundred seventy-five phone is Interstate that's a great use cases so.

[13:13] You could be a u.s. seller and then sound of Europe you can you know as you know they're really big in Indiana they have like 40 performance centers in India that's a huge Battleground for them Japan China are there now in Australia.
There's rumor still be in Brazil at some point so you could really use Amazon for your Global infrastructure and.
Interesting about this that gives Amazon a huge Edge is Amazon's also invested a ton of money into their catalog and you know so Dave.
Unlike a Marketplace like eBay which is more freeform not and where everyone that sells an Xbox or something kind of.
Describes it in their own unique way on Amazon they have this kind of golden description of.
Every Xbox and whatnot and what's nice about that is it allows them to then as they going to other countries translate that that skew or that a sand once.
And then now you as a seller if you match up against that and it's the same products as in like less you say France in the US you get kind of translation for free.
I just kind of the punchline they're so so that's a really nice benefit of the Amazon Marketplace solution say really talked about.
Kind of a six-step process where they made it,
insanely easy to sell globally system as you send your inventory so whatever your country you're in and also this is all cross-country so you could be an idiot seller as well as a UK cell or whatever so whatever you said your inventory into FBA they receive it in storage.

[14:44] And then it becomes Prime enabled and then Amazon you can tell Amazon what countries you want to listen to and then they will put the product into this country's and they will load balance across country so number three.
The customer orders the product number for Amazon pick packs and ships they handled the front end customer service so if someone has a question about the product,
eye of your delivery or anything like that they have their entire force of local folks even handle the reverse Logistics through back to the system so,
pretty amazing and a lot of people questioned Amazon's got money.
Don't doubt for this performance centers of the powerful things you can do when you do have that ass that you know they have to look at all the other.
Companies out there no one has as many assets like this as Amazon so so you can eBay when they're doing cross-border trade.
They're using and I think someone like a Pitney Bowes or something to kind of do the freight forwarding which is great and I'm sure that's a very capable thing.
But it's not hundred 75 fulfillment centers it's kind of a reshipping, model versus a get it native and sell the ones he too,
A2Z efficiently out on stage two examples of this one was exploding kittens if you don't know exploding kittens it's a fun card game that and.

[16:06] Kittens do not get hurt in this game is Callicoon oh except the draw for is an exploding kitten that's kind of the short version of it and then.

[16:14] They talked about how Amazon enabled them to essentially Go Global with you cut a five-person company that was really focused on creating a card game with witches.
Pretty amazing and then they booking did that we just got very untrue real story with Phillips and Phillips talked about how they launch the product and India using the Amazon Global selling offering so what's the one thing that's interesting is.
All the big guys were very much in by big eisenmann Google Facebook Amazon eBay all their talks were really geared towards.
How do you say wanted Brands to kind of get on their platforms which is pretty interesting cuz you know 3 years ago it was all about Sellers and that kind of thing now.
Everyone really excited about more emerging Brands and old-school Brands and how to get them on to these platforms so those are my takeaways from them.

Jason:
[17:05] Yeah and once I don't own that one there's a show in Las Vegas earlier in March called Prosper which is,
show really targeted at Amazon sellers I did not attend but one of the news items out of that was they formally did announce this program in North America and so they like apparently it's at least formally been,
announced that anyone can opt-in if you have FBA inventory in the US that they'll now will fill it in Mexico or Canada if you choose.

Scot:
[17:39] Sprinkle.

Jason:
[17:40] So it seems like it it's a real thing and I I really like I was super interested in that because it just seems.
Where you like we are to be successful. This is all one in 2D versus you know the sort of complicated orchestration and multiple partners like handing off the Box between.
Freight forwarders & Custom agents and all those sorts of things.

Scot:
[18:05] When you do that you lose things like trackability in a little details like that.

Jason:
[18:10] Exactly and the way the package arrives at the customer may not be the customer experience you want.

[18:17] So then the next keynote was the president of coaches Joshua Schulman.
And very different than the Amazon presentation is a brand presentation and coached of her listeners is going through a little bit of a change you know the parent company used to be coach when they were a single brand.
In the last I think year or two years they've acquired a couple companies so they acquired.
Alegria shoe manufacturer Stuart Weitzman and then last year they acquired Kate Spade and so they become sort of a house of luxury Brands and they renamed.
The parent company tapestry so Josh was the president of Coach which is you know the biggest of three brands owned by tapestry.
And Joshua talked a little bit about this this Big Brand Evolution that coaches just kind of completing.
They over a number of years had really kind of moved from,
luxury to mid-market so they they had gotten very promotional they were selling throw out of department stores that were very Promotional and a lot of people felt like the equity in the brand have greatly eroded.
And so for the last you know I guess I would say 2 years coaches been making this over to effort to.
Take themselves out of the discount supply chain as Joshua says is it that you know we are focused on reducing our promotional impressions.
And that's it.
He's probably a smart thing to do it it's both been reflected in coaches results which which have been much much more favorable this last year.

[19:55] But also as we've talked a lot about this show that you know Casey well and Bob would say the retail bifurcation,
but there's a lot of Market customers and you can do real well catering in them and there's a lot of Deep Discount customers and you can do really well catering to them but where you really don't want to be is the uncomfortable middle in between those two extremes,
and that's kind of where coach at Swift and so they've kind of done a successful job of moving themselves back up market so so Joshua was talking a little bit about that.
He did such a dress department stores which I found interesting I'm not I'm not sure that they mentioned it but Joshua is new to Kochi he became the president of coach last year and he was formerly the president of.
Bergdorf Goodman which is one of the you know the the.

[20:44] Kind of historic famous luxury department store so obviously you know he has a strong affinity for department stores and he shared his POV that you know department stores aren't going away there an important part of the ecosystem.
And then he kind of talked about the future of the coach brand.
And you know a big part of coaches future he believes is personalization so coaches rolled out a lot of capability to customize handbags on an individual basis so now from their website you can.
Personalize a lot of your products and their coach owns a bunch of different stores they're starting to deploy that.
Personalization capability in the stores as well so you know instead of getting the same bag as everyone else you can get a bag that's completely unique just for you.
Which I do agree that I think is an important part of the evolution of all these Brands and then his last point in.
North America which is coach's Home Market that you know where Promontory thought of is a handbag manufacturer and so they're they're investing a lot in.
Redefining themselves as a Lifestyle brand and in that sort of a jargon for,
where we're going to sell apparel and other items in addition to Handbags and he talked about markets like China where,
they've been a Lifestyle brand from the beginning because they had this much broader assortment when they first went into that market and how differently the Chinese customer thinks about Coach then the the North American customer and so that that was sort of his pitch for the evolution of the brand.

Scot:
[22:16] Recap my favorite part of that one was Courtney Reagan I'm a big CNBC junkie and she didn't really do it here but on TV I've seen her,
when you I think what happens is Sony's Executives meet these reporters and they just kind of assumed they're just general business reporters and don't know the industry Courtney has like an MBA in economics and Retail and she's been at this for for a long time and I've seen her just eviscerate Executives before I guess are good she had,
Lundgren tied up in knots one time.
When you just talk about the Amazon competition so I was kind of really waiting there for her to catch him in the Trap in and I think she went pretty easy on him because the cameras weren't rolling I do think you know why.
What are these guys seem like they're in denial about stories it's like they won't admit that.
Yeah it's a challenge or something like I got a really weird vibe from him that everything's hunky-dory Pollyanna you know stores are great brands are great and you know.
I can talk doses PR or if he was like really believed it also if that was kind of you know a little concerning.

Jason:
[23:20] Yeah and I think there is a theme you know all of these guys came on and they're they're defending their legacy ass that's right so he's talking a lot about how important the store experience is and in addition to,
you know the Wholesale stores that coach yells through coach owns a bunch of their own store so they certainly have a expensive asset there that they want the world to believe is valuable and I would argue,
is valuable and it's going to come into play on some of the other teammates were going to talk about later when you know when,
the CEOs have to spend a lot of their time justifying why their legacy assets are so valuable like you know it's it's it's fair to question you know if they really were that valuable they probably wouldn't have to spend a lot of their time saying they were valuable.

Scot:
[24:02] Yap exactly.

Jason:
[24:03] And by the way I randomly I happen to be sitting for that keynote next to Warren Thomas who's the other retail reporter at CNBC so that was so we were we were watching Courtney together was kind of fun.

[24:17] So then the next keynote was a very good get for shoptalk it was Mark Lori that the digital president at Walmart and Andy done the,
the founder of bonobos which is now a brand owned by Walmart.

Scot:
[24:35] Yeah this was a last-minute addition which I thought was interesting it almost kind of felt like maybe they came because they had something to say so I think we were all you really waiting on this one.

Jason:
[24:46] Yeah.
That that probably is true and I would argue that in a way that made it so it be less interest in keynote than it might have otherwise been for me because as we've covered on this show Walmart had a very visible Miss on there,
their Ecommerce growth last quarter in their their stock took a pretty significant hit as a result of that and so you know that was the 1st? Was was to,
kind of talked about in justify,
the the in a fact that they had something like 20 or 25% growth versus the 40% growth that folks were expecting and you know I'm really interested in and hearing him talk about that like it it did take up the bulk of,
this particular a keynote and you know I would have been interested to hear a little bit more about about some other aspects but I will say,
Mark's answer which seems like it's now that the corporate line there is essentially that Walmart planned,
to have slower growth and Q4 and that it was sort of a retooling quarter for them you know after that had had several quarters of,
a very fast growth and he kind of pointed out that look we don't give quarterly guidance we gave annual guidance and we hit our annual guidance so we don't understand why everyone was so surprised.

[26:12] And I like I I think it's fair to say we're all a little cynical of that that story.

Scot:
[26:17] Yeah I don't know if it's because of the podcast or what not but I think.
Between the two of us if I had 40 people come up and offer that they thought that was totally BS that you know the drill line was that you know nobody in retail plans for the 4th quarter to be a reach 1/4.

Jason:
[26:33] I think I think the the summary they're like well I think for an update they hit their annual guidance and that's all great if your plan is to have a soft fourth-quarter it's a bad plan.

[26:46] So other than that there were some interesting tidbits from that presentation you know Marc reported that they're up to seventy-five million skews for sale which is you know from a couple years ago that they were in the you know couple million skews so that's.
Astronomic growth I would assume the bulk of that is Marketplace and there's you know a slight bit of controversy,
here in the there is a former Walmart exact it's actually suing Walmart and one of his main claims is that Walmart store to artificially inflates this number bye.
By saying how many skus are in the database and not necessarily actively for sale but I think I think directionally.
Walmart has added an awful lot of skews and is within an order of magnitude of of Amazon which is pretty impressive.

[27:36] Is what I think Amazon's about 400 million skew something in that range.

[27:42] So then he did talk about you saying we talked about a lot on the podcast which is Walmart's grocery Grocery progress then I'll have 1200 stores that do grocery pick-up and so what that means is 1200 cities where customers can order groceries.
Online and I drive by the store and pick it up and you know except for those 1,200 stores you can't order fresh groceries from Walmart so.
That this is this weird thing and I think the analyst had until he picked up on you.
When you're talking about store sales you talk a lot about same-store sales cuz you compare apples to apples when you talk online you talk you know General growth.
But now you really have this third category which is sort of.
Online grocery growth which is a hybrid you can only deliver if you have a store and able to do so so there are 1,200 stores and they they expect open another thousand storms this year.
You know you're my mind that has been the primary driver of their they're huge e-commerce growth and so I think they need to open a thousand or 1200 more stores this year to comp well against.
Against the last year or they're going to they're going to laugh all those those grocery stores they opened last year and then and that would dramatically swell their comps.
He also mentioned that they are now in 100 metros with same day delivery this is this Blended solution where I think they're using to live they're using Uber and they're letting their own employees do deliveries.
So that that is interesting we we will hear about that from Target as well and then Andy talked a lot about the did you need a vertical brand which is a term he coined and and how that fits into the Walmart strategy.

[29:23] I think it's Mark Lori that always uses this metaphor a bit but they talk about the the.
The analogy of Walmart to Netflix and they say you know I got you.
Netflix is a super successful model you can go watch a bunch of other people's movies on Netflix but increasingly,
the big draw to Netflix are these first-party content that Netflix created exclusively like house of cards or Orange is the New Black and so to Andy and Mark these,
did you need a vertical Brands like bonobos ModCloth are.
The sort of unique videos in the in the Netflix model I don't know what they meant to but they did make an announcement that I had not.
She heard before which is that all of those did you need a Brands will eventually find their way onto the jet sales platform which many of them are not right now so that would be ModCloth for example would be sold through Jets and,
Martinez said the high level strategy is look where we're redefining the jet brand we're going to use jet as,
the brand to win affluent Urban Millennials and you know which sort of perfectly complements the markets that the Walmart brand is really good at winning.

Scot:
[30:44] Couple funny things in their answer to the question of the bonobos being on chat was,
your Delray Jason had gone out and search and I found like this pictures of monkeys since he couldn't find my notes they kind of lost Jason he was like so going to be a media company I don't think he understood the,
metaphor of unique,
original content that they were trying to make their butt but it is it's early as you know it's definitely I think it's a very valid strategy it's kind of like Prime exclusives that Amazon is doing the challenge with Walmart is,
you know they've got like 8 things going on that that are pretty intense and each of their own and their e-commerce.
Peace is not at a scale that Amazon is so sweet hard for them to execute well in all of this.

[31:39] The warmers.

Jason:
[31:44] I think that was the main main adjust of the Andy and Mark show other than.

Scot:
[31:49] Are you crushing on Andy Dalton.

Jason:
[31:50] Andy Andy had some really cool slippers on that apparently where the celebrity got married in.

Scot:
[31:56] Took a picture,
I guess my picture that was circling this fine then up next was house in the house Houzz,
and houses really cool story so I actually know one of the founders his name is Alana and he was from 2001 to 2010 he ran a bunch of engineering groups at eBay and his wife's name is I'll probably put you this but,
Adi tatarko.

[32:26] And they are from Israel and they moved to Silicon Valley and by house probably for a bazillion dollars and they were they were working on refurbishing the house I think about.
8 years ago now and you know what they found was there was no.
Great Ecommerce experience for Furnishing your house so house is borns they built house is a way it's kind of a it started out as really a place where.
Counting is a super vertical Pinterest so.
If you did a project where you refurbish your kitchen for example and you wanted and a designer wanted to maybe kind of get involved it was coming designer Marketplace so you could get ideas from other people could have done it and then also designers and an end designers like,
because it was a way for them to acquire customers and that's how they were kind of monetizing it.
Then what happened is there so many do-it-yourselfers that would say hey I really like how Jason and his wife did their kitchen.
I want to and I can see this faucet in there that I really like and this countertop but I want to know exactly what it is and how to go buy it.
So there's this disconnect between the,
products you would see in these kitchens in other rooms are being refurbished and ability to buy them so they created a product Marketplace on there in full disclosure we've been a partner of there is that channel visor for a very long time,
I used to be more of a paid less than kind of moved to a pure market place we can buy them all and house and they've been a great partner verse so it was cool to hear the story I've never heard the story from kind of that.

[34:00] That start to where they are now and here they are today they fit 10 million items on the marketplace they've got over 20,000 Sellers and 40 million monthly active users so you know it's pretty pretty neat that they kind of just.
Really solve the problem and we're able to build a couple different ways of monetizing that on there he was interviewed by Alfred Lynn who was one of the.

Jason:
[34:28] Yeah that's a good question yeah I think he was there at the beginning I do not know if he's officially a founder or not.

Scot:
[34:34] Yep but he left free shortly after the Amazon acquisition and Joint Sequoia which is one of the.
List of blue chips are in the Bay Area so a lot of his questions I wasn't sure the retailers were rocking on cuz he's talking about MARC station strategies,
yeah he's like going kind of deep into the VC language they're so it's kind of interesting and then,
the last thing I thought was interesting was they did talk about you know,
they are so this is really big right now in the home category,
where you know you can not eat you can use augmented reality to look at a room and being a piece of furniture or a faucet or something like that or maybe in the cabinet you can kind of get a feel for how that's been looking so they have a million skus that are when I call a are enabled and,
this was one that will make sure that we caught that,
it improves your conversion 11 x when when people are using they are to look at an item,
so in my calculus I kind of said well that was conversion rate something like two to three percent so what is that like 33%.

[35:39] What your kiss makes sense cuz people going to be pretty far down the funnel if you're going to be like okay I'm going to go home,
I'm going to fire up the say our thing and I'm going to drop that widget that piece of furniture whatever it is into my room to see if it's it's so it's so I guess it does kind of like a really big bump to me.

[35:57] Does that jive with you.

Jason:
[35:58] It does and I think YG for the reason you mentioned like I don't think if you just took any random Shopper on that site and force them to to use an AR experience that they would suddenly convert.
11 x better so I don't think they expect you know why these friends probably is better is,
I don't think it it's this the magic Silver Bullet to cause everyone to buy.
I think you have to already have a much higher buying intense.
To be interested in trying they are Peter so you have to already be more attached to the item and you're investing more time and in kind of setting it up on your phone and walking to the environment where you want to use it and so it's it's,
it's one step below are on the funnel and in so I think it is a great tactic,
they are also that your web urging a something we talked about in the show Google and and,
Apple have both rolled out AR kits for their operating system that make it way easier to do this kind of stuff well and so.
Pals wizard of the pilot user of those two stacks the what people is usually underestimate when they implement this feature,
is you need a source of really good data to have the 3D models of all these items into the fact that they have a million items out of there,
their inventory of,
you know that they have good 3D models for is is to me pretty impressive and that that now is officially the big barrier for any other retailer that wants to add this feature is just how do you get the good 3D data and I I think in the long run.

[37:32] The brands are all you know in the same way that they have to provide a long and short description for a retailer when they want to sell something you know what the brands are going to have to start providing 3D files for for these things as well.

Scot:
[37:45] Yeah that seems like a very large number to me because you and I know most manufactures is a struggle to get a you know a human readable short description you know so they'll be like.
Wooden chair so I kind of was locking the logic I was like wow that's a million is like 10% that's why I would have guessed.

Jason:
[38:07] Generally these first-generation experiences it's more the retailer created the data themselves.

Scot:
[38:14] Yeah so they must be like you,
getting the products in and scan I know people will shoot videos and practice way there's these houses that get quantity one of these things to do that so I was thinking maybe they picked they have the benefit of knowing the top 10% items get them into a studio and then you can run a scan on them that was did you wrote did you walk to the same process.

Jason:
[38:34] Yeah and they didn't talk about how they do it that's and I would have love for them to Deep dive into that but that's exactly what I would assume and it does create this interesting thing so,
and house where is really weird category cuz a lot of furniture is.
It's not really branded Furniture it's like private label furniture that a bunch of different retailers all sell the same thing and call it something wildly different so there is some office case in their butt.

[39:03] If you think about it house now has that in owns that 3D data the manufacturer doesn't so when.

[39:13] Amazon or Crate & Barrel or some other seller wants to sell that same item you know they they,
they're going to eat at to spend the same money has spent or the manufacturers are going to have to go spend the money to do a 3D scan the file or,
go back to the designer and get the 3D CAD files from the designer in so it does it does create this new work stream this is how,
a lot of new attributes in e-commerce this is how they start the first time someone a retailer wants to use in the retailer has to invent them and once it becomes a best practice it gets put back on the manufacturer and eventually the manufacturer gets couldn't provide that mean the same as it is true a digital images.

Scot:
[39:52] It also made me wonder you know the wafer ones talked about a lot that made me wonder how many models they have and if they're doing something somewhere.

Jason:
[39:59] Yeah and if you think about it in this category is even more ugly like a,
the hardware the 3D scan these big items is more convoluted than then you know like simple tabletop items and so much of the stuff is drop shipped like if these were shoes that sat in a filming Center you can imagine sitting up shop and seeing a bunch of shoes in the Fulfillment center but a lot of these things.
You know you like it in the case of Wayfair they never pass through a Wayfair facility where Wayfair could scan them.

Scot:
[40:27] F R Anderson cool so after house we had a Google up and the Google one was probably if I was going to pick one that was my highlight of this would have been it and even then I think it was,
how what Google announced the show was largely misunderstood so I wanna spend some time on that because I think it's,
pretty important so what are the interesting things that's going on is the the guy that used to run retailer Google his name was John a furnace and he was he left to join Pinterest and saw him several times the show he was there with pry like 50 Pinterest people which I thought was interesting because,
you know I'm easily sink shoptalk in Pinterest so I just got this vibe that there's something going on there.
And I don't know what it is but but he's also like his official title there is SVP of ads okay so that makes sense and commerce it Pinterest so pictures has had when I would call some.
Pretty you know man e-commerce things that got rich pins they did a little Marketplace I kind of went about it in a weird way that was not very.
Customer friendly was easy to implement but not a great customer experience so I almost kind of like was wondering you know.
Why is Pinterest have so many people here why they hire Al Fitness e-commerce have answers but I just thought was interesting to see that so anyway,
Daniel is a great addition to the retail team so it's official title is president of retail and shopping at Google I talk to a lot of googlers and they were all really excited because this kind of the folks that are in the Google shopping side and they've been working on retail for a long time.

[41:59] I feel like retail is really elevating at Google and.
The person they talk about Daniel has been a senior leader Google for quite a while I think his prior title.

[42:13] I was stressing yeah he was like Global and strategic Partnerships so you know he he was quite a senior person and,
he's also well known a Google you know these companies like a Google or an Amazon aren't really known for their ability to partner with other people wear as you know I think he has led the charge in certain categories were partnering is going to be essential for the wedding so I was really eager to hear what he had to talk about he went through you know.

[42:40] I don't think whatever Google people get up there they have to kind of go through the rigmarole of,
we have seven properties that were billing users were Google where mazing here's the big trends we see the meat and potatoes of his talk to me was the announcement of I called this Universal shopping cart and I'm not a fan of that I've had these two spirit things at Google,
send it. Google Assistant which we know and love on the show they've had Google Express.
What started out as a kind of delivery service in a couple of areas and just think of it as kind of one hour type.
Product and then they've had product listing ads and so through a the pieles are a.
A shopping enabled kind of a not enabled e-commerce ad unit if you will so far.
20 products that has a price and that kind of stuff so they put them all under this umbrella now and they've actually.
The cool thing for me is I sent you they built on Marketplace on the park posting ads and that they taking a couple shots at this last time I was called by on Google and.
It was just so micro so it was like 5 merchants on Android only Angie had to have Google pay and it had to be enabled it had to have this that in you but time you slice all that stuff you're looking at like you know.
500000 users which which is nothing but in the world of Google with all these billion dollar properties it's like why are you so where she going after these like you know,
like slice of a size of a slice of a slice but unfortunately are not doing a great job of describing it I think about it is you can now take any SKU and have it available in a lot of different flavors so so first of all.

[44:26] If it's like what I would call an e-commerce Q me you're going to ship it either from a fulfillment center or a store so kind of like a two-day plus kind of a thing you can make that viable in a Google search result.
Is that product is near the user and available for delivery same day that's another option Source, these rings of availability.
And then also you can make that SKU available to Google assistant so example that they have used a lot is as you know target has a private label cpg brand called up and up.

[44:55] So they show this this detergent that has been enabled with this new ad unit that's called shopping action,
abled then there's three use cases so you can say OK Google,
buy up and up laundry detergent and it will it will know then.
Based on where you are if you can get it kind of same day or in an e-commerce kind of a Note 2 day type experience so you it will ask you and if it's available in both It'll ask you which one you want.
The baby shopping shipping fees and stuff there and then if you're in the Google Express experience you'll see that product because it is available at a local store and then if you're in a sponsored.
Pla you will see it there as well so there.
You know we are at Channel advisor we are in early partner on this and it I can say they said on stage,
Target and Ultra Ultra are seeing 20% left from that,
police unit and I can say there's there's several other people in there and and this is causing really good lift for folks in this is something I think it's been a long time coming,
there's certainly some attribution things in there but but I think happens if the desktop metaphor doesn't work on mobile the whole go search for detergent go in to target.com forget your credentials.
Get a password reset login put it in your Target card.
Then order Denver enter your credit card that's such a drag because up further in the stack the phone already knows who you are and you already have your credit card in the Play Store so why not just use those credentials so so this is another attempt I think at kind of.

[46:38] Elevating that transaction higher in this. So I'm excited about it and they went to Great pains not to call the Marketplace but my mind it's Marketplace.

[46:48] So so I took this to mean Google is getting a lot more serious about Marketplace and how do they surface this product and make it.
Yo and partner with retailers to two.
I think the big win here is going to be closing the mobile Gap and what did Al furnace did is he came from the Travel Group.
At Google where they did this to an Indus was controversial because some people thought they were kind of going around to Travel Systems and stuff but you can actually buy a hotel room right on,
Google mobile and dramatically increase conversion rates versus kind of like that again that desktop metaphor of OK Google says there's a hotel over here,
now let me go to that hotel site and then iterate through you can actually go by that room on Google Now I'm so so I think they seen some really interesting things on travel and they want to bring it here they did a 100 of it over the last 2 years that didn't get a lot of success and then this time it's feels like they're taking a much bigger at that swing.

Jason:
[47:46] For sure like I do think they're taking a bigger swing it's going to be interesting to see how it plays out.
Huge difference between travel and most of the sort of product Commerce you know,
in travel you're mainly trying to sell a room or a flight and if you can bundle other travel Services into that sell it's great but like the overwhelming majority of the time it's a win the book a room,
a lot of individual items that you sell an e-commerce are only profitable if you get the customer to buy more than one thing and so you know that the level of difficulty for Google is is much higher in the Commerce base than the travel space in my mind because,
it can't just be.
Click to buy button in search results because that that frankly is going to drive everyone a single item purchase is a oviso go down and you know the artiste rest.
Profitability in the in the whole ekosistem would get even more stress so it's going to it's going to be interesting to see how all that plays out to.
I I get so one funny thing the economic model is different than most other Google ads units in in you know most cases your you're paying for that.
That exposure in the ad world and you know Google is charging much more like a Marketplace hear your your you know paying at a crate on the on the stuff that Google help you sell or you know in the.
The ad business they call this a rev-share model and when the word got out that they were watching this format.
All the traditional SEO guys piano.

[49:17] Because they misinterpreted this as Google will now share the profits with you and elevate your listings in organic search so they.
They said it was a you know several days of panic on Twitter where it where that was sort of going around I guess one other interesting outcome of this is.
It also creates the scenario where you may not have paid to have a pla show up.
But Google me decide to place your POA extra times that you didn't pay for and take the rev-share from it and so that that's it in aspect of this program as well as the Google can Canal run Google funded pla.

Scot:
[49:57] Yeah it's going to be really interesting to see and I know we're going to type for time but let's talk about some of the implications in a future show.

Jason:
[50:06] For sure we had to run from that Keynote.
To another event that that they is sort of an event within an event Jason Del Rey from recode they they host a.
A dinner or in the evening at shoptalk they call code Commerce and so you know he he typically gets like about three interesting speakers,
you know at at this sort of show within a show and so we.
We hooked it from the keynote to join Jason's event and there's some interesting speakers there as well so the 1st guys up there.
Was Eric Nordstrom who's one of the three.
Nordstrom Brothers running Nordstrom's right now and who does not do a lot of public event so that that is kind of a cool get and he was on stage with.
This gentleman Don Kingsborough who's from a company called one market and I'll get into that in just a second so having Eric there.

[51:14] Would be cool under any circumstances but news and come out bad day that the board of directors of Nordstrom had sort of turned down the Nordstrom families offer to buy.
The company back and take it private and so the the you know according to the reports the deal is dead now.
And so you know that was obviously a piece of news that Jason went right at Eric about.
And which Eric had very little interest in discussing and probably let you know wasn't at Liberty to discuss it created some sort of.
A humorous for us awkward for Eric moments at the beginning of that interview.

Scot:
[51:54] God knowing you Delray didn't what up it kept coming up he kept on them.

Jason:
[51:59] Exactly and I kind of a funny line he's like you know I'd like to say I appreciate the question but I really don't.
That's what I heard of humorist in so he's he was on stage with this guy Don Kingsborough and Don is the CEO of a company called One Market.
And there are there a spin-off out of a incubation lab that's owned by Westfield malls in so I don't think.

[52:26] Westfield may still hold an interest in one market but they're separate entity now I think they probably figured out that nobody would want to.
Participate with one market if they were exclusively owned by this one mall and one market is kind of an interesting venture.
You know personally I'm a little skeptical on it but the the gist of it is that hey,
Amazon has walked up a big chunk of the market and then this huge unfair Advantage Amazon has all this data about the consumer,
they see way more of the consumers purchase behavior and more the browsing Behavior than anyone else and they're really putting all the traditional retailers at a disadvantage because no one retailer.
With the you know possible exception of of Walmart really has the the.
Date of his ability to know the customer as well as Amazon does and so what Market is an effort to say let's create a data Coop where all the retailers share everything they know about a consumer,
and then we'll make.
That data available to any of the retailers in the coop to improve their experience and they have to make that data available in a,
a very limited way like they can't share.
Personally identifiable information from one retailer to another and they they can't you know give one retailer another retailers customers but essentially if.
If you're a customer and you've done a bunch of shopping at coach and so coach knows you really well and then you walk into Michael Kors.

[54:02] And you know Michael Kors says Hey I just met this guy Scot wingo and he's in the coop database the the,
One Market would be able to share some of the the enhanced data they know about Scott Wingo that they learned from Scott shopping with coach,
and so so at at it. I don't know if I explained that very well but at the highest level this is sort of a customer data Co-op to compete with,
Amazon.

Scot:
[54:30] Yeah I have to say I've never met non-don before but he seemed like a really story guy it did like it has a really great since it like PayPal and places so so no doubt he can build with it he says Google but I honestly didn't understand if it about it.
I did I guess I didn't get to use case it's like I don't really care if I go to Southpoint mall and then I go to Crabtree mall and didn't know about me like,
I just don't understand,
but I couldn't really get my head around you space and maybe that's cuz I'm a very transactional Mall person am I going to the Apple store to get my airpods that's it I'm not I'm not like a browser baby but I don't know I kind of missed the use case.

Jason:
[55:06] So you you are so you are hitting on one of the potential liabilities of this model is none of these retailers are pretty good at using the data they do already have about all of us when we shop and so it's it's hard to say that their biggest problem is they don't know enough about us,
but it is fair to say you know the date that they are worried that they know less about us than Amazon does so I can I get that a big problem with this model is is,
anytime you explain anything like this model to a consumer they're going to immediately panic and get creeped out and it it just sounds like big brother,
and so it's.
We'll have to see if it's focused on the Legacy mall guys in a Dina retailers and of course they have a bunch of other headwinds that are unrelated to any of this so,
I don't know I'll be honest though I did get the impression,
the Don has a personal relationship with Eric and that the deal struck and by the way Nordstrom is one of the retards participating in one market so I suspect the deal struck was,
Eric will come onto code Commerce and talk with Jason Delray if he gets to bring down with him and gone gets to make a pitch for one market.

Scot:
[56:14] Yeah and they didn't talk about it but I kind of got the vibe Nordstrom Ava invested in that that entity.

Jason:
[56:21] Yeah that well so it's a it's a co-op I think all the retailers that participate are basically investors why do you own a piece of it so it's so absolutely.

[56:30] Until Eric had a vested interest in Dawn doing well and you know let me just say like I don't think Jason had a lot of super interesting questions for Don I think he was a lot more focused on what did you get out of there.

Scot:
[56:43] Absolutely.

Jason:
[56:45] So I am not sure it was a lot of interesting Nordstrom revelations in in this interview other than.
You know the plan at Nordstrom's to do what they've always been doing you know it's the fact that we didn't buy the company back doesn't change anything was kind of Eric's message.
I thought it was kind of a just a funny random story Eric telling the story about his dad Bruce Nordstrom that was in a former president of Nordstrom's and how whenever someone would call Nordstrom department store.
How Bruce would be really upset and say we're not a department store where specialty store and you know for the.

[57:23] You know if I was listening Nordstrom started out as a shoe retailer and they they still like have a lot of that DNA and.
Eric said if not you know I would be like whatever Dad where we're big store with a escalator so call it what you want and it just was a funny moment for me thinking of this I store a retail family like having these arguments around the Thanksgiving table about whether there a department store or not.

Scot:
[57:47] Yeah I'd never met at Nordstrom's that was kind of cool.

Jason:
[57:51] The other thing that came up a little bit which is interesting I don't think Eric Shirley new information but Nordstrom has the store in Los Angeles called Nordstrom local,
and this is a small a small store by Nordstrom's standards I think it still pretty big I think it's like that twenty thousand square foot store which a full Nordstrom might be why.
50000 square feet.

[58:14] And there is no inventory for sale in the store so it's kind of like a bona bus guide shop like it's either you know there's personalized customer experiences and shopping concierge and lots of mannequins that you can look at,
but then you you order the product in Nordstrom ships at your house and the talking point that Jason was focused on was.
I've heard a lot about the store in the fact that it's.
It's not profitable and isn't likely to be profitable in the in the near future and so this feels like.
Kind of a project or an investment for Nordstrom and you know aren't you worried about not being able to make those kind of Investments going forward since you you know you were unsuccessful in in going private.
And I think Eric's point was no we we paid for this without going private then we we do lots of things like this all the time so this is sort of business as usual for us is,
and we do some things we expect to be profitable right away and we do some things that we expect to learn from and hope to make a profit in the longer Horizon.

Scot:
[59:18] Call the sex would really quick so I was excited at shoptalk surely but also could Commerce there was a little bit more,
kind of of the different models out there this one I would put kind of squarely in the on-demand economy bucket which is I'm obviously pretty fascinated with,
funny company in this is in the food delivery category where there is a battle royale going on so they had the CEO doordash in his name is Tony shoe,
oh that's spelled XU and then he was on stage with one of the leaders at the Cheesecake Factory which is a very popular restaurant and they had just announced that they are doing a delivery food delivery for cheesecake through doordash.
And I didn't realize it until I saw eBay partnership,
from 2009 to 2011 so that was cool to see someone from the world of e-commerce kind of spread his wings and becoming an option or.
The one of the.
Big news items us and Kara Swisher did the interview here and she couldn't seem to get her head around the fact they just raised over $509 so they're there well beyond the Unicorn.
Status which is Sue sought-after in the Bay Area which means you have a valuation over billion I would Hazard a guess or pry a deck of corn which is a 10 billion dollar valuation so there's so there's aislers GrubHub which is actually,
public there's the big one that's really gaining popularity is ubereats and then there's many many more of these there.

[1:00:48] Pretend food did this is like prepared food delivery companies and if you widen the radius little bit to include ingredient make yourself kinds of things than the category it's even even.
Even got more crowded and so she's kind of hammering on like you know why would you waste so much money and that kind of thing.
This is I commiserate with the size opportunity and he's right you know this is a multibillion-dollar opportunity if they can get 5% of all restaurants business to be,
true you're just in the industry and they capture 30% of that that ends up being a,
a really really big number so any talked about I think you said there in 30 markets and they're going to get into 80 so there there's a geographic component of this,
yeah when funny question was she asking what are you scared most of these at the telephone and she was like.

[1:01:41] What you mean and you know it's just like that's the customer experience they're up against is they kind of have to be better than just calling the restaurant on the phone to do take out with witch and and then you obviously have to go get it but I thought that was kind of interesting.

[1:01:55] And then you and I is kind of funny you and I had kind of had this discussion around you know with these with this business isn't good for the restaurants in bad and,
there's an argument that the sex it hurts marching,
because you're already paying for that kitchen staff and everything and then if they're making meals for this pickup you don't get a lot of that up sell that you get in the restaurant is your same argument that they made with the Google marketplace,
when you went to people go to restaurant have a meal there's alcohol involved there's maybe a dessert that you didn't plan to have appetizers and that kind of thing,
Raz I think,
I would guess the ticket when you're doing takeout or delivery is much less and you obviously don't get alcohol sales which is where there's a lot of margin but they got to ask a question about that and the cheesecake guy I explained that you don't know it's really.
Incremental business so they already have the fixed cost of the kitchen and they viewed it as incremental and they therefore you know yes the margin is lower.
Then an end in a dine in guest.
But it's incremental margin so you going to help the prophet leave the restaurant so I thought that was an interesting argument you a lot of people that I talk to after.
Forecast skeptical about that so and then he did talk about at the Cheesecake Factory.
Like 2 years ago they had 8% take out and now it's kind of risen to 12%.

[1:03:18] Didn't ever say if this was exclusive because one of these guys do is they will actually kind of order as if their customer and then said their drivers so they don't have to have a you know a relationship with the restaurant so I know GrubHub does that for example so.
Part of that 12% is not only doordash but probably all the other delivery guys too and then lasalette said that they said that.
25% of doordash volume is from chains and then.
I thought they said the rest was for Independence but I think you took a note and tweeted 5% so.

Jason:
[1:03:51] No no no. That's a typo in your notes you are exactly right 75%.

Scot:
[1:03:54] He has a deep restaurant background I think.
I think he said his parents are restaurant for sure.

Jason:
[1:04:06] Is Mom still run the restaurant.

Scot:
[1:04:07] Yeah but then somewhere in there someone said I think he said his grandparents also had a restaurant I I couldn't tell it maybe his mom is taking over the enrichment videos.
You can't came back to his roots and,
I'm really understood the restaurant business deeply and then final comment when asked you know there's always competitors out there when asked how they're going to win I thought his answer was pretty clever he said you know we're really just focused on this we're not doing self-driving cars were not doing.

[1:04:33] You know building a whole delivery Network that separate were really focus on how do we deliver an amazing dining experience and you know how do we in the he said it was very Amazon way of thinking it out we measure every second.
Between when the order comes in and it gets delivered and how do we get the food there hot fresh so I left that you know thinking,
here's a guy that's really kind of gets it he understands the customer and he's going to Worcester 500 million so so I felt like he had a pretty good shot at winning and I was excited to see where they take it.

Jason:
[1:05:04] That I would also argue that he already has a considerably better customer experience than a lot of his competitor so I'd like some of that that focus and Care like is already very evident in in their customer experience.

Scot:
[1:05:20] Yeah one one example of that was even worrying about you when they deliver the cheesecake from the Cheesecake Factory making sure the slice looks perfect and it hasn't like flipped on its side or getting off stuck around in the container,
that's those kind of details that I spent a lot of my day on this site I really appreciated that level of detail that they think about.

Jason:
[1:05:38] Yeah for sure and I think that I would just you know mention that listeners this is an area to pay attention to the whole food consumption industry is going through major disruption right now and it's really unclear.
What the future looks like but you know when the friction to get food restaurant food delivered home is way lower suddenly those restaurants are competing with.
What used to be grocery trips when you buy ingredients and make your own dinner and they're competing with the Ready-to-Eat food at the grocery store sells and you know the digital enablement of all this thing also makes,
a bunch of the restaurants compete that didn't used to compete go so maybe you would have done to a fast food restaurant in the past cuz you only had a limited amount of time but now if you can,
place your order for Cheesecake Factory before you get to the store and know that when you arrive there's a table wet,
ready for you and your food is going to be there in 2 minutes and then when you're done you can walk out and not have to pay because you'll get automatically charged,
Southern you can eat at Cheesecake Factory you know in about the same amount of time that used to eat at a fast food restaurant so all of these digital is enabling all of these former you know different channels to suddenly compete with each other and it's it's it's super interesting.
OneNote on the cheesecake guy he kind of poo-pooed some of those experiences and he's like yeah we're never going to have tablets on RR.
Tables which is sort of taking a shot at like Applebee's and Chili's and some other chains that are experimenting with that because we just think the customer wants.

[1:07:13] A personal experience and interaction with a server in.

[1:07:17] That could be true and you could be right that's also a justification that you always hear from the slow mover when when his competitors are adopting stuff that he hasn't been able to adopt.

[1:07:28] So what's interesting space to watch.

[1:07:32] I'm sitting in the last presenter at commerce was Jennifer Heyman from Rent the Runway so she's another entrepreneur that has really killed that she invented this clever model of renting apparel versus buying it,
they you know by all accounts have ever grown rapidly like I don't think they've they've talked about their exit yet.
But that you know could could be in the Horizon the thing that she shared that was news to me and pretty interesting.
The original rent the runway model you know they really focused on.
Women that needed something to wear for a special occasion so it's your spring formal it's at your company party,
and you might rent a designer dress that you would you would never you know want to own and we're at one time to that event and that's really you know the First Market that Rent the Runway went after,
there for a long time they really been focused on this subscription model where they essentially get their Shopper their customer to pay a fixed amount of money every month.
And get a rental apparel to wear every month and depending on how how much you pay you get a different level of.
Frequency of new outfits and so the Unlimited all-you-can-drink Model is about 160 bucks a month.
And she and she loves you that they were having a lot of success with this Hunter and $60 a month subscription service and that the average subscriber that opted into that program is wearing Rent the Runway apparel a hundred and fifty days a year.

[1:09:10] And so she did not tell us exactly what their penetration was with that model and that would have been really interesting to know but if there's a cohort of women that are 150 days a year wearing stuff.
Did they rent it instead of own,
that that really foretells of a paradigm shift in the apparel business I mean that's that's a lot like you know half of all car owners leasing their car instead of buying it and so,
that was surprising to me that she got that level of adoption and that that I think that's pretty interesting and well worth watching.

Scot:
[1:09:47] I called then after that we went to the Google party which was amazing and you and I we are security folks were kind enough to let Wyclef Jean and we did a selfie with them so if you're,
Wyclef fan like we are you can check that out on Twitter.

Jason:
[1:10:06] Yeah he seemed really thrilled to get the picture he's I know she spread it all over social media I might even be his profile pic now Jack's.

Scot:
[1:10:12] I'm sure it is the other thing I learned as we need to like we need a posse we need someone to constantly Facebook living us and we need a social media manager and we need big Burly security guard so that on our wish list.

Jason:
[1:10:27] The other two things we need is a stylist and talent.

Scot:
[1:10:30] Yes yeah we'll listen to Posse first then work on this Earth.

Jason:
[1:10:34] Yeah I agree with you I think I think that the first thing same way easier to get.
And so then you abandon me.

Scot:
[1:10:41] Yeah I had to call the East Coast was the siren song so I had to head back,
to continue working on my day job but fortunately I have a podcast partner and I didn't have to go to the Wednesday content but you did so tell us some of the highlights.

Jason:
[1:10:58] So it's the Wednesdays for the half-day and you can imagine a lot of people went home I think they probably had better attendance then than they otherwise would have because a lot of the East Coasters,
got stuck here as a result of a snow storm on the East Coast,
so they were there three final key notes and I think they were good Keno so that way you know interesting to the catch the first one was a eBay keynote and they had two execs from eBay they had,
John Peterson who's the chief AI scientist at eBay in this presentation was mostly about Ai and then they had Scott Cutler who I'm guessing you know who is the SVP of America's for eBay.

Scot:
[1:11:39] I have not met Scott up.
A bunch of people have the he's out of Step Up which is cool because StubHub has proven that vertical experience is on eBay or good thing and I've been a big fan of so I'm optimistic maybe he'll bring that into the eBay world,
in a deeper way.

Jason:
[1:12:00] Sew-in in front of he it seem like he kind of cute it up he gave the,
the kind of high-level presentation on eBay and then handed it over to yawn to talk about some of the AI things and young may have been a little.

[1:12:15] Technical for some of the audience but they they did get you some of that aiu's cases that the eBay is using and that was pretty interesting in the the.
The most interesting one to me.
So AA eBay has some of the the augmented reality stuff that we were talking about with house there they're using.

[1:12:42] Image recognition to categorize a lot of pictures and that attributes to a product listings on things like that but the most interesting one is this,
feature where a eBay seller can decide what box to ship their item in.
By using augmented reality to visualize their product in the various eBay box sizes.
So this is you could almost think of this as a seller facing feature instead of a customer-facing feature and they they kind of demo mode you know how that the seller could use this tool to visualize the boxing picks,
pick the best box and ship last air and spoiler alert we we also recorded and.
Podcast with Bob Cummins from eBay and and he'll be talking a lot more about that feature on that podcast when we get it published.

Scot:
[1:13:37] Yeah I'm excited to hear that one.

Jason:
[1:13:41] So then that the next keynote was David Jaffe who's the CEO of a Cena group for those that aren't familiar with that name there another house of brands in a parallel space,
David got up and gave a very traditional retailer presentation talking about how the customer is changed and we all have to you know be more personalized and we all have to embrace omni-channel and stores are super important,
but you know we have to use them in these new wave.

Marker 02

[1:14:08] So the last keynote is a super cool company this is and I think I'm going to put mispronounces name unless you you save me Scott but is it I think is Shay.

[1:14:22] So he's the wrong I'm sorry so he's the CEO of boxed.

[1:14:30] The we've had box on the show right.

Scot:
[1:14:33] We have yes not Shay but one of the one of the folks there.

Jason:
[1:14:38] Yeah and the keynote for boxed was.
He started out by saying hey I came in this whole you know corporate presentation all about us and I kind of decided that if I were in the audience I would find that super boring so I threw it away and I just want to let you know tell you some stories about how we got started.
And so I think he won the audience over right away with with that and he he you know show them these pictures of.

[1:15:06] Him and his Dell computer and you know a pallet of cardboard boxes in what look like his bedroom and they talked about you know this is the beginning of boxed or as my mother-in-law called in unemployment.
Any shared all these stories about how his mother-in-law was horrified and you know they didn't think he was good enough for,
tracker for her daughter and how this business was not instilling confidence and then later they got traction and they moved to the garage and set up racks in the garage and eventually they have all these like storage pods.
At side his house and this is like a house in a typical suburb in New Jersey and how all his neighbors had assumed that that he was starting a drug dealing business.

[1:15:52] And it was just kind of a fun origin story about boxed.

[1:15:59] Yeah I'm not sure there was like a huge take away about their strategy he did like briefly touch on on you know their core value proposition which is.
You know e-commerce is tough to be profitable and when you ship you know a few things in a in a box it's it's definitely not profitable and so their whole model is based on you know getting customers to buy more and and shipping.
In bulk he did not touch on these at all but they're all these other amazing stories about other aspects of box.
I think Shay personally pays for all of his employees wedding so if you work there and you get married you know he gives you like a $10,000 budget to cover your wedding and I think he's paying for,
College tuition for the children of any of the employees and so he you know he's an interesting guy that obviously cares a lot about his employees he mainly promote from within so you know most of the management team are,
guy that started out in the the warehouse and you don't even use has in many cases,
people they're doing a great job off and you know that may not have even completed their High School degree diploma so.

[1:17:08] Interesting story fun to listen to I'm not sure there was like a ton of takeaways that you would go home and apply directly to your to your giant e-commerce business but he definitely is taking,
a slightly different path and I I'm sure he's engendered a lot more Customer Loyalty employee loyalty than the average e-commerce company.

Scot:
[1:17:28] Yeah one one tweet I saw and I wanted to verify with you is he somewhere in there he said that one of their top customers is Amazon doing test orders from them so they he showed like some screenshot where yeah it was test order one at amazon.com test order to test order 3,
so it seems like they are stair kind of secret shopping him a lot over there.

Jason:
[1:17:48] Yes I don't think you said it was one of their top customers but he did make a joke about one of his early customers that he really appreciated whose first name was tested last name order who lived in Seattle by the name of Amazon.

Scot:
[1:18:04] Yep this is a good time to do it so Amazon is just kind of change the price Model for they're competing me up for the pantry thing too so I wonder I wonder if that was her reaction to box.

Jason:
[1:18:17] Yeah it easily could have been and just just a recap for listeners that don't know like you know Prime used to be there was a minimum I'm sorry Prime.

[1:18:27] Pantry was essentially you you pay a fee for a box and then you get to,
put as many Pantry items in the in that box as as you like for a fixed fee and so it was sort of a model similar to box to get you to buy a big box of stuff but the problem with the Prime Pantry model was,
that you had to pay this this $6 fee upfront to start the box and so you know there was,
you would only do it if you knew you were buying a lot of stuff in there was kind of this high threshold to start the Box,
and so now the pivot in the economic model is you no longer.

[1:19:06] Pay for each box and instead you pay a subscription and I don't remember exactly what description is I want to say it's like 10 bucks a month.
I might be wrong on that.

Scot:
[1:19:17] Yep I guess like 999.

Jason:
[1:19:19] And so in the one on one hand it's a it's a higher bar to get someone to do a monthly subscription than it is to do like an on-demand thing.
Once you do that subscription there's now very little sort of friction to leveraging it and I think what Amazon found was that the the $6 per box was was,
you know a lot of friction for anyone to use the box that they weren't getting as much add option and that you know now they can sell this this subscription service and start getting more you know,
maybe a smaller group of users but much more frequent use of of the program in so that,
in that does feel like a reaction to box.

[1:20:03] And I'd say it's happen again with you start a lot of time that we've actually used way more than are a lot of time,
so is as you can tell from listening to that yesterday showing today show there was a lot going on at shoptalk so that's,
you know I feel like we did a fast recap and it was two and a half hours if people do have any questions or you feel like we miss something or you want to continue the conversation we'd love to hear from you on Facebook.
Scot and I spent a lot of time on this so we sure would appreciate that 5-star review on iTunes but thank you very much for you know the two or three Wisner that stuck it out for all two and a half hours.

Scot:
[1:20:41] I think they'll be more if this is riveting so last comment while we're at shoptalk we get some really great guest on the show and over the next 5 weeks we're going to be releasing some of yours from Johnson & Johnson 1010data eBay Walgreens American Eagle sub on top Hatter and Comcast Ventures so make sure you hit that subscribe button cuz we are going to have a lot of content coming out over the following weeks.

Jason:
[1:21:08] Publishing storm and until next time happy commercing.

Mar 22, 2018

EP121 - Shoptalk 2018 Recap Part 1

ShopTalk is an annual trade show held in Las Vegas focused on retail and e-commerce innovation.  In it's third year, it has become the fastest growing can't miss event in our industry.  This year 8,400 industry professionals attended the event (up from 5,400 last year).  The 2018 version took place March 18-21, 2018 at the Venetian in Las Vegas.

There is so much content at the show, that we've divided our recap into two parts.  In Part 1 we cover:

  • Macy's Keynote
  • Target Keynote
  • Amazon Go Keynote
  • Future of Grocery - Moderated by Jason Goldberg
  • Zia Wigner Keynote (Global Chief Content Officer for ShopTalk)
  • Ulta Keynote
  • Nike Keynote
  • Ocado Keynote
  • Pinterest Keynote
  • Fresh Direct Keynote
  • Facebook Keynot

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 121 of the Jason & Scot show was recorded on Monday, March 19th 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Monday March 19th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:38] Hey Jason and welcome back Jason Scott show listeners Jason and rare time when we're together and this is actually the second week in a row so pretty exciting where live live live here from the Venetian in Las Vegas.

Jason:
[0:53] I know I feel like I have won the lottery getting to hang out with you this much.

Scot:
[0:56] I know you're you're a very lucky man that's all I can say.
Show listeners we are we recording this at the end of the day on Monday consumed 2 out of 4 days of content so I can call this the shoptalk halftime show.
And the show this year is really dense and we thought it be important to give you guys, real-time update of what we're learning about the show some of the more interesting ass,
so that we can kind of have at least have two updates with me actually put a third depending on what kind of content comes out in the next couple days so.
Just a quick overview of the show this year it looks like the attendance is about double I think we decided Jason is that right,
so I think they're saying somewhere north of 8400 attendees definitely feels like it the show outgrew the Aria and is now at the Venetian,
I'm in I guess it used to be called The Sands conference in your butt and now they caught this fancy Palazzo or whatever it is Conference Center.
And another thing that's really interesting this year is they've added a couple of new tracks there's there's a grocery talk track which I know is near and dear to your heart so there's this kind of acknowledgement that groceries undergoing digital change really kind of in a bike.
Not only that but actually on the show floor and then there's a whole track around Ai and machine learning which is been one of our favorite topics.
The the big me coming from the vendor world the show floor is absolutely huge this year last year there was like these little mini meeting room kind of things and this year they went full show room and they've done it I don't know the square footage of that but it is as big as.

[2:32] Shoptalk it's as big as shop.org it's his maybe half the size of a retailer I would say.
But for a shows for sure you're having an exhibit floor it's pretty impressive I would say that.
You know they've done a really good job with that another thing I really like is it under that they've done is a lot of the food and then to get to the general Keynotes you have to walk through the exhibit floor,
I and the vendors are well aware of that and they are lined up and ready for ready for action that's who hugs so that's that's interesting and any other kind of,
the macro things you want to talk about that you notice this year before we go into the details.

Jason:
[3:12] I mean just said the one interesting thing the way they were arranged the the exhibit floor is in these sort of subject-matter Pavilion so there's like.
AI Pavilion that you know is largely companies focused on a and a grocery Pavilion so if.
If you're looking for a particular type of vendor they've sort of Consolidated those all together which I like I think it makes it easier to find relevant stuff.
And then.
If you're a retailer you could come to the show for free if you agreed to take a certain number of meetings with vendors so the program that other shows have done that I've never seen it done on the scale they've done here so they.
Paid for a bunch of retailers to fly here in the end their hotel rooms they arranged a bunch of meetings with vendors and as big as the trade show floor is there's a whole huge back half of the trade show floor,
they just all these meeting tables that are like speed dating between exhibitors and vendors and it's it's a little bit like Tinder,
the vendor had to say they wanted to meet with this particular retailer in the retailer had to say they want to meet with this particular vendor.

Scot:
[4:23] Double opt-in.

Jason:
[4:25] Exactly.

Scot:
[4:26] Swipe left swipe right.

Jason:
[4:27] Yeah and so the the BD people for my company we did several those meetings and felt like they were all all valuable in in favorable so.
It's approximately.

Scot:
[4:38] Does that come with the exhibit space or is it kind of separate.

Jason:
[4:40] Yeah there's a bunch of bundles you could buy that were like this amount of space in this mini meetings.

Scot:
[4:45] Is there a popular in Europe I know are European Folks at Channel visor participate in these meetings and always felt weird from the US perspective that you were kind of like.
Paying for the vendor to meet with you but I.
They've always worked worked out pretty well for your PIN folks it's interesting to see them kind of bring that over date they did just do their European show shoptalk I wonder if that's something a best practice they brought over as part of that.

Jason:
[5:09] Actually it does appear so they did a Europe shoptalk last year and it and they cancel that show so I didn't get to go I assume it wasn't.
Quite as well adopted as the u.s. won and now they're calling this the global show and they're trying to get all their European attendees to come here.
But you're you're absolutely right like they could have definitely lifted some of those best practices and I frankly I came here a little skeptical about the meetings because.
There there were some logistic hiccups weeding up to it like if a vendor opted-in and we opted in but it didn't fit in one of the time slots they had available.
I think we bought more meetings than we got so they had to give us some credits back and and not to sound too vain but where.
Better known brand than a lot of vendors on that floor so if they struggled give us the meetings we bought you could imagine some smaller lesser-known vendors.

Scot:
[6:03] But it seems like the space was constrained not the demand.

Jason:
[6:07] Exactly yeah and then like once we got here it sounds like it went real well so agree with you like this feels like one of the few shows in our space that's vibrant and growing.

Scot:
[6:19] Yeah yeah and that's what sticking to some of the content highlights I got in late Sunday night super late and then you were here all day so why don't you could get off and tell us some of the highlights from Sunday.

Jason:
[6:30] So I am in back taking residency here in Las Vegas I'm here for 16 days.
In the hotel room that you and I are sitting in right now so that's a new experience for me and Sunday night had some good key notes that I was looking forward to hearing the first one was Jeff can that who's the CEO of Macy's.
And so he was talking about some of their progress they had their first.
Favorable quarter and I want to say like 11 consecutive quarters and and so you know he was very optimistic that that they're there.
Turn around program that they called the North Star is starting to work since we talked about a couple of the the upcoming initiatives they have a program they're calling growth 50 which is essentially.
They selected these 50 Macy's store.
The Dare going to.
Put all of their best practices and capex investments into in 2018 in the idea is to see which of those things work best and deploy them into all there the rest of the Macy's Fleet in 2019.
So it'll be interesting to figure out what those 50 stores are and keep an eye on them.

Scot:
[7:40] What does 50 stores are and keep an eye on them and it goes Herald Square.

Jason:
[7:45] Seems to be somewhat shocking of that was not one of them.

Scot:
[7:48] Does that mean like the giving up on the other 50 is at Macy's shutting stores.

Jason:
[7:54] Closed a bunch of stores but they're still in business will check me on this but I don't want to say that it's going to be like 2000 store so that it's still a lot of stores and what you don't do is just.
Do a bunch of expensive things and I'll mm hope they work so so picking 50 stores as Pilots kind of makes sense.

Scot:
[8:11] , complex offline av-test.

Jason:
[8:14] Yeah as we caught a match Panel test actually but that's sort of the original Navy test.
So that's interesting they announced that they are deploying mobile scan & go check out to all their stores by the end of 2018 so what that means is.
You've installed at Macy's mobile app you you scan the items you want to buy.
For it on the mobile app and you walk out without ever having to get in the checkout line if there's loss prevention tags on the apparel which there is on a lot of the apparel.
You have to walk by a security desk show on a digital barcode on your on your phone and they'll remove your tags but that potentially eliminate.
What date Macy says is the number one complaint about Macy's which is hard to find a cashier or too long a wait in line.
So they were they were pretty bullish on that.

Scot:
[9:13] Surfin you're doing that or that's just like part of their point of sale and stuff.

Jason:
[9:16] They did not disclose that they were partnering with the vendor to do it it seems like something they built or not ganic Lee you are you are absolutely right there are third-party vendors that you can hire to facilitate that for you but.
I somewhat suspect that Macy's is not using a third-party to implement it another one that was interesting to me and I haven't seen the meteor really pick up on this year.
But he talked about their desire to clean up their promotional calendar and.

Scot:
[9:43] Sounds familiar.

Jason:
[9:44] That's retail code for we want to get away from all of the crazy promotions were doing and he specifically said we want to eliminate the need for a Shoppers to do quote on quote Macy's math.
To figure out how to get the best deal.

Scot:
[10:01] This is longtime listeners will know this is kinda killed JCPenney right.

Jason:
[10:04] Even more more funny it it absolutely kills Ron Johnson's 10-year JCPenney they were highly promotional he tried to dramatically clean up their promotional calendar and.
Just didn't work.
A time a lot of us criticize Ron Johnson because we were pointing out that retailers like Macy's had tried this in the past and it didn't work for them so it's even more ironic.
That Macy's that has frankly past experience trying to move away from from promotional pricing models is going back to it and we we talked on listener question shows about the fact that.
Everyday low prices seems like the future pricing and because of transparency these promotions aren't as appealing as they once were.
But it's really hard to shift once you have a customer base that used to promotional pricing.

Scot:
[10:53] Now so Terry Lundgren so he is transition.
His big thing was to add that discount store inside of Macy's but I didn't hear you saying about that is that stole,
is that the kind of makes sense if your have this discount like Dollar Store jammed inside of Macy's or TJ Maxx is probably more appropriate analogy then I think it does make sense to then you could have at least kind of a,
a way of balancing out the promotional things is that still tragedy but or or is that off the table.

Jason:
[11:21] I I think that still is a strategy Macy still does have these off-price stores that I think the most Perfect Analogy is that are you notice or to Nordstrom Rack equivalent but they were mentioned it all in the keno.
So either you like they didn't double down on it or say they're moving away from it you can interpret moving waste and promotional calendar that you know they're there.
Trying to Jack the margins up in the main line Macy's stores but you're exactly right like they could be to differentiate it from the discount concept Moore,
so we'll have to see how that plays out the next keynote was Target so this is Brian Cornell is the CEO of Target there another retailer that you could kind of say is in the midst of.
Turnaround strategy and he spent he did a couple interesting things about his was a little more.
West tactical in the Macy's keno and he talked a lot about.
The their migration to digital and how they've embraced digital and he he talked about this he didn't called The innovator's Dilemma.
That's essentially what it is he's like you know there's this natural inclination when you have all these stores in the stores are profitable in these new shopping behaviors come in to say you like why would I ever invest things that discourage.
Customers from going to the store that that's just your natural instinct.
And he claimed that like Target had overcome that instinct and was now short of embracing.

[12:55] Digital and they were largely converting the stores in to fulfillment hubs and that they they ship something like 70% of all their eCommerce orders from the store.
Brought on stage with in the CEO of shipped which is a logistics company they just bought.
You said that they bought them specifically because they wanted to be the first national retailer to offer same-day delivery in all markets.

Scot:
[13:19] And then just last week they announced they're growing that out and more stores.

Jason:
[13:24] So I think their intention is to get eventually get it in all stores that are also experimenting with curbside pickup which we've talked a lot about here.
So a lot of interesting things there and then he pivoted to another topic that I think is going to be very common this year which is there they're doubling down and reinvestment in owned brands.
And this used to be the thing we call private label the the purple an hour when they talk about own brand they're talking about Brands they created offense.
That in some cases they even sell it other other channels of distribution I'm so potentially sell on Amazon.
And target has been very successful own brand they're also talking about brand exclusives so we'll sell stuff from National Brands but.
Excuse that are only available in our store and will sell limited edition stuff so the stuff you know that there's a constrained Supply Target some what famous for that with promotions they've done for people with Lilly Pulitzer in others.
So that is one of their big plays that's most retailers big play against Amazon has to sell stuff that Amazon can't sell.
So that was kind of his big talking points.

Scot:
[14:42] So I know they room essentials is there like furniture brand and then what is a jack and.
Kids one cat jacket are there any examples where they sold those other places.

Jason:
[14:59] So I haven't as Machine Target sell their own brands in other places.

Scot:
[15:04] Costco has.

Jason:
[15:06] Costco very famous he does there's more Kirkland on on sold on Amazon than on Costco.com I think.

Scot:
[15:12] Yeah but there are other.

Jason:
[15:15] I'm trying to remember if Target invested in or owns method but method is sold elsewhere so there's.

Scot:
[15:20] I swear Dakota velvet with that a designer Michael Graves Sr. Do one of our interns to research them.

Jason:
[15:28] Yeah yeah yeah let me know how that works out for you so that was an interesting keynote and then.
Sort of the perfect transition the third keynote on Sunday night was to VPS from Amazon that are responsible for the Amazon go store so this is Gianna Parini.
Responsible for who started the.
The business leader for Amazon go and then dilip Kumar who's responsible for all the technology used in the Amazon go store and is also responsible for the Amazon bookstore.
So the very first thing they did which was just I thought hysterical after both.
Target and Macy's had mentioned kind of Scan & Go.
Amazon of course came on and threw shade at what a pain in the neck skin and go is and how we really built the store just because customers don't want to have to scan each item as their.
As their shopping.

Scot:
[16:29] Is that a learning from the book store cuz that's how the bookstore model works.

Jason:
[16:33] Yeah well I don't know specifically I mean.

Scot:
[16:35] Typically the kind of throwing shade at the bookstore.

Jason:
[16:38] Yeah and I would argue the bookstore is in many ways the worst version because you like literally can't find out the price without.

Scot:
[16:44] Face can't even find a price there's more scanning you would even get it at Macy's.

Jason:
[16:48] I told you it was not a very hostile interview so let me just say that question was not asked.
Either of them but it was a little bit funny this was the keynote I was most looking forward to Amazon Prime now was at the show last year and I felt like.
They shared a lot of new information about the prime now program that they least I wasn't previously aware of.
It was less through this time so I didn't do was not a lot of like major new disclosures normally trying to figure out his.
How to get a roll go out to more stores are you getting to put it in Whole Foods your new announcements like that at this it is Keynote.
They did talk about what some of the best sellers in the store was and apparently there's this chicken sandwich that's been there Perpetual number one seller but it is a lot of food stuff so that Amazon makes their own meal kits in that store in the doors are top sellers.
Fresh fruit is a top seller there's an odd thing about Amazon and fresh fruit.
This store is in the corporate headquarters in this corporate headquarters Amazon has way less employee amenities than almost any other big company.
So the rare amenity that that Amazon liked out a lot is.
Did they give free bananas to all the employees and apparently this has killed the market for bananas in downtown Seattle.
The smoothie shops used to charge to put bananas in the Smoothie now they let you bring your own smoothie your own bananas in to put in a smoothie because everyone in downtown Seattle gets free bananas from Amazon.

Scot:
[18:22] Does the banana thing so when Prime took on Arrested Development there was a big.
What is running jokes I'm not a huge Arrested Development person but there's a banana stand thing in there and I think they started it as kind of like to celebrate that it's kind of kept going is that is that true or did I make that up in my head.
What decimal burx Amazonian Institute election.

Jason:
[18:43] Or just is this odd fruit thing with Amazon so then I found it funny that like this.
The store which is largely the employee cafeteria is really what the Amazon go store is the number one seller is fruit so it made me wonder if they're going to stop by the bananas.
They can monetize the bananas in the ghost.

Scot:
[19:00] How we don't sell a lot of bananas in the guest room.

Jason:
[19:03] No I imagine that it's fresh fruit other than bananas but there were a couple other interesting things so delete was talking about like.
The ghost are we talked about a lot it's based on.
Very Advanced machine learning around computer vision so this is mostly done with cameras and the interviewer asked why they chose cameras there all these examples in Europe in elsewhere of people trying to do similar concept with RFID tags.
And they they felt like aspirationally a store model where they have to constantly apply tags and sensors to all the Shelf some product.
Wasn't very interesting to them they felt like that the much more scalable long-term solution was to invent this computer vision model.

Scot:
[19:49] Now I know you're very passionate about RFID tags how do you feel about that.

Jason:
[19:52] I think he's right I think RFID tags are item level RFID tags for products in a store.
Is a pain in the neck and unless we get to this thing called Source tagging where all the manufacturers put the RFID tag on in the factory it's it's never going to take off.

Scot:
[20:09] Can you do RF IDs for like a fruit and stuff.

Jason:
[20:13] Potentially yes so at the moment.

Scot:
[20:15] Yeah at the moment.

Jason:
[20:19] Yeah it there's a man.

Scot:
[20:21] RFID on my app.

Jason:
[20:22] So there's a sticker on every one of your apples now and that sticker could essentially be an RFID tag.
That sounds like a Farfetch'd example like there's an argument in the future of food that you're going to want to know a lot more about that Apple before you buy it like how many,
days ago was picked and all these other things and so like you you could imagine them wanting a tag each individual apple for a variety of reasons.
All that aside it was just interesting to hear them talk about how they debated tags versus cameras and went with the cameras.

Scot:
[20:55] Another nice thing with with cameras is once you get on digital then more law should kick in where RFID tags rising to this manual.
Process that is not going to change the scale and will always be subject to let you have a robot that can put the tags on her which.

Jason:
[21:12] What kind of software vs. Hardware really like an unlike General lease offers I have a lot more profitable because as as you scale at the the normal cost is very well.

Scot:
[21:22] Yeah then you have the the nurse's other acceleration I don't know so Moore's logic we all understand that you don't processing power gets doubled every two years but then,
you know I wonder if there's some correlated to that with machine learning like the system get smarter every X things that sees Pride another there's some pretty interesting thing there that also is.

Jason:
[21:43] Yeah I mean there's a couple examples of that like the the.
Accuracy of computer vision which is this specific subset of artificial intelligence this towards using has been improving faster than more as wise as a noun yeah.

Scot:
[21:56] You think it would yeah and then I hit some kind of like.

Jason:
[22:00] Resume wait I had some flat toe because it's unlike chips which could always get faster at some point your computer Visions perfect.

Scot:
[22:09] How do they tell like a chicken sandwich in a tuna sandwich but do they have to put different containers on it to help her.

Jason:
[22:16] So that was a good question that wasn't asked but there was a similar one that was kind of interesting so because there no sensors on on the items the camera has to recognize every skew in the reporter said like.
Do you struggle the tell sugar-free Red Bull from regular red bull.
And he's like yes we do it right like that those are the the the really difficult edge cases and I thought about that before they like different flavors or or subtle differences your chicken versus tuna sandwich being up in exacerbated version of that.
Would be really hard and then he pointed out of part of the problem I haven't considered before.
Not only do we need to tell sugar-free Red Bull from regular red bull the moment when we need to tell them is the exact moment when you picked it up and probably block the word sugar-free with your thumb.
And so those sort of obfuscate abused that they get is obstructed views they get in the product is also a pretty tricky problem.

Scot:
[23:12] No Amazon in kind of the play but they've done with frustration free packaging you can almost see them going back to the manufacturing kind of having you know,
air visionfriendly packaging where you make this one purple in this one yellow or something other than a small kind of text word for sugar.

Jason:
[23:29] And you've hit on one of the reasons like this works for ghost or the potential and other things everyone keeps calling at the ghost or a more accurate turn might be Go restaurant because they're actually is a big kitchen in the majority where they sell is food that is prepared.
In that store and search your point they can solve their own problem by using square boxes for the chicken and round boxes for the tuna or whatever whatever they want to do.
A minority of the skews in the store are National Brands so for their own Brands they can make the packaging distinctive enough.
It does have that problem where has much harder to do a whole food store or something like that.

Scot:
[24:11] Wonder if they could even do have seen some examples this in retail,
I want to take an overlay some kind of a machine readable but not human-readable thing on the packaging to write so the chicken in the tuna come in the same package but the machine can see maybe the UV level or something you know that something that very clearly you know,
2 blinking circles versus a red boxer and things in.

Jason:
[24:35] They can build cameras that seen in the infrared Spectrum or something like that yeah absolutely not discussed but interesting things to think about.

Scot:
[24:41] Did they talk about when they first launched we did a deep dive on that the.
They had a room right there in the store where people were kind of like both checking the AI and then also you know I'm sure they are kicks out and says does not compute and there's some air right there in a human has to go, like figure it out.
Do they talk about that at all but the air raid and.

Jason:
[25:04] Omelette no only very indirectly so they did not talk about how well the machine learning the Machine Vision is working or the Air Raids they were asked how many employees work in the store for any Dodge that question 2.
She talked about.
Three big classes of employees that they're like you seen how you been to the store you seen how many people are in the kitchen you seeing how many people on the floor helping and you've seen how many orange shirts there are.
An orange shirt is if you been to the store is code for these employees that are working in the back room looking at the video displays and training the AI in so the implication was there still.
An army of orange shirts watching a lot of people shopping and refining though I'll grow them.

Scot:
[25:54] It's a nurse and they don't use Mechanical Turk for that because I'm a janaz be real time so after like you.

Jason:
[26:00] Videos welcome to the store I bet you that video isn't like it was in real time going I mean it's a lot of cameras so even even Amazon would like love the 8 of us bills for doing that.

[26:12] So that was interesting I would have like to hear some.

Scot:
[26:14] I'd like to hear some way you should have been the interviewer on that one but Amazon negotiates these things very carefully so I imagine there's a reason so that things didn't go to where we would like to see.

Jason:
[26:27] And then the only other thing that kind of came up with a bit that was interesting to me.

Scot:
[26:29] I put a bet that was interesting to me as they did talk about.

Jason:
[26:32] They did talk about the fact that.
You have to have an app to be in the store cuz you you have to have the go app to register you so to walk through like a Subway turnstile to get in in one of the.
The peripheral benefits of that is did they allow Shopper feedback to be given real time in the.
And so unlike almost any other store went to Shoppers in the middle of the shopping experience and something doesn't go how the Shopper wants they can in real time.
Give feedback and that feel it feedback is tagged with a contact that Choppers in so that shows she said that that's been a surprisingly valuable.
Data stream for them to improve their operations in the store which.

Scot:
[27:19] You are using beacons they know where you are too or that the machine that visual stuff are knows where you are better than any bacon they don't.

Jason:
[27:25] Visually light and again it's a tiny store so I you're in front of one of three gondolas so like so it's like probably tagged with with that kind of contact information.

Scot:
[27:35] Now Jason Delray overtree code that you Commerce reporter he is kind of heard rumors are dug up some some data that indicates there's a plan to open for 5 more the stores and then did they talk about Whole Foods at all.

Jason:
[27:49] Only in that context that they said they have no intention of deploying this Whole Foods right now and said two ways to introduce.
Usually win on Amazon and play emphatically says they have no intention of doing something you should sort of assumed they're going to do it right like because they have no intention of offering a shipping service they have.
There's a lot of history of them denying something right up until the moment they do it in this case I think there's a lot of logistical reasons that Amazon go dozen.
Legacy Whole Foods Fleet of stores particularly well so I sort of do believe them.

Scot:
[28:27] Let's talk about this I think it's interesting so why why doesn't it work in a Whole Foods is it just the cost or what.

Jason:
[28:32] So in this very smart 2000 square foot store there's more than 50 cameras to make sure that they have complete coverage on the store and.
What they need to do is from the time you walk through that Subway turnstile they have to maintain line of sight on you at all times and have to maintain line of sight on every skew in that store.
I'm so there can't be any blind spots where no camera can see you in there camping spots where every camera in the store loses track of you momentarily because then even when they saw you again.
They don't know that you're the same person that had the app when you walked in the store right so this store was designed from the ground up.
The perfect lines of sight it's a very boring square store with no displays in the middle of the store in a traditional store you have this thing.
And those Donna was in the aisle obstruct your ability to see certain angles you have lots of displays that.
You know for fruit and things that like tree blind spots in the store you have vendor provided displays that aren't even provided by Whole Foods that block lines of sight in the store.
The amount of cameras you would need to eliminate every blind spot in a 25000 square foot Whole Foods is.
Almost mind-boggling and then you still have another problem you can't let a customer go into an elevator where they wouldn't be on a camera you can't let a customer to go to a bathroom there's a whole host of things that you know just taking off.

[30:06] The Whole Food stores that are D exist and retrofitting them with this technology doesn't feel very likely to meet could they build new Whole Food stores.
They're intended to be more compatible with this yes could they use this technology in The Limited ways in that whole food could they use this technology to make you not have to get your wallet out when you pay and just charge your Amazon account.

Scot:
[30:29] Or the most popular part of a Whole Foods is the prepared section in a lot people just go and have lunch at Whole Foods so you could see I'm kind of like yeah.

Jason:
[30:36] Panda Express portion you can have an Amazon go store inside of the the Whole Foods or for sure.

Scot:
[30:43] I bet that's kind of what he's hitting at because he said he also said something like stay tuned yeah we have no plans to put in Whole Foods but stay tuned with a lot of people took to mean either there an open more stores are there was some plan to do something at Whole Foods it's kind of like different than the question.

Jason:
[30:57] And to me the most valuable thing that you can do with this computer vision that they could very easily do it at Whole Foods is just putting the camera at forget tracking the customer.
Just putting the camera to see the shelf and to accurately track the inventory on the Shelf is hugely valuable.
For the store stores are have very poor inventory and they spend a lot of money to maintain that poor inventory and leveraging the computer vision system to have more actor and inventory.
That alone could be super valuable to Whole Foods.

Scot:
[31:32] That's the really bad part of the delivery so I'm a big instacart I've tried I use them all over it regularly now because because it's a maintained DC,
so you're having cameras that then watch them and Tori and see the last apples been picked by in-store customer so that me the delivery customer.
Or that apple and then get a stock-out you know that you're some really big wins on all side of the equation there I think you're right that's it.

Jason:
[31:58] Absolutely and I think that's going to come up again and some of the other Keynotes we're going to talk about as well.

Scot:
[32:03] Cool so that any other highlights from Sunday you don't hit any crazy off the hook parties where you were dancing on the table.

Jason:
[32:09] None that I'm contractually allowed to talk about.

Scot:
[32:12] Or that you recall that takes us to Monday and then I got in late late late Sunday night so I was able to hit some stuff Monday,
the way it works this morning is you had two tracks in the way they're running these tracks as there's five parallel tracks as a,
20/20 build these events and always frustrate people that that event planners do this but they do it for a reason it's designed so that you'll bring,
five people you in for friends from your company so and then they there they're very somatic this year I don't remember being as the Mac last year so they're there was a grocery track for example.
I was,
I attended the first track it was really interesting it was about Brands as in the grocery track that could have been anywhere and there was a VC there that invest in kind of nascent brands.
Consumer Brands 7-Eleven was there and and then another investor of his rule was entirely clear to me but he's really all about subscription kind of products.
I think there is when we hit on the show a lot where,
you notes create a brand used to be like a PNG level event where you would have to go spend $92 to kind of say here's this idea for a swifter and it can be this or going to watch on TV with a 50 million dollar campaign to do the Super Bowl ad now,
the world is swimming in Brands and in fact this panel was there so many Brands out there that,
everyone's really struggling to kind of like figure it out one of the more interesting things I thought you would like is you know the interviewer has 7-Eleven is all this digitally need a vertical band saw it bother you that she said no it's great because.

[33:50] Those companies you know once they get to certain scale we know they,
control like it's when I have to test it in our store and then we can help them because most times if they're doing well digitally against the cpg they're selling cases and large volumes,
they can help them a lot with itches and how to how do you single serve package these things and they talked about some they give a case that they wouldn't say the name of the brand,
kind of the vibe it was.
They are buyer how he said that one that they had a lot of insights Wednesday packaged it at 7-Eleven it did really well because the,
the consumer they picked up a whole nother set of consumer because,
there's folks that wanted to try it and they also wanted it served cold for their commute back home were or what not so it's really interesting kind of things there of they actually view the digitally native thing very positively because it actually kind of,
you know already jumped the hurdle didn't have to build the brand in their stores pre-built and it made it easy for them to cherry-pick it down into the storm,
then track two came along and that was your tracking for today I had a meeting and had to miss it but tell us about what you talked about.

Jason:
[34:56] So you made an excuse not to not to support.

Scot:
[34:58] Well I figured we would talk on the podcast I don't want to spoil it.

Jason:
[35:02] Got it okay fair enough so I did one of the the panels in the grocery track in this was called sort of.
The future of grocery our grocery Reinventing itself until I had three panelists the first was.
Kind bars and so that was a Jared who's the VP of e-commerce there and and this is a very.
Interesting traditional case for me that's a traditional.
Cpg brand that that mix products and very successfully sells them through wholesale so kind bars are you not very successful there in every Starbucks store and a Whole Foods and Amazon,
and they hired Jared and experience e-commerce gaido launch their direct-to-consumer offering.
And we talked a lot of brands that are interested in doing that in the big question is always why would a consumer want to buy from you cuz generally.
You have the worst with just sticks in you're the worst price for your product and so it's interesting to hear kinds of you about that.
The a big component is.
Assortment so they're offering exclusive flavors and skews that the wholesale Channel.
Doesn't want to carry or is out of our limited editions their heavily relying on a subscription program that a lot of the wholesale Channel doesn't offer and they feel like they have.
Unique brand promise and there's a subset of the kind consumers that buy into the be kinder to each other.

[36:41] Serta brand ethos in want to buy from the brand even though they're not going to have as good of a Justice or prices Amazon.

Scot:
[36:50] Yep I think kind is one of these,
classic examples of a new newer brand that's really kind of leveraging that assortment packaging everywhere you go it's different from a consumer sometimes it's like frustrating because you want to go to Costco and my wife likes a certain one and then,
either can't find it at one of the wholesale clubs are bundled with like some really crappy flavor you're not going to eat so there is very clever on the brand side but but I do think sometimes,
be a little too clever on some of that stuff that makes it really hard from a consumer to get what you want.

Jason:
[37:20] And I feel like there's a bunch of brands that think they have that position with a consumer and they really don't kind I think probably does sit in the next episode.

Scot:
[37:30] Did they say how much as directed like do they give you any indication is that like 5-10 15% of their business.

Jason:
[37:35] They didn't but I I suspected the last than that right now it's it's it's it sounds like meaningful Revenue but it's still pretty nascent compared to their wholesale Revenue.
So I would imagine it's it's south of 1% of their other two other total sales at the moment.
The next company with Chef which that spelled Chef apostrophe D and they are.
And some meal kids are at sort of an interesting part of the grocery echo system at the moment.
A lot of people that think it's a fat and then it's not really going to be a thing or a lot of people think it's the future shopping whenever you say meal kids Denny when they immediately think of blue apron and Blue Apron famously.
Has like apparently no business plan to ever be profitable.

Scot:
[38:27] But earlier go sits when their top sellers right now so I'm in there Snoop the Timbers like these things.

Jason:
[38:32] And shut his actual interesting that they do offer their own meal kits but what they mostly are.
Form from young cats so they're actually the private label provider for a lot of grocery stores that are now offering their own meal kits and they have a lot of Big Brand Partnerships to offer Brandon meal kit so I,
Campbell's is a major investor in Chef for example.
Inside there you know there are so so that was interesting he had a lot of.
Understanding and familiarity with that market.
He talked a lot about the pros and cons of home delivery of meal Kids versus grocery store pick up a meal kits and the two takeaways I I had from his his.
That were kind of new to me.
She's very anti subscription in meal kits and he thinks that you know he's a fundamental flaw with most of these meal kits and most notably Blue Apron is you cantilever a meal and then reorder which is exactly opposite of how most of us.
What are the spines in particular things we like and we repeat those over and over again.
And he also believes that we all need a lot more personalization than the mule.
Currently allow and so a big part of their platform is an infrastructure that allows highly personalized male cats and he eventually envisions.
The distance can be highly personalized even.
In the store on demand so you can get the the spaghetti with a lot of garlic or a little garlic and a lot of onions are all those all those sorts of.

Scot:
[40:09] And deserve their delivery remix.

Jason:
[40:15] They do have a a chef branded meal kit that they delivered recta home but mostly what they.

Scot:
[40:21] On demand not subscriptions.

Jason:
[40:25] Mostly what they do is facilitate a regional grocery store offering their own meal kit or someone else selling a meal kit through grocery store so it sounds like more of their stuff is in store pickup meal kids then home delivery.

Scot:
[40:39] And my regional it kind of makes it seem like they haven't cracked into the top five or six big guys is not like a Kroger or Harris.

Jason:
[40:45] So I think there is.
I think it is pot like he was not completely transparent about who is Partners were so it's possible that he is white labeling for a big one and that part of their agreement is that they that they don't disclose that.
, number of the big ones at this point now own their own meal.

Scot:
[41:03] So Safeway bought I can't remember who.

Jason:
[41:06] Albertsons bought placed plated plated thank you.
Which is one of the biggest wins in history of Shark Tank by the way fun story there but so some of these guys out on their own Walmart owns their own.
For just bought one car for the second largest retailer in the world they just bought one this week so.
The market for the really big guys is probably smaller it wouldn't surprise me if they secretly have one but he certainly din-din disclose.

Scot:
[41:35] I feel like musical chairs and some you don't want me the guy off without a chair and then the meal world have their own meal than his distribution mechanism is like maybe some A&P.

Jason:
[41:48] Exactly so that was interesting and then the third panelist is this company I was also not familiar with call Daily Harvest and Daily Harvest I decided that milk it sounded too easy so they decided to do something.

Scot:
[42:03] Getting harder.

Jason:
[42:05] We're going to do direct-to-consumer home delivery of frozen foods.
And so there's a strong.

Scot:
[42:14] Prison meals are like blueberries so I can make a smoothie.

Jason:
[42:18] Yeah so smoothie kits I think is the thing the best-known.

Scot:
[42:21] I think it's the thing the best known for so all the.

Jason:
[42:23] Show all the frozen fruit you need to make a smoothie but also like not not so much like complete frozen meals but like frozen fruit and produce that you might.
I'm using a meal they seem very focused on.
A lot of the altruistic we need to solve a lot of the problems in the food chain or we're all going to die of starvation kind of thing they talked about what you'd foodways there is in the world and how Frozen is a great solution to a lot of food ways.
Throw away a lot of fruit just because it doesn't look perfect and nobody wants to put it in their fruit bin in the grocery store so what's what the industry calls ugly fruits and apparently when you freeze it and no longer matters that that fruit didn't love.
Beautiful so.
The bruised Apple tastes exactly like the regular Apple a lot of famous restaurants now try to primarily use ugli fruit.
They're trying to turn around this trend of throwing away all this fruit that has cosmetic damage and so is interesting that they're they're trying to leverage ugly fruit as a big part of the next there's also this.

Scot:
[43:32] Ugly frozen fruit.

Jason:
[43:36] And another one was this concept that I never heard of called transitional organic.
Say you're a traditional farm and you transition to becoming an organic farm you have to adopt a bunch of organic processes but then you can't sell your food as organic until you've been following the those processes for a number of years.
Writer so there's a bunch of farmers that are in Linda where they're paying all the expenses of.
Producing things in organic way but because they're only two years into their through your program that they're not allowed to call their product Organa.
And so so she's buying a lot of this transitional organic.
Products so that that was somewhat interesting and then because it's frozen and they've invested a lot in the technology to pack the Frozen stuff in dry ice and ship it through common carriers like FedEx and UPS.
They're able to deliver nutritious food to a lot of places in the country that don't have convenient access to grocery store so we have a lot of these.
Areas we call Food deserts that they're able to cater to so so that was somewhat interesting but they had to.

Scot:
[44:50] Ugly frozen food to food desert that's the fish.

Jason:
[44:56] They were able to raise money on it so.
There's a investor for everything.
But it was interesting thinking about all these complicated with Justice of the cold chain and.
Yeah so hats off.
Talk to her and if you think about it if each of these things are popular they just wrapped up portion of the traditional grocery business right so you know she pointed out the the.
The Frozen I always the Wiest appealing part of a grocery store and that it discourages interaction with the product and I'll and all of these sorts of problems,
and by the way you buy this Frozen stuff and then you throw it in the trunk of your car and it's not frozen by the time you get it home so.
So if she's successful in direct-to-consumer with Frozen that potentially takes to rose out of the grocery store the meal kits potentially,
take a lot of the individual ingredient shopping that happens today so so some interesting things thinking about how groceries Reinventing itself.

Scot:
[45:58] Absolutely cool so after that after Jason second track there,
then we went into the Keynotes so kicking off the show kind of the the opening keynote if you will,
which kind of strange I think they realize that a lot of people come in Monday or Sunday zo winter who puts together all the content for shoptalk kicked it off,
I thought I was a pretty good good kind of Esprit shortest like 5 minutes but the summary was you nowhere in The New Normal which is kind of you know,
in in 15 and 16 and 17 we had all this disruption going on and when you're in the middle of it you figure it's going to be.
You'll go back to the old normal but they have that never happens and then she called The New Normal and abnormal is essentially where,
I know you're not really reacting to disruptive innovation it's just you've adopted it and said this is going to be happening going forward so she really kind of had two pieces to it for predictions,
where we going to go and Retail and you can tell this that shapes the content obviously,
the number one back in technology will create new efficiencies in expectations number to Shoppers will come to expect experiences that are Cutting Edge today I kind of took that to mean yeah once Amazon sets the bar at,
today one day just walk out than the customers tend to expect that I called a zero friction it's pretty interesting,
human thing I'm Number 3 start up some traditional businesses or more line where I think we're seeing that you know we just talked about several is very very big trending in our industry be a grocery retail where you have kind of the you know the.

[47:29] Analog dinosaur acquiring the digital DNA and smashing it together to create a new kind of,
no I was using her language a new normal kind of combination.
And then a wide range of new consumer product to hit the mainstream in this is kind of what was in the first panel where the cost to build a new consumer product is effectively gone down to zero and now you're going to see this huge swath of new products,
your micro products micro kind of tribes that they appeal to and then she said those predictions field 7 trends,
I never won the rise of Miss France number to the growth of experiential retail,
we had a show in the can where will have some really interesting kind of examples of that and then the next keynote talk a lot about that,
store associate will not go away but change what they do there so I can becoming an orange shirt or between prep and so check out and in the go example cashier list check out as a big thing automation to the warehouse,
more transparent Supply chains in this goes to there's a lot of concern around food safety in that kind of thing,
a lot of people talk about blockchain there I think there's a couple talks around that coming up in an explosion of AI machine learning.
So after after yeah we went right into office of the CEO of Ulta was there and I don't know if it even some of these.
These Keynotes they seem really interesting but then like there's kind of.
People 20 minutes so you can't get into much detail and then the format seems to be show a video about the company.

[48:59] Talk about some high-level stuff most people are dino and then talk a little bit about,
diversity and maybe the company's culture seems to be the kind of formula you lived up to that expectation couple points that they hit on,
and we talked about on the show this kind of your beauty is an area that's doing really well and,
then why you know she said they're 90% off Mall property so they were smart to be off ma that three different shaders the real estate location which is off Mall product mix and services,
and then talk about the benefit of the Loyalty program they have 28.
Million members in that program and it represents 90% of their sales,
and the other day it's pretty integrated between online and offline so it's omni-channel loyalty program and then the other day she talked about the consumer changing this is interesting you know she talked about,
gender fluidity and now that actually helps them so now you have more and more people wearing makeup regardless of their gender and it used to be all these social things around you then wouldn't wear makeup you and I wear makeup because,
podcast but now the so you know it's okay.

Jason:
[50:08] We're actually thinking about launching our own line of podcast.

Scot:
[50:10] The Chase,
spoiler alert,
forward facing cameras at selfies has really helped all these Beauty companies cuz now people take more pictures of themselves and they want to look good for those she didn't mention that those with a freebie that will throw in there.
The you know.
Today's consumer wants a personalized convenient experience I'm certainly living that with my new company where convenience is everything for folks and then personalized as well.
Nothing I thought was interesting to see where she broke the script a little bit she went out on a limb and really said that they know is in her she paid homage and she's talking about we couldn't do this without our Partnerships with Google Google Express Facebook and then Spruce labs,
I end up that was interesting that you went to Old diversity thing which was good you know that they have.
Have a board that has over 50% women which is great and then officers in the company are over 60% so makes a ton of sense you know you know kind of,
older middle-aged white dude song makeup doesn't make a ton of sense and I think this is a great example of both aligning with your customer and then also having really good diverse kind of input in the company to make it better,
then how the Nike net was up so would you take from that one.

Jason:
[51:33] So that this was Adam Sussman who's the chief digital officer at Nike I think he's really tripping you in that really don't think Nikki's had a cheap digital out.

Scot:
[51:41] He said he was the first.

Jason:
[51:43] And so the heater is it Nike.
When they spend a lot of time talking about was their membership program so they they have a thing they called Nike Plus Membership.
And they probably have over a hundred million current members they want that to be 500 million in the next five years those members Ben Forex what non-member spend.
And there's a number of specific experiences they have in the membership program that have even more dramatic conversion results so is interesting.
I would have said that the general Trend in in Welty was that.
The effectiveness of loyalty programs is kind of a roading in here we had to back-to-back key notes that were saying how successful their their membership programs are so I found that interesting.
He also talked about their conversational Commerce initiative which is launching so this is called.
Hertz on demand and you can use the Nike apps to have a text chat with a Nike brand expert that will give you advice and so you know.
You mentioned that you get your running shoe advice from attend time Marathon winner.
Probably doesn't want to be giving me advice about running shoes but but that's interesting in a bunch of the the conversational Commerce vendors that.
At at the show were thrilled to hear him him supporting that experience personally I think the jury still out on.

[53:17] Particular chat base conversational Commerce I'm not sure if Facebook's gotten all that the traction that they were they were hoping to get but but it's still early so we'll see.
And then they did talk a lot like his corporate videos.
Nikes done some really interesting product launches so that you know Justin Timberlake debuted a new Air Jordan Super Bowl.
And they made that available for purchase through their sneaker app like the second he walked off stage and it's sold out instantly a month later the next version of that screw came out and they launched it on Snapchat with a.
I really enjoy Innovative kind of want Commerce experience and you know he didn't explicitly call this out but one interesting point.
Used to be that they would watch all these products through their wholesale partners and people like Footlocker would sell these and kids with a line up in the mall.
And now he's talking about all these Innovative direct-to-consumer experiences that are owned by Nike.
And the drink late relationship Nike has with his hundred million users in their Affinity program so to me Nikes really the poster child for someone that's transitioning from.
Predominantly wholesale to the majority of their sales but but predominantly direct-to-consumer from experience stand for.

Scot:
[54:35] Yep sidebar I don't know if you fall or not but the average several Wall Street reports that to the shoe guys are really having a first company of tough,
2018 I don't know if if it's because they're losing a lot of these launches or what's going on but you're trying to see kind of the cause sneaker fatigue with with.
That model seems like it would never run out but it looks like.
The average Sneakerhead has X number of shoes that really interested in watches yet Brands like Nike moving that away from retail that could be sneakers have been kind of sustaining through them the retail apocalypse mall again so bit interesting to see if maybe the steps over.

Jason:
[55:09] Yeah yeah I think of the inside tip.
The thing that sneakers need to save them now is much wider angle front facing cameras on that smartphone because the moment you can't see your feet in the selfie.

Scot:
[55:21] Yeah.

Jason:
[55:25] So the next keynote I think I was the only one that said in on so I think everyone left after Nike but I was really interested in this next keynote this is Tim Stein or who's the founder and CEO of a company that.
To her listeners that probably heard of called a Cato Cato is a uk-based.
To Consumer grocery store so you order online they have fulfillment centers they they deliver the groceries to your home.
And there are quite successful they sell the equivalent of 2 billion dollars a year in groceries direct-to-consumer.
Is we talk about an issue and UK 6% of all grocery sales are are digital where is here were less than 1% to.
So I was super interested there that the digital pure-play grocery retailer in one of the most successful markets in the world.

Scot:
[56:16] Scot to be part of the UK but aren't there like I know our folks in UK almost they have like six people they can choose from that and some of her like Marks & Spencer.

Jason:
[56:26] Grocery stores all out for some Marks & Spencer Tesco as though which is Walmart in the UK car for they they all offer.

Scot:
[56:34] Is the only Pure Play.

Jason:
[56:35] Yeah but these this is the Pure Play and these guys are bigger digitally than any of those those other companies so it would be a little bit like what a Peapod sold more groceries then Kroger.

Scot:
[56:50] Amazon has a big mouth for Walmart.

Jason:
[56:53] And I don't know what their ownership structure is it if they're in play or not those are interesting questions but he talked a lot about.
The benefits of.
Being a pure being built from the ground-up to deliver groceries versus being a retailer trying to transition to groceries so,
I have talked a lot on the show about how I think curbside pickup is the ultimate winner in this space and largely because it's something that traditional grocery stores can do and so we have this concept in the industry called store pic,
and that's what the traditional grocery stores have decided to do is will will pay our employee to pick all the groceries instead of the customer picking it.
And then we'll make it convenient for the customer to get those that store picked order and so he like very self-serving lie but with some credibility.
Talking about how he doesn't think store pick can work in the long run and how these.
From the ground up for filament centers for home delivery are better and he alleges that they've tried curbside pickup.

Scot:
[57:59] Pick up for their system in the customer always gives.

Jason:
[58:00] For their system in the customer always gives is always choosing home delivery over herbicide pickup Which flies in the face of my advice by the way.

Scot:
[58:07] So it's the.
Customer experience not the economics of let me take this item put it onto a shelf in a convenient way for a shopper and then at Pea Picker to pick it in an inefficient way.
It's not the economic so you saying it's when you give customers a choice they will choose delivery.

Jason:
[58:25] Exactly at the same price which is a big caveat in this and so so one thing.
Is he talks about is he he showed the math and he took all the things that have to happen when you place an order with Tesco and they store pick that order and you do a curbside.
Tesco delivers at your house and it a typical order by his math take 75 min.

Scot:
[58:51] And then.

Jason:
[58:52] And then he does that same order in his automated grocery fulfillment center that uses Robata.
And he picks that same order in 15 min.
So hit his fundamental premise is where 5x cheaper in these purpose-built things so store pick you know is really cost disadvantaged.

Scot:
[59:18] And if it's what the consumer wants regardless.

Jason:
[59:24] And I I buy that the.
Purpose-built fulfillment centers are way more cost-effective than store picking in there other problems with store picking then we'll talk about in that in the next Keynote.
I totally buy that where I'm I'm not as confident as him is the curbside pickup versus the the delivery and that you could I believe in that his customers want delivery in the US.
We find lots of people aren't home to receive that grocery delivery and one thing he.
Very much points out as he says we are at Price parity with all the traditional grocery stores so we scrape all Tesco's prices and our price to deliver it to your house is the same as Tesco's price for you to drive there and pick it yourself.
And so no one in the u.s. does that everyone in the US that's trying digital grocery have all kinds of premiums and added cost.

Scot:
[1:00:21] Service is the dreaded Services yes.

Jason:
[1:00:24] And it's it's worse than just service fees it service fees and they charge more for the same skus when they pick them for you.
So so a big difference between the two markets right now so his presentation was super interesting.
Then the afternoon Keynotes there were three more so the first one was was Ben Silverman who's the CEO of Pinterest.
And I'm just going to be blunt.
That was the most boring keynote to me of the show so far and large he did a great presentation about how important visual Discovery is.
Which I agree with him it is there was no unique inside the weight like a very self-serving for you know the business that the Pinterest happens to be in.

Scot:
[1:01:14] The governor there Rich pins and they also had a lot of marketplace initiative none of that no retail kind of tie on them.

Jason:
[1:01:17] Talk about any like it was it was purely like people aren't going to discover new products via text they need visual Discovery and where we build a business provisional Discovery and it was literally that abstract.

Scot:
[1:01:32] Go back on the K2 or however you say it one of the intern just came in they are a public companies are independent and they're listed on the footsie the London Stock Exchange and they're part of the foot C250 and have a market cap of about 3.6 billion.

Jason:
[1:01:48] So that's a perfect segue to the next keynote is.
In some ways the u.s. equivalent which is much more company is Fresh Direct so this is Jason acreman of who's the CEO and founder of Fresh Direct.
Resurrect is direct-to-consumer digital grocery exclusively in the Manhattan area.

Scot:
[1:02:16] I was going to confuse with hello fresh with their meal delivery company.

Jason:
[1:02:20] FreshDirect is like Aikido a built from the ground-up to deliver groceries to your home.
The most thought of is a grocery delivery company which annoys Jason to know in because he thinks of them first and foremost as a food company so so the big thing that happens is.
He buy stuff from the farm and gets it to your refrigerator in half the time that Whole Foods does so.
Pressure it's going to last much longer they do these promotions like a lobster day when you order Lobster to be delivered to your house in Manhattan.
It's been pulled out of the water in Maine less than 12 hours ago so that so the supply chain is super cool.
Like Ikeda although I don't think it's quite as automated like they built this.
Purpose-built fulfillment center so they're avoiding store pics and Jason jumped on the same bandwagon about why store picking isn't going to work right and.
Hey price structure is problem number one.
Problem number to none of the stores have accurate inventory something we aren't we aren't we talked about earlier and so they just can't fulfill your order properly like they're missing stuff and they make mistake eggs.
Phone number 3 store pic doesn't scale and so his point is is store pick ever got really popular the customers in the store would be.
Derogatorily affected as they're competing with all those employee Pickers in the store so then the customers will get irritated that they're losing out on the.

[1:04:01] To the to the Picker and staying in line behind too many pictures in the cashier and.

Scot:
[1:04:06] This happened the other day I went to Harris Teeter Saturday night and there was more employees picking and instacart people picking,
then us and daddy's giant things that you have these relatively kind of pallet size cards that you haven't seen him and it is it is cumbersome,
I can tell our grocery store is also throttling so they have you know,
when I go like a Friday to get started delivery it's already sold out so I think they're really limiting the number of deliveries which is another bad customer experience you're stuck between you know who's going to have the worst customer experience in-store person or the outer person and that's a,
that's a tough tough decision to make for the customer.

Jason:
[1:04:46] For sure so that was all super interesting so this is two guys that were lobbying heavily in favor of dedicated delivery centers versus the the store picking model again there just are so many grocery stores that have all this investment like it's hard.
They're going to be the best they can with the model they have but then he had another Insight which I totally haven't thought about it all that's super interesting.
FreshDirect is launching a sub brand service call.
And foodkick is 1 hour delivery normally FreshDirect is next day delivery.
And so what are you wanting out is he said only about 40% of food purchases are planned purchases.
So I'm going to do my grocery shop I'm going to shop from the list and it's fine that all those groceries get delivered tomorrow cuz I'm putting it in the fridge and using them all week.

Scot:
[1:05:36] This could be a Manhattan thing I'll just put.

Jason:
[1:05:41] This thing and that could be.

Scot:
[1:05:41] Is all the bodegas everyone I know in Manhattan they like shock day then yes it's like.

Jason:
[1:05:46] Is like this as well by the way but.

Scot:
[1:05:47] By the way.

Jason:
[1:05:49] So he's saying 60% of food sales are unplanned meaning like you just decided that your friends are coming over and you need an appetizer and so.
Thick is this new business to deliver in one hour and it first you go why wouldn't you just have the same website and let.
Next day delivery prison wait one cost in 1 hour delivery the different cost.

[1:06:17] Quickly pointed out that I hadn't thought about is the shopping context is wildly different.
For that person that shot like how you'd merchandise.
The the plan order versus the impulse order and what you would wood products you would feature and what pictures you would show.
Turn out to be very different and so.

Scot:
[1:06:40] They felt the experiences.

Jason:
[1:06:41] Experience is different enough that it warranted literally a second sight.

Scot:
[1:06:46] So it seems like if you're planning your very transactional and I need broccoli for the meal on next Wednesday but then I guess it's more serendipitous Discovery for the song I need an appetizer and innocent people.

Jason:
[1:06:58] Swag to the plan shop is a lot more about the ingredients in your you're right like reordering off this list and all of these sorts of things.
So that was interesting and then he alluded to one thing I already knew but maybe interesting to a lot of our users the other thing that people lose sight of in grocery is social proof and how important they are an e-commerce.
Show ratings reviews are super useful for grocery.
The traditional ratings and reviews would be worthless you don't care how people rated the bananas from a year ago.
You care how they would rate the bananas that you're going to get today if you order a banana.
And so what FreshDirect is done is they've hired subject matter experts to taste every.
The produce everyday and rate that days produce so there's some poor dude who's bad job is the Taste kale every morning at 5 a.m. and say today is Kayla 6 out of 10.

Scot:
[1:07:58] Just seems crazy expensive.

[1:08:02] Why would you store something that didn't have good ratings I've ever had.

Jason:
[1:08:12] Question and I've actually asked Jason that question and the answer is sometimes you just need an ingredient in you're okay with it not being perfect sometimes you care about the ingredients.

Scot:
[1:08:22] So

Jason:
[1:08:23] You're making pasta and you need tomatoes.

Scot:
[1:08:26] Yeah you'll take.

Jason:
[1:08:27] I'll take the tomatoes even though they're not in the peak of season versus if I tell you that this week's tomatoes are the most amazing Tomatoes of the year it might cause you to decide to make pasta.

Scot:
[1:08:40] Caprese salad or something.

Jason:
[1:08:43] And so what they do is they will only promote on the site items that are highly rated but they still will sell produce that's lower-rated because sometimes it's just a utility they let the customer just needs a friend.

[1:09:00] Incident in the last Kingdom.
Of the day was.

Scot:
[1:09:04] Was.

Jason:
[1:09:06] And that that Keno ended up being a little bit of hijack by sort of the day's news they were forced to answer a lot of questions about Cambridge Analytics.
And so you said they did talk a lot about that maybe we'll do we'll talk about the podcast but it's.

Scot:
[1:09:24] Florida Lottery issues around Facebook and privacy and things that kind of derailed the whole let's talk about retail on Facebook.

Jason:
[1:09:33] Exactly but then they did briefly touch on this topic this very interesting to me.
Because launched this Facebook pixel that stores can you use retailers can use to do online to offline attribution and they it's been a beta for a while.
An out of beta but they talked about one of their clients that was using an in beta which was Michael Kors and Michael Kors was able to validate that they could buy a.

Scot:
[1:09:59] They could buy ads on Facebook that increase traffic.

Jason:
[1:10:02] Increase traffic in a Michael Kors store by 11%.

Scot:
[1:10:06] And this is probably is not a pixel is it is this like their device ID thing where they can track you across every device and and did it does this they had a beacon program that seems if it's a surprise.

Jason:
[1:10:17] It's a very internal facing reason they call it Facebook pics of your rights are they basically they're using an ID graph.

Scot:
[1:10:24] But the one thing they don't have in the.

Jason:
[1:10:25] They don't have an ID graph is the customer in the store.

Scot:
[1:10:31] Facebook.

Jason:
[1:10:31] So Facebook pixel is there like net.

Scot:
[1:10:36] 44 let us.

Jason:
[1:10:37] Let's put our pixel in your store it's it's actually not a pixel.

Scot:
[1:10:42] That's like what.

Jason:
[1:10:43] Them in a great where does integrate into your POS system.
We can identify which is.

Scot:
[1:10:50] Cleveland weather put a pixel on your side it's funny so pixels become almost like this this name for tracking versus like it's technically actually specs.

Jason:
[1:10:59] So this is obviously all these ad platforms have a really vested interest in proving that they influence offline sales and so.
After a lot of money in helping many marketers believe that they can do it.
But it also is a really useful piece of analytics for a retailer to have and at least in the case of Michael Kors that appears to really be validating some of Facebook's claims.

Scot:
[1:11:26] Zack gets us through the halftime just,
I know we've used a lot of time we appreciate that a lot of content of the show I think it's important that if you weren't able to, or even if you were here,
hopefully we picked up on some things that will help you kind of summarize that I know a lot of people come to the show and they get tied up in meetings or the very long Starbucks line so just quickly looking for.

Jason:
[1:11:48] Starbucks twice during this podcast.

Scot:
[1:11:49] Subsequently looking forward,
the next two days we're going to have some key notes from Unilever others to be really interesting Jason Del Rey interview with Mark laureano in Indy done open oboes he doesn't ever pull punches so that'll be fun,
there's Amazon talking about some International things house another Google or I guess this is the first Google Keynote,
and then there's a Code Commerce event where Jason has a sidebar kind of a conference and does some really interesting interviews there will be reporting on.

Jason:
[1:12:21] I think is in that one this year.

Scot:
[1:12:24] And then looking forward to Wednesday on eBay will be talk about some things they're doing with machine learning and AI box that's interesting one cuz he's been all those reports that they've been looking to be acquired in one I saw.
Yeah I saw they turn down a 400 million from somebody so that's going to be interesting hopefully you're over that was a smart decision on their on their side.
So so a lot to look forward to hope you enjoyed this halftime report after the show we will be doing a second-half kind of overview to catch you up on all the things that happened at those Keynotes and tracks that are coming up.

Jason:
[1:13:01] And I just like to remind our listeners that we're living in Las Vegas for 16 days so you don't have to so until next time happy commercing.

Mar 21, 2018

EP120 - Negotiating with Amazon with Andrea Leigh

Andrea Leigh is the Vice President of Client Services at Ideoclick, Inc., an Amazon managed services agency.  Andrea enjoyed a 10 year career at Amazon where she served in a number of Buying and Category Leadership roles. 

We caught up with Andrea at the PathtoPurchase Summit, where she gave a key-note on selling on Amazon.  We covered a variety of topics including:

  • Andrea's new role at Ideoclick.
  • Amazon's presence in grocery and relationship with WholeFoods vendors
  • The language of Amazon metrics
  • Best practices in negotaiting with Amazon
  • Brands selling on Amazon

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 120 of the Jason & Scot show was recorded on Monday, March 12, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature, Google Transcription:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 120 being recorded on Monday March 12th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here cuz Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners this is continuous are segments here Live From the Path to purchase Summit where we have some beautiful background music from Grouplove one of my favorite bands.

Jason:
[0:52] Great now I have to pay a royalty.

Scot:
[0:53] Is there a Panda sounds like.
And anyway so we're really excited to have back on the show one of our most popular guest Andrea life Welcome Back.

Andrea:
[1:07] Thanks for having me glad to be here.

Scot:
[1:09] It is a quick reminder to fix your ex Amazonian and you are an expert on negotiating with Amazon cuz you were on the other side of the table I'm so this is why it's always such a Hot Topic you know what all the secrets car cards are the Amazon has.

Andrea:
[1:23] Exactly or at least some of them.

Jason:
[1:26] Does that mean they don't like you.

Andrea:
[1:27] Well I mean I like to think that we help clients find a win-win I mean that's the goal right it's defined areas where the brands can Excel and Amazon can continue growing the business.

Scot:
[1:39] It's been about a year since you're on the show so give us an update on what's new with you career-wise.

Andrea:
[1:43] Wow it was that long ago it feels like it was yesterday well.

Scot:
[1:47] Yeah these podcast it's like dog your stress me.

Andrea:
[1:51] So I think when we last met I was working with Melissa and Lambert Eric and Andre Kaylee Consulting.
Working with brands on their Amazon strategy in September actually joined up with my husband that I do click and I'm the vice president of Client Services there.
And I do click is a managed services provider so we offer software data analytics reporting Consulting and advisory Services item data management marketing AMS management.
And I have been there for about 6 months now and we work with clients across all categories but tend to be a little more focused in the cpg space so Grocery and health and personal care.

Scot:
[2:31] How's it work with your husband.

Andrea:
[2:32] It's so much fun we went to grad school together and have sort of had been in the same space for a long time so it's actually like one of the best things about.

Scot:
[2:40] Does he ever do that joke raise like talk about sleeping with his coworker it's classical today's world is great.

Andrea:
[2:43] You know he does he really enjoys finding inappropriate jokes and he hasn't thought of.

Scot:
[2:50] I need to I've got like yeah okay.

Jason:
[2:52] Why I'm presuming the regular Wisner so now he has.

Scot:
[2:54] Yeah actually it just that one of our interns just ran up and told me that you were last on the show May 11th last year so it has been about a year.

Andrea:
[3:01] Wow well thanks for having me.

Jason:
[3:05] Thanks for being here.
You mentioned cpgm grocery in a feels like groceries one of those areas where there's been a lot of progress in the last year and the groceries are thinking a lot more digitally.

[3:19] Obviously the Whole Foods announcement amongst others have you seen the grocery space what's going on in grocery.

Andrea:
[3:25] I think the biggest thing we're seeing is that you know where a few years ago Amazon in particular and the lot of e-commerce players were really just trying to grab customers and growth and sell a lot of grocery products.
The focus is really shifted to more about being profitable profitable and sustainable growth which means that for a lot of our clients in a lot of Brands out there.
Selling on Amazon has become really difficult because there are a lot of product categories that just aren't super sustainable online you know given delivery economics.
So we're starting to see a lot of Science and and then seeing folks in the space really starts in Sebastian capabilities Direction,
to Consumer on their own using 3pl focusing on.
And so I mean I just seen kind of the most I think the pace of innovation is really set up the last couple of years.
As Amazon in other e-commerce players start to push some of those profit concerns back on the brands.

Jason:
[4:24] Yeah I think I've seen all that as well and I keep beating this drum that everyone seems to think I'm wrong on so I'm going to.

Andrea:
[4:33] Try me out.

Jason:
[4:35] Amazon can't be hugely successful in grocery but because of the delivery economics I actually think that the dominant model for digital grocery is actually grocery pickup.

Andrea:
[4:46] Totally totally agree with you you know I think is going to be is huge.
And for a lot of these brands that I think God on the Amazon bandwagon early you know I hope they haven't abandoned some of their wine Amanda live in Bandon but I hope they haven't deprioritized some of their initiatives,
with brick-and-mortar because the brick-and-mortar space is heating up around click-and-collect and grocery pick-up and so you know I think that I totally agree with you I do think that sustainable model for e-commerce is something that looks more like Amazon's Pantry model,
where you try to get the average ring up.
And you're able to spread those delivery and shipping economics across the larger number of items and send it kind of the slowest ship method,
not only does it help with the delivery economics but it helps with forecasting when you have more time to be sort of more of a just-in-time inventory model.

Jason:
[5:38] Yeah yeah and speaking of pantry did you see the news that they've decided we change that model of this month so.
Country used to be a paper drink thing so.
599 per box and then you you put as much stuff as you can in the box so they're doing away with the 599 ft and it's now in new service you have to subscribe to for five bucks a month and then you can use Pantry as much as.

Andrea:
[6:03] That makes sense.

Jason:
[6:04] Yeah into the theory is as as opposed to having that big friction of taking $6 out of your wallet every time you want to use it that it just gets tacked onto your your Prime membership and you stop thinking about.

[6:18] Casper drinking you're more likely to use it more often.

Andrea:
[6:21] Yeah I mean I think that makes sense Amazon has had like wild success with all of the subscription models you know for fresh and for.
Obviously Prime and you know there if they have all these Prime add-ons now across their portfolio so it does really increase the stickiness I think we've all seen the metrics around Prime and how much stickier,
those customers are,
but I think that's really interesting and I do believe that in the next couple of years we're going to see a really big shift at Amazon from you know the traditional amazon.com grocery category over to Pantry more push to Whole Foods more precious to pick up.
To help really help the profitability it's a sizable enough category at Amazon now that it's extraordinarily painful for them.
You know to be to be unprofitable on.

Jason:
[7:06] I wanted to make changes this month is Dave there they're not doing a bunch of pilot cities where they're delivering literally from the Whole Foods until there's even was a funny article about like the instacart guys getting like.
Moved out of their office into the hallway to make room for the Amazon employee setting up setting up shop to do delivery they haven't announced it yet but I think it's it's inevitable.
The dab.
Logistics infrastructure get used for pick up as well and then ultimately a bunch of Whole Foods end up being pick up Depot Amazon Fresh pick up locations.

Andrea:
[7:39] Yeah I spent a number of years working in the grocery category at Amazon and also working on Amazon Fresh and delivery economics for fresh food are really really challenging.
You know density of supercritical you know being able to hit multiple orders in an hour.
It's a really it's an extraordinary Lee challenging business and so I think you know it makes sense to focus on a limited sort of version of that I maybe there's an opportunity for Amazon to get scale and then as they are able to grow that they can kind of.
Encourage customers to do more pick up.

Scot:
[8:14] We surprised by the Whole Foods acquisition.

Andrea:
[8:16] I was actually you know a lot of people ask me about.
About it and if I'd heard any Rumblings and no like it was completely silent and and I was really surprised although it makes sense right I mean.
That's if you in order to really be I remember Jeff or maybe it was.
Jeff Bezos Demetrius Jeff will he saying something in the earlier days about if we really want to be like a true,
you know everything store we absolutely have to have strong penetration in grocery and in fashion does R22 normous Industries groceries like the biggest industry so.
They've really got to figure out how to get that right and I think they were I mean frankly based on sort of the.
At the public sees like all of the projects that are launched in our successful in a scale but there's so many Pilots that happened in Seattle that,
where is interesting to everyone and if you look at all the fits and starts of this thing over the years it doesn't surprise me that they went and purchased someone who is doing really well.

Scot:
[9:17] Then you think so I can sleep at the store footprint one of the things I was surprised how quickly they worked on was getting the private label that was called whole 365 getting that into the other platforms very quickly that seems like almost.
Day one that that got you know I saw it in my Prime now and it was featured and then obviously they done a lot in the stores with the lockers and selling Echoes everything.

Andrea:
[9:38] I mean I'm sure that was one of the I think that was one of the probably if you were list out like 5 or 10 main reasons Amazon bought them access to their private label is a huge one,
you know they really dislike private label its assortment they can't usually have on their site,
they can use sometimes get it through resellers near we were able to get some of the Costco stuff through resellers on the third-party platform bed.

Scot:
[9:59] Amazon is the largest seller of Kirkland.

Andrea:
[10:02] Now there.

Scot:
[10:05] Costco doesn't sell it.

[10:08] It's a little bar but they they jump over it seems like as they integrate Whole Foods lb you know it seems Amazon's very efficient.
Right now there's finally a different buyers and things do you think they'll consolidate that what are you hear anything about that.

Andrea:
[10:23] You know I think it'll be interesting to see what they do with the went looking back at some prior Acquisitions like diapers and Zappos they were really slow to integrate some of those teams,
you know what I think I think they're probably a lot of reasons for that I expect this will happen quicker mainly because it's a category they have got to get,
you know they've got to get more profitable on.
So focusing on those classes and getting transparency there quickly is going to be important I just said something this morning about how.
They've reached out to some Brands and I've invited them to some kind of like Summit or meeting next week.
Whole Foods has to talk about I think it was to address some of the concerns that have been popping up in the vendor Community probably specifically around cost.
But the article is also speculating that.
Amazon was going to try to do away with traditional grocery Brokers which I think is a really that's really interesting and potentially like try to recoup some of those that funding for themselves.
Desert of cutting out the middle intermediary.

Scot:
[11:25] Give me the NADA grocery what's the for dummies on grocery brokers.

Andrea:
[11:29] So it's a lot of Brands work with traditional brick-and-mortar through what are called Brokers so third parties in negotiating,
negotiating for Shell space the brands are often like really involved in that process but the broker actually.
Stop managers that relationship and for Amazon they work within.
You know worked with more grocers in the earlier more brokers in the earlier days but have had really tried to kind of do away with a lot of that,
I mean in some ways you could look at it as an aunt pretty Antiquated model like brands are pretty sufficient self-sufficient in their ability to negotiate now and you know and negotiate for shelf space and figure out how to navigate,
a brick-and-mortar store it's not like a novelty anymore they know how to get into Costco so.
I think that's a model that's kind of ripe for disruption anyway it'll be interesting to see if this encourages it more quickly across the other brick-and-mortar channel.

Jason:
[12:25] What one.

[12:28] I've been trying to figure out we have this overlaps but like so if your craft you know how to sell to grocery stores and you have all those infrastructures and you you probably are already aren't using a broker or you're not getting on a value for the broke his heart.
Carried a lot of much smaller nascent Brands often at the local level right and so you can imagine your Amy's Bakery.
When you make baked goods in your kitchen and you're selling on through just the Austin Whole Foods a broker could be helpful in an opening that relationship because you don't know the kind of perms you should be doing all those hearts.

Andrea:
[13:02] Bright.

Jason:
[13:04] So part of me goes oh that's where they're taking the broker out but I actually think Amazon has already taken a lot of that local buying Authority away from the Whole Food store.

Andrea:
[13:13] Yeah I mean I think it's a model of those sort of deteriorating anyway and then I mean there's so there's Brokers which sort of like managed the deal but then there's also Distributors which actually procurar the product and then resell it.
And that's another Avenue that a lot of those smaller Brands used to kind of get into some of the channels where they couldn't it was in make sense for them. Feels team setup for all of those different channels and so working through like a distributor broker.
But you know it's more cost but and it's more profit that can be had by Amazon so I can see why they would want to get rid of that third party.

Scot:
[13:48] Go to this is Switching gears out of grocery this is the time of year when vendors get their their kind of notice from Amazon that it's time to negotiate which seems like it's probably a.
Not exciting notice to get so imagine you get you get a lot of calls on this kind of time and you're giving a talk here today on this and you talk about it on the last show.
What to do in in the world of negotiating with Amazon.

Andrea:
[14:13] Yeah I don't know if it's really new but growing is the concept will obviously always more automation every year there's more automation more and more of our clients even some of the larger ones now or getting through these automated email ask.
So more busherts Automation and then the other more recent it all in his hands always had for some categories sort of.
Professional negotiating teams and that's that.
Arm of Amazon is growing so we have more more clients who are being asked to negotiate with like essentially it's a third party with an Amazon so not the retail buyer.
They've traditionally worked with but instead like a professional negotiator which I think is interesting for Brands and some ways they lose.

Scot:
[14:56] Is it William Shatner.

Andrea:
[15:00] I think it's really interesting for Brands because in some ways it's a complete disadvantage for them cuz they're dealing with someone who like.
Highly skilled highly skilled negotiator but in other ways it's to their advantage because they possess a lot more category knowledge than The Negotiator does and so.
Thanks figuring out how to work with that team as that team grows and starts interacting with more Brands is going to be critical.

Jason:
[15:28] It's I don't know this is a fair amount or not but I in my mind I imagine it's a little like the.
The car dealership model where essentially the they they make you negotiate with the individual sales person who very intentionally doesn't have any Authority artonomy inside there intentionally.

[15:46] Aggregating you disarm mediating you from the decision maker who's the the the dealership manager in in the same way.

[15:56] Professional negotiators are just intermediating the brand from the the merch.

Andrea:
[16:00] I would imagine that the unprofessional negotiators at least what I know of them from our clients have a very very narrow window of what they can actually approve.
And you know agree to and then everything after that Pastor go is probably escalated like is far as we know the category leader is still the ultimate decision-maker so it's important to make sure like your social your large man you got access to that person,
but smaller brands that we work with are typically doing a hundred percent of the negotiation over email.

Scot:
[16:31] How does this go so your Brand X on the go she ate or I start off and I say Brand X you've been a great partner of the Amazons we love you you're awesome we need you to come down 20% does that sound like how it starts just.

Andrea:
[16:43] Yeah you'll get an algorithm to the brands are given algorithmically Drive-In email that is looking at basically a day to file and saying in order for us to.
Be profit positive on frayed for example we need extra sent and Afraid allowance and sometimes the figures I don't make sense to our clients of gotten messages like asking for you know 15 and 20% rate allowances which is not tenable obviously.
So it's it it's an algorithmic Lee Drive in email me look like it's coming from your buyer it's probably not.
Probably coming from a machine or up and it's in there some machine learning in it so if you're if you send back some responses we kind of had tested and learned on this with some of our clients you know some some responses generated,
some responses back in some responses get kicked out into an exception and then typically at that point especially if you're small brand your Kik to an offshore team.
But all that will conclude the negotiation.

Scot:
[17:35] What's the best way to like mess with a I would have your like that's too we would like to offer a bigger discount or can you just like start cussing at it.

Andrea:
[17:43] So we have found that for some of the critical negotiation components like Freight and marketing accruals continuing to just say no over and over again may result in the brand.
Amazon not ordering from the brand anymore so we've seen a couple instances of that happening where the brand took a pretty from line there were like no and then the person wrote back you know it's the auto thing it's like.
That is not an acceptable.
Like term for us and then no and then that's not expensive and then there was a threat so read the email carefully if there's a threat in there that Amazon will stop ordering it's important to dress like an CERN.
The address be asked but you certainly don't have to give Amazon everything they're asking.
You don't have to agree to like that exact term you can agree to something more than what you're doing and typically make it through the process.

Scot:
[18:29] Does it start like real macro like we want 12% and then is it a good strategy to kind of start to just try to get it to be more like at least category askew or down the street level cuz it seems like on the other side you have all these different.

Andrea:
[18:40] Yeah and we'll talk about this today see you but I think the two things that I would really keep in mind when negotiating with Amazon are.
First of all focus on win-win so you want to see if you have to give Amazon more money you want to figure out how to do it in a way that grows the business not in a way that just helps their bottom line so an example of that might be,
you know coming forward with investment in a program.
If crosstalk is great for you cuz it saves you money should be in if you were for some in centers it might make sense to invest in that program with Amazon because it also helps their economic so it's like a win-win or.
Bringing forward a plan for an increase in marketing spending specifically Roi driven marketing like I am a story.
You know helps you grow your business also helps Amazon's bottom line by giving more for things like marketing accruals or giving Amazon money for you know merchandising placements on the site that are sort of ended us.
Isn't always necessarily a win-win so making sure to choose those battles really carefully and she's those spot.
And then I think the other thing I would keep in mind is you know you don't you don't have to give them everything that they're asking for and if they're asking for increases in terms like free or damaged allowances ask for the supporting data that shows why the costume.
Right you might not get it but at least it shows that you're your auditing and you're and you and you may be able to drive as a stalemate through that.
By saying oh you want an increase in the damage Lance tell me what about my products or what specific products are showing higher damage so I can actually go fix the problem.

[20:16] Instead of just giving you a higher approval for that.

Scot:
[20:19] Is this one Amazon will ask for different packaging or you know just like frustration-free or or or like do a bundle of 2 or any.

Andrea:
[20:29] This is something that is very frustrating to me in earlier years Amazon would certainly do that and as as when I started in 05 as a senior buyer that was certainly a part of the annual negotiation you would say,
these items are profitable let's talk about how we can make a more profitable can we get this to a cheap Pack and change the packet me we would it would be more of a.
A coaching exercise but now it's just so much easier for Amazon to ask the brands for money and especially when the negotiation is either automated or handled by a third party there's no vested interest in.
And no knowledge really like expertise to help a brandy that so we have more and more clients that we work with it we're doing that with.
Playing that role that the buyer used to play in helping them figure some of that out.

Scot:
[21:12] Doesn't Amazon use so you should be you have your Warehouse pricing and I was over here kind of separate and then I know.
This may not be part of negotiation but no Amazon's now looking at that kind of thing while you're selling it on in Costco at you're the equivalent of this many dollars per ounce we want you can either bring that to you over here.
Or the turn ski we have we would like to see it at the same dollars per ounce is that is that these negotiations or that's more of just price parody.

Andrea:
[21:38] Yeah I mean if you're that kind of comes up in like a crap situation or Amazon stream free can't realize any profit where they say William Walmart selling it for this price how are they that look that's below our cost so how are they doing that and I would advise Brands whatever you do do not share,
your cost that you have with other retailers with Amazon I mean that's like a big that's a big No-No because you can't ever roll that back right.
Amazon's aware of your cost structure to other brands it also makes it so that you can't throw to move the beans around when you need to it's just a level of transparency you don't ever want to go.

Jason:
[22:13] And I think I mean Scott might be willing to there's like a specific version of the dynamic pricing the brands are really afraid of you know you sell a can of Campbell's soup on on Amazon it's a 12 oz cans to the price per ounce is whatever.

Andrea:
[22:26] Yes right so.

Jason:
[22:27] Salad case pack to Costco.

Andrea:
[22:30] Amazon is getting so much smarter about that I mean it used to be when we watch I went through many Revolutions of Brands divots doesn't like spending a lot of R&D on designing different pack sizes I think the K-Cup Industries a great example of this,
where they you know sold at this packsize to Costco in this tax ID Amazon this one to Target and they will never know that it's like all the wrong the same different prices.
They will price match each other but Amazon figured that out real quick and started matching perk up and then they started matching per diaper per White.
Per ounce a lot of categories have the / something rolled out by now and if they don't have it.
You know they will so trying to circumvent price-matching through different pack sizes may buy us some time.
But it isn't a long-term solution.

Jason:
[23:19] You mentioned a couple of terms when we were just talking about the certain negotiating strategies like Freight allowance for example it feels like there's a hole.
Different vernacular at Amazon and I know they they said these are.
Metrics and they really Drive everything to those metrics can you kind of educated so like what are the high-level Brands need to learn about to work.

Andrea:
[23:44] Well I think he's kind of two questions like what are the terms you're going to negotiate about and then what are the kpi is to manage your business but the terms are and actually don't I mean I don't know if these are really different from other retailers that don't have knowledge about,
you know about brick-and-mortar as much but you know they're typically looking at some kind of marketing.
Come up is a high-level term that refers to any money you give Amazon so often Play Straight payments accruals whatever it is all Co-op.
I'm better at least that's how Amazon Defiance Co-op it's typically a marketing accrual.
Or some kind of basic rule for base allowance there's a damaged allowance and Afraid allowance if Amazon is paying the freight sometimes the client for the vendors paying the freight.

Scot:
[24:26] These are all expressed as some so if I'm spending.

Andrea:
[24:29] They're all rappers.

Scot:
[24:30] Amazon to buy a million and I'm going to do co-op dollars at 10% is 300000 in addition to that and these are all that's kind of how they're all measured.

Andrea:
[24:38] All percentage of cost of goods sold all off invoice and then there are definitely get subscribe and save allowance depending on the category you're in there may be a mark.
There could be like volume incentive rebate.
There might be like straight payments you agreed to you throughout the year you might be paying for your talking about your SVS of your strategic vendor services.
Representative during this time of year that's like a headcount you can buy at Amazon that just works on your brand.
So all of these things going to come together to be the annual terms negotiations and son is when the automated tasks include everything that you're actually doing with Amazon so it's important to use a Tracker like Bill.
So that you got it all up you.

Scot:
[25:25] You have a free one that I've heard you.

Andrea:
[25:26] I do yeah it's on my website yeah it's on my website Andre Kaylee consulting.com will be adding it to be I do click sites soon too but it just allows you to swear to fill in.
Your sales and the last year's turns this year's terms and then it auto calculates all the actual dollars spent printed look at the actual dollars,
it's one thing to know that you're giving Amazon a point more this year and it's another thing to actually understand based on your gross right how many more dollars are actually giving Amazon anyway.
Because a lot of brands are going really quickly on Amazon and they're doubling their spend with Amazon without actually even changing their coop.

Jason:
[26:03] And then you mentioned so those are some of the terms you mention like their specific API.

Andrea:
[26:07] Yeah so some of the key so it's important to speak Amazon when working with them especially if you're sort of pushed one of these automated channels.

Jason:
[26:15] Side note I was thinking the way to work around that way I haven't tried this myself so you're on your own but is only negotiate in a language that their natural language processor doesn't understand something like Klingon or Jeff Bezos it probably doesn't.

[26:30] So I might be Swahili.

Andrea:
[26:32] About you know if I can get if I can get a willing client with a sense of humor that might be somebody that might be something to try.
But there are a set of Casey eyes that are important for understanding and running your business on Amazon if you can get a good command of them and understand them and have some benchmarking available to you,
you can run a really successful business on Amazon without ever interacting with a human but it's important to know the kti's sales sales growth obviously,
it's really important to look at a lot of clients who work with even big ones tend to look almost exclusively at,
orders Amazon places from the brand you really need to be looking at point-of-sale data that is the true indicator of Simeon,
that helps you understand how effective your marketing and promotional activities are so that POS state is really critical so shift cogs.
Gross gross and units gross revenue again really surprised how a lot of clients will only look at Revenue which you lose a lot of the transactional nature of the Metra.
Understanding like how customers are transaction with your units looking at the in stock and inventory rates I think.
Time and time again we work with clients where they're like why is my business not growing very fast Amazon you luck in the products are good and they are,
getting pretty good search ranking but they're only the brand is only feeling like half of the purchase orders like they're not willing to come and see you,
you have to have product in order to sell it so keeping track of some of those metrics getting your handle on your own metrics around this is important Amazon reports on a metric in Vendor Central called Fast Track in stock.

[28:02] Its sales waited and glance product may be going to eat there but it's Lance he waited you should just really know of all your items available how many.
Haven't been trying have any doubt it's a much simpler metric it gives you a much bigger picture and more complete picture.

Scot:
[28:17] So the sales rate is it is it does some indexing to get tire sales rank items and how fast are field.

Andrea:
[28:22] You get a bigger good guy if you're in stock on the top seller and you don't get a bad guy at all if you're out of stuff done something that is like a really low seller.

Scot:
[28:30] When does so when they come in sizes brands are frustrated Amazon's not buying their buying less and less of their swetman when does that come up in this negotiation or it sounds like it really doesn't sounds like the buyers know if I was going to buy these are the terms.

Andrea:
[28:45] If you're in a position where you're negotiating with a machine you've got to find another way to sell this product on Amazon through third-party so so it'll be really hard for you to get like.
Automated system or the team in Indiana to like respond to a request like that but if you are in a position where you got a live person you certainly should bring that into the negotiation.
Why aren't you buying all my products I'll give you this Co-op if you commit sore during my whole assortment and you know a lot of times you can talk to them about how.
That is certainly may not be performing very well because it hasn't been in stock it performs very well at other retailers like giving all of that data and information and can help Amazon make decision.

Scot:
[29:23] But not your custody with other retailers.

Andrea:
[29:25] But I think everyone knows that but that is important to mention I was surprised when I was a buyer how many Brands would be transparent about that.

Scot:
[29:34] I've never been offender son learning a ton.

Jason:
[29:38] You're lucky man last time you went to show we talked a little bit and you wouldn't do it earlier they have this.
Unhappy status can't realize a profit.

[29:51] AKA crap which great great back back story and all that about how that all came into being.
Scot mention vendors that are frustrated that they won't carry the whole line my perception is almost always that at the beginning of the relationship and tell me if I have this wrong.
They actually do carry the whole line and then products get crapped out and they start curating what they carry it is that largely true or or is it the case that they might only.

Andrea:
[30:21] So yeah usually am is it is depends generally speaking Amazon Lori thinks that customers look at so customers don't look at it they probably won't order it.
But if you if you just cover your whole assortment isn't available on Amazon there could be a myriad of reasons why that is it could go back to like item setup issues maybe Amazon tried to order from you and you didn't fill it.
You know maybe it's just not getting enough product gland to use.
Or maybe it's crap and we seen a lot of movement and interesting developments in Amazon's crap program over the last year.
The biggest one being that now they're showing the crap out products that are just little margin not negative margin used to be the zero was the floor.
Now if they're not hitting some Morgan emergent targets are requirements for the category they're essentially not ordering those products from.
Client there from the brands anymore or crapping the products out.
And I think that's a new development another new development is Amazon's kind of shifted the conversation from profitability to Pure product margin their PPM.
And I think the reason they're doing that is when they start crapping out products and communicating what products does our it allows clients and Brands and their parties to reconstruct Amazon's cost structure.
And so focusing on here product margin which is just the different at Pier product margin which is the difference between the cost of the product Celeste any marketing accruals or any Co-op.
And the retail selling price really helps them focus on products where they're having to do a lot of price matching and where they want the brand to take some ownership over that issue.

[31:55] Which might mean you know going to your other Retail Partners and saying stop selling at these price I mean that's what they want you to do right by you to go back to Walmart and say stop selling online at this price.
Which actually some of our clients who died and it has her mixed results with that which is been interesting.

Scot:
[32:12] Meaning Walmart said no and then there are stuck between a rock and a hard place.

Andrea:
[32:16] The biggest thing for noticing is that why maricon in Walmart stores have different prices and it's lower online cuz they're trying to drive Amazon low and then get them to Walmart online.
Walmart.com in brick and mortar from what we learn from our clients are like completely separate entities so if you go back to the econ team and you say and in typical answering very little business on an walmart.com so we had a few clients go back to Walmart and say.
Don't sell it at this price anymore or I will stop shipping it to you and Walmart income.
Raise the price so it actually has been effective for a few client that hasn't been effective for everyone but for a few of the players that we've worked with they had sex.

Scot:
[32:56] I think they're trying to normalize that have one buyer for both but.

Andrea:
[33:00] Right now there's still a gap you take advantage of it.

Jason:
[33:02] Yeah and I would imagine there's some flexibility about what you sell to them for online if it when it comes down to having to go to Walmart and raise the price in store I suspect that's not going to go well.

Andrea:
[33:15] Oh absolutely and I don't I mean clients wouldn't really it wouldn't be in their best interest to do that they're doing so much volume there,
but only time it's a different story we've also heard he, walmart.com will take whatever product I can get.
I'm there less selective about it and so potentially you know suggesting different products versus what you're selling on Amazon might be a good strategy.

Jason:
[33:35] Going back to that kind of picking the line that Amazon curious though why.
I guess the model and I had is that you're selling apparel right then you go calling Macy's and you bring a bunch of mannequins and you show me all the dresses and some Merchant at Macy's goes.
That one's pretty that one's pretty I don't like that one right and it's their subjective expertise around the category.

[33:57] My son says there's no Merchant in Amazon is going to subjectively try to pick winners and losers.

Andrea:
[34:03] I think there's some exceptions to that the biggest ones being the pantry program where they are choosing products you can just put anything in pantry it goes through an approval process now,
the people making those decisions might not know might not be as educated as maybe like a a Walmart in-store brick-and-mortar buyer,
but they are making assortment decisions and so Brands record making some recommendations there can really help move that process along the other space were seeing that is in fashion,
I think Amazon started trying to carry all the assortment and quickly realized I mean first we have a couple,
fashion clients that sell Alberta 10,000 skews and you certainly can't carry all that ass for me have to build Smooth Sailing Center so they did they have invested internally in.
What they're calling more tastemakers to actually choose assortment and and make those types of decisions.

Scot:
[34:53] Well I know we're running up against a lunch here so why don't we go ahead and wrap so that you can have some lunch before you have to talk.

Jason:
[35:01] Yeah so if people do have further questions or welcome to jump on her Facebook page and will continue the conversation if yeah if you enjoy the show we'd love to see you jump on the iTunes and give us that 5-star review but thanks very much for making time for us and the listeners today.

Andrea:
[35:16] Yeah thanks for having me guys.

Jason:
[35:18] Until next time happy commencing!

Mar 17, 2018

EP119 - Amazon expert Melissa Burdick

http://jasonandscot.com

Melissa Burdick is the president of Pacvue, and a former Amazonian who was involved in Amazon’s entry into the CPG space.  She’s one of the most popular guests on the show, so with all the changes Amazon has been going through it’s a great time to have her back.

We caught up with Melissa at the PathtoPurchase Summit, where she gave a key-note on selling on Amazon.  We covered a variety of topics including:

  • Melissa’s new company Pacvue and their Amazon advertising automation tools
  • Brands strategy on Amazon
  • Amazon private label
  • Advertising on amazon
    • Amazon SSPA – Self Service Performance Advertising
  • Brick and mortar retail

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 119 of the Jason & Scot show was recorded on Monday, March 12, 2018.

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature, Google Transcription:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 119 being recorded on Monday March 12th 2018 I’m your host Jason retailgeek Goldberg and as usual I’m here with your hoes Scott Wingo.

Scot:
[0:39] Jason welcome back Jason Scott show listeners.
We are live The Sounds different to you we’re live from the bustling show floor here at the path to purchase Summit in big beautiful Schaumburg Chicago which is pretty close to downtown Chicago.

Jason:
[0:55] It is it is thanks everyone that coming for coming to my hometown I appreciate it.

Scot:
[0:59] Yeah yeah so this is one of the rare times not only our Jason I love but our guest is life as well.
This show has three days packed full of mostly cpg content around how to how consumers buy things Jason tell you the history of the show he’s he’s kind of.
But what we’re doing today is an Amazon day were talking about Amazon so we are going to bring to you some of the top speakers from that program.
And we’re excited to welcome back to the show Melissa Burdick welcome back muscle she is one of the Keynotes here today what are you speaking about at Today Show.

Melissa:
[1:35] We are doing Amazon Insider tips with that Danny Silverman from clovis and I have a long history with Danny actually.
I was his buyer to Amazon launching Johnson & Johnson and he was leading e-commerce at J&J so fast forward I don’t know how many years later 10 12 years later and here we are.

Scot:
[1:55] You’re still on speaking terms that’s pretty impressive usually usually Amazon buyers in the other side aren’t really on speaking terms. So okay back then back when you were there.

Jason:
[2:05] Cool so this is your second time on the show a lot has changed since the first time you were on the show do you what’s been going on.

Melissa:
[2:19] So a new year new company.
We have a kind of rebranded to a company named pack you and have added significant add technology expertise to accompany a kind of.
Changing with the time so we still do the same thing strategic Consulting and advisory services and advertising marketing strategy for Amazon,
but with Amazon opening up some of their apis still in beta for for some but we have access to them.
It was really necessary to bring in some significant adtech expertise to be able to build what we consider the best in class at platform for Amazon so I have a new partner is actually the CEO of our company called Joey Tang.
And he was one of the original members of Microsoft ad Center being a.
And then he went on to find a founder of a company called add Sage which is largest FTM in China.
And has brought over a lot of those supper Engineers really understand dad text and so with my Amazon expertise that we have really built the Great a platform.

Jason:
[3:23] Very cool inside this is a tool that would be used by brands or by agencies.

Melissa:
[3:28] Sweet we use it for ourselves we also license it for agencies and Brands we have several using it right now so yeah it’s gray.

Jason:
[3:36] Predominantly around placing both AMS an EMG Style.

Melissa:
[3:41] Well the goal the goal will be ultimately Angie when the apis are more readily available,
right now there aren’t many apis available within Angie so ultimately we want to get all of marketing in one place for Brands make it easy right now it’s really building out the Automation and programmatic bidding for paid search,
and making it more e-commerce sized then other so what I mean by that is.
We want to do things like when your competitor runs out of stock being able to bid on their Brandon keywords and being able to get more of their share.
We also went to integrate real-time sales into a platform so that when there’s times of Greater conversions we can been more when there’s times of less conversions we can fit less.
So we went to integrate kind of e-commerce into our platform and that’s what that’s what we’ve done.

Jason:
[4:35] Interesting in it so some of the those triggers that you just mentioned are things unlikely to come from the Amazon apis that almost sounds like you would tie the kind of insight that you mentioned clavis earlier that.
You get from a service like that with the ability to take action on it very cool.

Melissa:
[4:51] Yeah and we’re so crossing our fingers that Amazon will ultimately launch my pee is in those areas but they haven’t yet.

Scot:
[5:00] Hope so let’s start high-level what are some of the trends you’ve seen since last being on the show that you want to share with listeners.

Melissa:
[5:08] I think a lot of the trends are so last year there and there’s a big difference between kind of the traditional big manufacturers and then these Niche smaller brands are coming Alliant online and I work with all of them,
that’s really interesting to to work with all these everyone has their own different challenges but I would say for the traditional manufacturers.
The biggest differences last year it was about building the business case to think that e-commerce is becoming big and they need to Big build big games and so I think that that box has been checked and people are now starting to invest,
building teams I probably get a recruiter call each week.
Asking me if I want to be VP of you know some brand or if I know someone that wants to be in a leading e-commerce other brands I think that there’s really this heightened.
Focus on e-commerce this year,
where is last year it was kind of like building that business case Tuesday we went to start really focusing on it and then this year it’s about execution finding the right partners and starting to implement.
E-commerce and making it kind of blowing it out so I think that these shows keep getting bigger people keep learning they keep hiring more people into this area so I see this big kind of Titans.
Focus on it.

Scot:
[6:28] What’s up.
What’s causing that the kind of that when I call Mulligan or have companies just kind of work through when when brands are trying to figure this out there’s this internal battle between like the sales department and.
The offline guys and online who gets credit and all that before you kind of want to have a VPS kind of works to that is just a life cycle what was causing it.

Melissa:
[6:50] I think there’s a lot of data points I think one is here people are tired of seeing those graphs where e-commerce is growing at such a high rate and you know store sales are declining.
I think it’s just a lot of these business cases that people put together around they see their competitor starting to invest at Procter & Gamble so they point out some of the other big guys that are starting to do these things they’re starting to see that,
then losing market share in e-commerce to other Niche players because they’re not investing in it.
So I think that there’s just this combination and culmination of all these data points that have finally gotten people’s attention.
And I think that regardless everybody agrees that they need an e-commerce strategy weather there.
On Amazon or not they think that they need to have a strategy anyway because they’re on their whether they want to be or not.

Jason:
[7:44] Yeah and to me it feels like.
It’s almost a double whammy like all these companies are waking up to an important it is to do well on Amazon and The Exorcist on the changing so much.
That it’s it’s not even easy to necessarily for someone new to this pace to even know what to do or like find the Playbook that worked last year is unlikely to be very relevant this year.

Melissa:
[8:11] Exactly it’s when I when I worked at Amazon and even now the pendulum swings it’s like this year to the strategy and then the pendulum will go the opposite direction and if you’re not already kind of understanding the ecosystem and what works.
And the kind of basic principles it’s really hard to keep up with that kind of environment.

Jason:
[8:31] For sure so when you get a new client that’s sort of knew where to that promise I was trying to invest in their presents on Amazon like are there some fundamentals you recommend they start with like is there what’s the high-level advice that you give people to start thinking about.

Melissa:
[8:45] Absolutely and that’s actually part of our presentation today there’s really some fundamentals that are critical to be able to start with.
And it’s it’s these basic retail e-commerce principles of having the right assortment.
Which is actually harder than you think it is especially in the Amazon because they have so many different platforms.
Fresh pineapple Pantry Pantry just change their business model Core Business and for each of the different platforms they have different economic models in different assortments that kind of work.
And so what happens is off by manufacturers Just they put their offline assortment online and they kind of square round Peg square hole does assortments and so that’s one of the biggest challenges,
being in stock is also a bigger challenge than you think and it’s what drives people to create hybrid accounts with third-party Merchant backup offers.
Does having the right assortment being in stock.
At continent is here I’m working on a big digital strategy project with a large manufacturer and it is so much harder.
Then what you can possibly think it would be with all the legal approval so you have to get.
You know it’s always this battle between SEO optimizing titles and content and what is actually approved and it’s things that are to us maybe.
Seem like it’s an easier not very risky thing to get approved but to a legal team it’s pretty hard so.
Those are at those are really the critical building the fundamentals and having those things in place and having the technology like a pem you know just integrating all of that stuff.

[10:24] Is is difficult and that’s where actually everybody’s really focusing a lot of time and tension on right now.

Jason:
[10:29] Yeah and it is interesting if if you were to start a brand new brand today and you knew.
Your presence on Amazon the super important they’re all these sort of best practices you would build in your culture so I like when you named your skews.
You be thinking about Amazon friendly SEO in your skin names.
Most of these companies were not born yesterday in that name is probably getting made by an in an Erp system by some supply chain person whose main concern is how it how it gets to Walmart.
And so like bridging that Gap from those those are the names and all that content getting created you no way Downstream for some other purpose and sort of morphing it into something that works in these digital platform seems like one of the big.
Expensive challenges at the moment especially when the brand has a lot of skews.

Melissa:
[11:21] Yeah actually one of the examples we have is with that she’s at the Cracker and yeah you know how to spell it.

Scot:
[11:29] Cheez.

Melissa:
[11:31] Yes but the misspelled version of that the misspelled version of that actually ranks higher in search then the correct spelling,
the people misspelled it more than they spell it and so that’s an example of all the misspelled Miss spellings of the word needs to go into the hidden Search keywords in the back-end data.
I have a word of a of a detail page of an item.
And that’s just like a small little thing but it’s you know it’s just these things that are so on a shelf that you don’t even think about it.

Scot:
[12:00] Yeah the Google group is probably already figured all that out but they’re not going to be talking to the Amazon group so they Amazon groups got to go bigger all out again.

Melissa:
[12:04] Exactly.

Scot:
[12:07] Sharing the common Channel kind of things.

Jason:
[12:10] But when they when they figured out a second time that means they pay a bunch of people in the Echo System a whole second time to help them so we’re okay.

Scot:
[12:16] True I guess you.

Melissa:
[12:19] Actually funny because when I work with a lot of Brands sometimes they’re getting the same information from like three different partners same thing since your point that that is happening.

Scot:
[12:30] One of the so one of the naysayer things about a brand selling on Amazon is what you put your brand on Amazon they’re just going to mind your data and they’ll come out the private label that just effectively competes with you.
What you say so there’s a lot of data out there that shows private label is really hot on Amazon they’re creating tons of new screws all the time there in almost every category what do you say to that.
That argument then we can kind of peeled onion on private label even further if you want.

Melissa:
[12:56] I think it’s true and one of the things I did I mean private label is kind of a challenge everywhere but on Amazon it’s it’s a hyper challenge because there’s so much e-commerce happening there and then.
On top of that Amazon has some unfair treatment of private-label in terms of they have special content that the private label brands have access to them.
Access to special widgets that other brands don’t have access to and then like you said they have access to data.

Scot:
[13:23] The break between Amazon Choice I’ve noticed it.

Melissa:
[13:26] And they’re very yes exactly that too I had a client where they had a product.
Amazon came in and basically kind of pretty much a very similar products same colors in the fashion space and half the SPF.
The price and so you know all the sudden their demand when was cut in half basically and I think it just pushes manufacturers to,
keep an eye on their quality in their price and their reviews and their star ratings as much as they can.
And then you know talk to Amazon about not being so aggressive on their detail pages,
which is what they actually talk to them about because it’s hard for brand to say we’re going to pay Amazon a bunch of coop and money,
Burnett Drive traffic to our pages and then they’re going to see a cheaper you know version of our product on her page and so that is.
Big Challenge to Brands and so.

Scot:
[14:25] So should bran just avoid Amazon because that like what’s what’s your advice to brands that are not selling on Amazon and they’re worried about private label.

Melissa:
[14:32] I think that.
I mean I’m a little bit biased because of what I do but I think that Brands need to be on Amazon because that’s where the traffic in the eyeballs are but they need to focus on building the reviews and their star rating and having good pricing and having good products.
That you know maybe Amazon copies but if they’re better and they can still be there that’s what they have to do.

Scot:
[14:57] And it’s way it’s kind of existential argument right so if if your brand and you don’t believe your brand that’s enough value to stand out against private label then why are you even a brand is kind.
That’s why I can never get my head around in that argument but I understand their concern.
Does does Amazon just kind of sit there in mind how does Amazon come up with private label ideas is it.
I’ve always thought of it from a they’re so focused on the customer that they’re trying to identify these gaps and selection and price points and it ends up colliding with a lot of things.

Melissa:
[15:30] I didn’t so I obviously don’t know but my guess is one of the things that we specially in the grocery and CBD space that’s so constrained with margins and profitability.
My guess is that they look at these categories were they have a really tough time making money with the manufacturers and go private label so that they can make the margins that they want to make so I think that’s one of the the big opportunities for them.
And they just they definitely have a prioritize list that they’re kind of working through based on a bunch of different criteria of demand the category size,
the data that they have collected and then where the profitability lies.

Scot:
[16:08] Being a native satellite I think one time you told me that there’s like a really hot group with an Amazon is that still kind of a hot group to you working for the private label area or videos when Elsa.

Melissa:
[16:19] You know I think I know I think that that group has definitely grown but I think that there is also other hot groups like Alexa like the shiny new penny is definitely a kind of the AI and Alexa and Amazon go groups.
Seems like that that’s you know there’s always kind of this Rush maybe private label has continued to grow but these other groups going to be a little bit more popular.

Jason:
[16:41] The M Amazon alumni group seems a little more popular than it used to be a lot of lot of like pretty high-profile defection.

Melissa:
[16:49] Yeah yeah it has been I don’t know maybe this stock price today hit a high and people cashed out and ready to to move to a new place I don’t know.

Jason:
[16:56] I was assuming it was some big trunk show of options that finally vested or something is what I was guessing but going back to the the brand conundrum for a minute it’s it’s interesting I want to unpack a couple things like.
I almost desperately try to avoid calling it private label with clients because private label has a particular connotation that.
Brands are aware of and that they’re not overly concerned about like the private label mono was.
Retail is going to make a carbon copy of a branded product and not marketed so the marketing is you walked up to the store to buy the brand and product in you.
Stumble over the private label copy and some percentage of the audience will opt to pay less for that private label product right.
That was always erosive to some.
Some portion of the Brand’s Revenue but what Amazon is doing and frankly what all other big retailers are doing now is not private label it is not let’s make a carbon copy of the national brand and just.
Put it on the product detail page next to the the national brand its let’s create a product.
Has its own value proposition in a mini cases has competitive advantages versus the national brand and then let’s Market the hell out of it and make people want.
Answer to me it’s it’s an owned brand strategy it’s a strategy that were retailers are making brands that are explicitly trying to out brand the brand so.

[18:27] Hey I am at score I’d say the brand should be more worried than they potentially are but then the flip side of this is.
It’s not just Amazon its Walmart its Target its Costco.
And it’s Amazon and they’re all creating these Brands if you’re in a world where the only way you can survive is if no one else can peace with you.

[18:49] Then you’re just at the end of your life like that model doesn’t work anymore there used to be this explicit deal with Brands and retailers the brands.
Created the product and they traded interest at the top of the photo in the Retailer’s found the traffic and traded interest at the bottom of the funnel and they had this at the alliance.
That Alliance is now gone and so I would say two brands.
You need to be everywhere where the traffic is in the traffic is certainly on Amazon but you need to have as a strategy to win in an environment when they’re all these great competitors trying to knock you off.

Melissa:
[19:20] Yeah and they’re so what you’re saying I mean I totally agree they’re they’re really building their brand they’re using all their marketing vehicles to do it.
And so I like to study their private label so I am a student of you know Harley doing their content what are the marketing vehicles are doing how are they.
It’s a route how are they boxing their products had the you know I did a whole workshop on how Amazon does private label and actually bought all the products and show people how their packaging it is it’s the perfect way for people to learn understand the best way to do it.

Scot:
[19:48] I love the battery packaging it’s like having spent you know 8 hours stabbing myself trying to open up the the Duracell and Energizer they’re just opening up a nice cardboard box and just right there is this pretty hen.

Melissa:
[20:00] And batteries is actually isn’t the Private Label Amazon Amazon Basics like 70% market share or so.

Scot:
[20:07] According to 1010data it’s really out selling all the all the Branded products and I think we are going to show it is also baby wipes if I remember like some batteries.

Jason:
[20:16] Yeah but you’re at right there that the market leader Amazon elements batteries are the market leader right by over 10% market share over Duracell.

Melissa:
[20:26] One of you notice too and some of the widgets I was talking about they attach their amazonbasics to a lot of these other devices within consumer electronics it’s you know it an attachment that you can add to that again kind of one of those.
I’m very Replacements potentially but that’s you know it it’s interesting.

Jason:
[20:45] It’s a podcast so I know I wasn’t as can’t see it but every time someone says unfair to Department of Justice attorneys like pop up right behind her and they’re like.
Furiously scribbling notes it’s crazy I don’t know what that is I’ll leave it.

Scot:
[20:58] Did she say Monopoly.

Jason:
[20:59] Yeah I have no idea what’s going on there but that sounds interesting that we have a showing that the one thing I have noticed a lot of these brands that historically have been holdouts and maybe even public kind of public about their lack of presence on Amazon it feels like.
Like there’s any news over the last year that a lot of them are starting to have a presence in that like one that comes to mind for me is Nike any.
Is this just an edible that we’re going to start seeing all these guys on there anything interesting about the strategies your scene from those kinds of brands.

Melissa:
[21:29] Yeah I mean I think I think it goes back to the same everybody whether they’re on Amazon or not they need to have an Amazon strategy,
I think Nike you know they got a lot of news and attention and then other people are who are not on Amazon yet or kind of seeing them as the first one I think other ones will fall soon thereafter.
But it’s one of the nicest thing was really about them controlling their brand on Amazon and having a partnership because they were tired having such a lack of control.
And so I think that we’ll see more of that happening where they come in and and try to control their brand more.
And I think what Nikes doing is really interesting to outside of the Amazon where they were using more experiences with Instagram and in other mediums to bring more of the experiential part.

Jason:
[22:18] I snap I think was the big block that they want us to new shoe with a cool snap.

Melissa:
[22:23] If they had the whole Super Bowl with Justin Timberlake write that was Nike word then you could buy that product.
So I think I think Aunt people want to use Amazon for scale you know and and maybe come at some of the some of the basics but then having some experience is like that to really drive the brand to.

Scot:
[22:40] Yep there’s a lot of tacos Nike selling on Amazon really just control the third-party Marketplace at some point Amazon’s got to look at the numbers and see if what they lost from third-party is not as big as what thank you selling I don’t imagine.

Melissa:
[22:53] 08 why I guarantee you it would be way more if they didn’t have that relationship.

Scot:
[22:58] Yeah yeah so you’re a bit of an advertising Guru on Amazon what are some of the trends there we maybe give folks that there are new to it high-level overview of the offerings and then what you’re saying people take advantage of.

Melissa:
[23:13] Yeah so Amazon has basically a paid search offering which is cuter based cost-per-click you can bid on keywords similar to Google AdWords.
And then they have a CPM display advertising Network across Kindle mobile desktop and Amazon advertising platform.

Scot:
[23:31] Amazon advertising platform is for like off Amazon so some of those damn zyalix or something that will follow them kind of retargeting within starting at the Amazon ecosystem.

Melissa:
[23:40] Yes and just be a little bit more complicated actually you can leverage it ASAP Amazon advertising platform you’re basically leveraging Amazon’s audience.
And targeting and you can actually Target them off Amazon or on Amazon to Andy on Amazon is maybe less or inventory but you it’s a cheaper way to get onto desktop.

Scot:
[24:01] Got it and then so then one thing it’s always been confusing is what’s available to first-party and what’s available to third-party any news on them.

Melissa:
[24:11] Yeah so you traditionally 1p and 3p have had very different offerings but they’re really starting to come together.
Much more and have much more parody so they’re still a slight lack of parody within paid search there’s one one ad type with in paid search that they don’t have access to which is that,
practice play I’d which is right underneath the buy box on a detail page so I still don’t have access to that they recently opened up headline search ads to third party.

Scot:
[24:41] That’s that’s that long vertical strip that kind of takes over the top yet.

Melissa:
[24:46] And then display advertising has always been available to third parties,
it’s just that a little bit more expensive and maybe they they haven’t wanted to to spend money on it but it’s definitely a bigger focus with an Amazon now is reaching third parties with Angie.

Scot:
[25:03] You told me there’s a new acronym floating around what’s that new one.

Melissa:
[25:06] Overpaid search it’s so.
Paid search is called a mess for when he Amazon marketing services and then it’s been called sponsored products or 3p but now there’s actually a sponsor products I have Lancer Chad’s it’s super confusing.
So now they’re referencing it as sspa which is cell service performance advertising.

Scot:
[25:26] So sspa is the new name for EMS or just like for a sponsor.

Melissa:
[25:29] The new name for search.

Scot:
[25:32] For search and it was in there you have the banner thingy in the thing under the box and the sponsored listings sponsored Prada.

Melissa:
[25:40] The products and product display ads all of it.

Scot:
[25:42] And it’s agnostic to one p3p.

Melissa:
[25:47] The term sspa is agnostic that yep they like to call it search and display just to be super simple.

Scot:
[25:54] Got it.
And the SS supplies more cell service so I guess a lot of brands are there more using agencies do you think that.
That’s negative three agencies cuz now the brands can come and go to the cell service or are they always just do it self service and you think they’ll need help.

Melissa:
[26:13] Question so Amazon in general is a platform is more more self-service they want paid search and they really launch pit search to be a completely self service.
Capability and they.
I think Amazon’s pretty agnostic as to whether an agency runs it or whether a brand runs it although they’ve always had this feeling like they want to cut out their parties because they had that money that they’re paying a third party they they don’t they feel like that’s wasted money.

Scot:
[26:42] Your margin is mapperton.

Melissa:
[26:43] Exactly.
So you know if you cut out that third party in a brand could just run at themselves and they can have some more money and paid search that’s that’s probably an Amazon mine better but the reality is at Brann’s is that you need that person with the expertise to be able to run it.
If you lack the expertise you should Outsource it.

Scot:
[27:02] Yeah this is Ernesto Google kind of famously was anti brand for very long time and Tide Agency for a long time and then it kind of swimming around and realize I had to embrace it you think Amazon will go to that or just like not part of their culture to embrace the partnering kind of them all.

Melissa:
[27:16] I think Amazon wants to embrace partnering but they don’t know how they’re to me they’re kind of in between Google and apple and where Google super open and apple super close,
and then Amazon somewhere in the middle where they’re date they they are really trying to figure out agency Partnerships Ashley have a whole team dedicated to this Outreach.
And they’re what they’re trying to build is,
Automation and scalability with agency Partnerships so they want to create a portal where they can’t you can come and get all the content information you need and never talk to human potentially more they can do that the more they can scale.
But that’s I think that’s kind of the vision but it hasn’t hasn’t happened quite yet.

Jason:
[27:58] It seems like they want to accomplish that in every aspect of their business.

Melissa:
[28:00] Yeah automation is the way to scale.

Jason:
[28:04] Yep yep.
Changing topics just lately there’s been a lot of brick-and-mortar news lately and mostly negative potential super tragically for me it looks like Toys R Us might not even emerge from there.

[28:20] Their bankruptcy I bet that went after all then I’ll be crushed if I don’t even ever learn to the song.

Melissa:
[28:26] Do you go to Toys R Us with him.

Jason:
[28:27] So I haven’t yet I’m eager to my wife is slightly less eager but I feel like that was the first song I learned as a kid so it seems like you should I’m not super nostalgic about all this retail stuff.
But that would leave a huge hole in the toy industrial be interesting but I’m somewhat curious.
Like as as someone that like predominately plays on the digital side and then obviously like you know so much expense in Amazon what your POV is on the.
On the retail side of this just inevitable as as consumer Behavior shift to digital or what it what do you how do you think about retail Armageddon.

Melissa:
[29:03] I think I think the interesting about Toys R Us in the one that I was really sad about was Claire’s,
I’m where I got my ears pierced and my daughter got my I told my daughter his at 8 that Claire’s is probably declaring bankruptcy and her first question to me was where all the girls going to get their ears pierced she was very concerned about this.
Think that you know when they are still there right about Toys R Us that that I think one of the executive said was that kids are changing their not playing with toys anymore.
And maybe it’s true that there’s so much more digital content consumed with.
Unboxing videos on YouTube but I feel like these retailers need to bring more that experience their stores to drive more the traffic there and that it’s just about the same products you know what the price for it.

Scot:
[29:48] The same time as new brand is just really taking off like Melissa & Doug which kind of implies there’s demand for toys are just like not being found them out missing them they went through more like the booty toy stores because.
Toys R Us toys and then they prove there is a market for.

Melissa:
[30:05] And I know Melissa & Doug thought of Amazon his big strategy for them to.
So you know I think if you’re just selling toys and there’s nothing else you know that store trip is less convenient I need to provide a reason for people to keep coming back to the store.

Scot:
[30:24] Absolutely yes, surprising that they missed the event an opportunity again so why can’t you have birthday parties at Toys R Us in all kinds of different things just kind of like the Mist experiential side of.

Jason:
[30:36] Interesting late and I seen how well played. But like one of the Retailer’s he’s talking about like beating up their toys to try to fill in that Gap as you mention events is Party City.

[30:45] I’m so that that would potentially be a new audience for them I’m not sure it’s like completely synergistic but but funny that you had mentioned events.

Scot:
[30:55] Back over to Amazon what are some of the other things you see them experimenting with these days that are interesting that book should learn about.

Melissa:
[31:04] One of things I think it’s interesting and on the last show I think you guys ask me a question like what you did Amazon get into and I said I think they should offer Healthcare to Prime customers and if you remember that.

Scot:
[31:15] Yes very prescient on your.

Melissa:
[31:18] And then now they want this whole Health Care initiative they also have this ability to create a private label drugs I think to like medicine over the counter drugs yeah.

Scot:
[31:28] And if registered as a pharmacy in like 20 something States.

Jason:
[31:33] Equipment.

Scot:
[31:33] Yeah and equipment.

Melissa:
[31:35] I think that with all their experimentation with a I like they have such an opportunity the healthcare industry had is so not transparent you know when you go into surgery have no idea how much you’re spending.
I think the Amazon has such such such a big opportunity in this industry to really disrupt it.
And make it better for consumers so I’m really excited about what they’re doing there I think the Amazon Go technology is really cool have you guys been to the ghost or I know you have right.

Jason:
[31:59] I haven’t been to it since it’s legal.

Melissa:
[32:01] Okay.

Jason:
[32:02] It’s it feels I could take some of the fun out of it when there’s like no danger of you being arrested.

Melissa:
[32:07] Yeah I think that I think that go Technologies really cool actually.
And I say they’re opening a new Amazon building in South Lake Union and I think that PCC is going in there which is kind of interesting that another go is not going in to another Whole Foods or something like that is not going to another building.

Jason:
[32:26] For those that are not seattleites PCC is local co-op grocery.

Melissa:
[32:34] Yes maybe they’ll adopt maybe the License To Go technology.

Jason:
[32:38] Potential yeah that that brings up a good question there’s someone of a Honda bait amongst go followers weather.
Joe is a another technology platform that Amazon does license to third parties on Amazon web services or shipping with Amazon all those sorts of things or weather.
It is potentially something that Amazon would keep proprietary do you have a like what you would you expect to see them license go.

Melissa:
[33:06] I think so I think that they would license it cuz I think that people going to build their own technology anyway so you know then they can control people they can get the data.

Jason:
[33:17] And it seems like it follows a pattern of so many of the other technologies that they’ve done interpointe.
There there’s I can find 10 companies that have similar technology that maybe further or last so long but it’s not unique to Amazon and so.
Like why wouldn’t you it’s not like no retard will be able to do it if you don’t license it so it’s not a huge moat but there is.
There is an interesting school of thought that most of the things that Amazon license have this sort of acceleration affect other parts of their business that’s the last likely.
This was obvious go. So I was just it was going to be interested in it will be interesting to watch how that plays out but the big question the most important question everyone seems to ask about Amazon which I.
Being totally sarcastic cuz I think it’s way over played hq2 any thoughts about where.
Where the the first non Seattle headquarters is and as a Seattle and are you even allowed to talk about that or is it too depressing to talk about.

Melissa:
[34:18] I think it would be really great for Seattle because of traffic is insane and out of control so I think most people want a separate hook orders to like lessen the traffic burden.
My wishful thinking I don’t know where but my wishful thinking with the Austin because I’m a Texan and I would move their back there in a heartbeat if it where Austin Whole Foods is there.
Jeff Bezos is from Texas from Houston although I heard he bought a big huge house near Washington DC so.
I think Austin’s in the running I’m I’m rooting for them what about you where do you think it’s going to be.

Jason:
[34:52] So I think DC I think there’s a there are these cognitive biases that we all have and one of them is we all think whatever we’re from or whatever we live is the best place in the world to live.
Until the Austin thing is totally fair and.
And I think would be a good fit in a variety of ways but like Scott Galloway who like to talk about it a lot like he keeps predicting New York and I joke that like only people that live in New York think New York is the.
Best place in the world to live I just think all the all the other factors.
That there need to be closer to 4 lobbying and the very big risk that some of these some some version of.
Amazon Google Apple likely get some antitrust challenges and like need really strong government relations in the next few years I just think you had all that together and it’s like.
Washington’s most likely and if for no other reason there’s three cities in the mix there so I triple my chances of being right.

Scot:
[35:53] I saw an interesting Wall Street report this morning from an analyst and they had a firm that has a machine learning AI kind of thing and they sucked in all this data.
And it’s been out Boston and when they kind of dug into y.
It was looking at all that Amazon job openings and they have so many machine learning AI job openings which is kind of like I don’t know if they I scooted this way which makes me like freak a little bit but.

Jason:
[36:17] AI has AI biases.

Scot:
[36:18] Yeah and then what it had done is it had looked at kind of the you know the it had some demographic that she evidently Boston is very high most likely I would imagine because of a mighty in a talent in machine learning, so that does come interesting.
Unbiased review of it I thought it was was.

Melissa:
[36:36] So is that your pic what’s your pic.

Scot:
[36:38] I go Austin First DC 2nd and Austin get some clothes to Whole Foods witches they made a really big bet on and it is.

Melissa:
[36:46] And also is very similar to the Seattle culture just way way hotter.

Scot:
[36:50] Yeah the negative in Austin is at the flights in and out of really bad I don’t know what build a direct for you guys but I bet today there isn’t a Seattle Direct.

[37:01] List of places you have to go in to DFW and then hop over.

Jason:
[37:07] I will point out getting Austin is a bit of a challenge but getting a Bentonville is a huge challenge to and that doesn’t seem to have just waited the big companies in Bentonville so.

Scot:
[37:15] Yes little different recruiting perspective I don’t think you would pick them Bill if you had done what you needed machine learning calendar.

Jason:
[37:22] I’m not I wasn’t for most I wasn’t from running Bentonville although that would be the most.

Scot:
[37:27] There’s a reason. Com is not there.

Jason:
[37:30] Surprise Bentonville.

Scot:
[37:31] That would be fine.

Jason:
[37:34] We buy Tyson chicken and we’re taking over.

Scot:
[37:36] One thing you didn’t mention in one of Jason’s favorite thing is voice Commerce or conversational Commerce are you think it’s too early for Brands we think about that or or should they be thinking about building an Alexa skill or how that impacts our world at all.

Melissa:
[37:51] I think the biggest thing that they can be thinking about is improving their relevance and start drinking so that when people ask boys.
What they should buy that they’re at the top of the list but in terms of building.
Skill specific to a brand I think it’s so early because nobody’s downloading that still there asking Alexa for music.
And some of those things I talk to someone at the Alexa team who is working on.
New technology building you things and what they said was really interesting which was they wanted make Alexa so important like.
When you if you walked into his house and you took his kids cell phone away the kid was like murder you before you left the door and he wants to create experiences like that that are so important so things like.
You know any gratian’s into your car or you know like really important experiences and your day and so I think Brands he was thinking about like how can they.

Jason:
[38:57] Set a recap he wants to elicit childhood murder.
Tendencies more so than South.

Scot:
[39:03] Get weird friends is all we need is more addictive devices we’re already seeing a backlash on that.

Jason:
[39:08] That’s because that’s one of the big problems in the world is there’s not enough devices to attack children.

[39:15] Another thing that came up in the conversation I want to do it back to you real quick is you admitted to a change in the Prime Pantry program and I was wondering if you could say a little bit more about that and and like what if anybody giving two Brands to take advantage of the nuisance.

Melissa:
[39:29] So that yeah this just came out and I think it was now instead of so there was a fee per box that was shipped use it was like.
599 or something we build your box and it’s 599 to ship it to you and now I think they’ve come out with is it $5 a month subscription program and then is it I think it’s all you can you just you just subscribe to it.
And it shows that it just shows that they’re constantly playing with this business model to try to make it work and I think it’s really interesting because.
Prime Pantry has been this place where when you can’t make your assortment work on the core platform in a bigger size you can typically.
You know sell your products in smaller size quantities on the Prime Pantry platform because it’s more of an Market Basket building exercise and there’s no better margins associated with it so.
A lot of Brands actually that are not fit for the core platform can actually sell more they’re serving Prime Pantry.
But Prime Pantry is always had this problem of adoption and trying to get more people to buy their so I think that this is one of those.
Opportunities to drive more traffic to Prime Pantry and to make those Economics work better.
So I think that it’s it’s good thing for a lot of these companies who are putting this offline assortments online and trying to get more sales of that so.

Jason:
[40:58] I think you’re exactly right I think it’s like ultimately Prime Pantry is more a solution for vendors than it is for consumers.

Melissa:
[41:06] Exactly.

Jason:
[41:07] Obviously to be a good solution that has to get consumer to adopt it and the $6 per drink charge was a big burden like you had.
Super interested in building a box before you’re going to take that $6 out of your wallet it’s kind of like.
When you pay by the hour for internet people that use the internet a lot and when they switch to.
All you can use model of course it became much more addictive and so by switching to a and all you can get model on Prime Pantry maybe look at more option and it’ll be even better solution for the vendors.

Scot:
[41:40] One last question in this is a big story of Amazon’s culture and we talked about that on the last show so I.
I found the leadership principles I’ve got a copy of that that’s really good reading I really enjoy that one thing I still can’t understand is so Amazon has like six hundred thousand employees and I deal with a lot of big companies in Channel visor.
They just go so slow like there’s groups like your head and injuring group they want to go fast and then legal gets in bar called rhri rpr.
How does Amazon go so fast and avoid that that that problem were like damn his own legal team comes in and grinds at 12 like.

Melissa:
[42:16] They don’t have a legal team I’m just kidding.

Scot:
[42:18] I almost wonder like you know one example is the prime now lady has been she spoken at shop talking.
You know where they opened one and then they got green light and they open like 20 in like 6 months or something like that you could never do that in any other company because there would be the team of lawyers that would come up with all the reasons that would be a terrible thing to do how does Amazon.

Melissa:
[42:41] You know I’m.

Scot:
[42:42] Does each team just like its own little Independent Business and they don’t have to go through Amazon corporate legal or is like corporate legal is just so bought into the day one thing that they just let you do there they’ve got the risk scale slid way over tomorrow to start a pecan place.

Melissa:
[42:56] Well I think one thing is so the legal question is that mean they definitely do have layers and they definitely have to approve everything but the other thing that Amazon does is they launched things at 70% like they never wait for it to be fully baked.
I’m in which is you know kind problematic for a lot of us working on these tools because they have literally bugs in them that you know are true bugs that don’t work.
But one of the things is there speed-to-market that they’re able to accomplish through really escalated processes and so they they do have a legal team that does have to approve things but I think that they just.
Jetway faster and don’t have as many you know their risk profile maybe a little bit higher I do I don’t know.
But I mean I definitely we have there’s a lot of legal.
You know approvals and place but the other thing I think that enables them to go so fast is that they never wait until things are completely baked they don’t have to have this long.
In a business case to to have it they’re able to just move very quickly and it’s actually the number one thing that my friends have left Amazon and now are working at.
Other companies especially manufacturers they complain about is this speed.
Is so much slower it’s like they feel like they’re Turtles compared to the speed at which they’re used to being able to why do people are just getting a lot of autonomy.
And I’m Stephanie Landry who’s the you know she’s amazing.
Really has that by fraction is that big principle one of those principles were talking about.

Scot:
[44:31] Again I come to the car crosslife companies that are bigger and have despised fraction but then like some parts at work just like Yang some.
BJ’s legal almost makes me think like the legal team must have some SLA with the rest of the company that they have to respond quickly like it’s nothing illegal says no it’s just like they don’t respond and it’s like 6 months ago.

Melissa:
[44:50] I think there any they’re pretty responsive and I think the other thing too is that they try to lessen the dependencies and bottlenecks from other team,
which is why you kind of got the toll pass for when peeing 3p going different directions because they were built on toy different platforms they didn’t have to wait for each other other now that’s coming back around but that’s why.
That that happened.

Jason:
[45:12] To me it it it feels like part of this I call Amazon a very object-oriented cultural I called all these individual little parts are tried to.
Be maintained is autonomously as possible and they just Define the inputs and outputs to each little team and they don’t have these big staff meetings that we was invited to and ever.
Just feels obligated to kind of Pile in iFunny I’m curious.
I have the opposite problem I hire all these X amazonians and I’m always super excited because I feel like I’m going to get all these employees that are reading these well-thought-out 6,
grease on everything we want to do and apparently they throw away Microsoft Word as soon as they leave Amazon and they send me a bunch of really crappy PowerPoint that they haven’t used in the last five years of their career so I’m super curious,
if you guys are mainly a PowerPoint culture now that you’re not an Amazon.

Melissa:
[46:02] Sadly I think that because I’m so quiet like I work with so many clients that PowerPoint just happens to be the format that works really well.
And also actually at work a lot with most of our bed software development is in China and so it worked out with the WeChat.
That’s the first thing I had to download and get used to it as we chat but so word is is maybe a little bit less in my culture these days.

Jason:
[46:29] Cool well that’s going to be a great place to be there because it’s happening again we’ve used all of our a lot of time in the special path of purchase Summit edition of,
Jason and Scott show so if you have any questions about the stuff we discussed or any other questions for Melissa feel free to jump on her Facebook page and will continue the dialogue there,
and as always if you enjoy this episode this is a great reason to jump on the iTunes and finally give us that five star rating that you’ve been withholding its driving Scott crazy and I I’m really starting to worry for the mental health,
and told that I will see you in the next Shell.

Scot:
[47:05] Yep yep definitely does ratings and thanks for being on the show mall so we appreciate it.

Jason:
[47:09] Until next time happy commercing!

Feb 28, 2018

This episode catches up on the latest e-commerce news:

Upcoming Industry Events

* Denotes shows Scot and Jason will be attending and broadcasting from.

Register for the Jason's Webinar on AI in Commerce, Thursday March 1st.

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Episode 118 of the Jason & Scot show was recorded on Tuesday, February 17th 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

 

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 118 being recorded on Tuesday February 27th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:40] Hey Jason and welcome back Jason and Scott show listeners Jason you have a big webinar coming up this week that I think listeners would love to hear about the also it's live video so listeners will actually get to see you,
that's exciting.

Jason:
[0:55] I know I know I feel like I do have a face for podcast so that you know is not necessarily a good thing but I'm a little disheveled right now I sort of torn apart my office to set up a little,
video set up because I'm doing the webinar on artificial intelligence in Commerce,
with episerver and I'm doing it on Thursday morning,
and the reason we're mentioning it on the show is because the last big webinar that they did I had this author I really like and I am embarrassed to say I don't exactly know how to pronounce his name but I think it's near y'all and he wrote this great book called hooked which is a lot about,
how people form habits and and he's a super interesting cognitive psychologist but he did the last webinar and I'm desperate to.
Get a better attendance than him so I think I just passed him in pre-registration and you know hopefully I'll bring it home on Thursday morning for the Jason and Scott show.

Scot:
[1:57] Awesome we're counting on you also it's it's starting to be season here of trade shows and we have I think 3 or 4 we're going to be there together which is pretty exciting going on right now and neither of us were able to attend Izzy tail West so bummer on that one.

Jason:
[2:12] Yeah but shout out to everyone enjoying the good weather in Palm Springs.

Scot:
[2:15] Yeah yeah can't can't blame me for one down so once we're going to get together March 12th to 14th in your hometown Chicago we're going to get the path to purchase Summit,
and it will be at shop talk in Las Vegas and then in PD ID in Austin March 18th to 21st,
and it be the idea is May 15th to 17th so it's going.

Jason:
[2:37] Exactly and I'm I'm speaking at shoptaw Canton PD but I'm particularly looking forward to Pat the purchase cuz I'm just going to be in the audience heckling you.

Scot:
[2:45] Yeah yeah I look forward to your heckling it'll be funny usually want to do that no one realizes who you are and it's Robert so it's always good.

Jason:
[2:53] Even when they know who I am it's generally super awkward.

Scot:
[2:55] Psych episode of the office but looks stretched out and more painful.
So since we're hitting the traits of circuit and we do that we do have a lot of guests lined up we're going to the Sobe we missed last week due to me I was on a little bit of a holiday so this week we're going to catch up on news and then,
it'll be a little bit of a news coverage drought so we need to kind of knock this one out and of course when it comes to news it wouldn't be a Jason Scott shows without.
Amazon news new your margin is there opportunity.

[3:38] Big news today it's been kind of timely that what you were going to do the podcast today which is good we appreciate Amazon working this out for us then else one of their biggest Acquisitions ever they are spending a billion dollars to acquire ring.
Rings cool as in October I think Rings kind of classic case study there for other option verse so the CEO the founder went on Shark Tank and was rejected by all the sharks I thought it was,
terrible idea admittedly the name wasn't that good was called doorbot.
They just kind of her like you know we can't see how or why anyone would use this thing so just goes to show you that sometimes when all these experts and your is reject you that you need to just kind of hang in there then they caught the eye of Richard Branson and he invested some like $38 I guess he really,
saw used for the product Amazon was an investor to the Alexa fun and they raised a considerable amount of VC.

[4:32] Rivers word that they were out raising Capital at kind of what's called a unicorn valuation or north of a billion dollars and Amazon has picked him up for a billion bucks.
What do you think about the new station.

Jason:
[4:44] Yeah they I really appreciative of Amazon getting all the news in before our go on their deadline I think that's always very considerate of Jeff,
number one listener thanks again,
and I think it's it it seems like a checks a lot of boxes for Amazon I think Amazon his has had a major push into devices and smart home obviously they have you know this huge put on hold with the,
the Alexa but you know they,
they bought that camera company not long ago I mean I feel like just as a consumer product space they've been particularly interested in that space and then you add to that that this that ring could be an integral part of,
giving Amazon delivery people and Home Service people access to the home like it you know it suddenly is synergistic with their supply chain and reverse Logistics Ambitions and so it seems like.
It's pretty it's a pretty clever investment and you know a lot of us were talking about after the big Whole Foods acquisition,
then maybe we wouldn't see another big retailer acquisition but that you know didn't necessarily mean that Amazon wasn't going to continue to be aggressive so to me this is.

[5:55] Another great example of them.
Trying to be in a build or own a consumer brand that has even competitive differentiation in the marketplace.

Scot:
[6:06] Yeah that really cons pros got let down if you can't think about the other,
folks really active in the space you have apple who's really playing catch-up they just kind of came out with their smart speaker and as we discussed on the show it's,
not not really clear that's going to be a big hit and it really doesn't do much more than be a speaker and then you have Google and.
Google is just kind of frantically also playing catch-up they acquired Nest which gave them the thermostat and they put Dropcam into that cycle of a camera and then they have the Google Home Smart speaker.
You pointed out to me that those things actually don't really work well together which is kind of funny you know it's cuz they're all it in the Google House of devices.
And then you know they there was talk of Nest coming out with a ring competitor,
so no now Amazon has bought the number one doorbell device Irene was working on a cool security camera which I tried the private label ish kind of Amazon home.
Cameron is not very good so I'm hoping that the the new ring camera will displace that or or at least have a better offering in that category so it's going to be pretty.

[7:14] I agree with you at the cut checks a bunch of boxes for Amazon so you know I get into the.
Alexa ecosystem will be great it kind of helps with home automation security which is this huge area that no one's really conquered yet,
then you have the delivery you know and and then another area I watch her the clothes that Amazon seems to be encroaching and more and more is home services so imagine some kind of an Amazon either.
Either, Marketplace from services with like a cleaning service or Amazon actually does it themselves through employees.
You know you could have all this time together and in one seamless experience so you could have it kind of.
The Holy Grail experience would be you you order your groceries through you know that your Alexa wish list they are delivered to youth from at Whole Foods.
And then you your do all this while you're at work and then you've authorized ring to allow access to your house to certain folks and maybe there's some.

[8:11] Maybe they hold up a QR code or some kind of authorization there with the ring device that doesn't even require you to answer your phone and see who it is and they place the items in your house so it really kind of.
Thinking through this user experience in connecting the dots and in a really interesting way that is so far ahead of everyone else is getting a little scary to be honest with you.

Jason:
[8:30] Yeah and you know when when you said I didn't immediately think of but the,
you know I think it's another big Synergy for Amazon you know most of these cameras are inside your house right so inside your front door or in your new Nursery or whatever the case is that the primary ring camera is,
on your porch and you know of course there's there's this huge problem in e-commerce of porch piracy where where you know bad people are are coming to people's houses and stealing their packages and that that happens frequently enough that it's a it's a major,
problem for some consumers that are frayed to buy stuff and have it delivered to their home so it literally is a limiting factor for Amazon and so having a,
an army of these devices that you don't have the potential did dissuade porch Pirates you know is even another synergistic thing with Amazon.

Scot:
[9:20] Yeah you could even do some cool stuff with a I wear a ring on her I don't have one they're telling the there's some neighborhood alert feature and so you can almost see you know if there is a.
Porch pirate out there you know a I could,
detected and then turn on all the ring cameras within a 3-mile radius and and you sit all the video to the police kind of a little scary there on the Privacy side but you know when you do think about these use cases is pretty interesting Amazon has all the pieces to do something like that,
actually relatively easily right so think about all the AI and the face mapping and everything inside of the ghost tour,
you're so they could easily apply those out rhythms to detecting hey this package was picked up by someone that's not the owner.

[10:01] So it's really interesting to think about all these Lego blocks that they're putting together and all the internet use cases to have.

Jason:
[10:07] Absolutely.

Scot:
[10:09] Another kind of kind of more on the Whimsical side hq2 search 220 cities,
I'm in is really funny that they kind of went into an in da mood where you know they kind of had this huge hoopla about what's going on in and now all these folks hurt the states there negotiating with her under NDA sermons trying to read the tea leaves and.
You know I think some of the funnier ones that you noticed conspiracy theories I guess I would call them that are out there.

[10:37] There's one that says that Amazon gave a clue that they're going to Austin and if you remember that Super Bowl spot that you and I both kind of thought really won the Super Bowl you know.
It kicks off with the lady asking Alexa what the weather is in Austin so a lot of people have kind of tied into that as a clue and then there's a couple other kind of you know Easter eggs in there that there,
Canyon to sellers country music that plays in the in the thing this little bit of a stretch but evidently.
Austin is has an affinity with peacocks and at the end Anthony Hopkins is sitting there feeding that peacock so I don't people have kind of used the Super Bowl ad is kind of saying is Amazon sending us a subtle clue.

Jason:
[11:18] Yeah most of those a lot of people are from Austin for the record but yeah.

Scot:
[11:26] And then another one I saw it was funny is a lot of people were kind of saying oh they're going to.
Los Angeles and what would happen is actually a local reporter here they're able to file an information act kind of thing and they got.
At least a cover letter for for how the proposal was sent from of a city in North Carolina and it called it project golden.

[11:50] And so then a lot of people said they said there's more evidence was found other other reporters kind of took this q and they were able to file these freedom information act.
Request get some information mostly cover letters ricewood was redacted. Okay it's called project golden that's like.
The Golden State which is Los Angeles or yeah so then everyone but what happened is the person that's just kind of.
Gathering Together The Proposal so their last name is golden,
who played around this hq2 so even though it's in super quiet mode and in a way it's actually causing more more kind of strange things going on.

Jason:
[12:34] Again it's it's evilly brilliant PR and you know they they got all these municipalities to you know,
drop their drawers and in demonstrate exactly you know how deep their willing to do in terms of Economic Development incentives to get Amazon there and you know whoever Amazon picks for the hq2 they know how much money is on the table from these other cities and you can imagine they're going to use all that in negotiation when there,
opening fulfillment centers are other pieces of infrastructure in those cities do you have a front runner in your mind.

Scot:
[13:07] For the longest time I thought Austin.

[13:11] Is it it for me it has a lot of the the elements are looking for so so I can think of this is Amazon's retail business from a people perspective is really well-built out,
so I think hq2 is going to be maybe 5 or 10% what you and I would think of is the retail business and the rest is going to be.
AWS mom so that's where you let things growing like 60% year-over-year,
maybe you put some add business there but but still it's kind of different footprint than the retail business so and and in the proposal and talk about it being largely engineering,
so I think it's going to be kind of these y'all hiring cloud-based engineer types so that really made me think Austin because you have three or four engineering schools right there,
I'm cost of living infrastructure all those things get checked and it's close to Whole Foods which you know I think if I'd spent 14 billion dollars being near that would be.
Pretty nice wind is well within the one thing that is suede me is Scott Galloway has been meeting up making a pretty.
Compelling case for the DC area so three of the 20 are in the DC area Bezos just bought like.
Largest residence in the DC area and it goes on the DL and then it leaks somehow.

Jason:
[14:24] How many owns the Washington Post to.

Scot:
[14:26] News Washington Post is like a toy project and you know they're if you do think about the only thing I see that could cause any kind of existential crisis for Amazon is the government.
And I do think you're having the influence,
being there getting some of those key virginia-maryland folks in your pocket is pretty interesting so so.
I kind of see it as a race between those two Austin if it's a kind of really leaning towards talent and they don't really worry about the government thing I think Austin wins and if they're at the government thing is kind of looming large with them that I think the DC area makes a lot of sense.

Jason:
[15:01] Yeah no I am I tend to lead towards the DC area as well like you if you sort of think of them.
In many ways like Amazon is the next Generation Walmart you know Walmart said really invest in there a lobbying in there and their government relations and,
you know like the guy running the government relations program for Walmart is like Dan Bartlett who's the,
with the press secretary for George Bush and you know there was a bunch of political news a couple weeks ago I had the number three person at the Department of Justice resigned and she resigned to take a VP job at Walmart so I Walmart building these,
this table is like really credible,
Washington folks and if that's important to Walmart like you know odds are it it already is or should be important to Amazon and sew in,
the proximity make some sense when they are just from the odds perspective you got you got three sites so that seems logical the one thing that.

[15:56] Makes me a little dubious of Professor Galloway's.

[16:02] Evaluation is he also throws in New York is the front-runner and is why Jake is because everyone wants to live in New York and I kind of called him out on Twitter he he.
Took the high road and then respond that only people that live in New York want to live in New York that's a little it's a little bit of a reality bubble that New Yorkers have.

Scot:
[16:20] Yeah yeah and you know Newark is on there that's like an no way they.

Jason:
[16:25] Hey that seems like a non-starter to me.

Scot:
[16:27] Yeah yeah you just can't get text out and some of the things that I have and then you saw some interesting news around the go store.

Jason:
[16:35] Yeah I think Jason Del Rey broke this on recode but it appears that they're getting ready to scale that out and open six more of those.
Stores in Time Turner member but I think they they even identified or speculated some of the the potential for sites was.
Austin one of them if I'm remembering right.

Scot:
[16:59] Yeah I think that carved out another couple already in the Seattle area at which makes sense that's what they did at the bookstore stay I think they open to in Seattle and then they went like San Diego Chicago New York kind of thing.

Jason:
[17:10] Yeah if you're really going to Market and try to you know Drive traffic to it it it it's much my door to open multiple sites in the same city because then you can buy.
Geographic marketing Vehicles like newspaper ads and radio ads in television ads you know opening one store each in a bunch of different cities is much more expensive for traffic generation.

Scot:
[17:29] Coon and since this is kind of a clever Segway into the grocery last week in our reader question or listener question segment we did run out of time for one of the ones that came in to Twitter and it was from long-term listener Michelle Grant,
and she asked do you think Amazon will close fresh and Charlie what do you think about the moose and so I think what she's referencing there is so Amazon did do a little bit of a layoff a couple hundred folks and I think it was the fresh team you know cuz now Amazon essentially has there's a lot of irons in the fire when it comes to a grocery store they have Prime now,
they have even like the what is it Warehouse or the the big box thing they have fresh which was the,
jewelry that have go and and the Nets Go curbside thing so it had it in and of course at Whole Foods and now they're doing,
same day delivery they're on their own how do you reconcile all those things.

Jason:
[18:28] So I do think fresh as a standalone fulfillment center,
model probably does go waste of you if you think about it like.
Amazon Fulfillment centers that they generally ship products from them or do One Day deliveries with their Flex drivers from,
they've got these Prime now for filament centers which have a much smaller SKU assortment but you know really optimized for that one and two hour delivery,
in the fresh cities they have a separate fulfillment center that has a lot more cold storage and accommodations for perishable in the drivers,
deliver out of the limited assortment of the fresh profillment Center which was different than the prime now fulfillment center which is different than a,
fulfillment center and now they're announcing that they're going to start delivering inventory straight from Whole Food stores and so what I think is going to happen is that that fresh.
Fulfillment center as a standalone entity goes away most of the volume for delivering perishables in groceries is going to come from the,
the Whole Foods store the Whole Food store. She has a much larger assortment then then fresh did,
and I do think Amazon's continuing to build out there,
fulfillment center capabilities for cold and Frozen so you know we wouldn't be surprised if they have cold capabilities,
in Prime now fulfillment centers and they continue to fulfill some some.

[19:59] Cold items from Prime now but I would imagine that those are mainly items that are synergistic with other,
other types of products that people buy from Prime now so maybe you need some like,
cables in an emergency router for your office and you can also buy you know a case of soda or water you know it wouldn't surprise me if they had those kind of skews in Prime now that you know if you're going to order bananas and milk,
that's more likely going to get fulfilled from a Whole Foods rather than a standalone fresh Depot.

Scot:
[20:30] On the show you guys talk about curbside wins delivery.
Is kind of tougher and probably doesn't win sounds like you just going to reconcile that all down two more like delivery dude do you think Amazon does continue with that curbside I think it's called Amazon go pick up or something.

Jason:
[20:50] Amazon Fresh curbside is it fresh pick up Amazon Fresh pick up,
yeah so there are these two first pick up locations in Seattle I continue to strongly believe,
that the majority of digital grocery shopping is going to be pick up right so you're going to order your digital groceries from Walmart or Kroger.
Or Amazon and you are going to drive to that store.
A surrogate location for that store at a convenient time and have someone to load your groceries in your trunk and that's.
The economics of that are just infinitely more favorable than the economics of delivering a fresh and we can get in the all the reasons why we just explore delivering perishables are much uglier than the economics for delivering.

[21:41] White goods in general merchandise there are niches we're home delivery of fresh make sense and you know rich people in New York and Chicago and California you know where are certainly going to take advantage of that and you know I think.
All of Amazon's offerings at the moment with the exception of those two locations are home delivery in so you know I was kind of answering the Fulfillment question through that lens but I also think I'll be utterly shocked if.
After Amazon turns does Whole Foods into home delivery venues they don't also offer a curbside pickup option.
For pickup at Whole Foods and what's going to be super interesting to me when they do that is,
what and if the pricing difference is between having his groceries delivered and picking them up at the store because at the moment the deliveries free as long as you you know trigger certain thresholds.
And you know but the the cost for delivery are much higher than the curbside pickup cost so it seems like.
You know there's there's going to be a strong argument for there being some price savings if you're willing to pick him up.

Scot:
[22:50] Prequel show thanks for the question sorry we couldn't get it to it last episode of a glad we were able to pick it up kind of rolled up inside of this Amazon Go News,
I'm just wondering I don't think I wanted to pick your brain on the big news kind of over the last week or so was Walmart really miss their e-commerce growth goals for Q4,
I am so I think they came in at a paltry 23% which is kind of fun,
because that's not too shabby but you know why she was expecting 50% which is a Dunham Park orders and then it there analyst day which we talked about on the show,
they're kind of being in their chest and saying hey in 2018 we're going to get this thing cranked up to 60% of the result of that.
Stock have been on quite an upswing since the jet acquisition and a lot of this good e-commerce news and it had a single worst day in history,
I'm from up with a percentage in a point bases so that did not go over well with the street then,
are there is a flurry of Articles you know is Lori on his way out what's going on what what's your take on what happened there.

Jason:
[23:58] Yeah so I mean just a brief moment of silence for all that that value that was lost when they announced that they're e-commerce crew at 23% when they're,
Industries only growing at 16% and oh by the way,
traffic in our stores was up in our stores grew by 3.2% which our store volume is way higher than the,
the unlined volume and way more profitable so they actually like reported really good financial news with this this one miss about what,
you know economically is kind of a relevant portion of their business and they they got cream for it but of course.
You and I are listeners know that that that you know in the long run that that winning e-commerce is is Paramount and so I do think it's fair that investors are.
I really nervous about that that Miss.
So that being said it's interesting cuz you know Walmart had these three phenomenal quarters where they went 63% growth 60% gross 50% growth,
and you know when they are doing those two were a bunch of Acquisitions and everyone's like oh the Acquisitions really paid off.
And Walmart really pushed back on that and said no no no the bulk of this growth is organic.
You know the boat Boca this girl isn't jet or bonobos or ModCloth are you almost out of those those things and so now year later when they kind of lapped those acquisitions.
And the girl that is way down you know people are speculating it's because the the Acquisitions are now.

[25:30] You. They've been in there for a year and said the cops are against.
Against the business Windows Acquisitions and so that hurt them you know Walmart came out and said that they had some Logistics misses and you know that that holiday really had a different mix and that caused them.
Tamisium shipments of missing opportunities but what I haven't seen talked about a lot which to me is really the hidden story of both Walmarts growth and Walmart's Miss.
Is the last topic we just talked about which is grocery so what what listeners need to remember.
Walmart is first and foremost a grocery store I think between 50 and 60% of the revenue is grocery.
And you know a year ago they started rapidly rolling out buy online pickup turn side grocery.
Two individual Walmart stores and so about a year ago they announced they had their thousand.
Grocery pickup store and you know my contention is a huge part of that e-commerce growth is they went from zero groceries to you know some grocery store sales in a thousand stores.
And so now they've lap those thousand stores those those thousand stores are in the comps.
Answer now the growth you know doesn't look as spectacular unless you open.
Another thousand stores which Walmart actually announced they were going to do,
and conspicuously absent in this in these latest announcements was any indication of whether they they hit their goal or didn't hit their goal or they were behind and I really think some of the young to be interested to hear some of the.

[27:03] The stock analyst you know you know if if they asked us questions and if they got good answers cuz to me.

[27:11] We really need to be thinking about these these e-commerce grocery stores a little bit different than pure e-commerce when when Amazon as a product of their e-commerce catalog it's available in all 50 states simultaneously.
The grocery is a store by store basis so you almost need a same-store sales number for e-commerce to really see the true growth.
In an Eakin e-commerce Grocery and so I like that that maybe evolution of the retail financial reporting that we we start to see.

[27:45] One other thing that caught my eye related to that mess is there was funny to me probably not funny to Walmart.
A Blog on gardeners website from a guy Bob head to who's one of the good retail Analyst at Gardner and he was talking about how he seen some substantial price fluctuations at Walmart.
In a centrally he tells the story about how I-44 research she tried to get his family to buy all there.
Their stuff online from Walmart they were they are Walmart shoppers apparently but he tried to get his wife to use walmart.com and she diligently tried and they actually failed because.

[28:23] Walmart online pricing was so much higher than their in-store pricing and so you know Bob speculation is.
That you know part up part of this mess is that they have this disparity pricing strategy between e-commerce and in-store,
and you know that he seen the shift more recently took two closer to Universal pricing and he thinks that might be something at Walmart suggesting.
In response to some of their they're softer e-commerce growth.
In that that is potentially interesting there is this you know huge urine everyday low price retail or it's it's part of your.

[29:04] All brand proposition knew you'd expect to see the lowest price everywhere and if prices are higher online like you know.

[29:11] You can understand why that would alienate the core Walmart Shopper and so that that to me is a interesting part of the story that we haven't heard a lot of Anna's talk about is.
Is the pricing part because we have separately seen Walmart make some announcements.
That you know I kind of funny announcements to hear a retailer make which is.
They're shifting focus of their online inventory to be more profitable and they're actually asking cpgs to make.
More expensive bundles and more expensive products for them so they can get the AO Vivo online up to get profitability up and the sort of.
You know implication and all of this is,
hey we're getting tonight's e-commerce growth e-commerce is going to be meaningful for Walmart but one thing that sucks about it is the economics and you know now Walmart's you know trying to shift to be more more profitable online and so you know when you talk about this growth.
You know is it is it profitable growth in his part of the the softness and Walmart's growth because they have shifted.
They are trying to shift the next to be more profitable online. You know what I don't know but those are going to be the interesting things to follow.

Scot:
[30:18] Any other Walmart new phone cover.

Jason:
[30:24] The couple other interesting things they they they have announced some new brands.
So they watch a bunch of new apparel Brands and I think they officially I think we're might have already been out but I think they officially announced them today as well I'm so again props to them for getting on our data Toro schedule but cities are Brands like time and true,
Tara and Sky nation and I think I'm one call George,
and you know for those that are intimately familiar with Walmart's apparel they've they've had private label apparel for a long time like that you know.

[30:58] It doesn't have a particular good reputation for style or quality and yet I think it's a pretty big seller into these new these new brands are.
Like we were singing The Marketplace the seems like there's a much bigger effort for them to be real brands that are distinct and not simply private label.
And so I think like the shift is yours going to see retailers talk about not their private label but they're owned Brands and so I think Walmart would say the only boats and ModCloth are owned Brands and now time in Fruit owned Branford.
For Walmart so it's going to be interesting to see if they're able to kind of move up market and get a better reputation in a peril.
You know apparel and everyday will prices haven't historically.
You know I've been two things you think I'd together so so I think that's working against them a little bit but they also announced a private label for mattresses that seems like it's directly competing with a Casper's of the world in that that brand is called them.
All is well I believe.

[32:00] And I think some of the new brands are interesting they also announced a couple of redesign so earlier this month they they did a pretty substantial redesign to their mobile app.
And what they did is they put a much more robust what I call in store mode they I think they call it the store system.
And so this is the notion that if you have the Walmart app and you run it in your house you get one experience but if you happen to be standing in a Walmart store and you open the Walmart app.
You get a very different experience that's tailored to the kinds of things you like to do if you're in the store so when you do a search it.
What does the search against that stores local inventory they have maps in the app now for all the stores and they help you find products they connect you with the local customer service and the local service offerings like Walmart pay,
and MoneyGrams and all those sorts of things in the in the store and said they're they're making the the in-store experience on the mobile app much more robust which is interesting and then.

[32:55] They the automatically redesign the home section and they made it you know much richer and content and you know they have some some new shopping utilities like.
Shop for furniture by style for example and things that you know who's more likely Walmart was a pretty straight catalog site so adding this kind of,
editorial element to their site was interesting and then they have teased that in the coming months we should expect to see a pretty substantial redesign of the whole walmart.com so I'm,
I'm always super interested to follow big retailers when they do design refreshes and and see what some of the new thinking might be there.

Scot:
[33:32] Yeah when I saw the all's well so an ounce of the witches the mattress and maybe think they probably went and tried to acquire Casper purple there's like six of these things now I can't keep them all straight Lisa,
are there several others,
and they probably didn't like the prices and then you know that it does seem like they're dime a dozen now so I think they're all coming out of a similar kind of a design studio and tractor in China somewhere and they just kind of said let's just do this ourselves I'm almost in surprise that Amazon hasn't done one hour or maybe Amazon hasn't really realized it.

Jason:
[34:05] No it wouldn't shock me if we see that in the near future.

Scot:
[34:08] Quick one. Since we just talked about Casper I did notice they opened a store in New York City which is continue that Trend we talked a lot about on the show with these.
Digital native Brands getting a certain scale and then having to open stores are I guess they're more showroom me so the mattress you could understand that we're.
You're the only so many people they're going to.
Trust in store trial and then home trial in the return policy and it is I've enjoyed seeing them in Target stores and I know you care so much about them and,
it is nice to have at least get to see one feel it I lay down on it and see what it's like before you take that did to me it's more the time risk of you know.
That's another thing I have to ship it back and all that so that was interesting.

Jason:
[34:52] Yeah absolutely Anna and as we talked about on the show number times I,
brick and mortar stores are a great marketing vehicle for online sales and unlike a lot of other marketing Vehicles which are pure expense you know the store can often pay for itself or be profitable and drive a bunch of traffic. E-commerce business so you know,
opening showrooms particularly in high traffic areas like New York City you can make make a lot of sense for bran.

Scot:
[35:17] Couple quick hits so over on the pier Place side eBay has been pretty quiet on that position front and also in keeping with their timing today they announce who won the first positions in a while another Marketplace and it's pretty interesting so,
eBay has a long history of not doing well in Japan they they had their own Japanese offering,
end of the exit of Japan in 2000 they also didn't do well in China they really struggled with with Asia and general General,
partnership with Yahoo auctions so if you look at the the Japanese Marketplace market today.

[35:54] Dominated by rakatan Yahoo auctions in an Amazon does really well in Japan as well and so they actually just acquired a startup called the starts called juices.
And the name of the marketplace I don't know how to say it so I'll spell it is qoo.
And then one zero I would she so I think you would be cute n. JP that's pretty interesting and I saw a rumor that they paid $700 for that,
so you have to kind of thinking a why would you pick 2018 after you've been out of the market for 18 years.
And my my reading the tea leaves on this is a really good job on kind of,
cross-border trade and enabling people around the world to order from.
Order from sellers across the world and then doing some interesting things with reshipping and,
Google translate and just make the entire eBay catalog as much of it as possible available in areas where the extra don't have a presence so so I imagine when I read this stairs,
there is demand for for you know.
Probably cross-border trade product and this gives them a platform to kind of put that on where is before their Pi just doing this kind of localized and I kind of caught up it's kind of a,
that's kind of a country page where you'll you'll go to eBay. JP but.
The listings are all coming for the US and Europe in and they've been Google translated in that kind of thing so this will I think.

[37:21] Their interest must be that they're seeing something in the date of the newest in Russia for example some of the largest countries for them where they do this and Brazil in other countries.

[37:30] Another couple quick ones back to omni-channel Macy's was in the news this week because they had an awesome 4th quarter,
and I hope you're sitting down Jason but they're same-store sales grew 1.4% year-over-year,
so that was a no cause for celebration I think there was a Wall Street expectation that they actually have negative same-store sales for the last three years they have been contracting so it is good to see them having increased it just kind of interesting you know that.

[37:57] Walmart gets the snot beating out of them for her for 23% growth and e-commerce Macy's I didn't see what they split it out but you know they grew 1.4% and it's kind of like you know,
the through the woods and everything is great. So you know that that is still growing shorter there are smaller than overall retail which I believe was in the high 3% for for offline so that was interesting,
what other kind of couple things.
take out of that announcement they now say they have a third of their skus are with a call Exclusive which to me means more like private label or if they have work with a brand it's only available at Macy's and that seems to be doing well which is at one of the things you and I buy stale retailers to to focus on.
And then they required a beauty product called bluemercury at Sephora.
And I'm not an expert on this and it's evidently to doing really really well and you know it is exclusive to them and I think they're starting to really kind of.
Push that pretty hard the last one I saw that was pretty interesting kind of in the financial news there's been a lot of rumors are Nordstrom's going private and looks like.
Now there's there's all these rumors that that deal is getting done the stock reacted to it so and I noticed that,
Jason is added them to code Commerce which will be his little kind of Sideshow that he does array shop talk he added one of the Nordstrom store that so it'll be interesting you know you can imagine.

[39:25] Is there something going on that's all Jason's going to ask about so you can imagine hopefully maybe a deal will be done by late March or that you know that they're kind of have some timing setup that they can talk about it then or something maybe read too much into that but I thought that was interesting.

Jason:
[39:37] Yeah I know for sure because they normally don't do a ton of publicity so far I think it's Eric Nordstrom that's going to the recode dinner it'll be interesting to hear what he has to say and I I'm sure you're right that you would certainly get some questions about the,
they going private I would do just just one site week Macy's so bluemercury the Cosmetics company their brand that Macy's bought in it and it's killing it luxury cosmetics in general are doing really well it's one of the fast-growing categories and so I told to and Sephora these,
two Standalone Cosmetics retailers are are growing really fast like you're doing much better than then retail in general.
For all of our our cosmetic Savvy wesner's I'll point out that Sephora is a retailer that carries a bunch of Brands including some private label so,
they're probably not the most direct competitor with bluemercury but you know you can think of like a Revlon or L'Oreal or or those those kind of Brands is competing with blue Mercury but evidently the analyst.
I have talked about bluemercury being one of the the crown jewels and one of the great assets assets that Macy's is hat.

[40:46] So do you feel more more cosmetic aware now Scott.

[40:54] What notes are they both carry a bunch of national Brands they both have their own stuff but the the the real Innovation here is why.
Before Sephora.
If you are interested in shopping for Cosmetics you probably went to a department store when you are a young girl and you became a certain age your mom probably took you to a department store to get your first cosmetics and,
all the Cosmetics were shop and Shop so you had the first and foremost pick a brand with your feet so you walked to the Mac counter or you you walked to the,
repair counter or whatever whatever Cosmetics you had an affinity for and you shocked by brand,
and so support I had this sort of game-changing notion that like hey people don't want to stop by.
Brand necessarily they want to shop I use case so I had to put all the foundations here from all the brands and let's put on the moisturizers over here from all the brands and that,
that concept played really well with consumers in and Trigger 2 for on this rapid growth in Ulta is a more recent competitor that is kind of followed in in support his footsteps,
and done a really good job of adding Professional Services to the store in a salon and things like that so that's now you really have the whole Cosmetics history.

Scot:
[42:09] Collective I was thinking we should do a deep that the boom you just did it right in the middle of news awesome the Deep dive delicious nugget inside of some e-commerce news.

Jason:
[42:18] Exact just wanted to establish my Qualls as knowing more about Cosmetics than any dude should know.

Scot:
[42:25] You die definitely bouncy.

Jason:
[42:27] I appreciate it so going back to omni-channel there was also a few interesting news nip it's about Target so one that caught my eye because it validated smart-aleck opinion I had,
you know a couple months ago Target acquired this company called shipped and shipped as a.
A third-party delivery service that would deliver purchases from a variety of stores to a consumer's home and there.

[42:55] Yeah you pay an annual fee of like $99 and then you get free home delivery you know.
Over some purchase threshold like 35 bucks or something so Target bought them and at the time I was like Hey that may be a good acquisition that may get Target some good capability for home delivery that they want but.
They're likely to have overpaid because.
Shipped was this two-sided marketplace where you know they tried to acquire customers that were customers of ship to not Target and they pay $100 to ship to be a member,
and the reason that they would get a bunch of customers is that the utility those customers get as they get free home delivery from the bunch of retailers to ship Ted 2,
appeal to a bunch of retailers and they had to appeal to a bunch of consumers and when one retailer buys them suddenly it's much less appealing.
For for ship to work with all these other retailers in that you know it has this negative Cascade effect on the whole two-sided Marketplace model,
and at the time of the announcement that I've no no no we're going to contain around another standing in entity and we're going to continue to.
To try to support all those retailers so you know interesting side-note 60 days later shift is no longer delivering goods from Walmart so.

[44:12] You may have paid your $99 under the belief that you could get free home delivery from Sam's Club and ship just pulled that that rug out from Target has pulled that rag out from under the ship's customers.
You know which in my mind means shipped is at the end of the day going to end up being a convenience delivery tool for Target purchases which.

[44:30] Maybe super useful but it's it's a different model than the original ship model so I found that you know interesting or self validating made me feel good about myself.
And then there was kind of an interesting interview that we saw with Brian Cornell the CEO of Target I think he was on Squawk Box and you know who's making the point about.

[44:52] The value of Target stores and how you know they're very successfully shipping from stores and they're making major investment and remodeling stores and how how important stores are Little Mix,
all stuff that I wholeheartedly agree with that I'm glad to see Target doing and if it's I think that the Marquee quote out of this whole thing you know the kind of got the headline was.
Brian Cornell says e-commerce is in everything most us Dale Sale still happen in stores.
And I have to be honest I don't love quotes like that because in my mind you know half of all Target sales are digitally influenced.
And you know dis deciding that a sale is a store sale or an online sale at this point is kind of silly that 70% of all their online orders they ship from the stores and now they have this ship thing to deliver from.
From the stores like you know I don't think Brian should be talking about his e-commerce sales versus Is Us sales and the my sort of.
Smart aleck metaphor is it's like the old retail Guy saying the only profitable part of our stores the POS because that's where all the sales are driven in the shells don't drive any sale so they're less valuable we should not invest in the shelves.
Obviously like it doesn't matter where the sale is consummated like the whole customer experience is super important.

Scot:
[46:07] Feel like there's a joke in there but I didn't get it some kind of old school retail joke.

Jason:
[46:14] Yeah I'll put the laugh track in so people will think that everyone else got it even if you didn't.
But we are up on time. Because I know we're trying to make the news episodes a bit shorter as a is an amenity to our listeners,
I do a reminder when I get in to see some of you in Chicago at the path to purchase Summit Monday March 12th,
Scot is going to be part of the Great track on Marketplace in Amazon selling and I I'm going to be.
In the audience learning from that one and we'll be podcasting some live shots from there so.
Hope to see some of you then as always love to continue the the conversation on Facebook so if you if you have any questions or comments about this episode or 100 out some of the many things. And I got wrong feel free to jump on face.
And we'll keep the conversation going and as always if you loved the show we would greatly appreciate that five star review on iTune so this would be a great week.
Finally jumped on the website go finder show all you have to do is type e-commerce in the iTunes where the first one they don't show up.
Click on that 5-star review and we will be forever indebted to you.

Scot:
[47:23] Thanks for joining us everyone and also when you're on iTunes hit the Subscribe button to lock people just download each episode which is fine but his subscribe it also helps us on the rankings and we appreciate that.

Jason:
[47:34] Absolutely so until next time happy commercing.

Feb 17, 2018

EP117 - Listener Questions

Amazon launches"Ship with Amazon"

Listener Questions

Q1: Amit Agarwal- Thanks for the amazing podcast. What is the future trend in pricing ? EDLP or coupon based pricing?

<Jason> Most new retailers will adopts EDLP, promotions aren't as effective in the age of transparency, but it's very hard for existing promotional retailer to switch.  Eventually we'll get to more dynamic, personalzied pricing.  Every Nanosecond Low Pricing #ENLP!

Q2: Kiri MastersWhat are the coolest or smartest things that brands and retailers are doing with voice commerce? And, what is within reach for smaller brands who don't have a $200k+ budget to drop on developing skills, etc. Where are we on the maturity curve?

<Jason> Transactions are limited to recurring and replenishment purchases, so Pizza places and Starbucks have the early lead.  Brands like Patron and Tide have made good use of voice skills for top of funnel marketing.  Small brands should think about voice for on-site search, and voice SEO on search engines.  It's VERY early in the maturity curve.

Q3: Patrick ParolineHi guys I love the podcast listen to it every week. When the numbers say that e-commerce revenue is up 17% does that include Amazon? If so what would be the e-commerce industry revenue increase if you took out Amazon? I believe you guys said that Walmart.com growing and 60% and Amazon at 30%. Would this mean if you removed these two companies then e-commerce as a whole is contracting

<Scot> Good question!  If you take the top 3 retailers out, e-commerce growth is very modest:

  2017 GMV 2018 GMV 2018 Share YoY Growth
Amazon $177 $230 49% 30%
eBay $35 $37 8% 5%
Walmart $15 $24 5% 60%
Other $173 $177 38% 2%
Total $400 $468   17%

Most e-commerce data is based on or correlated to the US Commerce Dept data, which is somewhat suspect.  Jason and I both believe the total market is probably a bigger, which means "Other" is probably bigger, and growing faster than 2% but still much slower than Amazon/Walmart.

Q4: Ari Nahmani - Mobile payments in 2018 - can we hear more about Android Pay / Google Payments API, Apple Pay, W3C Payment Request API, etc? Do we have any data that shows that when implemented properly, these things truly reduce the 'mobile gap'?

<Jason> Apple Pay and GooglePay have loyal but small user bases.  Paypal and Pay With Amazon have proven that digital wallets do improve conversion.  W3C Payment Request is great, easy to implement and likely to improve conversion, most sites should have it on their roadmap to implement.

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 117 of the Jason & Scot show was recorded on Thursday February 15, 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature - Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show at this is episode 117 being recorded on Thursday February 15th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:40] PJ's women walking back Justin Scott show listeners,
will Jason's covellite Newsweek to our couple things want to cover before we jump into listener news we warmed up the old Facebook page which,
is my responsibility and I have to have a met a couple that I have not been very active posting to our listeners there so one of my New Year's resolutions I know it's so late for those here.
Late February is to try to be more active on there and then gauge hook so we are going to be able to handle on some pretty great listener questions so we got today.
I before you jump into that you have a new gadget on here about.

Jason:
[1:19] I did I'm a very romantic guy so for Valentine's Day I got my wife a apple home pod.

Scot:
[1:25] Wow nice that will last longer than a dozen roses.

Jason:
[1:30] Yeah it will although I don't think it was a big hit I think she appreciated the gesture and my super artistic wrapping you can you can't even imagine how impressive that was.
But the homepod itself I wasn't personally very excited about like I had read a bunch of mediocre reviews as we talked a lot about on the show I have a house full of Alexa devices.
Extra Alexa devices at the moment.

[2:01] Into the really wasn't anything I was looking forward to in a homepod but my wife is heavily steeped in the Apple Echo System she had mentioned it a few times.
And she is very heavy Apple music user so I figured okay well you know what I mean it's present for her she's been talking about so we'll we'll go ahead and get one and I'll surprise her.
And I'm sorry to report that all of the mediocre reviews we sort of experience first-hand right I guess.

[2:33] Like I don't think Siri is as useful as as Alexa in general and the version of Siri on the the.
Homepod is kind of a dumb down version of Siri so it was kind of annoying it seems to understand us a less than.

[2:49] Then the Alexa does I will say the audio Fidelity is great like the audio it's definitely a higher-quality speaker than any of my Alexa devices which are all Amazon first-party ones I don't have any of the.

[3:00] The third party speakers sounds great but the voice interface sucks and it's it's just not compelling to have this.

[3:09] Extra Gadget in your house just to play One music service.

[3:16] And so I think even my wife whose Apple fangirl and kind of disposed to like their stuff I don't think she likes it enough to keep.

Scot:
[3:25] Man do you have the so I've read a lot of people that compare it to the Sonos Sofia what their name is for the one with Alexa.

Jason:
[3:32] I think it's the soonest one that has Alexa in it and I played with it.
I haven't had it in my house and I think those are mixed bag so I could this has really good audio quality in general I actually have a bunch of Sonos speakers.

[3:49] And people are saying that it's comprable audio Fidelity to the homepod if anything it's maybe,
a hair lower-quality there's some pretty sophisticated auto-tuning in the Apple speaker that I'm not sure the Sonos matches but that sentence is a hundred bucks of alas,
you know it's it's debatable whether it has worse audio Fidelity and it supports Alexa and there soon going to add Google Assistant to it as well so way better value way more utility the only reason I even bought one.

[4:23] Is it actually Amazon slightly neuters all the third party speakers so,
the only music service that the third party speakers. Port is Amazon music which is mostly what we use in my family on the Alexa devices but if you're a Spotify or Pandora user and you know there's a very good.
Spotify experience on the on the indigenous Alexis I think I think that might be what you use if I remember right.

[4:52] Spotify got yep good sapientrazorfish clients so we certainly like Spotify.

[4:59] But they're the the.

[5:04] Amazon doesn't currently make that available on the 3rd party speakers that have Alexa in it which isn't like clearly an intentional way to disadvantage the speakers.

Scot:
[5:14] Directions to Sonos I have also a Sonos system and it's pretty agnostic you know so I can like being Spotify to it XM radio I think it'll do Apple music.

Jason:
[5:26] I think it will and.

Scot:
[5:29] Just weird that that one is going to be like almost a step back for them.

Jason:
[5:33] Well so whistler's check me on this but I think the actual case the Sonos one speaker is a Sonos speaker and so it actually runs the Sonos firmware and you can use the Sonos app so so you can run Spotify.
Using the Sonos app on your Sonos one speaker what you can't do is use Alexa voice commands to play,
Sonos to play Spotify music on that Sonos one.

Scot:
[5:58] Look up a lot about the speaker Market here and then I've seen reports that the homepod is leaving white rings on Aaron's furniture did did it also damage your furniture.

Jason:
[6:11] So it is not where we have it on Formica desk so it may be a little safer but so it's not on like a nice piece of wood furniture but I have seen the same report it is,
the speakers both slightly smaller than I expected it to be I mean it's it's it's about the same height as my Alexa's and it's a little fatter and I expected it to be.

[6:33] Maybe taller but it's it's super heavy for its eyes like it's very it's very dancing it's because it has this big subwoofer in the bottom then I guess it's just now putting so much low.
Low energy that it's moving around a little bit and it has like this white rubberized.
Donut on the bottom of it and apparently when that thing moves around it it's leaving a mark.

Scot:
[6:59] So you're just about the same size as the old the original XO kind of the cylinder or more like the little one that has like a felt kind of filter.

Jason:
[7:07] Yeah I know so it's the same height,
patches I'm staring at them side-by-side it's it's like a touch shorter than an original of Alexa cylinder it's much it's much better than Alexa in fact it's it's.

[7:25] Diameter is probably like at least twice twice the diameter of the Alexa.

Scot:
[7:31] Well.

Jason:
[7:32] And it does have a weird it it it's also covered in fabric but what's it weird it freaked me out the first time I picked it up it almost feels like you can Dent it it almost feels like it squishes in a little bit.

[7:44] And then it seems like it it restores it's ya.

Scot:
[7:48] Yeah that makes you were either going to punch her thumb through the thing you don't want to do that.
Cool thanks for that Gadget experience report it wouldn't be a Jason Scott show without some.
Amazon news new your margin.

[8:15] Okay this one dropped it was bad timing for us from a podcast perspective cuz we recorded our show last Thursday,
Idol episode 116 and then sure enough Friday morning so big amazon news dropped and this is Amazon you know.
It's not clear if it was,
leader what happened but yeah they've been working with some third-party sellers for this full-on delivery service that's called ship with Amazon so it's going to Pilot in La it looks like and articles I read said.
It's going to roll out in 240 cities pretty quickly and the reason that makes sense is prime now is in 40 cities and Prime now built this super like.
299 car delivery Network called Flex So reading those tea leaves you know what I'm thinking is happening here is.

[9:05] Amazon started Flex to work with their 40 Prime now the foeman centers which are a different footprint than their normal.
Fulfillment centers then they started doing some deliveries out of traditional fulfillment centers with their own network of flex drivers and also.
Actually Amazon employees and whatnot and then now it looks like they will offer to third-party sellers the ability to ship with Amazon where if you were a third party and La let's say you were.
I'll pick on my friend Jackson who's I-84 city has a big Warehouse in LA and someone in La bought one of those products they could get that product in 2 hours and an Amazon driver would come to his Warehouse.
Pick this up and take it to the customer and so that would Leverage The flexnetwork so.

[9:52] That's pretty nursing and you know I we've been talking a lot on the show it was my 2017 prediction that I react for this year that Amazon will get more into dolak Direct Delivery and here you see yeah it's it's not.

[10:06] That hard to jump from that part of the Venn diagram to hey you.
Retail RX Nordstrom's here's your fulfillment centers we can help you deliver as well and then you can even adjust that product into the.
Burgeoning Amazon Fulfillment system network with airplanes and everything and effectively have a full-on FedEx UPS competitor.

Jason:
[10:31] Yeah and I think that's something that that you in particular but we've we've discussed on the show a number of times that that that seems like a likely play for Amazon to make.

Scot:
[10:44] Yeah it is there since internet retailer and I'll put in there this cuz I know you how I feel about surveys but they did a survey of I think it was 200 retailers and when I looked at, the size of sellers you know,
you know and it but then like a good a third of them were more larger retailers and I are 500 types awesome like 70% said they would,
it was either strongly try or are we.

[11:10] Only 30% said they wouldn't use an Amazon shipping service in the 70% said half of that 70% said it would have to be a bit cheaper than current offerings and I think it's very very interesting.

[11:22] This holiday,
probably not because usually impacted but next year's come you're very interesting because I know you said when you draw the lines of the amount of shipping needed out there and what's available Amazon will it consumed most of it and you know seems like Amazon's read those tea leaves and is finding a release valve with this new ship with Amazon program.

Jason:
[11:44] Exactly and you know a couple of things kind of come to mind,
the day before and a podcast we we had talked about some of their seller fulfilled FBA programs and including a new program where they were putting their own software and customers warehouses in,
clearly like those two pieces of news are at least partially related you can imagine if a bunch of.
Shippers are running Amazon software to manage their shipment and you know that that,
Doppler could take that shipping method and and you don't have sort of a biased towards Amazon shipping service.

Scot:
[12:27] Yeah yeah it's good if it's going to be interesting to see how this plays out and then you know a lot of people will say,
well you know this route is unprofitable that routes and profitable I was kind of stuff but you don't have me watch Amazon kind of decompose other markets pretty quickly they were the prophet is so don't go and you know it there.
Their profit is your profit is their opportunity right so they're going to go and they're going to find the routes that are most profitable for third-party shippers and they're going to pull those in the house cuz it'll by Logic if it's.
Probable for for the shipper it will be.
Amazon will have the best savings by cutting that Loop out so so so we really interesting to see what happens when they start doing this you know you can only look at it from a low Amazon just overdid 1.1% of volume because that .1% of volume could be like,
8% of margin of the deal that people have one with Amazon supposed to be really interesting to watch the positioning here.

Jason:
[13:26] Exactly I think like they think they don't have to completely match,
UPS and FedEx is Network to disrupt them right if they just take some of those most profitable deliveries and bring those in-house you know that that can create enough of an inflection point that causes some new unique paying for UPS and FedEx and I think,
I don't think Amazon wakes up in the morning and goes how can we ruin UPS is life and I think they're more thinking about how they can make their own lives better you know this,
saw some of their their Peak demand problems that solves like controlling one of their fastest growing expensive lines which is shipping and in the long run you could imagine then building all kinds of.
Reverse Logistics services that UPS and FedEx just might not be that interested in but that are.
Really important customer experiences for e-commerce right like so easier returns.
You know you you hypothesized that hey there's a bunch of warehouses that are all all the Feeling by Amazon and they all have Amazon software in there like Amazon could have literally trade a new Marketplace.
For warehouse capacity and sort of flex store Amazon Goods in other people's warehouses that are running their software you know you in a two-sided Marketplace exactly.
Like they do for for 3rd party selling so so lots of interesting new things that could evolve from here that make the super interesting.

[14:55] A couple of things like that that I had to point out,
I do feel like you have been talking about this for an awfully long time I know calling Sebastian was one of the first analyst to talk about this but I did have to chuckle a little bit like I feel like the entire all of Twitter broke their arms congratulating themselves.
Predicting this.

[15:14] And I'm not sure like that you know it you had to be the cleverest person in the world to predict this 3 months ago that Amazon would eventually try to monetize this like you have given that that's the model they've.
They followed with so many other things so I did I do think it's funny I may be made a joke that like the only person on the planet that didn't fully predict this is the CEO of of ups that kind of had a.
Last year that we don't believe that there is for Amazon strategy is to do it themselves and the reason we believe that is is we have this huge infrastructure we're investing in technology we have a great Mutual relationship with Amazon.
Like you don't obviously that was a bad day at UPS when when Amazon when SWA week.
And coincidentally enough this is the month when our friends at FedEx and UPS do their annual rate increases and so this year if you're a shipper.
You're the base UPS and FedEx rate went up by 4.9% so that's a huge.

[16:17] Operating expense for most e-commerce business is to absorb mini which are struggling to be profitable already.
Now they're their operating costs are 5% more and oh by the way most of the shipping went up even higher because.
FedEx and UPS are really design for business-to-business shipping so they're highly optimized for taking package it Parcels 2.
Businesses their least efficient at deliver at residential deliveries and so a number of years ago they introduced a surcharge.
For residential deliveries to kind of compensate them for the for the the greater expensive this home deliveries and those surcharges went up its kind of,
on a sliding scale so it's there's not an exact number but the surcharges went up like 8%.

[17:05] So very meaningful increases from FedEx and UPS and it's cool you know they're there.
Maxed out on capacity they're not growing as fast as demand is growing and so they're trying to you know maximize the value of the capacity they have by charging more.

Scot:
[17:21] Yeah yeah and a couple other interesting facts so FedEx says no one customers more than 3% of their volume so that you know a lot of people read that and say that's kind of where Amazon is Amazon definitely sends,
you know the most between faxing UPS to UPS and UPS says Amazon's about 10% of their volume so it's not cataclysmic for any of these guys.

[17:45] To go to go to lose some of the Amazon business what would I think everyone underestimates though is Amazon just kind of you know.

[17:53] Picking these very profitable businesses and offering them even if it doesn't involve Amazon it all eventually and then that's going to be your just like cloud computing you can you can host Netflix host you know on 8th and it's like.

[18:06] Competitor using their Cloud infrastructure which is the old world off on the world doesn't make any sense at all,
but enough for Netflix economically are so attractive they're willing to do that and you don't so what if I don't know,
I don't Walmart would never do it but what if Macy's start Cent shipping ring what Apple started doing deliveries using Amazon Network you know that starts to get.

[18:29] Pretty interesting and mind-bending of what some implications are.

Jason:
[18:33] The apps absolutely I will look like,
minor props like UPS and FedEx are well-run companies like there's they're smart to be making the most they can on the capacity they have and props to them for not having a huge customer concentration problem is that in most B2B business as you you have a much bigger concentration problem then your largest customer being 3% of your business.

Scot:
[18:57] Yeah cool so that was the big news let's make sure we will make sure we cover these listener questions so let's jump into him.

[19:10] Questions questionnaire questionnaire questionnaire questions Jason we got for really meaty questions,
and it was good news for me three of them were really in your alley and one is mine so let's ask you the first question so this is from admit Agarwal and he says thanks amazing podcast so clearly am it has impeccable taste,
and and is awesome to begin with and he wants to know what's the future Trend in pricing everyday low pricing or coupon base.
Pricing?? So maybe.
You know I know your ninja live on this but maybe give us a 101 on What is edlp what's it mean online and then where do you think kind of retail pricing goes in and eCommerce pricing.

Jason:
[20:00] Yeah,
so so edlp is an acronym for everyday low prices in the retail Echo System the retailer that then most.
Support cdlp unit it literally is sort of kind of their their core value proposition is Walmart so in in general they they very aggressively try to get,
prices on all their goods as low as possible and in general the pricing does not fluctuate a lot based on sales and promotions.

Scot:
[20:30] The idea is the consumer doesn't have to worry that they're getting low price they just kind of know and and all automatically roll it back if if target has toothpaste at a buck you know you can count on Walmart to do a quick roll back and I'll be at like $0.99 so.

Jason:
[20:45] NN light they don't make as big a deal about it being their cultural diversity different reason Costco is a great example of edlp like they,
Costco literally has hard rules for the merchant about,
the maximum margin they can take on a product so when the price to them goes down they they are literally mandated to pass that price on to the,
the customer and so you know and you don't answer I walk through Costco looking for sales you your condition that everything in prayer and Costco is a.
Consistent like you know good deal based on volume and and all these things and in so.
Those are the kind of retailers that are on the edlp side of the spectrum for a long time JCPenney was the poster child for promotional pricing and they still are very promotional but what made in the poster child is.
When the former retail Guru from Apple Ron Johnson went to JCPenney he tried to change them from their highly promotional pricing strategy.
To essentially edlp and said that that really raise the profile of how promotional.

[21:53] JCPenney had been before but you know I would argue Macy is very is very promotional.
And you know frankly most of retailers is pretty promotional said that the outliers are there.
They're the largest retailers in in North America are the edlp retailers these new hyper aggressive grocery stores like Aldi and Lidl are also a deal.

[22:20] So what's the future.
I think the future is edlp like a if you just do a survey of the most successful retailers.
They're edlp another and this is straining the definition of edlp slightly but another hyper successful retailer that edlp is Apple.

[22:40] Like not not very promotional like the low price isn't particularly low.

[22:46] You know it's very rare that they have deals and when they have deals they're not very deep.
Very very consistent pricing and you've never seen a sale sign has never popped up anywhere in an Apple Store.
So you work at all this successful retailers they're all edlp you look at a lot of the struggling retailers there more promotional.

[23:08] You know I'm not sure that's that's a complete causation vs. correlation the reason I say that you DLP is the future pricing is.
Because of digital disruption right like thanks to all the research we now do online and you know are huge access to information and the fact.

[23:28] That you know there are no more secrets in the world anymore we've shifted from this world of what I call Price office gation where you essentially.
Only saw the prices the retailer wanted you to see and when they did this kind of like fake is was pricing where they show you a low price high price Market out and show you a low price.
You have no way to know that that high price wasn't really the price that was offered yesterday.
Until you would believe the retailer today you read some app or some blog or you get some some.
Email newsletter,
and you you know exactly what retailers are playing what games with pricing until you we now have work this emerging world of perfect transparency.
And in the world a perfect transparency promotions just aren't as effective.
As they they used to be a lot of the the promotions rely on the psychological tricks that don't work as well when the customer is fully armed with all the information and who has a better deal.
And how much more or less you're paying than the best deal in all these sorts of things so I sort of feel in general that transparency is.
Forcing the world to edlp the most successful retailers are edlp and then I have to throw a huge caveat out there as.
Both Macy's in the distant past in JCPenney more recently have proven to us.
It's next to impossible to transition from being a promotional retailer to and edlp retailer.

[24:58] So when customers are accustomed to those promotions they punish you when you try to make that transition and no return that I'm aware of his been willing to stick with.
That transition long enough to make it work,
so they all have tried taking an early hit and kind of reverted to the original pricing model in the same things are the plays out every holiday season when retailers,
rely on promotions to sell more over the holidays and to comp against last year when they were also promotional in so we like most retailers that like.
Have a history of promotions become addicted to those promotions and so far it's proven to be a almost unkinkable addiction so,
don't expect to see a bunch of retards Sayo Goldberg said edlp beats promotional pricing so we're going to switch,
I think you're going to have to wait for those business models to those retailers though to sort of expire or turn out and you'll see the majority of new retailers emerging and it's really all the Disney DeBrands adopting.
Much more edlp pricing strategies and then the one big caveat on all of this is the new replacement for promotions in this edlp world because,
personalized Dynamic pricing right so we're just starting to see this but in lieu of a one-size-fits-all 30% off on these deals.

[26:29] Are all the custom offers you're going to get when you abandon something in your car that's based on,
your unique shopping behavior in your past purchases and all the evil data that the marketers have collected about you and so you know I think Amazon's a perfect example of a highly dynamic edlp,
pricer.

Scot:
[26:52] Yeah yeah the it's interesting because someone asked me Walmart,
Cyprus NASA you know how do you think about Amazon in a DLP DLP world and I think of it as like every nanosecond low pricing right so full disclosure one of our futures at Channel advisor is every pricing engine and worship to these things and this is a very popular functionality for sellers cuz once you get to scale,
you literally cannot keep up with the marketplace it's effectively a stock market for products on Amazon every,
every sin is constantly repricing and sometimes it's up sometimes it's down.
So this is why you know the Amazon bookstore doesn't have prices because they may find the,
book that you're looking at 5 minutes ago lowered his price somewhere and they want to lower that price in a physical world you you can't change prices that quickly because the infrastructure just not really quite there yet so.

[27:49] What is that do so.

[27:52] Select Plus use Walmart to pick on them so they're they're edlp but then online they're going to be competing with Amazon so do you have these periods of time where your online prices are are very kind of more dynamic in your storage cuz of the,
the nature of the the store being slow to be able to change prices.

Jason:
[28:09] Exactly that is the common practice right now is that very few really Progressive retailers have adopted what I call Universal pricing which means.
They are for the same price to you regardless of Channel.
Because they're edlp in the stores and they are there more to your point that you know there more Dynamic then daily online and then in the case of.

[28:38] Walmart specifically like you can even think about the you know as as they sort of Jetta fi the value propositions at Walmart right,
where you know jet will give you a custom discount based on your purchase as you're buying a bunch of stuff from this particular fulfillment center,
so I'm going to make other purchases from that fulfillment center cheaper,
or you're buying products from this particular vendor on the make other purchases from that vendor cheaper or you know that you opt out of some of the optional cost.
And those sorts of things a big version of Walmart adopting that strategy more more globally is when you order something online from Walmart.
And you're willing to have that item shipped to the store instead of to your home.
Walmart has a very efficient delivery vehicle for delivering items to store and so.
You're some of that savings that they're getting by not having to use UPS there now passing on to the customer and so the the ramifications of that.
Greater Dynamic pricing online and then the definite ramifications of the personalized pricing online that your Point University retards have tried to do.
Personal product pricing in in store.
Has resulted in there being some unfortunate price fragmentation where you know there are now.
Multiple prices at at Walmart right and I I feel like that's a imperfect compromise that Walmart has to deal with because.

[30:07] Technically part of edlp should be it's the same low price everywhere.
But because they're trying to offer this Dynamic pricing in this personalized offer system the pricing is different and.

[30:20] Frankly getting more complicated not less because if you order online groceries and you're going to do curbside pickup.

[30:28] Should you pay the same price for someone to walk around that store and pick all those items for you as someone that bought them in the store and did the work them self like you could you could you don't argue.
That there should be a different price for curbside pickup in a different price for delivery and in general we've learned from the psychology of consumers that they don't like paying fees so they'd rather those cost be.
Built into the the product prices but then that means wait a minute there's an online price at Walmart on a grocery pick-up price at Walmart and an in-store price at Walmart and you know that it flies in the face of the,
original Sam Walton edlp premise so it's a it's a tricky clean world at the moment in the long run,
I think stores figure out how to get more dynamic in the store and then we get back to more Universal pricing in the same offer everywhere and,
you know that my colleagues are laughing at their wissen to this right now because I'm famous for every year pretty thing that this is going to be the year when we start to see much greater adoption of electronic price tags in electronic bag tags.
Because retailers need to get more dynamic in the store and daily repricing is no longer Dynamic enough in these electronic back tags are the way to do that and every year I predicted in it it never seems to happen.

Scot:
[31:50] 101 interesting outcropping of this that I find really fascinating and if we run into this a lot of Channel visor is.
All this this topics that we talked about create and efficiencies in the system and when you have in efficiencies they can get to be pretty wide you have.
Product like all product arbitrageurs so for you it was classic example is.
The arbitraging between offline and online so someone will become an expert at something like a lot of these guys are involved in the sneaker world so that they'll have a really good idea of what you know.
Every line of Nikes and Adidas and whatnot are worth more than they know that like Footlocker and the the stores they do their markdowns on Thursdays.

[32:34] So the lineup at the campout look at there and they will literally load up car loads of these things.
Take him to Warehouse sell them on eBay and Amazon for like 30% milk.
I brought that because you know the store is inefficiently running this algorithm and there's these people that that are taking advantage of their their you know.

[32:54] Whatever I would argue it's inefficient because they're they're arbitraging and getting the value from that in efficiencies.
And then you know it gets even more crazy because there's people that will look at the inefficiency between Market places like eBay Amazon and Walmart and no actually take still discover a product on,
what's a eBay bid selling for 30% more on Amazon that it does for eBay for whatever reason maybe eBay search engines kind of wonky or something there's a variety of reasons these things happen,
that should take that product list on Amazon never touch it and then someone buys on Amazon and they'll go then go buy it on eBay and then ship it.
To the Amazon consumer so it's like a zero inventory Arbitrage that you can do and then they are.

[33:43] Adult for this kind of thing so most people build custom soccer for that but I've run into folks they're doing hundreds of millions of dollars in gmv,
and you know what you take fees out and stuff it's not usually look at it but they can maybe make five to 10 points if they pick their arbitrageurs right so these are these are $109 businesses usually without any employees that are run by robots that sit there and and do Wall Street level arbitration on products between stores Market places and things like that it's pretty,
pretty wild funny when you think about it.

Jason:
[34:16] That's I think that the crazy high-volume version of that below volume version I think it is pretty common it's a common side hustle for college kids,
to do the online or offline to online Arbitrage there now I like three or four mobile apps that you can literally install on your phone,
go scanning go skin skus that are on sale in these retail stores or even better go to stores that are having bankruptcy liquidation sales and apple tell you in real-time what products are profitable,
to buy from that store and go list on the marketplaces in the App Store,
darn polished and sophisticated they factor in like all the FBA handling and return rates and everything is pretty sweater.

Scot:
[35:02] Scream isn't,
well we could go on for pricing for the whole show but we have more questions this will probably be a short ones that's hope so but will first of all thanks for that awesome question that was great hopefully we kind of dug into the the Rita we're looking for question number to this one's also for you Jason what are the coolest or smartest things that brand retailers are doing with voice Commerce,
and what's Within Reach for smaller Brands who don't have a hundreds of thousands of dollar budget to drop on developing skills and in that kind of thing and where are we on the maturity curve so it's kind of three questions in there so so I guess question number one is what are some cool skills you've seen that the show what brands are doing with the,
The Voice Commerce guys.

Jason:
[35:43] I'm not that I want to answer your question but I want to take one step back and sort of highlight like a lot of times when people talk about,
voice Commerce they're talking about actually doing transactions you know so like you know Alexa order batteries type.
Type of experiences and that certainly is one element of voice Commerce like I would point out there's a lot of other parts of voice Commerce there are.
Marketing tools and so a lot of the skills in the Alexa echo system that are skills that are published by a brand are actually more marketing tools.

[36:19] Primarily trying to drive more interactions with the brands and more brand awareness and more brand Affinity than they are sell a specific product like you know immediately and so,
when you say What brands are doing the really smart things I actually think,
voice voice transactions are relatively nascent so it's pretty small like in general we think there's probably 30 million of these devices and in North America right now so it's you know addressable Market compared to the,
190 million households online is smaller you know 8.

[36:57] Small majority so maybe more than 50% of those those devices,
have ever been used for a voice transaction and that certainly isn't the most common way that those households do transaction so the total number of transactions on voice there's no good data out there but,
but our guesstimate sorry that it's pretty low and so I'm not sure I point to any brand other than Amazon and say hey good job,
selling a bunch of stuff directly from your voice interface so that the,
the ways that voicing most interesting are from one of these marketing things and so,
there are clever things Patron has a great skill for helping people explore in the stuff discover new cocktails that all conveniently enough.
Can be made with Patron tequila,
but it's a relatively sticky skill that has like a high,
active user rate that helps Patron build a brand once once that skill you know gets into the Zeitgeist of those homes it's hard for another brand to come in,
you know with an alternative Bartender app right and like to me one of the Marquee examples of this is the tide stain app which is kind of clever,
you know you if you spill some pomegranate seeds on your table cloth and now you've got this pomegranate stain and what's the best way to get that stain out is it.
Vinegar as a club soda how should you pretreat away what should you do so this app gives you advice on how to to treat all the different stains.

[38:34] That you might come across and it's branded by tide and remind you to use,
tide products to help laundry all this thing so I think some of those kind of brand Affinity apps are the smartest apps then you know there are a few categories were voice,
transactions are more common so I think the the Pizza Hut app is a good example of a highly recurring,
consistent,
transaction that people tend to do obviously in my personal Echo System the the Starbucks voice ordering app would be most useful,
because I travel so much I go to so many different Starbucks that it's actually not super useful in my household but,
for many people I'm sure that the the Alexa app to trigger a Starbucks mobile order in and pay is is,
a relatively high volume app so I think those are awesome good ideas I would also remind users that,
there's a significant amount of voice search going on so Microsoft has 20% of all Bing searches are boys I don't know what the Google percentages is probably not as high because it's not built in the Everett.
Every Google device but every laptop is running Google but.
It also is probably as a meaningful number and then more more e-commerce sites are building voice as an interface into their own website so if you're,
a brand that has Shoppers shopping on your own e-commerce site and they're heavily mobile users it off and is easier to say a search query then to type it on a mobile phone.

[40:09] And so you know we're starting to see some meaningful adoption.
From voice search on your site and so when you say like hey I'm a smaller brand I can't afford the investment the patron or Procter & Gamble made in there.
They're Alexa skills.
And I would highlight is that she not that expensive to build a skill it's pretty expensive to market the scale which both patronen and Procter & Gamble do quite a bit of.
Some of the the lower-cost ways to implement Voice or it's it's pretty inexpensive to have a third-party partner add voice search to your existing,
e-commerce search platform and it's super low cost to start doing some voice SEO to start optimizing your keywords for the things people say,
into being instead of the way the things people type so I think it's still super early days I think voice is.
A more useful tool for marketing than it is for actual transactions I think in the long run we're going to see boys shoes for a lot of transactions but it's going to be a specific type of transaction which are those.
Replenishment Auto fulfillment type orders I think you can use voice a lot to add and delete things from.
Your regular shopping list so you're going to say Alexa cancel this week's groceries because I'm going to Mom's house for Thanksgiving.
You're going to see a lot of those kind of things but I don't think you're going to order brand name dresses in specific sizes with particular Prince from,
you know your favorite dress designer via voice cuz I just think saying all those attributes and knowing the.

[41:44] The unique brand terms for each each designer is is super unlikely.

Scot:
[41:52] I saw this reminds me of a funny cartoon I saw the other day where someone says to the Alexa Alexa order me a Kleenex and it says ordering Amazon basic tissues and their said they spell out Kleenex and Alexa again says tissues and then they're like,
Amazon Kleenex and it's like I don't understand what you're saying.

Jason:
[42:11] I think that that ironically that could drive pups to be the second best selling facial tissue online because.

[42:20] Little problem with the synonyms at the moment but yeah it's and it's it's going to be for that replenishment stuff there's going to be huge fights to be the default brand and lots of interesting stuff but that's probably a whole separate show on voice Commerce that we should do sometime.
I want to get to our third question which is from Patrick per line.
And Patrick says hi guys I love the podcast to listen to it every week thanks very much Patrick I do too when the numbers say that he Commerce revenues up 17% does that include Amazon.

[42:54] If so what would be the e-commerce industry Revenue increase if you took out Amazon I believe you guys said that walmart.com is growing it at 60% and Amazon at 30%.
Would this mean that if you remove those two companies then e-commerce is a whole is contracted.

Scot:
[43:11] Oh yeah thanks.

Jason:
[43:12] Can I have that has math in it so I'm proposing you answer that one.

Scot:
[43:15] Yeah thanks Patrick for the question that it is a very good question and this is one that I've spent a fair amount pondering so let me let me talk to you.
Talk you through some of it I'm go this pretty quickly will will put some stuff in the show notes if I lose you anywhere so first of all.
You know what what's interesting is there's a lot of sources for the data so that's one of the big variabilities in this whole thing so you have the four sources I track and I'm sure there's more but the the four main ones are comscore US Census Bureau,
Forster and emarketer.
What are things you always notice is the comscore US Census in Forester tendo line with each other they'll be in the ballpark so silver example they'll say.
2017 e-commerce the United States was around anywhere between 380 and 420 billion but any marketable say 800.
And to emarketer is very inclusive of everything so I think they actually put cars in their tickets grocery.

[44:16] You know Events maybe even hotels or something so so you know when you're looking at these data sources it's important to understand what's in there and what's not,
I tend to like the comscore the Census Bureau in the forest one because they they do not throw the kitchen sink in there and it makes kind of thinking about this a lot easier,
so
what I did is I took the Census Bureau data and I'm and if you look at 2016 they say us e-commerce was 359 billion and if you look at 2017 415 but I'm such a difference of 56 billion and to your point,
you're 16% growth so so.

[44:55] That's it that's an important number so 56 billion increase your rear in the United States was 16% growth now let's look at Amazon.
Amazon's 2016 Revenue was 135 billion.
And in 2017 was 177 billion that's the global number so you have to Amazon's pretty much right down the middle of domestic and non-domestic,
and she have to give it a chops and it half and we do that you get the US is 68 billion in 2016 and 2017 88 million that's a difference of 20 billion or 30% growth which you correctly called,
and so you'll get that number that 20 billion and we had our 56 billion for overall Commerce then that means Amazon drove 36% of that growth.

[45:41] Then if you took if you took Amazon out then the remaining piece crew 10%.
So that's interesting number.

[45:51] But this is the common thing that I think happened to allies numbers longtime listeners will know that Amazon's revenues are essentially,
Banner reported cuz the third-party Marketplace and so we at the Jason Scott should like to look at the DMV so it's kind of Handy is I took the.
Total Amazon numbers and I cut them in half to get to the US will you can effectively just kind of double them again to get ballpark GMB it's little bit more than that but this will this will make you feel a little bit better because it under reports Amazon app,
I believe so when we do that we're back to kind of you know.
Amazon's gmv in the u.s. for 2016 being a hundred and thirty six billion then 2017 was 177 billion for difference of 41 billion okay so I think that's the real number that we look at for Amazon and again.
E-commerce grew 56 billion Amazon Groove 41 billion now you have all you're left with is 15 billion coming from other places or 4%.
So so you're kind of left you know what that tells us is that and learn if he Amazon grew 30% then the rest of world group had to grow 4%.

[47:03] Just kind of fact check that when you look at eBay they just reported their 2017 numbers they grew kind of around 4 to 5% in the US so kind of lines up right,
do we have Walmart at in there I think they're growing at 60% and then they want to go to 40% Jason you can fact check me on that one.

Jason:
[47:21] Yeah I think it's like last week orders were like 60 62 and then 50.

Scot:
[47:26] Yes now what I think is going on is Walmart's actually pretty tiny in the world were talking about that you know of eCommerce so you have something like three or four percent of Walmart sales are online which is there for near Blaine dollar.
Global retailer so there's really not moving the needle quite fast is fastest of the other things were talking about so it's what's going on here.
The way I like to think about it is let's build a pie chart and and this pie chart is a $400 pie chart that's the 2017,
yo i e Commerce so of that Amazon's 177 billion or 44% of the pie growing 30% eBay is 35 billion that's their us GMD.
X autos and that's 9% the pie growing 4%,
Walmart is 15 billion ish growing or 3% the pie growing 60% actually put the pool table will put in the show notes and where you left with isn't other bucket,
that is about 173 billion which is a pretty big slice of Titans looking like 40% of the pie but it's only growing if you do the calculus.
It can it has to be flat to effectively 2% because of the growth that has been soaked,
now what are things that doesn't jive with that is you have Target growing pretty fast while the omni-channel guys are going fast even some of the e-commerce platforms the report like Shopify.
They're growing their igmp like 20 or 30%,
now they don't report a sings Versailles so that that's a little tricky so they're they're actually kind of getting new customers in there and it's not apples to oranges but you know what's interesting is when I talk to all these data providers and I say.

[49:04] Two things are going on here the the you know there's someone is really losing a lot of Cher and I do think you have that going on so a lot of these stores you know we had more stores close last year than ever before.
And the dirty secret of closing stores is when you close doors and let's say you're you're serious you know when they've closed.
. 1000 stores decorative had one Fury Commerce business and the same is true for all these other folks that have clothes stores and whatnot so that's where a lot of the loss is coming from but it still doesn't a hundred percent at up,
I'm so there's there is a group of folks a lot of them work for the state of companies and what would they believe is happening is the US Commerce data.
Under reports vastly the size of e-commerce and the growth of it and then what happens is.
Comscore and Forrester correlate to that data so there's this Theory out there at and I'm not the guy to solve this is a kind of.
Delete it because it doesn't add up for me when I when I use the numbers I just got to watch you through it just doesn't add up so someone would have to be losing like you know that tree down like 60% year-over-year e-commerce businesses aren't big enough to really.
With a needle on what we're talking about here so so that's that's kind of.

[50:16] The most prevailing Theory amongst people and it's not really talk about much just kind of funny it's like this dirty behind the scenes secret of e-commerce there when talks about that shows and things but they don't really write about it and,
it would they believe is the US Department of Commerce data Vasily under represents the size and growth of the e-commerce market so,
there you go. That is an interesting Theory I have no way of proving or disproving it but it it's kind of I end up Landing there because I can't make the math work.

Jason:
[50:46] Yep and I I-10 the split that baby so I would say I do agree and strongly suspect the US Census Data under report e-commerce and like,
you know just a couple datapoint Spitzer to be aware of the methodology that you have senses uses is pretty underwhelming and just they just weren't designed to track e-commerce into essentially they're sending surveys to a bunch of businesses,
and asking them what their,
the revenue was and those businesses decide whether they respond to the survey in the same businesses don't respond every time and then the US Census uses a bunch of Black Box math that they don't disclose,
to convert you know the percentage of respondents into.
AAA National number and oh by the way the US Census doesn't even report e-commerce they report what they called non store sales which was originally,
catalog sales which are still in this number,
but essentially it's it's what they call everything that's not in a store and nobody gives the people responding to the survey any official definition so you know if Target is shipping 70% of their e-commerce orders from the store,
they may report all of those sales and their their store sales versus non store sales there's there's all kinds of room for,
messiness in the methodology and I will tell you that some reasonably credible Economist have looked at the US Census Data over time,
and flat-out found some glaring inconsistencies and they've written to the US Census asking for clarification and not got very satisfactory answers back and so these guys would say.

[52:27] That there's just too much Black Box math it's impossible to reverse engineer in the US Census there's some funny stuff going on,
and so it's it's easy for me to believe and by the way we should have them on the show one one time to defend themselves but,
it's easy for me to believe their numbers are perfect and SharePoint everyone wants to index to US Census Data so a lot of the other day two sources are based on US Census Data so I tend to believe e-commerce is growing,
is a little bigger Pi then then what a lot of these data sources say and I also believe that directionally your pie chart is still right,
that that Amazon has a Lion's Share of that that growth and so you know you factor out the the three or four biggest players in the e-commerce Market,
and the rest of e-commerce is not growing particularly fast and I have this recurring conversation with all these specialty retailers they're talking about their online and they're you know saying how how dare you know,
trailing the industry average and how concerned they are for their jobs and I'm pointing out that they're actually dramatically outperforming their peers.

[53:35] One last question that we may not have time for a detailed answer but I think we can probably give the high-level answer and then maybe we'll revisit it.

Scot:
[53:44] This one is very much in your wheelhouse and I feel like this is going to take you an hour to answer so let's see how this goes.

Jason:
[53:52] A challenge I like it.

Scot:
[53:53] Okay so this is from Ari and he says mobile payments in 2018 can I'd like to hear more about Android pay.
Google payments day. I guess Apple pay w3c payment request API and etcetera do you have any data that shows that when implemented properly these things truly reduce the mobile Gap.

Jason:
[54:13] And so it is the short answer. We'll do it deeper dive in upcoming show on mobile payments in general there's no,
great public data to show the conversion rate from,
true mobile wallets like Android and Google pay him now merge so we'll just call Google pay and Apple pay,
they're the number of people that use it as a small percentage of total transactions it does appear that that that highly loyal user base do have a much higher mobile conversion rate but there's an argument correlation or causation,
you know one of the rare users that using Apple pay online because you had the strong Affinity with apple and you're buying a lot of stuff from Apple probably and so is it you know,
is it higher conversion rate because you're using Apple pay or are using Apple pay because you're super loyal frequent purchaser,
that was Apple right so it's at the moment those are lower friction experiences there's some evidence that they have better conversion rate but it's all an adult and it's not a huge piece of the whole payment pie.
The there is absolutely some reasonably credible data out there that conversion rate is better with PayPal than without PayPal that's the most ubiquitous.
Digital wallet in North America and you know it's a lower friction checkout experience and so I think we have lots of evidence that every time we take the fields and steps out of checking out,
convergence better when those customers are already in the PayPal ecosystem and that's offered as a payment option conversion goes up.

[55:51] That makes sense to me and we we see it in the date of a lot of her private clients so that makes me think all these mobile wallets have a future or they can get enough users,
and then the one thing you listed that I'm most optimistic about of all of this is there's one thing that's not an actual payment while it's a payment technology and you rightly called it out as the w3c payment request API,
this is an open standard that they the HTML consorcia and essentially published that says,
let's have some better functionality in the browser to safely enter payment information on behalf of customers when they shop and let's let's tokenizing letting you know not store it as.
As some sort of insecure text on the on the PC and some way but let's make it really easy to fill out this form fields for payment.
And they've gotten really good adoption on that API it's now rolled out to all the browsers and so we're starting to see a lot more retailers adopted and.
Two good things happen when a retailer uses this API for their checkout experience,
in particularly there mobile checkout experience number one that checkout experience becomes more consistent and follows a standard convention from site to site so if all Sites use the exact same check out flow and gooey,
users get better at checking out and they're more comfortable with it and so it it actually reduces friction it increases what we call for dents,
and and you see better conversion rate and.

[57:24] That because this this a p i can store all the information that gets entered in that field & Auto in Iraq for you it essentially dramatically reduces the time needed to check out and so once you've used it once,
it becomes much faster and easier to check out on any e-commerce site anyone in the web that leverages.
This API so it's it's one of the things I highly recommend the clients and said easy implementation and everyone should be implementing that that payment request API and their,
in their checkout experience in particular their mobile checkout experience so.
I'll leave it at that for now but like the at the high-level there's not a great public data source.
To show the mobile wallets work but,
you can take my word for it that I've seen it in my individual clients that in general at it does have a measurable effect and for sure if you're interested in improving your mobile conversion rate you absolutely out of look at that WC3 payment request API and implement.

[58:27] And with that it is happen again we perfectly wasted an hour of our listeners time,
so now that Scott has redoubled his efforts on Facebook we highly encourage you to keep the dialogue going on Facebook again all these questions came from Facebook which was awesome so.
If we said some stuff is wildly wrong which I suspect Scott did and I didn't be great great to discuss that on Facebook we'll see you over on that page.
You can obviously find a spoof on Twitter were pretty active there and as always if you enjoy the show or learned anything or it's helped help you,
you're triggering anyway the way you can repairs for all that hard work as you can jump on the iTunes give us a 5-star review,
it's really one of the the primary drivers of SEO and I'll help other people discover our podcast and it makes us feel good about ourselves so.
With that I will leave it until next time.

Scot:
[59:26] Thanks everyone for joining us.

Jason:
[59:28] And until next time happy commercing.

Feb 9, 2018

EP116 - Industry News, Geek Week

 

SuperBowl News

Amazon News

  • SpaceX successfully launched it’s first Falcon heavy rocket, and recovered two of the boosters.  The photos and video of the Tesla in space were amazing.  And there appears to be a thawing of relations between Jeff Bezos and Elan Musk.
  • Prime Now delivery from Whole Foods stores
  • Expansion of FBA On-Site
  • Amazon expands it’s airport plans from 900 acres, to 1100 acres
  • The Spheres launched at HQ1
  • Private label continues to get traction especially premium denim “Hale and Denim Crush”
  • Amazon Go store opened to the public
  • Amazon is the largest spender on R&D, much larger than any other retailer

Walmart News

  • Walmart acquired Spatialand out of Store 8 for VR Capability
  • JD.com Coming to US
  • Walmart – Rakuten partnership ads digital books to Walmart.com

Drug News

Helena Foulkes becomes new CEO of HBC (from CVS) replacing Jerry Storch

Deliv launched DelivRX home delivery pharmacy service

Upcoming Events

  • Etail west 2/26 – 3/1 Palm Desert
  • Path to Purchase Summit – March 12-14 – Chicago
  • IBM Think 3/19-22 Las Vegas
  • ShopTalk 3/18-21 Las Vegas
  • Adobe 3/25-3/29 Las Vegas
  • NPD Idea 5/15-17 Austin
  • SAP Sapphire June 5-7, Orlando

Don’t forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 116 of the Jason & Scot show was recorded on Thursday, February 8th 2018.

http://jasonandscot.com

Join your hosts Jason “Retailgeek” Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

 

Feb 2, 2018

 

EP115 - Amazon Q4 2017 Earnings Hot Take

This episode is a hot take of the Amazon Q4 2017 earnings

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 115 of the Jason & Scot show was recorded on Thursday, February 1st 2018.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature - Google Automated Transcription of the show:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 115 being recorded on Thursday February 1st 2018 I'm your host Jason retailgeek Goldberg and as usual are you with your co-host Scott Wingo.

Scot:
[0:40] Hey Jason and welcome back Jason Scott Sugar Sisters.
Well Jason her here we are on the first day of February 2018 is zipping by and today was interesting because it's kind of like the Super Bowl of two companies.
Well yesterday we had eBay in Facebook announced and then today we have the Three A's Amazon alphabet / Google,
and Apple so a lot of news coming out of those results and the all these companies are announcing how their fourth quarter of 2017 went which is.
Exciting in the world of retail cuz that's the,
the biggest quarter so tonight we're going to really focus in on Amazon on this episode and I were to have a hot take on some of the dialysis of their fourth quarter 2017 results and then at the end we have some time we are going to hit a couple other highlights of some of the other quarterly announcements.
So long tail lizards know this but it's always important to refresh Aaron's memory when you look at these different results it's important kind of think about the Baseline out there and as an industry were growing looks like.
The holiday Ecommerce came in at 16 dating percent retail came in at like 4% Jason is that kind of what it's been.

Jason:
[1:54] Yep yep maybe even a little higher like for 4.5%.

Scot:
[1:57] Go to those are those are kind of the benchmarks and you know I think the the the way I view the world is,
if you're going faster than those are gaining sure if you're growing slower you're losing sure if you're not growing you're.
You're pretty much toast to the role of e-commerce in retail so let's start outside with some big picture things so Jason I thought for you first we talked a lot about.
Conversational Commerce and all.
Echo ecosystem and this is this is probably the most strong bases code I've ever seen in any of Amazon's quarterly press releases for the last 20 years,
read it in its entirety so Bezos said quote our 2017 projections for Alexa were very optimistic and we far exceeded them,
we don't see positive surprises of this magnitude very often expect us to double down so that was pretty interesting and kind of like a,
you know if you have to read that while you look at that picture of Jeff Bezos where he was like you seen the me where he was like super geeky on one side now he's all ripped,
so you have to you have to imagine the rips of Jeff Bezos list of some kind of saying that one they sold tens of millions of Echoes In the.

[3:12] Precious is the issue is not over 50 bullets I would say a good quarter of them were around Echo.

[3:21] Anything you want to add around Echo.

Jason:
[3:23] Yeah it wasn't just funny because I remember it wasn't very long ago maybe even 2 years ago.
Echo was just trying to get some traction and I think you mentioned to a reporter that you thought that it potentially could be the next billion-dollar business from Amazon and that was a,
shocking surprising prediction that the people were asking you to back up and you know.

[3:48] Tens of millions of of a echo devices get you pretty close to there.

Scot:
[3:54] Yeah yeah yeah yeah if we assume so I guess the lowest you spend is like 40.
Four. And then you're the most you can spend is like 150 so I imagine the average is a hundred bucks.

Jason:
[4:10] That would even sending it a hundred bucks each either so that's that.

[4:17] Exactly so as per usual you you were right and then you know I think it's one of the scariest as I keep seeing about this is.
What you did now the top two selling products on Amazon. Like are that that Echo. And the fire stick.

Scot:
[4:33] Yeah and since we're on the topic over on the Google side they were asked when they're going to start monetizing it and they're CR sudar.
Which I think is how you say he said that they're really just focused on the user experience and nailing that and monetization is very far away so that was interesting that you know that date.
Why do people read that quote is in committing their little bit behind and they can't really worry about monetizing until they catch up with where Alexa / Echo are.

[5:03] Cool so continue with the big picture Amazon's total revenue in another footnote is if he heard me say some numbers that may be a little bit out of line with what you read and special leases or are seen in the news.
I always take the voice two sets of Amazon numbers there's the ones that are just the wrong numbers and then there's the ones that taken to the consideration,
the effects of foreign currencies in Wall Street sign that's XFX set of the excluding the foreign exchange changes so if a British pound oscillates 20 or 30%.
That will just your earnings so if you strip that out it kind of is more apples to apples so I was going with the Apples to Apples numbers so that being said Amazon's revenue accelerated in the fourth quarter 36%.

[5:48] And that's up from a 34% growth rate in Q3 and they came in with a 60.5 billion dollar Revenue number which is not too shabby and you know every.
Every quarter public companies tend to give guidance in this was very much at the top of Amazon's guidance Wall Street was expecting.
Let's see.

[6:11] Yes so this was also above wall Street's expectations are expecting 59.8 and so does exceeded by it looks like .7 which doesn't feel like a big deal but that's like $709 so.
That's that's pretty pretty nice beat the key drivers of the quarter were amazon-web-services Wishes the cloud computing and then they have this,
tricky category called other Revenue,
and moose while shooting let's agree the biggest Chunk in there is ADS so that business we talked about a lot on the show which would include the AWS and AMS and AMG businesses,
That Grew that also accelerated growth and it grew 60% versus 58% the last quarter.
Amazon had a very high probability and prove pretty dramatically in the quarter Marjorie gross margin sticked up last quarter they were 35.2 and they took up the 36.4 so that's what you would call a hundred basis points kind of move which is.
Pretty substantial at these levels on the conference call to see if I owe attributed it to the North America business and Retail doing really well at scale eight of us contributed to that as did he actually caught the ad business is starting to kind of.
News the needle on Gross margins here which which I think is pretty interesting because it's actually pretty small I think it's.

[7:32] 6 billion annualized so that would be like.
Maybe 2 billion at this point in the fourth quarter so it must be just pure margin feel to move the gross margins of the larger 60 billion dollar business.
Not any meaningful way enough for the CFO to call it out so a lot of folks are reading the tea leaves there and saying that it that ad business is really starting to.

[7:54] Can I show up in ways it hasn't before.

[7:58] And hopefully they'll be a day when it gets to be big enough that they have to carve it out like today w x and they crawl curious is really see what's going on inside of their.

[8:06] Let's see about that.

[8:10] They also made kind of another one of these kind of things you have to parse where they said more new members joined Prime in 2017 than ever before which I think you know when your growing.

[8:19] The rate you're going you would assume that's the case.
But then most estimates out there Amazon does not disclose the number of prime memberships out there most folks kind of put it in about 60 million us households out of.
250 us households so it really good penetration there some surveys as you go up into the upper upper income levels you get north of 50% penetration and they did say 5 billion items shipped with prime over the year.

[8:47] That puts Amazon and I just put that in perspective not even half of Walmart when you look at it this way,
so that's interesting but you know Walmart I don't think they've announced yet but they did typically have been growing kind of you know their eCommerce is growing pretty strongly now overall they've been growing low single-digits I I would be surprised if they don't,
youngest Walmart comes in above maybe 5% growth All In.

[9:17] Doesn't it was a nice surprise is this is the first quarter we're prophets of come in over a billion no you and I talked a lot to people that the number one thing.
That you hear when you talk to Executives about Amazon is,
oh well she's giving a pastor unprofitable there a money-losing kind of business the only thing inside of their that makes money is the cloud computing etcetera etcetera know those things are true so if you took cloud computing out the whole interview at Amazon still makes money I even if it took ads out I'm sure now it is true that you carve out the retail business that show you a p&l for North America,
and international North America is quite profitable and then International is still losing money but that's because they're building enough they're investing like you know,
two billion dollars in India there still investing in China they just watch Australia you know there's something going on down in Latin America Brazil so so,
it's just because that investing pretty heavily there so.

[10:15] Not only did prophets come topically dollars for the first time in a quarter that came in at 1.9 billion this is really big surprise for Wall Street cuz I think they're expecting more like 500 million now it was so that is one time so Amazon did say that about 800 million of that 1.9 billion,
I was from the new tax plan that rolled out so they're decrease in the corporate tax rate in United States helped out Amazon pretty immensely.

[10:40] But you know what's interesting is you not talked about this but but it really doesn't care about profits which sounds weird and the reason they don't is when you're public company it it's almost impossible to.

[10:52] Grow profits in a way that makes sense because of the way accounting treatment happens,
yeah your Revenue gets spread out your cost gets spread out and all these things happen so Amazon believes a better measure of how the business is doing is free cash flow and that was 3.3 billion so a lot of cash getting generated Amazon even though they continue to invest in a torrid pace and fulfillment centers in those kinds of things.
So that's the big picture Jason you want to look at the retail side.

Jason:
[11:22] Yeah and I just one sort of thing that I always chuckle about like there's a number of people that feel like,
to some extent Amazon manages their Investments to make sure that they don't have a significant profit,
inside like under that Siri you can imagine that they were like mildly annoyed at the the tax savings that kind of came in with this big lump profit at the end of the year.

Scot:
[11:46] Yeah they didn't say that on the cob but it's possible.

Jason:
[11:52] Inter on the the retail side of the business and we will break this down when you get into the marketplace but from a pure Revenue side North American revenues we're at 37.3 billion for the quarter which is up 42% year-over-year growth so again,
you know you can tear that to the the kind of.
Ecommerce industry growth at 16% and you know they're they're continuing to eat up a market share at a,
a pretty scary place so I can I really only know of one retailer with meaningful volume that's,
potentially going faster than then that's that's Walmart and obviously they're growing a much smaller number and cheer Point International grew slower at 22%,
and you know that's that someone interesting like obviously they're still in in the early investment stage in a bunch of these markets but the but they're,
they're sharing a lot of those markets is much smaller so you know it it's actually easier to grow much faster and so that,
to me that that highlights the fact that they still have their work cut out for them to to win and be a meaningful player in some of those big big International markets particularly India that there,
they are in a knife fight in.

Scot:
[13:04] Yep absolutely and then I will be in the marketplace which is where I spend a lot of my time so the way I think about it is if there is a,
the pie chart of Amazon or our kind of a diagram,
you have AWS and other if you pull those out your left with the retail business and the retail business has two pieces what we call one p which is the traditional wholesale model in 3p which is the marketplace model Amazon is always historically been pretty.

[13:31] Kind of Silent about giving details about the marketplace the one the two things I do talk about our unit growth so overall in the entire retail entity unit growth was 23%.
Pretty interesting and it makes you kind of say all right if the retail business if you kind of look at the the midpoint of that 42 and 32 the retail this is probably true kind of mid-30s unit growth,
you 23% how did they grow mid-thirties,
and that's just selling that's an increase in average order value essentially so you know the value per unit that goes through is gone up so everyone gets a lot of nice multipliers in their model up because the scale they're at so how these to talk about.
The number of users that requiring that slow down pretty dramatically and but then Revenue itself accelerated that's another indication that the revenue per active user was really.
Growing because of prime the other metric they disclosed is they talked about a unit mix between 1 p + 3 P that is now 51%,
that's not a high water mark I think she wanted you to as a 51% and Q3 a dip to 50% because of all the echo,
Prime Day Day stuff and it came back here to 51% for the holiday quarter so long was long time ago she was the show know that this is,
Marketplace peace is really important because you know to really understand the impact of Amazon there's their associate iceberg,
and we really only see the tip of the iceberg and that that big kind of mass underneath the water at Amazon is the marketplace so here's how it works on the canal walk you through the mail so if we round numbers they did $60 in Revenue.

[15:10] 5 billion of that was eight of us so you take that out and now you have essentially 55 billion in retail there's like a billion or two of ads in there but let's keep,
math simple at 55 billion now.

[15:23] Well it says 51% of units were three p that doesn't mean that you take that 55 in / 1/2 because the way Amazon a recognizes revenue for each this,
pieces of business is different in the 1p world Revenue equals sales so I saw hundred-dollar widget.
My road is $100 easy reptile rooms used to doing it but in the 3p World they County Road SE,
when a third-party let's say we have I don't know Jason's audio shop and you know he has all this awesome audio equipment he sells $100 mixer on there a Amazon collect $10 as the commission so now what happens is you have the revenue is actually the $10,
and the transaction value of the item sold as what we called gmv or gross merchandise value in the world of Market places so you have this kind of.
Weird thing that happens where the actual transaction the volume is not Revenue anymore it's a small percentage that Amazon takes his commission or we used were taking it so.

[16:23] If you take that 55 billion for the quarter,
and when I do my analysis on this about 47 billion of that is first party so that leaves caught,
but that 8 billion for third-party is really just the commission rate and.
I argued if you want apples to apples this to other retailers you have to gross that back up.
Because when someone bought the audio device from Jason store on Amazon vs Best Buy,
Best Buy lost $100 even though Amazon only made $10 if that makes sense to the transactional value is the Zero Sum game out in the world of retail,
so if we take that 8 billion that's the revenue for third-party,
and we assume just going to keep it easy to take rate of 10% you have to effectively * 10 and you get 80 billion so first party was 47 billion and then third party is about 80 billion,
so you're by my math when you had this up the total gmv for the quarter would include 1 p + 3 p is 129 billion.

[17:32] This is all a very long way of saying essentially Amazon's Choice as big as people think it is and when you look at that context you know if that's what they're doing it accordingly rate.
20 billion multiply that by four you get 480 billion then an Amazon Apples to Apples is as big if not bigger than Walmart at this point we actually look at the transactional implications.
So did the other natural question is so if I'm saying 47 billion first party.
80 billion third party this kind of like 1/3 2/3 out of the total why is that unit number 51%,
and do you know the number gets very skewed the the bulk of one p units and Amazon her books and digital items they even include like if you bought a 99-cent app on your,
you know you're your fire your Kindle kind of device that counts in there so.
It seems have a much lower aov compared to 3p so so.
But that's the unit mix is 51% but the GMB mcscuse higher towards third party so usually kind of like how to get the ends up being like 62% this year versus 38 on the other side so.

[18:46] Now.
Other there's other ways to calculate this an Amazon is is gives when they release their quarterly The Q's which is there SEC document state day damn it. The annual one.

[18:57] They'll be some numbers in there that give us another view of that and when you look at while she puts out there in the ballpark might my way of doing it tends to come out a little bit high so I'm kind of in the other 129.
And I've seen some of the analyst kind of looking more at like the 1:20 so we'll see you don't no matter how you slice it though.
Pretty huge Amazon's bigger than people think it is and this whole entity is growing at in a 38 36% year-over-year and they're really just kind of.

[19:30] Destroying Shear I'm sure we'll start to see articles coming out where you know I seen Art summer day where they got half of the e-commerce growth but I think it's probably actually be bigger than that and I think they they definitely took up a lot of the overall retail growth when you looking at the scale these numbers.
Another last thing is,
you're one of my favorite things every year is the Bezos annual letter that doesn't come out until they do their final SEC documents in this works little Insider baseball on your public company you put out this quarterly reports and you do a very quick audit on that,
with Auditors to put them out but then when you do your annual and you have to go back and kind of do a forensic audit of the entire year so that'll go on and then usually in the first week of April is when Amazon publishes,
their annual numbers to the SEC which will include an annual report and that will have the business letter so we have to wait in Fortune until April to read that.

Jason:
[20:25] Yep and that definitely will be worth waiting for I mean great great breakdown I know there's a lot of detail there for folks that are newer,
that gmv point Scott makes a super important I just like to think of that as that's how much money consumers gave Amazon in exchange for goods or how much of a consumer's wallet Amazon got and so that's why,
when you're comparing any other retailer that the really important thing is what share of the consumer spending did Walmart get versus Amazon versus Target or anyone else and so if you're up,
a retailer that doesn't have a Marketplace like Target and you say you you sold 50 billion dollars for the quarter.
That's how much of the consumers dollars you got 50 billion bucks and then in Amazon case they said they they got.

[21:13] 43 billion in Revenue but that actually equals 82 billion of consumer spending and so obviously.

[21:21] There they are out there killing it now Walmart also has a Marketplace it's a much smaller percent of their total revenue but so Walmart is another retailer where did you want to look at him really closely you also would try to back into a.
GMB number versus Revenue.

[21:39] So moving forward Amazon doesn't think they're slowing down either so they they set their their q1 guidance in that.
47.8 billion to 50.8 billion so that would be somewhere between a 34 and 42% year-over-year growth so.

[22:03] You know it so middle that's 38% which again growing much faster than the overall industry.
Second biggest player in the industries Walmart they are growing even faster than than Amazon in e-commerce at the moment and so when you.
You talk about the 16% average there on a heck of a lot of retailers that are growing at 16% and most other e-commerce sites are actually.
Doing much worse than that because the two guys at the very top of the echo system are are growing so fast.

[22:34] You know it's it's crazy to see the biggest players in the industry growing this this fast.

[22:43] So you know the interesting to see what sort of numbers the Wall Street analyst put out in terms of their projections for the 2018 and 2019 models but I don't think they they do the these disclose to their names cause that writes got.

Scot:
[22:58] Yeah I saw one guy updated this model and he said 20 18 lb 234 billion and 2019 lb 284 billion so.
Still still really big numbers one of the things that was you know making some of the Wall Street guys a little skittish is.
The revenue guidance like you said is pretty solid at kind of like a 38% growth point at the midpoint,
evidence of used Amazon coming at the height side there was kind of thinking it'll be 40% so we'll see but then their bottom line guidance was pretty light so it's kind of like 300 million to a billion which kind of either is conservatism or Amazon saying.
Hey we're going to,
we had a great fourth quarter we're going to go to another investment cycle so the Wall Street folks that that Paul Amazon the kind of live in fear of these kind of Amazon ghost these Harvest. Swear they'll Harvest a bunch of investment state made this this year is very much a harvest year so you're really good bottom line.
Probably under spent on capex from an entry no overachieved on the bottom line as well and then,
Aaron lives in fear that they're going to wake up one day and say alright we're going to best.
Three-blade dollars in original content or you know a you know our whole load fulfillment system with trucks and everything or,
so that's just kind of things ratchet up there the worry.
Turn off the wall of worry gets higher and this is the one kind of negative that I saw everyone call out was you know what.

[24:28] What could they be spending that much money on that's like an incremental billion and a half of spend and they're going to Wawa color on that and,
they're kind of elusive on the phone call about giving any details what's going on there so it's going to be a wait and see you through the first quarter one thing I always watches the announcements around number of fulfillment centers so that's what we'll keep an eye on that,
add to my knowledge I didn't see them announce any in January which is kind of unusual they may have been in a quiet. So maybe we'll see a little bit of a raft of those coming out now they've announced earnings.

Jason:
[25:01] And there's a whole you know there's there's a big crop of openings that they try to get done before holiday obviously so it it makes little sense it would slow down.

Scot:
[25:11] Yeah they they I'm sure they need a month just kind of breathe.

Jason:
[25:16] Yeah so one other piece of interesting Amazon news that's come across my desk this month is not directly related to the earnings but I still think is exciting is it appears a lot of.
1p sellers on Amazon are getting new options for what content they get to put on their product detail pages.
I'm so historically there's basic content that you provide to Amazon and Amazon you know puts on that PDP for free and then there are like richer media options that would let you do things like.
You know have some product comparison charts are some some animated tutorials explaining your product or videos or things like that.
And those are often called a A+ content and they're super important to.
The the engagement and conversion rate on those on those pages but they're you know they generally have been a premium thing that Amazon has as charged for.
And this quarter we're seeing Amazon start.
To give away a bunch of what were the traditional a plus content options so making them free to any seller and they're adding even more exotic.
Options that you can pay for it so it's essentially a lot of sellers are getting the option to customize their pdp's to a far greater extent than they.
Ever been able to before and you have given an Amazon has become such an important distribution point for so many products.

[26:47] That that's really important to a lot of sellers so it's interesting to me that they they continue to evolve that pretty rapidly.

Scot:
[26:54] Could you know there's always this kind of it's hard to keep track of these things are available to 1 p and summer 3p and summer both do you know.
Is this is an on both sides or is it just for brands or is it is it also third-party sellers.

Jason:
[27:10] Yep so I have primarily seen this exclusively on the one p I can't definitively say that it's not available on the 3p but like one of the things you have to think about it's it's hard for Amazon to sell.
Actual like extra product attribute opportunities on the 3p side because all the seller share.
The same PDP into essentially.
You know one one seller would be paying for that extra content and then all the the other people piggybacking on that listing would be riding along for free.

[27:43] So like for the most part I see that these opportunities at the PDP level are exclusively to one piece hours but but Amazon isn't quite frankly they're not very good at life.
Publishing open price West and saying hey here's all the programs we have in here's how much they cost and they're the same for everybody you know what it feels like for the most part of the offer everything and negotiate everything on a.
Need your account by account basis and so like not not every Star tends to get the same options for the same deal.

Scot:
[28:22] Cool so that's kind of some good Roundup of Amazon's quarter any other interesting Amazon news before we kind of widen the lens look at other companies.

Jason:
[28:33] I think I think that's an interesting conflicting rumors out there about Amazon's effort to monetize ads on the Alexa echo system.

Scot:
[28:46] Gulfport what are you here.

Jason:
[28:48] So they're there had been some rumors at the beginning of the year that a few big sellers had been offered a.

[28:57] Promotional opportunity.
2 baht to be the recommended product via voice Commerce when someone's ordering a product for the first time so so is that sounds more complicated than it is so you say Alexa to order batteries and you bought a bunch of batteries before,
Amazon going to use your purchase history to try to predict what batteries are talking about,
but if you've never buy batteries before Amazon is going to come back and say I have a Amazon elements 8 pack of double a batteries is that what you want in you,
can say yes or no in so there was there was some rumor that like Brands were given the opportunity to be that that Amazon Choice product and then last week Amazon sort of came out publicly and said no no no,
you know we we've looked at at adding adds to the the Amazon Echo System and we just don't think that makes sense and we think it's disruptive to the user experience when so they,
they sort of explicitly said that they're not doing that so so,
the stuff you heard about Google like that could be that we don't see ads from any one invoice which I don't think any of us are going to feel very bad about.

Scot:
[30:13] Yeah one thing that was interesting that there was a lot of talk about is so a lot of the the business and world leaders were at Davos and I need to use that platform to announce that this kind of interesting contortion of,
Amazon Berkshire Hathaway and JPMorgan Chase are going to pull their efforts and work on Healthcare and is very nebulous they're going to start a company,
it's not clear who's going to owner run this company and it's kind of going to be dog food in whatever this is they build for their own employees sounds like what they're doing,
but you know this causes ripples throughout the world because that we talked on the show there's been Talk of the Amazon opening kind of a pharmacy online and then you start to say.
Amazon nursing pieces that kind of think about your Amazon.
Using the cloud services to kind of have health services so,
yo a nice portal for employees the ability to manage all the healthcare programs and then Berkshire Hathaway has a big division that does insurance so they could kind of provide that.
Then you would also need some kind of a you know a financial service piece around that too so that's give me something to really watch but that's good.

[31:27] This kind of thing could disrupt the entire insurance industry or you know all the HR systems out there so or it could be a big nothing Burger so I have to kind of see where it goes it's kind of a,
free nebulous right now but it was all the Talking Heads could talk about for for quite a while.

Jason:
[31:44] Yeah yeah and your point like it it you know if it's them trying to aggravate their buying power across those three Enterprises that's,
probably not a very meaningful so you know did the three of them together don't employ as many people as Walmart so they're probably not,
going to let you know make dramatic changes to healthcare system but if Warren Buffett and Jeff Bezos and Jamie dimon are trying to collaborate and figure out a,
a new product or a new a new way to solve the healthcare problem for employees that you know.
Is there a free smart guys that have a broken paradigms before so that potentially could be interesting and exciting.

[32:20] Another piece of non Amazon news that has has everyone buzzing is.
Early in the year I think the first week of this year the Supreme Court announced that they were going to hear a case which is I believe South Carolina versus Overstock.

[32:41] Dot-com and so this is a case about sales tax.

[32:46] At the moment there's a the Supreme Court has ruled on one sales tack case which is.
North Carolina versus quill and in that ruling essentially they said that in order to be required to collect sales tax.
You have to have a physical presence or a Nexus in in each state in so if you have no presence in that state you're not obligated to collect text a lot of lawyers were really surprised by that that ruling.
Because there are a lot of other occasions where your required to comply with the States laws even though you're not physically in that state.

[33:24] But be that as it may that's been a lot of land and e-commerce texting for a long time is.
If you have a if you have a physical presence in a state you have to collect tax if you don't have a physical presence in that state you don't.

[33:37] So again most of the omni-channel retailers with brick-and-mortar stores in every state.
There they've always had to collect tax Amazon has has slowly negotiated into paying taxes in in essentially every state as they've opened more.
More of fulfillment centers in distribution centers and so today Amazon Flex tax in every state that has a state tax oh.
A couple states don't don't have sales tax like a Portland Oregon and in the maybe Nevada or Florida.
But sit there collecting tax everywhere said they're not really affected but if the Supreme Court rules in favor of South Carolina South Dakota in this.
This new case the which they could you know here in a I want to say March of this year that suddenly obligates all other online sellers to start collecting tax.

[34:30] And there a couple interesting things that happened then.
Number one like you potentially have to calculate a different tax to collect for every municipality which potentially could be more than a thousand different tax districts in the US.
So that becomes a huge burden for small companies that are selling online to have to figure out all these taxes.
It's probably a huge Boom for the commercial tax companies that will sell services to all these guys so you can you can you know that's an extra fee for all those like you know small Shopify sellers.

[35:03] And in my mind the biggest entity out there not collecting sales tax.
Is actually Amazon 3-piece sellers Sowell Amazon collect tax on other one piece sales they leave it up to the individual 3-piece sellers what whether they have an obligation to collect sales tax or not and overwhelming majority.

[35:22] Don't except for in the state they're doing business in and so if the Supreme Court ruling goes against Overstock it could have a very pronounced effect on three-piece selling on Amazon.

Scot:
[35:35] Yeah and it's pretty complicated to because there's a bunch of scenarios right there's there's a scenario where I'm I'm a seller on Amazon,
and I have Nexus in North Carolina which is where my warehouses and I'm shipping all of the country so that's one so what most sellers do there is they say they collect the sales tax for North Carolina and Amazon has settings for this so say it up 7% in North Carolina I will collect that but the other states I don't have a Nexus etcetera,
maybe you're more sophisticated Celerity out to our houses so that gives you 2 points in Nexus but and.
Amazon doesn't really open on this Amazon says you're responsible for figuring out your own texting.
So so Amazon's listen to saying we're not going to your lawyers here we're not going to accept any liability for you collecting you're not collecting that you tell us what you want to do and then they actually give you some,
they rolled out some nicer apis that give you kind of that you know this this tax software used to be hundreds of thousands of dollars and now Amazon's rolled out whatever they use sellers can have access to it for you still pay for it but not really at the scale it's it's pretty reasonable,
but then it gets complicated right because I'm using FBA.
And you don't there's a PA is pretty much in Most states I think like 40 States and you,
it's not very easy to get from Amazon where your product is once it gets kind of into that cloud of warehouses it gets distributed out and you also don't.
You don't have a lot of control over today selling Amazon hey please don't put my product in Illinois cuz I really don't want to pay state sales tax there that's not really how the.

[37:11] The phone network works so.
What most sellers do is they just kind of say well you know I'll I'm small business how can I take the risk on that so this this could be you know.
Can I kind of clothes McPherson these guys that you know they may I end up having them a relatively complex set of States they need to figure out and,
not a lot of great infrastructure for figuring out where their products are the release valve on that would be so perfect Prime and there was a release a press release Amazon's investing more and more around giving sellers that are kind of larger scale the bility to have their products Prime enabled meeting their Prime eligible and are primed as they like to say and,
and then using their own warehouses to get them to the consumers and two days that could be,
you know it's interesting Amazon's doing a lot more around there obviously I think it's primarily cuz they want more Prime eligible product but you could see it as a,
a way of kind of if sellers were freaked out about this and wanted to have more control over Nexus that that's the answer essentially.

Jason:
[38:10] Yeah yeah I can imagine there that Amazon is it is potentially rooting for South Dakota in this case because,
a lot of the 3p sellers feel like one of the reasons they can be competitive in one of the reasons they can they can sell their goods even when Amazon is also selling their saying Goods is because of that tax advantage right and so potentially if they don't have that tax advantage to two good things happen for Amazon.
The one that Amazon 1p product wins the buy box more often.

[38:41] And number too it's hurting and suddenly forces everyone in the Amazon Echo System 2.
Comply completely with with the law and it eliminates all this gray area of who's collecting what tax on FBA.
And so that you can imagine in some ways Amazon would say hey in the long run that's cleaner now in the short run that could mean three PCL slow down on Amazon which is you know one of them are profitable elements so.
So who knows one thing I would point out.
Is the Supreme Court rules in favor of South Dakota so now everyone's obligated to collect tax everywhere it's very likely.
The Congress doesn't just sit Pat right so there was a lot of of work on legislation about at what kind of sales tax internet sales company should be collecting.
A number of years ago and there was this thing called The Marketplace Fairness Act in.
The the main notion in Marketplace Fairness Act is hey every online so I should be collecting tax but which should be a simplified tax so we don't have all this.
This complicated math and so instead of having a thousand different tax rates maybe we agree that all online sellers pay one simplified tax rate.
And so you can imagine of the Supreme Court rules in South Dakota's favor that might be the impetus.
To Congress to pass some sort of like that and.

[40:13] Conversely if Overstock wins there's like 8 more cases from other states that that are also in the queue and potentially could get to the Supreme Court later so it's not like.
Even if if the Supreme Court rules in favor of Overstock that this is over so it's the interesting thing to follow.

[40:31] Moving on to a couple ass little news news Clips UPS also had their earnings call.
Yesterday or today and one interesting thing that came up they had a good quarter as well.

[40:48] But the.
They there they beat their estimates in their stock still took a little hit largely because they announced that they're capex spending for next year was going to be much higher.
Then it had been in any previous year and the explanation for that was that they're being forced to invest a lot more in sorting centers and airplanes.
To make all the the residential deliveries that they're doing for Amazon more profitable and so you know that the sort of pithy had a headline is that UPS has an Amazon problem.
They're having that invest a lot to to deliver what they're already delivering to Amazon and of course.
Amazon's needs are only going to grow you know potentially 38% more.

Scot:
[41:34] Yeah and the other two could be a bit of a trap here where,
they're having a grow their infrastructure to support Amazon and Amazon is growing in structure outside of UPS so it's some point you know if your UPS you have to kind of start to wonder how far ahead of your skis can you get on that before it gets kind of risky.

Jason:
[41:51] Exactly if this was a video podcast we'd be playing Admiral Ackbar saying it's a trap right now.

[41:59] Reference I threw in there just for Scott in the last earnings that jumped out at me from this week eBay had their earnings called yesterday,
and I I think they the like met or slightly better beat their earnings but the,
the big drama was in there called they announced that they're.
Mandatory partnership with PayPal whom is a reminder that used to own and and spun off as a separate company when they spend them off,
the spin-off included in agreement that eBay we keep using PayPal for a certain period of time so that. Of time is now expiring and eBay has announced that they plan to shift payment providers from PayPal to a big European payment processor called Aiden,
and so that,
they probably has some implications on eBay but it has potential huge implications on PayPal because I think eBay is something like 18% of PayPal's Revenue.

Scot:
[43:04] Yeah they the CFO of.
PayPal is on CNBC any shows 18% but it was like their slowest growing peace there's little shade there's something going on between those two companies are definitely got to get zika nomics driving it but it seems like there's some more kind of,
they are not really getting along very well right now.

Jason:
[43:22] Yeah and it's like I would like to cenarios I you can totally imagine that this is an actual break up,
and if so that is interesting that says something about how competitive in the marketplace PayPal is if eBay really feels like there's a meaningful savings to be had by shifting to this,
to another payment processor that,
you know potentially said something negative about PayPal's competitiveness but you could also Imagine the eBay and PayPal are negotiating their first,
fees agreement since they're they're sort of mandatory partnership expired and all of this could.
Potentially be somewhat posturing is there sort of negotiating with each other so you could think of it a little bit like the showtime having a break up with Time Warner or while they you know.

[44:08] Weather negotiating how much the cable company should pay for free HBO or Showtime or something.

[44:15] And with that we have Perfectly Used up the allotted 45 minutes we had for today as we're trying to get the shows a little bit shorter for our listeners so we greatly appreciate.
Your participation in the show today and if you have any questions or thoughts as always we love to hear from you on our Facebook page or on Twitter we we have a couple of good good questions that came through this this weekend fact on Facebook.
So I think I have some answers there in fact.
And of course if you enjoy the show we would very greatly appreciate you taking just a second jumping over to iTunes and giving us that 5-star review,
we don't we don't charge anything we don't run any ads on the show so that way you can you can pay us for all the time we put in that show as right as a nice review on iTunes.

Scot:
[45:06] Yep thanks Wilson there buddy.

Jason:
[45:08] Until next time happy you comercing.

Jan 26, 2018

EP114 - Great Retail Bifurcation, Kasey Lobaugh of Deloitte

http://jasonandscot.com

Kasey Lobaugh is a Principal and Chief Retail Innovation Officer at Deloitte Consulting LLP, he first appeared on episode 68.  You can follow him on twitter at @klobaugh.  Kasey and his team publish some of the most useful research in the industry including The New Digital Divide which helps quantify the effect of digital on in-store purchases, and the Deloitte Retail Volatility Index which measures disruption in the retail industry.  Kasey sat down for an interview live from the NRF Big Show, to discuss some new research he'll be publishing in March at ShopTalk.  Kasey is giving our listeners an exclusive first preview.

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Episode 114 of the Jason & Scot show was recorded on Monday, January 15th, 2018.

New beta feature – Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this episode is being recorded on Monday January 15th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Tahoe Scott Wingo.

Scot:
[0:38] Good morning Jason and welcome back Jason Scott.

[0:42] Well Jason one of our most popular shows of 2017 much to our surprise was when we had our mutual friend Casey lobaugh on from Deloitte to share what they're singing retail Casey is Chief retail Innovation officer and a principal.
For the retail practice at Deloitte Casey welcome back to the show.

Kasey:
[1:00] Thanks I'm I'm happy to be back.

Scot:
[1:02] Don't worry we're excited to have you on we're all here live together so that's exciting too we rarely get to see our guest so I just want to say your hair looks amazing today good you're having a really good hair day.

Kasey:
[1:12] I was up all morning.

Scot:
[1:13] Yeah okay good good spot a product in there.

Jason:
[1:17] Having the best hair amongst the three of us is not is a very well bar.

[1:21] Welcome to the super rarefied air of the multi time guests honored to have you last time on the show you give us your.

[1:30] Your full background but like obviously the the shows expanding exponentially so there's a lot of listeners that may not have heard your first episode so can you remind us just a little bit about how you came to your role at delay.

Kasey:
[1:41] Sure thing and worse all thank you guys for having me back thrilled to be here long time listener how about that.
Set my background I've been with the lawyer a long time in the fact is I think about the number of years it's a bit scary I've been I'm approaching 22 years with the lawyer in our retail practice.

Jason:
[1:58] And you were the first teenage party.

Kasey:
[1:59] That's right that's right I do.

Scot:
[2:00] Doogie Howser ability.

Kasey:
[2:02] Early on you know early on with with the letter i really focused on e-commerce so we're talkin your 99 2000 2001 time frame you're helping retailers,
Enrique's launch e-commerce figure out what it meant to to operate.
The other operations in place and then we went through a period of time where we were helping retailer scale and it was really all about maturing business processes you had a new technologies that they gave more sophistication around e-commerce.
After that I did a bit of a pivot and started working on this thing that it's time we were calling multi-channel,
omni-channel helping retailers figure out how the channels work together and did a lot of work around on the channel strategy and then more recently I spent a lot of time on the future of retail like where is it going next how should we think about it,
what are the implications how do we create in a winning strategies against a very fast evolving retail environment.

Scot:
[2:57] Cool awesome let's start with, taxable? Sitting here it's January 15th the dust is still setting settling on holiday 17 what what do you think about what are some of the insights that you drew from holiday 17 come in early look of of what you got song.

Kasey:
[3:11] Great question you know so an interesting enough we do we do a report for our clients we don't publish it,
Alba we do share with her with our clients about what we saw us we just put the wraps on that last night at the highest level I'd say it was a good holiday obviously we believe it's the best holiday you and many many years now.
For retailers on upper upper around 5% 4.95% so clearly a good holiday and then,
no surprise e-commerce in a put up about 50% of the holiday growth but that also means that there's some gross that's coming from brick-and-mortar when you look at it and pure.
Dollar amounts it's about a 60/40 split 60% of the gross you know coming from an e-commerce standpoint 40% of the growth dollars coming from brick and mortar and maybe that's a surprise because we sort of look at it.
Brick and mortars growing up 1.71 .9% somewhere through there but when you do the math it's actually a big amount of dollars.

Scot:
[4:09] Yeah that was the 1% against 85 to 90% so so the number that squirts out speaker.

Kasey:
[4:14] We lose track of the number of dollars that come along and that's one of the things we try and highlight the second thing I'd point out is so you know meaning of are the retailers in the marketplace I I like to stay there.
They're celebrating but in many cases that you sort of have to look at that someone skeptically the markets at 5% so if you're up.
2% if you're up 1% that means you may have had positive results but you're losing market share relative to the market so we sort of always have to think about these things.
Yeah from a relative standpoint so if you are as strong as the market.
But if you're stronger than the market great if you're not as strong as the market that actually shows that you still have weakness relative to you know what's going on with the consumer and so I wouldn't take too many Victory laps too soon and that's part of what are our findings or reveal here.

Jason:
[5:02] Obviously we're doing this show from the internet Big Show in New York City I know you guys haven't had a chance to get to the show yet any like expectations going in what it what do you think the big topics are going to be this year at the shop.

Kasey:
[5:17] Yeah so that that's a good questions I think about the show one of the things I've heard a grown,
and I even tweeted about this earlier in the week was I'm always anxious to see what the new buzzword is the vendor seem like they're in this this arms race to figure out who's going to coin the.
The next bus word whether it's.
Cognitive Commerce I saw you know seamless we know from years past multi-channel on Beach and I threw out those buzzwords lot around personalization a lot around blockchain and so there's a lot of vendors who really trying to coin the buzzwords,
the interesting part is Buick historically the buzz words have never been the answer.
The right there if you think about it did you go back to we've done the study where you go okay back let's go back 5 7 years wear on me Channel.
Was Devo's new safe who were the ones that retailers that were winning around on me Channel and when you look at it you go they were winning because they had capability.
At the end of the day they're actually we're not the winners,
and so you still have to tear that apart and look at it and and be skeptical and I encourage everybody be skeptical of the buzz words and Sarah challenge whether or not those are are are really winning strategy so that's why I go to the floor I'm really looking at,
what are the new Buzz words and what's being said by the industry and how should we think about it.

Scot:
[6:34] So I guess you're not all in on cryptocurrencies not going to do at KCI Co.

Kasey:
[6:39] I don't know though if we just added Bitcoin to the show here you're at your Stockwood Skyrock.

Scot:
[6:46] Yeah we we are going to do a Jason Scott Coyne so just to let you know later in the year we'll talk about that.

Jason:
[6:52] I don't want to disclose too much too early.

[6:55] But I actually what I was at CES last week and like turn-up Kota to like literally launched us a cyber currency and got got some ridiculous kissing their evaluation.

Kasey:
[7:08] That's awesome by the way I believe in the power of blockchain and I think it's going to be revolutionary but that's different than the hype around cryptocurrencies this currently going on.

Scot:
[7:18] But then the show doesn't want to talk about future stuff but,
what are the reasons you're here on the show is you guys have a new report coming out in March and I think it debuted at shop talk so we'll be excited to watch that and we're really excited cuz you have offered to give our listeners an exclusive early look at the report here on the Jason Scott show.
The report is called the Great retail bifurcation this is a topic near and dear to my heart my full-time gig right now is on demand Car Wash what's 50.
And I talked about this all the time because people say and I talked to some folks and they say why would someone pay for a service like this why don't they just go to a $3 Car Wash so I,
bring up the bifurcation so you guys have been a great resource in there,
old report and I'm excited to see this new report coming out so let's dig in the report let's start out with you know you guys have,
come up you can write about a lot of different topics why the bifurcation and what's the Genesis of the report.

Kasey:
[8:15] So one of the things we try and do as we try and look at what's going on in the industry what's conventional wisdom.
And you know honestly one of the things I always try and do it take on conventional wisdom about,
what's going on and if you look historically you know we had done a big report that we called the digital divide that looked at how mobile devices were being used,
and we thought the industry wasn't thinking about it correctly,
because they were thinking the industry largely at the time was thinking about Mobile in in into the degree it was generating transactions and we said,
we actually think we have to look at it differently and let's look at how it's influencing in store sales if you work all that reports,
that was sort of conventional wisdom first that we took on and then subsequently we wrote a report called the retail volatility index when you know a lot of retailers at the time were you thinking about,
and instill today about you know the big online retailer and to the degree that they're affecting,
retail and so we took that on this a while there's something else going on here and if you guys are call it was really the fragmentation of share that was happening that was happening at nearly the same Pace as we were seeing consolidation.
And so from that you know we started scratching her head about it.
The conventional wisdom today and we hear words like digital transfer retailers need to do a digital transformation or.
Yeah that the idea that there's this retail apocalypse going on right now.

Scot:
[9:47] Call Ed Mulligan.

Kasey:
[9:48] You have Molly getting nervous you know that somehow the industry is being young traumatically just dropped in and by the way that's usually put in the context of people shopping online and not shopping in stores anymore we also heard that is a narrative that,
so it's the millennial the Millennials ruining but he got to see the list of all the things the Millennials are ruining right.

Scot:
[10:07] If they're killing everything.

Kasey:
[10:08] Everything including retail.

Scot:
[10:10] Fabric softener.

Kasey:
[10:10] So we decided this or that start big and clearly what are those.

Scot:
[10:16] But not avocado toast their they're putting all their money and avocado toast.

Kasey:
[10:20] The new things that the tide.

Scot:
[10:22] Tide Pods yeah they're it while they're eating those.

Kasey:
[10:24] They're eating that's right.
So so we started to take on this conventional wisdom so we said so let's figure out is any of this true and which parts are true and which parts might not be true.
So that was that was really impetus this her to take on the research at the time we didn't know what we were looking for we just knew this was the conventional wisdom and we wanted to start tearing it apart.
So we started looking at by the way this this research has been going on for about 16 months now so we started looking at the economy first now.
At the time we were started as we started to dig into the economy we started the recognized actually strong,
now you know even if you clearly a lot of people to recognize today the strengthen the economy go back 16 months and all the signs were there that the economy was strong you know the unemployment rate is at near historic low,
you know already,
and that the home price indexes have Rick of the index has rebounded and it's actually now got your the highest home prices we've ever had so record-breaking home prices consumer sentiments gone through the rough we know that and the median income.
You know for the for the consumer has now exceeded where it was in 2007 so by all.
Citations you going to go wait a minute we have we have a strong economy so how can we be having the retail apocalypse if if the economy stats.

Scot:
[11:44] The good news is unlike the Great Recession of 08 it's not on the back of it so people actually saving during this kind of unit boom cycle so so it feels like it's Cena doesn't mean it won't go down but it's definitely better set up then we had kind of liking o 6:07.

Kasey:
[11:59] That's right I mean really if you think about that in the last year this idea about the retail apocalypse is really taking on a ton of momentum at the same time the economy and you know the consumer.
You know it's strong right now only that but then you look see.
Markets gone through the roof right so we've got more you know more value on the balance sheet of our consumer and then even when you go over and you look at.
Retail industry the retail industry is actually showing strength and it's been showing strength for some time.
You know one of the things we've looked at is the correlation between GDP and retail sales and there's always been a strong correlation and in fact if you look back over the last 18 months retail has been outperforming the GP,
it you know at a pretty significant clip right so in 2017 we saw three and a half percent retail sales growth.
And at the same time we saw GDP about 1.7%.
If you look at the projections for this year gtp's supposed to be strong last couple of quarters has been 3% or so and and of course the holiday we've seen good results there as well.
In our own survey we did a bit of a survey around the great retail bifurcation and ask people hey did you spend more in the last 12 months and what we found was 44% of people we surveyed said I spent more 41% said I spent about the same so,
is 80% spent the same or more okay that all lines up as well even when we look at.
Retail by categories we find strength now it may not be in all of the categories you know from time to time the categories are different but we saw that we've seen Home Improvement.

[13:37] 5.2% of beauty cosmetics and fragrance at 5% Home Furnishings 3.3 apparel seem softness,
about 1% by the way we've done a deep dive into apparel and one of the interesting thing was we found there is is a real deflationary pressure around prices that we've seen units of apparel growing faster,
but then with a deflationary pressure on prices and we'll get a little bit into.

Scot:
[14:03] You think that's private label cousin on her.

Kasey:
[14:04] It yeah so as we think about the great retail bifurcations you hear me as we tear this apart one of the things we see you know has to do with with the consumer and their.
Available dollars to spend so if you did a couple that idea with our previous your report the talked about fragmentation of Cher let's Bears entry we've seen.
Competitive forces really driving deflationary pressure so you're off price you know fast fashion and a lot of these pressures for the build-up and they're causing for deflationary pressure.

[14:39] So you know what's that paint I just painted the picture that says.
The economy's strong right relatively speaking and retails actually doing well write 3.5% who can complain about that so then that you know cause you to think further about okay.
Well then what's going on what what what are we missing especially if you look at the headlines and headlines across the board you know from.
From the Press repeat this really you know they have painted this really bad picture about retail that means to me that.
There's something missing so what we did is we said well let's let's keep digging deeper.
And there's a there's a quote I was love Sarah finding the right quotes to think about situations and Albert Einstein said you don't have to know everything you just have to know where to look.
Okay so we took that we thought about that and in retail what where do you look like you look at the consumer right but consumer tells us.
You know what's really going on so he said okay let's take all of that and let's dig deeper you know into the consumer so can we don't know what we're looking for.
So we looked at generational differences we looked at Regional differences with hypothesis hypotheses around Urban vs rural,
gender we really started trying to rip this apart and we did our own survey to support this we looked at publicly available data through all these dimensions and.
One of the things that started to reveal to us was when we looked at it through the consumers economic lens right.

[16:13] That's where we started to see differences I'm going to talk to a little bit later about the idea about millennials,
the reality is we did not see dramatic changes generationally right we didn't see dramatic difference is urban versus rural cuz I had some hypotheses around that it was really when we looked at it through this consumer economics lens.
That we you know we're able to start to see some things so what we did we took.
We took the consumer and sort of broke them out into three cohorts and we use.
That the government's classification around this around low-income middle-income in high-income starting to try and figure out how they behaving different how are they shopping different you know are they.
Your do they have the available money where they pressured right now those are the kinds of questions we looked at so the low income consumer you know has income below 50,000.
The middle-income 50 to a hundred thousand high-income is a hundred thousand or more and you know sweetheart to look at that interesting part it's like a 40 40.
20% split so 40% of population low 40% mental 20% high and of course if you look at something simple like home ownership clearly you see that's cute with 49% of low-income only homes + 83 + percent,
High income owning homes as we ever is reporting that we looked at income while how they performing from an income standpoint we looked at.
Non-discretionary expenses right cuz we no income minus non-discretionary leaves discretionary or disposable and really that's the amount that.

[17:46] Really drives retail so we thought let's rip that Apartments understand net worth difference is xcetera and here's where we saw.

[17:55] A profound.
Difference here's where this was the aha moment this is when we dug into this this is for us what what the find that the research report when we started to see how drastic the difference is worth and for me personally I would tell you you know Apollo retail.
I listen to that Jason Scott show I do everything I possibly can to understand what's going on and for me this would really wasn't haha MoMA.
So I know when we probably all know we've heard about the bifurcation of income between the income and low income we probably heard that for a long time but the degree to which it has happened you know in the last 10 years for me was shocking.
The degree to which event is happening last 10 years.
And so when we start to look at that the fascinating part about this like if you look from 2007 to 2015.
What we find is that over 100% of all income gains went to the top 20%.
Over 100% that means the other 80% of the population.
Didn't do so well you know -2 flat fast for 80% of the population right so think about that in some ways I called this the last decade.
And for meeting of our consumers by the way it was I talk to my own colleagues I talk to the executives across retail like to remind everybody where where we fit where you fit as an individual within that because you have to keep in mind.

[19:23] You know you know that that you're you're doing favorably in this income it are in this environment if you're an executive if you're you know technology vendors many of the listeners of your shows and unlikely the owner of a car wash.

[19:39] That's right the owner of a spiffy car wash.

Jason:
[19:42] Regular listeners that the show will know that Scott travels with his own gold Throne that he's actually sitting on right now is he's doing the.

Scot:
[19:49] Yes and I wear my unlike snoke I wear my gold robe.

Kasey:
[19:52] I'd say over over 20% of all income gains went the sky apparently right.

[19:57] Show me where this this was really profound I would say in 2016 continue to be in some income games and some of those games actually were spread out more than they've been in the past to where at least at this point.
In a SS 2007 low income has actually gone positive slightly but they're you know that you see some some gain here.
The problem is income isn't the only component here that matters right so I've heard this like why the stock market stock markets up right well the problem is is that.
The top 20% own 93% of the stocks so any depreciation in stock.
Is all almost flowing to the same top 20% who have gotten the income games,
and by the way I don't have the facts behind this but it was my own personal belief that when we talk about digital disruption we talk about technology technology is fueling.
This is bifurcation of the income where you know if you think about the available jobs today read some of the other day that said there are now more.
Open positions that are going unfilled than ever in the history of our economy.
And you think okay why is that will unemployment rate slow while there's a lot of people though that.
Positions that have gone off of the unemployment rosters there no longer speaking and it's I believe it's a mismatch between the available jobs which you know are more technology-oriented and available skill sets.

Scot:
[21:28] Olympics Girl Scout on the 80/20 so so that's a population so if there's 300 million people in the US 80% are in that haven't kept up in 20% or a head.
Does the wallet split preview it seems like the wallet because the 20% or so affluent it seems like they would almost be like.

[21:45] 90% the wallet 5% or 10 on the wallet sideways backflip.

Kasey:
[21:49] That you're absolutely right right right so there's a small percentage of population that's really can controlling it a big part of that that you cannot expend.
So the interesting part though is you dig deeper as I dig deeper this only gets more pronounced because all we've talked about so far as we talked a little bit about balance sheet,
stocks we talking about income when we then look at non-discretionary spending this gets more pronounced in that non-discretionary expenses of skyrocketing.
And as they've skyrocketed the effect of the lowest income has been the most traumatic I mean think about Healthcare is during that same time. 2007-2016 up 66%.
Education up 41% food housing Transportation 1810 + 3.
Do you put all that together and you put that against a flat to decreasing income and what that does is it puts pressure on to disposable income or discretionary spending.
In fact when we look at when we look at that proportional impact it really becomes pronounced it that the non-discretionary expenditures for the lowest income of a 22%.
So again zero to negative and an 22% increase in non-discretionary spending.

Scot:
[23:04] The only relief is gas prices are down from that time frame.

Kasey:
[23:08] That's right that's right so there's some there's some there's some.

Scot:
[23:09] It's not offsetting what the increases.

Jason:
[23:11] Hello it is funny I mean we're talking about how these macroeconomic things affect consumers gas prices to me is always one that I think of is a little bit of a red herring.

[23:24] Close attention to it and follow it super closely but it's it's not a big chunk of that.

[23:30] Non discretionary budget for for the average household so it's it almost seems like people sort of overweight at like we're at their Healthcare is taking 30% of your not discretionary money in gas is taking 2%.

[23:45] Doesn't matter the gas is cheaper.

Kasey:
[23:47] Right right you have to sort of look at it in aggregate that's what we tried to do is look at 9 discretionary and aggregate knowing that there's no shifts occurring and what was it was fascinating as I talk to her about deflationary prices.
And apparel and slice of a Factory CD player Sherry prices in certain areas we see inflationary prices,
I haven't been able to tear this apart to figure out know what tribes that deflationary pressures what drives inflationary pressures.
I have my own hypothesis again this is not a proven fact yet at least that I've been able to prove out but I believe that those areas where technology has been able to make more inroads and more impact,
drives the deflationary pressures those areas where it's slower to adopt.
Alesso so freezing by talks about Healthcare you know being an industry that I personally believe is still tons of opportunity and technology is not made as many in Road maybe it has an inner in other areas.

[24:48] So okay well let's dig deeper okay this gracious let's talk about the scratch the discretionary share of wallet then,
what's the consumer left with the fascinating part here is low income has had a negative 16%.
Change in discretionary wallet in fact they've gone negative.
I ain't 2015 their discretionary well it went went negative a dramatic change from 2007.
And if you go up the only the only cohort that had any increase in discretionary is the high income.
4% increase in a 4% may not seem like a dramatic increase but when you put it against the the amount of dollars that are you know coming in.

Scot:
[25:34] $100,000 plus you.

Kasey:
[25:35] It's a significant amount of additional money so when I start to think about that in fact you what we show is going to low-income.
Now has a net change in discretionary income of nearly $3,000 negative.
While the the highest income is up around $32,000 net change in their discretionary income so we got one consumer that has money.
Money to spend in one consumer who is more pressure than ever around.
Therefore you got to think about price sensitivity of the bottom 80% versus available dollars of the of the top 20%.

Scot:
[26:17] You talk about low medium high at the very beginning now your time got two buckets what happened to the medium guys.

Kasey:
[26:23] Why I start a group those together I'm sorry so I start a group together when I talk about the 80 right who are doing not as well.

Scot:
[26:31] Exact more like the low then.

Kasey:
[26:33] That's right so I started just divide it like the top 20% doing well the other 80% is pressure.

[26:41] Okay so then I started thinking further about this idea about what retailers are really competing for discretionary income there two competing for disposable but we also know over the last 10 years something else has changed and that's,
new categories of disposable and specifically we look just at 1 devices devices and data plans so if you went back to 2007 you know who was spending money on devices and data plans,
due 2016 of spinning at Force what we now know is all income.
Cohorts are spending on devices and data plans and if you looked at digital spin.
As a percentage of income digital meaning on the device for the low-income category except 3.6% just in the last year.
And high incomes only at .71% as a as a percentage of their dollars going towards this category okay so what was to say that.
For that low and middle-income categories that used to spend on certain retail you know items and spin.
There their discretionary disposable is squeezed and another portion of that is going to new categories or spend that maybe they weren't too in 2007 just shows more and more pressure building up and for us we sort of you that is,
increasing the price sensitivity that those categories have right so that for us was sort of really interesting about.
Tearing apart the consumer because at the macro level the economy is doing well let's not doing well for everybody okay at the at the macro-level you think retails doing well.

[28:20] Let's dig deeper and figure out what what's going on so what we started to do is to say okay well if that's occurring how might that be manifesting itself on the retail industry itself.
And you know there's another quote that I like to quote often is follow the customers they change.
We change and that was from the Tesco former CEO we talked about like evolving the value proposition of the retailer in accordance with what the customer actually wants crazy philosophy right.

Jason:
[28:48] That seems super and Kim.

Kasey:
[28:49] That's right it does so how can we look at retailers in the context of what I just discovered here.
And so we took retailers you guys know me I was like to think about Frameworks to measure performance of the industry in the aggregate we put together a framework to look at the value proposition.
Every Taylor's simple-framework on one end of the spectrum we looked at price.
On the other end of the spectrum let's think about it in terms of Premium premium products or services.
So if you're a top price retailer you're getting plotted in a to the left if you're a Premier Service or product exclusive product your plotted farther to the right now.
How about called is a subjective plotting right because we're just sort of making an assessment of where.
Retailers are relative to each other but we thought it was a helpful and by the way there's a ton of debate.
Kind of debate myself my colleagues working through fighting and there was a lot of really in arguments about these relative placement.
A single dimension on a value proposition probably isn't fair it's more complex than that.
We use the framework to look at the foreman so as we planted everybody out we came up with three categories right if you're on the far left let's call that price based retailers if you're on the far right.
Lascala's Premier retailers and in the middle that's calling balanced right so if there's a retailer that doesn't necessarily offer exclusive.
Really exclusive products or extremely exclusive experiences but they're not cheapest either they a nice mix of Prada.

[30:24] And promotion in a Serta falls in the middle so those are sort of the three categories so we said okay we got three categories now let's look at the performance of those categories.
And this again was another huge aha moment for us is when you look at the five-year Revenue growth of of those retailers for a price-based you actually find they've been incredibly well.
Insight over a five-year. The growth is north of 30%.
If you're up earlier base retailer we also find their growth has been incredibly good in fact we find that north of 60% that we see.
His last drink there now the problem is and I gave you you may have noticed that I overlooked in that it is those Balance retailers over the same five-year. We're seeing about 2%.
Growth of those okay so it's really,
bifurcation of where the strength is in the industry and again if you were late that back to a consumer one consumer who is incredibly price-sensitive because of a constrained discretionary spending and another consumer actually has.
More money to make more decisions the questions are they buying more stuff.
Where they buy more premier stuff are they buying more Premiere plus Services you know oriented by the way you'll hear a lot you know in the industry by all people want experiences not stuffing,
yeah I challenge you to look through the same lens is that all consumers want experiences not stuff,
I think there's a lot of consumers who are just trying to get by you know with with squeeze dollars.
To figure out how to buy the stuff I need just to get by there is a consumer though who has more than enough money to spend on more experiential things than maybe they think they might.

Scot:
[32:01] An inconvenience is a huge factor form to that's what the whole car wash things about like yeah they're they're so busy because to make over that under K you can't just you know you're working 60 80 hour weeks the convenience factor for those premium retailers is a big.
Big part of it as well white why they're choosing that retailer.

Kasey:
[32:19] I think that absolutely makes sense is that there's an element here that says at some point you're willing to change it trade dollars for time.
Hey has to do it while I have extra dollars I don't have extra time right I'm willing to do that so anyway as you dig deeper by the way if you look just in the last year that same exact framework what we find is in last year except if your price based your up north of 6%.
If your Premier based your up 8% or so and if your balanced if you're the balance retail your negative so weak that that cohort for us is negative 2% or so.
So by the way I would call out that not everybody in the cohort.

[32:58] Forms like the cohort rights and every cohort there's an Amelie's where there's a price-based that's negative and there's a premier that's negative in there someone balance is doing a little bit better than others so that that's absolutely there.
In aggregate but we find a strength and weakness and that's really what we were trying to identify.

Scot:
[33:14] Yeah I need this is what hurts the mall base retailer because I'm all is neither you don't go to the mall saying.
Oh my God I'm going to save so much money right you go to the dollar store the club and does usually Arnot Mall.
Y'all so don't go to the mall saying oh my gosh this can be so convenient because you know if the park over here it's busy hike over here and so some malls I think kind of end up being in that Wasteland in the middle right now.

Kasey:
[33:36] Yeah I met many of the companies that are warm all based absolutely fall they're not although but many of them apps.

Scot:
[33:42] But the Apple Stores obviously bucking that Trend but.

Kasey:
[33:44] By the way one of the things I did point out his this is a lens to look at the industry there are other lenses that also have a credibility you know the idea about are you off mall are you off you know re Mall based might be another lens to look at this.

Jason:
[33:58] I would also just point out.

[33:59] All of these definitions shift overtime which is funny because there was a gyro in which you would have Define the mall as convenient.

[34:08] Like we put all the stores together in one place and surrounding them with a bunch of parking that was much more convenient than having to drive 15 miles to the store and today that same structure feels like.

[34:20] The inconvenient shopping experience because what are our expectations have just.

Kasey:
[34:26] That's right that's right.
I'm right by the way we looked at this then performance along a lot of Dimensions we looked at return on assets return on Equity we looked at PE ratio we're looking at everything we can look at that they would help us understand,
performance of these cohorts in an across-the-board on every one of those Dimensions you'll see the exact same.
You know if you looked at yet when you look at the graph in the report visually looks the same with strength on in the off price strength in the Premier and weakness you know in those that are in the middle.

[34:59] Even if you looked at here's there there's my other favorite conventional wisdom store closings.
This is closing stores the whole industry were closing stores closing brick and mortar stores that are being closed there's actually if you if you need it out there's more stores opening than there are closing.
Further if you then look at it via the same categories that I put forth you see the exact same thing occur you know price face retailers they're opening up stores in fact they're opening up stores like crazy.
Premier bass retailers also opening up stores and it's that the balance retailers were the vast majority of the store closing you know is occurring.

Scot:
[35:35] So there's like 7000 closures last year I think is like the number that a lot of people put out there so you're you're saying that there was more than enough more than 7,000 openings around the the value side and the other side took character.

Kasey:
[35:50] What we did we went out and we studied at 10 Case press releases we tried to collect the everywhere we could and we use theirs there's varying reports that include and don't include some.
Certain companies but we were able to get everything we could see and what are what what are study found is that there were more opening in the work clothes.

[36:09] We also looked at net promoter scores,
long the same three dimensions and we find the exact same thing where you know consumers are 22% more likely to recommend price-based retailers than they are these balance based retailers their hundred 10% more likely to recommend Premier retailers than their balance.
Retail so we find the exact same thing that really has to do with what's the consumer want.
This is the simple idea about how is the consumer changing how are the pressures on the consumer changing and then how are you as a retailer you know evolving and meeting those those changing to man.
By the way the interesting part here is if you look at digital through this lens right what we find is the vast majority of price-based retailers are physical with very little,
digital presence very little digital offering of course it once you get to the premier side you find digital matters a lot more as it pertains to Premiere but I was like to look at this through that lens of life.
Yahweh.
If you looked at ticket take a price-based retailer who's had signs of success over last 10 years and you look at them in and tell them they need to do a digital transformation or,
or go back 10 years time and tell them the way of the world is e-commerce,
they would have missed if they done either one of those things that she was opportunity they've had in the last 10 years the amount of value that they've generated,
you know my entire career has been about digital in retail and I certainly believe that the future of retail is predicated on digit.

[37:40] However I don't think being digital is the only strategy I don't think being digital is a sufficient strategy right.

Jason:
[37:49] It's not much of a differentiated.

Kasey:
[37:50] How much are the temperature like retailers need to have digital and Technology fundamentally sort of ingrained in what they do but how that manifests itself and how they create value propositions around that needs to be that's the Strategic question.
So anyway that that's sort of the Highlight you know you think about this great retail bifurcation says look on one side we've got income that's really changing their for the consumers changing and therefore,
if we look at retailers in success or weakness it actually corresponds and I'm fairly well with what's happening at the consumer at the wallet love.

Scot:
[38:24] So if I made from value and Premier I kind of know what I need to do I'm in good shape but I'm balanced what do I do.

Kasey:
[38:32] Actually.
I'm not sure that anybody knows what they need to do I think that's the that's the hardest question because the world is evolving and Retail environment consumers evolving so quickly.
That how you think about that consumer and how you think about creating value propositions one of the things we believe is it is increasingly granular.
You know Aunt in the value proposition actually is also increasingly modular so instead of having the big you know.
Monolithic value proposition that you're going to offer up to the consumer what we see is.
Fragmentation fragmentation not only of the market but fragmentation about how I approach the market if somebody call this personalization.
Right beside you that I talk to you different than I talk to you the next Consumer what we actually take that idea further.
And this idea that says no not just how I talk to you that's a marketing thing but how I approach you how I serve you my value proposition 1 assortment I bring to you we got to take all those things and safe.
That has to come become increasingly granular granular and modular how I take that out the market that's what's happening to the competitive base and frankly that's happened that's what's happening to the consumer as well.

Scot:
[39:44] So so some of the.
So like Nordstrom and tax and I don't talk about the Retailer's but when I look at Nordstrom's and Saks the kind of have two phases of the consumers they have the the luxury side and then.
You know then they also have the price side so that you know that Nordstrom Rack and Off Saks so that's it seems to be an example, like what you're talking about.

Kasey:
[40:03] Yeah what was that without a doubt that's an example and in fact if you if you if You Pull A Part the vast majority of big strategic moves that any retailers have made recently they really do line up with this idea about some cases there.
They're different brands some cases their Acquisitions of brands that you'd go while that doesn't make sense with.
You with your customer base and if you looked at it through the Senate lens you got all that makes absolute sense less that's a choir a brand that actually lets me approach you know and and capitalize on a different customer in my customer base.

Scot:
[40:37] Well there's tons of talk about Millennials word where do they fall into this mix.

Kasey:
[40:41] Yeah you know that's that's a great question cuz I was another thing we took head on this conventional wisdom that says this is all the money all the Millennials destroying all of this.
And what we found was.
Well I'm some ways that's true but the reality is it's more intricate than that so at the highest level when you average all Millennials together we actually find in our study we find.
They behave differently they behave in many ways that you might expect a shop online more often they go to the store last off,
you know those things but here's what really is fastening when we when we separated the Millennials by the same income cohorts here's where the big aha was as it pertains to millennials.
It's only the high in Cumberland you that actually really skews the entire collection towards the behaviors that you would expect.
The low-income Millennial actually behaves very much in line with the low-income consumer so we looked at propensity the shop online and what we found is a low-income Millennial shops online roughly the same way a low-income person does.
Meeting Tom middle-income Millennial does the same way also looked at whether or not they shop at discount stores and we found the same thing very much in line with the high in Cumberland Hill though.
Is is skewed dramatically towards behaviors and therefore they as a subset,
of the Millennials actually skew the entire collection of Millennials that way so when you pull it apart and then it becomes really obvious now the issue that you have is when you look at the high income Millennial you find out that's about 6%.

[42:13] The population or so it's a small portion of the population that really behaves differently one of the things we counseling and caution is to sort of think that the millennial is a group.
Now is that consumer we actually have to play the part we also looked at an interesting question is fragmentation of spin when you do shopping stores how many Shores at stores do you shop at when you do stop and shop online how many.
How many different places to shop online and what we found was high-income across-the-board skews hired a fragment or spend across more retailers.
The millennial online shopper skews.
Almost off the charts in terms of the number of different retailers that they're willing to shop shop with online that's very interesting insight.

Scot:
[42:58] The shop at a lot of very few.

Jason:
[43:01] The highway promiscuous in the.

Kasey:
[43:03] That's right that's right that's right.

Jason:
[43:04] Does a user than play this but just to save it stated explicitly like so all Court cohorts.

[43:10] Gain wealth as they get older right so the older the color is the more wealthy 10 aggregate but one of the things that's been unique about Millennials is they've gained wealth much more slowly.

[43:22] Then previous cohort So when you say hey there's a a high-income group in a low-income group.

[43:28] That hiding from group is actually much smaller as a percentage of their total population then was true for Gen xers.

Kasey:
[43:36] Yeah that that's a great point cuz we all like to imagine when we said around as retail experts that we are and we imagine you know a millennial and how they shot,
you know what there their they're probably wearing yoga pants they've got 3 smartphones they probably avocado toast I think you mentioned that,
you know we got the idea of a millennial that the problem is that idea is a very small portion of the millennial one in five Millennials live in poverty.
2/3 of Millennials didn't go to college don't have a degree and the older Millennials 26 and 34 are the cohort with the highest rate.
Of uninsured medical incidents are the incidents that most frequent lead people into poverty so there's many people who are millennials today who are not doing so well they really fall into categories that we don't often think about when we talk about money.

Jason:
[44:25] Yeah it's fascinating and I run into some retail all the time is just.

[44:29] Our industry was born based on these kind of urban legends in the you know this kind of word of mouth like oh this is who our customer is this is what their economic situation is in in you know you're you're bringing us another example of.
When you really look at the data the urban legend off and doesn't hold up but I used always chuckle.

[44:50] Personas are big thing for retailers he's going to need to return to have this Persona who their customer is and I have this premise that on average every retailers Persona is 10 years younger than their average.

[45:03] Because I want imagine that they have this like young hip Shopper and yet that that usually isn't who shopping in their stores.

Kasey:
[45:10] Something about this cuz I just I just shared data that most of it is you're looking in the rear right we're looking for looking back think about you know here we are interesting about the,
the buzzwords I'm in route back to this idea of the buzz words that were the big buzz words here at dinner after last 10 years.
In what I just showed was that there was something going on in the marketplace that none of the buzz words were.
Where anywhere clear to close to write were talking omni-channel retails the future in Mobile link.
Important in that they weren't good and that if you did them right they wouldn't be productive but there's a whole collection of retailers that that went a Direction.
Around the cut off price you know that was incredibly lucrative over the last 10 years that none of the buzz words.

[46:00] That opportunity and when was thinking about business with him. RetailMeNot retail strategy we got to keep in mind that this is about finding opportunity.
Finding where those pockets are of of demand or pressure or needs that we we can figure out how to capitalize on those in and serve those and provide to those right,
and if we look into the future we have to figure out,
where are those evolving opportunities where they coming from next and how do we think about those too often and Retail we think about capability we think of mobile.
The capability when we don't think about is is this idea of need right and the changing competitive environment and how our competitors are thinking about unlocking those opportunities so you know I got passion about this idea about.
You know Zig when everybody else zags write the passion about this idea about thinking in more granular ways about where there's opportunity and being skeptical.
I'm a bender let me be clear I'm a vendor but be skeptical of us off of us vendors who who you know show up with the buzz words and show up with these simple ideas that are conventional wisdom about what success looks like.

Jason:
[47:12] With the very rare exception of Jason and Casey be very skeptical of the vendors.

Kasey:
[47:16] That's right you want to be skeptical of Scott.

Jason:
[47:20] Scot used to be a vendor now he just helps make our life better by having our.

Scot:
[47:25] Agnostic vendor so what channel does being somewhere so choose your own strategy.

Kasey:
[47:30] You guys now that that's those are the highlights of the great retail bifurcation in the report you will be launching in.
The March will be sharing with few of our clients between now and then but in March we're going to be in a launching it and you will see it will make sure we push it out to the market.

Scot:
[47:46] Did you guys projected Ford like as it's only going to get worse or so like some of the tax cuts and we're seeing some people raise minimum wages for retail employees was trying to see some movement at that lower level I don't know if it's me and you don't fit.
WD projector for door.

Kasey:
[48:01] There's no projection on it but we certainly have had,
plenty of conversations of course this is it gets wrapped up it gets wrapped up very quickly and threw a political positions and thinking and and how you believe these things that are happening now policy changes made manifest themselves.
You know I would share my own personal view point would be that.
In a meeting of the changes that have occurred recently including the continued growth in the stock market skews towards one end of the Continuum you look at the tax cuts and you have to decide whether or not you believe.
The trick is trickle-down effect will.
You know ultimately find its way to the lower lower ends of the income Spectrum I'll refrain from providing will have to have more conversations over a beer about whether or not we believe one way or another.

Scot:
[48:51] We don't get into Kenzie in economics here at the end of the show.

Kasey:
[48:53] That's right it is it's a great question about whether or not you know the things that are occurring from a policy standpoint or only going to accelerate this or whether or not they're going to solve this.

Scot:
[49:02] Cool Whip between now and when the reports out what should should listeners they're interested in this topic where would you point them like maybe your Twitter feed or.

Kasey:
[49:11] Yeah so it will certainly in the Twitter feed will continue to offer more things out but I thought I would share this look we're sharing with our clients you know that the initial findings I'd be happy to share you knowing conversation with anybody in a prior to our official,
no more States and reach out to me via email or Twitter LinkedIn any of those ways I'll be happy to know begin sharing some of this there's nothing super secret here,
let me thrilled to share this with anybody that thinks this would be helpful.

Scot:
[49:40] Awesome and then what's your Twitter handle.

Kasey:
[49:42] Caleb.

Scot:
[49:43] Caliber.

Jason:
[49:44] And we'll put that in the show notes so you just have to click the link.

Scot:
[49:47] Go to last topic so you spend a lot of time thinking about the future you you're heavily involved The Singularity University and and you know we always have this fun topics around Ray Kurzweil and stuff what anything would we think about the next 10 years what does it hold for.

Kasey:
[50:01] And I always like to say you know if you think that you've seen disruption you know you ain't seen nothing yet.
Cuz the reality is if you don't we study this in the retail volatility index when you when you really think about okay is the industry being disrupted today I think pretty much people would say yes being disrupted but if you say.
Artificial intelligence isn't disrupting and I can't come up with an example this is all this is Ben and blockchain isn't disrupting and driverless cars aren't disrupting and you know advances and in human health.
So the vast majority of the the Technologies even that will see over it at interrupt.
Disrupting today the destruction that were talking about today is really after 20 years of first and maybe second year second generation internet Technologies.
Web IP protocol mobile devices you know so and we start celebrating him.
Of those and you know I look at it and go boy this next Generation that are just now coming online,
are going to make that pale in comparison but I finally I comes back to the exponential curve of advancing Technologies in the impact of those Technologies where we're now starting to feel the acceleration of that.
And I think things like I think things like blockchain and its ability to.
Open up the marketplace are really going to have a profound effect once once we figure out what and how do you use blockchain to open up Trading.

[51:34] Inventory providers and customers and you know there are retailers today that play The Ledger.
In between suppliers and customers today what happens when you don't need a company.
The place at Rolex that do I think I'm pretty bullish on that it'll take awhile for that to you know evolve and unlock the advances in artificial intelligence there's a great presentation of singularity,
on the advancements in what what like why now why are we talking about it now when you see that presentation about well here's how far it's coming The Last 5 Years it's mind-blowing,
about how far it's gotten so I'm confident that in the next five to seven years that will have a profound effect though you know I guess I tell people you ain't seen nothing yet that's my view.

Jason:
[52:21] It's funny one of the things I've learned from from Singularity is the human brain just isn't wired to sort of.

[52:29] Project these exponential changes and so we have this tendency to think linearly and you go home and there's been a bunch of change we're probably.

[52:36] Most of the way through that change when in reality I wholeheartedly agree that like the overwhelming majority of disruption were likely to see his still.

[52:45] Still in front of us which is great news for the three of us at this table because there's going to be a great role for our businesses and more importantly the Jason and Scott Show podcast.

Kasey:
[52:54] The interesting part I'll add one more common is that it's not usually the technology itself the technology gets all the attention it's the changing.
Competitive Dynamics it's the changing barriers-to-entry it's the changing idea about what it means to compete.
That we lose sight upright weight we want to think about our competitive model as it stands and will attack on whatever technology is and in largely will be the same but the disruption comes from the changing.
Competitive environment that's what changes not just that a you know my competitor now has a mobile app I need a mobile app to know.
That's not it it's like I talked to her earlier about deflationary pressures on prices and apparel it's those sort of changes that come from the technology that we miss when we don't double click and triple click into what are the implications.

Scot:
[53:43] And the consumer changing more rapidly than we can react to him to your point about the the quote they have.

Kasey:
[53:48] One of the things we're saying this is back to buzzword right this are buzzword we're saying this isn't the retail apocalypse it's more like the retail Renaissance,
brightest idea that there's a spirit of change that's occurring we sort of put it into the to the Renaissance. Where technology became important in science became important and the question is whether or not you can evolve.
You know during the Renaissance.
And that's really what we're at because the industry isn't week the industry has strength there are winners and losers it's happening at a faster Pace than ever but it's not the apocalypse.
You know and it in its demise it's actually in its you know when someone gets in at a day here as we as we figure out how do we compete in a new environment.

Jason:
[54:34] Well that is great news and that is a great place to leave it today because it is happen again,
we've used up all our a lot of time so we certainly appreciate your time Casey is a reminder if you enjoyed the Today Show we certainly appreciate a 5-star review on iTunes if you like to continue the conversation you're welcome to.

[54:52] Click on over to our Facebook page and leave us a comma.

Scot:
[54:56] Yep and a kind of a fun thing is you get to play you are in a rock band so you have in your your your night gig are night gig is podcasting in yours is playing a bass guitar so there's a big a jam session at the Retailer's get together at the soap look forward to seeing you rock out tonight.

Kasey:
[55:12] And I look forward to it.

Jason:
[55:13] Until next time happy commercing.

Jan 15, 2018

EP113 - NRF Preview http://jasonandscot.com

Episode 113 is preview of the NRF Big Show 2018.

  • Recap of CES 2018
  • Preview of NRF Big Show 2018
  • Retail News

Don't forget to like our facebook page, and if you enjoyed this episode please write us a review on itunes.

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Episode 113 of the Jason & Scot show was recorded on Sunday, January 15th, 2018.

New beta feature - Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 113 being recorded on Sunday January 14th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your host Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners Jason this is one of those are very rare times over the course of the Year where we are actually not only in the same town but in the same room at the same time.

Jason:
[0:53] I know it's awesome we make eye contact while we're talking this is very weird for me.

Scot:
[0:58] Yeah it's very weird I'm usually just staring deeply into the the computer.

Jason:
[1:02] I'm staring deeply into a photo of you I have over my computer.

Scot:
[1:05] Are there candles.

Jason:
[1:07] We don't need to get in any more specific.

Scot:
[1:08] Call Sue.

Jason:
[1:12] Why are we here Together Scott.

Scot:
[1:13] We are here at Big Beautiful New York City for NRS Big Show.
It's that time of year again where were you here making the Trek down to the Javits Center no snow on the ground this year I think that's the thing the last three in RFC I've been trudging through snow but this one's pretty dry.

Jason:
[1:30] There's no snow yet but the mean in RF weather tradition is the blizzard that comes in during the show and makes it impossible to go home after the show and if I'm if I'm remembering correctly there is it forecast for snow during the show so we'll have to see.

Scot:
[1:45] We may be doing a lot of podcast from the the podcast you here in New York.

Jason:
[1:49] Exactly are our misery could be our listeners benefit.

Scot:
[1:53] And what's up we definitely want to do a little preview of some of the things that were already hearing about it in RF but you are fresh out of Vegas where you were at CES I want to hear all about your CS6 transfer.
Exciting things I saw the Tweet about but I'm sure there's more color you can share.

Jason:
[2:10] Yeah so there's an annual tradition for me is you know you celebrate New Years and then you'll get on a plane and fly to Las Vegas with,
180000 of your closest friends to see the latest,
new Innovations in electronics and then you go straight from there to New York for the blizzard and the big interrupt retail shop and I go to CES,
almost every year I think this is my 32nd 2-year CES largely to see,
new trends that might affect our our clients on our Industries.

Scot:
[2:48] Now that he's become Dex and CS remember and you probably go if we're talking 32 years they used to be separate shows then it kind of merged and now you can hardly see a computer anywhere at at CVS.

Jason:
[3:01] Yeah so they were competing shows context was in November CES is in January they both briefly also tried to have second shows in Chicago at another time of year was that that wasn't very successful,
condex went out of business some of those exhibitors then moved over to CES and over history at various times they've been industries that.
UCS is an important part of their business and then moved on so I can the video games used to all exhibit at CES they outgrew it and launch their own show which is he three computers are not a,
super robust part of the Consumer Electronics ecosystem at the moment they're pretty flat.
Although there is a big push people are feeling like the Esports and the high-end gaming is.
Starting to drive a meaningful niche of these high-performance laptop sales.

Scot:
[3:53] One category that is CS now is Auto City Autos used to be kind of at their show which is called a Syma and then another part of SEMA Ace.

Jason:
[4:03] Cosima is the auto parts show that's in Las Vegas there there's a course of the Detroit Auto Show is going on right now in Detroit which is where all the.
Karma you typically see car manufacturers in Detroit launching their new Mustangs and those are two things and you'd get the like.
Tire guys in the the oil filter guys and all that at SEMA and for many years one of the big pieces of the consumer electronic show was the aftermarket.
Car audio industry which is of course almost completely dead.

Scot:
[4:34] Yeah and then we had GPS is for a while they were big now actually Autumn acres are there in a pretty big way right.

Jason:
[4:40] Exactly so they have taken over the hall that used to have the car stereo equipment in it and they're largely showing car tech in so you know they're they're typically not launching their new vehicles.
It in Las Vegas they're typically showing the new in-dash platform their new automation things the new wireless Services they're offering and what's what's a little funny is you you go to all the car boots and you.
You might say you'll see some cars but you see a lot more like.
Check components from the cars and then you go to all the other Halls where you see the the major ingredient tech companies like Bosch and Intel and Qualcomm that make alot of the parts in the car.
And they are of course have fancy complete cars and they're both so you go to the tech show to see the cars in the car show to see the tech.

Scot:
[5:31] So what's new in cars is it is there still a big battle for the Smart Car platform already moved on to self driving cuz I know Intel's bigger than that what were some of the big things and Auto.

Jason:
[5:41] Dazzled by far the big Trend in the the car boots this year is Automation and particular the self-driving Vehicles they have this system.
This ranking system from.
Animated level 1 through 5 so I go level 1 car has tools that help you drive better like a flashing light that tells you that the car in front of you stops and two can kind of assist you and certain things.
Like like a break for you when there's a car in front of you three can let you have your hands off the wheel for tonight you have your eyes off the wheel in five doesn't have a wheel,
inside there a lot of now level 3 cars being shown at the at the show and a lot of the,
the tech Innovation was around like these these autonomous vehicles and then to a lesser extent.
Electric vehicles in new charging Technologies and things like that Qualcomm has a thing called Halo which is wireless charging for your car so you have a plate in your garage and you.
You just parked the car over the plate and it charges it overnight free.

Scot:
[6:51] This may seem Irrelevant for retail but I saw on CNBC Ford,
you announced they're very excited about driverless cars but they really kind of they don't believe that they'll be kind of a fleet kind of a thing like an Uber there really more into package delivery so I think that it's going to last mile.
Absolution. That was kind of interesting that the others there's a major auto manufacturer that really thinks it's going to be really more for delivery and he specifically talked about new from stores to do consumers.
Actually competing with FedEx Amazon ups and all those kind of folks.

Jason:
[7:26] Yeah yeah I mean there's another time we can talk about from that the show is Robotics and so it's kind of a combination of Robotics and automation there's a lot of interesting potential,
new helping that last mile but the Ford booth at CES is kind of interesting they really focused on.
Their vision for what a city looks like in a world in which most of the vehicles are autonomous and so one of the big questions that they they were trying to answer in their Booth is.
How do pedestrians interact with autonomous vehicles right like to,
often when you're crossing a busy street and there's a crosswalk you may go out of your way to make eye contact with a driver before you just make a leap of faith in Jump front of the vehicle so what do passengers expect to do.
When an autonomous car is coming up to a crosswalk or those kinds of things,
in one of the things that they did to study this is they really did this big research study on future cities but they actually invented a costume that looks like a car seat.
And so they say they dress the guy up to make him look like the empty seat of the car and sat him down in the car so it was a fake autonomous vehicle.
I'm just thinking that that's a funny job to go home and tell your parents you just got is your portraying a car seat.

Scot:
[8:41] Or when you have time to go to Starbucks I must look really weird it's like here comes a Walkin car seat.

Jason:
[8:45] Exactly so they videotaped all these consumer reactions and they have this notion around like we'll probably have to have some Universal standards for like a lighting system in the car that you know as pedestrians know that they're being seen or those kinds of things.

Scot:
[8:59] When ironic when is the new there's a Netflix series that started in the BBC and then got picked up but it's called Black Mirror and in this they just released season 4 I don't know if you watch it or not I think you're behind on everything.

Jason:
[9:12] I am kind of on most of the stuff you give me Groupon so that's that's next on my list.

Scot:
[9:17] No spoilers but one of the episodes it has this kind of plot device where there is a driverless vehicle that delivers pizzas and it kind of.
Knock some of this guy and it's not really part of the whole thing but the looking shape of it was really interesting like you just wanted to know a lot of time thinking about how this look and then I saw that CS.
Pizza Hut or.

Jason:
[9:37] Toyota and Pizza Hut add a had a partnership for an autonomous pizza deliver.

Scot:
[9:40] And it was just like it was exactly like the thing on dark mirror so I was really really very strange and then I saw an article about it and there was no coordination or anything it was just.

Jason:
[9:51] I wonder who inspired who think they're cleaning independent invention and then.

Scot:
[9:57] It's kind of has to be because well if the show had known about pizza thing it could have been but the shows literally been out for like that came out December.
Like 30th or something so there's no way they could have designed a prototype that fast but it's kind of really Tales from the future kind of a thing to happen there.
Okay so that's Autos then as I was sitting watching remotely and not fighting for calves with a hundred and eighty thousand other people I saw,
a lot of Twitter traffic in stories were around the the home automation and then also kind of the battle of the smart speakers and intelligent thing so so last year report from cs1,
this year it looks like Google is really stepping it up don't give us an update on what you saw there.

Jason:
[10:41] Jump to that last year we didn't necessarily expect partsmart,
speakers to be a big part of CES but you went to the show and Amazon with embedded in like over 400 devices at the show and you know I seem to be ubiquitous in Amazon didn't have a,
their own presents at the show yet they were getting on the bus,
a big part of why I say yes existed to generate PR to drive future sales and so most people declare the Amazon the winter that show they didn't take a booth and yet they had this great,
present so this year we are all curious to see if they would.
Double down on that or if any of their competitors would make up any ground and it really clearly has emerged a two-horse race with Amazon and Google so this was probably the death knell for Cortana Cortana was the first born,
on the PC is part of the Windows operating system and even all the Windows laptop manufacturers are now shipping laptops that are Alexa enabled,
not Cortana enabled.

Scot:
[11:40] No it's a Samsung when I can't remember its name.

Jason:
[11:42] Bixby in Samsung is definitely has an interesting strategy overall theme of the show is.
The traditional product you expect to see the show we're not very improved from last year it was a very irritable year and what the exhibitors were more focused on was.
The platform of how all these products work together rather than their individual features so.
LG and Samsung and I'll have Smart refrigerator smart washer smart kitchen is all these different tools and instead of showing you how much better the refrigerator is this year than last year there were more focused on how much better to the house works when all these,
devices talk together so that.

Scot:
[12:21] That's a lot of mocked-up houses in this kind of thing.

Jason:
[12:24] Yeah I like vignettes and in these use cases like a you just bake lasagna in your Smart Oven your dishwasher knows you just.
Bake the pan and so it's setting the dishwasher to the the pan scrubbing mode rather than the echo mode because it's got to get the the big done she's off the pan.

Scot:
[12:43] Does anyone have a nest camera for looking in my refrigerator so when I'm at work and I can't remember if I have milk or not.

Jason:
[12:48] Yeah it that's one of the most popular features in a smart refrigerators are these these webcam.

Scot:
[12:53] The ones on the outside where I can see inside isn't it I need like seeing.

Jason:
[12:56] Inside so that when you're at work you can at the store you can see if you need eggs or milk or those kinds of things.

Scot:
[13:02] The fair when I saw her was at sokoler came out with a pretty much any any kind of Plumbing fixture in your house can now be Alexa enabled so.
They had the suitcase for the guys holding a baby with both hands.
And he says Alexa turn on the sink and then he like takes a hand and he liked holds bottle and put it under and it's kind of like why can't you just take his hand in like turn on the sink and then they have a toilet did you did you get to check out the toy.

Jason:
[13:27] I did I did not actually test the toilet but I did observe the the Alexa enabled toilet and yeah that was in bed and everything it's not clear.
That you want or would benefit from voice embedded in all these products and the what was interesting about the whole voice battle.
This year was you know the Google had a much bigger presence than last year they both took a very big boost themselves which will come back to you in a second Amazon actually stepped out the size of their boots so they actually had.
Immodest Alexa Echo System booth.
Last year they had the treasure truck so they should have had the treasure truck and these examples of all the third-party products that work on the Alexa Echo System Google built this big Booth with they want some new hardware at the show so they have.
Through Partners they're making what I would call Echo work type product to a Google home product with the screen.
In a very familiar form factor that people that.
I have that the echo look and today he wants to Booth to demonstrate all those things unfortunately that the booth is super extravagant and was designed for big parts of it to be outdoors.
And for the first time in a hundred 15 days it rained in Las Vegas and so literally the the Google Booth was rained out on the first day which I imagine is a multimillion-dollar mistake.

Scot:
[14:48] I saw I had a slide did you get a chance to sit down the side.

Jason:
[14:51] It it did I did not get a chance to sit down inside their Booth was so crowded that they literally had like wait time management for all the various things so you are.
It's 15 minutes to go to the roof and go down the slide and I just didn't have the time.

Scot:
[15:08] Yeah I did back on the color thing I heard that the deluxe integration with the toilet was kind of crappy.

Jason:
[15:15] I'll add the drum roll and post no no I won't listen.
It's ok Google like did everything presents they were embedded in in more products but what they really did as they spent a fortune on Advertising so,
so Google bought all the outdoor ads they had as on a ton of the taxis they wrap the Las Vegas Metro in in Google sign in.

Scot:
[15:38] Stairs I was under the stairs.

Jason:
[15:40] Yeah they I don't specifically remember some.

Scot:
[15:42] Escalators are like an escalator.

Jason:
[15:43] Yeah so they they spent a lot of money on outdoor advertising which is ironic I guess given that they're primarily an advertising platform.

Scot:
[15:50] Should ask him how they measured the ethics.

Jason:
[15:52] Yeah I don't think there is one.
They definitely got more mindshare as a result of spending all that money and it certainly shows that there Devin Ernest interest in winning the space it feels like.
They're still pretty far behind from an integration standpoint there certainly far behind from a skills perspective as well as we've talked about.
But it's really emerging as a two-horse race and lots of retailers have a vested interest in Amazon not owning.
The the home automation voice space and so you know there's a lot of people that that you know I'm rooting for Google because they're the.
Potential foil to Amazon.

Scot:
[16:34] The Google Talk anything about the business model and how ads are in a work and they're just kind of like charging in and we'll figure it out later.

Jason:
[16:42] Yeah they really didn't like obviously wasn't they didn't talk a lot about it but there was a big announcement to me last quarter when both Target and Walmart and some other retailers started sharing first-party data with Google so that.
If you if you're in the Google echo system in your shop at Walmart and you say order more peanut butter Google has access to your peanut butter purchase history from Walmart's to fulfill their.
The the most likely peanut butter better you'd want right in that was historically abused competitive Advantage for Amazon is there artificial intelligence system had all this historical data on consumer purchases and since Google doesn't sell anything.
They're pretty disadvantaged in.

Scot:
[17:21] Just Walmart and Target both share their data with Google and you say or did you just say order more peanut butter will Google know a Jason buys the most.
Jeff from Walmart and allergic from Walmart like what use that to discern between retailers.

Jason:
[17:37] Yeah although it's it's the last that it's deciding like you opt-in so in the Google home Echo System you say I want my fulfillment partner to be Walmart and then that.
That Ops you into Walmart sharing your data with Google.
And then you're likely to get Jeff if you primarily order Jeff there that is an advertising opportunity so when you're a freaking purchaser of Jeff.
They're likely going to sell you the Jeff you frequently purchased but if you say order peanut butter and your not a frequent purchaser of Jeff they need to.
Suggest something to you and they typically pick one brand historically that's been this Amazon Choice program on the Amazon platform so they Amazon Choice products,
usually ends up being the recommended product in in the Alexa Echo System but we're seeing some strong indications that Amazon is actually selling.
The that.
First recommended spot for new purchasers to a lot of Brands and so that it's sort of ironic like we've always talked about Google is primarily in a driven business,
doesn't have a way to monetize voice Amazon obviously makes money selling stuff and so if voice makes you buy more stuff Amazon food,
monetize much better than Google and then irony of ironies it appears that.
Amazon is ahead of Google in terms of figuring out good advertising models for voice or at least acceptable ones.

Scot:
[19:03] Yeah okay a couple more serious than what was the worst or the wackiest thing you saw.

Jason:
[19:09] Yeah every year there's some goofy products there's that you know the.
Bluetooth for car something like that something that jumped out of me is completely wacky there's a ton of new smart Health Tech and particularly a ton of sleep Tech in some of that seems.
Somewhat silly right so,
aromatherapy and video systems you know help you get 4 hours of sleep in a 20-minute power nap for example so there's a lot of that and then one product we thought there was kind of interesting I think you could both be the wackiest product or the biggest commercial hit.
Is this the 3D printing for presumably young girls finger nails so you can.

Scot:
[19:50] Does chocolate last year too in my room.

Jason:
[19:52] There their they're definitely in some 3D chocolate printer.

Scot:
[19:55] I thought you're going to say chocolate.

Jason:
[19:56] For a while yeah but to me that would not be silly at all.

Scot:
[19:58] You need to light a printer.

Jason:
[20:05] Well it's.

Scot:
[20:07] Did you see that Samsung wall around what there's a lot of Buzz around the Samsung.

Jason:
[20:10] Yeah so every year there's a big competition around what's the newest most amazing television that could be invented and a lot of these two televisions are ones that never get commercial adoption there there.
You know concept televisions that they they build very similar to a concept car.
And so they keep getting bigger and bigger or thinner and thinner LG at a television that you would like an 88 inch 8K television that you would literally roll up.

Scot:
[20:38] I saw that it comes in like a little tube and it kind of rolls up so it could be a very small footprint.

Jason:
[20:42] Exactly and there is this actual practical problem that a lot of people struggle to self install TVs on the wall so there's a lot of TVs that are damaged shortly after their bought when they fall off the wall and these these you know.
LG TVs that are now like 6mm thin like they're literally mounted to the wall with tape so that that is kind of cool and interesting the Samsung.
Wall TV is just impressive for its high resolution and enormousness they didn't give us a spec for exactly how many inches it is but it's well over 200 in I'm so that was just a.
A very cool piece of glass.
There you know there are a couple of the new car manufacturers can't afford to go to Detroit Auto Show that they watched new cars from.
Companies that don't have a history in the outer space tender launch at CES and so there's this new electric autonomous vehicle called the Bryant which i