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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Jun 29, 2018

Amazon News

Industry News

Supreme court rules in favor of South Dakota in South Dakota v. Wayfair, Inc., et al.  The ruling effectively overturns the previous Quill Corp. v. North Dakota precedent and opens the door for all states to require e-commerce sites to collect and remit sales taxes to states.

  • Amazon stands to be the biggest winner in the ruling.  Amazon already collects sales tax on all 1P sales.  Amazon will now be able to charge 3P merchants 2.9% to collect tax for them.  Amazon 1P will be more competitive with 3P and other e-commerce sites (eBay, NewEgg, etc..).
  • Small E-Commerce sites and marketplace sellers are the biggest losers, as they will now need to collect sales tax (and likely pay a 3rd party to do it on their behalf), and navigate a multitude of complex out of state sales tax laws that are likely to emerge.
  • All eyes turn now turn to Congress, to see if they will pass a law to clarify/simplify the sales tax collection issue on behalf of small businesses.

Listener Questions

Alex Volakis asks: Should others try the Warby Parker school bus store concept. Who do you think would benefit most from it?

Amit Agarwal asks: Do customers like bundled products or do they like to create their own bundles? What are different merchandising tactics used to sell a collection of products?

Jill Dvorak asks: Any leadership or managing through change tactics. at the corporate level to infuse more nimbleness in established brands?

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

Episode 136 of the Jason & Scot show was recorded on Thursday, June 28th 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.


[0:25] Welcome to the Jason and Scott show this is episode 136 being recorded on Thursday June 28th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

[0:40] Hey Jason welcome back Jason and Scott show listeners.
Well Jason listeners that are paying very close attention will notice we took a little bit of summer vacation off so we haven't really podcast for last couple weeks
but it's exciting to get back to it and we have a lot of news report on and some analysis of some big things that happened in e-commerce of the last couple of weeks
plus we've had some listeners very patiently waiting some for with some questions that they wanted to ask us so that's going to be rude the real focus of the show tonight.
So let's start off with some.
Amazon news your margin is there.
It wouldn't be a Jason Scott show without some Amazon news and there is no shortage today we're going to go through kind of the cream of the crop here so that the big one is and I know you've been on pins and needles Jason like I am is when is Amazon Prime day
well it has leaks and it looks like it's going to be July 16th to 17th
and like last year they're going to do kind of the day of the half of deals so I'm pretty excited I've been saving some of my Gadget money on the side and I'm going to be watching carefully to see what's offered this year.

[2:04] Yeah I am right there with you it's it feels like
as the as it gets more and more in French do not do the deals and stuff get better every year and I think there's been some interesting evidence that it's now starting to have a meaningful impact on back-to-school that people are literally.
Like planning their back-to-school spend around Sunday.

[2:25] Yeah any gadgets on your wishlist or I think you already have every flavor of the Amazon Echo if it's cracked but anything not that you don't have.

[2:35] So to be honest of the stuff that's currently available I there's nothing on my wishlist so I'll be.
Curious to hear if there's some deal that usually it'll be a deal on something that entices me or something that's relatively new released there are some new fire products that I don't have
but I'm not sure I really need to add him to my repertoire.

[2:58] Got it I I save all year for my little accessory cables so I'll probably be buying like
20 iOS cables and USB C use and we go to those like crazy at my house so this is my time of year when I stock up on all that good stuff.

[3:14] My wife thinks I have a hoarding problem with those things and I like but I'm not smart enough to wait for the deal so I you know I get my eyes I would be the one customer that would do the subscription service from anchor.

[3:26] Yes I Do by a lot of anchor product on Prime day that's like there the juicy stuff I keep an eye out for.

[3:32] Yes and I'm a little OCD about it I like I have much cooked my cables color coded so I got all my lightning cables are red and All Nite Nite my USB or black so I can.
Easily visually identify what I need.

[3:50] Brickell there was a big acquisition today I know that you're probably excited about cuz we've talked about this category on the show did you see that one.

[3:56] I did I did and I have to go back and check our predictions but I think this is even one of my predictions for the air which I'm so excited about.

[4:05] Darn it.

[4:07] Yes I I thought you might not have considered that but there today Amazon announced that they acquired a company called pillpack and this is a 1 billion dollar acquisition which is not the biggest obviously with with Whole Foods but
on the bigger side of the Acquisitions for Amazon and pillpack is a male fulfillment Pharmacy.
They specialize in custom packaging so their primary customer are.
Dogs that have chronic conditions and have to take multiple prescriptions daily and pill pack make these.
Custom packages of their particular caplet so you get this right you know nicely old.
Baggy of the pills you're supposed to take everyday and so that simplifies life for a lot of people that have to take a lot of medications.
And it is a good customer experience and arguably.

[5:04] It is in and of itself a nice way to reduce friction and improve the.
The prescription processed but I think the reason most people are are super interested in the Amazon acquisition is less because of their unique Twist on mail-order prescriptions and more the fact that.
This is Amazon buying a licensed Pharmacy and jumping into the pharmacy space with two feet.
We've seen them sort of toad it before course they they made an investment in many years ago and last year they got a bunch of.
Medical equipment pharmaceutical licenses in a bunch of states which allowed them to sell like.

[5:47] Oxygen dispensing equipment and gloves and a lot of the the medical equipment but this is now giving them access to actually fill.
Prescription medications and so you know a lot of us have been speculating that this would be another industry that Amazon would attack.
And you're as usually happens with these things with Amazon.
That you know I think they're market cap went up by you had ate the investment a billion dollars their market cap went up by like 15 or 20 billion today depending on what time you looked,
and the big pharmaceutical companies Walgreens and CVS
lost about 15 billion dollars in market cap today and it was kind of funny I think Walgreens had an investor call today and and that you know that.
That the Walgreens CEO at you know actually other the phrase that we we make fun of on the show all the time,
that he's not very worried about Amazon that pharmaceutical Pharmacy is much more complicated than all the other categories Amazon's tackled and it'll be much different.

[6:50] I'll never figure it out just like a apparel and what Macy's said there they can't figure it out return.

[6:55] Exactly return Macy's is positive the returns are too complicated and all the apparel companies are positive that everyone wants to try clothes on before they order on them.
And not excetera excetera usually a Bad Bet there are complications to the pharmacy but I would argue that that Amazon is very good at solving for complications.
And then just a couple other sort of interesting Snippets around the acquisition there are rumors that that.
Walmart was the primary acquire of pill pack and the Amazon swooped in at the last minute with a higher offer and sort of.
Stole pill pack out from under Walmart.

[7:40] Do you know if I know Amazon with myself registering in a bunch of States just go back to them into all the us or you know.

[7:51] I don't think so but I think he'll pack has only certain states that they had access to and there still is a pretty big bear you're like like still having the pharmaceutical licenses one thing but really,
be a hundred percent in the pharmacy space you also need all the insurers.
To agree to partner with you and light accept your.
Your claims against all the various insurance companies and so what would a lot of the traditional pharmacies think is the big barrier to Amazon is the Amazon doesn't have those.
There's deals with all the insurers and so you know.
Not sayings on can't cut all those deals and they probably will but that's potentially a multi-year process and so a lot of people are speculating that the day 1 Amazon would focus on
the subset of the pharmaceutical Market that's paying out-of-pocket for for medication either because they're under uninsured or because the.
Because they have some limitations or restrictions on the insurance that make them want to pay out of pocket and then you know there's.
I got some speculation that Amazon would would even acquire an insurer which would then of course let them be the Fulfillment partner for that right and there's.
There's that you know there's a separate initiative the Amazon is doing with Warren Buffett.

[9:19] Yeah around revamping Healthcare and and you know one of the the speculated outcomes of that is a potential new insurance product that could potentially partner with and with Amazon Pharmacy.

[9:30] Yeah they just announced the CEO for that energy so seems like it's getting some momentum there for those who didn't listen to kind of our predictions for the year maybe you know what
what's this mean for a CVS or Walgreens near us a Amazon successfully
can compete on the pharmacy side at least the pill dispensing are those things convenient enough still or do you think that this is a problem.

[9:57] Yep so here's what's interesting so that the traditional drug stores that are Walgreens and CVS is.
Their whole business is predicated on foot traffic coming in to fill prescriptions in so the.
Like they they don't tend to be super price competitive on all the over-the-counter products that they sell in the store and they don't tend to be a destination for any of those products for very many consumers but what happens is you going to get your Lipitor and you realize.
That you need some snacks or you need some tissue paper or you need some Advil or whatever the case is while you're in the store.
And so have a significant number of customers no longer need to visit Walgreens to pick up their prescription.
The Walgreens brick-and-mortar model literally doesn't work like there is not a like another compelling reason for traffic to go in those stores.

[10:56] And so you know either that would you know put Walgreens in huge distress or Walgreens would have to sort of find some way to reinvent their their retail space.
And you know most most of that analysts look at those retailers and say hey the big Investments those guys are making these are in insurance companies and they're really their their plan is to sort of pivot from being a brick-and-mortar retailer to being a.
A healthcare provider that's not tied to brick and mortar.
And you knows we talk about a few times on the show Amazon doesn't have to capture 50% of the pharmacy market or anything like it you know if they can take a a 10% or 15% and in the traffic of those stores.

[11:38] Like that probably put them over a Tipping Point that makes those doors not profitable and so it's.
A very material threat to traditional drug stores.
Whether Amazon successful or not if a bunch of consumers just decide that it's better to have their Pharmaceuticals delivered to home.
I'm in there many companies trying to do that then you know that puts that same stress on those drug stores,
it's been interesting the kind of traditional mail order pharmacy hasn't really gained a lot of momentum so there's a insurers insurance companies drive people to mail order pharmacy and there's a percentage of.
Consumers there get their stuff VIA mail order at the percentage of people that use my order has actually shrunk a little bit in the last couple of years and so it'll be interesting if.
Amazon can come up with a new enough experience or these custom pill packs are a big enough value-add that they,
you know permanently change that that consumer Behavior which will you know really put a challenge in the drugstores and I I would expect to see a ton of drug stores close.

[12:44] It just sounds so slow mail delivery.

[12:47] Yeah and maybe mail is the wrong word right like I mean you know you can imagine all kinds of same-day fulfillment centers like at the moment.
You know people tend to get get the home delivery of
prescriptions when they're tronic things that you take you around right and when you you know God forbid you're sick and the doctor calls in a prescription or you go see a doctor and they call in a prescription that you pick up like those are the things you're more likely to walk in and
and get that but of course there's no reason that pharmacies couldn't.
Prepare those those meds or Amazon you don't own pharmacies couldn't prepare those meds and deliver on in 1 hour to your house.

[13:26] Yeah yes so it could be a cool Prime thing like Prime Pharmacy where yeah Auto refills the pharmacies I deal with like they never called the doctor and do stuff right so Amazon consult a lot of that stuff so.

[13:41] There's a ton of friction in
current experience that like we as consumers are just learn to deal with that that you can imagine someone like Amazon taking out of the experience and and make it game changing like in the in the same way that Uber disrupted the taxi industry.

[13:57] Cope well that was one of your predictions of one of mine was about Amazon delivery and today there was an announcement about that sort kind of kind of
even on this I guess
Amazon sent out this really interesting effectively up a call to on chores to build delivery capability that that Amazon will then leverage there as we've covered on the show a lot there
the really worried about the capacity out there in the network they're building their own direct this is really what I would consider a call to arms for entrepreneurs to build a 1099 kind of delivery Network
yeah I talked about going out starting a business for a minimum of 10K
wish you the vans that are Amazon branded uniforms and then they talk about how and their models of doing this.

[14:43] You can make up to $300,000 in profit a year that's pretty interesting in.
A little unknown thing is FedEx Ground did this they had
they had a lot of 1099s their individuals and then there was some kind of a court thing that happened where that was deemed
did they should be employees so they world all that up into businesses so when you see FedEx Ground delivery out there it is a it is a 1099 Network it'll frequently say you know
FedEx Ground operated by and they'll be some little LLC brand they're kind of small down by the door.
Doubt they have built a similar, Network so
this is going to be interesting to see how Amazon build this out if they're certain areas they're targeting and then also what this means for the flex drivers which is more of an Uber individual kind of a thing there's a lot of work
a lot of
people believe the Uber 1099 model is at risk that that same kind of litigation will happen that they're actually should be treated as employees this would
Guild Amazon another kind of an option on delivery if that were to happen to the flex driver thing too so so kind of covers several basis I thought that was pretty interesting.

[15:55] Yeah and I in my mind I could imagine.
That it's easier for Amazon to enforce and Achieve certain service levels with these.
Individual with his business operators over the 1099s i e you know it's like you can require these businesses to buy these Amazon branded trucks into wear Amazon uniforms and things that are like,
less convenient and economically viable to impose on individual 1099 work.

[16:32] Yeah I should have mentioned it but one of the things they're going to provide is the software so there,
I can give you all the software needed to run a business like this I think it's from an acquisition they did that they have kind of been using internally or maybe as part of flex and now they've there they're part of this whole deal is they will give you the software
which is kind of a clever way for them to have visibility into the SLA is right they can kind of see if your using their software in the cloud presumably they be able to see you know how you're doing against LA's
the required to use their software because they didn't want to be able to see them.

[17:08] Yeah I mean I read through the whole program and to me it feels exactly like franchisee model like I mean they've they've completely template eyes the whole business they they give you all the processes and software like they literally have like.
The Dead
training program down in the hiring recommendations for these businesses and they have the whole economic model is it like they essentially say that like hey you know depending on how quickly you scale
you're going to make between you're going to net between 70k and 300K a year in this business.

[17:48] Anything else about the Amazon do it by the way what
I just found someone interesting the Amazon delivery was this big plans PR thing and they had a bunch of media to Seattle and they you know gave the media all the story under embargo and so
you know today was the big announced a and they got a bunch of press over that over all that and then it
it feels like I kind of got stepped on when they announce the pillpack acquisition you know which they did none of this pre-press planning for.

[18:20] Yeah yes sometimes the best plans going to get
Crush by that the dip The Pride react to Walmart into that position was on its own timetable that they couldn't control and it just kind of unfortunately probably landed on the same day happen sometimes.

[18:36] Another interesting thing that came out last week is
at age does this evaluation of all the top advertisers every year and a surprise,
appearance on the top 10 list was Amazon as the fourth largest Advertiser in the United States
so they're spending more on Advertising then folks like for GM and they're the retailer that spending a listen advertising so they're actually spending more and advertising than Walmart it.

[19:10] Yep that's interesting it's funny because it's for you know for the longest time basil said they would never really do marketing cuz they prefer to put all that money into shipping fee and you know that that word of mouse with mouth was the best marketing but then once they came out.
With Kindle they had to really kind of start doing some marketing In and Out imagine if you looked up the bulk of that is going to be around Alexa.

[19:34] Yeah no I think that's I think that's why Fair they develop a bunch of owned Brands and they've they've had the market to support those owned brands.
But I do think you know that and they've kind of had them float on this they are also investing a lot more in Performance Marketing for just a core retail business at the moment then they.
They have it in the recent past said so you know you leveraging Google products and things like that to drive more traffic to Amazon.

[20:03] Another interesting Amazon news piece this is kind of more internal facing but I think listeners will find it
pretty fascinating it was a little bit of clickbait so that you know the article came out of Bloomberg and it it showed one of the the Kiva warehouse robots and it said you know
Amazon's robots are moving for the warehouse to headquarters which kind of you like what are they going to deliver pencils or what's going on
what's really happening is as we've reported on the show we had to Andrea lay on and she was telling us about some projects they had internally where an AI World very frequently negotiate with indoors and they call it this whole hands off the wheel initiative,
there's several layers so that there's there's vendor negotiations but then there's also you know on the first party side.

[20:52] Putting machines against humans to see who can piss pick the best products to put on Amazon and buy.

[21:00] And at the same time you also have the marketplace side of Amazon
so what's happening is it looks like they're squishing all this together now the guy that ran the third-party marketplaces moved over to a new project that's on an ounce Peter Pharisee so they wrapped up
the marketplace and the 1pt mused to be very despair teams you I would go to Amazon in
in meetings and introduce people across his team so it was funny and it looks like the Common Thread there is less peep
so more machines can imagine these categories because they effectively do a better job more machines doing negotiations
and less people and then this kind of integration of 1p and 3p
I think this is good because we found a lot of vendors get really confused and mixed messaging from Amazon where they'll go to one team in Amazon the go to the marketplace apparel team and say hey we want to do X Y and Z in those say you know oh no you have to do this that the other and then the one p team will get a whole different answer so I think this ultimately be good and you're the 3p team the three-piece cider Amazon
bigger than the one piece side so
I think it'll be great to have a lot of that DNA kind of mixed in there and you know there's a downside this Automation and
can be pretty frustrating to companies that are used to the old school you know having going to.

[22:23] Bendle and chicken someone's hand and showing them the products and those kinds of things this is
essentially you can stay home and chat robot and have the same outcome of the Amazon now so you know it'll be interesting to see how vendors net out on this change but it did
pretty interesting the automation you know what they at least according to Amazon's data has beat out people is as it comes to merchandising and negotiating with Thunders.

[22:50] Yeah for sure who the things are interesting to me about that merger I do feel like there's a way when they were more siloed in which sellers could potentially take advantage of this I was so I do think they're brands that,
wanted to sell 3p on Amazon didn't want to be one piece hours because they wanted to control their own pricing like in in principle,
if you're going to be a three-piece seller on Amazon Amazon has the right to like also be a one piece seller but a lot of,
Brie and seemingly fell between the cracks there and we're able to be pure 3-piece hours without being bothered by the 1p guys and there's a lot of speculation that now that one p m 3 p r kind of merging that
like you know that Aunt Amazon going to be a lot more purposeful about who can be a 3p seller without without Amazon having the option to be a one piece hour.

[23:46] So it'll be interesting to see how that plays out,
and then that's the thing that I chuckle at with the hands off the wheel I think it's a super app metaphor if you're a very big seller on Amazon
you do have a a human contact and you have this personal relationship
and I think what's funny about that is it's exactly like the the safety driver in the autonomous vehicles like
you know it maybe makes you feel better that there's a guy sitting in the driver seat but he actually isn't touching the steering wheel and so you can have all the good conversations and take him to dinner and do other relationship building you want.
But at the end of the day it's the computer that's deciding you know what the the terms of your your trade relationship are with Amazon.

[24:35] Summary of some of the Amazon highlights over the last couple of weeks
biggest news item is our very own Supreme Court in the United States got involved in e-commerce and I know you have a lot of interesting insights on this one so I'm anxious to hear your thoughts about what happened there.

[24:57] So this is a case that the Supreme Court heard several months ago and they they ruled I guess this would be the last week now.
The actual case the Supreme Court ruled on is called South Dakota vs Wayfair Overstock and do egg and a lot of people sort of shorten it to South Dakota vs Wayfair.
And essentially South Dakota passed a law that said we're going to require sell sellers.
To collect sales tax when people in South Dakota buy goods from them even if the seller doesn't have.
A presence in South Dakota and that there's actually a precedent.
Based on a ruling the Supreme Court ruled on in 1992 that South Dakota can't do that right like there's this.
President called quill which was confusingly enough it was actually quill vs North Dakota.
That the Supreme Court ruled on a 1992 that essentially said.

[26:03] In order for a seller to be required to collect sales tax for a given State they had to have a physical presence in that state to establish Nexus and so a lot of.
Pure play online retailers.
Based on that rule like avoided having a presence in big populated states so that they didn't have to charge sales tax in those States.
And it actually determined where Amazon's corporate headquarters would be when Jeff Bezos was starting the company that.
President was already in place and so they they pick Seattle because it was a good techhub that didn't have a huge population and wouldn't be a huge customer base and avoided.
Having a presence in States like California that would be huge customer bases and in the early days of Amazon.
Amazon was super restricted with their employees they wouldn't let their employees you know do business travel to the states they wouldn't let the campus recruiters like go to the the job fairs in the college dates because they were there being super careful too.
Avoid establishing a physical presence so they could have avoided paying taxes.

[27:11] Into this this the Supreme Court in this ruling essentially reverses that quill precedents and so so so now it's going to be possible for states to pass a law that essentially require.
I'm all us out of state sellers to collect sales tax and remitted to the the states.

[27:34] And you know there's a couple of interesting things in that first of all.
You are a ton of the media you know I was writing about how what a big win for Mainstreet this was and you know how was a blow to Amazon and.
You know that the national retail Federation you know kind of claim though it was a victory for retailers and in tax fairness and all these things.
The reality is in my mind the biggest winner in this deal is Amazon and the reason I say that is because.
Amazon is already collecting tax Amazon gave up avoiding that Nexus a number of years ago.
They're collecting tax in every state that has attacks and the reason they do that is they wanted to put distribution centers everywhere and they wanted to put Prime now centers everywhere and they just found it.
Was better for them to collect the taxes then to have all these impediments on where they could have a physical presence.
So this actually makes Amazon more competitive with other online pure plays right so it it it actually makes Amazon more competitive with Overstock and Newegg and and like all these.
Visa vertical specialty retailers like a faucet that you know specialize in plumbing fixtures in our aren't collecting tax.
So it helps Amazon's 1p business be more competitive.

[28:52] That detect the sales tax that Amazon isn't collecting is from 3-piece hours who have the option to collect the tax or not and most don't.
And so this ruling is going to require all of Amazon's 3p sellers to collect tax which is actually going to make Amazon's 1p business more competitive with the 3p business so that's a win.
Also Amazon charges a 2.9% fee on all sales.
In order to calculate and collect tax for those 3p seller so this is a huge new service fee that Amazon is going to start collecting from all their Marketplace vendors so that's a.
A big win.
This ruling makes Amazon more competitive with everyone else and really doesn't hurt Amazon's competitiveness.
In any meaningful way.

[29:47] Which is which is interesting and I would argue a lot of the the the media and info Scott wrong when they when they first heard about this announcement.
Who's probably getting hurt by this is a lot of the small sellers right if you are a a a small business that's primarily selling via 3p on Amazon and eBay.
You know your your cost just went up and potentially.
There are about 12,000 tax jurisdictions in the US and so every one of those jurisdictions in theory could now pass a law that says you have to collect their tax and they can each have their own rules for the tax.
And So It Goes could be a huge burden to the sellers.

[30:32] Track and calculate these 12,000 different tax laws and so you're not allowed to have to cut the tax but you have to pay a bunch of money to collect the tax.
Properly and that is a potential big burden for the small sellers.
I would argue there's very few small brick-and-mortar retailers that aren't also trying to sell online and aren't also trying to ship out of state.
So you know when people talk about this benefiting Main Street it's only benefiting the dinosaurs on Main Street that haven't figured out how to launch a Shopify site yet right.
And so so it is going to be a potential burden on a new small businesses.
And what's going to be most interesting to watch now is that the South Dakota version of the tax law is a very mild version of the law.
It essentially says that all the different cities in South Dakota can't charge their own individual taxes that that dumb.
We're going to have a Statewide system that's easier for businesses to comply with.
And it'll also says that the state can't collect taxes retroactively so no one's going to be on the hook for their sales over the last 5 years but.

[31:44] Any new state could now pass out a more aggressive version of the law
it has more burdens for the the small business and that even tries to retroactively collect taxes for The Last 5 Years
and it's it's unclear based on the Supreme Court ruling weather
whether the states will be able to get away with the more aggressive version of this wall so that it's it's kind of going to the tech
e-commerce taxes into a little bit of chaos while this all plays out and you know I think.

[32:15] Everyone's hope which seems like a long shot is that what what could really simplify all this is it Congress sort of enacted a
a lot the clarified what what how State should treat the taxes and Congress could pass a national law that essentially say is all the states have to,
you know follow the same system in charge the same rate and there's lots of draft of these kind of laws there was one that was drafted a couple years ago called The Marketplace Fairness Act
and it could allow all the states to collect sales tax but dramatically simplify the process of collecting those taxes for all the the online Sellers and protect all the online Sellers from retroactive taxes and things like that so
like the right thing to do for our economy would be for Congress to pass a law but it you know it seems like
there's a lot of partisan stuff going on in Congress and you know doesn't seem like there their they're passing a heck of a lot of common sense legislation at the moment.

[33:19] Another interesting win for Amazon is there's a fair number of people that don't use at ba because
Amazon just parked around an FBI and if you're one of these companies that's really you know of a carefully watching where your Nexus is you can't say to Amazon
you can't say two things you can't say I only want my product Cindy's FBA facilities you also can't say you know where is my product right now so I can make sure that I'm tracking where I kind of I could have Nexus or not so presumably this
get rid of that both objection and now you might as well just use that Paso another win for Amazon is FBA if we're going to go to a world pretty quickly here which seems like what you're predicting where every state is charging some form of tax.
The NFPA is another enough was going to get more users because it's going to be enough there are no negatives for for doing that around Nexus.
How do you say so if I may say I'ma an eBay or an Amazon Seller today what do I do do I need to start,
cutting taxes out there one should start that right now like what's the action item on.

[34:30] Yeah so at the moment you're only on the hook for the state you have a physical Nexus and and South Dakota.
The each state has to pass an out-of-state tax collection law in order for them to then put this burden on on sellers
and there are a number of states that have laws going through their state legislature right now
and so you like your your immediate action is that you you do need to start you do not have a tax liability in South Dakota based on this ruling
but you can anticipate
didn't very short order all the states are desperate for money so of course they're all going to pass along some of the legislators are in a position to do it real fast summer going to be slow and and complicated
the burden is going to keep going up and almost you know certainly
the the way that most sellers are going to have to do this is you're going to have to pay a third party to calculate
and remit all these taxes on your behalf and so that's another big winner in this is
companies like taxjar and vertex and Olvera and those those companies that help businesses calculate and remit sale.

[35:44] Yeah now,
physical stores the taxes get down to you know literally the municipality so you could be in you know Secaucus New Jersey and they have a different apparel tax there's a tax on shipping but then certain there's no food tax or something that you cross into another area
and the taxes are all different do you think this is going to get that complex or are you to the municipalities going to try to take there
local tax structure in Buckhannon National kind of for that City kind of.

[36:16] So here is going to be the balancing act all the municipalities would have like to pass their own laws so Secaucus would definitely like to have their own tax collection law and have their there sales tax laws imposed on all out of
the jurisdiction Cellars the thing that's going to keep them all from doing that is that there's a
a clause in the the the.

[36:45] Though the prevailing tax laws that says
States cannot put an undue burden on cross-state Commerce.
And so the argument is going to be that it every municipality have their own set of laws and Secaucus has a tax holiday on this particular day and doesn't text food and all these different things
the bat is going to trigger the Commerce Clause and and put an undue burden right and so part of the reason that the Supreme Court said they ruled in favor of South Dakota is because the law is was very carefully written to try to minimize that
the the bird and right inside they don't date the it explicitly does not allow individual municipalities in South Dakota to have their own tax laws like they are there there's a Statewide
tax system for out-of-state Sellers and so it knows.
Supreme Court rule on any other than the South Dakota version so if Secaucus now pass is a really you know burdensome law and again Secaucus could also say and you owe is taxes for The Last 5 Years of sales.

[37:58] Then you know someone's going to be able to litigate that and say it's a violation of the Commerce Clause and that potentially could make it back to the Supreme Court and you you know,
the Supreme Court could choose to hear it or not and they could you know essentially say hey the South Dakota version is
we going to bed the more you know arduous Secaucus version is not legal and so you know every States going to have to balance how aggressive they want to be
you know with with how much we go Jeopardy they they they want to assume you know in case these things get where to get it.

[38:36] Yes it feels like it's going to take like 5 to 10 years for this all the sort out and it's kind of a
kind of a boring Plumbing topic but I think it's important for listeners cuz a lot of articles I read we're super confusing and I think you did a good job of summarizing.

[38:50] One last point that just was kind of sad I give you actually listen to the
the oral arguments in the case like the justices were asking really good questions how expensive is it for a small business to calculate their tax liability if this if we rule in favor of South Dakota
how you know how much is incremental cost is is that going to impose on Wayfair bright and.
It was really embarrassing,
how little tangible information the lawyers in both side of this case had and how e-commerce works and I I say that like.
If your lawyer like arguing a case before The Supreme Court that is like the Superbowl of
litigation right and you'd expect like the most prepared best teams and yet you know it it's felt like the
the level of preparation in knowledge about how digital Commerce work you know was was pretty pretty lacking in the justices openly expressed frustration that they couldn't get.
You know clear answers to who you know some some reasonable questions about this so it you know it's further further evidence that,
you know the economy and Technology are way way way ahead of the legal system.

[40:08] Oh I nominate you to be a expert for the next to supreme court hearing on this.

[40:13] Yeah I would make myself available that would be a pretty awesome gig.

[40:19] Yeah and you get to wear a suit how fun is that.

[40:21] I I have done some federal expert witness stuff in the you know I am willing to wear a suit for the the fees that you're able to charge as an expert witness.

[40:31] Cool that that kind of wraps up the news section of the show and let's transition into some listener questions.

[40:44] Question question question question question.
Alright get the echo turned way up on that one our first question is pretty Technical and it comes from a friend of the show Scott Silverman this one goes back you mentioned this kind of
in a phrase recently sniffing the tires Scott wants to know what do you recommend is the best technique for sniffing tires.

[41:15] Hey Scott I totally appreciate the question
sort of two-party answer if you are a casual Tire sniffer I think what you want to do is just you know get down on the ground get your nose is close to the tires as possible and you know really just sort of
in intake the the fumes but if you're going to be a serious professional Tire sniffer what you really want to do is
get the hydraulic jack and raise the car up to nose level because that actually
allows a lot more oxygen under the tires which which you know helps more molecules get in your nose and really get you the whole bouquet of the tire.

[41:56] And of course it's important to take the vehicle for a spin before you do this you get that like nice fresh smell.

[42:03] Yeah you do want the rubber warmed up absolutely great point.

[42:06] Our second questions comes from and I'll do a blanket apology there's some last names in here that may be a little tricky but I'll do my best this is from Alex Velasquez and he asks should others try the Warby Parker school bus tour concept and who do you think
would benefit most from it I had no idea what this was so I figured this was a good question for you.

[42:27] Yep so this is one of the early marketing tactics at Warby Parker did I think they actually did this before they open the formal store I'm so they I think they may be
were using their corporate headquarters is a showroom but essentially what they did is they bought an old school bus decked it out
and started driving to events and venues and things
and letting people try on their glasses and it was a super effective marketing vehicle it's sort of a mobile pop-up store if you will
and so in general I would say those kinds of things are a great tactic particularly for e-commerce business is what
you know you feel like you'd benefit from a physical presence so I got a pop-up store avoids a lot of the costs of
permanent rent you know which a lot of the times of the year the traffic in that that store is going to be low so you can do a pop-up just around Peak times and instead of it being fixed to one location the idea behind this bus is you could send the bus to a lot of different locations
so there you know what be purchased per ticket clever and they've done a bunch of versions of since the school bus
so they continue to use that tactic I do think it's a good customer acquisition and brand building tactic.

[43:45] The there's actually a retailer that's been doing it much longer LL Bean literally have a.
A bus built in the shape of their iconic rubber boot that they drive around and let people try on boots and kind of build their brand.
Do that and they send it to outdoor festivals and stuff where where people might be interested in the boots so I think it's a good tactic.
A lot of Brands could potentially benefit from it but the brands that would most benefit from it.
Is if there's a a physical a or experiential element to the kind of products you're selling,
so that it's not only are you building your brand awareness but you're also helping people you don't get that tactical experience so if you're selling.
You know food and and you going to give people a chance to try it or you're selling apparel that gives people a chance to try sizes or.
I feel the textiles are or you know things like that are particularly going to benefit from these kind of mobile pop-up store.

[44:51] Cool and thanks for the question Alex.

[44:59] So I think the next question is from vomit.
A gyro and thanks God for just claiming that were massacring names do customers like bundled products or do they like to create their own bundles what are different merchandising tactics used to sell collections of product.

[45:19] Yeah this is this is a good one you know it it kind of depends so.
I like a system where the consumer has the you know a fair amount of power and convenience and they can choose to either buy a core
product and its Associated add-ons and you have any Commerce system that is smart enough to kind of recommend the right things you know so it's not kind of recommending
these things that are kind of random but they're frequently bought together. Which is a feature that you see on Amazon all the time
now one tactic where this comes up a lot is in the world of marketplaces where.
Frequently you'll be selling where you see this the most is in digital cameras this is
kind of case study of this so what you see is you go to Amazon and you search for you know a Canon D40 which is a common camera
and you know the tops quc is that core camera body SKU.

[46:18] But then what a lot of people do is they will create a new skew by creating unique bundle.
And I'll take a camera a memory card a set of lenses and a bag and a variety of things and I'll create a new skew a new Ace in in Amazon parlance and that is you can kind of a.
You should have separate from the competitors for that Coeur Camera.

[46:43] The be there for you know when consumer searches for Canon D40 if you've done this right you should have a pretty good shot at showing up higher level and then see
you can effectively have a price that is much just submitted Lee discounted for that bundle and you're effectively hiding
you know the discount in the margin by obfuscating it to the consumer making it harder for them to price compare so some things now
you know this whole truth holds true for other marketplaces like eBay and Walmart eye center now the downside of this is Marketplace in her wise to the store frequently kind of challenging these things and saying you know
does a bundle really make sense what are you doing here are you kind of ruining the customer experience.

[47:33] So I've seen that used in it as a merchandising tactic there on your own website to
I don't think I've seen as we have a child as we have this very clever skateboard a Cellar and they've come up with a couple private labels like their own wheels and things like that so when they they take a deck and skateboarding you have the deck which is just sold without wheels and and the the other pieces there and then they
they take some private label stuff or owned brands do use Jason's language and it does create this kind of unique bundle that then isn't available anywhere else,
and they can do a lot of relaxing things with pricing on that because they can't really change
do the map the price but when they put their wheels on there they can offer this bundle that that is never more competitive anything else out there because they have
got a known brand on the wheels and they have more margin and they can pass it on to the consumer so those are some of the things that come to mind for me Jason anything you want to add on bundling.

[48:31] Yeah I would just say like the there are two similar but different things in my expenses,
in different circumstances consumers want both so so every
e-commerce platform uses a different vernacular but, binocular would be bundles versus kits right and so in this scenario a bundle
could be.

[48:56] A set of things that are recommended to go together right so shop the look you you one quick button and you add the blouse the pants the belt and shoes.
But all four things get separately added to your cart and then you could edit the cart you could get two pair of the the blouses if you wanted and you could delete the shoes if you already had two shoes for example so it's,
a shopping convenience to put related items together
you know in and apparel is a common version of that like in crafting it could be a kit or project I got all the.
All the items you need to make a sweater or something like that in food it could be by the recipe to get all the ingredients for a particular dish.
But you know of course the customer might already have salt so you you know the customer could take salt out of the cart after they.
They bought that bundle in a kids are often.
Hard coded things that have to go together so it's one skew it shows up as one line item in the car you can't edit it.
If any of the items in that cat are unavailable then the itin.
The kid is unavailable in the order we get back ordered and things like that and so there are certain types of products.
That lend themselves to kits and to your point.
If you're going to have a special price on the the multiple item configuration than you probably want that to be a kid because you wouldn't want customers to.

[50:25] Then delete three of the four items and still get a special price.
But in some cases you just want to make it easier for people to buy multiple things and have a higher overall cart and then there's.
A lot of nuances in the kits are they.
Hard-coated manual kits what you would often cause static it where you know the skews are permanently tied together are there Dynamic kits that are built by recommendation engines or things like that are there
customizable kids you know that have different options that customers can pick via VIA attribute type selections and
and so it is super complicated thing and it is one of the things that can differentiate some of the e-commerce platforms from the others is
their support for a broad range of these different options vary wildly
and then when you throw in the ability to offer promotions on top of these bundles or kits that can get super complicated and so that you know
if you know that that's a core part of your business that might drive you to select one one eCommerce platform versus another because it might have better support for the
that the particular model year use.

[51:35] Is anyone using AI to solve this like.
Yeah I think I need Amazon's is kind of a group thing I'm sure there's gotta be like 10 AI vendors out there trying to solve this kind of Phoenix recommended product.

[51:51] Yeah and I mean this man takes get tricky like I would argue that the
the Panic recommendation vendors that have been around for 12 years like they're rich relevance in a certain is like they're there heavily AI base solution so it's almost like.
Saying it AI recommendations versus not as kind of a difficult distinction to make the,
that most of the product recommendation product that I'm aware of the you know are going to be closer to you. The most common model is
they're going to recommend other products and you have to click each product separately to add it to the car
they may offer bundles which is one-click ordering right in in Amazon does bundle the recommendations the right so right below the main product information on the product detail page
there's always going to be up by these bring three things together which is you know it's the AI base recommendation engine is putting the three things that you most want together and you can choose to add one two or three of those things to your cart so that just that
S Mart Convenience that Amazon's done to try to get the aov up that's the company that's the best example of using AI to actually create
schitt's if you will is probably going to be Stitch fix right because they send one skew to your house which is a fixed with five items in it and they're primarily using AI to select which five items they send to your app.

[53:18] Wrinkled her next question
comes from jeweled work and she a skinny leadership or managing through change tactics and then over on the Facebook group I asked for clarification on that if I gave her a couple choices there and she said
you're more at the corporate level so let's assume you're one of these Brands that's been around for a hundred years this is very much in the news right now where allottees activists are going into the established Brands and brand houses and shaking them up and you know really getting agitated they're not doing enough direct-to-consumer you seen folks like Campbell's down 30 40% due to all these changes happening and you know I heard your question is essentially
how did these companies become more Nimble you know you've had this guy a hundred year plus world where the consumer didn't change very much and now they're changing constantly.
What what do you recommend a brand do to get more nipple.

[54:13] Yeah it's a great question Jill and the real answers if I had a perfect recommendation
I probably wouldn't be bothering to do this podcast cuz it would make my job so much easier that I'd be you know waiting on an island somewhere because it is a huge challenge in general you see digital native companies are much better at being agile and nimble
then big established Brands and it just so happens in my practice I mainly work with
big established Brands and they all struggle with being at a a speed disadvantage
TD small companies and the one exception is you know that the giant company Amazon is annoyingly.
Add jolyn and Innovative despite their their size in the fact that they're you know now 20 years old.
So two things to think about here the first is like a big question always comes up is.

[55:07] Ivory Tower Innovation versus Grassroots Innovation right so you know Ivory Tower would be,
let's set up an innovation lab right you know your target let's set up an innovation lab you know your Minneapolis wet set up at univation lab in
San Mateo California and let's hire a bunch of people whose only job is to be Innovative and let them come up with all the new ideas.
And if you're a store manager in Minnesota you know it's not your job to be Innovative right and so I having a dedicated focus on Innovation the hope his bees Innovation labs.
Can can be more efficient you know there was a huge Trend in retail towards these labs and.
Target Nordstrom Zappos Walmart you know all we're opening opening these stand-alone labs.

[55:56] While some retailers definitely still have these Labs I would argue the trend is a little bit against the stand-alone lab so we've seen a lot of the retailers including Target Nordstrom.
And a post move away from the dedicated Innovation lab model and so the alternative is.
Create the ability for Innovation to come from the the main line Grassroots employees right into the the Marquee example of this is not a retail for me it's it's a Doe B and they had this clever product called.

[56:29] Process called the Adobe Redbox and essentially any employee at Adobe that thinks they have a good idea for a new.
Product or process or or service at Adobe can apply for this thing called in Adobe red box and it's a Innovation kit.
And it's all the tools you need to sort of prototype your idea and get it to a level where you can present it.
288 sort of jury of Senior Management at the.
Add Adobe and so it you know it's pretty clever it has things like a debit card in it that you can use to buy you don't web hosting services and it has.
You know I'm feeling codes you can get to you know provide to some of your colleagues have them help you with certain things.
And said that the idea is to make it easy for anybody with a good idea anywhere across the the organization to pursue that idea.

[57:30] And so it the moment I see more retailers trying to Foster Innovation through.
Providing processes and tools to their main line employees than I do the Ivory Tower but I certainly seen both work and I've seen both fail.
The biggest advice I give to Legacy clients.
To succeed in Innovation is not so much where that Innovation sits in the organization it's how The Innovation is approached and here like I highly recommend.
Serta imitating the Amazon model right so you know Amazon famous we have this to Pizza teen model in the the premise behind that is.
Hey any project we do we're going to narrow the scope such that it can be performed by you know a team no larger than could be fed by two pizzas.
So that could be you no one four digit software developer or you know it might be six or seven people in your department.

[58:31] But the idea being.
The way to do Innovation is not to do some Grand pilot that has to integrate with 37 Legacy systems and has to get approval from 18 different departments and requires a team of 40.
And you know by the time you you get an experience to live you will spend so much money and effort that you know if if the experience isn't successful.
You know you you passed your company of Fortune and even if it is successful like the the business probably you know shifted from the time you started to the time you finish.
The most successful Innovations are when you can you know find gorilla ways to do things scale at and make the the.
Hiwot as independent and distinct from the rest of the organization as possible right and so to me the great example of that is.

[59:23] Amazon Prime now,
you know when they said like hey we want to deliver stuff in one hour they didn't say all right let's get a meeting together with the leaders of the Fulfillment center and figure out how we carve off some space in the Fulfillment center and figure it out we,
change all our software in the Fulfillment center to support this one hour delivery and do all these things they they got some guys that said hey we're going to buy our own you know even though we own all this stuff,
we're going to buy our own building for this pilot and we're going to write our own software and we're going to just keep things as simple and independent as possible get the experience out there in front of the customer as quickly as possible and learn from the customer,
which elements of our idea are valuable and value by the customer and which ones aren't then we're going to refine it from there and only after we've.
Proven The Innovation and unrefined it are we going to figure out how to integrate it into the rest of the Enterprise so I really like that sort of.
Independence and you know we highly encourage a lot of these big Legacy Brands to sort of adopt a more agile.
Business process so we talked about ad Joel a lot as a development technique technique but it really can be a a business process and you know sort of isolate these these projects as much as possible and make an independent initiative.

[1:00:40] That's awesome so I'm up I come out at from a startup
bad guy perspective I'm on my 4th company I started and like you have worked with a lot of Brands and I think the step a lot of them get wrong is what I would call buying soda
I'll start doing something kind of innovative like selling director something and then the VP of sales will say woohoo oh hey wait a minute what are we doing I've gotten upset
Channel partner that's upset wrestling direct and then doll the panic in the unwind the whole thing
so before you go down some of the steps you recommended you know I think.

[1:01:17] The key is got to get complete buy-in from the whole management team that this is going to be something they're there once committed to a book that I I
now that kind of started this discussion is the innovator's Dilemma. This is kind of a must-read for people interest in this topic in this by Clayton Christensen I will put a link in the show notes and you know what does essentially does it talks about,
how do companies get in this position and why and then it has some cases of the very few companies that have gotten out of this position so it's really
important to get that buying from everybody because if everyone's not bought in you'll get this whole failure cycle of trying to do something really Innovative as a brand and then it gets squashed by people that really aren't bought in and then
you know there nothing too happens and companies that are large and older is
a lot of ideas get squished because what I call exception base management where you come up with this idea and then to what is start to happen to edge cases well you know
what if you know a you know what if this isn't profitable what if this and that the other and that.

[1:02:25] Becomes you just get kind of stuck in tar with that you have to have to get everyone bought into taking some risk that the company's also not used to Basil's has a really good letter on this stuff about it Amazon where they have
commit to disagree is kind of thing you know so so you know we disagree but let's try it and see what happens like why not try it.
Go try something and
to that and there's really good book Jason mention you're taking some of these ads all kind of Concepts out of software development putting them in your company one of my favorites is called Lean Startup sat is geared towards when you're starting a company but I think big companies can learn a lot there and it kind of educate you on the languages start upset you know
Facebook kind of famously has said go fast and break stuff and that's really kind of craving orientation towards not worrying about the exceptions and guessing
put something out there
and take a little risk and then see how customers react to it and then course-correct quickly so the answer to you know what is what you know maybe not and.

[1:03:30] We won't know until you try so you got to kind of get your culture oriented towards trying stuff rapidly,
iterating versus kind of a 18 month cycle of planning and hand-wringing and getting every little detail done and then putting something out to be agile yet to be able to put something out and fail
I go over and over again the case study there for Amazon that's classic is the fire phone you know they they put a phone out there there's a million reasons that would fail and it failed Jason I think they're the only people that have one
but if they didn't fail at that Fire Phone
they would have never done Echo because they really wanted to be in the platform World they realized the failure the phone that that was going to be at and then they went all in on Echo and.
That is part of the culture they have is it's okay to fail just going to do it quickly and inner eight and learn you can't just kind of like digging infinitely deep hole.

[1:04:23] Yeah that's great advice.
Scot we have a few more a great listener questions but I actually think we are going to have to hold them for our next show because it has happened again we've used up the an hour of our listeners very valuable time.
And so if you enjoy the show we certainly would appreciate that that five star review on iTunes if you have anymore questions or follow-ups on these questions please do jump on her Facebook page and drop us a line or hit either of us up on Twitter because we will pick up the remainder of these questions and any new ones in the next show.

[1:05:03] Thanks for joining server buddy.

[1:05:05] Until next time happy commercing.

Jun 18, 2018

Chuck Davis is the CEO of Prodege (Swagbucks, MyPoints, and Shopathome), a leading rewards discovery site.  Chuck was the first President of E-Commerce for the Walt Disney Company, former CEO for ShopZilla, former CEO of Fandango, and is a former board member.

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

Episode 135 of the Jason & Scot show was recorded on Tuesday, June 5th, 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.


[0:25] Welcome to the Jason and Scott show this is episode 135 being recorded on Tuesday June 5th 2018 I'm your host Jason retailgeek Goldberg and as always I'm here with your Tahoe Scott Wingo.

Scot & Chuck:
[0:40] Hey Jason in welcome back Jason Scott show listeners,
Jason will real fortunate to have with us this week would I consider to be one of the Statesman of digital and e-commerce truck Davis,
Chuck and I overlapped on the board for a little bit there and get to know each other and we've been trying to get him on the show for a while and finally all the moons and stars aligned and where,
excited to have Chuck on the show today welcome Chuck thank you I'm glad to be here thanks for having me.

[1:09] Entirely our pleasure,
so usually won't have gas on I like to sort of memorize the the key digital places they've work so that I can you introduce your background of the audience but in your case that was impossible I couldn't remember all the cool places you had work.

Scot & Chuck:
[1:25] Yeah I don't know about that but I am you want me to jump in on that.

[1:32] Okay well I'm 22 years in digital following a publishing career so the 22 years of digital.
You know I think it's better to start off in the beginning I started at time Inc and I I was,
on the life monthly magazine that was briefly alive after the weekly went out of business and it was very important part of my career because,
weekly life Saturday evening post look all went out of business because they had one Revenue stream they really had two but one they gave away in that would circulation maybe they were getting $0.10 a week but they were getting a dollar a week and add Revenue,
and when television came those Publications went away cuz he Advertiser switch to TV so on my first job at life,
I learned there had to be two revenue streams they should be 50/50 and I went on a Sports Illustrated next.
And you'll remember that from the football phones and sneaker phones and helping with Michael Jordan videos who was the first big,
video purchase at the NBA at ever seen 400,000 I think on my first phone call they had to create a video to Vision the next day and then moved on a TV Guide,
in Radnor Pennsylvania which was the biggest magazine in the country at the time it was 14 million circulation,
and while I was there Netscape went public and all of a sudden that man it was opening day for a new industry called the internet.

[3:03] And other than AOL CompuServe in Prodigy there were no employees in this new industry so as soon as there was a browser I I had five.
Offers in the internet within 90 days of.
Netscape going public and I called 1 800 Gateway in ordered my first computer,
I mean things were moving very fast then and and I think the logic was will Chuck and get eyeballs to a publication that no one really needs maybe he can get eyeballs to my website.
So there were a bunch of startups in Northern Cal and I landed a Disney in Southern Cal to start their e-commerce and that word e-commerce had not been invented yet.
So a Michael Ovitz was President he had been there 11.
I was only there is present for 11 months and he says Chuck who knows if this internet thing as a fat or not but if it's a fad will find you another job of the Walt Disney Company,
so I hopped on a plane went back to Radnor Pennsylvania told my wife while we could do the start up north or we could go to Southern Cal and we could.
Get a job at Disney and if the internet's a fad will have another you know will still stay they'll be something else there.
So that's why I started my internet 22 years ago and my first job and.
Launch Disney Store we lunch Disney Travel ESPN came into the fold 6 months after I got there so I launched an ESPN store in NASCAR Store.

[4:35] Then infoseek I bought by Disney and we had all these go product I got to eat product groups and my concept was learn from a big company.
And then.

[4:46] I should do that smaller company thing but when I jump off I should know more about technology so 40 years after Disney I went to bizrate which became Shopzilla.
And that's where you know me from Scott because I was on the board there and that was an interesting time because the industry was building up from the o.

[5:10] Oak rash and that took a few years to build up and all of our companies of the board members were suffering at the same time.
At the same time the industry was including and which was a not-for-profit that went significantly negative at that time but.
What we found with bizrate after a series of cuts.
Are their business started hockey sticking and it became a comparison shopping site and did really well in the ew Scripps company bought that in 05.

[5:44] For over 500 million dollars so that we were working with all the retailers we had research that helped guide the shopping decisions for the consumer to know who to trust to buy online cuz at the beginning of the internet.
No one trusted.
Anyone online and Dad the credit card wasn't deemed to be safe I'm not even sure if purchases online recovered at the beginning of the internet anyway after Scripps bought Shopzilla.

[6:14] I went to Fandango which was in the same building and West LA Fandango have 35 employees it was.
It was kind of paused wasn't clear where it was going to go and quickly we scale back company and.
Comcast bought it and I stayed on and.
For another 40 years or so and that all worked out really well that was backed by tcv in Palo Alto.
And I became a venture partner with tcv and I eventually found the founder Joseph Garlits of Swagbucks.
And the parent company is called Protege with Addy Protege and.
And Joseph and I became good friends and I became his chair Herman and.
He said he wanted me to be the CEO and you never raised outside money and it was already a big company without money and I said you you don't have to have outside money you've already gone through the hardest part.
And he wanted to do it and so tcv came in on that deal to that's our only investor that is the company of that today that's what we're going to talk about,
so I presume we're going to talk about it a little so Protege is a reward consumer rewards platform.
Where consumers have learned about 250 million dollars on the Swagbucks site and almost 550 million on the three protists.

[7:45] Dating sites in free gift cards and we do this on our site from consumer shopping.
Where I'll learn a commission and I'll share that commission with the consumer who will get points and redeem those points from free gift cards from basically all the Merchants Online plus PayPal.

[8:08] Also from filling out surveys and sharing their opinion and from watching short-form videos that have ads on them.
So those are three main businesses and we have 3 brand Swagbucks.
Shop at home in my points the last two Brands we acquired over the last that's a couple years is that what you wanted to hear.
Perfect yet I wanted to just take a little bit in the past just cuz I'm curious I'm I'm I'm a huge user of Fandango.
Tulsa Lil Bit about that stint in. I love the little ad with the paper bag people just that was that created during your tenure it was but let me tell you the best story for Fandango so I started there as chairman.
And I was chairman of Shopzilla and they were same building as take the elevator up and down,
I was facing myself out of one company and phasing myself into the next company and about 1/2 year later I became the CEO and on my,
first day is a CEO again we only have 35 employees at Fandango but a couple guys fat me down.
Are they came to my office to Tech Guys and they go Chuck they're only like 5 of us who write code and we just and we know you have lots of things you want to test.
But we also know that we need you to know that we're also here part-time really because we're working on a secret project with Apple.
And I go well I don't understand am I paying For You full time but I'm getting you half time and they go that is correct and I go on that quite sure.

[9:43] This is a good idea is it a good ideas it's a good project you're working on does Fandango benefit from this they go what we're not quite sure and.

[9:53] And I said was it a bad project cuz I'll get our lawyer and I'll get you out of this and they go well we're not quite sure about that either now pause that thought for six months so that was July of 06 January of 07.
My Blackberry is is vibrating so much.
I figured someone was calling me and there was no one on the phone it was I was getting so many bbm's remember that that was a text message before we had text and and.
They were saying Chuck turn on.

[10:27] Turn on CNBC Steve Jobs is presenting at macworld he's showing this new product called an iPhone and he's buying movie tickets on Fandango.
Tell my team built the first app for the first iPhone and a CEO I didn't even know it was coming that's how secretive apple apple is and that did help Propel Fandango new excited we're all using very much.

[10:53] Brickell.

[10:54] Is it also in your background you did a stint kind of with TCB which stands for tech technology crossover Ventures they're one of the story to VC firms out there in the Bay Area and I know that they are involved in your current company,
are you still active with those guys so what's that relationship like.
PCV is a great company and has great funds and I've known them for a long time I was fortunate enough to Jay Hogue found me he was on the board of Fandango and brought me in,
to be his partner on that.
And then that Pat a happy outcome and and then afterwards he asked if I would be a venture partner with tcv that helps sit in sourcing deals and coaching current Founders Inn,
and just helping in the industry it did Girardi are all around and having someone on the inside is in a bad thing to do having a great.
Growth Equity company like tcv has been fabulous for me,
we brought them into Protege and they are the only investor in this company so I'm thrilled Jay Hogue and and.
Maiorano board were thrilled to have them both and it's been a great relationship both ways.
Well Jason I know is chomping at the bit to talk loyalty so I'll turn it over to him on that side.

[12:20] Scot is fascinating and.

[12:26] But you just got matching loyalty but I'm not sure why I think of Swagbucks first and foremost as a loyalty program right like you're you're really.

[12:35] A traffic generation program for for a retail site right like you I would partner with you.
Predominantly to get more new Shoppers to my site that that are already cut in the Swagbucks a ecosystem do I do I have that right.

Scot & Chuck:
[12:52] That is right and that's not dissimilar from what you know from my days at bizrate Shopzilla that there's a lot of lead generation that that comes from our shopping channel we.
Transacted or LED two transactions of over 500 million dollars last year in our shop Channel.

[13:16] Wow that's that's awesome and when I think about that like traffic jam versus loyalty like you know most people in they say loyalty they think of this traditional.
Sir points for purchase program and in the hope is.
You know if I get a bunch of points with Best Buy that that's going to let you know Anchorage people to want to use those points at Best Buy so that you know Best Buy will keep keep that customer loyal and it.

[13:41] Like there's a lot of talk in the industry like these days there's a lot of fatigue with those kind of programs because.
Consumers have so many are members of so many of these different programs that that none of them necessarily Drive loyalty but in your case.
They're those customers are building value that they can use anywhere they want right so that it doesn't have that same fatigue Dynamic that.
A Retailer's branded Welty program might have.

Scot & Chuck:
[14:09] One of the highlights of our whole platform is we have a horizontal platform versus a vertical so not only can you shop.
Are any of the e-commerce sites out there but you can fill out surveys and watch videos and earn points from that.
And redeem those points for shopping at your favorite retailers too so I think you have to look at it like an ecosystem.
That everyone put something in a wreath,
Taylor gets listed here they wait to see which customers come points are earned those points are usually redeemed to go back to that same retail or sometimes I'll go to other retailers.
In the end everyone's happy cuz everyone's getting a good mix of incremental orders.

[14:59] That that makes total sense and I I feel like even when we were looking at single retailer Affinity programs.

[15:06] Like one of the characteristics of the best ones is they always.

[15:10] Rewarded orange insanitized behaviors in addition to shopping so you might get you no points for buying but you might also get points for you know being a loyal.

[15:20] Customer and wearing their clothes out in public and sharing them on Instagram or introducing new customers to the brand or things like that ends in so it feels like Swagbucks has many of those same,
same characteristics and I'm assuming behind-the-scenes that that means like to other constituencies you have RR.

[15:39] Clients that want to do market research and are willing to pay.

[15:42] To get your your user base to answer those surveys and and clients that want to find eyeballs for their advertisements and are willing to pay to have have your your users watch those videos is that is that right I do swear to have.

[15:55] Three can sit you and seizes its customers the retailers the the the researchers in the advertisers.

Scot & Chuck:
[16:03] We have at least three we we.

[16:07] Transactive it on 25 million surveys last year and we had six billion video views so those areas are very large also but we also have,
just your run-of-the-mill everyday search powered by Yahoo on our site.
So when you do a search result every end sample you got a reward for that also we also have games on our site on channel in our play area.

[16:36] So yeah there are many ways to earn what I think separates us from other sites that might only work on shopping is where a fun place to go.
You you're going to be surprised with something new everyday.
And we take a lot of pride in that we want to be fun we want to be rewarding we wanted to be a place you want to go and you want to be rewarded for your time.
Your engagement is worth something and we want to make sure you get rewarded for it.

[17:06] That that makes perfect sense it now I think I understand hopefully the listeners understand the ecosystem you know I'm always curious to ask all the entrepreneurs on the show is how do you get.
What is your customer acquisition strategy how do you get customers into that echo system for the first time.

Scot & Chuck:
[17:26] And one of the unique things we do is we've got a referral program or a member can introduce another member.
And we will give the introducer 10% of the points from their friend for life.

[17:43] So if I introduce you and you start playing and then shopping and filling out surveys and watching videos and you earn points.
The company is going to give me 10% on top of what you earned as a reward for life.
For that introduction I made so there's almost a buddy system built in,
where I'm going to keep track of you and let you know of new areas that I liked on the site and vice-versa you're going to close that loop with me and tell me tell me how much fun you had and how much you learned in the past month.

[18:17] So that's one way we bring people in another really Innovative way.

[18:22] That is fairly new is we launched a trivia app called swag IQ and this is.
This was created I'd say in March April and we get.
Tens of thousands of people coming on every day 8 p.m. eastern Time 5 p.m. Pacific and we have a 10 question game and what's unique about Swagbucks.
Is we have our own currency is called SB and one point equals one penny it's $0.01.
So we can give points out or sbe's out every time you got a question correct on our 10-question nightly trivia game.
You don't have to just be the grand prize winner to win $2,500 or whatever that days for word is you're getting rewards all along the way and that has a strong following that.
Introduces people to our currency who then come to the site to shop.
Fill out surveys and share their opinions watch videos and search through Yahoo so it's all related so yeah we've got interesting lead-gen.
Opportunities and an execution across our platform.
Brickell and this is interesting to on the last episode that Jason I had we are going to the Mary Meeker deck and she had a section about China and you're a big thing in China right now is this intersection of kind of shopping and entertainment it sounds like you guys are.

[19:58] We're kind of bringing some of that to the US any other interesting kind of,
bottles you seen at that intersection especially on the how do you how do you bring entertainment into the e-commerce and shopping piece.
You know you brought up that's by the other the other question ago and we did a whole swag IQ episode last week.
That had to do with that spy that Best Buy had an electronic circular.
On our site of different promotions going on in their in their store,
and we had an entire game to tie in Best Buy two to the survey rewarding our customers for,
for looking at the circular and getting familiar with the different specials going on in the store so there's many new innovative ways to cross-promote e-commerce,
to cross-promote customer acquisition and to be engaged in a fun way.
It's interesting at a theoretical level because you know we're as consumers were giving our quote-unquote R-value away for free till I use social media companies and you guys are kind of.
Actually paying for it which is you know which is interesting because you you're obviously seeing you know the the government come in and got,
a look at what's happening there and in a lot of consumers are upset they didn't realize what they're giving away and you know how much how much is kind of going along with that data where is you guys are making a much more clear kind of value proposition I think.

[21:36] Well we like to think so too but the real.
The real rubber meets the road moment is when we have a live screen in our lobby of our office here in El Segundo which is by.
LAX to the Los Angeles airport and our lives screen shows.

[21:56] Depiction of the United States and shows who's redeeming a card in which city at that moment for which retailer and how much money it is.
Do we have done something like this at Fandango or people are buying movie tickets but what this does is it shows the total number of cards card value it's been redeemed since Inception.
And when I came in this morning we were at 541 million dollars of cards that have been redeemed,
and just watching that grow everyday is a heck of a lot more fun than seeing the billboard in Times Square showing how many people have died of cancer or in the more current way. What the national debt is per person in the US,
this is fun people like earning rewards and the rewards just power the whole system of e-commerce,
cool it was switch gears a little bit when we talk to retailers a lot of them have kind of had their quote on quote mobile moment which means more than half the traffic's kind of coming from mobile and Buy Mobile I mean smartphones imagine with an interactive platform like yours you you kind of crossed over that,
how many books are in writing to you guys to the extent you can disclose things through mobile vs. desktop and any other interesting mobiletrans you guys are seen.

[23:15] You know we've got very different channels on our sites as some work better on mobile than a mother's friend since the video channel called watch.
Watching videos remotely like that or odor or in a mobile way is very good but a lot of people like that stop to so-so for surveys or answer channel does very well on mobile.

[23:43] People get to see me,
get a bigger picture online on the desktop so it's the same thing with e-commerce some things can be transacted quickly on mobile and others are better on desktop so I can't give you numbers but I can tell you that.
Many fat most consumers migrate back and forth and were there in all areas.

[24:07] The swag IQ game is is it mobile.
Is basically a mobile game and that allows me to play anywhere I couldn't play last night we had two games last night I played the first game and made it to the 8th question before I got tripped up.
I think it was a nice I got ripped out that was the furthest I'd ever gotten and we had a second Flash game 45 minutes later and I.
I want to make sure I didn't have a car accidents I had that running in the car on the way home but I did not play it to dangerous but I'm at least able to hear it and hear the question.

[24:44] Yeah I almost want to suggest that you use the GPS to disable the the the trivia game win when the phone is moving it auto speeds.

Scot & Chuck:
[24:56] You just log off I do just log off so I can focus on the road in California that's an important thing.

[25:03] Yeah for sure and are you finding like so I like a lot of.

[25:07] That the activities you have are sort of endemically mobilelite what is you mentioned are you finding that that's primarily the.
The platform that new customers are coming into on like the majority of the new customer acquisition on the mobile platform is that growing faster for you than the the desktop.

Scot & Chuck:
[25:28] Now that's a good question and you could steer what users you get if your sophisticated in your in your customer acquisition efforts you can buy for Kate,
your mobile customer acquisition efforts and give them a mobile experience and your desktop,
customer acquisition efforts and give them a desktop experience and the N acknowledge that there's going to be migration across the two,
but the primary way that someone comes in it's probably a good predictor and the economics as you know are different from Mobile in four.
stop so I can just tell you that we play in both and we mark it to both and we get organic from both.
And I think it's important to keep track of.

[26:16] And obviously the mobile metrics for this industry let alone my company have are getting better all the time the screen is definitely smaller.
So so it's it sometimes harder to get the message for a partner so that's part of the.
Constructive tension that is there between what the consumer wants and what the partner wants,
because they might want for Real Estate so all of that is a constructive tension and we make sure we have great products and both.

[26:54] Yeah and that gives like a common challenge that the guests are seeing is you know.

[27:01] Increasing percentage of their other user bases are are becoming predominantly mobile.

[27:07] Which generally good thing you know people certainly happy happy to see that but.

[27:13] It it does feel like in most cases it's slightly harder to monetize that mobile traffic so for eCommerce sites like the conversion rate in the HOV from mobile devices tends to be lower than desktop and as you mentioned in that in the advertising platforms there's just less.

[27:28] Less pixels that can be ads and so you know it's time for us to monetize I think Mary Meeker in her deck even highlights that like.

[27:37] The the one kind of advertising that sort of wagging consumer.

[27:43] Eyeballs is mobile that there's sort of a gap between you know how many consumers are moving to Mobile and how many advertisers are moving a mobile site after I got the challenge we all have two faces.
More bar users becoming more mobile and it being slightly harder to monetize those mobile users.

Scot & Chuck:
[27:59] Yeah it might be harder to monetize but I'm just speaking as a general industry trend,
and but the retention or the time spent,
on mobile is probably more so if you go back to the metric from early days in the internet of pageviews so I know is somebody irrelevant now that would be Alien video but time spent.

[28:23] Could be more on mobile so if you're making less.
In your example of advertising per page view you're getting many more page views.

[28:34] On mobile because the customer likes the likes operating that way right it's their favorite way so.
So I think in total.

[28:46] The companies can make more money on mobile just for more usage even though they're making less per,
moment were / transactor / / screen.
Or Percy p.m. from something that is on a smaller pixelization.

[29:08] Yeah I know that's a that's a great point because you know I think the worldwide Trend there's already more mobile more minutes being.
More digital minutes are on mobile devices than on desktop devices and of course that's only going to grow because you got that mobile screen with you.

[29:25] 24 hours a day and all those other screens are with you can serve we left so I that I got I think that's a great point I want to change.

[29:33] Slightly to the topic of personalization because it strikes me,
you guys get a very detailed view of your users over time so you see a lot of their shopping behavior and what their individual purchases are but you also see a lot of these other consumer Behavior you know when they're when they're using your games when they're watching your videos when they're taking your surveys all those sorts of things,
that seems like a super valuable source of consumer Insight do you use that too.
Change to the customer experience at all I might like will the the offers that I see when I come to your site be personalized based on my past Behavior or is that something you're thinking about.

Scot & Chuck:
[30:13] Certainly we know what people like and don't like,
and where they tend to spend more time and there are many ways where we use that information to give a better experience to the consumer but we've got a long way to go.
We've got a long way to go and most of our customers.
I like bouncing around and and engaging in different channels on our on our site so.
So that makes it in the increasing challenge because should I be showing you more sites to shop on that I think you would like or.
Have I noticed you fill out a survey 2 days a week and I want to show you we've got.
Some surveys I might be right up your alley based on the consumer products you've you've answered before so there's a real estate play.
As there always has been and how much should be personalized horses how much is standard or that day's daily promo.
That's an inherent tension that I think is healthy within an organization you might have some partner who needs.
Need something,
blast it out to as many people as possible in a day and then the question is do you show that to someone in it and have it override personalization and many times it does so,
I don't want you to think that the whole world is fully personalized yet there's a lot of data we could help.

[31:47] Give it a better experience but it hasn't taken fully over where where everything gets down to that level,
Brickell describes what you feel this ecosystem and it's kind of has elements of a Marketplace as well and we kind of started Market places with traditional Market,
places like the eBay marketplace now we have coyotes hybrids with Amazon which is retailer with a third-party Marketplace and then even you can Skype I think of uber and Airbnb is a Marketplace when I talk to people,
adult marketplaces one of the interesting challenges is it's almost like buying your building 2,
two businesses simultaneously and getting that right on the supply side of the demand side can be tricky is that been a challenge for you guys how do you guys think you think about yourself as a Marketplace.
Well certainly I've I've been in Marketplace environments before cuz bizrate Shopzilla was a Marketplace and.
And we have elements of that heater to where we do need to make sure demand and Supply can be evenly met as much as possible but.
I will tell you this I've enjoyed being in businesses that don't have warehouses.
I got nothing against warehouses I work with lots of companies that have them but the marketplace business,
helps me focus on what I think we're good with and what we're good with his matching up the right consumer with the right products to be shopping for or or seeing on our site.

[33:28] And therefore I don't have to worry as much about the distribution or the logistics of a warehouse nothing against that it's just,
to your point a Marketplace still is very different it's getting the right traffic to the right place to meet the right demand.

[33:47] What's what's the most surprising thing you guys have experienced as you maybe a product you would have never thought would be popular or any any interesting consumer insights you can share.

[34:00] Well there a lot of deals that come on that do really well we have charity deals at do well or you could sponsor a different.
Different things there we saw a lot of razors.
Write Dollar Shave has been a nice partner of hours and and we're happy to see that that's always a lively one I think the the one of the pleasant surprises has been.
The Innovation to keep coming one thing I've learned is you can't be static in any business for long.
You know we're in jog here businesses so they change so quickly so if someone on my team as a great idea.
Will often let them try it.

[34:49] So that's how we launched swag IQ 3 months ago someone wanted to do trivia game we have our own spin on it we have our hose to come in in the afternoon now we're getting in the theme.
Games we had a baseball game a couple nights ago for the first day of the NBA playoffs NBA Finals we had an NBA Finals trivia game which was pretty interesting and and.
We will just keep growing we will keep innovating we will keep coming up with new areas are consumers tell us what they want to see they posted on Facebook they tell us directly.

[35:28] The employees here,
tell me what they want we use an outside firm to to capture all of the employee ideas and we review the Mineral Company meetings each quarter and I'd say close to half of them we end up unimplemented.
So and if we don't get enough.
We wonder why everyone has been submitted one per quarter cuz there's always things that could be better and having that philosophy I think is very important and having the openness to just keep trying keep.
Keep tinkering keep launching new things while scaling and sticking to your mission and making sure you're true to it.

[36:09] Very cool.

[36:11] You know Chuck one of the things we always want to make sure we take advantage of when we have someone that that has a deep digital experience like yourself is kind of get your view of where you think it's all going like,
do you do you have a clear idea what you think the future of e-commerce is or what what you know some of the big big trends.

[36:31] To think about now are for the next 3 to 5 years.

Scot & Chuck:
[36:35] I think it's hard I think it's hard to really 10 it because it changes so often like I never knew scooters were going to be so big and in the last month I've learned that.

[36:46] Bird the chest when just raise the rent,
had a billion dollar valuation its 13th month and and things like that that are just out on the sidewalks of Santa Monica had no idea that these businesses got so big,
so they're going to be a lot of new things that come up that none of us have ever thought of and I would say.

[37:13] I backed the question up a different way if you were 22 and getting out of college today I would recommend if you were my kid you make sure you get into something.
Along this digital Revolution this is a time where.
Brick-and-mortar has been laid but we have no idea how tall this building is going to be or how wide it's going to be or where it's going and you want to be there to be in this industry to live it breathe it.
And have a great journey cuz it is one fun way to go and it wasn't always this way in Prior Generations the grew up in.
Went to factories in and lived in the world wasn't changing as quickly as it is today.

[38:00] Chuck that is terrific advice and that's going to be a great place to leave it for this week because once again we've used up all our a lot of time but if folks have questions for for chukar want to learn more about Swagbucks,
will will make sure we include that the company information in the show notes and will continue dialogue about the show on her Facebook page so you're welcome to go there if you have questions and as always if you enjoyed this episode we sure would appreciate that,
five star review on iTunes.

Scot & Chuck:
[38:29] Chuck thanks for joining us if people are are you a Twitter or LinkedIn her or is there a certain way if you have business. You put them out there I think it's probably the best way to find me.
Do you want to do that Chuck Davis protege.
P r o d e g really really appreciate you taking time out of your busy day to share your thoughts with us and hope you have a great day.

[38:57] Thank you guys thank Scott and Jason.

[38:59] Until next time happy commercing.

Jun 6, 2018

Episode 134 is a recap of Mary Meekers "Internet Trends 2018" report, and the weeks news.

Industry News

Mary Meeker, State of the Internet 2018

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

Episode 134 of the Jason & Scot show was recorded on Monday, June 4th 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.


[0:25] Welcome to the Jason and Scott show this is episode 134 being recorded on Monday June 4th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

[0:39] Hey Jason um welcome back Jason Scott show listeners Jason's been kind of a busy kickoff to Summer here and we talk tonight this week we would cover some e-commerce news.

[0:56] Last time we talked about news there was the hot take on Adobe in Magento before we dig into that though and even more important question give me your spoiler-free review of Star Wars a solo story.

[1:11] Yeah well you know I took my wife to to the movie for our 5th wedding anniversary cuz I'm a very romantic guy.
And we really liked it I I feel like I owe the new Star Wars movies I've really enjoyed this or the new stories so and Rotel more than a rogue one more than.

[1:34] I I may be in the main trilogy.

[1:37] Awesome what is 5th year anniversary I always say it's paper to my wife to so I can avoid it.

[1:43] But yeah I I pretend everything is paper or dessert or cubic zirconia which apparently is not one of the anniversaries either.

[1:50] 10 tens another good one. They're on their give her some aluminum foil.

[1:55] When I pretend I'm taking her to Disney World for the the Star Wars Hotel.

[2:00] Nice.

[2:01] I'm just kidding we have to go probably sooner than 10.

[2:03] 10 m e t i n.

[2:05] Tell Tim I got it yes I like sorry I thought we were already planning my tent and a.

[2:10] Paper paper in Tempe.

[2:11] The odds of her being able to put up with me for 5 more years aren't you no not that impressive.

[2:16] I don't know the how about and then.

[2:20] Her or you for that matter.

[2:22] Yeah it's been a long 3 years her the trip reports and you covered a really cool conference around grocery tote us about.

[2:36] What all is going on with the exciting grocery folks.

[2:38] So Royal Bank of Canada has as this event every year focused on all that investors that are falling that that category so I got to go do a keynote on how did you disrupting.
Digital is disrupting grocery so that was a fun talk and they they pretended to laugh at my jokes which I always appreciate.
And there are a ton of CEOs there so I got to sit in a briefing with the CEO of Kellogg and he had some pretty.

[3:12] Pithy of comments that I think at some Traction in my Twitter feed he was kind of joking about how how these um.

[3:22] Startups are awesome and they all go to a hundred million dollars and then pray to God to be acquired by someone like dog craft.

[3:32] And the MPD did we cover their conference last year did pretty cool recap on the evolution of the grocery so there's a.

[3:42] You know obviously groceries a big piece of consumer spending and getting jujuy disrupted by digital right now so lot of people are trying to figure out what the what the sort of ramifications of all that will be in place marpat.

[3:56] Pulling in your talk to you the whole curbside versus delivery and and all that.

[4:02] So you know what I actually was a little higher level I was talking about some of the.
The main ways in which consumers purchase decision patterns are changing over all and it changed and other categories and how those apply to grocery so.
I didn't get the Deep dive into the tactics of grocery pickup versus home delivery for these guys that'll maybe next year stock but the.
Did talk a lot about her.
People need more information to make purchase decisions and social proof in absolute value and transparency are becoming a much bigger deal and you know what retailers are doing that well and what retailer still has some work to do there.

[4:45] And you know this sort of big big trend of Brands and retailers colliding and all the all the the.
Retail are starting to look more like brands of the you know snap up all these products and acquire meal kits and watch all these organic,
and I mean organic is in in home in in house new products that they did they're launching and that you know how all the brands are trying to figure out how to go direct to consumer.

[5:10] Brickell so let's jump into the news first of all just travel outline tonight without would cover,
sometimes we put kind of what we call other news is kind of tidbits at the end and it always gets bumped so we thought we'd kind of reverse that so you get the delicious Tibbets first and then we're going to talk about Apple's conference and then what are the big events that Jason I both being beta Geeks get excited about is Mary Meeker had her 2018 deck out so we're going to wrap up the show and go over the Meeker deck,
so that,
being said what would jump into Walmart they had a shareholder meeting that was just one of those things that they they hold and it's not quite as big as Warren Buffett,
pretty somewhere where thousands and thousands people go in and hear Walmart's annual report did you see any interesting news out of that.

[6:01] Yeah the other number to thinks it is that annual event that Walmart ahold usually a week or two after their their earnings.
I report and also usually right after a board meeting and I'm heading may not have as many shareholders come to the meeting as one that's for Berkshire Hathaway but the other thing that Walmart does is they bring,
thousands of Associates from all of all their various businesses all over the world and so the the sports arena where they hold the event is.

[6:34] Way more friendly they usually get some dick music acts and an interesting and see.
And you know they often have launched projects or talked about you know there their focuses and initiatives.

[6:53] For the year so it's a good if you're Walmart follower it's a good thing to attend it's kind of a pain in the neck because it.
Basically puts the small town of Bentonville in in Arkansas at capacity so I give you don't plan well in advance.
You're likely staying at a hotel like pretty far away like maybe down in the college or something and.
Hard. You don't get in a restaurant and all those sorts of things so I would I was actually pleased to follow this year's shareholder meeting from afar rather than attend in person as well as I have done none number times in the past.

[7:31] Call seems like the big thing that blew up is this jet black tell us more about that.

[7:37] So the rumors of this is are coming out a couple weeks before the shareholders meeting but they officially announced this new service.
At the shareholders meeting called jet black and one of our glory is Lieutenant Jennifer Fleiss came out to.

[7:54] To introduce that folks might recognize Jennifer.
She runs the the I keep going store 9 and its taurate.
The incubation lab for Walmart but she also is one of the original founders of Rent the Runway so has a lot of.
Interesting bespoke apparel expertise.
And jet black is a new concierge service that Walmart is piloting at the moment just in Manhattan and just for people that live in particular types of dwelling.
So you have to live in a condo or an apartment building with a doorman.
So the date they can use the Fulfillment methods that they have in mind and essentially what they're doing is there they're providing a.
Personal shopper for everyone that's in this program you pay a monthly fee.
I think they're experimenting with a couple different price points on the monthly fee it might be like 50 or $100 a month at the moment.

[9:00] And essentially you can call or even send a SMS message and say hey I need a new outfit to wear for this party or I need a birthday present for a 4 year old girl.
Or I need a very specific thing,
and your your personal shopper will track all your preferences and past purchases and you don't either get the specific thing you asked for or.
Or make a smart recommendation based on what what information you give in a mini cases Bill do same-day delivery so they'll,
like you you can simply send a text message and have something show up at your door man when you come home from work for your building in New York so it's a very.
High-touch data-driven model they're saying that they have some AI chatbots as part of the system but there's also a lot of human interaction and intervention.
And it's a it's a huge.

[10:01] Push for Walmart to try to learn how to capture these more affluent customers.
They're really the only part of the US market you know that Walmart hasn't captured yet so,
in Walmart owns a big swath of of the u.s. send you know the one the one demographic the date that they don't do particularly well in is.
These affluent Shoppers in in Walmart doesn't have a store in New York City for example and so,
watching this this service is interesting and it's semi branded jet which is also interesting right like it's not clear whether the jet in jet black is for the Walmart check brand or they just.
Chose to pick a descriptive version of black to name the the product so that's going to be a little interesting and it's,
you know it's going to be interesting to see if socialites in New York will will you know subscribe to this this high-touch Services provided by Walmart who they you know,
with what historically look down their nose at.

[11:04] Yeah yeah there's several startups in this area that have raced pretty considerable Capital one's called I think Alfred it's two women that have done it and it's cut.
It's got kind of maybe half product half concierge services kind of a thing so you can have,
yeah. Only can you say hey I've got it I need a gift for this party I'm going to but please deliver it to this address which may be some services along with the items that they could be interesting to see how that goes.

[11:35] Yeah for sure and.
You know a lot of the folks in my industry are super eager to try it out and so we've all applied you know for the closed Beta And so you know we all had to go and claim that we're housewives in New York.

[11:51] Funny when they show up in Chicago.

[11:56] Exactly.

[11:58] Other interesting retail news so a lot of retailers they have a combat off calendar q1 so they're just announcing their queue on but it's not January February March it's more February March April,
that they were hearing about now some of the Ulta in Sears were interesting I found because it's kind of Tale of Two Cities this kind of.
Bifurcation that that we hear a lot about.

[12:20] Sears was kind of one side of that story and they're cops were down 12% year-over-year same-store sales were down 12%. Going to close another 70 store so they're kind of doing this kind of a shaving knock stores as they going to spiral around conversely,
Ulta who we talked about on the show it is Crush their earnings and there's their comps were up pretty concerned and they're opening 34 stores,
search this really interesting kind of changing the guard going on in retail,
Mall based vs. Melt Mall based categories like Beauty doing well little lemon did well at least your and we continue these Trends we talked about on the show a lot,
I continue to go on and a lot of them at the bifurcation another area that's doing really well is a wholesale clubs and dollar stores so that kind of value-oriented side of the equation is doing well also.

[13:14] Yeah yeah it for sure and then.
I think Macy's also had their earnings and also was favorable so they think they there.
They're the revenues up 3.6% and cops were at 3.9% and check me on this, but I think this was the second consecutive quarter of favorable comps for them after a very long streak of negative comps.

[13:42] Yeah yeah on our good friend how is over there and so I think he can take credit for about this cuz it happened on his watch always always good you know to to land somewhere and then have things turn around right when you do it so we'll give how all the current flow.

[13:56] For sure and they they.
Do you have a bunch of initiatives that have gone live that that in some ways feel like they they at least partially have house fingerprints on them you know since.

[14:09] Shoptalk they've been really touting this this pilot of mobile scan a self scan check out that they've been rapidly expanding to a bunch of stores I find that super interesting because on one hand I feel like it.

[14:24] Saw the very real problem that that Choppers have with Macy's in fact I think they it's the number one report a complaint at Macy's is that you can't find.

[14:33] A cart to check you out after you made your purchases.
And so this is a sort of self-service thing where you pick your clothes you scanned them with your mobile app if they have security tags on them you you show.
The digital receipt at the door and someone takes those tags off and you you get out of the store much faster.
Minute parently Macy's Shoppers are really responding well to that service and it makes a lot of sense the one thing that's interesting as we've seen a few other retailers.
Pilot it and then sort of step back a little bit so you know Walmart had a pretty significant test of.
Mobile scan self checkout and they did it in both Sam's Club and Walmart and then they they rolled it out at Sam's Club and it seems like they turned it off at Walmart so I you know I think there was.

[15:18] A different learning there and maybe it's at a different shopping dynamic.

[15:22] I bet you know also are like turning up the heat on some of their their e-commerce fulfillment things today they did launch a new drop-ship program so they're expanding their.

[15:34] Their catalog by listing more vendor product that they don't even carry themselves and having the vendor ship that stuff Direct.
A lot of times for a retailer that's a baby step towards a true market place so if if this program successful for then maybe we'll see.
See Macy's launch of marketplace down down the road they also,
launch there buying on ship to store and in for lizards that don't track this carefully,
that's a slightly different flavor than buy online pickup in-store so buy online pickup in-store means.
The goods are already on the Shelf in the store customer orders online and then they go get in there you know someone pulls the one off the shelf and save it for him and they get that one,
in buy online ship to store the goods are still coming out of the e-commerce fulfillment center but instead of sending the goods to the consumers home which is expensive they should the goods to the consumers near store in the consumer I can come and pick it up for free,
it's a big win for the retailer cuz the delivery cost for my to lower and that customers going to walk in the store and potentially discover other things and so this,
the boss or buy online ship to store program is a new thing at Macy's if that also has been one of the major initiatives at Walmart,
over the last couple years and Macy says that they're going to rapidly scale all this program so so interesting digital stuff happening at Macy's.

[16:57] This is why not I thought you'd find interesting so Target had mixed results so on the positive side their foot traffic was up,
over 3.7% year-over-year which is really good in the world of offline retail you know where you're going to look in it at 2 and 3% comps then they said e-commerce grew 28%,
which is interesting and then we just had it wasn't Walmart in kind of 30% which footnote when all these things come out and always reminds me of this discussion we had on the show where.
Everyone's growing 30% than who is not growing 30% why is e-commerce only growing 15-day 18%.
What to save that discussion again for another day and get some Gaston to help us understand that.

[17:42] Anyway but that was the positive side but then while she was expecting a buck,
39 on you. And it came in at a buck 32 so it's a pretty big mess on the bottom line in the management team essentially said look e-commerce grew faster than we were expecting and it's expensive and crowded are margins so they really blamed,
the bottom line Miss on the the nice kind of hit on the e-commerce growing at 28% number so it kind of.
Whenever that happens I kind of think of Amazon has a lot of retailers in this really tough.
Lose lose situation where you know you lose if you don't grow your eCommerce then if you do Gregory Commerce City but I was going to Crater and Amazon has kind of figured out how to do that way more efficiently than these folks that I've invested all there.
Best looking into the store infrastructure but catching up on these things but Amazon's got a nice kind of you have 15-year lead so interesting kind of a reminder of that trap that I think Amazon has retailers in.

[18:45] Yeah and you know potentially this is just the new normal and Retail is obviously we're going to continue to see if shift in the sales mix to online sales and you know inherently from a retailer those those sales are less profitable so there's more pressure on margins than ever before,
and you know,
if you're if you're just expecting you know that they're eventually going to get back to that same margin level that they were at pre-digital that that might be unrealistic expectation.

[19:15] Yeah absolutely pivoting to the other recent event you know usually in the world of keep them this is,
pretty exciting but it's kind of mediocre out here today so today Apple kicked off their what do I worldwide developers conference creatively called WWDC and,
Prime most interesting thing it and there's there's new versions of all the operating systems coming out it really kind of it there's a theme for this when I think it was less positive fix bunch of stuff so so apples been inviting a lot.
And it's crowded just got a lot of dangling threads and things that aren't kind of a hundred percent so looks like.
This kind of generation for the next 6 months is going to be kind of you know some consistency so for example I always have trouble going between my phone and my iPad cuz the you is totally different cuz I have a 10 and it's different than the operating system on the iPad.

[20:08] They're going to raid a lot more of the stuff on the Mac Etc by the most interesting part of the day I thought was Wall Street reacted very positively to Apple.

[20:18] And you know we talked about on the show little bit there's kind of interesting race to see which of the the.
The Horseman of the internet are going to be the first $20 company in a big boom it was made today is Apple went up 5 to 6% so where it stands as of today which is recording this is June 4th after the market closed.
Apple is got a pretty considerable lead at 942 billion so really kind of 58 billion away which seem 58 million billion away from a trillion.
Seems like a lot but when you kind of think about percentage is another kind of 6% move on Apple and you'll be there so that's going to be interesting to watch.
Amazon if you've been keeping track Amazon used to be dead last now there in 800 and 8 billion in Amazon is also doing very well but not quite keeping Pace with apple and then Google has done quite well and they're sitting at about 8.
Switching with Amazon back and forth depending on how the stocks do then Microsoft at 781 the real laggard who was in the race is really kind of falling off is Facebook at 560 billion.

[21:25] So yeah it's pretty interesting I think.

[21:28] Think will happen is it's hard to tell who's going at their first right now you would kind of call Apple getting their first but I think we're going to see a scenario where we have like.
You know 3 or 4 trillion dollar companies so it's it's not going to be kind of the trillion-dollar company I think I think some of these companies that have built these massive platforms that are just soaking up.
Dollars across all these categories are are going to be each of them will be joined our company's so it could be we'll keep people posted on that.

[21:55] The three some things interesting obviously they're coming on there a lot of scrutiny and Regulatory concern and things for him going on there.
Apple really sue a lot of shade at them in the WWE.
DC so some of the features coming out although they don't specifically talk about Facebook there things for you know.

[22:16] Making you look even more Anonymous than ever and specifically getting away around some of the ways Facebook tries to fingerprint you as a user that was interesting perhaps the most interesting is there any missing some features that allow you to,
manage the amount of time you're using your devices and the time of day and things of that nature and then also a fair amount new features around that same topic around children so you can kind of say hey I'm going to let my kids have 30 minutes on their device,
after school so they can call me and be in touch but then that's it I'm not going to let them.
I'm going to lock them out of the device between you know that the school hours and then in the evenings as well so.

[22:59] It's interesting to see if that any of that will will cause kind of the reduction in online time,
your people are kind of addicted to these social media use cases primary Facebook's family up of apps so those were some of the interesting kind of high-level things I saw out of the conference,
what did you say it was interesting.

[23:18] Yeah so I think you hit it right like it.
I don't think they were huge Commerce Centric announcements at the show I think they Lowered Expectations for the show coming in by saying hey.
Probably not going to launch a lot of major new stuff we're going to you know we have a significant focus on fixing a lot of the stuff we've already made.
But they did announce an upgrade to their augmented reality stack so what they call a Arquette they they announce 2.0 which has Richard features.
We talked several times about how.
They are probably has a lot more application in VR does for for shopping in the in the near-term and.

[24:01] Historically it's required a lot of horsepower in a lot of special software.
To do decent AR on phones and now you know Apple and Google are both making it much more ubiquitous in much easier to code.
SAR Kit 2.0 can be interesting one of the date Apple literally has a new app coming out with a arcade 2.0 called measure which is sort of a using your your camera as a.
Surprisingly accurate ruler to be able to measure dimensions of rooms and things like that.
And we talked a number X about out you know how these cameras get better at measuring things.
That can apply to a whole bunch of Commerce use cases of fitment for clothes and visualisations and fitment for furniture and housewares and all these sorts of things.
Become much more more possible as as these capabilities expand there were no Hardware announcements at the show but there's a lot of rumors that the next iPhone.
Will have a triple camera on it and that third camera being a depth sensor and so.
You know there already is a really sophisticated depth sensor on the front of the camera for measuring your face.
Did they put a sophisticated temp sensor on the back of that next phone that could really open the doors to some interesting.
Apparel fit man and Maid to Order apparel over the phone and all sorts of think so.
So what Cantina watch that closely they did announce a potential very scary new feature for Safari so this is going back to the the Privacy stuff that you talked about that they're adding.

[25:37] The ability to block third-party cookies in Safari and so you like.
It is probably a good thing for users but it breaks an awful lot of the internet like almost all the news sites you can rely heavily on all these third-party cookies from all these contents indicator is an ad.
I platforms and things and and if if all of these Publishers have to adapt to a world in which third-party cookies don't work.
That's going to be a pretty big paradigm shift.
Inform me then like the like this is a double DIN for apple apple gets to say we care about users privacy and we're eliminating you know evil advertisers ability to track US.

[26:19] But when the the content sites that are.
Time are we making money by selling ads around free content they give you when they lose the ability to monetize their content through these add platforms.
It actually forces them onto Apple news and Google news as their only source of monetization for their their content so you know Apple announced the new version of their.
Their news platform at the same time they're making it harder for these these news Publishers 2.
To monetize their own content so so you know you can look at that as a coincidence or nefarious plan.

[26:58] This is already in Safari but I just want to highlight for folks that you know recent updates of to Safari added the ability for Apple to finally support Progressive web apps.
They been in the Google browser for a while and this.
People not talking about this is enough this is a huge Paradigm change for how to do mobile you can do way better mobile e-commerce sites using the pwa.
What are called Progressive web apps then you then you can using traditional mobile websites and certainly.
Better play for most retailers than doing mobile apps and now that you can do one code base and have it work on most of the Google and Apple devices.
Every retailer really should be redoing their mobile right now and interesting Lee not very many are and you know,
my my hypothesis is that part of the problem is that all these retailers have mobile fatigue that they,
you know in the last year they just want the responsive site and they felt like that meant they were done at mobile,
and now no one wants to talk about redoing their mobile again to support all these new mobile standards like Progressive web apps and accelerated mobile pages and leveraging this these new payment Technologies like the payment request API,
these are all best practices that make a huge difference in in Mobile, so it's going to be interesting.
To see how that that all plays out did you see any other cool stuff at the at the Apple conference that's worth noting.

[28:31] The other at the keynote there was kind of two that had a little bit of a Commerce flavor and they were are within the augmented reality World which which we we talked a lot about on the show,
side note we do have a deep dive into a rvr that,
you should check out if any of this sounds interesting to you so one of things they did is they had a group of folks from Lego there and they had a table with,
I just one of these little village kind of sets you know where they do kind of get you to buy one and then you can buy a multiple Village so they had this kind of apartment building set,
I didn't they could look through their iPads and they could do some really cool stuff that could go inside of that apartment building set virtually and See Kai animated Lego.
People living and doing things in there and then they kind of pull out other sets and look at how they would look next that set then there was a lot of animated.
Play around there so the building could catch on fire and then someone could have the little Lego fire people come out in a Lego helicopter and does really interesting cuz you could,
many people can have a shared 3D experience and then you know so you could imagine.

[29:41] Husband wife in a designer having a shared 3D experience in a house.
Planning where Furniture would go or the redesign of a kitchen and those kinds of things and then the other one that had e-commerce implications was Fender the Guitar Company,
at least actually showed this is kind of interesting example where they went to the website and designed a guitar.
And then they press the button and there's this new way of communicating these models that button than kind of.

[30:11] Creator 3D model put it into the AR kit and you can kind of like then see a 3D version of the guitar that was designed then they Presta and that was kind of in just kind of a white space you can kind of spin it and see it,
which is a terribly new for the world e-commerce and you could actually see it kind of like.
Sitting I don't know why you want to do some guitar kind of sitting on its stand and and you can even kind of like you know Vision it in your environment so.
These 3D models are starting to get kind of more transportable between experiences which is interesting and they announce the new new model.
Sweet file format for this that seems like a relatively big deal and you know it may have e-commerce implications cuz I do hear from eCommerce folks you know.
Everyone's out there creating these 3D models and there's a lot of duplication of effort so at some point.
If you're a brand you made that may just be part of the digital package you give to somebody is an AR model that everyone can kind of consumed versus.
Oh I have to.

[31:12] At maybe house needs one in the Ikea needs another and I don't know the Wayfair app needs another or they're all creating on a duplicating work so soon.
Scot a nursing implications out there for a our shopping for for what that's worth is probably many years out still.

[31:30] For sure but I think it exactly mirrors like the early days of e-commerce if you want any conversate you you hired your own photographer and took pictures of all the products you are selling because,
the manufacturer wasn't used to giving you digital,
versions of all their photos in overtime like we do all these pretty robust system is where you know manufacturers now syndicated a lot of digital content to e-commerce sites to help them merchandise products and I think you're exactly right you know that,
the early a are examples that the retailer all recreated 3D models of the manufacturer's products which you know is expensive for the retailers in,
oh by the way may or may not have been an accurate representation of the manufacturer's product until I think over time you'll see,
that syndicating that 3D data just you know being another another attribute that a manufacturer has to provide to a retailer when they sell a product.

[32:25] Yeah and then last will note the the one thing that as I was reading a summary of all the changes coming.
get me the most excited is I probably like you I am double authenticated on everything I do so probably 4 or 5 times a day I have to send myself a code and take that code and type it into a variety of,
different devices they're coming out with a new feature in across the operating system family called security code autofill so if you generator code to your phone and you need to go type that in over on your desktop if you're in the Apple ecosystem and you have the messages and all wired up it'll say,
when you going to tap in that code it'll say should I just use that code that came from this message you got about 5 seconds ago so that made me very excited I think that's going to.
Save Me by 40 hours a year and typing coats and remembering all the seven digits over and over and over again.

[33:19] Yeah for sure I'm definitely looking forward to that to multi-factor authentication is super important and everyone should be using it and it's kind of a pain in the neck at the moment so,
so reducing some of that friction is I'm all for it so we wanted to use the last bit of time on Today Show to talk about,
part of the recode conference or code Commerce conference is it's called us it is a Big Show at in California every year put on by our friends at recode and Kara Swisher,
and they get really Marquis keynote speakers every year and some of them have been very commercentre so I think 2 years ago Jeff Bezos was there and made some significant news,
this year there were not a lot of.
Connor speakers that are super excited about I think the big Keynotes were like the CEO of uber and CEO Spotify and Airbnb,
I know Katrina Lake had a little presentation who's the founder of Stitch fix but to me the big presentation,
did they have every year that always has some relevance to digital Commerce is one of the partners at the Kleiner Perkins on Mary Meeker does this annual,
presentation called the state of the internet which is a super data-driven deep dive into the the major Global Trends in digital and so this year.

[34:51] She did that presentation again and and what was the count was it like three hundred two hundred and something.

[34:57] 300 yeah right at 300.

[34:59] Yeah yeah almost 300 slides so for me that that's about how many sides I prepare for a 15 minute presentation.

[35:06] Yes Jason I have gone to those slides in want to kind of boil it down to 15 minutes that matters to you guys,
it may be handy will put a link to the PDF in the show notes so that you kind of like the zip to the slide numbers that that we reference as we go through this is kind of the takeaways we got from the e-commerce section so it's a macro trends.
Pretty much what I call, Steady As She Goes the some of the things from the macro Trends section the growth of the internet is slowing people are spending only 5.9 hours a day online that growth is kind of really slow down,
a lot of the growth kind of interior there is in messaging and video she referenced which is this platform which is streaming gaming that it's really up into the right.

[35:55] Natasha Lyonne by Emma.

[35:59] Don't I just spoke over you but exactly is owned by Amazon.

[36:03] Yes yes exactly.

[36:04] And then kind of the new thing this year is because of the you know the amount of internet time and and the companies that we talked about just a Min ago there is increased government scrutiny of course which creates this kind of.
Interesting Paradox that increasingly the the you know the displacement of the internet need more and more data from you to have these great personalized experiences.
But you know, regulatory perspective are you really clear the date of your giving up how it's being used to his thing shared with so you know she kind of.
Pretty easily predicted that's going to be an ongoing challenge for everybody Facebook's kind of squirrely kind of caught up in that right now but I don't see how anyone is really immune from it.
When they're singing areas I thought was.

[36:51] Investing in Tech in this kind of thing is at the highest ever over the 20 years they've been tracking it here in 2018 and that's both.
That's that's kind of venture capital if you will set private company investing at the same time when you look at public companies they're spending more on R&D than ever has been spent a slide 40 is interesting and it does show.
Amazon at the top there some people that really track this will know to that Amazon does put some of the acquisition of regional content in their R&D budget so.
I may not be quite as big and scary but I think it's only like two billion of that is original content so it still keeps them at number one in the R&D spending public company R&D spending is up 18% year-over-year so when you had those two things together.
If you thought the piece of Animation was going to slow down you're probably incorrect cuz if dollars are the the leading harbinger of innovation which I do think is true both public companies and private companies have,
getting larger and larger investment than ever.
Before I'm even at our scale percentage-wise it's a very large number so new slow down on Innovation even though the internet growth is slowing.

[38:04] And then from there.
Jason the e-commerce section really kind of kicks off on page 44 I thought you know last year there's a lot around ads in the ad ecosystem and I thought this year we got it.
Well it's not worth shattering who got more kind of of the Meeker deck was on e-commerce so is that would cover each of our car highlights here Jason what were some of the takeaways for you in that section.

[38:28] Yeah yeah and I'd start out by saying like I really look forward to this presentation every year in in in every year in the past,
there been in major insightful takeaways that were like major nutrients I hadn't really thought of that were super valuable to think of and so,
looking for that again this year and I have to say this year felt a lot more interested to me was a lot more Hades trans we talked about in the past or accelerating these Trends we've been talking about for a long time or decelerating,
I didn't have as many like aha moments as I have in the past and maybe that's just sort of the price you pay for this being the fifth or sixth time she's done this.
But that being said I agree I think she did a deeper dive in Commerce she kind of talked about a lot of Commerce trends that would be old hats at to folks that listen to the show in terms of.
You know 14% of 14% eCommerce growth in US 16% world.
The cheese is some really low numbers but like I think she has about 8% of all.
Retail sales being e-commerce now internet that's again the broadest definition of retail that includes I'd gas and things like that.
But then the big things are interesting to me,
she really focused on this this trend of personalization and everyone talks about personalization but she really excited as evidence for the fact that people are willing to trade.

[40:01] Privacy for personalization even in this it is crazy privacy climate.
She's highlighting services like Waze and Uber and snap.
And even next door which is kind of interesting service where people are willing to give a lot of Geo located data in exchange for this personalized experience and so she showed the rapid growth of all these sort of.

[40:27] Services that she defined is highly personalized services.
I thought that was interesting in the e-commerce delivery section she she talked a lot about the limited growth of a UPS FedEx in the US Post Office and Anna as we talked about a bunch of times on this show.
There's a huge gap in the the growth and knows those carriers ability to deliver packages and the 30% e-commerce growth that everyone is claiming they're having.
So that you know that certainly is going to be a recurring theme we're going to hear about.
And in the past she talked. She talks a lot about ads digital ads in general this time she talk kind of specifically about Commerce ads,
and she's talking about how these ads that have a conference call to action or emerging is one of the most effective formats of digital ads so she talks about.
Google Play is having three times the engagement is there another advertising platforms.
She talked about you know the Facebook's continued traction and then cheat you know how I did that Amazon is emerged as a.
A true huge advertising platform in that you interview they have a 4 billion dollar run rate they're growing 42% year-over-year.
The you know I thought that was pretty interesting she talked a lot about the adoption of subscriptions Commerce and how the subscription services are growing so she with you.

[41:59] Amazon Prime as a as a key Tampa subscription obviously but also.
Netflix and Spotify and Dropbox and Stitch fix and Peloton and how these things are all going up into the right.
88 Ranch she talked about a number of times that she hit again this year is her version of the mobile gap which is sort of.
And advertising look at the mobile Gap that essentially advertisers disproportionately spend on every other.
Platform compared to his percentage of audience consumption.

[42:32] Advertisers are still dramatically under spending on mobile advertising compared to audience consumption of mobile and so she thinks there's about a 7 billion dollar opportunity there and adds shifting to mobile being the.
The platform.
And then when she got out of the Commerce section the other the last thing also to highlight that there was really interesting to me we've talked about the bifurcation.
Spending power a lot on the show and certainly Casey well and buys been on a couple times who's done a lot of thought leadership in that.

[43:05] That's based she had some pretty detailed data that.
You know despite the fact that there's a lot of economic indicators that are really growing household debt is it highest level ever,
and she shows this really scary chart it says so I had 103 wear in 1968 the.
Ratio of debt to income and the amount of personal savings that people had were both similar things right and.
Debt to income ratio is a bad thing in personal savings is a good thing if you're talking about a family's Financial Health.
And from 1968 till today those two Transit been going in opposite directions were saving less every year than we did the year before and our debt-to-income ratio is getting higher every year than the year before and so we're opening up this huge gap in.
You know families being over leveraged and not having a lot of savings.
And she highlights that part of the reason for that is healthcare insurance costs and housing costs are going way up and people are having to spend more of their budget on those things.
Which subsequently means people are spending Less on food entertainment and apparel.
And we talked a lot about people spending Less on apparel but it's kind of interesting she's highlighting data that you know people are spending Less on entertainment experiences and food.
And you know compared to some of the hard Goods we said hey.
Experiences in in food are doing better but she's highlighting that like in reality I like all of those the spending categories are challenged as people are having to spend more of their.

[44:45] Their wallet to pay back their college loans in their health care and I guess the last part of the bifurcation was interesting to me as a she talked about,
this decision Walmart made back in 1990 to get in the grocery and how they pretty quickly became the largest Grocer in the US,
and that one of the big impacts of that is that grocery prices have gone down every year from 1990 to today and so today,
food costs are are you permanently and substantially down from 1990 and that's that's a row did every Grocers ability to make margins and and you know we talked earlier on the show and we think digital,
has the potential to do that to a lot a lot of other categories as well.

[45:31] Free cool so quickly some of the things I wanted to just point out to listeners from the deck that just kind of be aware of onside 50 she has kind of a look at some of the different,
Tools around e-commerce and where the the current state of the art isn't it kind of has a framework for looking at the online store platform the payment platform fraud prevention prevention.

[45:51] Purchase financing customer support Discovery process and then the delivery process so, weird order there I usually put kind of like Discovery at the top and Delivery at the bottom what not but but.
The guy interesting to highlight those things have a fun chart on 63 where she shows kind of the evolution of finding products,
where are you kind of have the old school to search box and then here we are today with voice search kind of Married With fulfillment,
using Amazon is example and then using Google as an example, showing again that same kind of growth from simple organic search kind of.
Google connect me to.
Is that like 1997 car time frame all the way to the current shopping options actions where everything is really kind of integrated and you can buy right from the platform.

[46:42] You know what.

[46:45] The Firm she works where has really big China group and they always chime in on here and I always find there's this really good insights China's ahead of us as far as penetration and growth of e-commerce is well as mobile so.
They're stuffing some insights there I think sometimes we ever read those here in the US so I think a lot of the rush to kind of copy the you know the messaging and the Commerce within messaging is.
Is probably not going to take off cuz it's kind of pretty unique to that that environment that ecosystem in China.
That being said there are some really interesting things there's a couple I wanted to point out,
I'm number one is Alibaba is on a really big they talked about this there see you I was at the conference as well they've invested a lot in these stores called him a human they call it dope lusso which is online plus offline,
which is kind of their version the kind of version of omni-channel if you will but it's much more of like.
Shops in those kinds of things so it's kind of like a Next Generation retail so you can see their.
What airlines I found interesting is some of the top apps in the US are these entertainment apps like HQ trivia most commonly abbreviated HQ,
in China this really cool apps that have kind of married entertainment shopping and of course Ali Baba does this round singles day but there's more of that are kind of doing it,
when I found really interesting to talk about your ended a lot of research on it this was a concept it's kind of invite.

[48:12] The 2000 time frame a lot of companies try this e-commerce it didn't work in those called group buying where they would say hey I've got this widget and if you can get a hundred people to buy it I'll lower the price.
The problem that is in those time frames we didn't have the platforms for telling a hundred of our friends very quickly but now has social media we do.

[48:31] Chili's discount Next Generation platforms are tied into messaging and social media and whatnot and the Really geared towards and sending the consumer to share to get a discount.

[48:40] The one on site 86 that she talked about is called pin duo duo and now I'd encourage listeners don't have time to go into it but I think that's really interesting concept and,
could be used for a way to do liquidation and Sky really.
To be like the next flash-sale kind of a model so I thought that was interesting,
and yep. That kind of were some of the highlights I wanted to point out for folks and you know if that stuff is interesting to you let us know on her Facebook page and we can kind of dig into some of the area's deeper on one of the feature shows.

[49:14] Yeah yeah we do have to do a deep diver that makes sense on any of this specific areas it's,
super dense deck and said there's you know a lot of potential things to take away,
but that's probably a great place to leave it for this week because it's happen again we've used all of our a lot of time again there there is further conversation we love to hear from you on Facebook again if this was valuable episode for you we sure appreciate it if you jump over to iTunes and give us that 5-star review to that that feedback is what keeps us going.

[49:47] Thanks everyone for joining us and have a great week.

[49:50] Until next time happy commercing.

May 22, 2018

EP133 - Hot Take: Adobe acquires Magento 

Adobe announced that they are acquiring Magento commerce for $1.68b.  It was disclosed as part of the deal that last year magento’s revenues were $150m, so that’s a 11X multiple which is pretty awesome.  Adobe’s largest deal in decade.

Adobe announcement

Magento Blog

Mark Lavelle, CEO, and Peter Sheldon VP Strategy at Magento Commerce were on Episode 50 of the Jason & Scot Show.

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

Episode 133 of the Jason & Scot show was recorded on Monday, May 21st 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.


[0:25] Welcome to the Jason and Scott show this is episode 133 being recorded on Monday May 21st 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your hoes Scott Wingo.

[0:39] Hey Jason are welcome back Jason Scott show listeners this is one of those unusual times.
You're actually recording back-to-back shows and Publishing them simultaneously that's because we had previously planned put out our.
NPD idea show recap which you should be able to find right there in your favorite podcast listener,
device select / technology,
and then the universe was curveball there was a big announcement after the market today and that announcement was that a Doe B is acquiring which into Commerce for 1.6.
Billion dollars that's billion with a B it was.
Disclosed as part of the deal that last year magenta revenues were a hundred fifty million that's already some analysts notes that are saying they would expect that to be about 180 million this year that's 11% multiple witches.
Pretty awesome for Magento and also adobe's largest deal in over a decade.
So what we're going to do here is a pretty short show because it is very timely and,
just got to get share some background on these two companies and their aspirations and some of the things that have happened to them before and then.
Jason is our resident.

[1:58] E-commerce platform Guru I'm going to send him some lightning around rapid fire questions to kind of get some analysis what that means for both Adobe Magento and then some other.

[2:11] Books out there so we can kick it off with a brief history of Magento.

[2:16] And I'll cover that and then Jason oil run you run us through adobe's e-commerce history.
So would you do was born in 2007 it's an open source project which means you have this collaboration of people,
they got together and there was a commercial company and Roy Rubin and you've cut his eyes at you.

[2:38] Aren't you don't know a Metroid but I never met you oh so I'm going to assume that's you got a ride.

[2:46] Listening you can write in and I would have better phonetic.
We have six new they released this isn't what they were planning on doing was taking a.
You know I previously open sourcing in making improvements but they did so much changes they came up with the whole new offering and so.
That started as a community project and then they monetize it to an Enterprise offering that initially just had some support and then later on had,
kind of different feature set than the community offering Bob Schwartz join in 2009 he is a guy that I think pretty much everyone in the world e-commerce is met several times he still out and about,
a great guy has enterprise software background really ramped them up and.

[3:27] Side note is a Jason and Scott show Wisner as well so shut out to Bob and Bob used to run e-commerce at Nordstrom.

[3:34] Hey Bob Hope you had still had some more options in here somewhere I'm not sure if that's possible but hopefully did he so then they sold Magento to eBay for $180 which was a great eggs.
Because we didn't raise a ton of capital of my recollection is maybe 20 to 30 million.

[3:53] Pair to today's companies you know, 6 x 2 money raised so that was good eggs.

[3:58] And by the way I think a bunch of that raise was from eBay.

[4:03] Yeah yeah eBay wasn't investor through the PayPal site but they.
A combined company at that point and it's part of that deal they got PayPal integrative Magento that was kind of what they were after there,
oxa 2011 eBay acquired the whole entity and owned it until 2015 eBay had bought both GSI and Magento and then,
put them out in 2015 along with the PayPal split so eBay sold the Magento asset to a private Equity Firm called permira.
And that was for about 200 million so kind of sideways kind of a deal I don't know the specifics that I've heard mentioned took kind of went sideways while I was in the in the eBay ownership Cyril the key people left.

[4:48] Then once it was free from eBay in 2017 the private Equity Firm raise an additional 250 million from a large Chinese investor called Hillhouse capital.
We actually had the CEO of Mark Lavelle here on episode 50 of the Jason Scott show so that was exciting to have him on a side note we do have a 10% finders fee so when there's an exit,
I at we and you put on the show we would like a 10% finders fee it's just a small thing of it is like that it's just a very small thank you to the podcast doomed.
Look at you that exit it's hard to nail down exactly how big Magento is because unlike a sass platform you no one there.
Publishing the source code out there they don't have many people are licensing dinner price version they don't really know how many people are using the Community Edition.
There are companies that spider the web and they'll kind of show tell you there's this many websites that they don't know how big they are from a sales perspective so it is hard to know how many active users there are over gento.
I've seen kind of numbers in the 300,000 range for both Community Enterprise I think Enterprises in the low thousands so like 1 to 3000.
And that is a brief history of magenta.

[6:09] Yep and I just one other side note on how hard it is to know what size they are like also because it's it can be at one time.
License or or download a free version like you don't know where there's someone that that got your software is still using your software a year later and so there's actually a lot of sort of.
Orphan sites out there that might still be turned on but aren't actively selling stuff that are running running Magento so it makes it even harder to know how many how many active sites you know with meaningful volume Iran on the planet.

[6:41] Yeah a lot of times you'll see this announcement you know like he was Pottery Barn Pottery Barn.
That's a huge win the you dig around you look around and they find it's like.
The kids furniture couch category in Australia.
So it's really tricky. These things can pretty seamlessly be integrated with each other and and you'll find a lot of times,
I see Magento used by larger players as a cross-border trade kind of thing of increasingly that's going over to different platforms like Shopify because just the ease of use of spending those up is a lot lower than the on the SAS guys can spend up a new store pretty quickly compared to the open-source guns.

[7:25] Yep for sure Magento for some smaller Brands it's their primary platform but for many bigger Brands it's a.
A utility platform that use for particular use cases in and you know smaller markets would definitely be one of those,
I was in a side note it's mainly an on-premise solution but there have been a couple efforts over the history of Magento to sell it is SAS so I think even during the eBay ear or maybe right after that you bet your other was this product Magento go,
that was sort of intended to be a low in SAS solution that might have competed more directly it was low but now Shopify.
But yeah it's you know it's it's a mix of of implementation patterns for for Magento and as we talked about with Mark.

[8:15] The bulk of users are on this first generation platform that the Troy and you are put together magenta one when Mark was on the show they had just released a major,
re architecture Magento this called Magento to but you know obviously.
He a significant number of those the small clients did not immediately move over to to Magento 2 and so you know there's.
When you're talking about the Magento installed base right you know one of the questions that you're you want to know is like what percentage of the users are even on the the current.

[8:49] The newest iteration of the platform review off.

[8:54] Yeah so then why would a Dobby care about this day how's the Titan with Photoshop.

[9:00] Adobe has a very popular product that we are all from there with Call of the Adobe Creative Suite which is like a Photoshop and Premiere and the the audio editing software we use for this podcast called in addition,
but they have another Suite of products that they call the Adobe experience cloud.
And this is a sweet of sort of Enterprise products that are used to host a lot of commercial websites so the.
To my way of thinking the disorder,
Cornerstone of the experience cloud is Adobe AEM which is there big CMS I think it's the most popular most successful CMS in the world it hosts,
tons of Big Brand websites like Mercedes-Benz and all these different.
Brands that you don't have non transactional websites would use Adobe AEM it's hosted SAS solution for for those kinds of.

[10:01] Use cases you actually can also buying on on Prime version of am still but then there's a bunch of other app.
Pieces of the experience Cloud that are pure SASS and so the one that comes up the most often in the Commerce world is.
A product they bought a number of years ago called omniture which is a web analytics platform that competes with like Google Analytics.
That's been rebranded Adobe analytics over the years and it's a very popular e-commerce analytics sweet that used by a lot of commercial websites we've had Tamara on number of times,
change some of the data from.
From that platform and they have a bunch of other e-commerce tools that they bought ATM was originally from a company called a software.
They bought an image technology called seeing seven that that a lot of website you use to resize images on the Fly four different sides.
They now have a other marketing tools I got DMP campaign manager.

[11:09] Sort of a next-generation ESP personalization engine they have a a b testing platform that used to be called the Adobe test and Target.
Insa Dave Dave sort of in the same way that they put together all of their their creative software for end-users together.

[11:27] They put this whole sweet of Enterprise packages together that are used by big companies to host websites and the one big glaring hole in that sweet is an increasing number of those,
does companies that are relying on the Adobe experience stack to create their web experience.
Want to sell stuff online and Adobe did not have an e-commerce platform so you know what Adobe historically has had is a.
Integration framework to let you use the Adobe experience sweet alongside someone else's e-commerce platform like.

[12:02] IBM Oracle sap or Magento elasta path and I think digital River or the big ones.
So for a long time we suspected that adobe did want to own a platform.
You know obviously I mention IBM has has their their big platform and they're trying to grow out a full marketing Suite to compete with the Adobe experience platform.
Oracle you know bought a number of companies and is put together a marketing Suite that competes with Adobe in or colognes.
Several e-commerce platforms but I think the the one we think of most for e-commerce is used to be called atg.

[12:43] And then back in 2013 sap bot hybris.
A lot of people were using hybris and Adobe together at that time and they were you know they were rumors that adobe was one of the.
The bitters on hybris and lost out to sap in 2013 I'm not sure that deal size was disclosed but like all the estimates were over a billion dollars back then.
Then we know in June of 2016 like the most successful.
SAS base in a B2B Cloud out there bought demandware and I think that was 2.8 billion dollars.
And I think it was fully disclosed that adobe was one of the bidders.
Fordham and where and so we seen Adobe out there trying to acquire a Commerce platform and seems like today's the day they got it done.

[13:37] Cool so that gives us the background let's do kind of a little lightning around here what's this mean for Adobe so they've got this content peas that got this experience Cloud why,
yeah you know why does Adobe need an e-commerce platform.

[13:54] Hot tub,
again like most of the brands that are hosting websites on AEM and that are tracking analytics on Adobe Analytics.

[14:05] Either already are selling Goods or want to sell goods and so historically adobe's had to partner with someone that provided an e-commerce platform and the functionality of that e-commerce platform competed with the functionality of the Adobe experience Cloud so.
Adobe would want you to save the data and they experience the customer data in the experience cloud and I would want you to say the customer data.
And in Webster Commerce and promotion engines and all these different things and so.

[14:34] Now Adobe has the potential to have a seamless solution that allows all these brands that are hosting websites on AEM to sell Goods,
and you know they can have a very homogeneous solution that shares data across all these these different pieces of the solution.

[14:54] Got it,
and then so most of the Magento customers are kind of SM he's so small medium size Enterprises it sounds like the Adobe customer service trying to make transactional you mention Mercedes-Benz that's obviously you know very large company.
Probably I don't know how big this Adobe content management thing is but it's probably pretty expensive so it feels like adobe's going to want to take Magento upmarket does that is going to create a problem for existing users.

[15:22] Potentially you registered it on paper this is not a perfect match up right it's a well-known popular e-commerce platform and a well-known popular experience platform so that you know that superficial level it makes sense,
but the,
right below that you're exactly right like the the bulk of the Magento customers are long tail smbs or you know mid-market at best and that the core Adobe customer is an Enterprise client you know there are you likely spent several million dollars on their implementation of the rest of the the,
the Adobe experience Cloud Adobe is a pierce a solution,
you know it the moment you know most of the magenta stuff is not sass add Adobe stack is mostly based on Java the Magento stack is based on on lamp or PHP so,
like they're they're definitely going to be some,
some challenges I got you know it's super early I haven't seen a Doe B come out with the message yet but hopefully in the in the next you know several days they should really put out a message to put the Magento customer base at ease,
because if I was in Magento customer I might be nervous that adobe is going to move them up Market going to want to move it to a SAS illusion,
and a lot of in a small businesses pick magenta because they could own it they could,
you know customize it and have access to the code themselves and they could host it themselves and so you know I think,
on the one hand I'm sure those customers are excited that there's some deeper pockets and you know potential for bigger Investments to kind of accelerate the Magento road map.

[17:01] But you could also imagine that the Adobe is going to shift the Magento roadmap in a way that isn't particularly advantageous to a lot of those SM Beats.

[17:11] Cool so another Domino has fallen or I like the musical chair metaphor so so now we've got to know the Discover the marriage here between Magento in Adobe one of the companies that's kind of always mentioned that doesn't have any Commerce platform now on the large software Cloud side,
is Microsoft you can make a stretch and say.
Google does Charlie have one you can even straight to say Amazon doesn't have one but but Amazon was in that business and kind of got out of it I think they pretty squirrely believe though.

[17:44] The marketplace is coming to the Future there I guess eBay doesn't have one but they don't wanted and didn't really suggest it very well so it's a.
Now that's that's one side of the equation then you have Shopify and Bigcommerce shopify's a public company with about a 20 billion market cap.
That's a really big bite for someone to take there and then Bigcommerce is private but they've raised three or four hundred million so that's going to be probably a bigger lift than.
Magento what what do you think is the next Domino toppling in this platform world.

[18:18] Yep I don't know that there's going to be an immediate counter-reaction here so the.
The other you know the Enterprise company that you mentioned that has a lot of the other elements of a quote-unquote marketing cloud like you can really think of.
Sap IBM Oracle and now Adobe,
really competing for the same core Enterprise customer right and in today I'll even need complete offering skin to compete with each other the the other company that competes with the awful lot of those Stacks is Microsoft,
and so you know you on the one hand you'd say hey they would be a really interesting acquire now Microsoft at the moment doesn't have a CMS or a e-commerce sweet but they do have a very robust Erp system,
Microsoft dynamics that includes a CRM that competes with. they of course have the the web hosting Services through azure,
so you on the one hand you could imagine Microsoft wanting to more directly compete with IBM Oracle sap and Salesforce in Adobe but on the other hand,
Adobe actually I think is moving most of their SAS hosting services to azure,
and they're actually several a cms's I know a sitecore and episerver that RT run on the Microsoft stack so there is a.
A counter argument that that Microsoft is doing well by supporting.

[19:52] Multiple players and that you know if they were to acquire a single CMS in a single Commerce platform.
Did they would potentially alienate some other partner so you know I don't know whether the calculus is there for Microsoft.
Show choir and I would say Microsoft in the distant past did on a Commerce platform and didn't do very well with it it's actually.
It changed hands a number of times and is I think now part of the sitecore solution.
So you know maybe they they eat are a little tainted from their their previous unsuccessful Commerce ownership that they don't make that play again.
There are a bunch of smaller Converse platforms that don't have the kind of traction that Magento has from a customer base that are much more.

[20:40] Are arguably more modern architecture there's folks like Commerce tools and Symphony Commerce mahzu there's a host of these other you know.
Companies that probably hoped to be acquired but never you know don't have the customer base yet that the Magento does.
I'm so will they continue to go out alone is it going to be harder for them in this world where you know that their competitors are owned by these big Deep Pockets.
That's going to be interesting play and a dark horse to buy a Converse platform to me would be some of these social networks so could you imagine Facebook,
buying a Commerce platform either to make available to their their customers or enable better at Commerce,
functionality and their echo system could you imagine Pinterest.
Or you know Instagram or SnapChat you know having more robust Commerce features to integrate into their platform would be another.

[21:37] Potential play like that there's some problems with that but you know there will be guys that you might you might see sniffing the tires on some of these these e-commerce platforms.

[21:47] Sniffing the tears I never heard that usually you sniff around or you kick tires at yes.

[21:51] The tires or sniff around yes I don't know if I mentioned this or not but this is the second show we recorded in a way.
In a row so I'm I'm mixing some metaphors sorry.

[22:04] I'm not the brightest bulb in the in the knife drawer away.

[22:06] Any last thoughts on the platform Wars as it were before we close up.

[22:18] No I mean from my perspective I'm excited to wear a big Adobe partner I should say and I'm excited to see them making a bigger investment in Commerce oh that is exciting it again.
Yeah I don't think Magento is a plug-and-play Panacea for Adobe and so it's going to be interesting.
Adobe has done a really good job of integrating all their other Acquisitions but they they were not in a particular hurry to do it they took a long time,
and slowly evolved all these Acquisitions into this this more homogeneous Cloud so you know where they going to do the same slope play with Magento,
that would be good for the existing Magento users but it would take a long time for Doby to get value out of this acquisition or you know will they do something on a more accelerated Pace to build Magento into the kind of.
Enterprise solution that fits the rest of the Adobe stacked like I'm going to be really,
eager to follow that and I would argue that we're still having those same conversations around demandware and Salesforce in that like Salesforce with predominantly of B2B play,
demandware you know Excel to be to see you and wasn't very good at B2B.
You know they were not on the on the same stack and so you know along while we're watching Adobe in and Magento figure out their negation plan I think we're still closely watching.
The the demandware which is now called Salesforce Commerce cloud and Salesforce integration play out and then I think we mention this.

[23:53] This is maybe a couple weeks old news but the Salesforce actually bought another Commerce platform called Commerce cloudcraze,
that is a pure B2B e-commerce platform that was actually built on top of the.
The Salesforce tax so so so sources continuing to evolve there there, strategy in some really interesting ways as well so this.

[24:16] We kind of been static in the Commerce platform Wars for a little while and this is you know where this this month we're seeing some pretty exciting disruption so I'm I'm eager to see how it all plays out.

[24:27] Yeah who knows maybe sap and Oracle decide they could always use one more platform.

[24:32] Yes I do like.

[24:36] Clearly these platforms are all have a significant amount of volume through it and you know a lot of the Legacy sites are on them I think it's an open question whether these any of these Legacy platforms are the future of the business like there's,
there's an argument that we're at the the most recent trend is I'll call it done platforming is actually moving off of these like shrink wrap full-featured e-commerce platforms.
And moving to a lighter-weight set of apis and microservices you know you talked to a lot of cio's and that's the.
The the kind of stacked that they're more interested in but we don't have a ton of great examples of big retailers like embracing that model just yet so it'll it'll be interesting to see if.
Any of these big Legacy platforms kind of transform in that direction or whether they.
They continue to win out against that there's newer architectures or whether some of these up-and-coming architectures can can kind of disrupt the market.

[25:34] But that's a great place to retrieve the quick-hit cuz I know we wanted to get it a short quick read out for a listeners in as things evolve what will you know.
Potentially do a deeper dive on some of these platforms down the road but if you have any questions about the platforms or would like to discuss this and more length.
We certainly encourage you to jump on our Facebook page and the post a question and will,
will get back to you as always if you found any value in this heartache we would love it if you jump over to iTunes and give us a a 5-star review.

[26:07] Thanks for joining us everyone and remember if you're going to sniff the tires make sure the car is not running.

[26:14] And while you're doing that have a happy commercing.

May 22, 2018

EP132 - NPD Idea 2018 Recap 

NPD held it's semi-annual customer conference, Idea in Austin Texas on May 16th and 17th.  Jason and Scot both presented content at the show.  This weeks episode is a recap of the show.

Entertianment by Runaway June and The Doobie Brothers

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

Episode 132 of the Jason & Scot show was recorded on Monday, May 21st 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.

[0:25] Welcome to the Jason and Scott show this is episode 132 being recorded on Monday May 21st 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Coho Scot Wingo.
[0:39] Jason and welcome back Jason Scott show listeners will Jason we're both back in our local areas here I think your local are you okay.
[0:50] I am I am your correct.
[0:52] I never know where you are these days we were both in Austin recently and we had a real fun trip down there it's rare were in the same city much less at the same conference and we both spoke on separate topics at the NPD idea conference.
[1:08] Did you have fun.
[1:09] I did it was a great conference I enjoyed the conference and of course it's always fun to get to spend some time with you in person I feel like we we talk all the time via VIA the microphone but it's it's fun to actually see you making funny faces when I say stuff.
[1:24] Absolutely yeah it doesn't come over to the the podcast quite as much as in person.
[1:29] No we might have to start doing this as a video Call Me Maybe.
[1:32] Okay so tonight we thought we would there.
[1:39] Wanted to share some of the insights from the show this is a pretty interesting show that we attend and let me kick it off by explaining who is NPD the provides data 2 / 20,
and how this works is because I like Nielsen Nielsen I think does this for cpgs and NPD does it for non CP Jesus how I can I think about it.
Large scale systems across.
Over a thousand retailers that opted into this program that data is all swirled together anonymized and then also mixed in with over 12 million consumer.
For surveys and output of that is really interesting data that they Brands license and retailers to understand things so for example.
Let's say you sell.
[2:31] I don't know what's a good idea if a GoPro style cameras or anything like that action cameras you can use in PD data to see how is your model doing versus the competition.
How you know how much is the number one doing the number to cross different retailers things like that.
Every year they every other year they get some of their top customers together and categories like apparel Automotive Beauty.
Construct Tronics jewelry I sent you everything but cpg and they look at the trends that are shaping the industry.
[3:06] And I've spoken of this a couple times and it was exciting to have you there this year the theme was Under Fire On Fire.
And it's got a clever theme so what are trying to articulate there is.
Retail is under Fire everyone's feeling that but then there are certain segments that are doing really well so there's certain segments that are on fire.
[3:31] Unfortunately had a conflict and I was not able to get down there for the first part of day one but you were there and we're able to attend some really good session you told me about so let's start the recap there on the morning of day 1.
[3:46] So there they kick things off with a bang,
you mention a lot of great brands that end it also tends to be really seen your stakeholders from a lot of the brands and retailers which is kind of cool so it's pretty,
impressive intimate Gathering into the first keynote was actually the CEO of Target Brian Cornell so that's a pretty good gift as we would say in the industry and I'm always.
[4:13] Like obviously I always want to hear what brand has to say it's always it's always great when these guys coming events are willing to share,
[4:21] The CEOs of major retail organizations are super polished and their they certainly don't come here with the intention of giving away any Trade Secrets and they never do so.
You know you got a kind of moderate your expectations you're not likely going to get some.
Revolutionary new announcement from from Brian at a show like this but you know I think it's interesting to hear his his take on on a lot of the things that targets going through in trying to do.
And he spent a lot of his talk.
[4:51] Really talking about the sort of changing role of the store and you know he was pretty damn that he's like hey you know these stories today have all these super important roles we.
Yeah we have customers that come to the store to pick up orders that they placed online we have a lot of curbside pickup now we're using the stores as an inventory location to do same-day deliveries to customers home.
We ship over half our e-commerce orders from the stores to the customer's home you know customers use.
tattoo sort of exploring evaluate products and now many customers want to check to make sure the products are in stock before they come to the store you know all these different use cases of how the target guest wants to use the store.
That are very different than the use cases the guest had.
Even seven years ago when you know most of the newest Target stores were built and so you know he spent a lot of the time talking about the challenges and opportunities of.
You know taking a test or if it was designed to solve one particular set of problems and leveraging it to solve.
A lot of newer very different problems and so I found that interesting.
And then he did Chef to talk a little bit about their their acquisition last year or this year rather for shipped and shipped is.
A delivery service so they are so you can think of the Minnesota personal shoppers before the target acquisition they supported a number of retailers.
[6:26] You could order products from their website they would go to a retail store pick up those products for you and deliver them to your home.
And in so you know I think most of us talk about them is primarily being a same-day delivery option.
And you know Brian to mention that I think that they have curbside pickup.
And over a thousand stores now and then they're quickly moving to same day delivery in a thousand stores leveraging these the shift employees that they have.
They've hired but he is real Focus was.
Did the delivery is the least important part of the the shipped experience that these are the magic of a shift in the reason at Target was particularly interested in and then versus some of the other vendors that into space was.
That ship that had this intimate personal shopper model where they.
They did that try to maintain full-time employees and they would try to send the same employee to the same customer so that all I read them you know I always tried to match up the same shop or with a customer so that that Chopper will get to know the customer overtime.
That communication tools built in the platforms or the Shopper has questions are asked to make substitutions.
They can communicate in real-time and apparently a high percentage of the the shipt personal shoppers are moms and so Brian kind of talked about it being,
a moms to moms service and that the the target gas really value this personal relationship that they were starting to develop with this.
This formerly shipped person personal shopper that's now a core part of the new Target experience.
[8:02] Wrinkled so then after that they followed up with another strong keynote this one was from Google.
[8:10] Answer this is a dude I'm pretty sure this is not the name his mother gave him but he goes by Astro Teller,
and I was familiar with that sir I haven't seen him speak before though and he was I thought he was awesome so she is responsible for the moonshot program at Google,
and you may know more about this than I do but like in general I think of the moonshot program is the portfolio of,
initiatives at Google that are all intended to develop new billion-dollar plus Revenue businesses so like the autonomous vehicles would be.
The the big Marquee thing in the in the moonshot program.
[8:51] Yeah they would they transition to alphabets I think they call it X and then the self-driving is spun out as,
waymo there's a couple other things they've done but inside of their.
[9:08] I think this drones the balloon internet's flying cars that you're so a lot of really wacky stuff in there so.
Plenty of interesting things going on in that that group.
[9:19] And will come back to Wacky but as you can imagine a guy named Astro is pretty good at talking wacky so,
he he he was mainly talking about,
Innovation and he started out by defining this thing that he called level 1 versus level 2 Innovation right and so level 1 Innovation that are like those things that could make your business 10% more successful and the level to Innovation are those things that could make you you know 10 x more successful.
And so you know he's not the only guy talking about 10% versus 10x but his point was.
[9:57] The first time you can't you hear any good 10x idea it's going to sound crazy,
and so like by definition to be successful at these kind of 10x Innovations in any organization you have to be comfortable sounding crazy and you and you have to cultivate environment that safe enough that,
the people are comfortable enough proposing things that sound crazy because he's like you know his is premises fundamentally.
These things that are so disruptive to the business that they could you know Drive 10x growth for the business.
[10:32] Like just are so disruptive that they that they don't sound rational or safe.
Upon you know first consideration and so kind of funny line.
He is a no-show hands in the audience imma give you a choice between two options and you raise your hands and tell me which one you would rather do.
Would you rather do an initiative that has the potential to generate a billion dollars in new revenue for your company but only has a 10% chance of success.
Or would you rather do something that will generate a million dollars but has a guaranteed success and.
Not surprisingly that you know basically everyone in the audience raised her hand and said hey we would rather do the billion dollars with a 10% chance.
Mathematicians on their listen to podcast with quickly note that like the.
The weighted value of a 10 billion dollar opportunity with the 10% chance is still a hundred million dollar opportunity versus a $1000000 opportunity so.
So statistically speaking that that's the.
The better risk but then he asked the funny frog question how many of you fundamentally believe that your boss always supports the billion-dollar opportunity versus the million dollars guarantee.
And way less hands went up and so he's like Alright so.
[11:55] Here here here's my Innovation solution for you you don't need a new innovation strategy you need a new boss.
And so he you know you kind of went into this this whole premise about how organizations are just.
Young wired to avoid risk and that you know even though it's irrational you know most most organizations are are built to reward.
In a biased towards the $1000000 in guaranteed Revenue versus the the 10% chance at a billion dollars shot and how companies that want to be successful you don't have to think differently.
He even kind of went into even some of the things that you you should do to be a successful level to Innovation company.
And you know one of the big points he had there was that you should always tackle the hardest part first.
Any he talked about how that's kind of counterintuitive that a lot of people that you don't want to get a quick success under their belt so you know the tackle the part that seems.
Easiest to do and you know you talked about how when you explain to someone rationally why they should do the hard part first.
They say they kind of get it but it doesn't really change behavior and so he has come up with this kind of silly metaphor.
To make it more apparent he's like if your boss assigned you to get a monkey teach it to recite Shakespeare standing on a pillar.
[13:22] Should you start by teaching the monkey how to recite Shakespeare or should you start by building the pillar.
[13:29] And his his point being like sure you could start by building the pillar and you get a early way in and you can say you are 50% through the problem because you solve one of the two problems.
[13:39] You're never going to teach the monkey how to recite Shakespeare so building the pillar was a complete and utter waste of time whereas if you would have started with the problem of.
Training the monkey to recite Shakespeare you would have quickly learned you cannot impact training monkey to recite Shakespeare.
And therefore you know you would have moved on and then a company that rewards level to innovation.
That that quick learning and failure you know what would have been rewarded versus versus penalized so that was kind of.
[14:09] The premise of his talk he was a super engaging heads funny antidotes.
My favorite part of his presentation was definitely the off-script moment he he walked through a bunch of.
Future technologies that he feels like are going to create 10x opportunities for fur companies so he was talking about bioengineering he's talking about it and he wasn't so much selling any of these specific ideas but just talking about how.
They trigger these kind of 10x ideas and you know some of the things that you might do with them sound sound crazy at first,
and one of the points you if you wanted to make was about you know some changes to cybersecurity and so is a precursor he said he he asked everyone like,
Teresa hand if they were you know primarily concerned about cyber-security today and,
how much snow in in the room raised their hand and it was it was his reaction was hysterical he it was kind of a No-No moments,
and he's like he's like oh my God forget all this stuff about innovation.
I have bad news for you the bad guy is already in your network like you've already been breached.
I didn't realize this wasn't already coming. And so this whole whole like absolutely correct narrative about how.
You know sophisticated intrusion has gotten and how you know these kids that attend that the hacker conference is if I break into much more secure networks than retailer networks for fun and how like all these networks are almost certainly already breached in there already people inside your network.
[15:44] And that if you don't have a business model to protect your customers data when you've already been breached you know you're probably in Trouble In fairness to the attendees,
you know he went right after Brian Cornell from Target so you know a ton of target people were in the audience and if you work at Target and you you you been the victim of the very public breach that had a material impact on your business,
you probably don't in a public room raise your hand and say hey I'm super concerned about cyber-security right so you know maybe maybe people just felt like it was inappropriate,
to share that concern publicly and that's why they didn't respond or maybe they had question-answering fatigue by that point.
But it was a funny diatribe that Astro went off on and and I certainly true like we all should act like like the bad guys already internet work.
[16:35] Got it yet maybe it's cuz Brands a lot of brands of these conferences are pretty early on their direct consumer turning so maybe they may they're not even really thinking transaction websites maybe while they're not retailers in room should be pretty stuff.
[16:51] Yeah and I will do it on another show that there been a lot more breaches and in retail in the last couple months in particular Avengers there a lot of retailers rely on it been breached and it's doing a black eye at a Best Buy in Sears in a bunch of others.
[17:05] Yeah but what I find interesting is it's the ones I've seen usually are not through the Commerce side because the Commerce sides kind of got more thought around this usually is to the physical point of sale which is the entry.
[17:18] Yet the physical plant cells have been a disaster and then some of these recent ones were where Aunt like ancillary things like the.
The chat system that the retailer uses for customer service that you know you can also change an order via chat and so there's a Commerce function in there and your point is.
It's not leveraging the same technology as the normal e-commerce site and doesn't you know apparently and in several cases didn't have the same level of security.
[17:45] Cool and then who was up after Google.
[17:49] So then the afternoon keynote and this is all on Wednesday so Wednesday was kind of a full day I think most of the attendees maybe showed up Tuesday night or early Wednesday morning.
Tuesday afternoon keynote after lunch it was a gentleman Michael Dart who's at the a t Kearney and.
He has written a book called retail seismic shift how to shift faster respond better and when customer loyalty and I want to see it came out.
Late last year maybe like November or so so it's probably about 6 months old though.
[18:28] And so he did it talk about consumers of the future and had a lot of good points in it I think we're going to try to get him on the show here in the upcoming episode.
[18:38] Yes so maybe we should let's give just a little taste and then we'll.
[18:43] So a couple of the things that jumped out of me and that's that's got subtle way of saying that we're going to slow an interesting thing I just never thought about is one of the trans he talks about his dematerialization which is this sort of shift.
From atoms to pixels.
And he had an interesting stat that in order to create a dollar of GDP in 1930 required about 4 kg of material.
Like you had to make into something to sell to generated our GDP.
That that same GDP in 1990 so 60 years later you can make with one kilogram so so the amount of of atoms I got cut down by 1/4.
Only 25% of the atoms are required 60 years later you know fast forward today and you only need a hundred mg so one tenth of what you needed in 1990 in so there's that just.
You know this this strong shift in the economy away from from Material Goods driving the the economy.
[19:47] He you know then kind of went into the the bifurcation topic that we talked about a few times on the show so you know he had to stab that 65% of the.
Of the population was in the middle class in the 1970s and today it's only about 40% of the population is in the.
The middle class so you're getting you know Uber rich people and poor people and you know his his promises one of the ways that that plays out in.
Retail is you have these on one end of the spectrum price base retailers are really focus on offering low price and that cohort a Retailer's he.
Believe have grown 35% is there is there five year growth rate.
[20:28] For the price face retailer 37% on the other end of the spectrum the luxury premium brands of actually grown even better at like 80%.
And all the retailers in between that he would call the balance retailers that aren't like aggressively focused on price and aggressively focused on luxury experiences have only grown at 2% so it's sort of showing the.
The growth and Retail is exactly mirror the bifurcation of the population of we've had Casey well and brought back from the Delight talking about that on the show as well.
You know you had some interesting statistics on on malls we talked a lot about how the a malls are doing a lot better than the rest of the malls but he actually has some statistics that all malls are down 9% it's just.
The a malls are traffic is down 9% over the last couple years from a better starting point so they've gone from like growing to flatware as the BNC malls have gone from Flat to losing 10% of their traffic in the last 2 years.
[21:30] Yeah on the malls he also I'll put it out as a teaser from having the show he had the the.
[21:38] Worst Mulligan prediction I've heard so he had the highest number of Mall closures that he's thinking are going to happen so I was a little surprised by that but that's interesting.
[21:50] But it is true that like only about like 20% of the malls would be in this like a category so I think did he say their UE thought about a thousand miles we get taken out of the system is that when I'm remembering 13.
[22:03] I think you said 1300 out of like 1500 I think there's only like 200 remaining.
[22:08] So that's that does still mirror that kind of a versus B and C ratio.
Sign out we'll talk about another show is the Planning Commission in Miami-Dade Florida just approved a new mall project which they're very few of those in the world,
and this mall would actually be the largest mall in the US who would be bigger than the Mall of America in Minneapolis and so that.
Can a bucking the the the mall again in friend is we could have a new bigger motor than we've ever seen before which would be an interesting evolution.
And then the last thing I'll touch on from.
Michael Jordan's presentation he was talking about this Matrix that he called the the con Matrix.
Is developed by this one on barbercon who's the professor at Ward and she she would have booked a couple years ago called the shopping Revolution.
And in her world like.
You could draw this 2 by 2 Matrix that all retailers fit in on the left side of the Matrix are our retailers that are focused on product benefits and so I'm proud of benefits on one end of the spectrum you have.
[23:16] People that focus on The Prestige of the brand and so she would use like.
Louis Vuitton or Warby Parker Saks Fifth Avenue or Zara Nike is kind of brand.
Branda Advocates there and she would use like Eataly or Sephora as experience face retailers as the other end of that that.
That extreme in in the other side of the Matrix would be people that focus on customer experience and their the.
The spectrum is from people that primarily focus on a low price so she's got like Costco Walmart TJ Maxx in Burlington and that.
That quadrant and then frictionless.
As the as the other end of that spectrum and she has Amazon is the primary example of a frictionless and so kind of a different Spectrum this would be way more apparent if I were able to drop for you on the podcast so maybe I'll try to put a picture in the.
In the show notes but as as you'll hear a lot of retail pendants talked about like another 10 to be the Spectrum there tend to be areas.
Any Spectrum where retailers can really Thrive and do well and then the the retailers that are really struggling and we talked about Molly get in and we talked about retailers that are seeing negative growth.
It's almost always the case that there.
[24:38] The ones that have fall in the middle of the spectrum's and haven't really made a committed effort to own.
You know one of one of the the pillars and so this this was another one of these Matrix is where.
Where that you know you kind of look at at her Marquis examples in each each of the quadrants and say yeah that makes perfect sense and then you'd say you know folks that kind of fall in the middle of this this to buy to our bar probably in trouble and.
And you know at the moment that that's sort of what's playing at in the marketplace.
[25:10] Yeah so then that was all really warm up so those were those were a sort of the three opening acts Target Google,
Michael dark,
because then we all went to a even bigger room where they had their biggest session of the show which is this whole session about marketplaces and sign up for our listeners Scott,
is a second-year Scott's done this talk and it was super annoying for me because every time I would talk to the the women planning the show about my session that say Hey registrations great you're doing really well you're right the second most popular session,
but you're way behind Scott.
[25:51] Yep so that was fun I was I was coaching them to make sure that you knew that I was figured a little fun competition there would be.
[26:03] Yes and I I was a little just cuz you did get to pick your topic and I sort of I I accepted a topic they put in the agenda.
[26:11] But you knocked it out of the park will get to that in the second yes or no.
[26:13] Thanks man so what did you talk about in marketplaces is that a thing.
[26:17] It is yep so two years ago and I did my skin.
[26:22] Standard Amazon talk which is essentially for long-time listeners if you go way back to episode 24 we did the Amazon Deep dive so that's kind of a lot of the same content,
that I gave that talk and this time they wanted to kind of widened aperture and talk about marketplaces so just just a quick summary about what we talked about.
And what will do is.
I'll send you a pediatrician that we can put kind of a copy to it in the link to it in the show notes if people want to go to the presentation so.
The Purge for Marketplace is really interesting because you know you and I've been at the salon time I've been at this Marketplace thing for 20 years.
[27:02] And what I found is there's a huge desire for Content that.
[27:07] Pretty basic for what a retailer or a seller with the Cabana Marketplace because what's happening is all these brands are starting to think about going Direct.
And they're just learning all the basics that that you know.
A retailer or a seller has already there I'm kind of version 8 these guys are on Virgin once so.
But it is always fun to kind of go back and revisit these things because the world has changed so much just a simple thing and you and I had a fun to scream about the marketplace and how do you do to find it so for example selling a car on over.
[27:42] Talk is that a Marketplace or not I would say by strict definition probably not because.
Well my definition marketplaces you sell off of your website.
There's transparency for the consumer who you're buying from and then the business model is a percentage kind of a business model not a traditional wholesale markup so once you have that wholesale markup in there it's just a drop ship relationship.
[28:07] First party retailer not a Marketplace so so in this talk we we probably talked about yo.
Taking a step back and talk about consumers what do they want yeah we've talked about that a lot on the show don't think they'll be any surprises there then what is a Marketplace.
[28:23] So just answer that question the types of marketplaces so you have pure plays like eBay you have hybrids like Amazon you've got a new social ones you got at base now.
and then we talked about the pros and cons of selling on Marketplace and then some takeaways for the Brand's so it was,
when I'm in the middle of training I can never remember the questions I don't know if you recall any that were Salient for listeners but.
There was way more questions we had time for and then we had to go to a break and then had a lot of good discussions around marketplaces.
[29:00] Yeah and let the record show I think you like I certainly agree with your definition that like,
Wayfair is a drop-ship program more so than a Marketplace but what you call and Marketplace.
That I totally understand after you explained it but like I think myself in a lot of other people don't immediately think of his Marketplace are some of the the social selling models in like when Google sells products through pla Zoar,
shoppable pins on Pinterest or some of those things and then once you draw the picture I totally get out it is a Marketplace but I think those are the the the the one that outliers that kind of surprise,
are the sneaky marketplaces if you well.
[29:40] Yeah and when you're selling on eBay and Amazon.
Don Juan differentiator is day or The Merchant of record which do I think about is when the consumer gets their credit card it says Amazon not you know Jason's Mouse shop so.
But then to July these new models they're using so his new payment systems like a striper Braintree and they're asking you to,
the merchant to now be The Merchant of record so it's kind of an interesting hybrid in that way.
But it still has a percent of sales model there still a fair amount transparency does Consumer they're dealing with a third party so I.
I continue to put those in the marketplace bucket but you know a lot of people don't.
Realize when you're using things like Wanelo or there's this many of these now there's,
we are well over 200 Market places that we track it down visor and more everyday and there's all kinds of really interesting models there is super vertical ones like.
Reverb for professional music.
[30:42] Or there's some for you know that dinner Morpher city-dwellers that are in the apparel category and it's kind of like high-end apparel so you're a pair of sunglasses that.
Probably you and I wouldn't buy for $600 but there's someone out there that that is into those kinds of things.
[30:58] Yep and I think one of the marketplaces that you introduced a lot of the audience to for the first time probably was wish and I happened to notice they're running like national tv ads now.
[31:10] Yeah yeah wishes really,
yeah they don't disclose a lot but there's all these rumors that they have crossed over a billion dollars at um they're spending a lot of money on National branding so they've done,
I need to be a sponsorship so drawn symbol logos their logos are on jerseys they're doing a pretty big ad campaign around their Marketplace.
I think of them as a cross-border Marketplace some most product available on wish is being sold direct from China and they.
If I'm in a lot of supply chain things and whatnot.
[31:44] The result is you get super cheap product which really applies that value or any consumer we talked about and bifurcation.
But the trade-off is cuz a lot of its kind of on the literal slow boat from China it does take awhile to get there so it's one of those kind of trade-offs that consumers seem to be willing to make,
I'm the one thing I worry about witches Amazon is now I got kind of all the same stuff at the same price but then it's an FBA so now you get it 2 days so it can be interesting to see how wish does against that.
Head-on competition.
[32:16] Yeah yeah the the television that I noticed,
it was like a dad that had bought like SmartWatches for three kids and they each got like 10 bucks and so the kids are you know it's it's he's low-cost like sort of surprise and Delight moments.
But I did have a take away from their their big NBA sponsorship is if you if you are building a business and you decide to use it professional sports endorsements,
make sure the players know what the heck you do because there's some really funny videos on YouTube of like reporters asking.
LA Lakers what which isn't as they're wearing The Witcher logo on their uniform and they they have literally no idea.
[32:54] And then after my session we went to a one that you were excited about which was the jinsy panel.
[33:03] Yeah I probably made Scott go to this one and.
You know this is kind of a common model at a lot of shows is you you bring actual Generation Z folks.
To talk to the audience and like help help give them the more accurate you know representation of of this.
This Persona that you don't lot of Market marketers are targeting and what what's a little different about the MPD version like very often.
Literally like the show organizers will go to a high school and get like five regular high schoolers and have you know some moderator ask them questions about how they shop or what brands they like and whether they like going to malls or not.
In this case these are almost I'll call them professional Generation Z spokespeople.
There's a guy I got to meet a couple of times now Connor Blakely who.
I don't I don't know how old he is but you know he's probably like 19 and he started a company called youth logic and they essentially cell,
need this kind of advisory service to Brands and so is a brand you you higher.
Connor and he sends some genze folks to your office to.
Serta evaluate your offerings and and talk about you know how they're seen through the the jimsey wins so Connor was on the panel one one of his employees Madison bringman was on the panel and then.
[34:34] Another gen Z expert that it start his own company called Jen's iguru a guy named Jonah Stillman and I think Jonah actually got Mark Cuban to invest in his company.
So we have these kind of three genzie's they were interviewed by the moderator who is Alexandria Levitt.
I wrote a book about about some some other customer to cohorts in the past.
Lacerta interviewing and they're all the typical funny moments like they.
You know it some point they talk about olds and you know referencing like parents that that don't get something and that you know they.
They talked about super old people and they were talking about people that were like 35 and older which you know probably was every single person in the in the audience.
There's a lot of of a interesting dialogue about.
Authenticity and purpose so you know like there's this notion that like genze like brands with a purpose like.
The Tom shoes you know buy one get one kind of program but how Jen's he's really good at smelling out these inauthentic purposes.
And that you know a lot of Brands Make Mistakes by having these inauthentic purposes Connor use one example of a you know company that bought a Super Bowl ad.
Do I got a message that they are that they have an environmentally friendly purpose and conures like.
[36:06] Hey if you really have an environmentally friendly purpose you would have wasted five million dollars on a Superbowl and and his you know kind of thing was,
what you have to understand is jenzie grew up digital they've been bombarded with all these messages after multitask much more than any previous generation and so is a result they're much better at curating information and he he going to bluntly put it,
like we we have more attuned BS meters than previous cohorts,
and so you know you just have to be really careful about being being inauthentic with him and so there's some interesting takeaways,
you know I thought the panel did a good job but I personally I do Wonder,
if this is the last cohort we ever have to talk about because I like I do have this kind of premise that all the behaviors they were describing,
like I can find you 60 year old to behave exactly the same way and in the old world of like television advertising like one of the only things we can know about her audience was how old they were and so we could kind of Taylor are commercials to a particular age,
but today I feel like we have much more granular tools to the market to individuals and so I just I just wonder if,
is like the differences between Millennials and gen Z are are ever going to be as important as as you know once the the differences between Boomers and and gen-xers was.
[37:33] Yeah I kind of came away from the panel with called.
Cognitive dissonance where says there's like six examples where they would say one thing and then they would like say something that totally countered it and it was really hard.
To get your head around so the one example is in the early part.
UConn reslife Genji's love them all is great I got them all the time and then someone else then several times you can tell that they haven't been to the mall a very long time because you know the guy was trying to describe what.
Abercrombie looks like now and he couldn't really kind of articulated cuz I don't think he's been in an Abercrombie in a long time and then some.
[38:10] Fun of Abercrombie from like 4 years ago but you're right like they have chain.
[38:13] And then someone said if you had $100 what would you do in one guys like buy stuff in fortnite and you know the girl was like I buy some Nike stuff but she's not going to go to the mall for that she'll go to.
I assumed she'd order on.
[38:27] She also said you know I just buy everything from Amazon and I know from my Gins ears that you don't got to college age kids they do not like to go to the mall and you really have to kind of like.
Dragon alert.
So there's some that was kind of one example there's like six or seven other ones were just kind of like you just counteracted what you just said like 6 minutes ago. I don't know it's hard to nail down if I can.
There's no actual thing to do.
[38:56] Yeah no end to me part of that is like,
I'm sure you can find Jen's ears that do go to the mall like an N relative to other cohorts yeah there are there are more 16 year old kids at the mall then there are 60 year olds at the mall,
but like it's going down across all cohorts and and you know the point is being today you can know which 10,
gen Z years really do want to go to the mall and you can have a message for them and you can know which ones like by 95% of the purchases on Amazon and you can have a different message for them so,
that's kind of my death of the personas as we move into a one-to-one world.
[39:36] Yeah I did not one thing the folks at NPD do a great job at is the entertainment at their shows is top-notch so they shuttle us over to Austin sea life which is exciting I never been there before I and we saw,
a country music band which was runaway June and then the Doobie Brothers and it was kind of a long day so I actually enjoyed the opening acts kind of more than the closing act but that was just going to be so that was good.
[40:04] Yeah and I I know nothing about country music so I had never heard of them so that way it's got a fun and I think it's a trio of young women that sing harmonies and one of the women was the granddaughter of John Wayne.
[40:18] Yeah that was kind of neat neat fun fact.
[40:22] So then we that was day one and then Day 2 began with you drinking three venti latte and then we went to go see Don Unser he is the biggest titles VP of sales there in PD he's the head sales guy and in one of the guys that leads there vertical teams and he had a really good presentation of some of the insights they've gotten from their data.
[40:49] And so.
The a Scott was nice enough to have bought at least one of those lattes for me that morning said thank you very much I appreciated that I had to meet early for breakfast with my panel so that was super nice of you.
So MPD because they have access to this really rich data set Don and in particular is super well known for doing these retail Trends Decks that leverage update a lot and so this was kind of a.
A permeation of that like he had some key retail Trends from the date in there and then you also had some.
Hypothesis about like how consumers were actually changing as a result of some of these Trends which that was maybe a new spin on it.
So is you mentioned upfront MPD tracks these 20 core categories across a whole bunch of retailers.
And so it was the first thing he shows is MPD money so I'd which is kind of.
How big each of the categories that they track is and whether it's growing or shrinking in so this was.
A March 2018 view looking at growth over the last 12 months and you had you know category like the biggest category with by far the most significant growth for them as video games.
So that category was growing at 18.4%.
And it's a decent-size market it's like a 36 billion dollar market as they is they Define it Prestige Beauty was growing at 9.4% small appliances were growing at 7% Auto Parts at 5%.
[42:24] Toys at 5%.
Consumer electronics at 4.7% a house where is it 3.8 and then you kind of dropped in all these categories that had.
Pretty nominal gross box office supplies Footwear perishable grocery Dry Goods Health and Beauty AIDS.
And then you got into the bottom categories that were laggards for them apparel was basically flat accessories which is like sunglasses and things like that was down 2%.
And then the big loser which is probably no surprise to anyone as Video Entertainment.
Which young for most of The 3 Tails used to be movies that they sold on these plastic circle is called DVDs.
And that that was way down at like 12% so.
All told if you total up all 20 categories and MPD follows their following about 1.8 trillion dollars in consumer spending.
All retails probably about 3.8 trillion dollars so it's a good chunk of all consumer spending and on the aggregate all those categories grew at 1.8%.
You know but it's interesting to know that you know they're these big opportunities and in things like video games and Beauty less opportunities and apparel and accessories.
And if you're a subscriber to MPD.
That the even more granular view which Don didn't get into is super important cuz you look at consumer electronics and you say oh my gosh it's growing at 4.7% that's good news but then you look you look at the Grand your data and you see that like.
[43:54] You know flat screen TVs which is the bulk of of the market you know it's kind of flat to down and it's things like headphones and smart smart speakers that are responsible for all the growth in the Consumer Electronics category,
that's really kind of the the magic value of NPD is having that that.
Granular look at what's happening in subcategories what's growing what's ranking you know what's on Trend versus off of trend.
The one of the things that Don broke out that was kind of a new-look that I haven't seen them talk about before is that this concept of.
Distribution of of Shoppers based on the amount of their spend is online versus offline so they so.
See if I can describe this in a way that this possible to follow there's a chunk of the u.s. population that spends less than 10% of their their makes less than 10% of their purchases online.
[44:55] And that chunk is 43% of all consumers spend less than 10% online then there's a cohort that's been 10 to 25% online that junk is 18% of the population another 20%.
[45:10] 20% spend 25 to 50% online another 13%.
Percent spend 50 to 75% online and then they're 6% of the population that spends more than 75% of their budget online,
and said you know they had this kind of interesting distribution and you say oh my gosh the overwhelming majority of consumers 43%.
Still you know which is the biggest by far one of these cohorts still spend less than 10% of their daughters online.
You know the easy take away there is there's a lot more online gross and you don't call back to Michael Dart from the day before like he made the point.
Nobody knows what that.
What the final equilibrium will be on online versus offline shopping like Michael postulated that it could be 50/50 eventually but what he says I do know is.
That is a one way Road people are only moving from offline to online that there are not people moving from online back to us.
Which only makes some sense so.
[46:12] You take mpd's new idea of breaking down the distribution of spender of Shoppers by these different different spending patterns.
And then he you didn't break it down by retailer and you get some really interesting insights right so.
Less than 1% of Amazon Shoppers spend less than 10% of their budget online so that big 43%.
[46:36] Amazon only has 1% of those guys like those guys are not Amazon Choppers yet which is like frankly great news for Amazon.
And Walmart is exactly the opposite right like the biggest chunk of Walmart shoppers spend.
Less than 10% of their of their budget online and a tiny sliver of the Walmart Shopper spend 75% online and so you kind of you know those are the two extremes.
Amazon heavily biased towards predominately online Shoppers Walmart heavily biased towards very casual online Choppers.
And then you know what was interesting as they showed Target Best Buy in Kohl's which had surprisingly even distribution across all of those different colored so it's kind of interesting Target Best Buy in Kohl's.
[47:25] Do just about as well with the the guys that spend 75% of their budget on line is they do with it that the women that's been less than 10% online versus.
Walmart and Amazon you know I tended to be heavily bifurcated and so I thought I thought that was sort of an interesting new.
New dimension that I hadn't really thought about before.
[47:46] Yeah it was really cool it kind of need to take away was you know once there's another one where.
[47:55] The big guy is so close Target at such a loss share as people went towards online in Amazon.
With exception of Best Buy so it showed in one takeaway was Best Buy seem so kind of figured out how to stop erosion so you're what are they doing to do that and then you know there's definitely this battle for that 43% of people that are.
We think we'll come online and your Walmart play wants to keep them in the Walmart family in Amazon,
wants to extract them over onto Prime and that's going to be a really interesting Battle Ground over the next five years was one of my takeaway isn't it was just,
we heard Mark Laurie talk about it Amazon hasn't really talked about specifically but some of the moves they've made with going to monthly prime number you know.
[48:38] Paying Prime fees with cats all that stuff has been kind of along the same lines so it's going to be interesting to watch that that battle come to play.
[48:46] Yeah yeah for sure and you know it.
[48:51] I mean I always enjoy Downs presentations cuz I just think the the date is super valuable and it's like you know we have all these urban legends about how things are doing.
Let there be super useful data sets the MPD provides like there's another one I didn't cover but that they do frequently.
Where they show the fastest-growing subcategories right and that's all you know much more important than the big categories are you find out there like a shoes my beat Footwear might be flat.
[49:21] Performance running shoes is a huge growth opportunity right now.
And you know they even particularly talked about how in the subcategories.
You can really see trends go viral so I can example that use is like Office Products is not a particular growth industry right now but.
Elmer's Glue like in that the adhesive category is booming.
And the reason is booming for for you no parents that don't have have like sub 10 year old children at home is there's this huge trend on YouTube of kids making goo.
And slime rather yeah.
And you know they're all these different ways to make an all these interesting you know things kids are doing with slime in the primary ingredient for all this slime is Elmer's glue and before this trend.
Office product companies mainly sold for Nas you know bottles of Elmer's glue that you'd use to glue paper together and now they're all selling 5-gallon bottles of this this this glue and you know selling a much higher quantities.
[50:31] Yeah it sucks I won't get into it it's a problem so I'm fine just taking over our lives.
[50:36] Yeah it's interesting to see those Trends in and be able to react to this trans another one is like the instapot is the is this you no booming small cooking appliance which has you know lifted the whole small appliances category at the MoMA.
[50:52] So that was the highlight there and then there was some random guy talking about last mile did you go to them.
[51:02] I did I did I was actually the moderator for that one.
[51:05] Oh yeah yeah.
[51:07] Yes it might have been hard for you to follow because they had to like shrink down the room a lot from the earlier Marketplace one you know not make it look empty with with just interested in something as trivial as.
You know how you get the goods to the consumer.
[51:24] Is more intimate setting than the marketplace.
[51:27] Exactly.
[51:28] But I thought we had a good day so so I had three subject matter experts on the panel we had Jamie sadlowski who's the VP of customer experience at Walmart VP of marketing.
Owns the Indian customer experience for Walmart and this is you know Scott Walmart is doing you know a ton of new last-mile experiences.
We had a Jarren Waldman who's the founder of curbside so there a vendor.
Curbside pickup programs for a bunch of retailers including like Sephora Nordstrom CVS.
And Jared has kind of cool past he had the it started a mobile geolocation company that ultimately got bought by Apple and so Jaron actually ran the the mobile geolocation team at Apple for like 4 years and.
You know a big part of the value proposition of curbside is that there's some really smart technology for using your phone to geo-locate you and get your order ready you know as you pull into the parking lot.
So he had had some good good povs about.
What customer expectations were in in The Last Mile and then we had a gentleman named Warren schauble who's from.
A consulting firm called Gwen industries that specialize in drum Technologies.
And Gwen is his bosses name who was the former president of DJI so you know certainly credible.
[53:04] Drones face but these guys are selling like industrial drones for a lot of B2B uses.
And of course you know drones are fake only talked about in The Last Mile and and I was certain pleasantly surprised orang was was.
Turtle refreshingly candid that like.
Really the regulatory environment in the u.s. is is we we are miles away from drones being an important part of the The Last Mile solution in the us cuz we're.
Where you know there's still some very significant regulatory barriers but he did mention that most of the other technical barriers that you know the ability to build these practical drones that can carry heavy payloads.
And the software capabilities to do the traffic management and delivery like you know he felt like those problems.
Used to be big big technical challenges and essentially are completely solved and so you know in his mind at this point.
[54:01] That the one barrier to two drones being important part of of The Last Mile are regulatory but he doesn't think there's going to be a resolution of that anytime soon.
We did get to talk a little bit about autonomous vehicles and and you know their role in the last month which was interesting.
The big takeaway from Jaren and Jamie is kind of going back to this Persona thing that like.
You know the old world where we have like buy online pickup in-store consumers versus home delivery consumers versus in-store consumers and what you know both curbside and Walmart it started independently learned is.
[54:38] Every consumer is a user of all these different experiences and that it's it's just really based on context and that there's a.
In a soccer mom that loves curbside pickup for her regular groceries but you know how to certain occasions when she wants home delivery and she really wants to shop in the store for her own Christmas dinner meal so.
You know thinking about.
All these experiences being important in different context for the Shopper as opposed to thinking about these experiences being the one and only delivery method that different consumers would use I thought was pretty interesting.
[55:12] You just back up a little bit I think it'd be good for listeners you had a great.
It kind of opening setup which was good and you talked about the existing carriers and how much package volume they can handle and how much they're growing versus e-commerce maybe maybe run to that.
High level for folks.
[55:32] Yeah yeah so we've talked about this at a high-level a couple times before on the show.
The in general e-commerce is growing at you know call it 15%.
And that the carriers are growing their capacity at about 8%.
So you know we we we have a clear mismatch there.
For this show I showed some more granular data that Kalin and put together and so you kind of paint a picture for for how eCommerce companies are using the different carriers and and you know don't you know,
the primary carrier that Amazon uses for the last mile is the US Post Office.
And that's because their fulfillment center so close to the consumer that Amazon's big problem is not.
[56:22] Moving the goods across the country they they mostly do that in their own private Network now they're their big problem is the Last Mile and the US post office has the by far the most economical.
Route based delivery solution for that last Mile and so you're saying like 44% from memory of of all of us.
Amazon packages get delivered by the US post office then UPS of the big air air carrier for Amazon.
FedEx does do some deliveries but it's only like 5% and then you know a growing chunk I think it's like between 13 and 15% of Amazon.
Packages get delivered by Amazon Zone people in that that's obviously a growing percentage.
So then you break down that like the US Post Office is growing at like,
their capacity light 8% UPS and FedEx are growing actually even slower and you go man for for these big e-commerce sites like Amazon and Walmart that are growing like 35%.
They're they're consuming much more capacity than the post office and and ups are growing and so you know you think about Amazon investing in their own delivery Network,
that's not too bad just reduced costs or to threaten the viability of of the commercial carriers it's really cuz they,
they simply enough to meet their own growth expectations need more capacity than they can buy on the open market.
[57:53] Yeah I thought that was so so super insightful and really cheated up nice and I just kidding it was a really good paneling.
Learned a ton.
I wanted to ask her side guy a couple things that he mentioned they're doing a lot more food curbside delivery in when he starting about food now these places have a curbside vendor like curbside and they've got six or seven other kind of pickup and delivery places at one point,
do like.
[58:20] Does the supply chain that the soccer they're using consolidate because you don't need restaurants think it like the six iPad sitting there so let's try to get Jaron on the show and see what he has to say about that kind of thing.
[58:31] Yeah yeah that'd be awesome we we we did not,
talk about that specific question so that be great when I asked him he definitely did take usra sort of the fastest growing component and I do think.
That like he's providing.
Software that essentially the retailer buys and owns versus a lot of those delivery services are sort of outsourced Solutions and be well you're certainly right like there's a but you know a,
a desk full of tools that these are restaurants in Key West hours are using at the moment.
[59:04] Cool and then your panel wrapped up and then I had to shoot out and then did you get a chance to see the rest of the show.
[59:13] I didn't say there was one other.
Breakout session that I did not get to attend but like I should we should have said for each of these hours during your session in my session there were a couple topics that you could choose then obviously we we were both you know the.
The most interesting one to choose.
[59:34] There a couple couple sessions during the last one there was an interesting case study on Sony.
Sort of rebounding from really losing a lot of their brand Prestige to focusing on making some really hard decisions to get out of some categories and reinvest in others.
I heard I did not get to attend that but I heard it was interesting and then the final Keynote.
Then unfortunately a work emergency called me away for was the A-Rod was in town and and.
You know talked a little bit about his own entrepreneurial Journey which I imagine was was interest.
[1:00:14] Yeah I wonder if Jayla was there.
[1:00:17] I did not see her yet I feel like she would have drop me a line if she was in town but.
I feel like it's a good thing that we didn't have a deep brief recap on a ride because it's already happened again we've used up a perfectly good hour of our listeners time.
So if you have any questions we didn't get to or or if you're at the show yourself or had any any comments we would love to hear.
Your questions on Facebook and we can keep the conversation going there as always if you enjoy this show you know it only takes about 10 seconds of your life to jump over to iTunes and give us that 5-star review.
That that really helps us with visibility on the podcast and we we really do appreciate.
[1:00:59] Yep thanks everyone for listening and thanks to the team it in PD for putting on a great conference and for having Jason and I are speakers we really enjoyed the show and appreciated the opportunity.
[1:01:09] I absolutely in until next time happy commercing.

May 12, 2018

This episode catches up on the latest e-commerce news

Walmart News

  • Walmart Acquires 77% of India E-Commerce Site FlipKart
  • launch
  • Website Redesign
  • New Delivery Partners Doordash, Postmates

Amazon News

  • Sears Tire Partnership
  • Kohls traffic is up at Amazon Stores
  • Chicos says presence on Amazon is driving more store traffic

Other News

  • Google IO
  • Facebook F8

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

Episode 131 of the Jason & Scot show was recorded on Thursday, May 10th 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.


[0:25] Welcome to the Jason and Scott show this is episode 131 being recorded on Thursday May 10th,
2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

[0:40] Hey Jason and welcome back Jason Scott show listeners.
Jason our podcast schedule did not allow for it so we missed May 4th so I'm going to use this opportunity to hit rewind go in the time machine and wish you a late fee May 4th May the force be with you.

[0:59] Thanks.
As I hope you know I was thinking of you on May 4th I was kind of sad that we didn't get a chance to talk and I was carefully following your social media feeds to see if you would like post any any pictures of you like,
with memorabilia are in costume or something so what what what did you do for May 4th.

[1:18] Yeah I'm soaps first of all I don't know if you know or not but May 1st kind of controversy in the hardcore Star Wars community.
I don't have a lot of passion on this but a lot of people feel like it's kind of like our Hallmark holiday in the Star Wars world because the movie came out on May 25th so everyone's like what the heck made for Seattle.
Funny pun but we should really be celebrating May 25th so just some fun diversion Star Wars.
Factor for cocktail parties so I celebrated.
I buy first I do have about cosplayer so I was not a Princess Leah or anything this year but I do have some pretty awesome Crocs from our friends at Crocs have some Stormtroopers and some cheese,
this year I decided,
tour of the Stormtroopers which was exciting and then I have a new Han Solo movie jacket that I got that's pretty cool it's kind of retro 70s kind of kick,
jacket exciting thing for me on May 4th was I had an inkling that tickets will go on sale for the Han Solo movie so I was able to jump on those work some Fandango Magic,
and secure up,
have good set of tickets for myself in a bunch of friends so going to go see that on the 24th at 7 p.m. you're welcome to fly in from Chicago and see what this would love to have you.

[2:41] If I can get a hall pass from my wife I'm totally doing it.

[2:45] What you can bring her and Beta key we got room for all you guys.

[2:48] That would be fun in honor of you I missed May 4th but on May 5th I took baby geek to Toys R Us cuz I was kind of worried.
That he was never going to get to go to a Toys R Us and I I tried very hard to interest him in the the land speeder bed II it was not a sale.

[3:10] What is just couldn't did like it.

[3:14] So we spent like he's very into Vehicles so we spent about 4 hours in the little electric vehicle section of Toys R Us.
And I got heat he drove everything from the like Frozen themed Beetle through the the yellow Lamborghini and he on his own volition pics.
This GM Silverado two seater pickup truck.

[3:45] Yeah which made my my in-laws from the Flint Michigan extremely extremely proud and so we we bought this.
The Tesla of a toys right like it's an electric vehicle and.
I am now officially the last member of this this long-standing Detroit family to build a GM vehicle.

[4:07] Cooley schedule pickup truck you can pull off shotgun on the back there real cowboys.

[4:13] Exactly there's no gun rack yet but let me just say it was a we live right across the street from a park so we drive it over to that Park and he's already picked up about the four ladies that he's taken for a ride back he was very smart took down the two seater.

[4:27] Nice Draco.

[4:28] Yeah that's a chip off the old block but that's way more advanced than they block the original block.

[4:34] 4 hours in a Toys R Us is a that's pretty that's a long time in a Toys R Us was it so tell me about you guys are there obviously liquidating it was it was a kind of the ones I've been it's been super depressing hip I was yours.

[4:47] Well that's right I find Toys R Us just depressed right before they went bankrupt they were somewhat depressing because it's like you have all these fun childhood memories and it just.
Not that fun or inspirational of a,
environment these days but this particular store I'd say is early in the liquidation so it it absolutely felt like.
Like they had a full inventory of stuff in the store didn't feel like the the selection was thinning at all and you know the deals weren't super deep yet.
So it was enough heat my son will never remember the trip it was fun for me to say I've took him and I do think he had a really good time.

[5:27] And you have pictures and they are in a pickup truck so it's good.

[5:30] Exactly a pickup truck that by the way why doesn't fit in my condo.

[5:35] So you had to pay for a parking spot.

[5:40] I am I am bartering with a neighbor to share one of their extra.

[5:44] She like the most expensive toys.

[5:48] Well and the U-Haul truck I had to rent to drive it home yeah.

[5:51] Cool well wouldn't be a Jason Scott show without some Amazon news but today.
We are going to start with Walmart news because they have been ruling the headlines to Big transaction so first of all about 2 weeks ago go rumors started swirling that they were looking to divest of their,
UK grocery brand which I think is asthma.

[6:17] Exactly right.

[6:19] And they ended up selling that for 10 billion to Sansbury so that's interesting cuz they bought that 528 years ago.
And it hasn't really grown has been kind of growth anchor for them so you know that that has been a bit of a black eye I don't know what they paid for it I think.
I think is pretty even said that they sold it for about what they paid for it but it it hasn't been a huge success so then on the heels of that they turned around and this week acquired.
The majority share of Flipkart India has very strict rules around for an ownership so they.
My understanding is they can't own a hundred percent of it yet there's some path 200%,
but they bought 77% for 16 billion and I think you do the math on that at the Vets out to value of,
28 to 22 billion dollars total for for a Flipkart so you know they they kind of exited the UK and then went into India with the proceeds.
It was an interesting discussion on CNBC so you know this is here we are it's been.
Couple weeks since Amazon announced their first quarter which which recovered on the show was just amazing and if you remember my free cash flow discussion there just pumping.
Billions of dollars if 16 billion dollars is about what they're spending into quarters just for growth an Amazon just just out of free cash flow so.
And so interesting CNBC discussion cuz what happened is the Walmart stock did not react well to this transaction thin and it is hard to cuz it's kinda like we did this m&a didn't work out so we're selling it and the good news is we kind.

[7:54] Came out relatively unscathed in the UK.
By the way we're going to take this plus $16 more and we go buy something even smaller so they don't disclose the revenue of Flipkart of the GMD but.
All indications would be that it's not as large as as as though or you know even close to $16 I would you know the last I've heard it's like.
2 to 5 billion and GMP and then if you can't put a 15% agreed on that you know this is a smaller.
Sub billion-dollar business Revenue was probably so pretty interesting.
The normal discussion ensues which is it's not fair Amazon gets to spend so much but Walmart doesn't so it's kind of interesting to see that,
play out with this transaction where you see yeah I don't know how involved he was you may have some inside of that but this is a very much feels like Mark Lori kind of saying look we.
We got to be aggressive in India we got to get out in front of Amazon and outflank them and and.
You're not to do that and you take grocery. We need to be in India so it feels like.
Doing the right things they're not getting credit which I'm sure must be frustrating inside a couple more quick things there,
eBay was kind of a big winner in this because about 6 months ago they invested 500 million into Flipkart they folded.
EBay. I n into it and then now that position is worth 1.5 billion so nice three-bagger or 3x of their money,
and I think they got free to go and it's not clear if they're just going to spin it off for relaunch but but they'll come back in India as eBay. I n.

[9:28] With a nice warchest from the transaction so so kudos to the corporate development team anyway hopefully there,
at least enjoying some extra pizza or something like that Jason what did you think about this deal.

[9:40] Yeah well first. Just as a reminder to Wisner is the reason that this gets so much players is,
you know any is a potentially huge Market second most populous country in the world you know and rapidly evolving,
population with with an enhanced spending power and very little,
Commerce penetration brutal e-commerce penetration in the country so tons of growth and so you know flipcart is the biggest player but Amazon has been,
China indigenous way,
build a business in India and Amazon is already the second biggest player in India and is actually growing faster I think then put card so,
it's interesting you know Amazon try to do indigenous we compete in China,
and that didn't go very well it's a lot. You know people are like you know they won't repeat that mistake in India and you know so there's a lot of rumors and Amazon was bidding against the Amazon,
Amazon was betting against Walmart for Flipkart alot of us back you I don't know where you were on this cop but you know I assumed Walmart was going to get it,
because in my mind Amazon was only,
would have been interested in foot cart if it was a good value like that they had no interest in overpaying on some strategic basis for Flipkart whereas,
and I feel like Walmart really you know does have an interest in.

[11:13] Establishing some some Global credibility you know Walmart wasn't particularly successful in China struggle in the mature Market in the UK and flipped Asda and so kind of felt like,
you know we seen Amazon reached for Acquisitions before like Jet and that or Walmart rather and it wasn't surprising to see him.
Reach again this time and supporting me almost wonders if Amazon sword I intentionally tried to beat him up a little bit.

[11:39] Yeah there was some talk on CNBC that,
Amazon bid 2 billion above the 16th but the founders chose the Walmart did and it wasn't really clear what was going on with that so I don't know if that was just rumor or actually officially reported and I couldn't find it in writing anywhere so,
but I do think Amazon was either really interested in it or.
It was kind of a win-win that were they made Walmart really pay up for it so it'll be interesting to see how it plays out.

[12:11] The one thing I did I do believe is that Walmart was a more attractive buyer because there's a less likelihood of,
regulatory impediments because Amazon is the number two player if they were to acquire the number one player there there would have been some some.
Further regulatory hurdles in in India I'm so maybe I was just a safer safer way for the four,
stop thinking and Company to get the money back so be interesting while Amazon is there anyone else that Amazon would want to buy there or will they just you know continue to go to loan and try to do better than they did in China.

[12:51] There's always been kind of a third player Snapdeal and in that round I talked about or eBay and Dustin 500 million there was rumors they were going to merge they didn't and I really heard much about Snapdeal lately so that maybe something Amazon,
could pick up.
Probably relatively cheap now cuz they're kind of left at the party without a chair in the music is stopped so I don't know if they really want to Amazon you know their acquisition strategy is.
To get into something to don't have in their dardi have a Marketplace they have invested heavily and FBA for that Marketplace what are the rules in India is you can't operate one p as a foreign entity and I think Flipkart has enough for investors they can't be one piece so all these are pure what I would call a pure Market Place model me they don't have a retail component,
Subway Flipkart and Amazon have been furiously building out the photo centers though to help their sour basis I don't think Snapdeal had the investment.
Not to do that and they got left behind so it said they're kind of the distant third player there that you know I'm paper Amazon could pick him up to you no time to continue to be ahead but I think they'll just got there.

[14:00] Yeah I feel you in a lot of markets you would you potentially acquire Local Company because that would would get you license to operate more as a local company but I think India has a strict rules about,
ownership percentages that mean like you know Snapdeal word indigenous Indian company in Amazon acquired them they would then no longer be considered indigenous.
That the feminine side is interesting to cuz one of the challenges in India is not just lack of payment centers its lack of infrastructure overall its its roads and delivery services and it's a very fragmented Market inside.
My my sense is that the Amazon efforts and the fbar.
The 10th potentially super lucrative because literally like they're building a whole capability that you know it's not like if you don't.
Use Amazon you would just use UPS to deliver this.

[14:54] Yeah.

[14:56] So that's interesting and then I guess it's the one you know if is Amazon really wanted to spend some money to jump-start their presents and India the other thing would be interesting as there is a big payments player there which is paytm.
I have no idea if they are for sale I think that's you know big investment from SoftBank and $0.10 but that.

[15:17] Payments tend to be a big driver of digital Commerce platforms and obviously in China like I would argue that $0.10 and all I pay are.

[15:28] In a big drivers and so you can imagine that would be a strategic place to invest in India as well.

[15:34] Yeah that's one.

[15:35] So some other Walmart news.
The we talked a lot about retail strategies in general towards what I called owned Brands so essentially.
Treating brands that are exclusive to the retailer that you know usually are a lot more than private label its.
An aspirational brand with its own positioning in marketing in Walmart launched a new one of those last month called all is well home which is kind of there.
Home Goods brand its bedding and mattresses.
And in and of itself that would have been interesting that gets added to the stable of Brands they bought like bonobos and ModCloth.
The weather things that I found interesting about all is well home is that Walmart actually launched.
I stand alone you are out so rather than selling all's well on or even selling it on you buy all is well from.
All is well home. Com in so that is a sort of,
further step in the own brand a play then we've seen before like you know cat and Jack from Target the super successful brand that it doesn't have its own URL Rocketfish is a super successful brand,
Best Buy it doesn't have its own URL like even you know the world's most successful own brand Alexa,
you know obviously I'm buying Amazon like it doesn't have its own URL so interesting.

[17:08] You know to see if that's a trend that we see more of his these Brands launching with their own URLs and a particularly interesting to me inside baseball thing.
Walmart has built super robust e-commerce platform that they going to spend billions of dollars developing overtime call Pangea and when they watch this all is well all is well home is running on Shopify.

[17:35] Yep so.

[17:36] Ya Allah be with your Shopify to lunch kind of a micro set one clarification on Alexa is he was on does on the yard all day just don't tell Alexis on it it it it like.
You you you obviously know but like if if people haven't looked Alexa was this company Amazon acquired this goes back into the 90s and preacher like 9899 and you would web web users would webmasters wood,
it's all set of tools from Alexa and it would help them rank various websites and you would see your rank so it's kind of shared.
Metrics kind of thing not many people use it today because the the date is pretty.
Yep sketchy and but Amazon only are on the brands they use that when they came up the product they I guess they looked on their sweet of trademarks of the owned and pick that one out to to have the Alexa brand come out.

[18:29] Yep and I think I use it as I could be to be site for Alexa right like isn't it more for like people that want to partner in the Echo System.

[18:36] What else Alexis still has this traffic kind of thing and they try to turn it into a marketing stack so it's kind of a PPC tool kind of a thing a lot of the companies that did so he's metrics.
Headed that way like a lot of comparison shopping engines have gone that way like next time but there's a lot of them don't have a ton of tricks that I've never heard of anyone using the Alexa tools.

[18:58] Gotcha,
and then in addition to this new all is well home website Walmart also launched a pretty substantial redesign of,
somewhat controversial like it's a very minimalist design that you know doesn't have a real loud Walmart branding to it so it's the spark is what they Walmart cause the,
the start of Starbucks logo and you don't want you scroll down from the homepage you get a very minimalist search bar at the top of the the site with just the spark and the what the word Walmart doesn't show up anywhere.

[19:41] Just freaked me out cuz I was working on a presentation and I was going to know do a screenshot of a Walmart marketplace,
and I was looking at us like how is even going to know this is Walmart they're going to have to recognize the spark because the word Walmart literally kind of once you leave the homepage it melts away and there's no the menu becomes hamburger menu,
yeah they moved the mobile metaphor to the desktop and yeah it's kind of.
Kind of wild and then you know as you scroll on shop you have this persistent search bar hamburger menu and Spark which takes you back to they really have no corporate branding so.
Come on or something so it's kind of saying.
You know where we want to give you more space for search results then our corporate brand and then also you know there's not a lot of browse here so once you leave the homepage and get in to search results there's not.
There's nothing like a lot of bread crumbs I found I got a little lost their it took me awhile to kind of like get familiar with what's going on so it's a bit dark but it's interesting I was doing our desktop I'm sure it's great on mobile I bet on mobile it's it's kind of.
Feels really good on desktop it feels kind of strange it's going to take so long Easter.

[20:57] Yeah I think overall it's way more visual so images are much more prominent and bigger and you know for example like on the pdp's the the skew images,
take up way more real estate than they used to and so I think that's part of drinking that bar down is to have more real estate for the images and then you know the thing that Mark Lori has really hit on in the new design is,
that it's,
substantially more personalized for each individual visitor but also for each SKU category so you go to Department landing pages and they,
that there's a lot of Rich editorial content that's in very different on the dog food from home from apparel and all those sorts of things.
So pretty big operation for Walmart the thing I've seen most people complain about is not the lack of branding grocery is super Promenade on it and there's a grocery button and it takes you a separate URL with a completely different design aesthetic,
so I think they've that's been the big critique I have seen of the site but I,
I believe the grocery refreshes and fight as well so I suspect they'll they'll match up eventually,
and then some other news on Walmart Last Mile,
they've added some new delivery partners and they're phasing out some of their old delivery partner so so,
about a year ago Walmart you announced that they were doing a lot of them at home delivery for book groceries and general merchandise and they announced Lyft and Uber is.

[22:32] As initial partners and it now looks like they're phasing both of those vendors out they,
they have used several third-party deliveries other delivery services they added Postmates to it.
And then an interesting one of me is they added doordash as a grocery delivery partner.
And the reason that's interesting is part of this I've never seen doordash deliver anything but restaurants.

[23:00] Yeah I know I saw him at shoptalk they you know they were talking about their reason restaurants lovers they only do food so yeah.
You have prepared meals being food like restaurant food so they the kind of I guess when Walmart come calls you yeah you take that phone call.

[23:18] My recollection was that the CEO for.
Cheesecake Factory was highlighting why they were such a good partner because they only did food and I I suspected the CEO of doordash already knew that he was in the throes of appreciating that getting highlighted so much.

[23:38] But it is interesting you know there are all these delivery services tons of people Outsourcing delivery right now like one of the interesting things it seems like.
Walmart is picking players that are willing to provide the delivery service but don't insist on owning the the delivery interface so you know I sent you that would provide delivery is sort of API if you're well so that Walmart could own.
The digital interface unit the big delivery service that Walmart has never partnered with his instacart and you in front of the speculation Why is the instacart.
You know that so far has it seems like they've always insisted on being the the front end for all the orders that are fulfilled through instacart.

[24:21] Got it said they're really just using the 1099 workers of these hooks have you go to Walmart or in the app do you do your groceries and it's delivered by one of these guys pretty probably unbranded out imagine right because you're not using their apps.

[24:34] Yeah.

[24:36] Just yeah just like.

[24:37] Yeah it's a white label delivery service.
And it is you know these are all pilots in different markets at the moment and there is a pretty substantial pie with it actually does use Walmart W-2 employees,
and this was a system where they essentially like offering an additional gig to all of the existing.
Walmart employees that you can also do deliveries and I think it was some controversy that you know,
like when they first announced his people sort of misunderstood and thought Walmart wasn't wasn't going to be paying their employees for these deliveries.

[25:13] Got it. This reminds me I forgot to put this in the show notes but I was at a Target the other day,
and it's one of the newer ones and I noticed they had code off a part of the parking lot and it says it's got this kind of interesting that's got two arrows and it says Line 1 line 2 and then it's all blocked off and it says coming soon pick up area,
passing and then now since I've done that pretty much every Target I go to has that and I've been deprived 6 targets the field research also known as looking for Star Wars toys but anyway so I was wondering if you know anything what's going on there.

[25:53] Yeah so they've announced a pretty substantial expansion of there curbside pickup program again for Grocery and General Merchandise and is a reminder,
maybe 18 months ago they started a curbside pickup pilot using a vendor called curbside and they they abruptly cancelled that pilot.
And then fast forward about nine months later they bought a competitor curbside called shipped and so these,
so they now own that capability and so these these,
does drive-thru lanes are the new curbside experience that's being managed by shipped and that's a shipt,
and shipped does both curbside pickup for for customers that want to swing by the store and pick him up at their convenience and they also do do home delivery ship from store,
On Target Staffing.

[26:51] Okay so it's not just for shift couriers will shift couriers go there too.

[26:56] I do know I don't know if that's a good question.

[26:59] So shift is going to walk it from the store to that look herb not a Target play.

[27:05] Yeah well so that shipped are target employees but so.

[27:09] I guess you.

[27:10] Yeah so.
And the pilot is an exclusively using employees that were formerly shipped they could be originally target employees it's using some software and infrastructure that ship bought so that ship tones so one of the big things.
Curbside pickup sounds really easy but it there's actually more complication right like do you.
Schedule a time when the customer have to promise to come pick him up or do you use geofencing on the customer's mobile phone if you was geofencing how do you you know avoid,
taking their groceries out that are perishable out to the curb when the customer just drives by the store to go get gas before they come to the store and,
you know if you're using geofencing in the customers mobile app how do you avoid like burning through their battery and having the customer,
uninstall your app because it's there the biggest battery hog on the phone like they're there are all these edge cases in complications and so some of these vendors like curbside and shipped.
A big part of their IP is mitigating a bunch of the Zedge cases than in the case of curbside they're actually.
X Apple employees that where the the geolocation team at Apple that that launched curbside so that's that's.
You know very much what they highlight is one of their core competencies.

[28:28] Walmart curbside you pull up and you call this number and I've,
people people Rave about it but there it does fail a lot of times like sometimes you call that number and no one calls and you know,
and sometimes you call it and they have no idea who you are so there's still a lot of kinks in and making the stuff work.

[28:48] Yeah all of these retards are struggling to make them perfect and I would even say like all of them are piloting multiple experiences so in some Walmarts there's that SMS experience there are some Walmarts that are sort of drive-thru,
venues in Walmart even have some Pilots where it's,
curbside off site so they have dedicated pickup locations similar to the.
The like Amazon what is it called Amazon.

[29:20] Go pick up.

[29:22] Trash pickup I think is actually.

[29:24] Yeah so what's a different permutations out there I don't think the world is a landed on one but it's it's an area where I think all these retailers feel like they can have a differentiated customer experience if they're the ones that,
The Canal at and your point it's it's can definitely be hit and miss at the moment.

[29:43] Brickell well it wouldn't be a Jason Scott show without some Amazon news.
Amazon news new your margin is there.
What the Amazon news I wanted to throw out there. It was kind of a,
quite week for Amazon there's only like four or five things when I'm usually there's 10 and we have to cut it back the one that's kind of near and dear to my heart is in the auto category,
and if you're not a long-term listening to you may not realize this but I am a Serial entrepreneur my third company was Channel visor started that still exist,
German there started that in 2001 and then left around middle of 2015 on a day-to-day basis but still involved at a board level and then started another company,
call Spiffy man we are on demand Car Care who started with car washing and detailing Nevada Doyle change and a bunch of other things were in five markets so I'm,
I'm not keenly watching The Car Care space to understand what's going on there in the subsection of tires there's been a lot of interesting things there,
there's a lot of Pilots of on demand tire sales and installation but that's really hard to do in a mobile kind of setting because the equipment required install tires as non-trivial,
I and the skews of all the tires we could probably do it a whole show on this Jason,
you and I have both been involved in auto parts for a while but it is a is a very complex you set to say the least just for the tires not even counting all the rest of of what goes on with with auto parts around fitment what not but this week There's a really interesting.

[31:27] Announcement partnership between Sears and Amazon this is not the first time these companies have kind of had interactions before,
so Sears is actively selling Kenmore and Craftsman on Amazon and.
That is allegedly going pretty well so the way this is going to work is it satire partnership so it'll be able to do is buy your tires on Amazon,
and then install them at a Sears for a nominal fee so this is.
This is one of the challenges of buying tires online they're a lot cheaper than if you went to your local tire store but you know.
If you've ever done this you literally get a giant cardboard box full of.
For very heavy tires sent to you and then you then it's up to you to kind of holidays around and take them to your local tire installer and say please install these tires I didn't buy from you so it's a,
it's not a great customer experience to say the least and no mirror I'm not aware of any mere mortals that can install their own tires that that's a non-trivial problem to solve.
So is this going to work is starting to pile it in 47.
What the locations they're called Sears Auto Centers and they're going to start an 8 cities and,
Adobe in 47 of the store is Nate said he's now serious has 400 locations in 21.
200 technicians out there so they do have a really big footprint around tire installation Auto Care and the way to work is this so,
you go to Amazon your Prime user they don't supposed to say this but I'm imagining this will be a prime only feature you select your tires that you want to buy so it's so you get a nice lovely.

[33:02] Mommy upset at michelins it's up to you the consumer to figure out that they fit on your vehicle or not,
Anna. Then at checkout you will get an option just like an Amazon Locker or something like that where it'll say Jason you live in Chicago and we have a.
Pilot with the Sears near your house there and would you like to have these shipped to your Sears Auto Center on 1 Wacker Lane and have them installed for you you choose that and then,
you are given three possible appointment times that you choose and then it wouldn't when you show up at that Sears.
Center at that time they want saw your tires for a nominal fee you don't have to buy the tires from them obviously.
So that's that sounds good and what I have learned the hard way on the stuff is you know the,
in Excel and I call it these things work really well in and go awesome but you know you mentioned the edge cases of curbside I can think of like 60 edge cases here the number one I am going to call is,
getting the wrong tires the vehicle of this is going to be a pretty common thing.
OEM screen very specific about tires so if you buy a Lexus they have very certain tires they want you to put on there there's a lot of decisions around if you need one tire should you buy all 4 how do they wear,
rotating the tires the same time there's like a Plexi there that's just really hard to capture an e-commerce is that that's going to be a challenge and then the scheduling of this is going to be tricky but I've learned about.

[34:39] These customers that want you know automated car care is.
They really like convenience and there's not much convenient to me like I don't say to myself a while I really want to go.
Hang out at the Sears Auto Center for an hour while I install my tires so so that that's kind of a,
of the places that install tires. All of mine are are inside malls inside Sears inside of malls so you have to deal with mall traffic the mall parking and all that kind of stuff to get in there so,
I'm going to be interesting to see how this place but you know it is good news for Sears at any Lifeline when you're drowning is helpful their stock was up something like 17% this is like,
yeah they're at $3 they bounced at like 3:50 and never was super excited,
that's like the most their socks prison in in years now but I'm a little skeptical about the user experience on this one and see how they're going to nail it especially with that once yours takes over the time this thing I'm just not really sure those windows are going to work and how engaged this this year's.
Low-level employees are going to be on it.

[35:42] Yeah and you you could imagine there's all kind you know suddenly Sears is competing with Amazon for pricing on the tires that Steve Sears historically sold them all those sorts of things to write like.

[35:54] Yeah there's Channel conflict now it's serious maybe thinking is,
okay at least I got the customer in here now we can try to sell them on breaks in an oil but I know thing I have found is when when you talk to people about.
Car Care experiences the number one experience people hate especially females is the upsell experience also known as the Jiffy Lube experience they hate going in for a.
$50 oil change and leaving Having spent $400 they come home and their husbands like.
What the heck you know why I just spent $40 and they're like well I got new brakes why you know,
balance didn't check the shimmy on every tire and I got a cabin filter,
and I got the premium oil filter and so you know there's there's actually lawsuits around all the stuff around the the upselling of these kinds of things to make these Services profitable has resulted in a really bad customer experience so,
and then you when I think about Casey and and the Deloitte model of the bifurcation you know we deal with this every day at Sophie,
the that customer on the convenient side do I think is Amazon Prime user they like zero friction in their life because Amazon stream to have you,
you press 2 buttons and stuff shows up your house 2 days later what could be more convenient so it's interesting to see how smoothly this goes because that customer is really really hard to please and sending them to a Sears Center where I think just give me some upsell and some challenges going to be interesting to see how that works.

[37:25] Yeah for sure I mean it's funny one of the I think probably the original Legacy player in the spaces Tire Rack and their model as they they essentially sell you that tired of it you Commerce and then they they put together their own.
Network of independent dealers that they chip the tires to you and you go to that dealer in that dealer would install it for you,
and there's some very happy customers but they they have a lot of unhappy customers if you read the ratings and reviews and when you talk to people like one of the biggest problems they have is.
Tire Rack shops those tires to that independent Tire Dealer and a customer comes in between the time that the customers about the tires comes in and,
the the deer sounds that that customers tires to someone else.

[38:11] You can see that happening at Sears to you know if they don't have him get it off yeah.

[38:14] Yeah that's what I mean do I like you think about the the advanced things I fit Manton all these other issues but like just simple like you know commingling of inventory and those kinds of things could all all be challenges that I have to get worked out.

[38:29] Any other Amazon news outside of tires.

[38:34] I'm thirsty if we had mentioned on the show that Kohl's and Amazon are Partners give us an update on that.

[38:40] Yep so last year Kohl's announces pilot where you could bring Amazon purchases,
to a cold store to return them and they sent you became a return center for Amazon that's now in 42 stores and if they're their quarterly earnings call they the CEO called that program a homerun and essentially said,
did they had a discernible increase in traffic and all the stores that accepted Amazon returns and that that seems totally viable to me that's it.
Felt like a win-win it's one of the rare partner with Amazon cases where as far as I can tell.
Kohl's really isn't giving up any data to Amazon right so it's not like.

[39:24] Amazon is getting to meet and steal at Kohl's customer as a result of this this is really Kohl's getting to meet an Amazon customer and gets an opportunity to surprise and Delight them and sell them something when they bring their Amazon returns in,
in sounds like like it's working well for them so far much earlier but this,
this month Chico's started selling their apparel on Amazon,
and Shelley broader the CEO there you know is saying that that immediately after the product went live on Amazon there seeing an uptick in traffic to the stores and today they will do I feel like,
by virtue of being on the Amazon platform they're getting an opportunity to introduce the Chico's bran to a bunch of prime customers for the first time which is then,
driving more sales to the stores in Chico's let you buy an Amazon return in the chico store so they're getting some visits that way and in that that seems interesting I I guess I'm.
More skeptical in the chico story than I am Nicole story.

[40:32] You don't the one I'm skeptical to azra saying that what occurred to me was the podcast we had with dorel juvenile wear,
they had done a fair amount of AMS and mg and it drove store.
No traffic for them they don't own stories but it drove like Downstream Costco Walmart Target kind of visits so I could see where I think it could make sense is if as part of this launch Chico's went and they not only buy it you know a bunch of headline Search terms for like Chico's but,
yeah maybe now you starting to browse Amazon and you're seeing you know women's blouse and pants and skirt and now people,
you just having listings wouldn't do this but if they had a fair amount of marketing budget I think that could drive people in the stores.

[41:18] Yep no I I could definitely see that I think in general Chico's has a lot of head winds and.

[41:26] Yeah they're in malls there you know where someone older customer they're in their parallel space which it has a bunch of indigenous challenges until you know a lot of us as soon they were on Amazon because they were somewhat distressed in in,
needed to find some some some new eyeballs so there's there's a school of thought that it wouldn't take that many net new customers walking in the Chico's to be favorable to Chico's.

[41:48] Oh my my middle schooler would say burn.

[41:51] Yeah yeah not don't mean it to be pretty good harsh but you know,
they are one of the first players in this category that right so I'm certainly watching and trying to learn,
we talked a little bit in the Walmart case about owned Brands Amazon of courses is dominating the own brand space,
and they watched it but I think isn't another new one that we haven't talked about in the show yet they wants to wag which is there pet food brand.
They may have had a few skews but they they want a whole line of dog foods and what's interesting to me is.
How robust the content and selling on Amazon is around wag so you know you go to the the pet department on Amazon now and it's a.
Personalized editorial Rich page it doesn't it doesn't feel like.
Just another page in Amazon catalog it feels like a real landing page for pet owners and then the the department Pages for wag are are super robust and.
As is usually the case.
When Amazon makes pdp's for their owned Brands they really execute all the best practices so whenever we're talking to Brandon about you know what what kind of content they have to have in their pdp's.
You know we always use the Amazon owned Brands as examples in these wax cubes are going to be another another good example like they're there very long Rich pages that have a lot more content to help you feel good about you know finding the right food for your dog then.

[43:27] Yeah some of the national brands that have been selling on Amazon.

[43:30] Is MacGyver enjoying some wag dog food.

[43:33] So MacGyver is a super Elite one percenter that's probably eating better than I am so no.
He get some fancy Boutique food from you know I'm a cow that was probably like massage by a Japanese Wagyu dude.
He probably eats the best in her family and he also officially has the most expensive haircuts in her family so.

[44:01] Man if you guys are adopting a sign me up you get out of an electric vehicle.

[44:08] The three-year-old gets his own car and in parking spot and the the dog gets a groomer that comes to the house and gives him a you know full day spa treatment so yeah everyone in my family but me is pretty high on the hog so I you know.

[44:21] Songs going to pay for all this.

[44:25] Exactly that's what you asked you were you were posting some new job listings on Twitter the other day that you found interesting and I'm like I might need to do some of those two moonlight.

[44:36] Yeah I thought you would be a good applicant for one of those interesting there or is this was a recruiter on LinkedIn you saying hey I'm working with a large top-tier cpg brand that's looking for a head of Commerce and your Amazon experience is a is a would-be is a,
very strong nice to have kind of thing so that was interesting like a year ago no one would have thought to make that part of a job requirement for e-commerce of the CPT and now it's it's kind of.
Top top line.

[45:05] Yeah that night I think that's actually interesting and I probably would have replied but you also forwarded it to our friend David who I feel like his way more qualified and so I didn't want to apply and then get rejected.

[45:18] So they were also two big Tech conferences this week that we generally follow for big news that's going to affect the Commerce Pace Facebook's big developer conference,
and I think there's some controversy I'm still calling it a fate but I think you've heard some people call it fate.

[45:39] Yeah.

[45:41] So if you don't know what the official ruling is there but they had their conference two weeks ago and then this week was Google IO which is there big developer conference.
Did you have any takeaways from the either of those.

[45:54] There's a lot of stuff to talk about outside of retail but I think probably the big news for this podcast is there was a lot of retail news you know so we've we've had you know.
Google talking about.
You know they're making some changes in Commerce so we've covered on the show with their new Express is Comic-Con Marketplace is how I think about it but they did tweet.
Google Express and then Facebook had in the last.
Fates or Fates they have increasingly down a lot around messenger and talking about transactions their favorite company talk about their is everlane where do they show the post transaction messaging happening in Facebook Messenger.
I saw no e-commerce kind of related content from both these guys you maybe the big news for me at Facebook is a reorg they're tired of all the team and the guy that was,
CEO of PayPal,
who they moved Messenger to blockchain Technologies so it's kind of like he,
felt like to me they threw this against the wall or let's go create a WeChat we bow type you know chat.
Commerce teen and it feels like either.
Either he is moving on cuz he's not interested or there said let's try watching now so yeah I may be reading too much into that but I thought it was pretty interesting there.

[47:19] Yeah and I think I was part of a bigger reorg I think a bunch of execs kind of moved around so it's.
It's going to be interesting to see how that all plays out from Google I O I saw a few little things like in years past or much more substantial announcements that I felt were sort of court of Commerce.
This year you know before the conference Google Consolidated several payment Technologies and so now it's just Google pay you know which consolidated,
Google Wallet in Google pay and Android pay and that,
that is a digital wallet that's been available on apps on the Google echo system for a while but they extended it to the web so you can now use if you are a Google pay user you can.
Pee in a Chrome browser in a mobile web situation if the is the e-commerce site supports that.
So there's a bunch of mobile web sites out there that you know would probably benefit from adding support for Google pay.

[48:22] Apple did that earlier in the year and so you know there's a couple reasons to update your your mobile web experience.
Google did announce some new versions of the Google home that have screens in them so you know in theory that could be Richard Commerce experiences you know I'm not.
I'm not sure that the Alexa show where the screen has his been you know the the the fast runner in the Alexa family and so I I kind of suspect.
Is it that the Google home screen will be even more niche.

[48:58] Google have some does have some really interesting mobile technology so you know a big one that's getting a lot of traction is amp.
Which is a technology for rendering lighter-weight faster rendering mobile pages and originally you know it had some really great user experiences but it came with a lot of baggage.
Can I type A constrained by Google and Google's been spinning it off and making it much more open and adding a bunch of capabilities that are a lot more e-commerce friendly.
And in their continuing to do that so you know some of the the complaints that people had about amp for an e-commerce site they've.
There a dressing in announcements from Google IO so definitely of your eCommerce site.
I would be thinking about implementing amp in my mobile experience in in the other big mobile technology that Google really was first to Market with his Progressive web apps which is this kind of notion.
Being able to download binary code on demand that have a real app like experience without having to force the user to go through the App Store and download an app and another password and reinstalled the app and.
And all of those sorts of things and said that they're continuing to evolve pwa.

[50:19] But that standard is never really got a lot of traction because if it wasn't supported in the Apple echo system.
And you know frankly the overwhelming majority of mobile Commerce happens on Apple devices so despite the fact that Google had this great support for pwa.
It didn't make a lot of sense for eCommerce sites to implement pwa is because you were only addressing.
The minority of the market that were you know Google shoppers.
Apple in the most recent operating system you know finally implemented pwazon Safari so now.
You know I expect we're going to start seeing that be a best practice as well so at all those Google Technologies together in a couple other things.
And almost every conversate on the planet you know could probably do with a pretty substantial Mobile update right now because there are so many new beneficial Technologies.

[51:11] Good thing to do before holiday.

[51:14] Exactly in an if you're going to do that you should probably be starting right now.
So feel free to call me at work and we'll take care of you.
Scot that's going to be a good place to end it for this week because we we have used auto added a lot of time as we're trying to shorten his up and make him just slightly more concise but if we've left you wanting more or you have any burning questions.
I would love to continue the conversation on our Facebook page so jump over there and then drop us a line and then I mean Scott hangs out there almost 24/7 so.
And you always you always get a response there and of course if you enjoy this show the best way you can repay us for all the time we put into it is to jump on the iTunes and give us that 5-star review.

[52:02] Thanks for joining so.

[52:04] Until next time happy commercing.

May 7, 2018

EP130 - Comcast Ventures Daniel Gulati 

We caught up with Daniel Gulati (@DanielGulatiat ShopTalk 2018. Daniel is a partner at Comcast Ventures a venture capital firm that focus on early stage consumer internet investing.  Comcast Ventures was an early investor in Away, MealPal, and recently invested in Zola (hear Zola founder Shan Lyn in episode 98).

We spoke with Daniel about his background, his book, Passion and Purpose: Stories from the Best and Brightest Young Business Leaders, his portfolio companies, the direct to consumer market, competing with Amazon, and the future of retail.

Episode 130 of the Jason & Scot show was recorded on Tuesday, March 20, 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:


[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 Scott Wingo.

[0:38] Hey Jason and welcome back Jason and Scott show listeners we are live here from the shop talk show in Sunny Las Vegas and excited to have on the show Daniel Galati

[0:48] Daniel is a partner at Comcast Ventures and has Ed Stinson retail with BCG fashion Steak & More.
His current portfolio companies include away mealpal Pancho shine and athletic welcome to the show Daniel.

[1:02] Hey guys great speaker.

[1:05] So before we even get into it I know you you I had a little experience with Fab is my name bringing.

[1:12] Bad.

[1:13] I had to do a double-take but I would say it was it was a roller coaster ride at 5 but that old good memories now so I think we're good.

[1:23] That is the beauty of.

[1:24] Yeah that is video time.

[1:26] Daniel one of the things we always like to do early in the show is get get a little flavor for sort of how you you came to this industry and.

[1:35] What your tournament regulation was.

[1:37] Totally my matriculation well.

[1:41] Paid extra for using big words I'm not quite the sesquipedalian.

[1:46] I like it I just woke up.

[1:46] I just write that down so I guess I kind of made a winding road kind of photo ID Road into BC so started my career straight out of undergrad at a company called Boston Consulting Group B C J.
Management consulting firm and really a BCG focused on actually read retail clients so like very large retailers.
And you know at that time this car 2006-2007 a lot of those retailers were really thinking about just starting to think just starting to think about technology kind of customer facing.
So I think historically they had to wait till. Kind of court and Court it is kind of his back office efficiency box that they had to check.
And kind of with the growth of Amazon and and and some of the some of the other early e-commerce players Rita's or technology is a customer-facing vectors of strategic tools.
Really starting to shift to the to the full front so a lot of my time there was cutting my teeth on filming digital strategy technology is big is Big retailers.

[3:06] I figured out that I had a passion for technology for early stage of embryonic Technologies and wanted to kind of double down there.
So you're off to a few the BCG few great use a BCG went to Business School.
And started my first real company called fashion sacred Marketplace for independent fashion kind of vertical eyes that see.
I was at a time where the fashion industry specifically was kind of opening up so.
You know it's going to sound really Antiquated but this is 2009-2010 where you at Young blogger is coming to New York Fashion Week to the first time I don't like posting these like.
Amazing photos of all the stuff that was going on.
That's one of democratization of the industry of never really happened before I think fashion was always cuz it's closed.
Closed-loop industry and so what you had was you had these new wave of consumer demand that was Unleashed in consumers were really.
Trying to go beyond the traditional luxury brands.
And an answer to the aperture so different types of fashion from different types of designers.
Was increasing and we will try to hook into that so we we.
Rent in your eyes Venture Capital group the team ran the business for a few years.

[4:42] And a little company in New York called was just getting started in 2012.
And at the time it was basically the fastest growing e-commerce company you're definitely here in the US.
And and maybe even be on that and you're sad was really for those that don't know if that was really a.
Highly curated design Centric e-commerce destination.

[5:14] Dynastar was kind of a flash sale and then kind of built kind of more going to carry that stuff around.

[5:18] Did will actually start a bit actually.

[5:20] Hook up yet.

[5:21] So was it what we had was kind of it was a hook-up site and then it became so to be a social media site.
For the gay population that was Jason Bradford's stick and I had a big following and so have been pivoted to these comments destination.
And so they did amazing numbers Haven today the number is kind of throw out there you know you're over a million dollars a month in the first 25 days and to the popping up from there.
And I really built their business off of Home Goods actually like Home Goods in and.
Home Furnishings in and fashion was always something that they almost needed to get into because of how big it was but just didn't have the right and DNA and and you know we're doing 20 other things that they around the core business.
We ended up joining forces in January of 2012.
And a whole team went over night I ran the fashion vertical essentially in fashion when did not hear from you know nothing to Fab's biggest vertical softwoods the palace Pacific rated men's and women's wear.
Fab's biggest business.
He was a bit of a sign of the times I think you'll group and some of the other companies had had popularized kind of online shopping fit for Apparel in a way that.

[6:53] I'm didn't exist before end and also from imagine spective it was it was actually really attractive so.
Had a great time there for let's roll let's pros and cons didn't want to get back into the early stage well.
I'm sorry you're ended up joining Comcast Ventures entrepreneur-in-residence and I've been there since you know 2014.

[7:20] Temples in New York right so they knew the Jew what did you move out to SFO.

[7:24] So I move to San Francisco in January of last year.
So I spend a lot of time in this photo New York e-commerce saying which is like a pretty new singing group in 2007 and and.

[7:39] It's all double click people a lot of it is.

[7:41] What a double quick people.

[7:42] Double click Mafia that doesn't get talked about as much as I like the PayPal Mafia but there's an East Coast double-click Mafia that's behind most of the companies are.

[7:49] Totally light where R investors in a lot like really happy messaging in a company called Zoeller and Shannon was obviously a joke group and.

[7:58] She's been on the show.

[7:59] Stream the show and and and and that. Sort of an issue Cadre that 2007 2008 cohort is kind of old gone in and done really great things in in your bed.
To that it was pretty small community now it's a really big Community with all the d2c brands.
The time they went that many that many folks in and he come over there and so you want to jump over the VC had the.
So have those relationships and had the privilege of some pretty red boss daily deal fudge.
It was not hard to kind of bear hug the the sector and come and get to know everyone and then and then you know as I start breastfeeding Comcast Ventures.
Your San Francisco is West Coast is kind of too much too big to ignore and so I moved over here and and and try to call the New York from here as well.

[8:57] Brickell.

[8:58] Brief side note one of the founders of Jason Goldberg and I share the same name and he's somewhat of a polarizing figure so I get.

[9:08] I used to get like a ton of funny emails intended for him and so we would talk to him I do want all these and he's like only if they're really.

[9:17] I guess I'm not know my experience.
You're reporting directly to him was I've not seen many people that kind of rally troops the way he can rally troops right like internally as well as accidentally with investors in touch I think it's no.
It's not anyone who's ever met him into those environments I don't think would be shocked.
So the amount of capital he's able to continually raise I think he's a great he's a great Storyteller and and a great salesperson in into the best.
That's why I think there's a lot of things that Fab didn't do right I think Jason also has a lot of a lot of strength.

[10:03] In fact he's just starting a new gig which is in the.

[10:08] So he found that follow that and start getting that email the you also we talked a lot about Amazon being a friend of me they for sure for you because you have a book that's for sale on Amazon.

[10:21] I dare I do so passion and purpose. This is going back to 2011 when it was published.
The book was really your kind of written at a time when.
The economy was talking like this was post financial crisis you know recession was in the air and more importantly.
So the ins the core institutions of business were being very much attacked right so I.
Why do people pee in the cross the sun on the banking system I think that's a fair characterization.
I think large companies are big corporations kind of the Fortune 100 with being.

[11:12] Torn down in the in the media and dosage kind of General anti-business anti-capitalist kind of climate right.
I really didn't drive with what we were seeing you know it business school and end with some of the folks.

[11:27] The icons in under which was.

[11:28] But I come tonight which was folks that we using business and they're in their own start a company specifically to kind of be a force for good.
And so the book was really a bad hey how did how can we eliminate the stories these kind of green shoes.
Folks that are your whether it was in sustainability whether it was in cleantech whether it was in your more traditional kind of Industries trying to.
Generate profits but not disregard their obligations to other stakeholders.
And so sent you the book is about those people in those stories and trying to provide some inspiration to.
The folks in an engender more trust in kind of market economies and and capitalist system is more generally.
So I would say Amazon in that do not census is a friend because you know we pretty much know all about all that product for Amazon. Books fit on the Cowboys.

[12:37] Brickell let's dig into to Comcast Center so,
every VC that I know has kind of really good kind of a synopsis of what the firm's sweet spot is you guys are interesting cuz you have that Comcast word in there so I would love to hear and understand how that brings the weight of a large corporation to two potential startups,
and then would love to hear kind of a Lil Bit about some portfolio highlights of the company's you've invested in while you're there.

[13:01] Absolutely so yes the way I think about it it's kind of VC Plus.
Right so at Comcast Ventures we are first and foremost financially motivated.
So it's a it's a completely separate your full of capital all of the partners around the table are.
Compensated based on the performance about investing right which is I think.
Fundamentally different from a lot of kind of quote-unquote strategic funds out there right so first and foremost was looking for.
Great companies Great teams in promising sectors and yoga with the with the goal of generating Roi on this.

[13:49] Plus part of it is really around a relation. Kind of special relationship with a soil P which is come to you.
Comcast NBC you when you when you can I think about it between the Coca-Cola video Business Wireless bsmd side of the business.
Your media side of the business the theme parks out of the visit you want to go on and on and on.
It's kind of rare the startup company Weatherby you consume a company or Enterprise company that doesn't have something to gain from a relationship with compass and BECU.
So where possible and kind of time these things right.
Auntie on both sides we try to we try to broker relationships between between both sides and so really good example of that is showing aggression.
So your NBC has your original programming.
And and your TV can be really great customer acquisition tool and so y'all better pull for a company shine wear.
We really tried to look for opportunities to integrate the shine message in the shine product in the shine story.
Into core Embassy you don't listen to the NBC slight that's a really really it's one example of many of how.

[15:21] Play a tool not every VC can bring to the table.

[15:26] Is one of these things when nothing is again you have to kind of time these things right nothing is promised and lots of stuff but it's something that I think I find at least it helps me differentiate in the Moc.

[15:38] Yeah must be nice to because you could you let say your shoptalk you see this interesting marketing technology from assassin der you can go to you know imagine there's like a.
Yo of Pride the best marketing people in the world you can go to and say Hey how do you feel about this cool new email thing or because you know cuz you guys are doing it at a scale that so you know top 20 kind of a scale and they may say wow that's pretty interesting or,
oh I've been doing that for 8 years and after that. Must be nice on your side to go and be able to get some real verification from.
From practitioners that are doing the stuff on a daily basis.

[16:12] It is that's all true I think the other point to make is.

[16:18] You think about kind of I think I'll give you his financial returns almost proceed strategic value.
I feel like there two ways you can look at it one is hey let me just take what Comcast NBC you can currently interested in.
And go in investing of sectors by that's one lens and that's a lot of strategic funds corporate funds if the other lands like let me go out and find the best companies.
And yeah I think we take that approach because we feel like those companies.
Future I will actually be most beneficial to someone who come cost me see you right so that's one kind of premise which is kind of financial value per seeds.

[17:03] Eventually eventually create strategic value not the other way around necessarily.
I think secondly if you actually look at the data and I was going through this the other day it's kind of like the the hottest sectors of today.

[17:19] Accurately predict the best returns of tomorrow I took you look at.

[17:26] You're so old I threw that the different life cycles attack you know.

[17:33] If it can be the case that.

[17:33] Can be the case that you're a hot sector today generates in a great great returns but in general we see that your prices got bit off you get a lot of me to competition to protect I'm sorry.
What we really try to focus on his Less on.
Sir sector-wide bats but he only the only stage and more and like the individual.
Companies in the individual teams and we feel like they're building something kind of unique and interesting I think we we definitely take the point of view that.

[18:06] Have to be you have to be contrarian rights to make money right.

[18:12] Go to the you are just some of the normal DC kind of parameters is there a guy's is a certain stage we like series ABC seed and then is there a certain kind of investment amount that you're looking for,
what's nice about strategic books is a lot of times I have a lot more flexibility than you know like certain BC will go to their limited partners and go get it.
Pretty boxed in LW you know we are a you know,
we're looking for series B and their company has to have 5 million in revenue and Scooby consumer internet and and really very specific are you guys where do you find that special.

[18:45] I would say historically we would have more specific and today we're very.
When much more General ride sir historically and I think this is the driving Factor he was kind of around the table would just kind of mole latest stage in their orientation right so we used to.
Your before I joined sent me focused on I didn't say post-series be investing.
And probably more heavily on the Enterprise so I've been consumed inside.
Your ad tax ass even infrastructure was kind of more of the focus I would say since then I've lost you in five or so years.
Your appetite for early-stage investing has kind of dramatically increase the man we still we still do a lot of growth growth investing and was still.
We got a grave to the Enterprise to be practiced by.
Your what we saw was your mormal companies getting through locked up by deep-pocketed BC pretty early on in their in their life cycle.
And you're the facts about it was just like we weren't getting a shot if we went already in those companies and so.
Increasingly we you know I focus on Seton series I investing almost exclusively and my colleagues and so.
You're when you still have put it all together we are a.

[20:16] Relatively sector agnostic your and now stage agnostic I think there is some there is some markets that you going to where you kind of say.
You know we want to let this play out a little bit and come in a little bit later and and right Bigga checks later.
What weekend are we now it's too pretty big effort equipped off this year.
And your we've been tracking the space for a number of years and for a variety of different reasons felt like now was a time so come in and.
And we're focusing on early stage investing in in in that area and there's some other markets where.
Call Madison's is one example of that where.
We feel like we can be really competitive at the light stage as well as the early stage and we're happy to sometimes let things play out before kind of jumping in with an investment so it's highly.
Secta dependent the teal point I think we've got the flexibility to too so to enter it at most points in the in the business cycle.

[21:22] So give us some so I went through some of the portfolio companies maybe give us like a little kind of summary of some of the ones that would be most appropriate for like the shop talk kind of obvious.

[21:32] Yeah so just a couple that I've invested in your one of them is a company called a way which is a direct-to-consumer travel brand.
So I invested in that company in July 2015 was was when the seed round but Don.
And really the the thesis around the investment was you've gone.

[21:57] You've got these pretty big incumbents in in Stamps not into me that don't actually generate a ton of.
Excitement with consumers and yet at the same time your luggage is a 9 billion dollar category domestically in.
Yeah it it's a it's a it's a huge Market opportunity the same time those play as one.
Digital natives right and so.
You know you could see the opportunity from pretty dramatic shift if someone came in you know applied the DDC model to that industry.
And instead of Market themselves is so it is aspirational travel ranches what why is Don and I think.
I think it's going a lot faster than than even to the.
Investigative have would have predicted and I think that growth is being pretty astounding.
They I think you've successfully created like one of the things that I would think about is what makes a great DC brand right like why does away succeed when others even in the category of failed.
And I think the thing that makes a really good day to see if I think that away what is white has done really well is created This Woman's aspirational World for the consumer the kind of stepping right so it was never about.
Nickel specifications of the suitcase it was never a. Even the suitcase it was about the story around this lighting of the travel the global traveler last all that these millennials.

[23:38] I think really took too early.
And the fact that matter is when you create that aspirational lifestyle that kind of gives you the license to sell a lot of things to the consumer right like starting with luggage but today they announced.
Front pocket you know last week they announced your aluminum luggage a lot of other really interesting things in the pot.
But you could have you could have only done that if you had first kind of laid that brand Foundation nothing that's where in the DDC will receive the bifurcation where you know.
You would have glossy or away or Casper you guys done such a great job selling the lifestyle to the consumer.
And I mean the ones that we see the less successful and just kind of pushing product and playing the same kind of LTD cat game is everyone else in and you got feels a lot more on Sanibel to us.
Yeah I think of ways been a really exciting company for us and I think.
To give you an example of as more of a Marketplace investment led the series a round in a company called mealpal.
Which is a subscription service for meals that you pick up.

[24:54] Meals that you take off.

[24:57] So that the.

[24:59] This is made by individuals kind of so like I'm a cook I have some extra capacity I want to join the marketplace.

[25:05] Restaurant meals so existing existing restaurant in the thesis there was really.
The market for a $15 cheeseburger delivered to you for an $8 delivery fees pretty tiny Market I think we got.

[25:23] You're looking at that Mark.

[25:24] It's a it's a you know.
The top 1% top of top of Market that you kind of solving for that and it's a pretty.
It's a pretty crowded Market actually if you think about all the different plays at it there in that space it's a mealpal was really coming out of it What attracted me to point of view which is.
Instead of charging for delivery we going to contact cost out of the chain I'm going to I'm going to give value to the to the consumer and so they're actually going for.
You're essentially the most affordable restaurant lunch you can get right into the.
The The Innovation there is such kind of the pricing model Innovation there is really to these restaurants in the thousands of restaurants on the on the platform there in 13 series you're going really quick way.
The Innovation there was really supply-side innovation.
There their deals with with the restaurants and kind of how they get the restaurants to the Albright profitably is being I think pretty unique.
I did exactly the business actually has to Marshall a lot of really.
Interesting elements right around data around to the operational aspects of the business around you know managing me.
Whole Fleet of restaurants in are there a lot of things I have to kind of come together to have this. Lee seamless consumer experience and I think.

[27:01] It's one of those it's one of those like complex coordination businesses where you know if you get a ride to Canby it can be really powerful and I think you know the end of the day the market for a $6 restaurant launches.
Channel more times bigger than the market for a $19 cheeseburger delivered to you so that's why we got excited about that one.

[27:22] Can you go to these restaurants now and I got his one Chinese on today they really have 10 devices lined up and they've gotten enough to Uber Eats tablet the GrubHub tablet there's usually like to local ones like,
in North Carolina we have order up and something else and it some point you're like this is not sustainable.

[27:39] The last thing we wanted to do was just be another kind of delivery player right we wanted to really crave I for these restaurants.

[27:47] What is interesting to me about that space though is that.

[27:51] For a long time we had these are the traditional segmentations of these.

[27:54] Segmentations of these bites.

[27:56] Different ways that consumer saw their eating problem like groceries versus Ready-to-Eat versus USR versus fast casual in life.

[28:04] The digital disruption of all of those businesses if it feels right at the moment like all bets are off and they all are potentially competing with each other for the consumer use cases.

[28:17] I think that's definitely true I think we in the food space generally speaking have.
I think what stopped in the in in the food space.
Is that you're trying to combine you know Logistics which is essentially a very low margin tough complex business with.
Your food prep which is a food supply chains which is like a really low mileage and top business with delivery which is a really let you know like it.
I think we're a lot of these players have really Fallen is is impetigo somebody's restaurant today.
Maple is a pretty good example where they're just really really low margin complex businesses that done a lot of cash you know I think we could companies it's one where.
Retention is is is Yokai the issue there any kind of what happens if you just kind of Chun through your early adopters in your Cactus and it goes off popping up and and kind of Hit the ceiling on.
Basement running through your audience so I think we theoretically agree that you know that.
Grocery stores selling full movies online in a way that it hasn't in the in the past but I think that will be the domain of the logic.
Players so like I just walked into my local Whole Foods on the weekend like the whole front portion of the whole foods with the Amazon 2-hour delivery Prime Bridge.

[29:54] And I think that like when you have that scale when you have that physical full praying you're you're really well position to.
Century like execute on an omni-channel play right which is order online and they speaking store your kind of leveraging both your online and offline assets.
I think for a company starting today.

[30:19] That.

[30:21] It's kind of subscale I think we feel like the the the ones that are going to win have to have a pretty big balance sheets.

[30:30] Yeah.

[30:32] I'm wearing dresses in a company in instacart which is a company that space where they have a really big balance sheet and they are doing really well but.
Your takes it takes awhile to get there not every company and get the.

[30:47] Yeah it was interesting I moderated a panel on the future of grocery at the show yesterday in one of the the That's My Pan was the founder of Chef.

[30:56] And he is so there I mean okay company in his POV was very much.

[31:02] The future of me on kids is on demand Not subscription because of the fatigue issues you mentioned and that it's most likely store pickup versus direct-to-consumer which feels like the sort of your bed mealpal as well.

[31:14] Yeah and I think again that's one where.

[31:18] Tren can always favors the incumbents little bit more than the disruptors.
And so yeah we never want to throw the baby out with the bathwater when when making Investments why we we try not to redline categories we try to really focus on the individual companies that will be the winners.
But I think that one is at your pretty capital-intensive one.

[31:45] Switching topics right away cuz you you mention to instacart and it suddenly dawned on me.

[31:53] You you must have some relationship with Unilever because I know you're both investors in instacart and you have a really famous exhibit in our in our space that use Ulta Unilever.

[32:05] Yeah so your Dollar Shave Club was an investment that one of my partner is Rick Ross co-lead you know that.
Business I mean from the get-go was pretty early stories about every business is a roller coaster and nothing goes up and to the right I think that's one where.
We pretty much went up into the ride.
Time you're right from the get-go right from the video all the way through the 2 to the exit I mean with a few exceptions but for the most part was a very very healthy business kind of early on and so stay that way.
You know I think increasingly.
For a lot of these big e-commerce Acquisitions you know whether it's in jet whether it's a Dollar Shave Club where there's a chewy.

[32:54] It always becomes if you're obviously the fundamentals are important I think.

[33:00] Critical to to Taconic stop the conversation.
I think a lot of the times these companies and now thinking about how quickly e-commerce is happening and.
The fact that if they don't move quickly they're kind of going to get left in the dust and so they're almost thinking about these Acquisitions as.

[33:22] Extent of market cap.

[33:23] Percent of market cap when was like an insurance play and I think that's what's driving a lot of these kind of strategic multiples I think Dollar Shave Club could have definitely been Justified on fundamentals.
But I think that was that was as much a fundamental kind of lead m&a story is it was a strategic Ma.

[33:47] Yeah I think I read some stories and I don't know any of the numbers but I think they were putting some pressure on like Gillette and they're like starting to feel it at the cash register.
So I was more than insurance policy is really on to something and eating our lunch.

[34:03] Totally.
Totally and I think it was that was more of like a P&G story but I think the Unilever was a great opportunity to kind of get a shot at running the the male bathroom right so like it was a story around raises but I think.
Other ancillary products.

[34:21] Scot some interesting knock on effects there's an activist very active and P&G right now and his whole thesis as you should have bought Dollar Shave Club and you're not doing enough to go to racton,
and it's really interesting to see these these really big brand get shaken up from the top down because they day or not interesting enough and direct consumer in France.

[34:41] Totally and I think you know this way cuz you have to give the Toys R Us and use your that's one where.

[34:47] I just feel like that company is being really slow doing today you know it's it's they you're in this huge category.

[34:55] Huge category.

[34:57] You've got the biggest physical footprint you know in the world in the category you've got almost ubiquitous awareness amongst consumer and and and Muldrow.
And so why it's not.

[35:13] I think I could have done a lot to Sriracha themselves into this new era and I kind of didn't see the result on the retail side what we see is almost.
Application of like retail so I think it's fashionable to come out and say and Retail his dad these retail apocalypse whatever.
I think what we're really seeing is there pockets of retail that actually make a lot of sense in that a growing really quickly like off price is really good example of.
Actor value segment of retail is growing really fast.
And I'll pry specifically are you okay to Ross you work at a TJ you look at a Nordstrom Rack you'll get a Saks OFF Fifth like all of the growth in in in the causes businesses are from the off-price channel.
Increasingly Seymour Mo Supply made for channel made for a price you know I think on the other end of the spectrum you got a lot of growth in luxury I think it was as you see the premium ization of also different categories in.
You know.
The rich getting richer and I think the growth in the luxury segment kind of place to that I think where we see a lot of.
Issues a kind of the middle ground right so where you know you know the value play to the consumer you know the luxury play.
You kind of a middle play which I think is increasingly kind of nothing play because I think that's where.

[36:45] A piece is that where e-commerce your kids you the hottest that's where I was on hit you really hard and I think that's where you saying a lot of these bankruptcies in and what not wear.
There's no basis for differentiation in the consumers mind and you just never going to win on price and selection and so that's where they're all failing.

[37:04] Yeah but if you're if you're neither value or convenient then you're toast like Toys R Us isn't like a convenient place to go and it said we not value Macy's allow these guys are closing stores are kind of stuck in that.
The Death Valley in the middle there we had books from the light on and they have a really good report about this when they called the retail bifurcation and it got really good data around that that that's a definitely something that that all brands and retailer should have in mind I think.
I'm going to think about who they're going after,
you kind of brought it up so it was big into it and it wouldn't be a Jason Scott show we did talk a little bit about Amazon how much does that factor into your investment decisions you know what kind of,
you know what used to be like when I started mine when I first companies I was like oh my gosh what do you know about Google and then it was you know,
there's always some company that that's kind of top of mine with investors seems like Amazon's definitely least in the Public Market Chino they they open up pharmacy license in you have some little part of Florida in like all the,
all the drug stores are down 30% is that when you guys go in is that like one of the main things you think about.

[38:02] For sure yeah I think it's really hot if you know if you have latest at our soul was Amazon is taking like 60% of every new e-commerce tall are coming on stream.
And that piss and his actually.
Going off of velocity is so I think he's got a tumble is a couple years ago that number was 50% now 60% and so they're actually increasing their share of new e-commerce dollars which is.
Kind of scary at the same time like.

[38:35] You're speaking to a Avicii friend of mine, talking about shop talk is always become like how to play defense against Amazon.

[38:45] There's some retailers again that's that's probably the right you know it's probably a gender item number one.

[38:51] But I don't think that.

[38:51] I don't think that it is a given that I'm as on will you know when across all categories all geographies or.
Your consumer segments is that right I think there was a time where you could serve.
Draw boundaries around what Amazon would do ride like they would never get into it supposedly never getting to Fresh That was supposed to be never be able to do high-end fashion like boundaries and now being kind of broken down as Amazon.
And needs to be in the biggest markets and will be in the biggest markets at the same time you know I think you.
As investors we really think about what are the stop with the consumer. What are the vectors on which consumers make their buying decisions.
Price convenience selection experience all the way down to the list and I think you are seeing like I think the data C.
The revolution is coming. Because you've got proprietary product not available on Amazon you got right brand stories and you've got your value for money.

[39:57] And I think.

[40:00] I think you're you're seeing the success of these Brands I think.
In a world where I'm is on his is actually you're gaining share I think you're both things can be true but I think you can have vibrant.
Lifestyle brands that are worth your billions and billions of dollars and you can also have at the same time I was on kind of growing and you know I don't think those two things are mutually exclusive.
You know I think that they're they're all the pockets right like I've been feeling a lot of time in.
Sir cross-border near the international weather it is retail is based of the Seas or.
Trying to play the geographical Arbitrage between for the east and west and kind of like what wishes done before are the categories and we've seen some great companies in the space that are really trying to.
Reinvent the value equation for consumers like I think they did it say brands are really educated consumers that.
Traditional Brands can be a riff off right and I think.
You look at businesses like Hoshi look at businesses like wish either either going to be really really want me we shorty is a really really big business.
In part because it is a value play but also because it's fun right it's fun to shop wish like we're investors in a company hold holler it.

[41:27] That the vector those guys are competing on one of the back doors is a shopping experience.

[41:32] And so.

[41:33] And so that's another thing that we're looking at here which is.
I love this company shop shops which is kind of live streaming platform where influences can kind of come on in and talk about the products that they're excited about it and eventually have continued transact like.
That's something shopping as entertainment feels like something that I'm is on.
Ward get too early.
And so you know. Yes roundabout way of answering question like yeah we definitely think about Amazon same time and we try to be full full. Where I'm is on would be weak.
And make investments accordingly the other datapoint is like it when you talk about Fanatics or chewy or like these are all.
Your horizontal multi-brand retailers right.
Arguably competing head-to-head with Amazon so like some of the biggest outcomes that we say some of these companies alike actually.
Directly competing with Amazon and so I don't think it's a given I don't fall in the camp that like your multi-brand retail was Dad and it's kind of Amazon forever and ever.
I think that you know.

[42:49] For those companies I think the main.
Echo by which a computer customer service and so you really trying to get the customer to shop you for a particular category ride for cherry wood.

[43:03] Yeah I think Pat's I think my pad I think Cherry Fest and I think if you can do that you can't really compete against against I was adding takes a lot of things really hard to do that increasingly difficult to do that like a job is to really try to find the.

[43:19] We we hear that a lot though the shoppertainment component being a potential differentiator the sort of.

[43:27] Discovery X-Type experiences nothing Amazon strengths but you put all those things together in the the big winner that we think at the moment is the most defensible against Amazon is branded live marijuana plants.

[43:40] Just as I am.

[43:41] I'm done with Dad.

[43:42] I'm going down I'm doubling down.

[43:43] When I before I move on from the Amazon topic so the one tactical kind of thing that a lot of Brands struggle with and you're just too kind of pick you up you mentioned a way which is kind of a travel company.
Should they sell on Amazon so you created this this brand if you're not an Amazon you're missing like 60% of e-commerce so.
An unbiased on this one cuz you started companies helps people selling Amazon so but it is an interesting dilemma because you know.
The argument against it would be all right now we're going to educate Amazon in this category were going to show him our best sellers will come out with private label but you're kind of like you know damned if you do damned if you don't so.

[44:22] Yeah I think where I coming come down on that is it really depends on the company I think if you are building.
I think the risk with selling on Amazon for direct consumer that brand that's what we're talking about is.
You get your scent to get commoditized weed in the Amazon environment I'd still like.
What what happens is you of your number x on a list of products and your the consumer is essentially.
Intent driven enough discovery-driven in and very very very price conscious right and so if you think about a brand that is trying to tell its story.
Amazon the Amazon environment just doesn't give you much.
Breath to give you much rope to tell your brand story right and they're going to a discussion earlier then give you any,
way to create this world that consumes kind of step into going back to what makes a great Lifestyle brand.
There are a ton of risks or d2c brands that are trying to tell this all encompassing story.
Deciding to go on Amazon for the volume and find themselves speak commoditized I actually think about it last is like Amazon copy your and I have so much dead already without you being there that like.
Went out investors in older than me if you look at all soon as such old is on Amazon like there are hundreds of CopyCat products already right.

[45:53] Weather old veggies on there or not I think that that activities would have happens.
So it's I think on the brand side it's it's kind of tough to two face. Commoditization.
That's it I didn't Amazon I'm actually looking for companies that are leveraging Amazon of the platform right and so like I think that.

[46:15] You know I think that there are really interesting things you can do with Amazon data outside in.
I think they're really interesting things you can learn from trending products on Amazon.
And I think some at the same time on the supply chain side things are getting a lot quicker than they've ever being right to life.
I'd love to see more companies that are actually kind of.
Playing to the strengths of Amazon and really trying to leverage Amazon and you talk about some of the biggest companies in the world like.
A lot of a lot of becoming get started because you have some sort of distribution unlock.
I need to think about gaming space single on Facebook right it is very obvious example where you know.
You kind of unlock this proprietary distribution you can get this guy really quickly.
Amazon could be. Now for for the right types of companies you know.
Types of companies will be aspirational lifestyle Brands but I think there are other types of companies that are more kind of data-driven foston you know companies that you can see being I could built on Amazon and being very successful.

[47:29] If you are you trying to see any like Amazon ad Tech deals yet that seems like I've been coming space.

[47:35] Definitely we pray like every off AC haven't really focus on that Tech recently.
But yeah I think there's some really interesting I think I think Amazon itself is only starting to get into the potential of the their platform in that in that respect I think.
Name something that we continue to look out for and we've seen a couple we haven't really.
Well I'm really dog and I think to the extent that we will but suddenly interested in that in that space in those opportunities I also think that like.
I think about bonobos is an example on on Facebook you on Facebook open that right rail like one of us was right there and I think they had benefited a lot from those early.
Nordstrom sales perspective but just from an iguana spective like if you were on Facebook you were in their target market at that time like you sold but overhear you sore but other side and I think Amazon.
Add ecosystem is out of similar kind of point in time out where it's not.
I think in a couple of years it'll be very very expensive I don't think it's quite there yet so there's this kind of this window of time.

[48:49] Not if it's going to be interesting to watch I think you know special.

[48:53] It's becoming important platform for all the brands into your like months earlier contrarian point like I.

[48:59] Probably wouldn't be very excited about adtec around Google or Facebook at the moment but but Amazon may be an interesting space and we had a couple of interesting guest on the show that I want a pivot the.

[49:10] I want to put it though.

[49:13] One for the last last set of questions before we have to break.

[49:19] All these Trends due to the sort of the traditional notion of a store I know I am in particular you you.

[49:26] Mentioned the way which I think.

[49:30] A way which I think I have a couple stores.

[49:34] . yeah yeah so we spend we spend a lot of time thinking about then you store format right and I think.

[49:43] That probably gives it away right which is like when not we don't think about it as.

[49:48] This this nice wipe out of physical retail you think about it and he's probably a pretty consensus of you we think about it as the innovation of the stall format.
And what does that actually mean right so you know you know why is example display the the easiest one to Think Through.
Yeah you going to the store you got to walk to the back of the stores to find a suit,
right like it is it's it's a it's a very intentionally design store.
Around giving the consumer a inspiring the consumer to think about travel and.
And really dig into that you're the next.
Yeah that actually like it's funny like in the New York still have got a cafe with all these travel guidebooks a lot of people sit there and read these guide books and.
Yeah it is the stores are intentionally designed to kind of make you think about traveling and have you think about traveling always give you this.
Oasis like in your day to kind of have that space and and.

[50:54] How do you buy into that buy my cell right now.

[50:54] How do you buy into that that last all right and then I serve at the end of that process your hair if you want to buy suitcase we have them to.
That's a very different it's a nuanced but very important distinction.
Between your something like that and you're the physical store as a repository of product.
When you think about the physical stores are product repository that's kind of dying and I'll Ghibli.
That death is kind of going to come about foxes in a lot of people think I think it's one of those things where you kind of declined 2% a year and then you cut a full off a cliff because the operational Leverage is is such the bad happens.

[51:44] If you can and we think a lot of that stores as experiences and what does that mean for the individual brand and not trying to push you Prada.
And I think some of them are tactical parameters that are typically smaller format stores typically less inventory in the store sometimes no inventory in the store.
Typically an online offline sync right whether it be.
The conversion happens online and pickup happens offline or is some data collection online and you know the inventory fulfillment happened I'll fly out of whatever the parameters are.
Your we talked about small short-term leases only said about Tactical.
I think.

[52:35] We really it's.

[52:36] We really it's kind of rare the direct-to-consumer brand at scale that won't have their own stone at work I think that store network will look very different to the incumbent stone at work.

[52:48] I suspect a you may well be right and Daniel that's going to be a great place to leave it for today because it's happen again we've used.
About a lot of time so folks want to continue the conversation we didn't charge you to jump on her.

[53:01] Page and leave us some questions if you enjoyed Today Show we would certainly appreciate you jumping on iTunes and giving us that 5-star review.

[53:09] Daniel thanks for doing this today if people want to find you online what's the best way to find you.

[53:13] You can tweet at me I'm at Daniel Galati Daniel gulati on Twitter.

[53:20] Awesome thanks Ryan coming.

[53:22] Until next time happy commercing.

May 1, 2018

EP129 - Amazon Q1 Earnings Hot Take

This episode is a hot take of the Amazon Q1 2018 earnings

  • Amazon Q1 Earnings Highlights
    • $51b, which is a 43% y/y increase - 39% constant currency,  27% ex- Whole Foods
    • NA was up 46% y/y which drove $1.1b in profits (26% ex WFM)
    • Intl was up 21% constant currency and lost $622m 
    • AWS had a material acceleration up 48% y/y constant currency and profits were $1.4b
  • Amazon Prime fee increasing to $119 (20% increase)
  • Marketplace 
    • 52% 3P by Unit sales
    • 3P Growing at 60% (constant currency)
    • JMP GMV analysis-> 1P - $31b / 3P - $69b = $101B GMV
    • Wingo GMV estimate -> 1p - $37b/ 3p - $66b = $103b GMV
  • Amazon Ads - $2B quarter 132% y/y growth (72% y/y growth before accounting change vs. 60% last quarter)
  • Increasing possible Amazon becomes first $1 trillion dollar company
  • Bezos Annual Letter
    • 100M Paid Prime Members (likely 60M in N.A vs. 124M Households)

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

Episode 129 of the Jason & Scot show was recorded on Monday, April 30th 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 Automated Transcription of the show:


[0:25] Welcome to the Jason and Scott show this is episode 129 being recorded on Monday April 30th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

[0:39] Jason and welcome back Jason and Scott show listeners.

[0:45] Will Fox tonight we want to focus on some Amazon news because there's been a lot of really big amazon news that his hit the wire in the last week or so and we've been.
Bisley publishing are shoptalk interviews and wanted to interrupt the flow of those coming out so you get something a little more timely here and so that you know how to,
did Justice Amazon news and think about what it means for your business Jason wants to kick it off.

[1:12] Yeah so two big events that we're going to talk about tonight early last week,
Jeff Bezos released his annual shareholder letter and as we talked about several times on the show this something that he publishes every year he publishes one for the current year and he republish is the first one he wrote which is.
97 if I'm remembering right is that.

[1:34] That is correct.

[1:35] Ding ding and highly recommend you read the 97 one if you haven't,
what will you talk about that a little bit later but then later in the week Amazon did their earnings announcement and tons of interesting things from both events so that's what we want to talk about tonight.

[1:57] Yes we're going to jump into the earnings let's look at the high-level and then we can kind of dig in so one thing that's kind of interesting is there's a new accounting standard coming out I know you're excited about this Jason.

[2:10] Oh my god I've been like my family have been on pins and needles for months waiting for this.

[2:14] It's a sit-down folks it's a it's a big one buckle up and so the.
I know this because I am involved to the public company but the there's a group called The General accounting standard thingy Gap,
and they have come out with a new way of recognizing Revenue that's called accounting standard 606 and this is.
I'm packing all kinds of businesses one example of how it's impacted Amazon is.
Amazon used to take Prime subscriptions and waited heavily towards the fourth quarter because that's when I got a lot of sign ups in this standard says you can't do that you have to allocate it,
equally amongst quarters you can't do weighted averaging and things like that so it causes a little chaos and in the world of looking at these kind of results because you said we have apples and oranges so tonight on the show we will.

[3:06] Do our best kind of straighten that out whenever it comes up but it's interesting just for folks to be aware of cuz you'll start to see some really weird numbers coming out and if you see the 606 that's a clue that just the rules are changing under underneath it's not the company doing some kind of weird shenanigans.
So that being said.
Best way to come to give us a $30,000 summary of Amazon's first quarter is it was a blowout quarter so not only did Amazon exceed pretty much every Wall Street expectation and its own kind of guidance but I watch even more closely is,
the growth rates and pretty much every growth rate we track here at Jason Scott show is accelerated,
which is pretty impressive so they had a very strong fourth quarter so to accelerate year-over-year coming off of 4th quarter.
It's just pretty impressive it just shows they've they've kept a lot of momentum I'm also you know we haven't had prime day it's just kind of a few one kind of a normal.
A kind of boring quarter to be honest with you in the world of e-commerce usually it's a breather quarter but Amazon you know it doesn't take breathers they just soaked up a bunch of Cher.

[4:13] The Lucy so we're going to talk about the marketplace briefly at but then when things you want to spend a little bit of time on is the ad business ever going to jump into that and worked at the show then we have in the past.
Jason wants you kick ass off with the overall results and then we'll will dig into the marketplace.

[4:33] Yeah first thing that caught my attention was shortly after their announcement I saw like a Jim Cramer segment and he called this quarter for Amazon like the greatest quarterback company ever did you.

[4:47] I did that saw that yeah.

[4:49] He may be slightly front of hyperbole but that seems like kind of a big deal.

[4:53] He is prone to hyperbole my favorite is when he famously wrote on his knuckles Duke 600.
Got turns out he was right but yeah so which is Facebook Amazon Netflix Google so he watches these stocks all pretty close.

[5:12] For sure for sure answer the first time we want to talk about is the growth and before I make the big reveal let's remind listeners like what kind of growth numbers are impressive so,
in most cases you hear folks talk about the typical annual growth rate for e-commerce is around 15%,
inter put that in perspective.

[5:37] Good a brick-and-mortar retail growth right now is maybe 4% averages like 1% so 15%.
Is much faster growth.
Then retail is a whole already which is kind of impressive but the 15% number actually has some controversy that comes with it so.
Most of the folks that site these 15% numbers in.
They vary slightly so do you know if depending on whether you're getting in an RF number or a comscore number or a drug number from the US Department of Commerce 15 could be 17 or 16 in a lot of that has to do with.
Their definition of retail exactly what categories are are in or not in their number.

[6:22] But most of those companies based their estimates on Raw data from the US Department of Commerce and the 10 all come in with North American grow that right around 15% and so when we look at a company crossword kind of comparing it to that 15% number,
I will say that most of the companies we tracked are growing substantially faster than that 15% in it.

[6:46] Kind of throws that 15% in doubt you know it's so for example Amazon alone is.
Right around 50% of all e-commerce you know arguably a bigger percentage of the growth some of the other big retailers Walmart and Target.
Best Buy you know if all of those huge companies are growing at north of 15% it's it's actually hard to figure out how you land at 15%.
In there there are some Economist that you know fine fall in the Department of Commerce is methodology for tracking e-commerce a also.
I'll just throw that out there for your consideration but that being said.
Amazon q1 number was 51 billion in Revenue which is a 43% year-over-year increased so.
What you dramatically above that 15% if you take out currency fluctuation that's 39% it at the constant currency if you take out the Whole Foods acquisition they grew at 27%.
In that the thing I like to remind people is usually we talk about.
The biggest players in the industry and then we talked about the fastest growers in the industry so usually you're talking about you know.
Company X maybe it's Walmart you know what they say the hugest percentage of the,
the retail market and then you're talking about Warby Parker is the fastest growing or so it's it's extremely rare and you know frankly scary.

[8:22] When we talked about Amazon in in eCommerce and we talked about them has both the the dramatic market leader and.
One of the very fastest Growers.

[8:35] So one thing I always like to remind people like whenever you see these kind of numbers you always get someone in the room pointing out that hey that's great but like,
you know it's easy to grow when you're not profitable in your you're sort of buying buying market share and you know so there's this common diatribe that that.
Amazon is funded by eight of us and now maybe the ads and that the the core retail part of their business isn't profitable.
And I would really encourage people to sort of update their they're thinking on that there's unit significant evidence that most parts of the the retail business and mature markets.
Are profitable their operating income this year this quarter increased 92% to 1.9 billion in the first quarter so if you back in the math.
The bulk of that that growth came from the business in AWS so it is fair to make the argument that,
those are the the fastest growing businesses in contributing the most to the revenue but you know remember the Jeff Bezos,
always talks about revenue and profitability not being the the the,
key success criteria and the fact that free cash flow is really wet at Amazon's trying to optimize for free cash flow bassist the the retail businesses is like the majority contributor to their revenue.

[10:06] Yeah that's a good point. And the reason free cash flow is more miserable is because it's cash right and you pay stockholders back in cash not operating income operating income is an accounting.
Space thing that,
importing a lot different businesses but it's really hard and Amazon's business for it to matter because you have all these rules that spread Revenue out even though you got the cash and then they also spread out cappex to appreciate it so,
I really kind of distorts what's going on so FCF is a better way to look at Amazon and how they're in the business so it's when you look at that free cash flow came in at 7.2 billion best down from 10.1 a year ago,
but it's not down because when operating reason it's because.
What you have is you have total free cash flow you subtract out Capital Investments and then you're left with kind of net free cash flow 7.2 this year q1 is down from the 10.1 last year.
But if you take out the Investments they're making and quote-unquote your property and Equipment purchases and I'll talk about that in a second the gross.
Freak Ashley was 18 billion and then they've invested.
10.9 billion and capex this quarter so we kind of say yourself you you made this point earlier you know if they're so big and they continue to grow how do they do that they are still investing at a just tremendous clicking other taking about.
No more than half of that free cash flow and investing it back into growth and that's that's pretty crazy no not many businesses I'm not an expert on Walmart but I think they.

[11:41] They're probably dusting I would imagine 10 to 15% into growth and hear Amazon's ingesting like 50% of free cash flow into into growth and you know where that and it's out what is that it's a lie.
Buying rights for movies and things for the streaming that's a small part of it the two biggest chunks are going to be equipment for the cloud computing and fulfillment centers you know they they continue to build fulfillment centers that just on Norma's clip they're building out.
Prime facility in CVG you know so just amazing amount of investment in infrastructure they're making to keep this business growing at the pace it's growing up.

[12:20] A year ago that that same kind of investiture.
What's 7.4 billion say ramp that investment up from 7.4 billion to 211 billion a year of a year so that.

[12:32] Pretty sad when on capex that's why I went down your weird but it's because I think they're increasingly bullish that they can grow this business for the foreseeable future at least 2 x this rate of e-commerce which is which is.

[12:42] Pretty crazy yes I'm point you do run out of.
Performance tuners to build a I would imagine they continue to invest in the.
Like the same day infrastructure with the planes and whatnot.

[12:56] Yeah and again all those Investments are out of long-term competitive Advantage it's a moat against everybody else.

[13:01] Yeah and at some point when they stop doing those Investments That free cash phone number in a right now if they weren't doing this investment would be 18 billion which would be.
A lot of cash but if you keep going 30% you know that that number you know could conceivably get up into 30 40 50 billion dollars in free cash flow and that's why.
That's how Wall Street salary this thing.
Because if you look at kind of though you know the the single-digit billions that they're making an operating profit you're like wow why is this thing worth.
Nearly a trillion dollars it's a free cash flow and that's what Wall Street you know it is watching and when you can see a packed free cash flow being like that it it's it makes sense to invest at the pace that while she does.

[13:45] Yeah and oh by the way they also drop 22.6 billion and 100 which is way more than any other company like way more than any tech company invest in R&D.

[13:56] Take us on into the sum of the Interior results.

[14:00] Yeah so is it a reminder like the break their revenue down into these three big lines of business that are you no material to there,
their revenue so the first is North America so North America was up 46% year-over-year so that drove 1.1 billion and Prophets,
without Whole Foods that's 26% year-over-year growth so pretty healthy in North America which is.
Their most mature Market International was up 21% based on constant currency and they lost about 622 million on that.
So you know a couple of things to know if they're that lost was actually.
Much smaller than most of the analyst were forecasting for international a lot of the international markets.
Are much newer in Amazon is investing to win those markets you know some of those markets India in particular is you no potentially.
The biggest prize out there either India or China but India's largest perceived as like the the biggest potential consumer Market that that you know doesn't have a dominant player that already has it locked up.
Like Amazon does North America or like Alibaba does China in so it it really is like the the biggest battle out there and you you wouldn't expect to be turning a profit in those kind of you know early.
Investment markets at this point so the fact that that on their whole International portfolio they only lost 622 is actually.

[15:35] A substantial piece of good news for Amazon.

[15:39] And then the 3rd big chunk for them is AWS Amazon web services.
That also had phenomenal growth That Grew at 48% based on your VR constant currency and prophets were like 1.4 billion.
So you don't amazon-web-services once again 48% when you're already like the dominant market leader is super impressive.
I think in the the shareholder letter Jeff Bezos talked a little bit about how.
You know that Amazon really had this sort of 6-year Head Start before they had I think we called the like-minded.
Competitors enter the market and so they they got this like 6 year old Vantage over everyone that they've really you know continue to keep their foot on the gas and just kind of you know take that early lead they were given and there.
They're using that to keep building it and and you know so far they they haven't run out of growth opportunity there which is pretty scary and amazing.

[16:47] So
Saturday a business which we like to talk about a lot is there add business in it isn't yet big enough that it gets its own segment so the ads are kind of blended into those.
Three buckets so there are at least they're in a 2/3 buckets in the North American International numbers.
And what we'll talk a little bit more about them later but then the.
The other shoes piece of news which I think it's most of the consumer a buzz this week,
is that Amazon also announced a substantial increase in the price of a Prime Membership so they jacked up Prime 219 bucks a year,
which is like a 20% increase for consumers.

[17:34] Yeah he had that goes into effect May 11th so if you're not a Prime member this is your chance to get it at a discount and it's it's it's interesting they're doing it now you got to presume Prime day will be sometime in early June so I think they're kind of ramping into Prime day I think they know they did have a lot of data that shows that's a big sign up time so there,
third there some method to the madness on that date are you going to cancel your Prime Membership Jason.

[17:58] I am not potentially my wife and I which each one of them,
for those not in the know One Prime Membership not only covers the whole household you can actually share it with five family members,
and so someone silly that my spouse and I each have a Prime member but membership but you know those were these valuable assets that we both brought into the marriage and we're both love to let go of our,
old old Prime memberships at work white and financially irresponsible.

[18:31] I look forward to hearing who's a subscribe and save as to be recreated.

[18:35] Yeah I as with most things I think it's pretty clear that my wife is going to win that.

[18:41] Cool let's see let's do a quick review of marketplaces so long time listener still remember that Amazon does not disclose the size of the marketplace from a GMP perspective but they do disclose one metric which is the mix between and it's a unit mix between 1 p.m. and 3 p.m.
so that came in at a new high of 52% to 52% of the units sold on Amazon or third-party and.

[19:07] We probably said this a thousand times so I'll just run through it very quickly so Amazon's revenue for the quarter is 51 billion and the third party is counted the other.
30 greatest between 10 and 15% I use 10% to make the math easy so really when you when you.
When you back into it what you find is there's a huge hidden amount of sales happening at Amazon because they only can count 10% of those sales for the third party Marketplace so the ends up that about,
67 billion of that 50 billion is revenue from the third party Marketplace multiply that by 10,
her actual number so this is.
I used to be the only one that would pontificate on this so when I run it to my calculator I end up with the quarter at a hundred.
The first party stuff has a lower aov because most of the digital.
Apps books and those kinds of things are are in first party and they have a lower aov so it it kind of.
Excuse the third party tends to be higher average order value so it's.
Unit wise is 52% but volume-wise were looking at almost like 66% or 64%.
Third party 40% first party so that people are kind of.

[20:37] Picking a part of those clues in and then figuring out so they tell you.
Seller Services Revenue in inside of their is FBA fees as well as third-party fees so if you make some educated guesses you can do something so one of the one of the Alice JMP,
baseball schiano's pick this out there all around the same range they came in at 1 p.m. 31 billion third party at 70 billion so a total of 101 the right in the ballpark of where it where I've been guessing which is good so.
The punchline of this is Amazon feels like a 200 billion dollar pastry Taylor but there really a 400 billion dollar pastry Taylor so just in this quarter.
Yeah it feels like 50 billion which is the top line but there's another 50 or 60 billion have a hidden under the mass of the ice,
which is this Marketplace in we always encourage people you and I are on a Jihad to tell all the retailers about this so that they don't underestimate the the impact of Amazon I just just reading an internet retailer.
They're kind of doing that they missed it at this time and that all this is frustrating what other little nugget on the marketplace side Amazon is really pushing this new functionality called Amazon Global selling they were talking a lot about it at.

[21:50] Shoptalk for example this is what allows small or businesses anywhere in the globe to search Lee use Amazon Fulfillment Network and load balance globally so you could be a seller in the UK.
And have a practice doing well and if you allow Amazon they will load balance it.
Across Europe into China and Japan that even in the United States so they had interesting stat that.
The first time I saw where they said in 2017 Global sellers sales grew more than 50%.
Exodus this kind of cohort of people doing Global selling their sales grew more than 50%,
and now it represents more than 25% of third-party sales on Amazon so strong to be a pretty material part as this kind of cross-border trade functionality that Amazon has now.
We know at Shell visor one of the red hot pass for this is China manufacturers over to the US and then to Europe in other markets.
So so Amazon is kind of got rid of all the middle men in the import world so you have these factories directly shipping product into fpa's across the globe,
and that product is getting sold on Amazon so it's kind of the wish model,
put on steroids and that is a huge kind of growth area but it also frustrates a lot of the sellers on Amazon because you know they're up against I'm selling a brand in microscope,
and there's a Chinese manufacturer signed exact same thing out of the same Factory without a brand for half price so that it does cause a lot of lot of angst out there in the world with this this program.

[23:25] Yeah and I think it's,
Rite Aid the program works crazy well I get super hard to move goods from country to Country in Legally sell them and customs and Tara sent by,
it used to be that that there was a huge competitive advantage to this like relatively small pool of people that have the expertise to navigate all those systems and Amazon really takes all the complexity out of that like kids in their dorm room can now do cross-border trade which,
you know what uniform was not possible and so is as more people adopt this system like,
the fact that it kind of raises all tides in it it it also makes you know counterfeit product and and all those things sort of more ubiquitous we available it is a growing concern.

[24:14] Yeah. I don't think that people underestimate it's just like just kind of Fino translation so because Amazon has this a sand catalog if they take a certain widget,
and translate it you know it gets translated into for five languages the next person to come sell that widget doesn't have to do the translation for just kind of say,
yeah yes that's the same Mason and they get the automatic translation that's been done they get to ride on that investment so,
if you're doing your website or something like that you don't get that benefit you going to translate it over and over and over again for every SKU where's Amazon gets this really nice kind of I reuse out of their catalog which is another huge benefit of this program.

[24:52] Yeah you know one thing I've never asked you know Diddy translate like the reviews or the reviews country-by-country.

[24:59] Country by country.

[25:01] Okay so they still have to build up the start of social proof in each welcome Market.

[25:06] Anything else we want to talk about in the marketplaces this week.

[25:12] Dallas jumping to ads.

[25:14] Yeah so you know they have this Revenue line they call other services which we think is mostly their ad business you know what else is in other services anything meaningful Scott.

[25:27] The do some of the do a branded credit card and they do some other,
they do on-site advertising so that ever tizing were talking about is a mg and a mess that tends to be 95 to 90% of the Intensive purposes it's the advertising business which is the new helping sellers promote their products.

[25:49] Got it yep and said that whole pool guy grew a hundred 32% year-over-year to 2 billion dollars for the quarter so I think that is one of the this is one of those categories that was affected by the 606 Gap.
Reporting is that true.

[26:05] Yeah if you if you met that out in group a paltry 72%.

[26:09] Well then I don't know why we're even wasting their talking about it.
So like this is more than one of these classic models where you know Google and Facebook are the dominant digital advertising platforms that have the bulk of the revenue and,
you know Amazon it at a much more base is there for able to grow much more quickly.
But 72% is is still a red-hot growth and I think they worked that's up from 60% growth last quarter so I.
The pace of growth is accelerating.

[26:42] And you know as a reminder for somebody games on the one of the reasons ad revenue is super exciting is.
It's highly profitable like you. Much more so than been selling physical Goods you know to the extent that it successful.
It's an ear recurring Revenue stream and so it's almost like a more valuable dollar of Revenue than some of Amazon's other sources of.
Of Revenue in the Amazon is really quickly and merging.
As kind of the the third digital advertising platform and so you know you seen a lot of buzz in the trades about it.
You know when people try to analyze that number they get to a couple different places like I think I've seen some estimates in the like 5 to 6 billion dollars a year.
I seen some people estimating 8 or 9 billion dollars a year for 2018 I have a feeling some of that has to do with.
Whether they're looking at the old accounting of the new accounting there is some seasonality that advertising for a for a lot of these products.

[27:52] The I think there is an anise out there that kind of try to forecast this Revenue out to 2023 and they got 236 billion.
So that put you in the order of magnitude of Google and Facebook although you know presumably those will both be a lot bigger by.
By 2023 than they are today but today Facebook said about,
like just under a 50 billion dollar run rate so like 48 billion dollars so they Amazon's really able to get there that's a meaningful third competitor and that's a pretty nice,
like ancillary Revenue stream for Amazon on top of all the other well-established businesses that they have.

[28:29] Yeah and we will talk about this we've been pounding this drum for probably 2 years that you know a lot of folks think this will be the third leg so that retail being one actually,
marketplaces I would call the second and then AWS the 3rd and then adds the 4th you have billion dollars and then you and I have talked about,
a voice like Alexa being number 5 so so I think there's kind of five legs to the store which is just not fair that you only need three but anyway that's the life of the Amazon.

[28:56] It's a very stable stool.

[28:57] It is a very stable stool and you know I said I think.
It's going to be really interesting so Facebook's had some stumbles here you know,
Google has some headwinds in certain areas in fact Google had a really nice quarter and they're shocked and removed much and I think a lot of it is people are starting to think when does this you know,
so if Amazon is growing this business at cause 72%,
when is the start to eat into Facebook and Google and it's long been an industry metric that something like 25% of Google's revenue comes from product-based terms which makes sense cuz they're you know if you kind of think about the verticals at Google you have time for a retail vertical I finance vertical Auto those kinds of things,
the feels like it would be a pretty big one Facebook also and I either Superior amount of product that's advertised on Facebook we had them on the show several times talk about all the great offering they have there so it's going to be really nice to see is this wraps up.
Do yo at some point there's got to be some share that gets taken and,
maybe maybe the lines cross faster than we think there are if maybe if Amazon on its path that 36 billion maybe Facebook doesn't keep growing it kind of the pace it is because there's going to be some loss of share somewhere in there,
I am when we at Chalmers are we talked to Brands specifically they are moving big dollars to this in a lot of it comes from your Prime.
More you got more data than I do on this but a lot of it's coming out of old school media but it's coming out of Google budget some things that because they're just feeling like this is actually more miserable than the Google stuff because if you're a brand is hard to go buy Google ads because you usually have to find a retailer to do it and it's really complicated you have to trust their data and it gets really.

[30:44] Really murky but if your brand you get really good data back from Amazon on exactly what's going on so so to the Brand's it feels like one of those measurable things are doing,
hi the last point we we had,
Jamie from Darrell on and remember he was talking about how they can actually measure offline impact of Amazon advertising because so many people are starting their product searches Amazon they saw.
Stop sales at like Walmart and Costco go up when they did a very kind of isolated programming Amazon so this is a pretty interesting area of Amazon and we're keeping a close eye on it and courage to run to,
to watch this because and if you haven't experimented in your business this is where I be.
Putting a lot of effort heading into holiday at 18 because I think it's going to be a really big opportunity.

[31:29] Yeah for sure to so one thing I don't you mention Jamie just a piece of side news Jimmy is actually left her out and he's now running e-commerce for Keurig which is a,
interesting to report having a back on the show to talk about his experience there in the near future.

[31:46] In your two interesting things about advertising the.
At the moment the reason that you probably don't feel like Amazon's growth coming out of Google and Facebook is because it,
it is like all digital advertising is growing very rapidly as it's coming out of the traditional sort of dead tree media right so so print in intellivision and if you think about,
the the traditional base advertising,
your most advertising comes from Brands not retailers and they start they do two kinds of advertising like they do advertising to build awareness for the brand so they'll buy a Super Bowl at the by ad in a magazine that just says you know Mercedes-Benz cars are great or you know Bounty towels are the quicker picker-upper or whatever whatever the case may be,
and the success criteria for those ads are just how many people saw.

[32:41] Or maybe they'll do some study to say how many people remember our brand as a result of seeing that at rights of the the the.
The outcomes of those ads are that the ad reached a person and that maybe the person remembered it.
And then brands do this other kind of advertising with a partner with a retailer and what they called trade advertising and most of that advertising is like.
Ads in the paper for their products you know what we call store circulars.
Or even a lot of the advertising in the store the the point-of-purchase advertising is funded by manufacturers.
So when you think about digital the.
A lot of the Google advertising is replacing that brand awareness advertising I'm in it has the same kind of success criteria like how big was the audience that's on my Google ad,
one of the things that super you know interesting and appealing about the Amazon ads are that you your success criteria is,
how much good you sold rights are you you do get much lower on the funnel as people start to lose confidence in these advertising Vehicles the safe place to be is the advertising Vehicles where you can actually measure a true Roi.
And so Amazon actually has a big competitive advantage over Google and Facebook and being able to quantify the value of the ads which is super interesting.
But the other interesting thing is Amazon can actually draw ad Revenue.

[34:12] From both of those old school models right so Amazon can get ads from the CMO at Procter & Gamble that used to buy a Super Bowl ad,
an Amazon can credibly make the argument that you'll get more eyeballs on our platform then you will on the Super Bowl,
but they can also get ad revenue from those trade teams that were you know historically buying store circulars in it and advertising in store at Walmart and instead get them to advertise next to the products,
an Amazon and so systemically those are two big advantages over the other big digital platforms it in the long run make Amazon a real scary competitor to Amazon Facebook and Google.

[34:51] Absolutely and there's a fair amount of add load on the site.
But you know if there's an auction underneath there so there's a fair amount of room to run so Google for example has had you have near the same ad load the tweet that but you know call it around the same ad load and and they continue to grow the last 10 years so so just within the current system,
but but Amazon hasn't even there kind of version 1 L on a lot of their tools and they haven't even really started with video so one of the smartest Acquisitions I think Amazon did a lot of people don't pay attention to his twitch so you see all these people now that are making,
there's this guy ninja he makes like $500 a month streaming fortnite and other games,
well that uses switch for that and you can imagine that's a pretty interesting audience for people to monetize so there's.
This really interesting things that they can do and they're also doing the Thursday night NFL so you could even say.
Musterbrand let's run in NFL ad and I can sell you exact exactly how much tide you sold this ad versus just eyeballs.

[35:54] For sure which is very powerful I think that NFL deal maybe one of the main reasons they're able to get away with a hundred twenty bucks.

[36:01] Yeah absolutely.
Cool last little piece on the quarterly earnings everyone Wall Street is very much a what have you done for me lately things are like good job great quarter what's coming next work so it's Amazon's practice to provide for guidance and they released their Q2 guidance,
and it's going to come in at a growth rate between 34 and 42% which is 38% of the midpoint this the succeeded what all Wall Street was thinking there so,
I am kind of classic Wall Street parlance it was a beat so the current quarter.

[36:35] Expectations and then they race was being raised which is kind of what you want and it was a it wasn't kind of a wallet and a huge jump up kind of thing,
so correspondingly you saw the stock really take a nice move and then most analysts have raised their price targets up into the socks kind of in the 1500 right now most people have raised the stock up to the highest I saw this 20/20 which was actually a,
a phone number where that is that's right when they get to $20 so Scott debit over at stifel raised it up to 2020 kind of saying,
county is Chester this will be the first trying dollar stock,
I'm to the point we we pretty regularly about once a quarter when we do these shows we talk about this race to a trillion dollars so when you.
Public companies you have a market cap and that's essentially taking the number of shares outstanding of multiplying it by the share price niggachu a market cap,
use Yahoo finance or something it's already calculated for either so last time we visited this Jason Amazon was kind of going back and forth.
What's number 3 and 4 with Microsoft so today if we look at this the number for company is Microsoft at a 718 billion dollar market cap.

[37:47] Number three is Google at 7:06 and Amazon is now number two so this move they've had up in the stock from about a thousand to 1500 over the last.
8 months.
It's beautiful up to the number to market cap company is 760 billion which is only about in a 340 billion shy of a trillion and 10% away from the lead the lead right now Apple + 838 billion.
Apple is announcing tomorrow Tuesday or Wednesday there's a lot of concern around Apple there,
you know we talked about the the new speaker they have you were not a huge fan of that one and,
that has been kind of dud the iPhone x hasn't been blowing off shelves and they have a China problem so there could be.
Because you have this kind of combination of looks like Amazon how to blow out there's a lot of concerned about Apple watch can see how they come out.
But but anyway long-term if we can't think about this leading up number 5.
Is Facebook at 497 think I should drop pretty considerably since this whole Russian interference thing is going to come up and in Autumn so.
The the number for listeners to keep in mind is when Amazon gets to 1700 they should be in the lead and then when they get to just around that 20/20 number,
they should hit a trillion dollars so it weave,
I've been calling that they would be the first to get to Troy and for a couple years and it seems like that was a long shot and it's increasingly looking like it's theirs to lose so we'll see.

[39:23] How much will you personally make it they do that.

[39:26] No,

[39:31] So we mentioned in the outset that Jeff also released his annual shareholder letter so you know there's a bunch of interesting facts in that way every year but this is one huge Marquee fact that caught everyone's attention and was at,
some of the big reveal and that fact is the Jeff Bezos does not know how to do a handstand.

[39:56] They're so yeah so kind of a painful personal admission.

[40:01] Yep. So he told a little personal story that involve the fact that he's going to do a handstand and after he got through that he mention that oh by the way we have a hundred million paid Prime members.

[40:12] This is a surprise cuz they've been very private about this for since Inception so I think everyone was caught off guard when they're reading the letter to see that and it caused quite a frenzy.

[40:24] Yeah I feel friend the show Jason Del Rey like predicted back in in like 2015 that he thought this was going to be the big year that Amazon Finally Revealed their prime number and so he was was only off by 3 years which is.
Better than some people but so that we were talking a little bit before the show that number.

[40:45] It requires a little bit of context but it certainly was in the range of a lot of the estimates,
the verse folks have been making right like I mean certain order magnitude would you you call that like soda in The Sweet Spot of those estimates.

[41:01] Yeah there's so the washer guys were kind of clustered right around this hundred million number and so couple,
couple things so she act all these parts would but these guys a very closely so that person why they said over so that gives us some pretty big range you know something somewhere over,
I got a hundred million and one up to Infinity so there's there's a big range there but I think we can assume,
you know I doubt it would be more than 110 so I think I would guess it's between 100 and 110 I don't think they would.

[41:30] He would have said over a hundred ten million if it was over a hundred ten.

[41:33] Maybe but then they're very catty to so for all I know it could be like a hundred fifty so it's really hard to guess what you guys.
But that being said so if you take that hundred million and it's paid so just remind folks do see a couple free entries into Prime and if she'll does off when used to be Amazon mom's now,
if wrap that up in the family program Jason was talking about we can have multiple people on a Prime account and then so it's kind of more of a household thing and then number to used to have free for students,
this is largely to get their textbook business which is quite lucrative,
I'm in Amazon now doing it does that to give 6 months free for students that's a very long extended trial program and then four-year discounted until they graduate.
All those programs up now pretty much converted to two paid so the only free Prime out there are people that are either in their 30-day trial or their 6-month trial with their students so it's a largely survey people and they say their Prime I think,
but she can be paid maybe plus or minus 10% but but pretty small. There is a global number so most Wall Street people had,
weed when you take Amazon and you want to take their Global number and parse it I usually go 6040 so 60 us 40 International which is kind of how there,
their GMP goes so some example that add number at 2 billion is probably 60% us 40% International now ads are probably less developed International so I made fudge that look at 7030 or 8020 but I do think for her prime,
pretty mature and all the markets so I would say that hundred mine is going to be 60 us.

[43:07] Although there are a bunch of Prime benefits that are exclusive to North America still right like grocery a lot of the digital video content.

[43:18] Video ethics National now.

[43:21] Okay the the like the prime the grocery delivery from Whole Foods is certainly unique to the US.

[43:34] Okay so I'll give it to you so 60.

[43:39] But in the UK you get same-day so it's kind of.

[43:43] Yeah but that's a tiny little island that's cheating.

[43:45] There's a pretty big part of your 2.

[43:51] Oh they're not part of your anymore he didn't get the memo.

[43:54] It hasn't happened yet we're working Liam.
The the one outlier is there's this company called cirp in a few what it is like consumer information research protocol and they had Amazon it 99 in the US so I think they kind of are off a bit now.
you guys find out to do surveys of really small numbers in the extrapolating so they like survey 10 people in 9/2 Prime and I like well certainly 90 million people in the US have,
it's not that bad but I think that's the little bit off so.
You know the way to think about this I always see this like 60-70 80% of us households have Prime if you take this number and we see it 60 million there's a hundred twenty six million households in the US so this puts a right at 50%,
I'm so 50% of households in the US have Prime that that feels right to me and then I think if you know if you parse that and look at demographics.
Yeah if for household this is the way the Census Bureau defines it for household incomes over a hundred and twenty K you're going to look at like 80 90% penetration then as you go lower it's going to get off.
Yeah down at the sub 50k it's going to be 20 30% of us households so so at that all fuels and checks out to me.

[45:08] Yeah two things are interesting to me so you crank up Prime membership to a hundred twenty bucks a year you have a hundred million page users you,
start the every year with 12 billion in Revenue before you sell I think.
Which is a pretty nice asset versus every other retailer on the planet that starts in zero every year with one exception which is our friends at Costco.

[45:36] Give me.

[45:40] And so I always like to compare Prime Membership with Costco so Costco has 90 million paid members in Costco is almost exclusively and I think is exclusively North America so not so there still,
significantly ahead of Amazon which is interesting and just a reminder on on Costco's model,
what is an oversimplification but Costco almost drives to break even on all their sales and essentially make.
There their annual profit be that that Costco membership fee that they earn every year.

[46:26] Inside like pretty interesting you know Costco membership is less expensive than a Prime Membership but like it's Costco members tend to skew older than Amazon members at the moment so it's kind of interesting you,
you would certainly think that if you're looking for with a cap is on Prime members it's certainly not the 60 million there at now it's at least the 90 million and since Amazon has a much broader demographic than Costco.
In North America.
You know you can imagine it's even north of that so you know maybe one day after Amazon passes that that trillion-dollar Mark you you know we could see them.
I'm in that 90 or hundred million just in North America.

[47:07] Yeah I've seen analysts do a bunch of surveys on this and there's a pretty high enough it's almost like 85% overlap of Costco and Prime members is pretty high.

[47:18] Yeah for sure and then the other interesting thing to me about crime is there was also some news it was alluded to in the shareholder letter,
but the Whole Foods is actually in the process of turning off all of their existing Affinity programs and it's a pretty clear that they're going to be replacing.
The the Whole Foods Affinity programs with Prime in those Whole Food stores and that's going to be.
What a real interesting set of new experiences and you know another lucrative reason that that people might.

[47:58] Become Prime members or at the very least retain their Prime Membership.

[48:05] And with that it is happening again we've used up all our a lot of time we tried to be a little more concise for this deep.
But if you have questions or you feel like Scott or more likely I got something horribly wrong we love to hear your point of view on our Facebook page so jump on over there and leave us a comment and we'll try to respond as quickly as possible.
You're always welcome to reach out to us on Twitter and if you found this show useful or valuable we would certainly appreciate it if you'd spend 30 seconds and jump over to iTunes and leave us that 5-star review.

[48:42] Thanks for this five stars everyone and thanks for joining us this week.

[48:46] Until next time happy commercing.

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.

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:


[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.

[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.

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

[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.

[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
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.

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

[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.

[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.

[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.

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

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

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

[5:16] Under that bastard us.

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

[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.

[6:18] Great time to start compass.

[6:19] Yeah.

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

[6:24] Frugality.

[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.

[7:16] Sweet and nice.

[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.

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

[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.

[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.

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

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

[8:14] Yeah that's a b c.

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

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

[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.

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

[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.

[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.

[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.

[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.

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

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

[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.

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

[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.

[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.

[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.

[14:42] Just some Mau movement.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

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

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

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

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

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

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

[19:13] Yeah yeah.

[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.

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

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[24:12] That can you get the data.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

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

[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.

[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.

[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.

[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.

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

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

[31:42] Did buy a lot of stuff.

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

[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.

[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.

[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.

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

[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.

[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.

[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.

[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.

[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.

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

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[37:41] I want to go lighter.

[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.

[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.

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

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

[38:30] There's a will there's a.

[38:32] Fortnite Meats products.

[38:33] People love the competition.

[38:34] Gamification for sure.

[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.

[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.

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

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

[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.

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

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

[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.

[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.

[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.

[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.

[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.

[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.

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

[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.

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

[42:00] 10% for you guys.

[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.

[42:13] I got high.

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

[42:24] We saw a lot of drunks video.

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

[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.

[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.

[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.

[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.

[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.

[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.

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

[44:23] Going to star in the first.

[44:25] Yes absolutely.

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

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

[44:41] Awesome watching NBA jerseys.

[44:43] Not yet.

[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.

[44:53] Thank you Jason thanks God.

[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:


[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.

[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.

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

[1:06] Did we use it as your.

[1:07] FedEx in his own bath so.

[1:09] That's great to hear.

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

[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.

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

[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.

[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.

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

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

[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.

[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.

[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.

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

[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.

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

[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.

[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.

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

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

[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.

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

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[10:48] Marriage Style.

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

[10:58] Very early.

[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.

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

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

[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.

[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.

[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.

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

[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.

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

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

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

[16:22] D'Amore.

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

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

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

[16:35] Falling Down is.

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

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

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

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

[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.

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

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

[17:04] 10 + *.

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

[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.

[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.

[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.

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

[18:06] This way that these tools.

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

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

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

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

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

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

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

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

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

[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.

[19:01] Buckeye Jail.

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

[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.

[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.

[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.

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

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

[21:08] Ulta Keynotes.

[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.

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

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

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

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

[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.

[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.

[24:20] Not yet.

[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.

[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.

[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.

[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.

[27:48] Buckle up buttercup a perfect.

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

[27:56] The time.

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

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

[28:01] Join us.

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

[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.

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

[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 and General Manager for  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 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.

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:


[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.

[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
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
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.

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

[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.

[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 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.

[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.

[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.

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

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

[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.

[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.

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

[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.

[12:33] The bigger shopping cart.

[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.

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

[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.

[14:50] One room left.

[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.

[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.

[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.

[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.

[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.

[20:09] I need the address.

[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.

[20:24] What am I cramping.

[20:26] Brand experience.

[20:28] Stores.

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

[20:36] Free.

[20:37] A lot of my life playlist.

[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.

[20:49] Actually already done.

[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.

[21:01] Customer.

[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.

[21:20] Score now yeah.

[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.

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

[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.

[21:47] Install.

[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.

[22:05] Engagement uninstall Ray.

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

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

[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.

[22:28] Traffic getting into tonight.

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

[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.

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

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

[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.

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

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

[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.

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

[23:51] In a world where.

[23:54] I got more people going.

[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.

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

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

[24:17] My business.

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

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

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

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

[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.

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

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

[24:54] Looking.

[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.

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

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

[25:06] But then you transact.

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

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

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

[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.

[25:55] Tricks that you can do.

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

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

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

[26:15] How often do I see one.

[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.

[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.

[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.

[28:20] 73rd Avenue.

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

[28:26] What actually is.

[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.

[28:55] Beginning of recognize.

[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.

[29:20] Crediting on sale.

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

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

[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.

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

[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.

[30:36] Somewhere are awesome store.

[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.

[30:47] They're just.

[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.

[30:58] Can anybody any.

[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.

[31:19] Give me the.

[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.

[32:06] What is 5 *.

[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.

[32:35] Chris sails.

[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.

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

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

[33:16] Very very boring day at work.

[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.

[33:30] American Eagle sale.

[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.

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

[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.

[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.

[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.

[34:19] Experience.

[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.

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

[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.

[35:19] I'd much rather.

[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.

[35:46] How to make silent.

[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.

[36:09] Who am I.

[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.

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

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

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

[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.

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:


[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.

[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.

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

[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.

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

[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.

[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.

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

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

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

[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.

[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.

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

[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.

[4:54] I'm a big fan of Indra nooyi.

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

[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.

[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.

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

[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.

[7:17] Nice.

[7:18] Indian DJ.

[7:19] Deathrhyme.

[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.

[7:23] All Style no substance.

[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.

[7:34] Got her all doing this.

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

[7:39] The bar is very very well.

[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.

[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 truly put and then obviously Amazon.
That and B2B b2c with lady. She out now pretty well you should check out and 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.

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

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

[8:51] You don't know how I rock.

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

[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.

[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.

[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.

[10:50] Big fan.

[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.

[11:10] No More Tears.

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

[11:13] And pictures bottle.

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

[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.

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

[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.

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

[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.

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

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

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[16:37] Journey.

[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.

[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.

[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.

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

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

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

[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%.

[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.

[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.

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

[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.

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

[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.

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

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

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

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

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

[21:41] Trend continues.

[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.

[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.

[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.

[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.

[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.

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

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

[24:14] My main focus.

[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.

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

[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.

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

[25:13] 1010 data.

[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.

[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.

[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.

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

[26:18] It Last Forever.

[26:19] 30-day attribution window.

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

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

[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.

[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.

[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.

[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.

[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.

[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.

[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 it's not very different right after I've spent a lot of time but,
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.

[32:03] Exploding kittens Lee.

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

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

[32:12] So was I so was I.

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

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

[32:22] I'm really good at you know.

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

[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.

[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.

[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.

[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.

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

[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 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.

[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%.

[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.

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

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

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

[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.

[35:31] Cilantro.

[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
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.

[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.

[36:18] Any strategy.

[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.

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

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

[36:45] Did you see me.

[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.

[36:55] Probably going more online.

[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.

[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.

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

[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.

[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.

[37:50] My belief is on that timer.

[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.

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

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

[38:21] I think a lot of.

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

[38:26] Blackboard.

[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.

[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.

[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.

[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.
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.

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

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

[40:28] Got some great stuff.

[40:31] Company mostly publishing LinkedIn.

[40:34] So I have my own bed.

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

[40:38] But it won't turn on.

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

[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.

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

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

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

[41:13] Kazakh feeling me.

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

[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.

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

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:


[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.

[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.

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

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

[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.

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

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

[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.

[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.

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

[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.

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

[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.

[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.

[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.

[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.

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

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

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

[4:11] Small HDMI cable.

[4:12] Exactly the server room.

[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.

[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.

[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.

[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.

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

[6:25] Absolutely absolutely.

[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.

[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.

[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.

[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.

[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.

[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.

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

[12:03] That was so long ago.

[12:03] It in the internet years.

[12:05] Absolutely.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

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

[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.

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

[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.

[22:47] It went the intern do it.

[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.

[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.

[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.

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

[25:17] What's feedback.

[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.

[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.

[25:47] That's be a balance.

[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.

[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.

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

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

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

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

[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.

[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.

[27:28] The sellers often is an hour.

[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.

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

[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.

[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.

[29:05] Yeah you're offering.

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

[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.

[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.

[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.

[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.

[31:28] Honestly I've been super transparent my email my email is just Bob at and I'm happy to take any any sort of questions or input at that at that email address or we've got 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.

[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.

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

[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.

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:


[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.

[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.

[1:09] Thanks for having me.

[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.

[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.

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

[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.

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

[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.

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

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

[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.

[3:33] Awesome.

[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.

[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.

[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.

[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.

[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.

[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.

[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 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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[19:51] By numbers.

[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.

[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.

[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.

[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.

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

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[30:58] Thanks.

[30:59] Thanks I appreciate it.

[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.

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.


[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.

[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.

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

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[8:22] Yes absolutely.

[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.

[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.

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

[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.

[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.

[17:39] Sprinkle.

[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.

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

[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.

[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.

[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.

[24:02] Yap exactly.

[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.

[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.

[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.

[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.

[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.

[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.

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

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

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

[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.

[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.

[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.

[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.

[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.

[38:07] Generally these first-generation experiences it's more the retailer created the data themselves.

[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.

[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.

[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.

[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.

[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 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.

[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.

[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.

[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.

[51:54] God knowing you Delray didn't what up it kept coming up he kept on them.

[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,

[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.

[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.

[56:14] Yeah and they didn't talk about it but I kind of got the vibe Nordstrom Ava invested in that that entity.

[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.

[56:43] Absolutely.

[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.

[57:47] Yeah I'd never met at Nordstrom's that was kind of cool.

[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.

[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.

[1:03:51] No no no. That's a typo in your notes you are exactly right 75%.

[1:03:54] He has a deep restaurant background I think.
I think he said his parents are restaurant for sure.

[1:04:06] Is Mom still run the restaurant.

[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.

[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.

[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.

[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.

[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.

[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.

[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.

[1:10:27] The other two things we need is a stylist and talent.

[1:10:30] Yes yeah we'll listen to Posse first then work on this Earth.

[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.

[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.

[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.

[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.

[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.

[1:13:37] Yeah I'm excited to hear that one.

[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.

[1:14:33] We have yes not Shay but one of the one of the folks there.

[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.

[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 test order to test order 3,
so it seems like they are stair kind of secret shopping him a lot over there.

[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.

[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.

[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.

[1:19:17] Yep I guess like 999.

[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.

[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.

[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.

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.


[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.

[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.

[0:53] I know I feel like I have won the lottery getting to hang out with you this much.

[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 it's his maybe half the size of a retailer I would say.