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

Join hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder & Executive Chairman at Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Apr 9, 2019

EP170 - ThredUp President Anthony Marino 

Anthony Marino (@amarino) is the President of thredUp (@thredup), the nation's leading online marketplace for women's and kids'​ like-new apparel. Over 25,000 brands, ranging from Gap to Gucci, are listed on thredUP.com at prices up to 90 percent off retail. 

In this interview, we cover the basic thredUp value proposition, challenges and opportunities for the re-commerce business model, the dynamics of operating a two-sided marketplace, customer acquisition, reverse logistics, and the dynamics for brands in the re-commerce space.

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

Episode 170 of the Jason & Scot show was recorded on Friday, February 22, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Friday February 22nd 2019 live from the etail West Trade Show here in,
somewhat Sunny Palm Desert.
I'm your host Jason retailgeek Goldberg and unfortunately due to travel issues Scott couldn't be here today so you're getting twice the Jason for half the usual cost,
Kira detail one of the big topics of conversation has been new retail Concepts that are blowing up and so we thought.
What better guess to have on the show then one of those Concepts so today we have the president of thredup,
Anthony Marino on the show welcome to the show Anthony.

Anthony:
[1:08] Thank you Jason great to be here.

Jason:
[1:09] We are thrilled to have you long time listener that the show will know we always like to start by getting a little bit of background about the gas so I can you tell us how you you came into your role.

Anthony:
[1:18] Sure so I've been at thredup about 6 years.
And I came to thredup it's it is actually an interesting story I came home from work one day six seven years ago and my wife had a big green polka dot box on our kitchen table.
And that was a threat of box,
and she reached into the box Sycamore have to show you something and she reached into the box and Sheepshead of unfurled this very good-looking cashmere sweater.
And she said I bought this for a box and I was like okay and she said this is a $500 cashmere sweater and I was like.
Okay and she said and it's used and I was like what and so she then told me the thread up story where she had sent in a bunch of our kids and her clothes to thredup. Credit.
The shop on the site from sending in her stuff.
She could have cashed that money out but she kept it on thredup the shop and she bought this amazing sweater that was used a great deal and she said to me you need to go work for this company.
And then about six months later we moved to California I was renting a house in the East Bay my kids were crying cuz they missed all the friends in New York and a big adventure in an e-commerce marketplaces in retail and second hand started for me.

Jason:
[2:37] Wow so decide note I'd be really focused on your wife's new interest in shopping habits if they're going to that directly affect your career.

Anthony:
[2:45] Yeah she's she's she's a smart smart person so I listen to her advice at least that's what I say publicly.

Jason:
[2:49] I feel like we exactly we all benefit from marrying up so used to it but let's jump into the threat of story little bit like down and give us the the rundown on the value prop.

Anthony:
[3:03] Yeah well that the the founding story precedes me by a couple years are founder and CEO James Rinehart look into his closet and just saw a closet full of clothing that eat that he didn't want to wear,
but all the clothing was in was in fantastic shape and I think if you.
A few fast forward to today where Marie kondo is encouraging people to the spark Joy by removing things from their homes that they don't use or don't love anymore,
his inside in his closet and on that one day many years ago and in Cambridge Massachusetts turned out to be something that millions and millions of people were experiencing as if they bought a lot of things that they weren't wearing or enjoying the fact those things,
making them feel guilty or unhappy because they were taking up space and they were reminders of mistakes from purchases past and he said I want to figure out a way to,
I make it easy for people to easily get rid of these things know that they're not going to be wasting their for destroying the Earth and getting into the hands.
And and that was really the birth of thredup it was how to help people,
clean out and make amazing you so the things are no longer wearing a particular women's and kid's clothes and then provide amazing deals for the people on the other side of that equation for whom those fought those were amazing finds there are Treasures.

Jason:
[4:17] That's awesome so if I like to read repeat to see if I get it right basically you're a sort of a two-sided Marketplace for Consignment so,
people that have stuff in their closet that they come to regret or in end of usefulness for them they send those to you,
you go through a process on board those keep the ones that are resellable and wisto's on a e-commerce site that consumers can then shop for
like a high-value products at meaningful prices.

Anthony:
[4:48] That that's right about there's about twenty-five to thirty five thousand Brands listing on thredup at any given moment there's 2 million plus items on the site.
And they're up to 70 80 90% off retail and there in like new condition so it's the things that America has in its closets are.
Beautiful but for the most part of what the vast majority are and we take those things that come to us and we we price them and attribute them and photograph and put them online so it's super easy with a person who wants to clean out,
and then for the person on the other side who wants to buy great brands at great prices is just as easy as shopping do you want any other e-commerce site.

Jason:
[5:25] Awesome and I have no trouble imagine that there's a super valuable merchandise and all of our closets that we don't use I imagine not everything in our closet is super valuable and I feel like there's some
remorse about what happens to that like I'm guessing you're going to tell me you have a good story for how you disposition the stuff that maybe isn't as hell.

Anthony:
[5:46] Yeah where are our goal and our commitment is that you know we have a 100% reuse goal and commitment for the items we receive so there's a couple things we can do.
With items that people send to us that aren't high enough quality to be listed on our site or in one of our stores or with one of our Retail Partners so what will we can send those things back to them we can say hey,
after the animatronics app you can you can pay a little bit and shipping and will send them back to you by the way most people.
Do you know they do that only wants they that they don't want to see it come back again or like wait how'd that happen why did I do that and then there are some things that we can.
I'll distribute through our partners who can sell those at consignment stores that don't have the quality standards that we have,
some of those things can be recycled into carpets and and if you've ever gone to the car wash those those Rags that they use to dry your car off those fibers can be recycled into into other future fight future Fabrics,
and I'm so yeah that's that's how we do it.

Jason:
[6:47] Got you and what are things that seems cool about your model to me.
2 fundamental problems you have with a lot of marketplace models are that you have trouble guaranteeing a service-level so I went eBay matches a buyer to a seller,
they can't necessarily guarantee how fast that sellers going to ship the goods to the buyer,
and they're also can be a trust problem the eBay can't necessarily guarantee the web the sellers selling is authentic in in the condition that the,
the seller promised it's in so you can send it to me you feel like a two-sided Marketplace except
you handle all the logistics and fulfillment so you basically can guarantee a service level and you also act as a sort of independent trust verifier that gets to see all that merchandise before the consumer buys.

Anthony:
[7:31] That's exactly right we are the we are the seller of record you know so we take possession of the goods we have for distribution centers throughout the us and we're increasing our volume of those,
are those items are upcycled did an incredible incredible volume I mean we will,
up until today have a vial cycled over the past couple years over 60 million items this year alone will do another 30 million so.
Yes we take possession of the goods we make sure there in like new condition we photograph them and put them on a hanger and then we can ship them in a beautiful box wrapped in tissue paper and and send them out to our buyers and they are.
Generally Blown Away by the quality of the product.

Jason:
[8:10] And so does all that merchandise that you've received an unloaded within a single fulfillment center somewhere in the US or out of the Majestics work.

Anthony:
[8:17] It lives in in for facilities in a distributed across the u.s.
And we do all kinds of interesting things TARTA route inventory and product to different centers depending on supply and demand and how the overall market place is performing but yeah those those four facilities process all those items,
for sale online and offline.

Jason:
[8:38] Got it and is everything in the Fulfillment center available for sale right now or do you try to I can almost imagine you get a lot of new merchandise from Spring cleanings and there could be a lot of fall merchandise in or winter merchandise in that
and in that stops or try to sit on any of that or how does that work.

Anthony:
[8:55] You mean how do I optimize for seasonality.

Jason:
[8:57] That's a way more elegant way.

Anthony:
[8:58] So so so it's a great question because it's a really tricky math problem because think about it from from the consumer's perspective,
they don't necessarily want to go into the closet to be like is this fall is this spring is this winter all they see is too much stuff.
And they want open up a bag or open up a box and put it all in it and and move it out so.

[9:23] All of that said you know we've been at this a while and we have millions of Sellers and when a seller sends you a box of stuff there's an incredible amount of data that you know about that seller their sizes their brands.
What they're what the what the what the what brand items are moving into versus clearing out of as you get multiple bags over time so we found that there are ways.
To influence what the what the seller will put in their clean-out bag to thredup and it has a can have a significant impact so,
we are we are we work with wood sellers in a way that's this pretty light touch but the people generally want to do the right thing if they feel like,
they can put a few extra more seasonal things in a bag and maybe learn a little bit more because we'll see faster cell to run an item that's it's perfectly in season we want to share those economics and incentives with sellers we're not heavy-handed about it,
we try to use our data and what we can do on the types of people who you request bags from that helps us,
can we just want to make it as easy as possible for sellers but yes we are everyday getting more and more seasonally relevant I think it'll actually be.

[10:35] Don't forget I think if I think ahead and 6-12 months I think you'll see the the seasonal element of our site really really kick out cuz we're.
We have so many billions of data points on this now that we're actually starting to figure it out.

Jason:
[10:48] That's awesome and I can come and there's this healthy tension on the one hand
you really like to sanitize that person to only send stuff to you that you know you're going to be able to sail and is highly monetizable and like frankly that's going to let you come back to that cellar with the best news hey we got you a bunch of money
I can imagine there's a subset of your sellers that like.
Appreciate the money but there's some catharsis bike again for your earlier Point their Marie kondo followers or whatever in there that you aren't a,
new better way to get everything out of my closet than the Salvation Army was last season or something like that and.
In a way you don't necessarily want to discourage those people because 10% of what they send you is going to be exactly what you want you're just going to,
after project lights out in general do you try to get people to just any of the 10% that you're going to resell or are you happy to take everything because it makes you more seller friendly.

Anthony:
[11:47] This is something that how we treat.
Salaries in how we think about their experience and why they they decide to order a front of clean-out bag has been.
Something that we've always wanted to be very very clear about from the beginning cuz you're exactly right do you want them to only put.
Perfect things in the bag or do you want to shove everything in there and there's real trade-offs you know them or prescriptive to get with people the more they'll be like to know what this is a little bit too hard but if you just let him do put anything in there then it then it becomes hard for us and I think what we.
Decided in general is that we want to make it really easy for consumers and let us as a as a business that is built on,
reverse Logistics and data let us figure out and become the most amazing company at figuring out how to make the best use of those goods and monetize them in a way that's great for suppliers great for our consumers and great for the environment,
so I think that has been our our our challenge you know but I think we've come a very long way and look there's always.
There's incredible benefits over the long term for making things easy for consumers and if we're the company they can figure out how to crack those problems.
Then I put you in a very powerful position to build quite a moat around that that volume the quality of the supply that customers are going to send you.

Jason:
[13:07] That's awesome let's talk about that reverse logistics for just a sec because it is funny in apparel.
I've been in this industry long enough to remember when it was like oh no one will ever buy clothes online like they need to fit everything and feel everything and obviously that.
That.
Could have been disproven but it is the case that the economics of e-commerce prepare alarm or challenged in some other categories largely because
there is such a high return rate right and you could talk to most retailers and it's like me and the return rates are tripling and those returns are so expensive though it just takes of getting that stuff back and then how that retailer.
Dispositions that can they resell it is new what do they do all of those problems most retailers would say we're not very good at it and it's a core fundamental challenge with our economic model and I'm looking you and it's like,
that's your business is convincing people
to send stuff to you so I'm curious like a view if you found a Magic Bullet like what what is the experience and how do you how do you tackle that that sticky reverse Logistics challenge.

Anthony:
[14:12] We found the Magic Bullet is to be extremely transparent with your customers so we love to say to our customers when they call customer service or when they write in.
That there's no such thing as free returns you're paying for it somewhere you're paying for it in the product or paying for it in your membership fee you're paying for it somewhere it will be like to see the customers is our goal was a business,
is to be able to list online.
The greatest volume of high-quality second-hand apparel at the lowest possible prices and we will be explicit with you this is what it cost for us,
to take that item if you send it back to us and put it back online whatever cost $0.50 or $0.99 whatever it is and so if you send those items back to us.

[14:58] It's going to cost you this but we also say to our customers hey if you are shopping with us and you don't seem to return a lot.
When it will never charge you a return fee if we then we bought but by equal measure will say to customers who buy 10 things and return 9,
hey we we see you but you been doing this,
we love you but you're killing us and so what we're going to do is we're going to give you a one more free V but if you keep returning 90% things you buy we're going to have to start the charge you a dollar 99 per item to restock it so,
we just want to be really upfront with people about the reality of the business and.
Is yours a good news about returns they affect everybody equally they're equally miserable for every e-commerce company so what this forces us to do is just have the best possible product you keep the core proposition
it's got to be in a bang on as far as the brands we are for the quality of the product the selection daily freshness and pricing so forgetting all that right.
Then we should be able to sustain returns if you can't then you got to figure out a different business model.

Jason:
[16:03] Got it better in general it sounds like you almost have a dynamic pricing model based on customer Behavior but you're super transparent about it.

Anthony:
[16:11] Very transferred there's no mystery maybe call him we call you use your level return policy and.
Looking to maybe some customers who we say you know what you eat we see you're returning a lot if you want to pay 999 a month.
And you can return as much as you want then then we'll offer that to you so I think you I think we just got to think about and see where you're going to meet them where they're at and left with them about what it takes for us to stay in business if they love the product to be like you know what I get it,
it's like I don't know actually returning nine things back to you until we actually created a product called a buying bundle,
we're and we found a lot of customers were buying lots of things and they were paying shipping from you know from us to get the stuff sent to them and then returning stuff in the way back,
we gave them its ability to,
can I purchase things we didn't ship it to we have critical mass of their items on the site and then they would they would avoid the the shipping fee until there's things you can do when you understand a job your customers trying to do,
then you can start to say okay I see what you're trying to do here is what it what it looks like on our end and hear some here's some options on ways we can,
we can make it work for you and Mike brought work for us we're big fans of that we we love experimenting with things like that we think it's the way he Commerce has to work.
And yeah there's no such thing as free returns.

Jason:
[17:31] So one of the fundamental challenges usually have with a two-sided marketplaces is you have to win at two things you have to convince a bunch of people to be sellers on your platform and you have to come in too much of people that want to buy goods from your platform on most resided marketplaces
the strategy is usually to be great at one of those which,
facilitates the other if you get a ton of buyers it's easier to get sellers if you get a ton of great merchandise it's easier to get buyers like in your case have you found that there's one side that you absolutely have to win at or what what is the strategy around customer acquisition.

Anthony:
[18:02] There are really two so that the needs and the in the complexities of the marketplace of significant they're very different on both sides and so so what start with with suppliers generally speaking.
Are our core supplier the value proposition is the clean out the closet in a really simple way and to feel good about it and so we've invested a lot of time and effort,
and delivering on that value and so suppliers come to us in droves we we do not have a difficult time attracting suppliers to thredup in one thing I think,
people are often surprised to hear about our businesses are like well okay so they come once you know when do they come back like in 2 years I'm like no they come back in like 3 months,
because they go out and they keep on things so it's not it's not as if they clean out their closet and their I'm good you know they're good like until the next season rolls around so.
So that side of the business is very viral and it drives itself.

[19:03] And for us we spent a lot of time and effort understanding at the really at the at the at the user level you know how to get the best Supply I had to get it at the right rate how to manage that with the with the overall growth and scale of our Marketplace,
on the demand side little bit different there's lots of places in the universe for people to buy inexpensive clothing.
If you are looking to buy a $8 dress you can go to Walmart if if you're looking to buy an $8 J.Crew dress little bit harder so we we've learned a couple different things on the demand side which is the,
are Brands matter customers love.

[19:40] Defined the brands they love and trust and who's quality they believe in at great prices and the fact that it's second hand is almost incidental to them,
if we can maintain the quality part of the equation that they don't even I think they actually probably forget that they're shopping second-hand I think another thing we found,
that app that that our customers love on the demand side which is a key part of the value problem I'll come back to you that your acquisition point in a second,
is they love to see new things.
Every day we have customers would love to see new things on thredup every hour and they come back that that much they're hitting refresh if they're going to their app that much because not unlike their Instagram feed,
we're all day long we're listening 60 70 80 thousand fresh items every day so if they didn't see that dvf wrap dress,
or that Banana Republic jean jacket,
that they were looking for right away if they come back in an hour at the rate which were processing Goods to our system but there's probably something there that's if not V things are looking for it's pretty darn close so that's a very
powerful part of the demand side proposition that makes it look a little bit different from being just you know hey I'm looking for a great value on clothing and I think the final thing is.
One thing about Millennials and and younger Shoppers these days is that they never want to be seen on Instagram wearing the same thing twice.

[21:01] But at the same time they they don't want to be conspicuous consumers they don't want to feel wait so about what they're doing and thredup is is an interesting solution to that problem because they can.
They can scratch their x444 wardrobe that can move at the speed of their feed,
but at the same time they can take those things put them in a bag send them back to us and feel like they're part of the solution and not part of the problem.

Jason:
[21:26] That's why I make sense you you hit something in the in the course of that explanation that it just occurred to me,
another word justice problem you have that maybe more cute than a traditional retailer is your onboarding a heck of a lot of new SKU so like I'm pick and and you're not in most cases getting content from the manufacturer,
The Whispers queues so I'm picturing you up to have like,
high-volume photo studio and people riding a lot of like attributes for product listings is that.

Anthony:
[21:58] Yes and went when when a bag or a box of nice a box because.
You can do the way that to send items that start out as you can go to our website a request to clean out back and he's someone to you for free it's a recyclable bag about the size of a camper and a big green polka dots on it and it's,
I'm very cool or you can just print a label because we know that people have boxes from all their other e-commerce shipment sitting in the doorway of their house and we like to get up the opportunity to have a slightly smaller compact soap.

[22:27] Yes people send these stuff to us our customers suppliers send these items of clothing toss and he's bags and boxes and when they come out of a bad they don't announce themselves they don't have a barcode they don't have asked you it's literally a pile of clothing and so what we have built,
over the past several years through through tens of millions of transactions is the ability to take you know his ability to take those items and begin to attribute them their brand or size their measurements and do some of this with software and we do some of this with people,
because it's it can be hard to teach,
a computer what an acceptable level of fading is on a black shirt you know so there's only certain things that humans at least right now and can.

[23:10] Certain things are computers going to leave Divine so well so people still have to do it but yeah we've built a system where we can take all these items to come out of the bag on an ounce of with no information.
And attribute them as we attribute them those items magically transform from being stuff in a bag that was essentially
value less are worthless to the person who wanted it shipped out of their house to becoming an item that,
with every attribute that we had brand size increases in price from 51020 to $30 is now its 8 now it's a fully formed living fresh item of clothing again to someone in the universe,
and so.
That's how we do it we don't get data from anyone we we we built all those systems in house and we are able to do characterized and categorize and photograph you're right we have we we probably take more,
photographs on a on a daily or weekly basis than any retailer on the planet and that's how we do it.

Jason:
[24:06] It's a going back to the customer acquisition for buyers I think of you as a digital native company you you've been around for awhile now you have six years of history and I see this,
kind of consistent progression that every new digital company launches and based on their value proposition that there's some amount of organic traffic
that they can acquire super easily and in fact there's this Pitfall in the first year you see this nice hockey stick of growth and you think it's going to keep happening for the next six years and unfortunately for most digital companies
it doesn't like they grow fast to a certain point and then they start to plateau and depending on their value prop that Plateau could be
60 million dollars in sales that could be a billion dollars in sales it almost doesn't matter but what happens after that.
It certainly requires a lot more effective marketing to acquire new customers and so I'm curious six years and I'm kind of assuming you're either at that point or you've already surpassed that point and what are you doing now to acquire customers and how's that working.

Anthony:
[25:07] So your ear right I mean that we've been through those Cycles I mean I remember the days of 00 those days of yore when you know spending money on Facebook or Google,
was was easy and satisfying but,
you're right you get to a certain scale and those auctions get more more competitive,
and you need to start to do two things you need to diversify,
the way in which you reach customers because on up if you're trying to build a predictable business.
Were you can where you can grow smartly quarter-over-quarter you can't just keep turning up the Facebook and Google dial and assume that the Matrix are all just going to continue to work so you've got to figure out a way to to grow efficiently by doing different things,
in addition to doing the old things better and better and then the second thing you need to do is,
and you just have to run a better business I mean if you would have that you're putting more product online or renovating,
the types of products are the types of solutions you deliver to customers based on what they're looking for or it's whether it's their margins Mansion to you you in the early days it's easy to be you know when twin growth,
is is easy it's very satisfying to investors in to employees it feels really good but as you as you get to the further down that funnel.
Need to think more holistically about the business to figure out how to grow I mean I think I think for us we feel that.

[26:36] A real change has happened you know since we started the business six years ago and how we how we think about.
Second hand clothing and resale and how frankly how the hole.
Retail of retailers are thinking about it I brand you think about the beginning our vision was hate me know we're always going to take.
The items that we that we the supplier sent to us in front of them were going to sell them on turn up., exclusively and what we started to see.

[27:03] Is that customers are saying to us look at you you know 1020 30% of my closet.
Is second hand clothing so it's 8 you note ever going to be a hundred percent but this is how I shop now I buy some things new,
I buy something second hand and I want to be able to find this product in more places it you know it's and it's sort of,
it was it was it was a very exciting part of learning for us to your customers start to say that.
Because it was clear that we had moved from oh yeah there's only this certain type of customer that buy second-hand to being actually.
Over 10% of our customers are millionaires so there's a broad range of people demographically psychographic Lee that just wants a great deal and I want Brandon it doesn't matter if they.
I need to based on their budgets or not they want to because it feels like a smart thing to do and they're saving money and they're getting the product they want so on the customer acquisition point.

[27:56] We're finding that you're so we open for of our own stores,
and we're working and running some tests with some department store is where we have stores in stores where customers are actually,
thrilled to find second-hand product that's that says that has the quality in the freshness and the brands that we have in places where they shop every day and it's it's it has the potential to drive younger Shoppers into these,
offline physical stores that want these younger Shoppers you want these Brands and want this type of experience I want this type of content and it gives you the ability for us,
2801 Des dollars in in in point of distribution that I thought that isn't just Facebook or Google or TV or instagrammer all the other well-known Performance Marketing,
channels that we love but that as we try to try to expand in a T Bar vision.
Inspiring a new generation of Shoppers to think second and first you have to be where they are and they're not exclusively on on Facebook.

Jason:
[28:56] Sure and I want to drill into that brick and mortar tactic for just a second do you tend to think of those stores as a.
The separate Channel or separate p&l in that like hey I'm going to invest a certain amount of it fixed inventory that's going to sit in that one location and I'm going to measure how how much money is made off of it or,
do you think of it as a true marketing customer acquisition expense that causes you know a lot more eyeballs to become aware of thredup and then,
you know maybe buy from you across any channel down the road.

Anthony:
[29:27] I think over the over the long term.
You need to make the case that these are powerful marketing vehicles and that they're really accretive to your overall.
Acquisition in Gross that you need a lot of them so you know if you have for like we do it's it's still early days for us there but I think in the end you know until you have a critical mass,
you can make the case in Excel you know any of us could do that but you know any early days I think our view is that the stores have to perform.
And they have to perform on their own without having to factor in the unreasonable.
Gino synergies you know that everyone who walks by is a vis a Steno it's worth $100 CPM he does so so I think for us it's a it's a blend and it's a matter of you know the time frame.

[30:19] But I think it's pretty phenomenal if you can have your own stores,
and the stories can stand on their own financially and you can put the right product in them at the right price and draw you customers into the store and some returning customers and if customers can bring a thredup clean-out bag into the store and drop it off or pick one up.
So there's that there's a number of service functions that we can perform in that store that.
Are really accretive to the business but the early days look make make those things make those things work,
and then I think yes overtime I didn't mind he would be then you could start to lean into out what and what an amazing Symphony you have between your online marketing spending your and your retail visibility.

Jason:
[31:00] Yeah that makes total sense that just triggered a follow-up question are you.
Like you have any Partnerships around drop off locations like I could imagine,
you know like we were coming or places like that where you you could imagine hey there's a bunch of Millennials that are working here let's make it super convenient for them and drop off his back.

Anthony:
[31:20] Yes State stay tuned so those are things that are that work we're getting a lot of inbound interest from Brands and retailers where they want to work with us to essentially.
Sanda a threat of turku branded thredup and we're doing this with Reformation now where where you can wear their customers can get their hands on a Reformation clean out bag and then Reformation customers can put,
a bunch of the clothing they're not wearing from their closets in that bag that bad comes to us but then the customer gets shopping dollars to shop on Reformation.
So what's up so it's a really really nice way,
to make a Reformation front of mind for customers when they're cleaning out the closets and then they're not only front of my man customers are cleaning out their closet thredup has been putting Reformation dollars into the customer's pocket to go and spend the Reformation so it's a,
it's a really powerful way for a retailer brand to get rate right up front and center when a customer is empty no shelves in their closet and you know the next thing they're going to do is,
stack them up again with new things.

Jason:
[32:20] Yeah I said that's interesting cuz you can imagine the first time a retailer sees the thredup,
e-commerce site it could be competitive in it feel like that's a clever pet pivot to make them you feel like any incremental partner instead of a direct competitor,
how did the brand feel about you I do they hate the fact that you're you're you have ads on the internet for their stuff at a lower price point than they like or do they like that it makes their customers feel better.

Anthony:
[32:46] It's it's it's evolved dramatically so when when we got going on this when I started at thredup.
18 on the early day 6 years ago.

[32:57] Retailers Workwear little bit puzzled and and you know they didn't they didn't pass their brand didn't pay it much mind because where we know where we were teeny and I think with the change that's happened.
Is that these brands have seen that this is going on anyway so if you go to Facebook and you go to a a Facebook buy sell trade group and you can find.
1500 moms in Wisconsin who all they do is trade Children's Place dresses
you can find thousands and thousands of those you could go to eBay you could type in pick your favorite brand you'll see tens of thousands of items they can come to thredup and you'll see tens of thousands of items so the,
their resale economy is happening and it's growing it's growing faster than retail in a couple weeks we're going to.
Release our annual resale report what we put in all the stats around how the industry changing and I'm so we can I can send that to you.
So the point is it's happening in the difference between the early days when retailers and Brands were like huh and now is that the retailers are brands are starting to come to us and say okay.
It's happening is there a way we can work with thredup to participate and.
It's a win-win and I'll go back to the Reformation partnership we have where.
They they they put a clean-out bag in their customers hands or they getting their customer can print out a label.

[34:24] They clean out the closet and they get credit the shop so it's great for us because we get terrific Supply from those Reformation customers it's great for for RAF because they get Revenue what we're finding is that.
If a customer gets $100 from their their bag that they sent to thredup they spend far more on reformation and that hundred dollars right they they they think of that hundred they got for the clothing they didn't they were no longer wearing is almost free money.
So and then it's great it's great for the customer because they the cleaned-out closet they feel like they're interacting with Brands who are doing the right thing so it's it's a it's a win-win-win and.
We expect over the next two five ten years to see hundreds and Brands doing this many retailers doing this because consumers are saying second hands are part of my life.
It went and Marie kondo has been a great push to remind people that hey you don't have to buy something and hold onto it forever you're not buying it for ownership you're really buying it.
For use and I'm in so we we think we're one part of that story and we think we think smart retailers and brands are going to want to be part of it too.

Jason:
[35:27] Interesting so it's funny I have the saying that a lot of readers don't love hearing but my premise is,
but it's getting harder and harder to make a living selling other people's stuff and I would argue in a way that you're more insulated than most from that because.
Well you're selling other brands products the version of that you're selling I would argue is partly is yours at that point because it's no longer,
you know once you that a manufacturer made 30,000 of it's a unique skill of one task you have one with a unique value proposition and a bunch of unique attributes.
But that aside the way this plays out in general is most of the big retailers that used to be 90% wholesale,
are increasingly making their own product and leveraging their customer intimacy to make products that the manufacturer didn't see until like 8,
apparel space I think of like a cat and Jack from Target is being a phenomenal success
probably super early days but I read that you guys are starting to use some of the data you have from your customer base to venture into product manufacturing as well is that do I have that right.

Anthony:
[36:36] You do we we we tested something and we continue to test it called remade and it's essentially a its new product.

[36:46] I think you can buy on thredup app but it comes with essentially a buyback guarantee so you you purchase it on thredup.
And we say look if you were trying to toss in good shape will give you 40% of your money back.
And so you may wonder why did we why don't we make new stuff if if second-hand is.
Is our bread and butter and I think what we wanted to understand and we're still understanding it is is there a group of customers out there their segment of consumers who were like hey I like I like this whole second hand thing.
And and I and I and I need to to buy something you but.
I get it is this an easy way for me to try it out you know can I buy something new that comes with this buyback guarantee.
And it said if I can Ava way to onboard a new type of customer who may not otherwise want to just come to the site and buy something,
they may want to buy it new and then so and I think it's it's been pretty remarkable to see how we can use the data we have on what selling what's trending,
and then come up with you know I A A handful of items and it's not really a line there's a wrap dress in there and there's a floral top and there's some there's some pretty specific.
Items can we can we take that data create the right things and then attract a customer who otherwise may not have purchased on thredup.

[38:10] And I think we're still evolving it and we're still learning but you're right the whole move towards private label is massive amongst retail and for us we're just trying to get as many people thinking.
Second hand first and we're always experimenting with new ways to do that.

Jason:
[38:28] That's interesting I haven't thought about that as a sort of trial customer acquisition tactic that's clever and I also,
there's a few brands that are like using customer data to invent products and I think I have a stitch fix is an example of a company that lets weaning into that.
So when I read that you're doing it on like oh yeah that's cover they're selling some stuff they know the address to the stuff they're selling they see what the browsing behavior is they can leverage that data to make some products,
during our conversation that occurred to me you actually have a ton more data about those Sellers and like.
Everything that's in their closet and what they kept and so it is interesting it's a pretty,
potentially valuable data set in the long-run so I'll be looking forward to seeing how that all plays out I want to wrap up with one question cuz we're running time on time,
we are here to Big e-commerce show and you you were talking on a panel about the next big things and Retail Concepts that are taking off
do you have a sort of view for the future if we come back to the show and five years like what is that you Commerce industrie going to look like then.

Anthony:
[39:31] I think what we'll see at least it as far as the the thredup growth plan and the trajectory we're on is I just think you'll see amazing second hand Prada.
Everywhere you'll see it in more places you'll see it across more brand you'll see a more integrated into the ecosystem I also I also think you'll see more rental product I think you'll see.

[39:54] Packages are our poor offerings like Stitch fix you don't continue to like where your way into America's closet so I think.
If you think of the closet of the future which we do a lot and if in the past that was up there was a massive chunk for department stores and then a bunch of little specialty stores I think those chunks the Departments are junk is shrinking a lot.
And off price has grown a lot TJ Maxx and Ross another to give brands at great prices and daily prices and then I think you'll see folks like us,
who do resale you'll see folks who do rental you'll see I think you'll see all these different modalities or shopping start to expand their share of that closet,
and like our hope and our mission is that it should be great for consumers it should be great for the environment,
we're a very mission-driven company and where we never forget the fact that the clothing industry is second only to the petroleum industry and being a polluter,
and sell it we we we we love at least the idea that we can try to be on the right side of history on this and the more of those brands in those concept expand their way into closets to make.
To make us all live a little bit better as it could be a very satisfying world to be in.

Jason:
[41:07] That is awesome and that's going to be a great place to leave it because it's happen again we've used up all our a lot of time as always a folks have questions for Anthony or want to keep the conversation going and could you to jump on her,
page and we'll be happy to respond to you there if you enjoy the show this is a great time to jump on the iTunes and give us that five star review,
but Anthony of Whispers want to reach out to you or get involved in thredup in some way like what's the best way to reach you guys social media or LinkedIn.

Anthony:
[41:35] But yeah we're in all those places on on Facebook or on Twitter or on on social on LinkedIn yet reach out with we'd love to hear from you.

Jason:
[41:44] Awesome we'll put some of the songs in the show notes and thanks very much for your time Anthony was real pleasure to chat with you.

Anthony:
[41:49] Great Juicy J.

Jason:
[41:50] Until next time happy commercing.

Apr 4, 2019

EP169 - GGV Capital Principal Robin Li 

Robin Li is a principal at GVV Capital, a global venture capital firm that focuses on seed-to-growth stage investments across Consumer/New Retail, Social/Digital & Internet, Enterprise/Cloud and Frontier Tech sectors. The firm was founded in 2000 and manages $6.2 billion in capital across 13 funds. Past and present portfolio companies include Affirm, Airbnb, Alibaba,  Peloton, Poshmark, Slack, Square, Wish, and many others.

In this interview, we cover a wide range of topics around the hot trends in retail and consumer in North America, and we deep dive in what’s going on with retail, social and e-commerce in China well.

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

Episode 169 of the Jason & Scot show was recorded on Wednesday, February 20, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Wednesday February 20th 2019 live from the etail West Trade Show here in relatively Sunny Palm Desert,
I'm your host Jason retailgeek Goldberg and unfortunately due to travel issues Scott couldn't be here for this show so we'll have to try to Soldier on without him.

[0:46] His longtime listeners will know two of the most common questions we get on the Jason and Scott show are what are the hottest Trends in
consumer retail companies and what's going on with retail social and e-commerce in China so we're really excited to have on the show one of only a handful of people that can answer both of those questions
please welcome to this week's show Robin Lee Robbins a principal at ggv Capital welcome to the show Robin.

Robin:
[1:12] Thank you so much for happy having me.

Jason:
[1:14] We are thrilled to have you running really like to start the show by running a little bit about the background of our guests can you tell us a little bit about how you came to the PC World.

Robin:
[1:25] Yeah sure so before I was Adventure I was actually an educator so I spent three years and Teach for America teaching special education at Middle School pretty much all subjects,
then I went on to go into business school I really didn't have a hundred percent Clear Vision of what I wanted to do,
but I did a lot of volunteer work in the local Chicago Community especially at startup accelerators and Teach for America is entrepreneur program which is why I really learned a lot more around,
answer when I was in business business school I took a chance and apply to this job opportunity to intern at shemane which turned out to be a top PC found in China,
and I actually never lived in China I was born in Hong Kong but I was like hey this is awesome and I'm very curious to learn so I ended up.
Applying and that's up to me and that's where I'm at hahnstown managing partner now at UCB Capital little that I know.
He was actually on the Forbes Midas list as one of the top PCS in the entire world and so after meeting Hans might not work really crew he's an amazing mentor,
I was briefly have Flex has a venture capitalist but then after I finished business school I returned ggv capital and I've been here since ever since it's been almost five years.

Jason:
[2:37] That's awesome so you are basically followed like Jack Ma's career trajectory sort of starting as a teacher and then going on a diamond 80.

Robin:
[2:44] He is definitely my role model.

Jason:
[2:45] I think he's a lot of my real mom so that is awesome and I love the Chicago connection I'm also a chicagoan and until recently I I work right next to 1871 everyday so.

Robin:
[2:57] Well and that is what I want to do.

Jason:
[2:59] Yeah perfect so you probably walked by my office at razorfish all the time.
Back in the day so let's dig into ggv just a little bit can you tell us a little bit about the firm.

Robin:
[3:11] Of course I'm ggv capital is 6.2 billion dollar of global Venture Capital firm I mean Bastin entrepreneurs globally in the US and Asia and other emerging economies,
it's always actually been doing this for the past 18 years we have offices across Silicon Valley which is Menlo Park in San Francisco,
we have Beijing Shanghai most recently Singapore and I am based in New York as a team we live by a few Simple Rules great impact the local and then global.
So in terms of stages we're actually stage agnostic and so we can do anything from investing in a c Stage Company to very late Stage pre-ipo Company so that means we can buy checks as small as a hundred K to 11:50 million dollars,
I would say that we are very sector-specific we focus on four main particles consumer internet and Arbonne Tech which is what I cover,
Enterprise SAS and detect and so we.
Adventure capitalist we are believers behind the Billy verse we look for a very globally-minded entrepreneurs and Founders that are changing the world that we live in.

Jason:
[4:16] That's awesome and you were smart enough to pick the best of the sectors that GB covers to sew.

Robin:
[4:21] That is very exciting and very relatable.

Jason:
[4:23] I like it and I know it's a famous whistle I already know the answer to the question I'm going to ask but can you share a couple of the companies that you guys either LED or been involved with.

Robin:
[4:36] Yeah of course in so I mean given that we already tell whether I'm going to focus on some of our e-commerce before you we love and nothing in the sector and e-commerce ecosystem and so we're actually early investors in Alibaba back in 2003,
which really helped to shape our Global Commerce strategy,
and if you ask me back a lot of companies in Market places such as wish house Poshmark offer up,
do even direct to Consumer Brands like Peloton Lively when key locks function of beauty and even each other's like boxed wholesale and yammy buy and sell.
We invest a lot in e-commerce enablers and so you could think of these as,
Payment Solutions such a square and a firm to Bigcommerce to power a lot of the merchant shop.

Jason:
[5:22] That is totally awesome and congratulations on all that success I'm going to assume there were some that weren't as successful that we didn't answer.

Robin:
[5:34] Thank you we try.

Jason:
[5:36] Yeah and I hope we will get a chance to dive into a few of those but you were here in detail West to talk about a pant to participate in a panel about what's hot in,
internet in retail so I want to steal all the Thunder from that panel what what are some of the things that you're you're singing excited about.

Robin:
[5:57] So in terms of what we're excited about we we look a lot into these e-commerce enabler is an ecosystem partners,
and so for us we could we could be in a box brands and at Marketplace is and what not but we we do see that there's been an emerging Global trend,
and so whether it's next-gen retail
across the world or enabling Global Commerce Solutions weather on the payment side or actually on the cross-border shipping Logistics I that's something that we're diving deep into.

Jason:
[6:28] And it is interesting cuz you guys have a big International footprint and obviously a lot of successful North American brands as well.
And you're one of the three conversations we have here is.
Like us there things that seem like they're wildly successful for like particular in China like social commerce Arch at Commerce or different things that we.
Maybe haven't quite gotten his quick adoption in the US when you take a global investment strategy I could imagine that's even harder because you're investing in a company that may excel in one market and and.
I have a more difficult time getting Traction in the in some other mark.

Robin:
[7:09] Yeah that's right I'm but we actually looked at both markets for a lot of inspiration I mean,
you know before China Look to You a signed copy. A lot of the models they're right but now the US looks to China and so we actually take a lot of lessons learned and help each size scale,
we also see this happen a lot in Emerging Markets which actually look very similar to China on so we recently made some investments in Latin America as well as Southeast Asia.

Jason:
[7:37] Nice.
I sometimes have an iPod hypothesis that there are experiences and consumer value products that get launched in China sooner.
Eventually get Traction in the Uso it's white and sometimes sometimes I feel like you can use China as a little bit of a time machine sometime to predict things that may may come to pass year if you like are you able to do that at all or.

Robin:
[8:04] Yeah for sure and so we we see a lot of Trends in China particularly because China have leapfrogged and many different Industries and so you could say you know what,
China has LeapFrog in the mobile side of leapfrogging a payment side and so that's really exciting for us to take a while to look into and next-generation Retail from offline to all mine is a,
very fake friend in China that we take a lot of inspiration from.

Jason:
[8:32] Yeah for sure and it's like.
The thing that comes up by for me obviously there's great Mobile payment Solutions in China and I feel like that's a foundational thing that enables a bunch of great customer experience as they are,
in people go ho maybe American consumers don't want to do social commerce or something like that and my premises that they probably do we just don't have the great Universal.
Digital wallets to enable those transactions like we like they do in China and so in my mind,
we may see more of those does Asian experiences come here once some of the enabling foundational things like like mobile payments are in place.

Robin:
[9:13] Yeah actually you know Instagram has doing a lot of these interesting selling features and it hides a lot into social commerce in the lessons that we see,
I in China and so this has been like a huge area and opportunity for us and we started investing in this in this a couple years back,
we made an investment call Little Red Book or red for sure,
it was founded in late 2013 now it's growing to about a hundred sixty million users in China and is the number one lifestyle sharing community in China,
and if you want to think about read it a try to like an Instagram memes Pinterest me to Amazon,
nothing is that users there are on the platform are young predominantly female Urban I'm very trendy and so they not work with each other through a lot of this content on the platform.

[10:01] And so we see this as,
a chance that are in China right and they shape a lot of the Next Generation consumption behaviors and what we call like social commerce and so what they do is they buy something whether it's in China or overseas come back post about it,
how do you know if your show off to your friends but also collect items right and see what's trending in a which category and so,
I'm making a career trip next week I want to know what's the best selling beauty products,
what are the top snacks in Japan that I should bring home and so they actually have about a hundred thousand years are generated content post per day amassing billions,
Impressions I so given that they know a shiny at any given time,
they actually can Source by while I'm building Marketplace and this is exactly what they've done so they now have this incredible e-commerce business and a Marketplace on that platform,
how to cut a tire back to the us a few months ago they even started helping Brands like kkw Kim Kardashian's Beauty brand launch in China.
And so we definitely see that you don't answer damn is definitely Berry global,
and are starting to take a lot of lessons and enables social commerce to work and I'm very excited to see what what what.

Jason:
[11:15] That for sure in so going back earlier Point could you see that becoming popular in the US as well like,
obviously you know you mentioned the Instagram's new shopping features I feel like a lot of their predecessors have tried shopping features and didn't get good adoption until you could go.
You know poo poo that but you against your for your point you got to China and like man the level of Engagement with,
the social Platforms in WeChat and pick a dude in red and all these platforms you go man if if so many consumers are doing that there it's hard to imagine that they don't want to do that here as well.

Robin:
[11:51] Yeah I definitely think that you know if anyone can make it work it's probably going to be Instagram I think it's a little too late for for Pinterest to make that type of pivot but,
yeah I definitely think that especially with Logistics getting easier or payments becoming faster and I'm working at 4.
Consumers estate it's definitely possible.

Jason:
[12:12] A bunch of the companies in your portfolio are direct to Consumer Brands and we've been spending a ton of time talking about sort of the evolution of the market and it's interesting.
I frequently point out to my like water just have us retail clients that there.
They're really only has been one new wholesaler launched in the last 10 years and nobody can name them by the way they're your company it's boxed but in general like all the new companies aren't.
Traditional wholesale retailers there direct to Consumer brands that make their own stuff.
The challenge has been it seems like they all get to some threshold level of sales and then like seemingly plateau and so you know once you hit that plateau.
We see them sell themselves to bigger establish brands or making huge investments in customer acquisition that maybe,
seem crazy and unsustainable and I'm thinking about Jad or blue apron or some of those those bad examples examples.
Or they start to look at other channels to grow like partnering with traditional wholesale retailers are opening their own stores are those kinds of things is is that just growing pains of the Sea Market and are you confident that these Adidas e companies.
Are are going to be able to like hit the kind of scales that give you a good return on investment or is that a challenge in that space.

Robin:
[13:40] Yeah I mean that as you can imagine this is a Hot Topic Mojave sees the decency and Landscape is changing faster than ever and I think that.
What we seen is that there's just been honest and amazing increasing amount of new players launching pretty much every day
I want these Innovative strategies that can reach customers that have never been,
been able to be done before writing and in the US and this has really been powered by Facebook and Instagram has made it possible it and in China like you said it's really WeChat WeChat mini programs right,
just to give some perspective we've now seen 820,000 merchants on Shopify alone that sell pretty much decency.
Most of which aren't even venture-backed but have built huge businesses,
Amazon has 136 private label Brands and Amazon's pretty much start to Consumer and these are what to taking over what traditional.
Department stores and grocery stores have done 383 exclusive Ranch House on the Amazon platform alone and I think that
you know if he's he's going to play in the space I think we have to take a look at hey
it's been so easy to start these Brands what is it that I can really distinguish up from the other is it a very unique supply chain we look for a Founder that has an incredible story ambition and and something that can give them a very tough and competitive.
Definitely somebody who wants to go global.

[15:08] Because I think today if you only create a brand just for certain group of audience you actually missing out on billions of other smartphone users around the world and we're very bullish on cross-border e-commerce.

Jason:
[15:19] Yeah and that that feels like another interesting evolution of me is like you go back in time traditionally brick-and-mortar retail has not.
Expanded geographically very well like there's a few examples but like you look at some of the most successful retailers in the world and they kill it in their home market and they really struggle to get.
Global adoption in other markets in this this new DLC model.
You know seems like it thrives globally and jumps borders much much easier in with lower risk frankly.
Without all those costs I'mma start a big believer in the DTC Market to talk a lot about how like I feel like the future is.
You know one or more big aggregator marketplaces in every market and then every other retailer will essentially be d2c and the.
All those retailers in the middle that are mainly trying to sell other people's stuff are the ones that are most at risk and what's interesting is people. We've met so you think Walmart and Target are going away because they're wholesalers.
And what's interesting is there.
They're becoming DTC companies too and you look at Target in Hugo man they've launched five new brands like things I can and Jack.
Are selling two billion dollars a year in some ways those are the most successful new consumer brands that have been launched in the mark.

Robin:
[16:40] I mean Walmart and Target have always had private label right and it's only been kind of resurfaced lately and I would packaged in a different way.

Jason:
[16:48] Yeah and I think I think the difference is now they're treating it like a brand instead of a.
A cheaper value proposition to a national thing they're putting marketing behind it and said to me that.
A hugely interesting trend is like Kroger has this wildly successful private label brand called Simple Truth.
They're selling simple truth on tmall in China by Kroger is in a retailer in China.
And I feel like that that's an interesting Trend that you guys are sort of on the,
the right side of it the moment Scott would be very angry at me and I didn't ask about on demand Services as you may know he he's started up another one of those as we speak.
So he's obviously bullish that is that like you see a good future for the on-demand type Services as well.

Robin:
[17:37] Oh yeah this is a segment that we love to invest in especially because it is a crossover between both e-commerce and orbitec and so you know we we actually started to see this take off and then you ask me for China,
but what China is done is another Emerging Markets is is that it's taken off because it's driven off by them by micro Mobility I saw when you look at on demand services in the US you can always remember.
All the different silos that is touch like GrubHub doordash ubereats really just go after food.

[18:10] And then you have instacart going at the grocery and your Postmates going on these various goods and,
and then you have some very select on demand for massages or what not.
But I think that you know that the issue or kind of the challenges that this can provide is that.
You have to acquire users again and again and it say it gets really expensive and maintaining even operational fleets on your own is something that requires a lot of capital and it's very very intense of an illusion all four,
Founders as of what we've seen in China emerge I need mega platforms are so-called super apps so very sample maid swan.

[18:50] It's a rising super app in China it's kind of like an Amazon for services,
that's all you have fresh. Reviews Yelp delivery local Services booking,
movie tickets groceries even you can't even book travel and vacations on there and let alone ride-hailing and I'm bike sharing is so it's pretty much everything,
and they leverage the micro Mobility solutions that they have to power all the deliveries and every category that you can find an you know that actually last year they are. And it's now 40 billion dollar market cap company,
we actually,
take this lesson from China we don't think that is exactly representative what can happen in the us but we see it in happening in Emerging Markets like southeast Asia and in Latin America particularly Brazil Mexico and what not and so.

[19:40] Even the new Emerging Markets are improving upon that model which is so exciting and they're adding like Payment Solutions on top of it,
and so we are very bullish on On Demand.

Jason:
[19:51] Very cool and then the other one,
has a lot of Buzz lately is that last Mile and like new innovative solutions for retailers and Brands to do the delivery is that a space that you think also has legs or is that played like.

Robin:
[20:06] Yeah I I think it's still very much TV.
Does does a retail Outsource a ride or do you do it in-house I think Walmart has try to do it in-house where they they make their own employees going to take something home along the way but obviously house callable but you know
you know I should you be wavy we've invested in a lot of these last-mile Solutions and so you you don't like
Didi in China hello bike which is number one bike sharing in China in from just having,
you know on your own the Lorraine on your own kind of using the service as a as a bike sharing but actually
leveraging get to become the delivery and that becoming a vehicle right we have five in Southeast Asia with lime and that you asked for scooter sharing bike sharing and even yellow who now recently merged with rain to become grow in Latin America.

Jason:
[20:59] Yeah it I mean obviously the direct the home delivery gets like a lot of the buzz and that's what people think about in last-mile you early on you a little to the Soto experience are you out of working grocery space and I I really feel like.
Pick up is going to be the high volume last Last Mile there and you you will get you know things like I think they just change their name at what used to be all about him and now I think it's.
Blue hippo maybe is that.

Robin:
[21:27] That's just the English translation.

Jason:
[21:29] Titian but yeah I know but it feels like they've officially shifted to the English like I think they're putting hippo on the side.

Robin:
[21:37] Actually seen them I recently had enough and the Big Show.

Jason:
[21:41] Yeah which is interesting that they're exhibiting at us trade shows I think the US retailers are having a lot of success with that to like Walmart with online grocery pick-up and,
and that is interesting that feels like there's even a bunch of new startups in The Last Mile space that are focusing on helping retailers with that.
Pick up experience as well so that's going to be interesting when we get asked about a lot is voice comers what is that like a fat or do you think Boy Scout.
A big opportunity.

Robin:
[22:13] I think it's still a little bit too early to tell me and you have these huge numbers around 86 million units shipped worldwide last year and and 60 million households around the world have these devices but you're acting like,
literally consumer consumption Behavior to change and like how do you actually educate a customer to do that and having,
having even enough accountant and Payment Solutions and stuff like that enabled and I think it's still a few years away.

Jason:
[22:42] Yeah.
I think their categories where it could really work but I'm not sure people are going to order things with a lot of complicated attributes in Brands specific language for the first time the invoice Commerce.

Robin:
[22:57] People are so sensitive right everybody wants a good deal.

Jason:
[23:00] Yeah for sure that's always at the top of the decision tree no matter what else happens is.
I always always is a big factor so we talked a little bit about some of the successes and unique companies in China but like are there any Big Mac Road friends that you're saying in China that that wasn't should know about.

Robin:
[23:19] Yeah I think,
you know we talked a lot about the continuity of social commerce right the influential live streaming as is huge industry and producing a lot of e-commerce growth in China and so that will actually you know Legion,
maybe 4 billion in Revenue this year and just sit with influencers live streaming to almost like 450 million viewers,
which of the lot at 9 so I think that that's really exciting to watch you still haven't seen that take off here yet,
new search engines are in China and so instead of like the Google in the by do,
a model by you people are actually now searching directly on the super apps and WeChat mini programs and so instead of starting off I'm just,
figuring out what you want you're actually inside a platform that your messaging or your transaction or transacting already and spending a lot of your time.
Alaska think you know Chinese platforms are starting to go Global we just talked about Alibaba all right,
but that's how much does one part of what they have in you have fight dance in Tik Tok and,
some of these digital platforms are just just massive and then lastly alipay and WeChat pay will continue to expand across borders.

Jason:
[24:30] Yeah it's funny when I get a tourist destination now it feels like the one that's had the most Traction in the u.s. is Ali pay for Chinese tourist so like you can use all your pay that to pay for your taxi in Las Vegas now all right like beginning makes perfect sense.

Robin:
[24:44] Oh yeah I think that you know you definitely see Ali Baba and other players,
really focusing on the China outbound market right it is a very valuable demographic you have only pay has 600 million active users in China they have you know,
but they have a lot of focus on these outbound outbound Travelers last year there was about 130 million outbound trips just out of town all alone and so 25% of that was actually to North America,
and so in order to service them who kind of,
use alipay at home every day and they're spending like $4,005 in dollars per trip abroad how could you not.
You know Market to that consumer base and so I think that you know that's definitely something that you'll see more and more of in terms of Partnerships around the world.

Jason:
[25:36] Yeah I know that makes perfect sense we talked a little bit about Alibaba one thing I'm curious about is.
Is China a winner-take-all model like it feels like Alibaba is so huge and is,
doing so well and everything in all their categories and obviously we chat seems like they're huge and yet there are still new Mega platforms it's seemed like they emerge and it seems like they're getting traction like that.

Robin:
[26:00] Yeah and I think our accounts you just the percentage of
e-commerce as a percentage of retail Ryan and sell in the US has 10% and in China that's what money per side so it's still a lot of room to grow
that said Ali Baba still accounts for 60 to 70% of that market and in terms of volume and so I think that they are incredibly smart and very strategic,
so instead of just looking at you know influence our side and partnering with red.for example on fasting and in these cases they actually have time now which is it is amazing with just a,
not working very efficient wealth domestically and operationally international as well,
I am so impressed by that platform at this this Consortium just to get some background.

[26:48] Play Alibaba committed to the smart China Logistics Network to provide had a 24-hour delivery of any product anywhere in China.
And I actually spent about 43 billion dollars she just even kick start this project and so they,
they want to do this in terms of like shipping domestically in China and even 72 hours globally,
I am so as taobao in China has transformed in entire generation shopping Behavior I think that time now from Alibaba can actually transform the traditional Logistics ecosystem,
and so they have this incredible brain behind data intelligence domestic fulfillment cross-border Network,
Urban Last Mile and even tapping into the rural Villages of China which tons of opportunity may think we we care a lot about you know Beijing and Shanghai all the time but you know the real opportunity in I'm just dumb,
the bulk of the people are actually living in your 2 tier 3 tier 4 City and so.
I think that like it's it's very smart that you know Alibaba is investing heavily in the logistic space,
I'm just as Amazon is doing so here in the US and globally as well.

Jason:
[27:58] That's funny I I've been any Commerce long enough to remember when people used to think e-commerce was going to be a capital light like the numbers that they're throwing out in terms of infrastructure Investments are like hard to get your brain around.

Robin:
[28:12] Oh yeah and I mean I think that you know when you think about shipping that's a necessary necessity for any reason we are a merchant not just shipping to the consumer but even like,
how do you handle returns I had an end kind of how do you make a faster but also more cost-effective and I think that sucker is still.
Still early,
Amazon is as pushing the envelope right into the bar is that a higher and higher for the customer everyday and so you actually see we see this a lot of startups popping up
in very specific Niche Solutions right or just one product Solutions hey shipping labels
or where how they ignore talk stores are handling returns and I think that it's definitely a very promising and as Avicii where it were looking a lot into the space cuz I think the last few years,
we talked about TTC it's a lot of investment and how do you how do you prove to find an experience and now you know,
baby toddlers And and companies are really investing into retail automation back and how do you improve the inefficient sees that you have and that's something that they're learning a lot from overseas as well because China really leads and logistic.

Jason:
[29:23] For sure and it you know you mentioned the reverse Logistics that feels like.
There's so much room still to improve that and it's so important for the economic the unit economics by.
In us the apparel industry you know he's usually moving e-commerce but returns are like an enormous piece and cost of that thing that seems like it's not sustainable.

Robin:
[29:45] Oh yeah and a lot of times you could be even 40 to 70% are recharged much higher than what you would see offline.

Jason:
[29:52] So you can imagine there's some small vendor here that you and I haven't met yet that is figured out at help mitigate that returns problem for retailers and that could be a great,
Great Neck story for for growth and then e-commerce face.
So I know we're running out of time I'd love to get your perspective about where you think all this is going like you know if we jump in that time machine and go forward 5 or 10 years how do you see the the markets of.

Robin:
[30:18] What I definitely look alive for to Global platforms I'm being with a shop a very easily all across the world,
what no matter where you are in the US and China what not then second and is I look a lot into a eye and intelligence,
so how do you make a more efficient last waste Mendes trickles into other categories not just an apparel or Commerce right but you have,
you know from anybody from univ restaurants to coffee shops and and whatnot and lastly.
Sustainability and kind of CSR right and I think that,
you know what I shop a lot on mind mapping Chopper have a box that coming almost every day but it appeases me to think about how many trees that like I'm actually cutting down and and even though we recycle,
how much of that really gets reused a memory package and it's a really looking forward to somebody solving the sustainability problem for sure.

Jason:
[31:18] Got no I got those are going to be interesting I'm looking for to find them as well and that's going to be a great place to leave it because it's happen again we've used up all our allotted time,
as always if folks have a comment or question feel free to jump on Facebook and will,
continue the dialogue there if you enjoyed this episode we love that five star review on iTunes but Robin if listeners want to learn more about ggv or they've got the next grade,
Innovation and I need your help finding it like what's the best way to get in touch with you.

Robin:
[31:48] Find me a LinkedIn I leave my email there and you can message me at anytime.

Jason:
[31:53] That's awesome we will put that in the show note so no need to try to write it down while you're driving or anything with that Robin is it's been a real pleasure to chat with you and thanks very much for being on the show.

Robin:
[32:04] Thank you it was a lot of fun.

Jason:
[32:05] Until next time happy commercing.

Mar 28, 2019

EP168 - Bombas founder David Heath

 

 

Bombas CEO David Heath

David Heath is the CEO and Co-Founder of Bombas (@bombas), a fast growing, energetic e-commerce apparel company, focused on making the most comfortable socks in the history of feet, while helping those in need. Founded because socks are the number one most requested clothing item at homeless shelters, for every pair they sell, they donate a pair to someone in need.

In this interview, we cover a wide range of topics including the Bombas founding story, their SharkTank experience, the DTC business model and growth challenges, social marketing, innovation, the brick and mortar.

If you’re inspired by the Bombas story, they are hiring!  FREE SOCKS included. https://boards.greenhouse.io/bombas

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

Episode 168 of the Jason & Scot show was recorded on Friday, February 22, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Friday February 22nd 2019 live from the etail West trade show,
here in semi Sunny Palm Desert
I’m your host Jason retailgeek Goldberg and unfortunately Scott is trapped on a plane so we’re going to talk about him and assign him a bunch of action items.
One of the top trends we always cover on the show is direct to Consumer Brands and so we’re excited to have on the show one of the top DTC companies in the apparel industry,
so joining us from bombas we have the CEO and co-founder Dave he.

David:
[1:01] Thank you.

Jason:
[1:02] Hey Dave thanks very much for being on the show a long time listeners will know we always like to get things started by getting a little bit of the background about how you came to your current role can you tell us a little bit about your bio.

David:
[1:13] Yasso born and raised in New York and I don’t think we need to go back that far,
but I so actually my dad’s not to renew are so very early on it I knew that entrepreneurship was something that I wanted to do was very inspired by him and watching him build a business from,
the basement of our house to you know something that I think we’re all very proud of I need to go to school for entrepreneurship at Babson College and then upon graduation.
I always found that every job I had I can end up working for a smaller and smaller and smaller and smaller company ultimately landed at a media company where I was the seventh employee Rana clean up where I ended up meeting one of my co-founders Randy Goldberg,
it’s been 6 years there we developed our relationship and kind of always shared his mutual passion for wanting to start a business together one day.
We developed business plans for numerous ideas ranging from services to pack the product,
ultimately it was kind of one of these moments of Fate that I think let us to where we are today I have Andre scrolling on Facebook back in 2011 I came across a quote that said that socks with the number one most requested clothing item at homeless shelters in.
I immediately wasn’t like oh my God there’s some business to be had here I just kind of stopped me in my tracks and I was like what you said something that.

[2:38] I’ve never spent more than a second of my life or day thinking about is perceived as a luxury item for somebody else,
so I remember walking over to Randy’s desk and I remember sharing the quote with him and then over the next couple weeks we both found that we just couldn’t shake this idea,
obviously followed entrepreneurship and the other Trends were happening in the startup World in,
Tom’s was in there 50 or business and growing incredibly fast where we park her just announced that they had launched about six months prior and kind of bug and reinvigorated the conversation around the one for one business model cuz when more be first launched.
They were one for one I wear that was kind of their remains take they’ve more position to be a fashion brand these days babe.
That’s some kind of the light bulb went off and we were like, what if we created a company where we donated a pair of socks for every pair of socks that we sold to help him solve this problem in homelessness.
Remember like okay well what type of socket we integrate how are we going to create,
no carve out our place in the in the market and so we spend the next two years looking at your doing research and development trying every pair of sock on in the market and ultimately landed on was.

[3:55] I’m much more comfortable and Innovative kind of everyday casual
athletic sock so at the time Brands like happy socks and Paul Smith we’re coming out with these brightly colored dress socks and your funky dress socks for men wear a trend
Randy and Iraq start of guys we were jeans and sneakers to work everyday.

Jason:
[4:14] And you are tube socks up till then right.

David:
[4:16] Oh yeah totally totally you know Walmart all packed everything,
and so what we ended up realizing was that there was this large gap in the athletic Market where you guys are.
12 pack from Walmart or you buy these individual premium price products that were really aimed towards the runners and cyclists and basketball players and hikers that were costing 15 1820 $38 a pair
and so I was like what did Linnaeus a $38 pair of socks from a $2 pair of socks.
So all of this technology and Innovation seamless toe arch support comfort footbed you know high-quality fabric new articulation in the heel.
Amounted actually a lot more Comfort just an everyday wear but I was realizing that all of these sock companies are marketing all of these Innovations just towards the enthusiast.

[5:04] I’m kind of waiting our light bulb moment our our our our our moment way so what if we took all those Innovations and marketed towards the mass Market consumer and,
pitched in a while seamless toe is better for standing on your feet every day as a nurse or a firefighter or a baker or you know,
mom chasing after her kids or a school teacher.
And that’s bombas was born and we launched the company back in August of 2013 and here we are five and a half years later we’ve just donated I believe our 15 million pair of socks.
Team has grown significantly we continue to double your over here and sales yeah it’s been a wild ride.

Jason:
[5:47] That’s awesome I put your key like there’s some pesky details that might have stopped some people from pursuing that like expertise in like design or Manufacturing,
Jane or a bunch of stuff I didn’t hear you mention having a having a rich background in.

David:
[6:04] Did not did not at all.

Jason:
[6:06] Yes I’m sort of curious was bombas able to happen because,
those things are now easier to Outsource in your able to leverage that or did you guys just jump in and learn how to do stuff and make some mistakes and kind of grow the expertise organically.

David:
[6:20] Yeah I think it was I think it was a mix of luck and the fact that we didn’t have any expertise that allowed us to create a product that was I think far superior than anything that we had,
ever experienced it say the lock portion of it was so when I sat down.

[6:36] Early early days of the idea I sat down with my dad and I was like I got this idea for a sock company,
yeah expecting him to be like that’s one of the worst ideas you’ve ever had but do you think I’m leaving your godfather was in the sock business for 40 years and I know that you did really well by himself can’t go talk to him,
so I called him up and it turns out that in the late eighties and early nineties use presidency of Gold Toe,
I’ve been left Gold Toe to start a private label stock manufacturing company which ended up being one of the largest private label stock manufacturing companies in the world so.
Falling into kind of expertise and somebody who literally knows every single supplier of socks in the world and knows how to manufacture any type of sock in the world,
was a massive advantage and something that I totally totally a tribute to lock,
the component that wasn’t luck that I think once we started the R&D and design phase,
with the fact that we had no bias and no snow we weren’t skewed by any preconceived notions in manufacturing and I remember.
Very vividly talking with one of our manufacturing Partners I said to them I said I want to put a seamless toe on this athletic sock.
They’re like why would you want to do that like that’s wildly expensive you only find seamless toes,
ano Italian made dress socks because they’re so thin you can actually feel the same they’re like on athletic socks you can’t feel the same cuz they’re cushiony was like I can feel the same like I want to go to see what’s the weather like.

[8:06] Do you know how expensive that is on a per pair of socks be so it’s like I don’t know you know how much and they’re like $0.10 a pair and I was like.

[8:13] 10 senses like I can makeup 10 said that my godmother was like no I used to make socks for less than a penny a pair whose like this is why they’re pushing back on this but I think the fact that we were.
Truly designing this coming at it from a consumer’s perspective,
and not coming out of her manufacturing or you know resellers perspective of oh well we need to create a product that has this much margins that weekend we didn’t think about it we were just like let’s create the best product possible,
and see if people like it and so that’s how we came to me.

Jason:
[8:42] That’s awesome and I feel like in some ways that’s not an uncommon story that the disruptors one of their their core advantages as they don’t have the bias of all these preconceived notion of the the people that did them before in some ways II,
I feel like I’ve heard similar iterations of that story from like the Tommy John guys or you know a bunch of other even Dollar Shave Club like where,
if you would come from Joe at it probably would have been harder to imagine Reinventing the.
Product like that exactly so early on the model was that we’re going to put the socks on a website and sell them direct-to-consumer and was that,
the the idea why did you guys ever kick around being a wholesale supplier of socks or.

David:
[9:30] I mean so rainy and I came out of the online media business so the online space was I think what we knew and I think we were the most comfortable I believe we also thought that you know early days we,
United States early days when 2013 doesn’t exactly feel like early days of the internet when you think about it it’s only e-commerce is only been around for you
20 + years or so yo it’s still relatively early days I think we thought that you know.
For building a brand around another wise commoditized product like a pair of socks we we need the,
the unlimited landscape and palette by which the internet affords to tell deep and enriching stories and produce really great content which is ultimately what builds great brands are at least we believe build brick builds great brands,
and similar let you know it’s like the Dollar Shave comes over all that you know I think having.
The ability to use things like video and deeply Rich photographic content and copy in a way to talk about a really small product that on a store shelf,
would only got you know what to in of packaging space to tell a really how do you tell a deep story like that and so I think.

[10:48] Are whole thesis early on was,
let’s see let’s put our content in a brand that’s why we launched an Indiegogo we created a 3-minute video about the socks
I only like I don’t know if you’re going to sit through a 3-minute video about Sox ultimately they did and I think the product in and our brand resonated,
with the customer base and I think that’s kind of sad our path and I think we always talked about.

[11:14] Wholesale at some point we just launched a small wholesale Partnerships last year with Nordstrom’s Dick’s and QVC.
But I think it wasn’t I think we felt like there was so much room and still believe they’re still so much room to grow,
online where you kind of really got to have that one-on-one relationship with the customer around and otherwise.
Forgotten or not thought about product like a pair of socks.

Jason:
[11:41] Yeah and Sumter is one of the things a lot of DTC companies talk about as one of them obviously,
is your name higher margins when you’re selling direct to Consumer but a big thing is customer intimacy and you get like the immediate feedback what what’s tough customers like what they didn’t like you hear directly from the voice of customer inside there’s always this hypothesis
we can iterate our product faster we can make our product better because we’re directly connected to the customer as opposed to just turn feedback from the Walmart by or something
curious if that’s marketing speaker that’s true why are your sock the same as they were the day they want or have you have they evolved in integrated based on customer feedback.

David:
[12:21] I mean I think for us I mean it’s it’s not marketing-speak I think a lot of the.
The ways that the company is involved and you know I wouldn’t say that we we changed our core product in a whole lot of ways.
I mean without without any sort of you guys think we’ve nailed it I think we got it pretty right but things like.

Jason:
[12:44] He’s doing a little dance while he’s saying that just so you know.

David:
[12:46] I remember one one very distinct moment through customer service we kept getting a lot of Outreach from people saying why don’t you make socks that are size 13 to 15.
Or like extra large that’s got to be a small market for us you know who’s really going to buy them.
And we were like now is put it on hold us but I’ll hold it like customer service to be like we keep getting request for extra large socks when I okay fine will produce a small number of extra large socks,
in kind of summer are course I also,
and it ended up representing 10% of our overall business I mean in the in the industry on a whole I think it represents someone like three to 4%.
But I didn’t because we were there listening to the market and then serving that market where owning a much larger share of that because we’re producing a product.
Foreign otherwise probably over over seen part of the demographic it’s that was one instance and then another one in the incense is wise we,
earlier cuz I’m sure you hear from a lot of other d2c brands or Scrappy so like all of our photo shoots for basically like.
Me and my other co-founders we happen to be for white males and we got a lot of feedback from from customers of color being like.
Yeah why don’t you give him.

Jason:
[14:07] Why can we get a good looking feet in that yeah yeah.

David:
[14:09] Baphomet why don’t you representing African-American feed or or or more people of color and we were like you’re absolutely right we should you know it wasn’t something that.
We had really thought about but we took that feedback and then immediately our next photo shoot we have wide range of diversity and and now it still continues to be one of the pillars
of all of our photo shoots and content going for is it we we always learned from an eye of inclusive inclusive and diversity
which I don’t leave our socks around ass or shelf I don’t know if we would ever,
if we ever would have gotten that feedback all the way back to us but listen to our customers and having that relationship with them we can react and say like yeah.
We talked up on that one we oversaw it like shame on us will fix it but we can’t we have the ability to fix it pretty rapidly going forward,
and the response we get back from those customers is like,
the extra large like I can’t believe you listen to me you were going to buy a ton and then you know the people who are proactive on the photo shoot stuff,
they wrote back at me and be like wow thanks for listening to me and and implementing change.

Jason:
[15:13] Yeah you know it that’s interesting cuz again I feel like I’ve heard that similar story for my Andy Dunn bonobos and it’s like the exciting take away from that for me is.
The because we never had the relationship with that brand that was sitting on the shelf to even care.
And said they tasted like that a better connection with you give you feedback might have started off as a negative that it turned into this this positive opportunity to get closer to the customer.
So first place I can buy this oxygen to go go I’m guessing you’re going to tell me you were oversubscribed and that was a wildly successful launch.
And so the back in 2013 you got all right now I got to stand up a website to sell these things and in 2013 it might not have been totally obvious what the best way to do that was so I’m just I know you’re not the CTO but I’m just curious.
Did you guys decide to build your own site from scratch did you find Shopify back then and you remember what you did.

David:
[16:09] Yeah so I actually had the fortunate nature of two of my co-founders were former creative agency guys so.

Jason:
[16:17] Hold that against him as a creative agency guy.

David:
[16:20] It’s been a it’s been a massive massive advantage that have them on our team so they both built design number of websites for clients in the past so it wasn’t.
It wasn’t that foreign to us and I think that having worked at this Media company we put a lot of microsites and kind of manage that aspect for four different clients as well,
so at the time we were like well we want to be an Enterprise company one day so you know obviously going to go with Magento because Magento runs out of the enterprise software and they had Magento community in Shopify was,
not I mean they didn’t have + when we started and it’s amazing to see how how much they’ve grown over the years but.
Probably one of the worst mistakes we made was not launching on Shopify to begin with you have a Gen 2 ended up being a bear super resource-intensive you know,
from all of this press bike so we got on Today Show Good Morning America Shark Tank every time our website would crash and it wasn’t until we got on Shopify eventually,
that we’ve never experienced any of that pain going forwards I’m a big big big Choppa by fan.

[17:33] But yeah I mean it wasn’t signed up we would put up with magenta community site within about 30 days post our Indiegogo campaign we really wanted to capitalize on queue for sales that year and yeah I was Bruce.
Relatively easy against again again borrowing against some of the.

[17:54] Bumps along the way I think managing managing the site was not something that was super foreign to us.

Jason:
[18:00] Sure sure and don’t beat yourself up I feel like the path forward was very much not clear in 2013 if you like them I feel like the options of four for the incubation stage of clear.

David:
[18:12] I couldn’t afford demandware and so.

Jason:
[18:14] Fast forward your next problem what you should be on when you’re selling a billion dollars a year and socks like the answer is unclear at the moment to buy,
but that’ll be a first world problem I think to solve so then remind me how far along you were when you went on Shark Tank.

David:
[18:30] I so we were fourteen months at 11:13 months old so we launched in August of 13 and R episode.
Aired September of 2014,
they did reach out to us in April that it’s our Indiegogo campaign I think one of the things most people don’t know is that there is an actually there is actually an active casting department at Shark Tank which is.
After being on it an hour and I watch the show pretty regularly I now see you there like yeah we had a successful Kickstarter I’m like they found them.

Jason:
[19:09] Fishing they weren’t that what they didn’t stumble upon.

David:
[19:10] So so what are the tips of your they want to get on Shark Tank have a really successful Indiegogo and Kickstarter campaign cuz that’s where they look to reach out to us an April kind of thought of it as like a laugh to begin with her like really like we want to do that like,
like I guess what’s the harm and went to the went to the interviewing process and you created the videos and flew out there and film
and then you fill him in there like.

[19:36] Cool with you may or may never hear from you may or may not ever hear from us again if you do will let you know like a week or two before your episode airs,
don’t plan on anything basically in the meantime run your business is normal and so we were in the middle of fundraising at that time and so,
no I was like man if we are going to be on Shark Tank like,
I want to be able to like use this as leverage to like raise a better valuation but ultimately we closed the round about four weeks before the episode aired
we got the call and then I cure episodes good are in 2 weeks
not a whole lot you can do at that point we staffed up significantly on customer service cuz we just did it now luckily I talked to my friend over Nick over at plated who been on
and he was like Overstock customer service he’s like that’s the one thing like that you can actually do before you,
go on air everything else is he can’t buy more inventory can’t fix the website you know just going to kind of cross your fingers and hope it all goes well,
so yeah we hired I think 30 customer service people and ended up I think’s going up to like 50 that weekend cuz it was just so overwhelming.

Jason:
[20:51] It’s in his crazy that you get so little notice there’s an earlier iteration of that phenomenon like Oprah’s West Wendover used to be on
and literally by the the end of Oprah’s run she had a full-time team that just helped those aren’t for entrepreneurs like Harden their business to get ready for the show airing because.
She put them out of business.

David:
[21:13] Yeah yeah you can actually crush a business.

Jason:
[21:15] Intermountain my senses shark tank is a lot more there now then it sounds like like I do like that you get more notice than 2 weeks now is that not true or okay.

David:
[21:23] I think so I mean at least not from what I what I hear look at the end of the day ABC is trying to reduce the television show.
I think they obviously have interest set you know they want to see their their entrepreneurs succeed but at the end of the day they have to protect.
They’re their IP and make sure that nothing leaks in advance and yeah they really want to control you know.
What businesses are going to be on in and in the messaging around then I think,
there’s probably too much liability on there and 4 if they tell you too far in advance is probably going to lie that you’re going to tell somebody and then it’s going to end up in the Press somehow like I think the Press would really give a shit about,
like cool your man with long with nine other brands but.
You know I hope you know I hope no like ill will against them and neither our interests are two different things but we’re trying to run a business and they’re going to reduce television show.
Is partner’s past Shark Tank ABCs been incredible I mean you really do become part of the ABC Family when you when you close a deal with a shark in,
you know you got on Good Morning America you get on The View and they put products in you know the Bachelor and dancing with the stars and they do a lot of cross-promotion across their platforms.

[22:43] So they’ve been they’ve been really fantastic since them but in the early days they’re just like you got to run your business.
Cuz I also think they don’t want it cuz I’ve also advised the number of other.

Jason:
[22:54] Oh yeah don’t ramp up like you’re going to die.

David:
[22:57] And I have to say that like I’ll say you have to prepare for the best-case but expect the worst.
Because I’ve seen people who bought hundreds of thousands of dollars worth of inventory and then they do like $10,000 and say us.
It’s no telling what it’s not like Oprah where I think it’s a little bit more Oprah endorses it it’s probably going to go through the roof if you go on Shark Tank with.
Alarm clock that fries bacon how many of those are really going to sell.

Jason:
[23:26] One right here but I take your point.

David:
[23:27] I volunteer.

Jason:
[23:31] Yeah I tell you I tell you get it I know you’re in the ABC family so feel free not to, but like I feel like early on there were some entrepreneurs they were smart enough to say hey this is a great customer acquisition opportunity and I don’t really care if I get a deal and I feel like one of the the secret things that that ABC is done to combat that is
they now like they charge a piece of equity just to be on the.

David:
[23:53] They don’t actually anymore now so they did that for the first five seasons but actually,
Mark I think threatened to walk off the show because he felt like it was to turn good businesses from coming on the show right cuz if you got a,
10 or 20 million dollar business you’re not going to walk on this phone and give up Equity car blondes without knowing really what the outcome is going to be in so.
Look I think the way that they try to combat that.

[24:22] I think anybody will realize and admit I mean I could M you even being on it yeah it’s a great obviously exposure opportunity but what I will tell you in the research that I did going on to the show.
From the like six or seven brands that I talk to.
The people who ended up getting deals ended up having higher success rates from immediately you know airing the episode than those that don’t I think there is a little bit of that Oprah effect where the customer validates.
The product or the business if a shark actually invest in it versus if they down is a truss a month,
I’m sure there’s probably a number of cases where people have seen Monumental success Following the show just from the exposure from our standpoint we were really like we want to create it we want to do a deal because we know that all kind of guarantee
higher degree of success once we are and then also say following that being a part of the ABC family and then kind of the value that we’ve gotten since then and obviously having a shark in our corner,
yeah I certainly certainly paid for itself.

Jason:
[25:29] That’s awesome and I just wanted something which I truly appreciate so remind us you were funded and who who was your.
Daymond John who sort of in the space so that was,
probably an aspirational shark to get I always chuckle in this particularly I feel like comes to play with like Robert and Mark is.
I have a sentence that like in general the sharks are looking for good deals right like inside other very often is an argument that that you should give away more Equity than you might to.
Traditional funding source and part of their argument is always we’re going to bring all this support and expertise and technical help and and Mars always oh and I’ll take care of all your website and all that stuff
and as we now know from falling a bunch of these usually what that means is on the throw you on shopping and I’m like.
That could be good advice I’m not sure how much Equity I would want to give away for that advice alone so I’m always curious to hear from sharks that they feel like they’re the they got more value than just the cash from there,
there shark.

David:
[26:35] I mean in our case it’s really been a level of mentorship
you know I think Damon will be the first to admit and he always says he gives us a ton of accolades he’s like let these guys understand e-commerce way better than I do you know he understands the wholesale and brand-building side of the world but,
there were moments where you’re we were talking about going in the new product categories are going into wholesale and having him as a sounding board.
And I think that that’s why each of the relationships are super unique thing in our relationship it’s been.
Mutually beneficial because it we were two business guys that come from startup world would come from the online background can we knew how to build a brand.
We need to kind of build and scale online we had to do digital marketing so we weren’t there calling him every step of the way being like how do we do this how do we do this how do we do this how to do and in some instances you know I think there are.
More inventors are than entrepreneurs or like I came up with this really cool idea and think of my garage.
Are the first thing about starting a business and for them the advice of go on top of eyes like they wouldn’t even know which I was I was so it’s hard to.
Argue you know somebody doesn’t know something and they got to a path of there with the path of least resistance.
Yeah what is the value.

Jason:
[28:01] It’s a view from an expensive mistake like absolutely,
and I think it’s so a I sit there with a box of popcorn and risking no personal Capital heckling that show all the time and one of the things I feel like is really involved is all of their perspectives about,
the value of various channels right now if you like early on it was like oh you might do direct-to-consumer until you could get a wholesale but whole sales only way to get scale and I feel like more recently and I’m like damn John in particular he’s reference
did he learn from you guys and I feel like like I said there was at least one show where he mentioned like as a result of my experience with people like you,
I’m now a lot more weary about that wholesale model and a lot less excited about it and I think it even says he’s liked it at his own business,
based on some of this morning so that’s it like you should be getting some Equity back I think that’s when he calls I’ll tell him.

[28:55] Yeah so so that is totally awesome.
One of the things that we see with a lot of direct-to-consumer companies is based on your value proposition there’s a certain Market out there that’s really easy to acquire right in.
That’s says the market could while they vary between different kinds of businesses.
Whatever it is you launch you grow really fast you get to that point like we’re in the old world if you’re opening Gap stores it might have taken you 5 or 10 years to acquire all the customers that were predisposed to love you
today you get all those customers in the first 6 months and so you get this nice first Spike but then most companies,
hit this Plateau where the new customers stop being quite so easy to acquire and so I’m always curious for for folks like yourself of kind of,
in my perspective gone by that first raunch like like did you go through that and then what what if you had to do and how do you think about things differently about acquiring customers today than you did back in your Indiegogo Shark Tank like.

David:
[29:59] Yeah so how how much time do I have okay.

Jason:
[30:03] The recorder will be out for 12 hours.

David:
[30:05] It’s a great question I think I think it’s obviously something that any d2c brand is constantly thinking about right when is this is when is this going to run out I think for us you know.
There are there are number of levers that we continue to Paul that allow us to continue to acquire customers profitably on first purchase and that’s always been our kind of marketing.
Principal and guidelines from day one is a we were never going to chase LTV you saw what it did other companies you know you saw that over paying on customers early on that you thought we’re going to repeat
didn’t repeat yo ended up
tanking the company sue you are always thinking okay as long as we can focus on some of the core metrics that will define success in the business which are.

[30:52] Produce a high margin products as long as you got high margin then you can you’ve got a lot of dollars to work with then contribution margin on on aov so if we
start to reach a plateau in terms of being able to acquire that customer how can we raise a OVI you know one of the
key things that we did for the beginning we used to be a singles only company that we moved the packs the day that we moved to pack sorry you if you went from $36 to $60
since then we’ve introduced higher-priced product so we’ve got Merino wool and you know ski socks and
bar product mixes as is grown from a merchandising perspective than our aov is like $86 so we’re constantly finding ways to combat,
yo the inevitable growth of cost-per-acquisition on a customer base is so this year when we introduce a new product categories that all have a much higher price point hopefully will raise its over the $100 mark,
simultaneously we’re always looking to optimize channels and I think one of the things that people are people under value,
or they don’t think about and it’s one of the things I constantly advised some of the early-stage startups that I either investing or mentor.

[32:03] Is the power of creative.
Really really really good creative can actually lower CPAs sum when we introduced to our our million pair video campaign
original you’re like okay this is just me a thank you to our customer base will produce this video not really expected to go anywhere and then our CMO is like,
I want to test this in marketing or like okay fine potestas in marketing but it’s always like a 2 minute long video or like no way this thing is going to work online,
it’s scaled so rapidly we were getting like CPAs in like the $9 for a few months were getting like low team CPS,
are the time when we are averaging a thing you are average CP is probably 40 or 50 bucks the time significantly drop that campaign ran.
Over a year until it started to see fatigue I think that videos to date is over a hundred and fifty million views probably attributable to close to,
10 to 15 million dollars of Revenue off of that one single piece of creative and so.

[33:10] That was that was a real eye-opener for us we’re like how we need to constantly be reinvesting in in creative and sweet built out this.
Full basically internal agency model which is nice cuz two co-founders from Regency people you have a lot of that skill-set internally but we develop.
So much creative more constantly pumping it into the marketing field you know and 90% of it.

[33:35] This garbage you know it doesn’t work but the 10% that does well you kind of start to distill down and distilled down into still down to the power I think of e-commerce is that,
are being able to see when you put money behind an ad be able to see what performing and why it’s performing in on what audience base is it performing well then you can try to replicate that across similar audiences and then tweaked it,
and as long as that engine and you start to build you know that engine up and start a leopard the data you can start to become really really smart about the way.
We also have to be willing to take risks is one piece of creative that we came up with last year our laundry back guarantee we’re basically said.
Never lose it one of a pair of bombas in the laundry will replace it for free did horribly on Facebook.
And our CMO is like well I think this is such a great campaign I got such great press coverage like let’s put it on TV.
And I was like why are we spending any more money on this piece of creative it did terribly on Facebook why do you think it’s going to do well on TV,
and miraculous agents really really well on TV so you know I think the ability to kind of create content tested iterated but also be able to take risks on where you’re publishing that content,
with an eye again towards those metrics.

[34:52] Is for us would what is allowed us to continue and also diversifying channels I think that was the other thing I think realizing.
Early on it take 90% of all of our spend was on Facebook,
our budget continues to double every year on Facebook by Facebook I think represents 40% of our overall spend today.

[35:13] TV represents a large power podcast audio direct mail I mean every single of these channels add up.
Yeah direct Mills great CPAs hard to scale it you know it doesn’t scale like TV in Facebook,
but it gives us a really really competitive CPA is so having the overall mix bring the overall cost for a cost for a position.
Facebook is higher these days but as a blended mix that’s all we really care about while we also in one of the other advantages of our businesses,
kasaks a replenishment item,
naturally and we have a very very high repeat Ray and repeat is what ultimately drives the profitability of the of the company,
Zack gives us the ability to reinvest into new channels and.
Yeah I got not every businesses as fortunate or set up the way that you know our margin structure is or some of the repeat rates but.
What’s a lot of Cisco.

Jason:
[36:09] That’s why you would spend some time picking the right product categories suicide note that that seems like one
path to success has to be really smart about your Performance Marketing and and do great executions and really agonized unlock trade even try lots of different things and learned that’s one way to go is to just spend like a drunken sailor
and then I hope to get a choir to go public before anyone notices so I’m just saying for listeners to pads you choose.

David:
[36:39] I would recommend against the ladder pass.

Jason:
[36:41] I would too but like more.

David:
[36:42] Super super stressful yeah I think those are fewer and farther between I think if you look at the Acquisitions that Walmart made by mod fast forward 70 million dollars and they raised 75,
I don’t know I don’t think anybody really did well on that deal.

Jason:
[37:00] I think the only one that wasn’t a value acquisition was yet for sure.

David:
[37:04] Yeah I mean I owe dark bonobos was was in there somewhere.

Jason:
[37:07] I think it was close to like One X Revenue.
Which it like I would argue I’d like to get a lot more but that’s where you may not be closed yet what we shall see.
Once I take you didn’t mention but I feel like I have not been in a in a car in the last year and not have you remind me about the seam in my socks is it is radio or really affected part of the.

David:
[37:33] Killer yeah yeah podcast Radio audio serious all the way across the board that continues to be one of our largest growing,
are fastest growing channels by spend I think we tripled,
tripled spending audio over the last two years represent probably 15% of our overall spend now.
Yeah we can meet at 8 it’s a little bit more hit or miss I think it’s like TV and then you’ve got to find the channels that resonate for you and there’s not,
unless we will find a podcast that does really well for us and then I think we saturated over time and then it stops performing so it’s kind of move on audio two kind of mining for gold tonight might find you know
one that does really well you dig really deep and then the other one the other mine
dries up and you got to find something else but across-the-board audio does pretty well but it’s time-consuming for sure cuz you got him that it you know it’s you got to create the spots.

Jason:
[38:35] Podcast in particular one thing that podcast from notorious for his like the attribution model is kind of tough.
You Tennessee products that are like really fast direct sell direct all the action and it’s usually you’re cracking attribution based on like a URL or promo code is that how you guys look at podcast or do you feel like you have some sense for.
Building in that kind of thing.

David:
[39:00] Like if anybody I think I think if there was anybody who figures out how to do multi Channel or multi-touch attribution in e-commerce well I think they would.
Yeah I think they would be the next multibillion-dollar company honestly we were lying on a pretty easy.

[39:18] Way we do we do how’d you hear about us surveys and yeah we cross metric that against the data coming through the coupon codes for the sights but,
what you’re fine and yeah I think the big maybe it’s not a big secret but I think,
what most companies do is the same offer that you’ll get by Just landing on their website is the same offer that the promote within a podcaster on a radio show.
So what we end up getting is a lot of people just type in bombas. Com and see the promo offer 20% off your first order and then they just go through that.
What we find is we got probably,
a four times after bution on the how did you hear about a survey when we overlay that data so if it was $100 CPA office specific podcast will come down about 25 bucks.
Once we kind of overlay that how did here but you know we’re in so many channels now it starts to become really challenging like did they first learn about us some podcast was that the last one touch point of entry into how many times today
you know see us on Facebook or television or you know Direct Mail which was the channel that ultimately got them over the hump
this is why were I think.

[40:32] Monitor Channel by Channel acne or cost-per-acquisition to look at efficiency I think the thing at the end of the day that we really really care about it’s just overall cost per acquisition across all channels
that’s that’s truly the one metric that allows us to know whether we’re on the right path or not.

Jason:
[40:48] Got it so that ends up being your sort of next best dollar calculus is
is customer acquisition cost with that makes perfect sense that’s a perfect to my next question you mentioned earlier in the show that you’re just starting to pile at some some wholesale partners and I’m curious.
Are you thinking of that is a separate channel in separate piano and just evaluating the ROI from that channel on its own or are you thinking about,
that exposure in those those high-traffic retailers as a customer acquisition marketing tactic as well.

David:
[41:20] Yeah I think it’s I think it’s a mix of both I think that when I.
You know when I eat when I look at the future of the company and we have plans to be a billion dollar company in the next 10 years.
I don’t think that the rate at which e-commerce is growing,
will we be able to necessarily do be able to do a billion dollars of Revenue just online and look if you like fashion over or proving that you know you can do seven hundred million dollars of Revenue online cuz I got things up first for a,
branded only retailer Nan Marketplace retailer to be doing those kind of numbers I think I think more and more brands of get there but.
When I look at our strategy and kind of diversifying where we’re going to get growth probably need to be a little bit more strategic about it and not going to put all my eggs in one basket and so I still see you,
a large opportunity and also assume there’s a lot of other brands that are in our space I look at Stan’s you know.

[42:21] Over a hundred million dollar your company predominantly at wholesale so when I look at that I’m like okay well apart of the market share you know can I take you know how big can bombas be not necessarily competing against ants and when we
interview our customers the majority of our customers are coming from Brands like Hanes for the loom
your jockey there they’re buying up rather than buying over.
And so when I look at how big of a market share those brands have at retail,
Mike well if we’re doing this online we surely should be able to carve out a nice little business for us at wholesale that will just add to the revenue stack over all but.

[43:00] Interesting lie enough when we launched at Nordstrom’s dicks at Nordstrom’s and Dick’s specifically,
we were over indexing pretty significantly against every other sock in the category,
and remember I was like I can’t believe you know I knew that we were confident that we were going to be successful at at retail or wholesale but,
I didn’t think that we would be two to three times the sell through rate of of the next best-selling sock in the category and I remember sitting out with our private Equity partner and they’re like.
Will you realize there’s not another sock brand on the Shelf spending $40 a year on marketing and I was like,
all right so I think that we’re benefiting at wholesale from a lot of the radio ads and TV and stuff that we’re thinking is all direct response
what is actually having a lift at wholesale as well because there’s brand recognition if you’ll rocking through the store is there
yeah maybe they’re listening to us in the car and then they get into a Nordstrom’s like alright that’s the brand I just heard about I’m going to buy a pair of those
I don’t think we ever kind of really thought about the the overlap effect.
Are online or online marketing I just did Eric Woods would have in the offline world.

Jason:
[44:14] I’ll put their clothes in the show notes so people can see him,
you know you talked about hitting that like billion dollar threshold and you say like how many direct-to-consumer like native brands have gotten a billion dollars and it’s it’s pretty small right,
and then you go all right well what about the traditional House of brands that dominate the retail shelf the VF Corp sayings like how many billion dollar brands of a built in the last 10 years smaller
so you know where all the new 10 billion billion dollar run rate brands are coming from the retox.
It’s cat and Jack its lights to Target to lunch 5 billion dollar brands in the last 2 years Kroger has billion dollar brain is crazy.

David:
[45:03] Gary Wright coming out of Aeropostale.

Jason:
[45:06] Yeah so there is this to me there’s something to like.
And I don’t like using private label cuz I actually think these new brands are our evolution of private label it’s not just a cheaper version of the national brand on the show.

David:
[45:20] They put like brand thinking and jolly.

Jason:
[45:23] Microcytes they do all these things but you think about it what the common denominator of those Brands is.
That retailer has the same customer intimacy that our direct-to-consumer brand has they know the customer to have a direct relationship and then they have us the scale visibility and low customer acquisition cost.
Retail some you know if or do I give all that infrastructure has already been amortize somewhere else and so it is like I do and I say you like man,
part of the equation for digitally native Brands to get to billions of dollars probably means some you know some blend of that that brick-and-mortar presence is.
So this is all been great I do just in case I was stupid enough not to ask any of the right question is there anything that you feel like you’ve learned in this run that would surprise new entrepreneurs are new direct to Consumer brands that,
that you’d care to share with us.

David:
[46:21] Yeah I think I think one of the biggest piece of advice that I got really really early on for one of my friends who worked at Tom’s was the.
The ability to focus our main focus on a relatively small product set.
When I remember when we had done like $500,000 in sales those like we’re killing it Riley sales in her first six months we need to be producing shirts and underwear and sweatpants and sweatshirts and he sat down and he was like.

[46:52] We at times is that we sold the first we sold one silhouette in five colors for the first I think like four years I am built like a multi hundred billion dollar company off of that he’s like don’t underestimate.

[47:05] How small you are or don’t overestimate how small you are.
Compared to like the larger population and we’re over a hundred million dollar brand today and I
still and now I’m not surprised by you no bite as much when I meet people in there like oh I don’t know I’ve never heard of bombas before I cuz I was it just like more humbling at this point where I’m I have to assume
that nobody else has heard of us despite our size and even though I think that puts it in respect that you can be a brand over a hundred million dollars,
go to the middle of the country and ask people at Warby Parker is our guarantee most of them are like I never heard of Warby Parker I think I remember of somewhere and I was like oh Casper mattresses,
what’s a Casper mattress and I like right you live outside your like New York in LA and you know some of the bubbles that we live in
and yeah these Brands don’t penetrate quite as deeply
as you as you may think there are that’s what brands are thing like Target or able to you know it’s been up brands in a much easier it cuz they owned those customer bases across every single Geographic and demographic,
Physicians I would say don’t like don’t overestimate.

[48:18] Your size and stay focused on the one thing that you do really really really really well and frost I was producing socks and selling them online that’s why we didn’t get distracted by going to wholesale we didn’t get distracted by producing other products
here we are five and a half years later we still just sell socks,
and I still think that we’ve got hundreds of millions of dollars more Justin our core product category just online.

Jason:
[48:42] That that is awesome and don’t forget to get out of the New York l a bubble sometimes figure out what the customer in Muskogee wants Muskogee is in Oklahoma,
people Walmart frequently talked about like that’s the prototypical Walmart customer at Muscogee random facts on the Jason and Scott show
so we’re running out of time I want to get one last question in when you and I are back at the show five years from now you have any sense for how the the market in the world might be different if you have a view for the future of,
of Brands and like do we have the same assortment of direct-to-consumer and wholesalers and things that we have today.

David:
[49:25] I think there will be a might have been anything there’s going to be some consolidation I think I think it would be great if,
I think there’s so much efficiency to be had by rolling up some of these e-commerce Brands together by centralizing marketing centralizing back office operations,
I think Andy at Walmart that was kind of their you know what he was charged with I’d love to see him pull it off.
If not him I think there’s I think somebody should should come into the space and and kind of wrap up a bunch of these big Brands to make them even bigger.

[50:02] So that’s what I’m kind of hoping for over the next five years and,
I bet you will also start to see I’d like to hopefully see some more Acquisitions in the space that aren’t that better,
not billion-dollar Acquisitions right I think you know a hundred million two hundred million dollar Acquisitions for the small the native deodorant company right I think those are,
in the end the next round of entrepreneurs that I’m meeting interesting Lee enough are all in the product categories that they’re all developing.
Are not sitting down being like I’ve got the next billion-dollar idea I think they’re saying that I mean like,
I see an opportunity to carve out a 40 million dollar you know Market in this direct-to-consumer space and hopefully somebody will hire us for a hundred hundred twenty million dollars and I think that’s the right mindset of this next round of entrepreneurs you don’t need to go out and raised
50 to 300 million dollars of capital to build this Behemoth or and that’s going to take oatmeal a world domination and be the next P&G,
yeah I think I think we’ll start to see a little bit more of a fragmented space and smaller smaller fundraises and smaller a relatively smaller acquisitions.

Jason:
[51:13] Interesting in that lights up.
I think we talked about the fact that I got our business can be a great business for a bunch of employees I can solve a consumer problem and the challenges,
which businesses in that size is they don’t offer the return on investment for the traditional VC model and so if you build your company based on that VC model like that BC does not want you to see.

David:
[51:38] We could have a whole nother podcast about vcu’s and where I think their place is in building direct-to-consumer Firenze versatile.

Jason:
[51:45] So that’s that’s kind of what I was like in the short version of that like you talked about raising less when you say raising less do you think that’s raising last from the traditional funding sources or do you think that’s a newer funding sources.

David:
[51:59] I mean,
you know I use us as an example we were we raised $2000000 to seed funding in 3 million in our and haven’t raised a single dollar ever since we raised four million dollars and total and built a hundred billion dollar company in 5 and 1/2 years at Super profitable.
It can be done right you don’t need to go out and raise $50 hundred million dollars to build a hundred billion dollar company is like that that’s like to me is like asinine thing k,
answer this next wave entrepreneurs I think they’re looking at margin or looking at cost-per-acquisition they’re looking at contribution,
they’re looking at the financial is in a much more surgeries way and they’re also not just looking at online they’re looking at omni-channel they’re being a lot more strategic about how they’re bringing products to Market and you know how they’re acquiring customers and realizing that,
there’s a subset of Angel Investors and there’s a new wave I think of you to see entrepreneurs like myself and Andy and you know Jeff reiter and all these other due to see CEOs that are now investing in this next wave of companies and saying
you don’t need to go raise 20 million dollars from you no first-round or any of these other big you know no knock on them I just think that.

[53:06] They serve a great purpose in writing in funding Technology based companies that require massive amounts of capital that don’t
have 90% margin profiles that shouldn’t you know that that don’t generate cash in the first year but like if you’ve gotten retail brands have been being built for the last hundred years without.
Massive amounts of VC funding because if your business is set up correctly.

[53:31] As a consumer business you should generate profit on your product like it it sounds crazy to be like stating that as a fact today but like your.
Fundamentally if you have the right model setup your business should generate cash and that cash at scale should be able to fund growth I don’t know.

Jason:
[53:50] That’s a wildly controversial position I’m sarcasm fully intended totally agree and I
that’s a great place to leave it because we’ve done it again we blown through are a lot of time making some people stay at the gym a little extra long for this episode which I like.

David:
[54:05] Look at this excerpt Rhapsody.

Jason:
[54:06] Exactly I got nose I need them if folks have some comments or questions about the show feel free to jump on our Facebook page will continue the conversation there as always.
If you really enjoy this episode we sure appreciate if you jump on iTunes and get us that five star review Dave if folks want to connect with bombas or follow some more of your thought leadership is there a place on the internet that it’s best to hang out are you a Twitter guy.

David:
[54:31] I’m not at it I’m actually not a social media user much to my communications Apartments Chagrin but.

Jason:
[54:38] I can put your mobile phone number in the show note so that would be better.

David:
[54:40] Founder it’s out there somewhere I get a lot of random phone calls from.
Bender’s but no I mean by myself, we’ve got to buy me something on Instagram that’s what the kids are using these days but I’ll plug that we’ve got 55 open positions the company right now,
incredible company culture so if you’re interested in a job in New York go on our career pages and definitely.

Jason:
[55:07] That is awesome and that that best Pat there is the Gear Page on bombas.com will put that in the show notes as well Dave really appreciate your time and really enjoyed our conversation until next time happy commercing.

Mar 21, 2019

EP167 - Instagram Checkout Hot Take 

This episode is a hot take on Checkout on Instagram feature.  We cover the main features, details about the closed beta, potential pros and cons, and a recommendation for brands thinking about selling on Instagram.

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

Episode 167 of the Jason & Scot show was recorded on Wednesday, March 20th, 2019.

Join your hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer and Scot Wingo, CEO of GetSpiffy and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature – Google Automated Transcription of the show:

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode 167 is being recorded on
Wednesday March 20th 2019 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.

Scot:
[0:40] Jason and welcome back Jason Scott show listeners
yesterday Facebook announced an exciting new feature for Instagram called checkout on Instagram those marketing Geniuses over there so today we wanted to give you our hot take on that.

Jason:
[0:58] I am excited to talk about that Scott but before we jump into it you are officially podcast cheating on me now.

Scot:
[1:07] I am I am you know we need full disclosure I told Jason I was going to do a podcast use very supportive
so we have an open podcast relationship if Jason wants to do a podcast that’s fine but I really know he doesn’t have time to
so when your Chief Commerce retail e-commerce strategy officer don’t have time for one podcast baby
new podcast is really kind of a spiffy thing so it’s the future Vehicles so I was framework called vehicle 2.0 where we talked about
what’s eclectic are changing car ownership electrification an autonomous vehicles so if any of those things are interesting to you at over the vehicle to. Get spooky., and you can find a new podcast would love to bring some Jason Scott show folks over there
another funny thing is we got a call a couple weeks ago from Lyft they’re having a big event in Houston it’s a rodeo to Sunday your.

[2:10] Find out your first review and 30 Day Rodeo can you imagine a lot of people that go to the
just a lot of radio and
so we didn’t experiment which is pretty interesting we did a kind of driver rewards thing where we set up right near this rodeo and lift would send messages out
two drivers that were doing a lot of work on their Network and giving free car washes so that was fun we wash over 400 vehicles in a pretty short 3-day.
It was three days around but it’s really time or in the evenings so
does a lot of car washing soap not it’s exciting to partner with companies like Lyft there are also in their IPO process if people are interested in IPOs the lift.

[2:57] Roadshow is available it’s really cool by 30 minute video I think it’s well worth your time
you go to Retail Road show.com the SEC makes companies now publish their Roadshow
and it’s a little known fact that they do that so I can go out there and do that it is only up there for about a week so we’re recording this on the 20th and I think I’ll probably be down by the
3rd or 24th so rachaelrayshow.com to watch Lyft IPO it’s a really cool another aspect of what looks spelling
so that’s what’s going on in my room.

Jason:
[3:30] That is very cool you in one of your first podcast episodes for vehicle 2.0 you broke down the Lyft s-1 filing which was also very informative and interesting.

Scot:
[3:43] Yeah yeah and unkind of swing that back over here diepio pipeline is is just bursting with with all kinds of
convenience really goodness so we could lift in there Ubers rumored to be in the pipeline instacart Postmates are also candidates and then
as he sings come out we’ll be covering all the distance cop show if they’re little more relevant than this was.

Jason:
[4:09] Yeah in sign up for a long time listener G of course to know that I used to be a rodeo clown and I can tell you those 30-day rodeos are exhausting you are super sore by the 30th date.

Scot:
[4:21] Your Barrel by the end of your Barrel your rubber Barrel this is all dented.

Jason:
[4:25] Exactly fun but yeah there’s actually a lottery for which Clown goes in the barrel every day so you’re not generally in the barrel all 30 days.

Scot:
[4:33] Wow what to do a whole episode Deep dive on Jason’s rodeo clown.

Jason:
[4:38] Exactly
that one that would be super interesting and I did get a chance to listen to several your podcast they were super informative I’m right up to the point where you have gas so I’m I’ve done a full dose of Scott wingo and I’m excited to
to hear from I think the CEO of smart car.

Scot:
[4:56] It’s exhausting God doing it on you cuz I’m not used to talking so much.
I usually get like 5 minutes out of 50 and now I have to like there’s a lot of a lot of space to fill I miss you.

Jason:
[5:09] I bet you I got to we having a cute version of that problem
and then the last thing before we we jump into it I am too busy to do another podcast but to be clear it’s what makes me too busy to do another podcast is my job as the audio engineer for this podcast.

Scot:
[5:26] Yeah I learn from that we have we have a ghetto person for that.

Jason:
[5:34] Thank you for not saying like confident person.

Scot:
[5:38] Not nearly as good as you are but they have a lot more time to work on.

Jason:
[5:42] I was I was a little jealous about that aspect that I’m excited and I’m a subscriber.

Scot:
[5:48] Cool let’s talk about Instagram so if you’ve been living under a rock Instagram is a very popular social media Network driven by pictures of the kids in my family have a rule
when we get we’re at a restaurant
this doesn’t apply to Applebee’s or anyone basic but if we’re at a fanciest restaurant no one touches her food until we instead because
instant or it didn’t happen so that’s what I’m talkin about tonight so Instagram is very popular as a refresher it was acquired by Facebook
for a huge at the time record-breaking billion dollars in 2012 looking back from 2019 most people feel like that was quite a seal and other stuff so
show history there was a reminder that that Facebook owns Instagram.
Ceaseless jump into the announcement I know as the chief Commerce strategy officer you probably about this for a while what were the highlights.

Jason:
[6:55] Yep before I jump in that we always like to have useful tidbits on the show and so I feel like the the valuable one for this show is going to be that there are actual,
psychological studies that have proven that when you take pictures of your food before you eat it you actually enjoy the food West.
I’m super sorry.
To share that with you but I feel like the Wingo family could actually be enjoying your meals a little bit more if you weren’t interested in them. I’ll put a note to those studies in the show notes and you can decide.

Scot:
[7:25] I’ll try that with my kids but I think it’s actually more correlated to the number of likes your free picture gets sick.

Jason:
[7:31] Yeah Isis I suspect that that is true and who cares if you enjoy your food if you get new new follower,
yeah so this is obviously a feature for Instagram that for a while Instagram has had the ability to pin products to organic content.

[7:52] So you you can have some hot spots on photos and click that hotspot and there’s been a vehicle where you could sort of Click through
2 e Commerce site that had that product so it would take you out of Instagram to the mobile version of the,
the Brand’s website to look at a product detail page in in most cases and so what the what they’ve done here is they’ve eliminated the need to leave the Instagram app and go to the e-commerce site so you now get a
a native product detail page in Instagram
can let you do attribute so you could like selected their shoes you could select a color and a size and then you can add it to carts
and then there’s not really not add to cart they’re sort of just a checkout button because you’re only allowed to buy one thing at a time and when you check out you enter,
your your name and address and your payment information and they will ship you the product,
so essentially Instagram is becoming your favorite thing on Marketplace wedding letting,
primary Brands and in most cases at the moment did you need a Brands sell stuff natively on the platform they’re paying undisclosed.

[9:10] Take radar feature to Instagram and the Hope from Facebook Sandpoint is,
we have people like in this visual platform that are doing a lot of product Discovery and had a lot of high buying intent and now we’re dramatically reducing the friction to convert that buying intent into
purchases.

Scot:
[9:32] I have I’ve been busy washing cars and haven’t had a chance to look at experience I know I looked at the launch Partners a lot of them were in the fashion category that in fashion we have the age-old problem of of styles and colors
I have they saw that or do they just kind of plan on that neat have a different PDP for each.

Jason:
[9:52] No no they do they have a dream you drop down so you so you can select a size and color
they a little bit about it’s a closed beta at this point so there’s 22 Grande selling
if you’re a brand interest in selling the you can’t apply or sell right now
yeah but you can have up to five products in one piece of Instagram content this is only organic content so this is not an ad format so you can.
Certify visibility for this content you have to be publishing content that that a lot of viewers are already consuming and they say that the way they selected these 22 initial.
Partners are folks that were already heavy users of the Instagram platform and we’re getting a lot of Engagement and we’re already tagging their content with product and so
you know that apparel and Beauty category did it heavily skewed towards apparel and Beauty it’s mostly digital-native Brands you know some of the.
You know so it’s it’s the Warby Parker’s and the Unicorn clothes.
There’s some laundry stuff like Prada Nike and Adidas to me are the big mainstream manufacturers,
there on the platform but there’s also like Burberry and in the oscardelarenta and revolve clothing some folks like that.

[11:21] Yeah so they do let you do those attributes. General question what they there are some from my perspectives,
limitations to what they do let you do on the product detail page and I’m actually going to hold off on.
Hitting those now cuz it we are going to come in and walk through some of the.
The the pros and the cons at least as you and I see them but you know we’ll put a link to their actual announcement and I’ll try to find,
a product what are the limitations is this only works in the Instagram mobile app so it’s only on a mobile it’s only a nap but I’ll try to list a product so that you can click through it yourself
they do have a video demonstration on their on their blog announcing it so you can kind of watch a video of someone checking out.

Scot:
[12:10] Call is it IOS and Android or did they just pun.

Jason:
[12:13] Yeah it’s all the platforms that other mobile platforms that are Instagram supports it is also only in North America right now.

Scot:
[12:19] Okay yeah and then
I should actually know this but do you know so let’s go back so there’s been a long history of social networks trying to kind of Mary e-commerce and frankly a lot of success what are some of the historical highlights of
biscuits have been tried that you recall.

Jason:
[12:41] Yes it is it it’s an interesting conundrum there’s been a lot of efforts at what I’ll call the social commerce in the US,
like a particular bunch of iterations and sort of social by buttons and none of them have really been very successful and yet there are Platforms in particularly China by throughout Asia
where this this Paradigm is super popular in heavily adopted and so for a long time we’ve always wondered are.

[13:12] Eastern consumers just fundamentally different than Western consumers are they even more digitally native and Savvy in China and therefore ahead of the US consumers and so this will eventually catch on or you know it is the,
are the experiences that the Pinterest and Facebook have tried.
Fundamentally inferior to the experiences that that we chat and and others have done in China like.
Don’t know the answer but I can tell you that Facebook launched e-commerce on the platform in 2010 and there was actually a pamper store where you can buy your diapers on Facebook back in 2010.
That really didn’t go anywhere and in the subsequent 9 years.
They’ve they’ve dropped a lot of Commerce capability some that wasn’t adopted and it’s been sort of abandoned and others that are that are still utilize but aren’t you don’t fall short of actually letting you do the transaction.

[14:14] And so you know I think like 2014 that they wants to Facebook buy button.
Which is you know not not in service today but they also wants things like collection ad formats which were like a,
Commerce oriented ad format that let you have multiple products in a single ad,
in 2014 and that that so is used today if you know it doesn’t let you go all the way to the by,
in some non us markets Facebook actually lets small sellers host or friends on Facebook and they’re they’re powered by Shopify.
So that’s interesting in some markets.
Course in 2016 they made a big push to doing Commerce in the Facebook Messenger platform and there’s some.
Some examples of that being useful but that certainly doesn’t you know have.
Have brought engagement and you know their competitors have had similar challenges to Pinterest as as.

[15:17] You know incrementally added shopping features like Rich pins and shoppable pins and Shop the look but hasn’t really you know been able to do transactions on the platform.
Twitter had the the buy button for a little while and killed it Google has some shopping for mass that had buy buttons in it then aren’t aren’t.
You know hugely successful and Broadway deployed so there’s a checkered past here and it’s,
going to be interesting to see if now is the time that works if Instagram is resolved some of the fundamental
challenges or you know the timing is just right I have my own Theory which I I promise to reveal by the the end of the podcast.
The you know,
one of the things that most of these efforts have in common and I I think I did notice this about the the Instagram one is if they do get successful one of the Whitney in ways they envision
brand being able to publish their content to the platform is through this company I I think I’m familiar with Kyle Channel advisor.

Scot:
[16:26] Yeah yeah yeah so I was
as surprised as you are to see jamas are there so I’m not involved in the day-to-day but you know the usually when someone needs a Marketplace integration Channel that’s what it’s called
and then Spirit of of kind of.

[16:46] Open the other partners that were announced where Shopify and Bigcommerce which are more kind of SMB e-commerce platforms so there it’s not like an option where you say hey if you want this widget to show up on your website you can also make it shoppable on,
Instagram and then more of a competitor to channel advisor is called Commerce Hub there more
XML you Dropship e but a lot of similar kind of connections that we have them so they announced kind of the for lunch partner Sarah
Channel visor was excited to to the apartment I actually don’t know so I was going to ask you earlier I’ll swing back that,
when Twitter first came out the buy button we got in this really big argument with them because
they just wanted a retailer to put the Spy button up there and tell them inventory one time and then they would keep track of it going forward I said well
that’s okay but you see these retailers have all these pools of inventory so,
it’s very easy for you to get in an oversold situation because you know on on Tuesday March 1st when the retailer said they had a hundred of these widgets.

[17:52] Then here on the 20th and they have zero days do it listen to us and turn off it end up being kind of a
Calamity and they had to go back and figure it out you know how the inventory kind of checks are done on the sir they kind of,
get the better systems will do you can either sink inventory I’ve been kind of constantly update it,
I or you can do kind of call back when something’s about to be out of the car is she going to say hold on one second let me go back and verify I still have this widget in stock do you have any idea on how that’s working.

Jason:
[18:21] Yeah it’s a great question I don’t have super detailed.

[18:31] Sort of architecture understanding of the solution I can tell you that all of these 22 vendors have bespoke Integrations and they specifically mentioned that they did Integrations with,
customer service and with OMS in so what that means is.
Like they say they do have some sort of robust automated way to talk to the order management system of those individual sellers.
And it in the one thing that’s interesting to me very often went a platform like this watch as a service.
By the way they they they do an integration with like one or a few popular platforms and then they pick beta partners that are only using those platforms.
That does not appear to be with what Instagram did they pick 22 brands that were popular on Instagram and figured out how to integrate with all of them and so my suspicion is.
Some of that these Integrations are likely more robust than others and so.
You know it wouldn’t surprise me if the higher volume sites is like the Nike and Adidas there’s probably a real-time Perpetual inventory system in there with her it’s pull or push I don’t know.
But it’s not going to surprise me if.
A few of these Brands you know are doing that integration via you know file sharing and in nightly uploads or something like that and and could have some some real disparity on availability of they ever,
ever had a product go viral or something.

Scot:
[20:00] I know I’m speaking for listeners when I told us out here what would be really helpful Jason is if you could do some experiments for a so you can go order between one and three hundred items from let’s say I’ll pick a random on here
Prada and then let us know what your your your rate of receiving goes in and out of stocks I think they’ll be super useful.

Jason:
[20:24] I would totally do that but I’m afraid that that that this purchases would come out of my Star Wars budget which would be tragic.

Scot:
[20:30] You have a very large Starbucks Star Wars budget.

Jason:
[20:34] I think the parts going to be expensive.

Scot:
[20:38] So do you think this is going to kind of finally bring that Chinese level of of Engagement and activity to the marriage of Social and e-commerce.

Jason:
[20:51] I don’t so so to be clear like I actually think this is,
probably a good step forward I think Facebook and Instagram were smart to do this and I think in certain circumstances that makes
sense for the brands to take advantage of it so I I think I could have some adoption I think it could be more successful than any of those.
Serta previous efforts that we that we highlighted earlier in the show but at the same time I don’t think this solution as is hits the sort of.
WeChat level of of a shopping engagement.
I don’t think this is going to end up being a primary selling platform for any Brands and I would certainly argue.
It should not be a primary selling platform for any of these Brands it ought to be.
A smart sort of secondary platform the brands leverage but not the primary way that there.
That they’re looking at getting their product in the hands of consumers and so in that way I don’t think it’s going to have the same kind of adoption that some of the.
The really big brands have had success with in China.

[22:08] But I will like so if you know in the way I got to that is kind of just thinking through the pros and cons of this experience in there are some clear benefits to this right so I mention early on.
That Instagram is very much a discovery experience right in there the.
There you know there was a great quote earlier this year and now I’m I’m spacing on and who was from that I want to get.
Attributed to Katrina at 6 fix that like Google saw Amazon solved.
Buying but ruined shopping.

[22:49] In the gist of it was essentially that e-commerce has gotten really good at the transactions of trading goods for for currency but that we haven’t really figured out how to do this sort of.
A surprise and Delight of browsing for stuff in discovering stuff you didn’t know you wanted and in the modern digital era in North America the two platforms that scene.
To do that sort of serendipitous Discovery the most are Instagram and Pinterest.
Enso adding Commerce to a platform where people are already doing a lot of browsing and Discovery experiences.

[23:29] Makes a lot of sense and it it frankly fills in a gap like there just aren’t that many consumers that are.
Shopping for designer clothes by you know thumbing through Pro detail pages on Amazon.
You know I know Amazon would like to change that but at the moment that’s just not the case so I think it’s it’s super smart and important that this is a discovery experience-based.
Platform,
you know we’ve talked a lot in the past on this show about the mobile Gap that you know the whole shopping audience is moving from laptop to mobile phones but they actually convert much poor on mobile phone,
are mobile websites they convert really poorly on apps they do better but almost no retailer or brand can get a meaningful audience with her app that almost all cases the app has very poor reach and so you have this problem.

[24:22] Bad experience on web small audience on mobile apps and Instagram is a potential perfect solution to that it’s a nap.
With a huge a highly engaged audience so it you know it it potentially can be that that solution to the mobile Gap,
like all marketplaces one of the big things it’s bringing to the party is a bunch of eyeballs right and so there’s a lot of traffic on Instagram that you get to monetize if you’re participating in this.
And you know there’s a lot of brands that even though you can’t do Commerce on Instagram before this feature.
The Instagram and other social networks are already a super important part of the marketing mix and so a lot of.

[25:07] Particularities digital-native Brands you know really.
Launched by creating organic content on the social networks and having that content go viral and that’s,
really one of the primary ways that they do customer acquisition and so you know there’s a ton of brands that invest a lot of money in content for these social networks,
and you know one of the challenges has always been you no attribution for that content like what’s the ROI for that great viral story that you did on on Instagram,
they didn’t have a Commerce call the action will now it can have a Commerce call the action and you can you can monetize that and you can attribute that so suddenly you have a better way to,
attribute value to all that that effort and content York rating on the platform so to me those are all favorable things that would make it appealing.
To try this new platform of course there’s also some cons.

Scot:
[26:06] What is the current Jason.

Jason:
[26:07] Yeah well so a big one right off the bat hat is this a platform that’s owned by Facebook and you have to enter your credit card information into it right and there has not been a lot of favorable news,
about Facebook lately and they’re certainly has not been a lot of
favorable news about trust and security with regard to Facebook and so I do think it’s reasonable that Facebook is going to have a trust Gap,
that they’re going to have to overcome to become a Commerce provider and I think everyone that sells has this trust problem and I would argue that Facebook potentially at the moment has a more acute version and so,
that’s going to be super interesting in all these beta announcements Facebook has been super clear that they’re not disclosing what the fees are for the service.
And so you know it is going to be interesting to know what the take rate is here like is it.
You know a few percent that covers credit card processing then that could be a great deal you know is it.
Higher take rate than a sort of Commerce base Marketplace I got Amazon or Ebay than you know.

[27:20] That could be problematic because these are all brands that have a a direct-to-consumer economic model and they you know there.
They’re not expecting to have to give away a huge chunk of those margins to an intermediary I mention it’s a great solution for mobile,
oh, it’s only a solution for mobile and so if you’re someone that doesn’t use the Instagram app or you want to do Discovery experience on a on a browser or a desktop.
This is not going to reach you so the audience’s is inherently limited one of the big problems to me is,
mousse brands that decided to be a direct to Consumer brand did it because they wanted to have a direct relationship with the consumer and they wanted to collect first-party data about how that consumer was shopping for him buying their products,
and wanted to build a relationship with that consumer and have a higher lifetime value and most d2c brands would talk about how.
That the value of each customer is much higher than a single transaction and certainly much higher than selling a single SKU.

[28:28] This this solution breaks all that right like the brand selling through Instagram don’t get any customer data.
Instagram gets that customer data you don’t get the payment information Instagram gets that payment information and in fact at the moment they’re piloting a.
An opt-in choice to let Instagram share the buyers email address with the seller.
So so when you buy a product on this From Prada there’s going to be a checkbox you’re going to have the option of checking that says Prada can have your email address but if you don’t check that does not even going to know who you are or have any way to contact you,
and you know in those cases people don’t check boxes to opt-in for marketing stuff so,
I feel like first-party data is a big down or of this kind of solution.

[29:23] You also have a problem that that the first time you buy a pair of Nike shoes on this platform you’re going to have to enter your payment information in the Facebook which is kind of klujian in a pain as it is with most mobile phones.
But then Facebook’s going to store your payment information and so in the future if you’re on Nike Site and you want to buy some Nikes Nike isn’t going to have your payment information even though they sold you that pair of shoes you’re going to enter your credit card again.
But conversely if you later discover a pair of Adidas on Instagram that’s going to be a very low friction purchased because.
Adidas friends at Nike earlier you know got through that that friction hurtling got the customer to enter their payment information on Instagram so in a way.
You’re you’re giving customer data that benefits competitors as much or potentially more than it benefits you so that’s a little risky.
And then there’s just a bunch of.

[30:20] Tactical execution thing that like I don’t think as it stands right now the Instagram check out full of is a best-in-class checkout flow so you can’t use Apple pay for example it’s you know it’s.
Limited and payment types are all these edge cases that consumers sometimes want to do like gift cards or splitting a purchase on the two credit cards or things like that you’re not going to able to do any of these things for the Instagram platform.
The best practice for entering a shipping address right now is to use the lookup database so you start typing a street database and we find your old address and save you a bunch of keystrokes.
You can’t do that on Instagram if you got to enter all that the address Fields Me and You Lie,
a huge killer for a bunch of Brands is that you can’t sell multiple skus or accessories or upsell the customer doll you each item is a separate transaction,
and then you know one of the things that makes e-commerce most successful,
is having social proof on that product detail page having ratings and reviews having Rich content that tells a story about that product.
And you know there are no ratings and reviews on your product detail page on Instagram and there’s actually not a lot of rich media like the rich media is up front in the discovery experience but once you get to this conversation.
Yet you know you not getting like detailed information and description and selling points about the products.

[31:44] You know those are just a bunch of things that like if you were comparing it to experience you could deliver from your own e-commerce site are sort of in my mind inferior.

[31:54] And so none of those are deal-breakers they just are less than perfect right so you roll all that up and I was thinking about.
You know what I be advising my my clients to use this feature and the kind of conclusion I came to is.

[32:13] Most of those down sides are not negatives to the brand they are negatives to this one channel and so they limit how much success you could have on the channel.
But they don’t actually like fundamentally hurt the brand and so you know.

[32:31] In a mind if you’re a brand that’s already spending a bunch of money on Instagram content and you’re getting organic reach with some of that content then.

[32:40] Probably makes a lot of sense to try to monetize that and you know some of the negatives I mentioned will like slightly limit the success you can have but you can still have.
Pretty meaningful success but if you’re not someone that’s creating a bunch of of Instagram content then I think you need to think really carefully because there’s a major expense and commitment to this this is very different than a.
A transactional market place where you know you got a thousand skews and channel advisor and you just had publishing it sends a thousand of them to this platform,
that’s not going to help you here like you’re gonna have to create bespoke content that has tags to these individual skews and that content is going to have to show up organically to a meaningful a size audience on Instagram.
So if I was not on the Instagram platform and I was looking to grow I’m not sure I would look at this as a primary tool and I for sure
would never recommend to anyone that they say hey what’s not have our own e-commerce site that’s not have a direct-to-consumer effort let’s just selling Instagram like I think that would be a.
A horrific mistake to be sort of a digital sharecropper and try to build an audience exclusively here that you don’t own so
to me it’s a great secondary channel that can really accelerate things for some
people that are already good marketers but it’s probably not you know the holy grail for for replacing e-commerce sites and and those sorts of things for for everybody to see bran.

Scot:
[34:08] Yeah the the One Direction Twitter was going I thought was interesting in that it’ll be interesting to see if Instagram goes this way is it a lot of times,
people,
aren’t really looking at the brand pages and falling them their find influencers right so I’ll pick on a Kardashian or less a Kanye that’s about let’s see let’s say
LeBron James right so he sells Nike shoes and so he may want to put something on his content that’s actually a shop old Nike ad
but it’s like him wearing the shoes and chocolate that starts to get kind of complicated right so you know she doesn’t want just anyone kind of,
making an ad Nike shoppable so then how do you collaborate the influencers in the shop ability to see if Instagram tries to go that route or or if it stayed with the branch being the one stopping.

Jason:
[35:06] Yeah like that was an early question about this was is there an amenity for influencers or even a way to track a Filippi’s I can influence are referred to say the brand did do this content and did have a sellable product on Instagram
if if influencer directed an audience to that brand could they somehow be tracked and compensated for that because,
there’s a lot of of.
Influencers who is monetization like you know do use Instagram as the primary way to reach customers and it is pretty arduous at the moment to do at the Venetian on that and so
yeah none of that is in this platform right now you know I will say a couple months ago Mark Zuckerberg talk about the direction Facebook was going in and he mentioned that commerce was going to be a major
part
of the the future of Facebook and so I don’t think this is the only major Commerce feature that we’re going to see this year so you know I I won’t be surprised to see other,
Commerce amenities make their way into the various Facebook platforms and you know I do think there’s a
a huge influence our community that’s not perfectly well served right now so I wouldn’t be surprised to see some new products there but there’s no no hanser indication that that is.
Eminem or you know the next step of this.

Scot:
[36:27] Any last Lots.

Jason:
[36:31] No idea this this to me is one of those things like you know the bummer is as a brand,
you didn’t have this on your road map yesterday you had a big road map of initiatives that you drink we didn’t have enough resources to get and now you’ve got this new problem.
You know where it is hey Jason said this is maybe a good hit. So where does this go in the priorities do I bump something do I need to jump on this right away and let you know I do think a bunch of brands are going to struggle with.
Sort of figuring out how this fits in the privatization the good news is I don’t think they’re going to be opening this up to other brands in the very near future so I think we’re going to several months to.
To watch and see if we can get any any.
Tidbits about how customers are adopting this with these top brands before anyone really has to make the the decision to invest in it so it’s a little bit it’s a kind of thing you definitely want to know about him be falling carefully and it’s a you know.
However it plays out I think it’s an encouraging sign that the Facebook is trying more Commerce things I think that’s super important.
But you know I don’t think anyone is I don’t think it’s going to change anyone’s economic fortunes dramatically in the in the near.

[37:47] And that’s probably a good place to leave it because we’ve slightly exceeded our allotted time for this abbreviated hot take.
If we missed any questions that you have if you want to continue the conversation we do every to jump on our Facebook page or hit us on Twitter and won’t be happy to discuss it more,
as always in this hot take was helpful that great way to repair says jump on iTunes and give us that five star review.

Scot:
[38:15] Yeah thanks for doing the same one we always try to give you more podcast for your money so be enjoyed this episode.

Jason:
[38:22] And until next time happy commercing.

Mar 18, 2019

EP166 - Shipsi CEO Chelsie Lee

Shipsi CEO Chelsie Lee

Chelsie Lee (@ChelsieAnnLee) is the CEO and Co-Founder of Shipsi, a software solution for aggregating and managing last mile delivery services.

In this interview, we cover a wide range of topics including last mile solutions, curbside pickup versus delivery, changing customer behaviors, and the Amazon effect.

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

Episode 166 of the Jason & Scot show was recorded on Wednesday, February 20, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Wednesday February 20th 2019 live from the etail West Trade Show here in sunny Palm Desert,
I’m your host Jason retailgeek Goldberg and unfortunately due to travel issues Scott didn’t make it to the show so you get twice the Jason for half the usual cost,
but to make up for that we have a great guest listening to the show will know that one of the topics we spent a lot of time talking about his last mile delivery so we’re particularly excited to have on the show Chelsea Lee and co-founder and CEO of shipsi,
a company that helps retailers saw that exact challenge Chelsea who welcome to the show.

Chelsie:
[1:04] Thank you so much happy to be here.

Jason:
[1:08] Chelsie as a long time listener of the show you’ll know we always like to think that getting started by having to listen to get a little bit of background about how you came to your world so can you tell us a little bit about your background.

Chelsie:
[1:19] Absolutely I am a proud Minnesota native.
I grew up hunting and fishing with five uncle’s which is probably not as common as most founders.
Spend some time in Europe New York now reside in LA,
and spend a lot of time in corporate retail and then working in technology and Technology Consulting anyting EDI Erp and VI point-of-sale analytics was.
Was my passion for a long time and then,
I think it all started though actually my grandfather’s gun shop supply and demand and the fact that you can negotiate anything he wanted during gun season was was also really entertaining for me.

Jason:
[2:01] That’s awesome I’m a big family of a big fan of a family retail business as I can from a retail family as well I’m sorry I forgot that he missed you because he died r p e p o s are some of his favorite acronyms,
and his listeners will know I sort of think of Minnesota as their retail capital of the us having.
And a lot of time at Target in Best Buy a lot of lot of great retail in a lot of great retail people come from that region,
so what’s taking the ship see a little bit can you tell us how you came up with the idea.

Chelsie:
[2:37] So it originated because I was getting really frustrated that any brand that I was working with from Bob’s Bait shop and Nike everything in between they always have his big big Dark Cloud of Amazon.
So maybe not New York recently but yeah yeah.
It really stem from this frustration so I wanted to figure out how I could solve for it so I considered working for a private Equity Firm.
So I called my friend and a mentor of mine been who is now my co-founder and said what do you think you think I would like it.
And he’s a Serial entrepreneur angel investor and said,
I think you would like it fine but I think you should look at the side project I’m working on and it’s it’s called the shipsi and I said it sounds like Logistics I’m not into that you don’t want me and,
a solution that was originally made for traditional Logistics I looked at it and,
the Ben what are you doing this is the front of a nanny cam so we flipped it inside out and upside down and that’s Gypsy today.

Jason:
[3:46] Very cool give us a like what is the bullet like how does shipsi work.

Chelsie:
[3:52] Yeah so when I was speaking with Ben originally and we started toying around with this idea Banda Manatee cam,
I called every friends and old client in my retail networking and said,
if you could deliver within a couple of hours without changing any of your existing business systems and not pay for shipping,
is that something that you would find Value in would you invest in something like that would not fall in line with your priorities this year,
and it was really hard to find someone who said no.

Jason:
[4:27] It’s always a good problem for incubating a good thing to happen when you’re getting a new idea and so in my mind.
Unlocking all this inventory that a retailer had an individual store that can only serve visitors of that store and essentially turning that inventory into e-commerce in the far is it can be.

Chelsie:
[4:49] So we’re in a great an additional shipping option or add an additional option at checkout in any existing e-comm website,
and then we aggregate multiple last mile delivery networks on the back end so that the consumer is completely dazzled and gets the best price for it,
and then we also utilize existing infrastructure as you mentioned of stores warehouses distribution centers to basically open up an instant shipping option in whatever City those things are in.

Jason:
[5:19] Great and so I’m going to dive into the details in just a second but before I do I mention we’re etail West you were just on a panel that you tell West calls a tech tank and it was kind of like
you each got the picture businesses in the audience voted on the the business they would most likely want to adopt,
and how did you do.

Chelsie:
[5:42] Well it was an amazing thank you for all of my voters I swept it I would say so that the question or the what they were judging and I believe it was something like.
Which of these companies would you invest in within the next 12 to 24 months or seriously Implement within your business and I had over half of the votes in the entire room out of the the panels.
It’s definitely top-of-mind as you know we come in last my alarms are only a Hot Topic.

Jason:
[6:10] For sure for sure tank so congratulations on that wear with the inaugural Tech tank.

Chelsie:
[6:15] Yes thank you thank you.

Jason:
[6:17] Very exciting.

Chelsie:
[6:18] I plan to that so that I we could finish that before coming on here.

Jason:
[6:21] Yeah I didn’t want to spoil it but like I would have only invited you on the show because I knew for a fact that you are going to win.

Chelsie:
[6:27] I knew it yeah so where’s my tiara do I get a tiara crown or some kind of trucker hat Maybe.

Jason:
[6:34] So you know it said I was going to bring it to Yara and some of your people said that you just ordinarily wear a tiara and so it seemed like it would be redundant.

Chelsie:
[6:43] Depends on the day multiple hats yes.

Jason:
[6:46] That is that the job of a Founder rarely is one of those hats that Tiara but yeah.
So let’s dive into it a little bit so you’re solving Last Mile I think.
You know what I just heard that I would imagine you either hiring a bunch of people to deliver packages or maybe you’re on demand system where you’re using like gig workers to deliver packages is that what you’re doing.

Chelsie:
[7:10] No so we have the beauty of learning from a lot of other mistakes that last mile networks who are very successful now have already made,
so because they figured out a lot of heavy lifting I think for us in the beginning we partner with last mile delivery Network so a big piece of it is,
we don’t own the car is the warehouse is the merchandise nor employee kind of anyone within that,
we just you know basically are the master aggregator Wrangler coordinator.
And a really critical piece in that is that we set up different business rules are parameters to make the option up here or not appear so we don’t touch the traditional Logistics,
but let’s say a driver isn’t available or the merchandise isn’t available we build all of these profile and business rules or what we call a PBR,
behind the scenes so that the consumer sees the option and we can ensure that they get what they need.

Jason:
[8:04] God you you have to be careful cuz there’s a lot of hunting stores a PBR mean something totally different.

Chelsie:
[8:07] Yes.

Jason:
[8:10] So so let me make sure I have this right so I’m I’m a hunting dog, I have a website and I ship stuff out of my warehouse via UPS or the mail and maybe I have a store then my loyal customers come in and Shop.
You add the option to my website to say deliver same-day and then the customer pics that and then.

Chelsie:
[8:32] I’m going to make a slight correction on that it’s generally within an hour or two hours at most.

Jason:
[8:38] Even better okay so deliver in an hour as I’m about to go on a hunting trip and you’ve got that new training collar I need for my hunting dog,
so I clicked on that one hour delivery and then your software is deciding who the best,
Last Mile fulfillment partner is in you’re going to send that order to that fulfillment partner,
they’re going to fill that order you’re going to collect all the data about about delivery and all that stuff and feed that back into the Retailer’s.

Chelsie:
[9:06] Exactly and that’s a big piece of it that often.
You know it’s cool that we can ship something within an hour from point A to point B but the real value that I see especially in a couple years is having that,
Predictive Analytics on the on-demand market and to be able to feed that back to our Retail Partners so that they can in turn feed that into the rest of their supply chain.

Jason:
[9:29] So you’re sort of the middle layer between the last mile companies in the retailer and are there any particular last-mile companies that you tend to partner with other that westerners would be familiar with.

Chelsie:
[9:40] Oh yeah you know it ranges some of them are small Courier Services some of them are the Postmates of the world and it’s it’s just been amazing to see
us fueling every party involved with with more Revenue we will be making a big announcement in the upcoming months about another,
why is my old partner on major one as well today we’ve accessed over 500 cities across the US and by the end of the year we anticipate having,
over a million drivers through those driver networks to be available for shipsi deliveries.

Jason:
[10:12] That’s awesome so so pretty much a national reach at this point the are there any particular categories that you’re finding our are lending themselves to one hour delivery like what kind of retailer is best suited for the service.

Chelsie:
[10:25] Haha that’s a good question I wish the data skewed one way or the other would help our sales team know what to go after a little bit more but.
It’s really diverse I would say the younger women demographic.
Works a little bit is very slightly skewed some of the luxuries skewed but then there’s also things like a phone charger and birthday candles which has been really interesting to see there’s not a clearly defined,
category or vertical,
I should I’m not surprised anymore by our new customers because our first time customers were a men’s clothing women’s clothing footwear apparel accessories a sex toy company I mean.
Everything so to answer your question no we haven’t seen as a friend or vertical yet.

Jason:
[11:21] Awesome. You can’t go wrong with a vices I feel like everyone you know once devices delivered more quickly in.

Chelsie:
[11:27] Absolutely.

Jason:
[11:28] So chocolate in in alcohol might be good although there’s some complexities in the alcohol one.
So one of the topic categories we talked a lot and last mile delivery lately is around grocery are you doing anything in grocery or is that something you’re you’re thinking about.

Chelsie:
[11:46] So we have a little bit and grocery some more specialty gift food items such as edible which is a delicious edible cookie dough if you haven’t tried it,
and we.

Jason:
[11:56] Speaking of vices.

Chelsie:
[11:57] Yes he has absolutely so we are really focused on retail we’re actually really.
Making it a point to stick away from grocery but if you look at some of the trends that’s happening in grocery right now it is,
is amazing I think something like a Business Insider just recently published a report on 35% growth in grocery and that,
consumers wanted you know 69% of them wanted home delivery versus 31 or curbside and pick up.
So I see those Trends and Retail is is trying to catch up but we need to go fast.

Jason:
[12:38] Yeah I know for sure I should have asked you a question earlier but this will open up to my next set of questions,
so you’re you’re helping collect that order in your you’re getting that last mile person to show up in the store in in your model is the the retailer most responsible for picking the order in the store and having it ready for the,
the delivery person or the delivery person like going into the store and picking stuff off the shelf.

Chelsie:
[13:04] I have a delivery person is not picking things off of the Shelf,
the retailer either picks it up or there’s a dedicated place for shipsi delivery is just like there would be for a 7 to 10 day or two to four day whatever might be in the warehouse,
and then with some of our larger Brands we have a shipsi person that we have hired to say,
we will get you guys set up if it’s if the demand is so high or maybe in the first couple months will send someone from the ships that you to go work with your team in the store Warehouse to get them familiar and then we also have a,
customer service layer that is absolutely critical so that we can be one point of contact for the consumer for the retailer for the warehouse for the driver so that.
The retailer doesn’t have to deal with some of those things in the consumer gets what they need and feel confident about it.
Someone last week actually referred to us as The Wizard of Oz because they didn’t even know is a retail customer of ours and.
So many things that we do the retailer doesn’t know about it so every 10 seconds word checking in order to make sure that everything is okay and when it’s not we catch it.
99.5% of the time before the retailer or the consumer even know.

Jason:
[14:18] Got an internet metaphor they didn’t want to even know what’s behind the curtain they just wanted to see the magic so.
The whole curbside versus delivery thing like I feel like there is in the abstract there’s a consumer preference.
But I do like price also comes into play in that so like presumably the more you have to charge for home delivery,
the more likely a customer is to opt for the convenience of curbside pickup versus delivery so I would assume if you can get the price low enough or at least the price as perceived by the consumer,
then do every it heavily skewed towards delivery but in places where the unit economics don’t work for that like it might for a real grocery store,
side becomes more popular.

Chelsie:
[15:05] Absolutely there’s actually two points for our business and why that matters one is because we’re aggregating multiple Last Mile networks and Courier Services,
we’ve seen really drastic scenarios where maybe one specific last-mile Network says that it’s going to be $51 and then another one picks it up for maybe $6 is a really really bad,
differences in that so one piece of it is the aggregation and the our ability to do that II is that,
the retailer is no longer responsible to pay 12 bucks to drop it off to FedEx or USPS because the consumer sees exactly how much it is,
so we have a couple of retailers right now that we’re playing with the pricing and they say well I already have $12 allocated in my p&l for FedEx,
what if I throw 10 to the consumer well in many cases it ends up to be a dollar for the consumer to get it now and obviously there he comes sales skyrocketed,
they’re doing silly Facebook videos and so that’s been really really exciting and we’re finding out a lot about,
really what the consumer is willing to pay for but especially when the brand allocates a couple bucks towards it a lot of times it’s a dollar or dollar is $5 you know ten bucks and we’re just been really exciting to see him.

Jason:
[16:21] Yeah it is you know pricing consumer pricing is one of the interesting things here because,
because we’ve sort of overwhelming data that in general consumer don’t like paying for shipping right inside you know the the Dirty Little Secret is something like 68% of all e-commerce.
Is sold with free shipping like that in that free shipping is of course never free to the retailer.
Readers are being forced to pass to absorb those costs rather than pass them on so I’ll call it a premium delivery service it’s doing 1 hour.
Like it’s interesting like our consumers more willing to pay for shipping for that one hour premium and they perceived that that’s that’s okay or do they have sort of the same attitude that they do with regular shipping they feel like they shouldn’t have to pay for it.

Chelsie:
[17:10] I cannot wait until a more data behind it I will say we have a brand right now that 68% of their consumers last month pick the ships the option when it was available to them which is,
phenomenal right I was thinking well if we have 10% 20% growth that’s amazing you know who knows what we’ll find,
what does to have one that 68% of their consumers are picking the ships the option and,
as a Founder it is so exciting to have this I want to color a team camaraderie with a lot of our retail clients because I’ll get a call that says child’s we just broke a record this week,
and I said quiet so did we because we just seen a consistent growth every single retailer has had,
higher shopping cart more dollars in the every in their shopping cart collectively and also Maury come orders so it’s just so exciting to see that that growth with those brands.

Jason:
[18:08] That that’s awesome I do feel like you’re benefiting from the sort of rapidly changing consumer expectations as well.

Chelsie:
[18:14] Yes yes.

Jason:
[18:15] I had a number of clients that sort of piloted not even one hour delivery but piloted same day delivery.
A number of years ago before I would argue before like in particular Amazon have,
had like set that expectation and back then there was this really interesting learning the same day delivery was considerably more expensive than the other delivery options,
and it wasn’t selected by very many consumers back then again they didn’t have the perception that that that was the the expected time frame and so it looks like this premium option,
even back then what it did when you added this really expensive same-day option it dramatically increase the number of consumers that would select the two day shipping option versus the slow shipping option so we started that price anchor.

[19:02] The the middle shipping options seem more appealing and you know fast forward,
we’re getting benefit from it even though there wasn’t really high consumer adoption and now you fast forward 5 years and it seems like that’s completely changed and per your experience when you throw that,
getting an hour button on it sounds like at least in some cases,
the majority of customers are now picking that option so that’s that’s a key lesson I think in this whole industry is.
You can’t just learn something once and assume that’s how it’s it’s going to work like the customer expectations are changing really quickly and what wasn’t a requirement for your business last year may well become a requirement.

Chelsie:
[19:49] And it’s interesting to see the price Dynamics I’m part of a woman’s group and we were working with some younger women who were in a,
I can’t quite work all the the name of their group but they were you know Middle School elementary school women who we were going to have to work with Friday,
someone had raised their hand after I was explaining shipsi and I I had an example where the ships the option was less expensive than the overnight option and so I think the girl must have been seven or eight and she stood up and said well.
Why would anyone pick the more expensive overnight option if I can get it in an hour for less less money and it was just,
that’s stuck out to me it because and I think my response was something like,
what is a really good question I don’t know why would someone pick them or extensive longer option but examples like that and and when children maybe point that out it’s fun to see that.

Jason:
[20:44] Yeah it’s always a good time when your business model can survive are you smarter than a 4th.

Chelsie:
[20:48] Yeah.

Jason:
[20:49] For sure so it wouldn’t be a Jason and Scott show if we didn’t mention Amazon and sewing in Scott’s absence I’m going to try to channel my my inner inner.

Chelsie:
[21:00] Okay let’s hear it.

Jason:
[21:02] It does feel like this is a major area of emphasis for an Amazon and they’re building out this Flex network of their own drivers the buying tens of thousands of their own delivery trucks,
and,
in the most recent earnings statement they did an interesting thing you know that they wished the the competitors that they that you should be worried about any added a new phrase to their competitor list shipping and logistics companies,
which I find very interesting so the fact that they’re winning so much into this is that,
competitive threat is that an opportunity how do you feel about about Amazon vs shipsi.

Chelsie:
[21:43] I actually think that it works to our benefit because I don’t know Jeff Bezos personally but I would say that he.

Jason:
[21:52] I’ll probably call you after a year.

Chelsie:
[21:53] Absolutely I would say that it would be shocking if Amazon didn’t take a big brother approach,
the things and I love the fact that we humbly sit in the background and support our retailers and that they are the hero they get the credit at the end of the day,
so I actually have seen the the expectation that Amazon has set on consumer expectations work to our benefit,
because any other retailer needs to figure out how to keep up and that’s when hopefully I got a call from them and they work with shipsi.

Jason:
[22:29] Yeah I would totally agree it seems like,
Amazon has like super access to Super inexpensive capital and lots of it so they build out this big infrastructure and that raises the expectations,
for all those consumers and tell every other retailer that needs you to figure out a more cost-effective way to deliver that same capability that I am.

Chelsie:
[22:49] Yes yes.

Jason:
[22:50] Best it in so you can only see that Dynamic playing out in your space are there any sort of case studies or initial clients that you can tell us about.

Chelsie:
[22:59] Yeah absolutely I said we’re working on a release that’s going out within the next couple of weeks so a few of them will be mention there but Atlanta vinyl is a really hot one for us right now edible who I mentioned,
there’s it’s really every shape and size and small and large and we cater to kind of their volume that they’re doing,
we also have a partnership with Oracle as part of a woman’s Founders program so that will essentially give us access and,
I’ll be able to cater to any any retailer that is currently running on that but yeah it has been so fine like I said,
one of the best parts about being a CEO is when we get calls or I got to call and I think it might be a customer service issue or or maybe something bad when someone on my team does they really want to talk to you right now right now right now,
we broke another record thank you I guess it’s just so so much fun.

Jason:
[23:53] Yeah for sure in general it’s it’s usually not a good thing when the retailer calls and demands to speak with you so it’s fun when it it’s it’s been when it’s happy news.

Chelsie:
[23:59] Yeah right right straight the other does another interesting one and they’re kind of in this younger women demographic so yeah it’s it’s been really exciting to see to see the progress.

Jason:
[24:13] Very cool you imagine the partnership with Oracle are there any particular software platforms that retailers run that you like a prickly well like that you have pre-existing Integrations with or you’re particularly well suited for.

Chelsie:
[24:26] So the way that we work as we would partner with our we do partner with the demand where is the netsuite or the I’ll call him that sweet forever because of my background but,
Shopify so we do a prebuilt integration,
if we have that pre-built integration it can be a couple of minutes until someone’s up and running and live with shipsi or I can be a couple hours,
of course we do some tests orders that we initiate or if we initiate with them,
and if it’s one that we’re not currently connected to our average time is anywhere from 6 to 12 months to finish that pre pre built in a gracian,
so we’re not not necessarily limited it’s just some of them are in a matter of minutes and some might be you know a month or two months yeah absolutely.

Jason:
[25:11] Got you but that’s a mean it’s big chunks of marketing Shopify alone you mentioned that sweet which is a quartz nail in my Oracle with that stuff to get used to it ain’t even tougher our friends at Salesforce want us to start calling demandware.
Salesforce Commerce cloud.

Chelsie:
[25:25] Commerce Cloud I will never and sweet Cloud it’s a yes.

Jason:
[25:29] Yeah the consolidation and name changes are up I do want to dive into what like are often perceived as some of the challenges with this model so you know one of the the challenges with using as on demand delivery services are the,
the drivers don’t work for the retailer right and so the retailer can’t make the driver deliver something like the reader can merely,
offer a deliver delivery in the driver can decide to accept it or not.
The majority of the time that works great and it’s a great career for you know this gig economy,
but there is this challenge with Pete demands right so everybody wants to deliver on Valentine’s Day and everyone wants to deliver the day before Christmas and a lot of those gig economy guys are working for multiple services and they.
You know might be making more money doing Uber deliveries then postmate deliveries on those peak days and so I think one of the perceived challenges with on-demand delivery drivers is,
shoot on the day I most need to promise the consumer I’ll absolutely get the package to them.
It’s the day that’s most risky that the gig economy drivers actually going to deliver that pack.

Chelsie:
[26:38] Yes yes.

Jason:
[26:39] Do I have that right and how do we solve that problem.

Chelsie:
[26:41] Yes absolutely so there are so many things that go into working with multiple last-mile networks one is the size weight and dimensions of whatever we’re sending soap just because someone has a specific type of car,
maybe that’s why we’re aligning them,
and we also have very strict criteria on The Last Mile networks that we work with because we want to always dad’s all the consumer expectations so maybe,
it’s a certain peak time that we don’t even pull from that last mile Network maybe it is,
specific merchandise or not during food hour is if it’s a food-related one so we have a last-mile Network that has just over 90% accuracy,
when they’re on their own but we build all of these blocks if you will blockers so that they have to deliver within that,
and we’ve gotten ones that are on 90% on their own up to a 98.5% delivery,
accuracy because we building a lot of those blocks and parameters.

Jason:
[27:42] That toy makes sense and I also Imagine because you work with multiple delivery networks you have the ability to sort of spread that risk around more than someone that’s working with a single delivery Network.

Chelsie:
[27:55] And automatically fill someone else in and yes absolutely.

Jason:
[27:59] So then the other thing that’s scary is there’s a lot of points of integration where data is flowing through the system,
Ecommerce is flowing through this way super Antiquated point-of-sale system that’s keeping the inventory and you have to get data from those systems and they have to send data to this wide variety of different,
delivery networks and get it sounds like a lot of real-time data back from them about the status of those deliveries in those are two things,
I feel like we’ve all been at a a restaurant that’s like struggling to do all their their various food deliveries and you see the printer jammed up in like,
everything goes off the rails like there’s there’s some fear that there’s a lot of fragile point of integration in this.

Chelsie:
[28:44] Is a lot there is a lot and something that was really critical and important to us when building the business,
is it’s not our reputation that is at stake it is the retailer with their consumer which is why it makes all these complicated systems even more important that we don’t screw it up,
because it’s not our reputation at risk it’s really the retailers which is why we have that customer service and the real-time tracking but something else that.
Is that an investor pointed out to me actually was probably almost 2 years ago.
And we had been working with a couple hundred Alpha and beta customers at the time and he said this is just too messy and complicated you can’t do this and if anyone who first and only remember you professionally knows me.

Jason:
[29:28] The wrong thing to say or the right thing to say.

Chelsie:
[29:30] Are you yes yes it let another fire under my ass off I know you don’t think so great watch me and I delivered something to him within 21 minutes and had him initiate the order,
and yes it is complicated but you know we have an amazing Tech Team and I think my CTO all day long that they finish things before I even really know they were a problem so thank you been,
and it’s just been amazing to see it come alive.

Jason:
[30:00] One thing we failed to bring up earlier the economic model for your Retail Partners do they pay you a fee per delivery is there something like is it a red sheer like what’s the,
I am not looking for the actual price but like what’s the basic model that a retailer buys into.

Chelsie:
[30:15] Yeah the basic model is the based on four different tears so it’s based on the size of the volume of orders that the retailer is doing so that we can cater to the Bob bait shops of the world and also the Nikes so it’s a monthly subscription,
and then a small portion of the delivery fee but keep in mind the retailer isn’t paying for shipping,
so we have seen that actually we should we charge about 10 times more than we are but we really like retailers and we’re on boarding as many as way we can right now so we’re just going to keep rolling with it it’s fun to see them breaking records and US breaking records as well.

Jason:
[30:51] Yeah I feel like there’s some hidden costs that are saved in last mile delivery that people sometimes forget about.
Packing cost to make something UPS a bowl can often be a lot higher than the poly bag that you might.
Deliver in until there are some places to take costs out of the system when you do this kind of delay.

Chelsie:
[31:12] Yes and we’re working on some cool case studies right now with some of that because people that have to pay a lot for the packaging like if it’s dry ice or if it’s fragile or things like this we one of our tears of retailers we actually offer a,
like a matte black bag so that the driver picks it up instead of a sexy matte black bag or a box because the retailer doesn’t have to,
packaging and some kind of fragile packaging and yeah there’s also saving money on the packaging and the materials as well.

Jason:
[31:41] Yeah but in the end we talked a little bit about the the price that is offered to the consumer at it sounds like,
researchers are testing different price points are there any best practices that have emerged so far like like what where do you recommend retailer start in terms of pricing 1 hour delivery.

Chelsie:
[31:57] So we either we have a couple different options option one is just a display what the exactly what that price is we are completely transparent about that cost and filter it through directly from The Last Mile Network we don’t want to mark that,
up or down because we wanted to be as low what we want to do is low for the consumer as possible so that they pick up more.
The second option is if the retailer subsidizes a portion of that,
we’ve seen Jurassic success even if they only put 3/4 or box towards whatever that might be,
and it’s easy if you already have something like that built in European L and I already have a line item for that just throw that into the shipping cost so,
I should know we haven’t seen any crazy you know they always pick it up at the dollar that’s easy to say or try not to use always and never but.
Very very very very often when it’s a dollar or I would say under 5 is kind of a no-brainer for consumers,
it’ll be interesting when you asked me that question in a year looking forward to to finding out more about that.

Jason:
[33:04] Well we will take you up on that offer to come back in a year and share some of that data
and that’s going to be a good place to leave it because it’s happen again we’ve used up all our a lot of time as always it was nice have a burning question for Chelsea feel free to jump on Facebook and we’ll continue the conversation there
if you enjoyed the show we sure would appreciate that five star review on iTunes Chelsea of listeners want to learn more about shipsi,
where should they find you guys.

Chelsie:
[33:30] Yeah I would say probably the first guess is a hello at shipsi. Com otherwise feel free to reach out on LinkedIn.

Jason:
[33:38] So we’ll put those links in the show notes for folks that are driving please don’t stop and write that down but it is a ship SI.

Chelsie:
[33:48] Phi PSI.

Jason:
[33:49] Yeah on a podcast you might be imagining that your ship.

Chelsie:
[33:52] Yes.

Jason:
[33:53] In the letter c so wanted to highlight that Chelsea really enjoyed chatting with you thanks for being on the show.

Chelsie:
[33:59] It was a pleasure thank you so much.

Jason:
[34:01] Until next time happy commercing.

Mar 13, 2019

EP165 - Amazon Alexa's David Isbitski

David Isbitski (@thedavedev)is the Chief Evangelist for Alexa at Amazon.

In this interview, we cover a wide range of topics including the growth of the Alexa platform, the evolution of the developer community, the future of voice, and voice commerce specifically.

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

Episode 165 of the Jason & Scot show was recorded on Friday, February 22, 2019 from the eTail West tradeshow in Palm Desert, CA.

http://jasonandscot.com

Join your hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Friday February 22nd 2019 live from the etail West Trade Show here in not completely Sunny Palm Desert
I’m your host Jason retailgeek Goldberg
and unfortunately Scott is trapped on an airplane so we are going to make a lot of fun of him and hopefully assign him some action items for after the show,
long-time listen to the show will know that if we were to make a word cloud of everything that we’ve said in the hundred and seventy something episodes.
Amazon would be the biggest word on that word cloud and Alexa would probably be third I think Star Wars might so I can let you be.

David:
[1:02] Well that’s good to hear.

Jason:
[1:03] Be ahead of Alexa,
but obviously we talked about a lot on the show so I guess we’re super happy to have on this week’s show is Dave a bitsky who’s the chief of Vangelis for Alexa at Amazon welcome to the show.

David:
[1:17] Thanks for having me super happy to be here.

Jason:
[1:19] Yeah so I record a lot of these for my home studio and the first thing I have to do is mute all of my Alexa devices.

David:
[1:28] Oh yeah I’m the same way yeah in fact even when I’m on stage if I’m Kino to hear something when I say her name there’s still that thread that goes through my head waiting for a response.

Jason:
[1:42] Oh no it’s something going wrong.

David:
[1:43] Yeah yeah.

Jason:
[1:45] So David for a long time with some of the show we always like to start by getting just a little background about the the guests can you tell us a little bit about your backup.

David:
[1:52] Yeah sure I guess it depends on how far you want to go back.

Jason:
[1:57] I have your high school records of.

David:
[1:59] Yeah yeah exactly so I grew up in the 80s in Commodore and this this vision of how,
science fiction and Technology was a future rights what do you mention Star Wars growing up on Star Wars and things like,
the black hole right and Star Trek and all of that and I just,
man I want to be a part of it and I remember speech technology TTS text-to-speech back then be able to do stuff like that I had to do that and.

[2:29] I just I was like man when is this going to happen right and I started out any e-commerce 96-97 building.
Commerce pipelines actually competing against Amazon was just getting started the time at this company called microwarehouse macwarehouse and then I did web whole rise of the web did want you to. Com Consulting did I,
Enterprise gig in a large pharmaceutical company,
and that was my me trying management and realized it wasn’t my cup of tea I just I love that I love being,
I love traveling talking to people and using new technology which is right and around 2007,
October to a Microsoft December roll to I have now there a lot of stuff around games and mobile and worked on Windows phone and Xbox Kinect,
and then I joined Amazon,
oh gosh 2013 help out with the we are kicking off the Android App Store that we have with the new Kindle Fire tablets did that watch Fire TV is Saint with fire phone and then.
I am super fortunate I was Employee one for Alexa skill marketing team around 2014,
and now it’s crazy where everything is now in 2019.

Jason:
[3:45] That’s awesome so I don’t listen to the show will know that Scott and I are two of the four Alexa fire owners so you.

David:
[3:51] But thank you I still have mine.

Jason:
[3:52] We sometimes we have our suit we sometimes predict it shall rise again I’m not asking you to.

David:
[3:59] The dynamic perspective stuff still awesome.

Jason:
[4:01] Yeah there’s that there’s some cool features so that’s going to be interesting to see if you have a rear job and Amazon you mentioned liking to talk to people I would argue the majority of Amazon employees are not encouraged to talk to her.

David:
[4:13] Yeah I’m just I’m one of those rare birds where I approved,
Alexa’s spokesperson Amazon spokesperson,
I’ve been doing it for a long time though I’ve been in very much these Community Building public-facing you know kind of marketing PR working with marketing and PR roles,
and there’s always a need for that because you know.
I have this belief like large companies we all have processes and there’s so many things that if it falls out of that process gets lost,
and I’ve always looked at my job to be the person that’s finding all those anecdotes cuz they’re so important cuz a lot of times there’s signs for things that need to change or that we missed and that we need to do better,
and I’ve always I left startup mentality and unfortunate Amazon is just as Perpetual startup mentality it’s not for everyone but it’s it’s Scrappy man it is like and that’s,
I love that I love where things aren’t to find you got to figure him out there tough problems you’re constantly inventing things you have to think about the customer problem and dive deep in the stuffing,
I’ve just been able to make a job out of that you know it’s it’s funny because funny you ask that I’ve gone on a couple podcast,
the past few months cuz that seems to be the big thing is like.

Jason:
[5:30] I guess to warm up with a couple of those farm system podcast before they come here so that’s all.

David:
[5:34] Yeah it’s like you got to start thinking about cuz you cuz it’s so all over the place there’s no defined like I went through this. Where I was like,
I’m old enough that all of my friends now are turning into CIO CTO xorbee peas and I’m like I’m doing this thing,
what is this thing exact but I love it and I would talk to him if you like crazy but we do sucks I would love to do what you do. So it’s like just Embrace what you’re passionate about and get down there and if I like to look at it like if I saw 12 year old me,
and he was asking me when all this Tech was going to happen I make it happen for him and keep him happy.

Jason:
[6:13] I like it I like it I also like your Amiga Roots I actually work for, nor in the.

David:
[6:17] Oh man we got to talk.

Jason:
[6:18] Yeah that that text-to-speech engine was called Sam so Sam was the person.

David:
[6:22] Yeah yeah well I still have it I have I have been working Amiga fully 1000 or 2000 I’ve 600 1200 I still Google Talk.

Jason:
[6:30] That’s why I sent my nigga 1000 predates, door and it’s actually in the The Tech Museum in San Francisco.

David:
[6:34] I have never been but I’ve always wanted to go.

Jason:
[6:39] They’re a couple of those key Engineers one of them is a Google Now RJ Michael.
And one of them Jim Mayer Who did all the hardware chips is actually the the Chief Architect behind the Roku.

David:
[6:53] Yeah yeah.

Jason:
[6:54] Fancy Nails guys continued.

David:
[6:56] And Dave Haney is I’ve seen him out in so where I am cuz I’m near Philly there still it’s like in,
in like Wall jersey there’s this Tech thing and he comes out there and people talk about forgetting his name but he helped build Amiga 3000 and 4000 and a couple of things like that he’s out there,
but a lot of people stayed in the area after Valley Forge after a little.

Jason:
[7:22] The the USA quarters for, nor was in West Chester Pennsylvania I was based in San Diego and so my boss never trusted that I was working cuz if you’re in Westchester in winter.
That you don’t think the young kids in San Diego doing anything years later I visited a client in Westchester and I’m getting at the address to their thing it’s the old commodore.

Marker 01

David:
[7:42] Yeah well that’s on its QVC or Home Shopping Network is one of those owns that whole campus map.

Marker 02

Jason:
[7:50] Jumping back to today stopping at appreciate the reminiscing.

David:
[7:55] We can look forward without looking back.

Jason:
[7:57] Absolutely you talk a little bit about your role love to hear just a little bit more about your turn trolling as it is it mainly like developer poking focusing is it mainly like consumer adoption.

David:
[8:06] No we hire teams that are on that now I would say you can think of me as helping incubate new Alexa businesses,
so I worked a lot with Alexa for business helping them get started a lot of what I do is helping Brands nowadays to what does it mean in this boy’s first world how do you connect with your customers.
How do you build better quality conversations things like that so it’s it’s new areas yeah it’s,
the nice thing about having such large teams is once I’ve done something and I can operationalize it it’s not something that I never need to do again and I burnout least called isbitski burn out when I was growing up where,
I’m always it’s funny if you look at personality test like if you know anything about the five core traits I have super high in enthusiasm and.
Open to new experiences and assertiveness which basically means that even when I was a kid,
I would get super excited about something I make all my friends go and follow me and do that thing and then six months later I’d be excited about something else and I feel like we all need to try this now right now Amazon with all the different things that we’re doing now,
to be able to do that.

Jason:
[9:20] That’s awesome couple quick things we want to get out of the way like what’s your personal wake word at home for your Alexa devices.

David:
[9:26] So it’s always been Alexa I mess around with computer when it was out but by then we already had a relationship with Alexa and it’s interesting here’s a little anecdote Cell 2014 when I would talk about it,
and I would talk to press and think everybody would say the Amazon Echo,
and then I noticed about six months in people would say Alexa and that wasn’t like anything from that people just started saying Alexa cuz you hadn’t you could say Amazon you can do it was a smart speaker.
Now when I talk to people they say our Alexa I don’t know if you picked up on that which is super interesting because it’s become part of the family it’s our Alexa right it’s not Alexa that’s hard Alexa she has her own way of knowing what we like.

Jason:
[10:05] Indeed she does and I know we we love all our children but do you have a personal favorite Alexa device.

David:
[10:13] Oh boy well I love the new show at home I would say there’s three I had love the new show Thomas cuz super big screen,
and that’s the main one on my desk if anyone is curious I really loved the spots and that’s my kids have enough and I also have one in the den cuz it looks like a clock,
you know it’s just a perfect little little size and my third favorite is I have a head for years are Garmin speak which looks like a little tiny Echo dot in my car,
and that’s why I listen to podcasts because I have a Honda and so I have Android auto and I have carplay Nike all that but what I find is just saying with voice to go ahead and without having to hold down a button or doing anything and just pause,
play the latest episode of and then I mentioned this in the keynote today but you know if you do a lot of trouble and you listen to podcast news in the audio books are sometimes where you’re like,
especially stuff I was sometimes it gets deep and you’re like my brain shutting off I just want to play a game,
so I play games I played like Westworld and it played Skyrim and I put Jeopardy and a car I think this,
I’m a I’m a huge gamer so right by my own gaming rig at home and I have consoles I have Xbox One X and PS4 Pro.

[11:31] When I’m in a car and there’s an Alexa skill available I’m surprised how much I’m engaging with that stuff so I think there’s you know it’s it’s,
it’s about the situation you’re in right and in continued conversation as fun my kids doing and yeah.

Jason:
[11:46] I like it I like all those devices I have to say my new favorite though is the Billy Bass.

David:
[11:51] Yes but I if you look if you go to my Twitter there’s a link to a dead reinvent so that team they weren’t they were going to watch that,
and so a Tremont I did a talk and I did the actual unveiling,
of the twerking Santa and Bear,
I think about like a even a little man with a flag if you need to take your medication use and that’s just a visual for somebody in the home like my parents are old to be able to see that they walk in and they see it you can’t have light but there’s all sorts of things you could do it right,
somebody can make that maybe you’re delivering a package again little guy carrying a package or something like that right it’s just it’s integration with his of objects I think it’s pretty neat for notifications that way.

Jason:
[12:36] The old digital physical things going to continue to be an amazing at Lowe’s,
you alerted your talk today so your topic was how to talk to your customers in a voice person world can you give us a little bit of a recap about like what the what the topic was there and what you got.

David:
[12:52] Yeah you know it’s a sew-in audience like this and with the 25-minute keynote it’s like what do you talk about right and so for me a lot of it ctas and so I always break this down into three things,
is there going to be people never heard this they’re going to be people that have a relationship with Alexa already and so.
And then maybe people getting gas how do they do this until I always start it off with what does the future look like cuz I’m constantly thinking about that what does it look like 5 years,
you know head and why we we look back right so we start off with that kind of paint with a futures.

[13:27] Make sure people know that this is Amazon is just part of that,
but this whole voice first is huge you need to think of it like the internet even even bigger right it’s it it’s the interface for everything it’s the human technology relationship moving forward,
and it makes everything accessible and simple and so
I make sure people understand that and then explain some of the Core Concepts because I think even for me when I start my shift same for me cuz I’m stupid
everybody should just assume for me the first time I use this is I use voice control before the stuff doesn’t really work right and that’s not what this is this is understanding intention,
something called natural language understanding is not TTS it’s not looking at phonemes and actually translating them into the letters right it’s different so getting people to understand that and ways that doesn’t get to computer science he and,
try to make myself look smart or anything like that right side motor stand in terms like that and then,
third party that is okay well what can I do today and what have you learned.

[14:30] Because I get to you lot I have this unique view of the field when I talk to somebody customers I have access to so many teams at Amazon I’m always thinking in this space A lot of times when I meet with people they just,
used to freak me out was like what what can I have to offer and they’re like
Dave your view the field this you meant just share with us something so you know and so that’s what I try and do as I learn new things and I talked to customers and we’ve released new features based on that feedback I includes those in the Kia Soul a lot of it is
this is what customers are saying this is how people are using it today they could be using it differently a year from now and this is what you need to be thinking about and,
starting to focus on.

Jason:
[15:08] Fair enough and so most of the listeners of this show are our brands are retailers like.
4 Brands like how should they be thinking about like is it a no-brainer that they should be building a branded skill is there a different more nuanced way they should be thinking about it.

David:
[15:23] That’s funny.
I always feel like I’m in a Morpheus in The Matrix and they might my Syfy should write my what if I told you what if I told you and you could talk to your customer,
everyday in the moment where they are on their own terms.
That’s an Alexa skill or Flash briefing or in any pain but that’s what this is doesn’t exist is always been a barrier and so if that interests you it’s about what I like to call meeting your customer in the moment,
and it’s your tongue got really like I was growing up in Jersey I had it you know I work two jobs since I was,
gosh like 10 with a paper out but I remember one of my favorite jobs work in a movie theater.
I can still tell you I would have to say to people would you like to upgrade that to a large popcorn and a large soda for only $0.25 more the big combo special right but it was that up sale in brick and mortar
right there and it’s in the moment and that is,
completely different than it did not purchase react hit the side button or use your fingerprint or any of that kind of stuff right you’ve already enabled it knows your voice you can set up a pin but it’s seamless and nothing beats time,
right and that’s what that’s for Brands is something they just think about is customer in the moment having a conversation with them every day and.

[16:48] What would they say if they could talk to you today what brands don’t know other than the help desk tickets right and I’ve seen companies now.
Where they are now looking at the Amazon skill reviews as part of their entire ux cycle to know what new features they need to be releasing because it’s the easiest thing that people can just talk you know and so you need to be thinking about those things and then,
lastly what I tell them is what is your brand sound like Miami for us you know podcasters and listen to felt like for me I just,
I loved one for me audio I love conversation I’m always thinking in those terms but I find most brands it’s still very visual social is visual so it was a bunch of images and video and so what does it mean.

[17:34] Do I use Alexis voice do I use my own voice do I have create a new voice of the company,
write like Jeopardy skills Alex Trebek that you here right and then we you know based on feedback we provide more and more voices so you can generate through what we have a service and Amazon web services closed poly so I can
generate all sorts of voices if I need to do that but that’s another thing that they need to start thinking about in the moment,
what do I sound like one of my customers asking for where they want to have an early day so it’s,
Newcastle new customer acquisition is not going to be like what you think in Mobile and wet right it’s early like early mobile web days but man if you have an existing customer and they have a device,
and I’ve ordered something from you and I can just say reorder,
or when is that coming right or check on a status or even games like Destiny made us feel other games and made a scale where you can just say hey what’s my friend score right like you’re just like that it’s interacting again without what I was talking about is it is human,
technology that relationship together and that’s really what’s enabling and that’s to me is a couple spaces where it’s just a huge and exciting business brands,
Auto Vitaly.

Jason:
[18:56] It is interesting the likes of the there certain brands that.
Needed we have this permission to have a daily conversation with a client because of the nature of the brand in the product or whatever and it seems like it’s a no-brainer for them that they need to have a scale and be there a way to have a.

David:
[19:14] There’s certainly some of that like the early web days where it was like I have a skill and then you talk to the scales just about the company I mean I was building those websites for Brands back in the early 90s.

Jason:
[19:23] But if you’re the Weather Channel or something like it would be foolish not to.

David:
[19:28] Yeah yeah.

Jason:
[19:29] Have a skill there because again there’s people are going to get up every day and want to know what the weather is and how to get dressed.
The children have a little bit with some Scott like it’s just needed to voice we talked a lot about app fatigue on the phone right and if you’re not one of the apps on the front page of the phone you get forgotten pretty quickly.

David:
[19:46] Yeah.

Jason:
[19:47] On voice we don’t even get the visual cue so the problem is there to be 300 great skills that I’ve enabled on my Alexa echo system,
if I don’t have a daily reason to use them I’m likely to forget a bunch of them exist and so that like so some of these by I probably don’t want a daily relationship with Charmin toilet paper.
Sherman still thinking about how are Branch it evolved in a world in which voices are super important in her face like any advice for those cut like I feel like you’re mostly going to interact with Charmander,
through the native utterances on the on the Alexa platform is going to be at.

David:
[20:25] But what’s interesting is like.
Why have a mobile app to write like you these are all of it doesn’t change any of those questions what it does changes what’s the relationship of my customer right the demographic of the customer ships,
voice,
you mean somebody has to understand they have to have a smartphone they have to know how to patch it after I have downloader app get the latest version of your dad if they’re using a web browser they still have to be able to patch the OS on a computer do all those things,
in some of these devices you’re talkin like 5 $10 right and it’s always the latest version.
There’s never been a technology as a brand where your customer has the latest version of your experience at all times right,
cuz even the web I mean man,
I spent so many years with all the different web browser differences there is not I’m sorry there is not one version of your and anybody that’s how to program client-side knows that and you know jQuery and other things made things easier but gosh,
that is in a nightmare so it’s that except my dad and he said my mom still print out emails.
But he’s never did with his money right really gave you really turn on computer my dad,
you know he’s a butcher he’s retired now never touch computers life and when we’re hanging out he tells me about songs he pulled out and thinks he’s talked to you with Alexa.

[21:44] And that’s when the light bulb went off for me is I’m like this is empowering man like this is like anybody can do this stuff and so maybe toilet paper isn’t important for me and my age but maybe,
it is for somebody else that needs to think about stuff that right so it’s that’s what you really need to think about what’s the demographic,
your customers if any demographic had access to it cuz there’s kids that are talking to everything now,
because they’re used to Alexa right I hear from customers are expected to so when that happens right that opens to meet new possibilities,
and so you need to focus on those things and look at existing customers when I like to tell people is.
To get to the utility of speed right nothing being speed go look at your mobile app and look at the top 10 things people are doing what are they doing everyday they’re probably doing that one thing everyday cuz it’s fastest on mobile.
So if you can make that faster,
even if it’s just checking on the status even if it’s just a reorder or maybe it’s getting information we try to do things to make it easier to have conversations and so we have the ability for you to say something like that.

[22:57] Alexa how do I remove a grass stain now I may not know what brand but a brand can respond,
right cuz that’s a human being to think we may not remember the full invocation or anything like that until we try to do more and more of those things or Alexa play a game and I get some suggestions but it’s about,
what you think about this is Alexis going to learn about you what do you what do you like your right and what are what’s,
getting reviewed well and things like that so if that’s kind of I think.
To me and this is going to sound crazy from a guy that’s spent so many years building app stores across so many platforms,
but to me I don’t see that 10-15 years down the road,
right cuz I put all the onus on the human being would I see 10-15 years down the road is an AI that knows me intimately that’s already out there,
and remembers things so can be like hey Dave and we had a conversation a month ago about XYZ topic I just found some information about that if that’s what we want we never had that and that’s what voice is going to enable imagine trying to do that in a mobile app.

Jason:
[24:02] Yeah I totally agree I feel like a lot of these things that we have to explicitly enable is apps or skills or whatever like become implicit like apis or capabilities that we just.

David:
[24:12] I could always do it because for some reason computers,
I just nerd it out on them I love them just even in like we talked about it maybe I just spent two hours like making my icons perfect. It was fun,
and I used to get upset that I couldn’t share that with people cuz it’s such a joy to me and people like right like they just didn’t like it and so I knew
did that was just inherently broken if there’s such that technical divide that something else has to be there right and this is it man this is the.
The big enabler.

Jason:
[24:44] Why don’t you mention the kids screaming at the Alexa ideas funny like two things that come up in my newsfeed a lot lately you are,
advice for parents that we need to teach our kids to use politeness with our our Alexa stop Alexa devices because there’s some risk of.
That’s raising a less polite culture because kids are used to sharing commands at the other devices and they respond.

David:
[25:07] My anus is there and this isn’t a belief isn’t that starts with the family what starts with the individual first in the family and then the family.

[25:18] These up to the Community Practice Community is a bunch of families and so regardless of what technology was introduced we’ve always had a set family Rules so when.
Screen when we first started getting iPads and and the Kindle Fire and things like that we had to set rules around screen time.
And some of those rules where you do homework first you do not know when we wake up on the weekend first thing I’m doing is not logging you into these things when we eat dinner as a family for us everybody put phones away. Included,
right and so that is in something that comes with the manual for that technology has something you decide as a family and then as a culture so voice for me absolutely was that because when we first got it early days I be playing music and my,
so this is 2014 so gosh she was six,
and she would run into the room and say Alexa tell me a joke and I be like that’s listening to music so then we had to do a family joke that said you know like this is what’s rude this is not with rude,
and you can do stuff like we did hear from families,
so we enabled stuff like a follow-up mode so if Alexa does something and you say thank you she’ll say you’re welcome back she recognizes all of those things or whisper so if you a little one at home and you can be like Alexa,
quiet and she’ll Whisper back which is a very interesting the first time you hear it cuz it’s so human to do that you know and so you can enable whisper mode.

Jason:
[26:46] Yeah I know it’s totally totally cool like the other parental thing that’s happened is Amazon has completely wiped out the the female child’s name Alexa.
Parents don’t want to name their kid for you no fear of triggering all those devices Olive.

David:
[27:02] Yeah well I do I talk to families that have names that are similar in that they are all Amazon or Echo.

Jason:
[27:11] So it might be my family I have a sister-in-law named Alexis which is close enough inside where we’re at Echo family cuz we also for work say Amazon to off.

David:
[27:21] What’s going to be the new left handed right.

Jason:
[27:23] Exactly is that at that is exactly what it is so I mentioned the other listeners are retailers,
the default position for a retailer is Alexa is the evil,
front door of my competitor and I’m desperately rooting for any other artificial intelligence technology to win because when Alexa wins that comes attached to my competitors store,
are they.
If that’s true that’s fair enough like I mean there’s a lot of competitors in the world is that true or is there a way in which we like Israel and which Walmart should be thinking about how to leverage Alexa or are they right.

David:
[27:58] They could completely make an Alexa skill it’s open to everybody it’s interesting because even and this is going to be in iOS use Amazon services,
was because they weren’t locking into an ecosystem I could use my Amazon video,
my Windows device on my Android device on my iPad and I could get my Kindle book on the Kindle I had 10 years ago where I can download it onto my phone
audible working across everything so it was always I always viewed Amazon.
It always depends on the space that you’re in right so I always do that was on as this Innovative tech company and that that was not locking it is all about giving in the customer choice right and so for me.

[28:50] I never looked at it as what you’re you’re saying that’s just a personal on an Amazon note,
from day one this is been open everybody don’t charge the idea has been that voice,
review is the next big disruption it’s the human.
Technology interface so it has to be everywhere so we’re not going to be the one to do that we’ve got to open it up to everybody,
and so that’s why you see it in the IQ and I we can make our own Echo,
there’s hardware specs to lake house and then you and I can go sell it on Amazon for five bucks and we can make it the retail geek Echo,
write and let me know that that Tech and so it’s,
that but that benefits everybody because it’s helping customers its helping push it for its I view that the people that aren’t that would say something like that are the people that would say cuz I dealt with this years ago to that would say,
that I’m not going to use HTML in the internet because Google Microsoft phones.

[29:50] And no they don’t own it it’s the way that human beings are going to talk that’s what this is there’s no single company infected.
Jeff has said I completely agree with him is that there’s going to be hundreds of a eyes in real life not just okay I mean Alexa maybe the one,
I want you spray but there’s going to be all sorts of him and eventually we’re going to want them although to talk to each other,
and that’s what this is this isn’t some smartprix speaker that you can order stuff on although you can this is a new way of human beings interacting with technology and it’s going to be in everything everywhere.

Jason:
[30:25] It involves the normal Trend like usually these Technologies come about and they start out as like wall Gardens where everyone wants like everything in their own echo system so I got I go to CES every year for 30 years.

David:
[30:37] My apologies.

Jason:
[30:38] It’s like I did not say it is a matter of pride,
the first year there’s a voice interface for televisions everyone has invented their own voice interface and it only works in their echosystem than they imagined you can buy all the devices in your home from just from LG or Samsung and you know you walk that show three years later and.
Frankly like this year there’s an Alexa and a Google logo on every one of those devices and it just.

David:
[31:00] Customer choice.

Jason:
[31:03] How to make is a better experience with a customer.

David:
[31:05] Nothing’s nothing’s in a vacuum all of our lives have multiple endpoints and we just want to simplify that.

Jason:
[31:11] You talked a little earlier you’re like hey if we looked at that uses on the phone there’s like certain things that would have weight higher usage because they’re just the the low-friction best best things to do in the phone and like there certainly is an analogous twist,
her voice and relax all right until we’ve seen some of the surveys and it’s,
people overwhelming we are going to use it to play music to get information you know there’s and you probably know the exact list on making it up.

David:
[31:36] Because we’re at bombers show.

Jason:
[31:37] Commerce show like we always notice like at the moment Converse is pretty low on those lists like it does not appear.
The primary thing very many people are using their device for is to place orders for for stuff and I’m just curious if you have a POV is.

David:
[31:55] Is

Jason:
[31:58] You are truly an adoption or is it never likely to be the dominant thing we do the invoice or what your.

David:
[32:04] It will be the dominant for everything is my opinion but I mean I’m old enough to have heard people say that about the web and mobile as well,
and that’s what you want man you want you want it to just you want in those early days where you’re going to see it up Tick and get in cuz that’s when you can build a really strong brand and really strong relationships.
It’s early days but there’s nothing like in the moment so I’ll give you an example.
If you follow like the thinking of like app store,
where you can buy like Jeopardy you can buy extended and you can do more questions and things like the offer that you can do premium subscription answer today.

Jason:
[32:52] Forgot to take stuff the bus.

David:
[32:54] Nice nice and you can do the innocent and I think people are familiar with that but people were familiar with that in the beginning I mean I grew up I’d buy go to Electronics Boutique and buy a game and that was it man
I wasn’t like I was spending five bucks a week on a skin I just paid one price right and so it’s funny we can get used to it and so there’s that model,
but there’s also did integrates with Amazon pay so physical Goods in things like I’ve started seat like you guys have a podcast maybe you have somebody on the podcast that has a product if you had an Alexa skill where people can listen to your podcast
right in the middle of it you could say you know for 50% off would you like to purchase this and then you’re getting,
physical Goods in you’re getting part of that Amazon affiliate program and things like that right then you have other types of skills that look at it as an endpoint.

[33:43] So I do this is It’s At Its if I don’t do it all the time but it’s my it’s my guilty pleasure I love the Domino’s thin-crust Pizza I’ve always have the grown up in Jersey and,
so if I’m when I’m not traveling and we calling my house Friday night party table I’ll be like all right Friday night and so as I do is say Alexa,
ask Domino’s for my easy order boom it’s already got credit cards not going through Amazon that’s an existing customer relationship,
we have something that we call account linking so you don’t even have to go through Amazon use Amazon pay you don’t have to use login with Amazon you can have your own existing customer relationship they see screen it’s like a mobile,
analog in a waffle those kind of things so you could use any of those providers or your own so it’s an existing customer through a different endpoint,
and I’m surprised even in my own life the use in that and so I think this is my thought.

[34:46] Is that nothing as human beings when it comes to technology and this is especially with purchasing beats speed.
That’s why I think I shipped it and most people shipped it to mobile.
Because I don’t want to go log on to my what the title is a desktop and a laptop and patch and get to the browser and figure it out is in the website and then using them over I mean it’s Common Sense instead of even using the mobile,
I just say Alexa ask your brand to order my stuff.

[35:17] So what does that look like when people started using that year after year after year was that look like 5 years what does that look like.
People who may be caught the people that would call up a number to order stuff right I have I won’t name my in-laws that she is huge QVC Home Shopping Network all of those things.
Call the number doesn’t use the app you know and so and she picked up in a wax on her own and I and was telling me about all these skills it was funny,
I just want to run away maybe 1,000 scales and I were over 80,000 and.
She’s like I brought it to play the Eagles she’s huge Eagles fan and I was like,
you know I already I already pulled up every album I know how to search might like I I’ve never had,
a relative a family member ever just run with a new piece of technology have you it’s like you literally you go there over the holidays in your patch and stuff and your training and maybe you’re trying to reorder some what are something new cuz what they have is so outdated,
the song it’s like it’s an appliance the hardware is the appliance,
this day is getting smart and smarter over time said that I think if you just naturally think about human behavior.
Write an end how we act and if you make something easier and you give me incentives that’s just naturally the way things are going to go.

Jason:
[36:45] That’s right I mean I feel like there’s two points and then I would totally agree with theirs.
The experience and product are going to get an exponentially better because I just wanted some everything at the magically improves and it’s just better than next day versus like these,
product we have to make one go back to the drawing board design version 2 and you know it’s a much longer duration and for sure I have also in my life via in-laws seen the leapfrogging Where do I,
there’s a bunch of the user interfaces that are so complicated my relatives are never going to learn them.

David:
[37:16] But then just let prognose in her faces yeah.

Jason:
[37:16] I just left brought those interfaces the laptop in the phone and now you know the voice they are they’re totally capable of embracing,
the I do and I I’ll be honest I’m nervous about this opinion because I’ve shared it a bunch of times and I have the whole deck of Ono was ever going to buy clothes on the internet no one’s ever going to buy a TV on the internet and like almost any time you hear that.
Precondition to no guarantee that’s going to be wrong.

David:
[37:43] Info.

Jason:
[37:46] So voice Commerce I have a slightly nuanced guess,
I feel like there’s a category of stuff that people probably aren’t going to buy any internet that are high consideration,
they require a bunch of complicated brand specific attributes right like so I’m not likely to go hey Alexa order I will leave Urbana leopard skin size medium.
Address for 2-day delivery here’s my promo code right like out I probably will never wear in the vernacular to order a dress for the first time with all those custom words in it.
But that’s how you know just one chunk of Commerce incident okay I see that Jason but I think all of this like consumables and replenishment and order the peanut butter everyone’s going to do via voice I get that response a lot and I would even say.
The easiest stuff I actually think Amazon’s going to figure that out without voice like I feel like you’re just going to send me the Charmin toilet paper,
and no I need it before I need it right and so.

David:
[38:44] Yeah but that’s just making customers lives easier.

Jason:
[38:47] Which is a good thing so it to me voice is going to fit in this middle Zone which could be a huge chunk but I called the Goldilocks zone.
Too complicated to learn how to say and stuff that’s not perfectly predictable what my consumption pattern is right and so are your point like the pizza is.

David:
[39:06] Make a perfect example in this.

Jason:
[39:07] Check example in the Starbucks and hey I have family coming over double my peanut butter order all those kinds of things like manicuring aren’t my reoccurring.

David:
[39:14] Super Bowl commercial with Harrison Ford and so it’s it’s super interesting because it’s,
individual based like maybe this was two or three holiday seasons ago we released like what people ordered through Alexa and people were ordering like huge stuff.
Like like stuff that was like thousands of dollars I think maybe something was an engine or canoe just like.

[39:43] Everybody’s different In-N-Out.
And it’s also I talked a little about this on my weasenforth With Friends Podcast is as somebody who’s been gaming for 30 years it’s I buy favorite genre and I still play is massive multiplayer online game.

[40:01] But I see with my kids the battery out the fortnite’s right and now they want Apex and there is a genuine General shift.
In those patterns with gaming just like there is and how information is shared through social media just like information the and any parents who have teens know this they FaceTime all the time,
there’s there’s did the visual seeing each other I’m more comfortable with text the chatting all right so,
where’s that how easy is it for me to be in the middle of an Xbox game and or PS4 or whatever and say something like,
buy me another skin pi to half up right now,
just walking down the street you see you know the pizza boxes people holding it up horizontally they’re talking into it now they’re talking to text you know all of those things occurring is,
there’s a study of science with epigenetics we’re with our Behavior actually turns off and on genes,
and so over time is people get more and more used to that the Comfort level increases that to me is the most important thing that has happened in voice.
In five years is there are people now.

[41:21] And I include myself as part of this when I want to use a piece of technology to try to talk to it that’s the first thing that goes through my mind I try to ask Alexa or whatever.
I didn’t exist five years ago so that to me is what.

[41:37] Stuff gets ordered online because I can see you talk about I remember cuz I where I started out,
in e-commerce like I was talking about and this Mac Warehouse might get some of those you know there were $5,000 $6,000 and then it was servers and stuff and so are people going to order that,
cuz or they want to talk to somebody and have them walk if it’s a comfort level you know and so I never I think it’s going to be different I think it’s going to fall down into,
and I think you’re going to be surprised I think people be surprised where the engagement is like this is one of things I talked about in the keynote is.
I had a picture up of both a younger gentleman and an older gentleman and I said I pointed the older gentleman I said that maybe your biggest future customer.
That somebody or targeting today.
Gagement stare right and so I think you know those people have never had a chance because I think about if I had an opportunity to just order stuff.
Cuz they’re come from.

Jason:
[42:40] The thing that lowered that friction enough that they can finally do it or not.

David:
[42:43] Wait cuz we’re basing all the data we’re basing all the data on a certain generation of people who were familiar with technology or who ramped up right and you can and so I think all that’s going to change over time.

Jason:
[42:56] No I told you buy that there’s tons of funny videos on YouTube of the toddler’s to get handed a magazine and they’re like trying to swipe the magazine.

David:
[43:03] Oh yeah my kids are like that when they are young yet.

Jason:
[43:05] Magazines just an iPad that’s broken to a toddler right and there’s this clip by using a lot of Dex but you may you may need to steal this but one of the original Star Trek movies they like go back in time.

David:
[43:15] Scotty computer.

Jason:
[43:17] And it’s Scotty talking to.

David:
[43:18] I talked about that yet that was my favorite year.

Jason:
[43:20] Yeah yeah he just assumed it like a horse weigh.

David:
[43:23] Computer.

Jason:
[43:25] And then when he finds out he has to use them at the.
I do I’m serious though Fallout like you you mentioned the.
Speech interface to the phones and you know that you are and you start to see that here and I definitely see more of that here than I used to in the in the pizza configuration.

David:
[43:41] What’s our primary Computing device as of right now.

Jason:
[43:45] Go to Asia and it’s noticeable to me how more frequent it is and so that’s like one of the my curiosity’s is like,
man I see people in Shanghai like constantly talking in their phones in here it’s a little bit like I would argue it’s more natural to talk to,
an Alexa. Then it is to talk to a Google Android.

David:
[44:06] It depends man like if I got to go pick my teen up and I see them all waiting they’re all.

Jason:
[44:15] Talking on there okay.

David:
[44:16] They’re all on the devices right purses like if I’m hanging out at work or something like that so it’s,
I think a lot of that. Related it could be cultural by here you were talking about there too but it all goes down to learn to behavior and so you can’t get to any of that voice, stuff without foil learned behavior,
Comfort levels things like that.

Jason:
[44:39] Part of me in it does just hypothesis I’m wondering if China is just a little earlier adopter a voice because,
keyboard input of the simple Chinese is a little more painful than than English and so they’ve gone to voice sooner but in the long run.

David:
[44:58] It’s painful for everybody it’s so low bandwidth I have this problem where my brain,
I think it’s way faster than I can type and I used to like be down on myself I was like I’m just a really horrible writer but I’m good at having conversation right,
and I don’t mean that in an egocentric way to I do I mean that,
as I don’t need to make fun of myself I have a comfort level it’s natural and so then I started doing I have Office 365 and they one of the new releases they have,
dictation and I’ve been using that in my work. And I just.
Tons of it’s it looks like I’m writing 15 pages but all’s I did was talk for an hour because it’s finally there and that I met an author he used to,
he was one of those the co-creators of the onion it was at the digital Summit I gave in gosh now it sounds like I’m done driving I’ll just go but I was impressed by who he was,
and that he had the same problem and he wrote this whole book and he said to me he was like Dave just he should he basically did it on Siri on his phone he had this app on his phone and he wrote the whole book by talking to it and so,
voice,
your keyboard and typing and mouse and all that it’s so low down with voice is higher bandwidth when we get to spot we’re going to be a little better.

Jason:
[46:24] So that that’s actually good pivot to our last question cuz we’re coming out on time.
The folks jump in the time machine and go to the show 5 years from now and catch you know what we’re all talking about like we do things in a surprise than the most like what’s going to be,
the most surprising thing is is it is there going to be an Alexa that plugs in or brain or what you know.

David:
[46:46] I know gosh I have to I always go way out for me.

Jason:
[46:51] Okay even go further yeah I’m good with that.

David:
[46:53] Well I think the way that you can predict the future is to go way out and then you’ve got to pull it back because everything’s done in Milestone so if I was going to say 5 years.
I think what we’ll start to see is that.
The human isn’t the major driver like technology today is very what I would call a veteran,
I have to initiate something as a human being I’m looking for something as a human being I’ve turned something I push a button I’ve done all of those things.
I think within five years there going to be a eyes that know us well enough.
That it becomes a way to amplify ourselves and what I mean by that is.

[47:37] When is has been proven right is that you have to have a conversation about a topic in order to learn how you feel about that topic know to defend your position into
this is why you know in groups that you can come up with better ideas because of that process but if I have an AI that I can have a conversation with rise me up like the Star Trek Holodeck,
right you can go back and talk with Einstein and Newton and things like that that’s real when we get to that point,
that wooden locks in human potential is huge because my biggest problem is like,
my OneNote man is like 10,000 different entries right and I’m searching and it’s all these thoughts I’ve had and I Journal a lot and I think about things a lot but I’m like,
I just wish my brain could access that better and I think that’s where we’re going to head is there’s going to be a digital self of me it’s going to understand that.
And is going to be able to interject on things like I’m working on an idea and it’s like actually Dave five years ago you had a similar idea and by the way you were feeling this way around the time cuz I’ve also found in journaling that I go through,
very cyclical emotions based on other things which I wasn’t attending self-awareness is very very key right and.

[48:51] Not to get existential or anything like that but I think that’s what AI is going to allow everybody to get more self-aware who they are and the type of questions they answer and everything else is just
barfing opinions of everybody else and not listening right and it also allows I think it’s.
If we go out more than 5 years it allows Legacy imagine if a hundred years from now you know my,
great great great in a kids could talk to me and that’s the reason why I podcast so much as I know there’s going to be the ability for an AI to go through,
how I respond in conversation in my thoughts and my experiences there already is some of those kind of experimental Services you can say and just be able to have a conversation with me you know and that’s going to tie us together,
you’re feeling the same way that my great-great-great done the same stuff I do you know and so I think that is with all of this is going to be able to,
invoice I think voices the beginning of it it’s I like that’s why I like this a conversation in folks on human beings cuz I think voice is,
start I think we can we can understand a little bit and we can speak a little bit but we still can’t see we still don’t know feelings,
and if there’s so many other things touch there’s so many other things we as human beings just inherently are great at ability to detect emotion in face,
I think when we go out 20-30 years that that stuff will also come into play more does that mean right.

Jason:
[50:21] Visual Commerce you.

David:
[50:22] You got it dude and yeah and then you got to be careful The Uncanny Valley and things like that with people game freak which to human.

Jason:
[50:33] I told you I hope that none should I come to pass and that’s going to be a great place to leave it cuz I have burn through are a lot of time as always,
questions we can get you on the show feel free to drop us a note on Facebook and we’ll continue the conversation there if you enjoy the show we sure would love it if you jump on iTunes and give us that five star review,
David and listeners want to connect with you or or learn more about what you’re up to what’s the like are you.

David:
[50:54] About what you’re up to what my vanity and my vanity URL is just the Dave Dev so the Dave dtv.com and that’s my Twitter LinkedIn email podcast everything.

Jason:
[51:07] Awesome if you’re driving don’t write that down I will put it in the show notes and you can you can click on it when you get to your destination David really appreciated talking you thanks very much for taking the time.

David:
[51:17] Thank you for having me on.

Jason:
[51:18] Until next time happy commercing.

Mar 1, 2019

EP164 - News live from ICSC OAC 

http://jasonandscot.com

Jason & Scot gave a presentation at the International Council of Shopping Centers Open Air Centers show in Austin Texas and got together afterward to record a news update.

  • Amazon Project Zero - New brand protection program
  • Walmart Earnings.  Same store sales up 4.2%, E-Com for the quarter up 43% (up 40% for the fiscal year), guidance for next year is that e-com will grow 35%.  Profitability of e-commerce continues to be a challenge for Walmart, and they expect that to continue.   Walmart stores offering "Online Grocery Pickup" (OGP)_ grew from 800 to 2100 stores this year, and is expected to grow to 3100 next year.
  • JCPenneys Earnings. Revenue down 8.4%, same store sales down -4% (vs. 4.3% expected).  They announced the closure of 18 stores, and said to expect more in subsequent years).
  • L Brands Earnings - Victoria's Secret same store sales down 7%, will close 53 stores.
  • FedEx launched a new delivery robot, SameDay Bot
  • Stamps.com dropped it's exclusive deal with USPS, a possible precursor to an Amazon partnership (or acquisition).
  • Target launched Target Plus, a new invite only marketplace to expand Targets online assortment.
  • Marketplace software vendor Mirikl announced a new $70M fund raise, reflecting investor confidence in the marketplace model.

Jason will be at ShopTalk in Las Vegas next week and will moderate two panels:

MONDAY, MARCH 4, 2019 TRACK 4, SESSION 4: 2:50PM - 3:30PM

TOPIC: Selling on Marketplaces

  • John Evons, VP, Global Direct-to-Consumer, KEEN
  • Bridget Davies, VP, Revenue & Seller Growth EBay
  • Jordan Bass, Head of eCommerce, The Wonderful Company

TUESDAY, MARCH 5, 2019 TRACK 2, SESSION 5: 3:35PM - 4:15PM

TOPIC: Creating a Single View of the Customer

  • Charlie Cole, Chief Ecommerce Officer, Samsonite
  • Steve Miller, SVP, Marketing & eCommerce, JOANN Stores
  • Greg Fancher, SVP & Chief Information Officer, Express

Jason and Scot will be giving a joint presentation (and recording a live show) from ChannelAdvisor Connect in Austin on April 8th and 9th.

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

Episode 164 of the Jason & Scot show was recorded on Thursday, February 28th, 2019.

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer and Scot Wingo, CEO of GetSpiffy and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature - Google Automated Transcription of the show:

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 164 being recorded on Thursday February 28th 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host,
Scot Wingo.

Scot:
[0:40] Alright alright alright hey Jason welcome back Jason Scott show listeners
we are joining you live live live in the same room which rarely happens and we are here in Austin Texas at the icsc OAC conference.

Jason:
[0:57] That is a mouthful very impressive specially with Matthew McConaughey standing right behind you.

Scot:
[1:02] Yeah yes sir this is a conference that will you put her on and I have all it I'll let you introduce the conference.

Jason:
[1:09] So I think icsc is a Trade Organization for shopping centers and this particular event is about the,
open-air centers which is like,
a strip malls and power centers and lifestyle outdoor malls so it's a bunch of real estate people from retail companies and a bunch of.
Individual property owners that own these these properties that host them all Z's my senses this category Mall,
tends to be less aggregated in the big Regional malls where you name the three big mall operator.

Scot:
[1:46] Yeah I guess so it's a sold-out show about 500 folks here and fair
yeah it's pretty interesting we were here doing a talk I don't want to say too much I think we're going to try to turn it into kind of a visual
but video presentation so we're going to try a new form out with that but we were asked to come give kind of a live version of the show and we talked about you were always the folks to get to get in front of a bunch of retailers and Tom they're going out of business if so that was exciting.

Jason:
[2:14] Yeah I put a bunch of them on a slide that said you don't want to be here.

Scot:
[2:18] And then I saw some people storm out so I think Mission achieved we think we just killed.

Jason:
[2:24] One way or another.

Scot:
[2:26] I wish we have a lot of one and dones here with a Jason and Scott show Roadshow.

Jason:
[2:35] Exactly we are the ultimate one-hit-wonder but I had fun chatting with you and in a rare occurrence we budgeted an hour for the presentation and took exactly an hour.

Scot:
[2:45] Yeah yeah if we could just be as good on the podcast that would be amazing but we we nailed it.

Jason:
[2:51] I like to think when we go long we're just making our audience more.

Scot:
[2:55] Yeah we're giving them more content for their their dollar.

Jason:
[2:57] No I mean they have to stay on the exercise bike longer.

Scot:
[2:59] Truth absolute yes do not get off the the cycle will work time constraint here cuz I've got to hop on a plane next week you or in Las Vegas that shoptalk I'm super envious this is I'm going to miss this year shoptalk unfortunately.

Jason:
[3:11] It will not be a true shop talk without you to be my my co-pilot but I am looking for to go of course it's been a,
Erasure the last couple years it's sold out this year it's at the Venetian I want to say that more than 10,000 people last year so expect it'll be.
A big shindig and I'm moderating to panel so I'm doing a panel on Monday in the afternoon at like 2:50 on selling on Marketplace has.

Scot:
[3:40] What that's my topic.

Jason:
[3:41] I feel like this would have been your panel has you gone but they're trying to channel,
You by inviting me and so I can have the halo effect but we have a couple sellers that are.
The telling marketplaces so we have keen is on on the ship which is a great Footwear brand from,
from my old Hometown Portland Oregon and then Jordan bass I don't know what this guy did wrong in life but this is will be,
the second time he's been on a panel that I moderated and Jordan Reed's e-commerce at the wonderful company so I always like to.
Wonderful company owns a Fiji Water so I like to spend.
30 40 minutes talking about the Fiji Water girl with him and then I like to get into the details about how they're able to Shell the pistachios and just sell the the unshelled pistachios are the shelled pistachio.

Scot:
[4:31] Can you have you been on your panel to.

Jason:
[4:33] I do incident in addition that you sellers are we have Bridget Davies who is the VP of Revenue and so our growth at eBay so we'll get to hear from from eBay's perspective about how Brands and should be thinking of amusing.
Using Marketplace.

Scot:
[4:48] Cool and then decide for marketplaces what are you talking about.

Jason:
[4:51] Yep sit in on Tuesday I have a panel called creating a single view of the customer so talking about.
Kind of aggravating Gator dated to get that 360 degree view of the customer and how you do personalization and data capture and in all those kinds of things and so we have.
Three retailers on on the show we have a.
Charlie, who has been on the podcast so I vaguely remember that show because I think we did it in the middle of a party and there may have been some drinking.

Scot:
[5:22] There was some inviting I remember Charlie is pretty outspoken so I think he'll ask me a fun panel I'm going to call I'm going to call it now.

Jason:
[5:29] Yeah I think so too and Charlie runs e-commerce at Samsonite which is of course Samsonite but also to me and and i e bags,
incident we've got Steve Miller's that's VP of marketing and e-commerce at Jo-Ann stores in so that you know they have an interesting perspective on,
on a digital in End customer capture so that that'll be interesting to talk about and then,
we have a Greg fanshare who's the the CIO at Express and express as one of the most interesting,
long-running customer Affinity programs in the apparel space so he'll be an interesting perspective as well.

Scot:
[6:07] Free call and then we are back together here in Austin actually April 8th tonight we're going to do another live version of the show for a channel advisor connect so we should start thinking about doing the sides when you get back from Vegas.

Jason:
[6:19] Do you think I will Channel advisor just pay for us to keep this room at the Fairmont so I can just leave my stuff here.

Scot:
[6:24] Probably not this is a this is a pretty fancy I don't there is a Residence Inn I'm so maybe maybe they'll store your bags over there.

Jason:
[6:31] Oscar.

Scot:
[6:33] Cool well it wouldn't be a Jason Scott show without some
Amazon news new your margin is there opportunity,
quotes of the day Amazon announced a new program for Brands I wanted to kick this one over to you Jason cuz I wanted to get your perspective on it
tell us about Amazon Project zero.

Jason:
[7:03] Finally I get to be the one to do some Amazon news I feel like that's always your thing.

Scot:
[7:07] Since you're taking my panels I'll give you the whole Amazon news thing too but I'm going to talk about digital fact tags going for it.

Jason:
[7:17] Project it was kind of interesting so this is a new program that Amazon just announced this week and it's a,
program by invite only for select Brands and it apparently gives them these brands of the ability to flag and take down a counterfeit listings.
And so.
Without any intervention from Amazon or any appeal process a brand that's in the program would have a self-service tool where they could.
Identify a counterfeit copy of their product and take it down so for example of Vera Bradley was mentioned as one of the.
The pilot customer so they they saw counterfeit handbags on the on the site they could take him down and that's the part.
In the short run that I'm most interested in and there's probably the most buzzed-about and there's some pros and cons to this this program,
this is part of the bigger counterfeit program anti-counterfeit program they don't actually have a program.

[8:22] The weather trying to get Brands to serialize their product and literally like Prince a unique.
Serialize barcode on every product and so Amazon's offering that if you,
go to this expense when you manufacture your product to put this authentic Asian serial number on each product the Dell validate those serial numbers when they bring them into,
the Amazon fulfillment center echo system and so they'll the only allow products with valid serial numbers to come in so this is.
Kind of a systemic way the Amazons offering to help Brands keep only authentic products on the site but the reason that's not super interesting in the short run is for a brilliant benefit from that they have to be willing to print this.
Spinning a serial number on a package that you need freeze packages.
In incremental expense normally they just awesome print the package in huge bulk and then they have to put it on every single package in the channel so it wouldn't be just on the,
set of goods they're sending Amazon they have to print it on,
everything they sell at Walmart and Kroger and everywhere else and so I have not heard of any adoption for that other than small.

Scot:
[9:40] So I've been at this for over 20 years now and eBay has gone kind of around the horn on this a couple times where that does program called verified rights owners,
the song is a bureau and they they went through a phase where you can kind of like go and solve your room and then the brands way over reach to know they would just kind of go knock out any third-party seller that was selling stuff without any kind of
way of validating that it was not even talked to be counterfeit and then they had to kind of like to swing back and
I'm in the telecommunication to see if Brands Conover reach on the sand and it just because a third party is selling a Louis Vuitton bag doesn't mean it's kind of it
and you know you have to think it's a little kind of murky so it'll be interesting to see I do think,
my my easy prediction is going to be a lot of overreaching going on early on with this third-party sellers will go through an outrage phase
gmv will go down in these categories in Amazon will then kind of have to swing the pendulum back to some Middle Ground so we'll see how that happens for third-party sellers,
I do think I'll be a short-term negative for third-party sellers.

Jason:
[10:44] Yeah I mean I think there's a couple of ways to look at this somewhat cynical so.
Light at the moment most brands would say there's not enough tools to protect the brand on the site right and so there's a.

[10:58] A complaint process but it feels very slow and,
sort of automated and things take a long time to percolate and you don't necessarily ever see any action in a bit and an even to event Avail yourself of those limited tools you had to have a formal relationship with Amazon which in most cases meant you had to be selling products.

[11:16] Through Amazon and so you know some of the brands that most don't like the counterfeit stuff on Amazon have also made the decision not to sell on Amazon themselves and since they have no relationship with Amazon
Amazon doesn't make those tools available to them so some some people would say that some of these brand protection tools one of their their secondary purposes is to entice Brands to,
to participate on the platform and so I've heard a lot of people speculate that that's one of.
The main reasons that Nike for example participates on Amazon is to Avail themselves of the Amazon brand registry so this is more powerful tool presumably as far as we know you have to be in Amazon,
brands are selling on Amazon platform to use it so that's another enticement to some of those those holdouts and you know per your point,
brands are almost certainly going to over-reach lots of Brands don't like gray Market product even though that's perfectly legal to sell on the,
on the side or they don't like product that doesn't comply with Matt,
pause price policy even though they don't really have the right to take that down so pretty likely as they invite more people in the program people were over reach you and I were speculating a little bit.
Maybe Amazon even already knows that and doesn't care like there's a.

[12:34] A hypothesis would be then Amazon wants to improve some machine learning to improve the automated detection of these counterfeit things and said the first thing you need is a big data set,
listings that have been identified as counterfeit and so one would thing you do if your Amazon you hire a bunch of people.
Look at the listings do the research figure out which were fake and which ones weren't flag all the ones that are fake and then you eat all that data to a machine learning algorithm and eventually you have a really smart system to identify counterfeit and if you were Amazon and didn't want to pay all those,
to do that work you could sort of outsourced to the brain by temporarily giving them the tools to Flagstaff themselves,
knowing that they would eventually Miss use the tools and you have a great excuse to take the tools away from them but in the interim you have built a good dataset you could use to train a machine Learning System.

Scot:
[13:24] Another another signal is the product reviews so I've seen many product reviews especially in the health and beauty category it seems to be where I I see it most we're pretty significant number of reviews will say this is not really from,
Brand X it's is fake and then so you know that's another interesting signal so maybe if a brand comes in and then does Mark that and they'll get,
yep the machine learning could get smarter and no okay up books like these reviewers are right that this is a counterfeit or or if it's not taken down though they'll learn the opposite.

Jason:
[13:54] Yeah and if you're not a regular selling Amazon like you you'd be shocked how deep are this goes like the the fraudsters are super sophisticated now in the black hat tactics are really evil so for example,
they're not likely to write a bunch of negative reviews about your their competitive product they're actually more likely to write.
Positive reviews that they know Amazon will flag is fraudulent about their competitors products.
And figure takedowns and things that way knowing that Amazon's is very slow and not very good at responding to those complaints about accidental.

Scot:
[14:29] Cool so also in the news Walmart had some earnings so walk us through the highlights there.

Jason:
[14:35] Yet so I think it was overall a good quarter for Amazon their same-store sales for Walmart their same-store sales were up 4.2%.
Oh that's that's not a huge number but by retail standard that's a very good number again you know there's a lot of retailers the same start negative same-store sales,
so 4.2 is reasonably healthy across such a big number that they have and I'm more relevant to our listeners there econ was up 43% for the quarter.

[15:06] Cousin hit their 40%.
Increase for the year which was their guidance last year so they basically hit it exactly now that issued new guidance for next year and they're,
predicting 35% eCommerce growth so still a big number still bigger than Amazon certainly bigger than than that industry overall,
but but like many e-commerce sites their rate of growth is is probably decelerating and as we've talked about on the show,
a lot of Walmart's e-commerce growth is really tied to this grocery program they have right and so you know unlike traditional general merchandise e-commerce where you know you you put the listing up once available to everyone at Shops at walmart.com,
when you put eggs up for sale in a particular store,
does eggs are only available to Consumers that our shopping within a close Geographic proximity of that one store then so it's e-commerce sales it's it's it's listed as e-commerce but you almost have to think of it as same-store sales.

[16:09] You know that when they they add more stores there their growth seems really high but the reality is is because they went from a store that wasn't selling groceries online to a store that now is and so if you look at it through that lens,
Walmart is a little more than halfway through making grocery even available on all their store so they announced that they're at 2,100 stores have online grocery pickup right now,
they have 4,000 stores they said by next year.

[16:37] 3100 store so that's about the same amount of growth next year they had this year so if you were a investor or Speculator its it seems pretty safe.
They added a thousand swords of grocery this year and that drove this is big 40% growth number,
they're planning on adding another thousand stores next year that if they hit that stores.
Probably going to you know not be that impressive did they cheat 35% growth and they have one more year and them but what you be really worried about is how they calm.
Ecommerce sales after that final year when they don't have more more stores to open,
and then the other thing is interesting to me is they also announced that only 800 of the stores do they have home delivery and you guys are all heard me talk about I think curbside pickup a bigger deal than home obviously a lot of people do want home,
so the only 800 of the 4,000 stores do home and Walmart has used a variety of.
Internal and external vendors to do home delivery so they have this thing called spark delivery which is kind of using their own employees to deliver,
and they've done some mixed press on that it doesn't seem like it's a huge piece of their delivery Network they partnered with a lot of the third-party delivery firms.

[17:51] To do that delivery and that they're only at 800 stores they said they want to double that next year given that they're leveraging Partners you expect that means they're going to lean into their Partners even more.
About a week before their earnings deliv announced that they were actually stopping their Walmart partnership.
And it first you would assume oh my gosh Walmart my stove fire them for some reason but the the word on the street is that deliver actually turn to Walmart off,
because the.
Delivers using a gig workers and the workers were so dissatisfied with the deliveries they were getting from Walmart that they started refusing.
To get them and that the fundamental complaint is.
Hey you're doing worker you take in order to deliver groceries you go to the store the order is not ready you have to wait a long time you have a bunch of downtime.
As the deliv driver talk about it.
It's a bad experience for the delivery drivers and a lot of inefficiencies on Walmart's part and then on average the customers that are most ordering home delivery are the ones that are farthest away from the Walmart stores which are.

[19:01] If you're very far from Walmart store your super roll and it said expensive long delivery thing so it sounds like.
There's still some some optimization than improvements.
To get home delivery nails at Walmart but it seems like the curbside pickup is going quite smooth and then I guess the last big talking point is,
despite the fact that he Converses growing huge it's a significant contributor to that top-line growth it's not a contributor to profitability and in fact Walmart talks about having a loss on their entire e-commerce business and given that there,
Thomas make 10 billion dollars in an incremental capex expenditures between now and 2020 they've actually said you can expect.
Those losses to increase in potential accelerate in so.
They're talk about like a strategically one of the few things Walmart needs to make progress on that they haven't is.
Getting profitability on that e-commerce sales.

Scot:
[19:58] Girl has any Wall Street analyst, picked apart the the growth to see how much is incremental and how much just kind of moving from the offline to the online, part of The Ledger.

Jason:
[20:09] Not that I have seen and I like to be honest I haven't even seen that you would think at the very least people would start a back into a same-store sales,
number and I haven't seen that yet now you you get a lot more of the investor Communications than I do for some reason there's some.
People perceive that you're like smarter and more economically successful.

Scot:
[20:30] We'll get we'll get some of our interns on this for maybe a few drops of
also this morning JCPenney announce there are things I thought there's a couple interesting things there that the stock surged and I was like oh they must be out of trouble but really it turns out to be one of these less worse than books. So Revenue was only down 8.4% year-over-year I think there was concern out there
as we heard this kind of continuing drumbeat of the back end of Q4 was slow
we've had more bankruptcies we got Payless Shoes is kind of have they filed or their tottering on the brink of filing so a lot of people are really concerned about JCPenney so this ended up being kind of a new idea positive in that it wasn't as bad as people that kind of imagined,
same-store sales in 219 were only down 4% versus,
proceed 4.3 that's like at a point swing compared to Walmart which is pretty interesting Avenue CEO I won't even try to say her last name do you know how to say it Joel Soul Tallahassee while I will try Soul Town
and so she made two announcements that were interesting and there's there's this other weird thing that happens in retail now when you announced store closures or stock pops because there was like Yay work closing stores,
obviously you can't like enough the endgame there as is.

Jason:
[21:48] Add trendline doesn't doesn't go forever.

Scot:
[21:49] Yeah so she knows they're going to close 18 of the main stores and nine of their home and Furniture footprint
I and then she declined to give 2019 guidance and then said no pretty much telegraphed expect a lot more store closures so
you kind of said something to the effect of we're evaluating all the stores there's no sacred cows all that kind of new CEO stuff,
kind of an interesting whipsaw there is so so I see we had Ron Johnson and he left at 13th and there was a guy to co since then so she's like the third since Ron Johnson.

Jason:
[22:22] Yeah they had the original CEO come back after Ron Johnson and then they had and I'm I'm going to say the name wrong Marvin.

Scot:
[22:31] Marvin and I he was big on appliances were one of the first things that you'll did was yank all the appliance stuff out so you know it's interesting to watch these gyrations as he's trying to figure out what what they want to be when they grow up.

Jason:
[22:46] I didn't even know you were allowed to just take a pass on offering a guidance.

Scot:
[22:51] You can't have soy Amazon only gives 1/4 of guidance they don't give annual guidance and it's more of the trend these days not to offer.

Jason:
[23:00] Incident in rounding out this foreclosure news L Brands which is the parent company of Victoria's Secret and.
A bath one by.
Thank you very much I was desperate to say their competitors name.

Scot:
[23:20] You're the marketplace guy and now I'm the retail.

Jason:
[23:22] Exactly I love,
so they also had a tough quarter or same-store sales in Victoria Secret was down 7% then after closing 53 stores and of course they've been in the news lately for,
seemingly not being in touch with the their customers in the marketplace always being accused of that so obviously,
they they have a particular image that they try to sell their customers they don't necessarily have super inclusive sizing the a
like absolutely do not have super inclusive sizing of models selling their stuff,
and as there's been more backlash to that the the management team's response has been pretty like from my perspective.
They have a legitimate point for their brand they need to find a much more elegant way to measure message.

Scot:
[24:16] Yeah at some point you face an existential crisis in you change your mind on those things will be interesting to see if feel feels like they're up against that with 53.

Jason:
[24:23] Or your successors change change.

Scot:
[24:27] Absolutely.
Some interesting news in the Des kind of delivery category So Yesterday FedEx released a new robot delivery system this one is pretty cool,
a little background so Amazon. I think it was three weeks ago they announced that they're also testing a little robot delivery there's looks like a little Moon kind of a Rover because it's got six wheels I don't think that there
they can like scissor up or anything like that it just think it is a really good traction on a flat surface.

Jason:
[24:59] Pick one perfect neighborhood in in like a Seattle suburb that has a perfectly smooth sidewalks that I can go on.

Scot:
[25:04] Or on Mars so is there does your two options so craters and and a sidewalk in Seattle so out of Memphis FedEx is announced a new robot and its really cool it's called the same day and they partnered with the Segway folks to there's a
kind of famous scientist in Cayman and most people know him for Segway but he also before Segway
he took the same technology that is in Segway that allows you to use as gyroscopes things to create a balancing system
create a wheelchair this is been really huge for four people are disabled this wheelchair can go upstairs so you using the same technology for this robot and in the video you know they show it kind of numb going through some pretty
rough terrain and then it can kind of effectively climb up stairs so really cool video there a lot of press for them rarely do you have,
delivery on on things like the night shows but one of the one of the Jimmy is the Kimmel or one of the other guys they said they had it on there I'm so
really good PR for FedEx they're going to roll it out in Memphis and then quote-unquote other cities so they haven't announced those yet
did you have a pretty nice list of brands that are launching it with so Pizza Hut Target Lowe's and AutoZone and if so this is kind of this interesting the last mile delivery problem
using robots to do that other interesting thing about the robots that I saw was there using a lot of autonomous vehicle technology so these things are connected they have a little bit of a lidar camera kind of thing on it.

[26:31] I'm there. I dug into this pretty good and I couldn't get a lot of details on that so I can be interesting this to learn more about
what that looks like cuz I think there's some pretty meeting problems for these things you is there a human just driving this remote from a central location or is it actually autonomous there hasn't been that I saw a lot of detail on that aspect of it.

Jason:
[26:52] Yeah that'll be interesting when I know we had a lot of attitude yes this year's just even a side effect of a lot of these lidars is they,
they're really bad for camera so you can imagine ironically the the FedEx robot taking out all the the ring doorbell.

Scot:
[27:13] Yeah and another something about lidar as you can shine laser pointers I didn't confuse it.
I'm taking meds and someone trying to steal a package by confusing the FedEx robot with a light iron so interesting to see what what happens from these things
I bet you know seems infinitely safer than drones in the lot easier to test these out then you haven't had that pee involved in Lacosta,
also in Shipping News a couple of quick ones
stamps.com is interesting so everyone knows kind of the front end stamps.com but the biggest chunk of stamps.com is they went acquired all the shipping companies that are out there shipstation ship works.

Jason:
[27:52] And by shipping companies you mean software vendors that help people ship stuff.

Scot:
[27:56] Yeah for colic smbs and like eBay sellers in Amazon sellers stamps went on this kind of acquisition spree in is accumulated a lot of the large package shippers using the stamps.com software
then they have this connection into the USPS just called in Deca they had an exclusive relationship the USPS and they would effectively get
sales commissions or I don't know the right terminology there
did eventually get a revenue Sheriff's whenever you would buy you $3 for an overnight kind of a delivery from from the USPS if you miss one of the many stamps platforms they would make like a nickel or something like that
the shipping so many products that ended up being a really big.

[28:39] Part of the revenue will they announce the week ago they were ending this exclusivity Arrangement will USPS and you know the market freaked out but was really interesting is reading the tea leaves on that the CEO of essentially sad you know there's.

[28:54] So much going on Amazon and set the bar at 11 so we need to have much higher service levels that we offer and then there's a fair amount of speculation that
this is an interesting if you were going to go do a deal with so so a couple of things you have together if Amazon we're going to
you know open up their shipping Network for anyone to use it like a FedEx UPS,
that's one if in the second half if you wanted to do a deal with them
then this is the first step of what you would do if there's a lot of speculation that stamps.com is going to be a front-end into more of a Amazon Logistics kind of solution
and you know that that's going to be pretty fascinating.

[29:39] Sidebar I've been I'm going to road trip so I don't usually do a lot of road driving I file a lot like you do
and I have been blown away by the number of Amazon Prime trucks so I went on a three-hour drive from Raleigh to Washington DC and I literally saw 20 Amazon
trucks Emmys on the road it's just like startling how much Amazon Logistics is going on out there then in our area I'm sure in Chicago we see the prime trucks I don't get anything from FedEx or UPS to my house anymore from Amazon that's all direct Amazon so they've definitely kind of started trimming out certain zip codes that must have high Prime density
and are doing deliveries through
that that smile van program where they have this 1099 networks they built up so big moves happening under the under the surface in the world of of delivery.

Jason:
[30:25] Yeah I believe so you won't see the bands as much in Chicago because Chicago was an early Market where they build out a.
A network of actual Amazon W2 delivery people and so they're there full-time Amazon employees but they don't use the mark Vance so the majority of my packages get delivered by an Amazon employee,
one of the easy ways to tell by the way is if you go in till like the mobile app and you look at your orders when Amazon delivers a package they take a photo.
That UPS or FedEx won't you if you have a photo as proof of delivery than you know it Amazon for some pride delivered it.
The Vans are mostly reserved for those there's third-party companies.
That that are franchisees of Amazon Fulfillment of you will end in Chicago we have a blend of flex drivers and.
Amazon W-2 employee so we don't have as many of the franchisee.

Scot:
[31:24] And then the last hit bit and this is back into the world of marketplaces there's a company out of France called Miracle m i r a k l and just want to send them a shout out they just announced 70 million dollar round and what they do is they go primarily to retailers but they also work with some malls in a lot of other
other places where you can have a Marketplace so think of it as kind of a Marketplace in a box of so you can kind of say hey
let's say I don't know hey JC Penney you want to add a Marketplace here's the software and all the components you need to integrate that in with your existing shopping cart functionality
full disclosure their partner of Channel visor so we're already pre-integrated with him so we can go to bring a bunch of celery along with the software
and then the last thing I actually forgot to put in the show notes is,
Target at least that they have a Marketplace so I saw a thing on cnbc's it looks like targets doing some Marketplace stuff which is interesting so these marketplaces are a kind of
I feel gratified talked about him for a very long time and we could only talk about even Amazon but now we have.
Copious marketplaces and talk about with obviously Walmart it's a big part of what they're doing and it's interesting to see not only Miracle raise a pretty substantial round of funding to keep spreading the marketplace fire and now we have.

Jason:
[32:46] So it is interesting to me and almost feels like a a new wave of marketplaces so you obviously you have the businesses that are fundamentally marketplaces I gave an Amazon there their they're.
In the past have been some retailers that leaned in the marketplaces so you know Staples talked a lot about it and I still think run one although you don't hear them talk about as much.

Scot:
[33:09] Actually close to them.

Jason:
[33:11] And of course the best by briefly ran one and closed it down and so for a while there was a whole Market places are great but not.
Every retailer can earn the traffic to make the marketplace work.
Now for your point we're seeing I mean Walmart's is leaning heavily in the marketplace is this new Target initiative Albertsons is an interesting,
tackling marketplaces from a fresh and frozen perspective which will be unique.

Scot:
[33:40] Yeah Urban Outfitter has one.

Jason:
[33:42] And then for your point like Miracle being able to raise money means that there's investors that that think that that's a,
a trend that we're going to continue to see as well so it'll be interesting to see how it plays out I almost wish I had founded some company that made money helping people sell on Marketplace.

Scot:
[34:00] You're a chief strategy retail Commerce digital officer you don't have to worry about mundane things like.

Jason:
[34:07] No no no but keep doing a good job you may eventually earn another initial in your title of your.

Scot:
[34:11] I keep working on it sorry.

Jason:
[34:12] It's important to have goals and that we are going to have to leave it there because,
it has happened again we've used up all the allotted time for this
a special Scott has to get to the airport short edition of the Jason and Scott show so if you have any questions or comments about the show jump on Facebook and leave them there let us know how much you prefer this much shorter version of the guests,
and as always if you enjoyed it would love to get that five star review on iTunes.

Scot:
[34:43] Thanks for joining us everyone and remember...

Jason:
[34:46] Until next time happy commercing.

Feb 12, 2019

Digital Alcohol with Diageo and Drizly 

Jason & Scot will be podcasting live from the eTail West which is held Feb 19-22 in sunny Palm Springs, CA. As a special gift to listeners, you can use the code JASONSCOT for 20% off.

This episode is a deep dive into the digital alcohol market with Diageo and Drizly.

Taylor Burton (@TBurton86) is the VP of Strategic Partnerships at Drizly, the world's largest alcohol marketplace to shop beer, wine and spirits, currently available in 95 cities.

Wayne Blum (@waynegblum) is is the Director, U.S eCommerce strategy and partnerships at Diageo,  A global leader in beverage alcohol, with over 200+ brands.

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

Episode 163 of the Jason & Scot show was recorded on Monday, February 11th, 2019.

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer and Scot Wingo, CEO of GetSpiffy and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

http://jasonandscot.com 

New beta feature - Google Automated Transcription of the show:

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 163 being recorded on Monday, February 11th
2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners as a reminder we are going to be at etail West and as a special gift to listeners you can use the code Jason Scott that's Jason Scott on Scott for 20% off
but that's next week and let's talk about today long time listener to the show will know that we have been talking about Brands going direct or direct consumer as a strategy for a very long time since I think 2016 started.
And you also know we are huge fans of the digital native vertical brand Trend as well,
so today on the show we are going to take a deep dive into a huge segment of the beverage industry the spirits your space one of Jason's favorite second only maybe the coffee will find out that will be a question.

Jason:
[1:27] Yep that you don't have to keep those two separate.

Scot:
[1:29] I'll turn it up down up down
understand the space and what's going on we are excited to have the rare to guest on the show
so Crown Royal Johnnie Walker Smirnoff
my personal favorites Guinness for strength what do all these brands have in common that have a single parent company
they're one of the largest global spear companies and that's just some of the highlights that I picked out there Brands there were so many that the show would have gone long if we covered all the brands we're excited to have on the show
Wayne Blum who is the director of e-commerce strategy and Partnerships with Diageo.

Wayne:
[2:13] Thank you guys I appreciate it and I am excited to be here because the e-commerce space is one in which I'm super passionate about and figuring it out for.
Beverage alcohol is is an incredible opportunity for Diageo so excited to be here thank you.

Scot:
[2:31] Great happy and as listeners also know I am a big believer in the on-demand economy and one of the top companies in that space that intersects with the alcohol Spirits world is drizly.
And they provide on-demand Spirits so join us some drizly we have Taylor Burton and he is the VP of strategic Partnerships welcome to the show Taylor.

Taylor:
[2:51] Hey guys long time listener first-time got Russia have me on today.

Jason:
[2:55] The awesome to have you here Taylor
appreciate you both taking time out to educate our listeners about this exciting and I would say somewhat emerging space
for those of you that haven't listened to the show before we always like to get things started with a brief background about how you
came to the space so maybe Wayne you want to give us your sort of a path to Diageo.

Wayne:
[3:19] So I just ruined the audio 2017 to.
Take on this econ strategy Partnerships real but prior to Diageo I had worked for Nestle focused on.
Direct-to-consumer and was running e-commerce digital operations and and platform.
Abilities for either largest GDP in the beverage segments and you know I really kind of chart to figure out.
You know what is the future of consumer goods through econ and particularly how the last mile,
play and so that's kind of been formed by thinking is I started to focus out that out,
and then before Nestle I was with American Express for quite some time and that was either really where I learned a lot about,
digital working with consumer data for Target in optimization loyalty like I value CRM,
what is a fundamental tools of understanding e-commerce promotional Marketing in the digit in the landscape today.

Scot:
[4:27] Brickell so when I went from chocolate to Spirits Taylor did you have an interesting of a background as as winded.

Taylor:
[4:35] Did not come from chocolate and spirits
company timer spaceship part of my last three years leading the charge in the partnership. Drizly on eBay,
I'm working on the gator products specifically helping Merchants great offers within the platform to Target see how users based off their purchase history
the great opportunity for me to come over I'm a check to apply that to what is the relatively new space.

Scot:
[5:09] Causes of vintage Meg Whitman Dara eBay PayPal.

Taylor:
[5:13] A little bit after her I started there about six and a half years ago about 3 and then jump.

Scot:
[5:23] What's at the Bay Area kind of side of things or did you get it from.

Taylor:
[5:26] I work out of New York.
A lot of them and partner drive if they stopped here on the east coast and actually started off
I do. She purchased by PayPal surround advertising.

Jason:
[5:45] That's cool so and I don't want to say anything about it it feels like you are falling all of the traditional vices so I have some theories about what what your next step in your career going to be.

Wayne:
[5:54] I'll be interested to hear that but maybe that's one for after the podcast.

Jason:
[5:59] Exactly maybe we'll do that offline.

Scot:
[6:02] Vaping vaping and cannabis are hot.

Jason:
[6:06] Yeah yes we careful in this category bringing up the whole cannabis things to work we're not going to go there
but when I do feel like regular e-commerce is maybe a little bit too easy and so I I suspect there are some unique challenges around regulation in the distribution model in the alcohol and Spirits category am I right and can you tell us a little bit about,
about that how that changes the business.

Wayne:
[6:31] Yeah so just lay the regulatory environment means that we have to think about things differently right so the US has this three-tiered system that,
essentially says Diageo is going to fill Brands and create these these great products and then,
working at we're going to sell those products through to a distributor who then sells them through to retailers and so across the street to your system we essentially by law go the traditional router.
Selling a product directly to a retailer putting it into their warehouse and then having him the fill out for retail distribution or.
Corporate direct Chef when were looking at beverage alcohol 3 Commerce in the regulatory environment do we play with it at most effectively.
And if you like it what's happening with last-mile this is this is essentially our opportunity particularly for beer and spirits and in my opinion so.
The products being close to Consumers and then the Retailer's learning how to fill them compliantly as you need to do for beverage alcohol she doesn't understand,
that presents the opportunity for for this type of Orissa expanded econ shop.

Jason:
[7:48] Fair enough so in like a general merchandise you used to have two prevalent models you have you know,
a direct-to-consumer model where you know you have tons of Brands launching their own website selling their own Goods direct to the consumer so that's.
Caspar Warby Parker bonobos never give retailers that own the goods and sell those goods direct to the consumer like at Target and then of course she have these really prevalent Marketplace models like Amazon and Alibaba,
where where did you lie you're just kind of introducing the buyer to the seller and that the.
The seller actually you know who owns the transaction because of that that regulation and.
Turn of the locality and fragment of nature that relationship it seems.
Way more likely that we won't or or won't see as quickly any of those sort of direct-to-consumer models.
In in alcohol and that that you know maybe more of the momentum is on the marketplace I am I reading that right or is that an oversimplification.

Wayne:
[8:54] No that's that's exactly that's so the momentum is going to come from the likes of a walmart.com who scales are grocery business,
and has the beverage alcohol category available to add to the basket or it's going to come from.
Some played some small instances like wine who asked of a trustee Wisin who does ability to go direct to Consumer and Wineries and stand up their own web site in and build a brand that goes to.
When were thinking beer and Spirits were really thinking about the last mile either through direct retailer or the Emmys.
That operate like a three-piece up like a dress.

Jason:
[9:41] Yep like the two of the things that they feel like they are super important in this faced so if you're an alcoholic if you're a licensed seller of alcohol you take on a bunch of obligations when you sell that alcohol to a consumer or Aids verification,
you know potentially some liability around over-serving and some of these things and so have you if you have a liquor license and you sell online,
you still have those same obligations and so it it maybe makes things.
More risky or more messy to Outsource some of that last mile to a third party because you still have those,
does liabilities attached in you could potentially you know be at risk for significant regulatory fines or even the loss of your liquor license.

Wayne:
[10:22] You guys are assholes they correct their neither is there is definitely a there's definitely additional levels of compliance and complexity that retailers,
do I dress when they are essentially sending this product off to the consumer enough you know that's what I.
The challenge to the product teams to solve that the challenge for their compliance group to figure out how they navigate the right way of implementing checks and balances but
we've actually seen some some really great innovation in this space you know
think I think of companies like an instacart who do hand off the product and they do have the ability to AJ
at the front end so they present the terms and conditions and ask the conservative,
that they hate that they're within the compliant age to purchase but then they also can scan you know a handoff to the consumer on something like a phone invalidate.
This is their driver's license to actually seem really good progress in the DH dating in the the product management,
side of this business so retailers can start testing and expand into this category.

Jason:
[11:32] Awesome I'm excited you're more about that and then one other follow-up it also seems to me like,
as with any new product category like consumer demand and in sort of the you know smart marketers are maybe ahead of the the regulatory bodies a little bit and so it's
it's not always 100% black and white what is or isn't permissible in any locality and so it's it's it's not even as simple as,
here's the rules that you have to follow up on when you'll be fine
every provider has to sort of make their own determination as to their level of risk in whether they're being completely compliance or not right and so you can imagine,
big companies are at more to lose and therefore are more risk-averse than maybe some you know super small startups that aren't well-funded or those. Is that is that also true or my imagining that.

Wayne:
[12:25] No I think it I think solutely correct.
I seen a lot of of what I would stay out of ambiguity and some of the language around what what are and aren't the rules.

[12:38] Looking in this business everything is kind of driven down to the local the state level or even in some cases the local level you have.
Tri Counties for example that you know someone like a shipt or instacart may need to solve a 4 in terms of family make this product available in this ZIP code.
And if someone order bring it outside the zip code you know what are the rules of,
using various types of digital media that were never thought about when you know these laws and regulations put into place many years ago so.
We're definitely in a bit of Uncharted water orgone sort of unmapped territory to some extent but.
At the same time I think consumers are are voting with their wallets shoveling that.
Baby love the aspect of convenience.
And they want to be able to take what they traditionally purchased an r and an in-store traditional retail environment and replicate that for.

[13:44] Full basket delivery and so we think that if you follow the rules if you understand the local laws and then you get creative around how you,
you find new ways to serve the consumer that you know some of the stuff will become more clear and and you know what the category will find its way there,
just like every other complicated category has found its way to to the digital or eCommerce Channel over time.

Scot:
[14:13] Taylor now that Wayne's given us this good overview of of kind of the three-tier system.
Tell us news how does drizly inject into their so it got the bread man's distributors in retail where do you guys fit in I saw the site you're in 101 cities so I'd love to know more about how you skill so quickly all those kinds of questions I look.

Taylor:
[14:33] Yeah well you first start off by saying it and it wasn't as quick as we would have liked to be there we've been at this for over 6 years at this point and I think cautious.
I'm in control broke is really what you see not to buy,
I think it's important that you know players in our position specifically a category leader in the early early to the space,
are really asking for permission before going to head and diving in and doing things that might be in a regulatory gray area large parts.
Drizly business days but also the Retail Partners on our platform as well as the state and local level of been taking phone orders need an online orders for a long time,
you're making and executing and purchase an app like drizly,
it's really no different from a compliance perspective then it is a you know a person walk into a store and showing an ID so all of this being rules will still apply you're looking at a market that software lawyer,
did it simply allowing a customer to shop for that commodity good in this case alcohol level.

[15:41] And what we basically do with integrate with the Retailer's TLX you leverage Braintree at the back end to take the credit card payment from archers Lee consumer
actual retard South and then the retailer is actually the one making the Fulfillment though,
it appeared at the W-2 employee of a retailer in some states worth compliant we have third-party integration set up at the retailer Postmates or doordash or whoever might be,
I'm in the future and eventually their consumer is owned by drizly and then the actual ending of the alcohol and in-store housing and ultimately shipping of y'all called.
That answer your question.

Scot:
[16:24] It does so imagine you've got in a great to the point of sale system is that is that so you can pull inventory and then.
Is this point of sale systems as instacart is kind of painfully found out grocery stores they are pretty archaic and they don't even have like graphics and army images.
Consumer-friendly descriptions how heavy of a lift is it for a seller to implement drizly.

Taylor:
[16:48] It's not happy with that used to be for the actual Stellar I'm wearing a gray didn't know what you wanted different POS system anything from an analog all the way up to your yard when its tail system,
I'm to the roadmap there and we can onboard a new retail partner and that's 24 hours a day system,
you should be a big challenge but yeah we done the groundwork again over the last six years to make that process as painless as possible for our partners,
but the reason why we do not really require that integration is because when a customer shopping in the product and cart that product and then go to the.
Not a great weekend breaks chains to get to the end of the journey and say hey you know what bye sorry there's no Captain Morgan available for you because your story doesn't currently have,
I'm having that really clean crisp integration on the POS side absolutely Akita.

Scot:
[17:42] Cool and then so give us some characteristics of these sellers are they restaurants their convenience stores there
here in North Carolina become ABC Stores so there's like this legal I have retail for certain Spirits what's the profile of the stores on the.

Taylor:
[18:00] I'm putting a lot of local retailers great so that the poster typically competing with with the larger chain with that said we do have quite a few men size regionals on the platform,
I'm in a strictly scaled over the last two years especially we start to see larger partners jump on the platform,
I'm primarily because of the amount of volume that you're through the platform is driven and really that we kind of angered ourselves as if we go to Spotify and Shop alcohol online.
Can we start the profile to ship a little bit as we continue to grow and scale,
and that's really what keeps our Marketplace model moving right the more,
the more selection we can offer our consumers the wife's grave price and ultimately delivery method is going to make that shopping experience just that much better for an end consumer.
And at the end of the day that the best shopping experience typically will win and that's what I think would be great if you're at replay.

Scot:
[19:03] What are the things that I'm a big instacart user one of things they've kind of had a nursing challenge with his price shopping so let's say I'm looking for the cheapest Coke Zero and I
make it very hard kind of like switch between stores to do that because they don't.
I'll have you know if you have any stores with the same SKU how do you handle that that experience.

Taylor:
[19:27] We're going to show them all right you want to leave that choice ultimately Yang consumer but it's not just price that we found our consumers or shopping they stop.
What type of rating does the retail store that's providing that price provide.
They have a higher score a lower score I'm in that also other factors like store hours Etc are going to fix a plan for that ultimate collection.
And we've also found a lot of our you know local consumers will you know how to store that they like to shop to maybe they go there in person,
they want to continue doing business with that's or whether that's in person or online the number of factors
you're the point that you're heading on the difference between the way instacart running their modeling and what we are doing dinner at Wrigley is really offering a wide array of choices selection and I'm really not trying to funnel use.

Scot:
[20:19] One thing I've noticed on the platform is most of sellers advertise 1 hour delivery which is which is pretty impressive is that is that the market at work or set a guideline you guys to give them that kind of the standard in infant.

Taylor:
[20:31] I think it's a great question you said really shy away from saying when I was delivering we didn't want to be bumped into this just yearly on demand.
It's something that you come in Table Steaks right product is for media consumption and we understood that that we actually took,
yeah I really data analytics approach to understanding what's causing our consumers to hit check out,
I'm a huge factor in that was the immediacy write the how fast can I get that when you look in the market like New York know what would you guys guess the average delivery time here is.
Stop the top of your head.

Scot:
[21:06] York this fast so I'm going to go 30 minutes.

Taylor:
[21:10] Yes it's 30 minutes or less right you know I don't know what the exact exact but it's probably closer to 20 minutes.
But it it's super fast almost right,
but that posted something with the New York Market is very used to write deliveries always been a thing here put laundry or Chinese food on that consumer expects that quick and then meet you
if you're in New York is your delivery fees don't lie there just like Amazon's going to great job of training computer the new Prime delivery should be free,
I knew your contemporary it seems it's free delivery to me actually don't even talk on a delivery fee here in New York like we wouldn't them other states so you'll have to understand what is that local market condition and how can you make sure you're checking all the boxes in decision tree,
a person might think through as their healing check out.

Jason:
[21:58] Interesting a lot of my agency colleagues are based in New York and I can't speak for everyone in New York but for them I can say not only the delivery fast but the consumption is probably really fast.

Taylor:
[22:08] Absolutely let me know when you're looking at,
you know you're really seeing people put time and effort and energy into sending just the folks I think that's something you know that we really brings to the table is Bilal
I'm trying to offer unique experiences not some of the stuff that we don't know,
you know companies like Diageo on the building how to get the experience in trying to offer something special.

Jason:
[22:38] Awesome and that that's a great point.
Can a throwback to Wayne Wayne mother thinks it's interesting to me is again going back to kind of General e-commerce you have this tension between like traditional cpgs that you know where houses are brands
and these new did we need a vertical brands
that sort of reinvented the product and the customer experience for this newer digital enabled consumer and is week we talked about in the top of the show it seems because of the regulatory climate is probably unlikely Diageo is going to launch a bunch of new,
direct-to-consumer spirits but I am curious if
these digital enable consumers in the fact that people are you no more likely to place an order from drizly than they they were six years ago and that is changing how you think about.
Product Innovation and building Brands like you know are there brands that are more digitally friendly in the Diageo portfolio than others or could we expect to see,
more in the future like had you guys think about that.

Wayne:
[23:41] No yes I mean you are 100% correct about that so so it's true we will never have what sort of digitally native heritage.
Foreign brands that have a direct-to-consumer proposition but we absolutely do have is a category that I like to say consumerist.
Find Conquest,
it's not it's not like we're going to create a breast and that I'll put in the warehouse and ship it out and say this is a direct consumer brand but we arguing,
is understanding like what is most culturally culturally relevant and then using front of the reaching power digital to to get that message out for consumers,
and I won't be seeing in on the back of that if people trying to Conquest the stuff online to find it so,
what are the best examples I could come up with was Diageo released a limited edition,
Game of Thrones 8 houses to align 3 8 houses in the show set of single-malt scotches so you got you know it Oban Night's Watch it.
What we realized by looking at things like Google search.
It was that this is this is where people go first and foremost to find something that they want to understand where it's at and how much it's going to cost when you don't have you know what station.

[25:01] Commerce Ave Warehouse stop in the mix right now that can say OK Google you don't want to buy Google Search terms.
Guys that have the product understand out of Market at online in essentially starts a go to match up with those consumers.
To essentially find what they're looking for a joke telling that brand story digitally the comes the opportunity and then.

[25:30] Retailers partnering with companies like.
Drizly to help bring that stuff to life on life online and it's actually close the loop on placing that final order.
Becomes what I would say the closest thing we have to digitally native Brad and.
Because because the category is just so engaging for consumers and somebody where is it so much for thought-out purchase,
they want to understand how to use it where they want understand the story behind the brand,
I definitely think building brands in digital is is a great strategy to think about or this guy too gory and then starting to get creative and how we essentially
close the loop on the purchase side becomes the next step in that cuss words.

Taylor:
[26:17] One of the things that I think that's a good point there when you get in the Game of Thrones example that was a new product release.
When that product is released it's important that you know when they're on the Fireside they're launching these products are making sure that drizly in the other.
Have the correct.
Collateral right do we have the right product images do we have the right bottle facts you all these things in an e-commerce consumer expects to see before or right at watch let's that's another thing to think about as you're going down that brand building.

Jason:
[26:52] Yeah I know that makes total sense when I would imagine a new skills for a company with this been around as long as Diageo I have to have,
read digital merchandising the support drizzly & Company but I'm even assuming your traditional wholesale Partners you know there's a there's a lot more buy online pickup in-store than they used to be so I think,
the Total Wines in bed most of the world are probably doing more of that and then you have all this grocery pickup in Walmart and Kroger like you know I'll bet you.
Digital marketing and digital Shopper marketing shops are becoming a much higher priority across the board at the auto show.

Wayne:
[27:29] Yeah and I think that's that's part of the Mandate of our team so when we where we are.
I'm just over a year ago a lot of it was just going after some of the low-hanging fruit stuff so.
Do we have an internal audit the images we have if we don't have 400 and some odd you know brand of Fruit Products job descriptions ready to go,
do we use an in-house supplier or do we Outsource the production work to get that stuff set up,
you know who is R&R syndicating partner can we try and build something internally you two weeks ago.

[28:02] The likes of us ossify which ultimately we end up doing to distribute the content.
We were elastic just showing up in the most fundamental ways was incredibly important for us in the in the sort of phase 1 of this journey.
Once we got that in place then you're absolutely right and starts to become the,
more ideated space of how do we think about marketing on the back of this content now that we know we can trust,
not the content is of a certain caliber and quality to Syndicate to the retailer.
You know it's not an easy conversation to have with with any national retailer any Regional guy if you will if if they come back into you and say something like we don't even have product images and descriptions for your brand so I don't really,
really know what we can start to do for e-commerce year and,
you know that that's been the journey for rusted Dave and that's you know and I think that's a similar journey to most of what she could she'd companies in Centreville.

[29:06] You want it you want to do something aspirational and you want to go big but there's just a ton of work to do when it comes to establishing the brand presents online
correctly effectively and then a scale so you know you look as good with the walmart.com or an Amazon as you do with you Noah Kroger a liar and Albertsons and anywhere else your products are available.
In some type of online chatting format.

Scot:
[29:33] Taylor on the drizly side I saw you guys recently raised around of 35 million that was good hopefully you got up your fair share of that and then that's according to crunchbase that that says you guys are up to 79 total,
clearly must be grown very quickly to to get that much venture capital and there's demand for your service we had to wait on the show several times talking about what they called the bifurcation wear,
u.s. split into Canada.
Surprised by some of the things we've seen there I'm sure it would have you guys seen you think about your I guess it's your sellers customer but I'm sure you guys see you.
Updated.

Taylor:
[30:20] Identity of the consumer is a drizly consumer to be clear the war doing all the work on addition excetera to drive the volumes for a local Retail Partners that value layers be provided outside of the software,
I think what we're seeing is a more receptive consumer to buying alcohol online if he did that was one of the big hurdle that we really overcome in the last year and a half or so is.
The majority of the folks that were shopping kind of more by accident but still felt like they were doing something that might be considered illegal or On The Fringe but we've done a really good job and making sure that are messaging we are in,
they were putting the retailer out front.
When you shop with the New Jersey experience you're seeing which local retailer you're actually shopping from and that's crystal clear to Consumer on our platform I think that's been a big piece of it.
Bill you lagging the general you don't match grocery e-commerce percentage still we're still looking at below 2%.
I told you nobody by building groups and Biagio like Wayne and his team is done
I think of that kind of shows the importance from a category perspective of where alcohol e-commerce is headed
that makes sense when I start to look across the ecosystem of know who's going to be a quarters the consumer consumer probably go shopping or do most of their shopping online,
that's really who's coming to the shop you're just like.

Scot:
[31:50] And then any resting time Trends is this kind of is there a peak time from liking it.

Taylor:
[31:59] Yeah and it's exactly what you think you're seeing a lot of stock application,
no happening later in the week you know Monday Tuesday Wednesday that's more for searching and sorting and complaining if you will
and then as you start to Rolling the Wednesday night Thursday night Friday night that's Morgan start the peak gallop and then obviously just Saturdays
Dagon in anytime if there's a holiday that has any celebratory finish to it you're going to see an uptick in orders,
we have to think New Year's Eve Super Bowl Saint Patrick's Day.

Scot:
[32:34] What was interesting and often struggled with this is a lot of the on-demand guys they go app only because it.
It's easy to measure the metrics but I know what you guys also have web you have a great out but you also have kind of a web transaction model.

Taylor:
[32:55] The majority of our orders do you happen within the app experience and then iOS specifically but with that said it's important to shop and then that experiences,
you know a good experience right we don't want to create an MVP if you will we want to create an MLP if we want to meet him all lovable product,
and I think that's something that we take him very seriously beginning. I personally shop on the website when I'm shopping around Ridley,
typically playing together a little bit larger basket sizes in order,
no. My favorites into the favorite thing,
you know across the app and she just looks like a full bottle of wine she's looking for for for bachelor night with with the girls and she's off on her way so I'm really trying to meet all of our consumers where they are.
I'll take about you that our corporate anybody got a couple.

Scot:
[34:00] Speaking of corporate consumers as cooking around your site and saw some pretty nursing seems like you guys have done some interesting things there are audience maybe how that came to be in some of the programs you have for corporate.

Taylor:
[34:12] Yeah yeah if we we've got a green head of corporate over at drizly
Amazon a phenomenal job of building that practice out for us it's an area that it actually took a little bit longer to really take a deep dive and we've always had corporate customers
yo
would show that we really cared and corporate until released on this latest round of funding so I think it will be tried to do today that's really white blood that service for a corporate customer.
You're a larger order on there's more Logistics involved whether it's coming through a Docking Bay or whatever it might be in typically when you're also ordering for that or you're not,
scheduling it for an hour later you find a little bit of it and you want to make sure that you really get that delivery window because when I,
my happy hour and office is taking place at 6:30 they mean 6:30 they don't mean 7:30,
those are all important factors I think they mentioned that you're chatting
fire but no we also have taken the opportunity to make some Partnerships with some other folks out there yet mentioned the Buddy fridge power that on the back end,
you know what you did great Bay for offices that have the cooler unit within their office to automatically reorder their favorite beers online.
Doing a lot more in that space and I think that for me and Gracie perspective you can expect to see more and more of that stuff happen as Jersey becomes against Anonymous and alcoholics.

Scot:
[35:35] I think it's obvious but anyone that had the title Chief strategy digital marketing Revenue officer would definitely have to have a smart alcohol fridge.
A b a b shot if Jason doesn't.

Taylor:
[35:49] No greater no greater.

Jason:
[35:52] You think you're mocking me but I feel like we have a full-time team at boob assistants dedicated to our in office alcohol consumption technology.
So there I literally think we have tags in our office that are on Twitter and tell you when there's a when they've been tapped and and all that sort of stuff.

Wayne:
[36:13] The route to the reorder part of that cycle in and drizly can deliver.

Taylor:
[36:20] She's she's phenomenal.

Jason:
[36:24] I do want to go back to tell your little bit about some of the differences between how you and your wife shop the leveraging of the using of list and and that's one of the mixed blessings with
digital shopping for a lot of these categories I can in grocery
on the one hand it it makes reorder and it is much easier in an improved convenience and and all these things that consumers are demanding more than ever.
The flip side is there's less opportunities for serendipitous discovery of new brands and things like that and so I've noticed like in the grocery space,
you're saying some new interesting Partnerships and opportunities that the marketplaces are inventing so you know interesting promotional units from instacart or interesting data partnership with Marketplace
shares data back with the flowers that they can use to create new experiences like are you guys.
Seeing that in the alcohol space as well and is there are there any interesting Serta brand Marketplace Partnerships that.

Taylor:
[37:23] Yeah yeah we're doing a lot up there and we talked with a lot of what we consider not endemic partner so you know a recent one Netflix just wants to show called Final Table partnership with them where you know it is essentially,
yeah they're answer to a food show type contest,
where we basically paired wines that correspond with each of the different episode when we actually went through some of our Retail Partners and created in Thor display so taking online and offline,
a creating a little bit of Piper on the show and then about some of the wines that are brought up in,
it really looks at all aspects of the ordering process but also like what people are ordering at a local level write a report with Neil Finn in the past I think the biggest.
Unlearning to be at our people really care about what's being made at a local level on a product.
And we write a logo on it to 10% increase of sales for that product,
English forget that the various craft breweries I'm really like to highlight that fact that he's around the corner from you.

Jason:
[38:48] And I feel like a glove just came off now.

Wayne:
[38:52] Well I mean we don't have as many local badges because I think some of our best stuff happens to be made in Scotland but I would argue that we also have some awesome brands that are local to the US.
I wish you'd have local badges on them too and I know we actually do tell her.

Taylor:
[39:12] Yeah Ugg you got the badges think about you,
you know when you're serving up something a consumer you mentioned earlier,
I think that's an area where you going to see drizly and backed up in the next 6 to 12 months have only in and making sure they were putting right in front of the right consumer at the right time specially given you the the way it is
you know that e-commerce World works today you're very limited Chopper and
right thing in their basket you're so does the better we can do it helping push products at the browse grid.
Are consumers to purchase the more likely they are to check out and continue in the shop with our platform.

Jason:
[39:56] Wayne not necessary enticing you to throw me under the bus unless you want to but in general
like you guys feel like you're you have access to enough data and enough promotional opportunities via all these new touch points to do the kind of marketing,
that you like to do or is there an opportunity for your partner's to do more.

Wayne:
[40:18] I would say we're getting there there's always room for more but but we've realized through some of these what I'm.
Call Canada for spear of of the category the drizly.
Instacart the Postmates you don't whole or the license are really always managed to put some of the product is that.
They do tend to know more about the consumers they serve than some of the traditional retailers and so the data we can get from them is is really interesting for us we get to understand
the notion of usage occasions but now we get to get into purchase occasion so,
you know we spent a lot of time for additionally learning about when people consumer Brands but,
knowing about when they buy them is also super interesting knowing about where they buy them is really interesting knowing about,
in a high price point low price point all the different stuff that you can see comments release these particular channel to partnership.
It's all new data for for the category but it certainly data that I think in the form of our strategy in a whole new way going for it.

Scot:
[41:26] Well it wouldn't be a Jason Scott show if we didn't talk about Amazon so.
Can you sense Wayne with last do you know every startups worst nightmare has to go to build all this out and then Amazon says oh that's an interesting space let's go replicate what how do you guys answer.

Taylor:
[41:45] Yeah the Amazon car says everyone favorite.

[41:51] We be crazy not to think about Amazon right they only had faith in every e-commerce or Marketplace or otherwise I'm just because of how successful they've been,
I think it it honestly is it helpful to have them in the face and I don't use the word oil but I will
because it helps build consumer confidence that your back to my earlier pointed you know you buying online went down the right way and with the right partner is a very legal transaction is something that you know makes the shopping.
I think they were we've got an advantage is really in our Marketplace rights or our ability to show.
And to your point of the 8 to 15 different retailers in a single location with that same commodity product,
and then allowing the consumer to shop based off of what characteristics of that retailer are the most important to them whether it's Private Selection excetra
Jana and I think it will be both are really proven and it's been one of our biggest most to is this is a highly regulated good
right and drizly was built in its core,
the handle does the supporting sale right from the software perspective other regulated
so I think that you're just slapping on and alcohol category that's why we haven't
not the number. Of instacart and Postmates some of the other companies out there because it's not just that right the very different shopping experience.

[43:17] I'm not talking about the bottle of wine they can run into a shopping cart that you know,
yeah I might drink half of and cook with half I'm talking about the alcohol specifically sale,
and I think that's going to be our advantage now and in the dead moving or specially if you start to grow it our national retail.

Wayne:
[43:35] I mean Amazon is is testing this category and we we talked to them and then
you know they do have availability through Prime now in Seattle through fresh in Illinois through Prime now I believe in in Sacramento and Southern child coming from what we understand
we're Amazon has an opportunity to get better to tellers point on this you can't just add one more category and expect you to be successful,
the proposition that consumers looking for when they go to a liquor store in it's obviously price is important but really selection and so.

[44:13] You're the prime now facility were there for filling out of doesn't always have all the space that I think they would need to represent a wide enough assortment,
including various sizes right some people want 175 some people want 375.
You know big bottle small bottle for Matt about to challenge logistically that that I think anyone needs to overcome including Amazon to really build out an interesting proposition for,
are spirits online particular at the marketplace model essentially lets me is the end user on the app.
Columbus ZIP code say I'm interested in Bourbon and essentially yet.
You know almost any bourbon you could think of from from the lowest price point all the way up to you know bottles that are approaching thousand $2,000 for.
You know brand like maybe a copy that anyone should be looking for when you have that proposition and you have it almost.

[45:15] Spell nationally this point it's how you start to see a lot of opportunity for e-commerce to,
firstly when you're operating a very local level like Amazon or most of the retailers all right now you've got to you've got to think through that how do you how do you essentially provide.
. assortment that people are looking for but also you know let people come into the top of the funnel at any sort of scale and sufficiency to to make this thing work like you could do or say or diapers or.
You know any of them more traditional Goods that are available ubiquitously everywhere.

Scot:
[45:53] Yen into the drizly point.
Example Amazon's done like you have 200 friendly Integrations with point-of-sale systems and then like Amazon pay hasn't had a lot of adoption with with retailers because it's kind of like you know.
Hey at this feels really weird having Amazon kind some ways their scale.
I think you heard them because they're not going to be very hard for me to build a network.

Wayne:
[46:21] Yeah I think I know you look on Prime now I think the experience for some of these third-party seller.
Optimize the way presented and then you know I know car category either there's a lot of price for the disparity so I think consumers would expect someone to to see the price options but then also understand why,
you know there are these different prices presented to them so early a challenge that at Amazon,
I think we need to address her or think for a little bit more closely was they knows they look to scale and something like at 3 p.m. I'll only agree with you.

Scot:
[47:05] The big thing this happened in were,
more mature meaning higher adoption categories is now Amazon competing themselves with private label right and you guys worry over at the au jus about amazonbasics beer or an Amazon basic vodka.

Wayne:
[47:23] I don't and I and the reason that I think we are we are not so concerned with something like that I digitally first private label brand with with someone like Amazon is that
one is technically speaking there is this this rest of Market wall with that off so you can't necessarily create a,
Brandon not make it available now Costco does have some really good trip propositions with Kirkland brand of backyard Kirkland brand tequila but
you know I think when consumers are looking for Spirits in particular and beer,
I think I'm looking for that brand story they looking for that experience you know this is.
This is generally a more thought through purchasing you know that the price point is not that of your standard consumer guide and so.

[48:14] You know we we have trust in Our Brands and we we really see the strength of our friends has.
No fighting throw this in a potential disruption from private labeling and one in which I saw very very closely it play out where I was at.
It's just it's just not as easy to enter to win in a private label proposition.
Categories within the other category where you could directly Source manufacturer.
Any other thing with private labeling is essentially you do have to buy it back from the distributor you can.
Direct store so the various tax reform.

Taylor:
[48:54] Yeah and it's a double down on Wayne's plane really strongly believe the brand should one timeline you know they've done the brand building with the consumer
they brought him down the car I think that's the kind of one big point to sit who is an e-commerce world as they need to continue to prove that value prop and buy that brand and that should be shot War.
Ecommerce consumer as well go get some of the traditional channels that have always work,
should be also augmented with coming to think that Wayne and his team are doing to really go about that Chopper and make sure that they end up being.

Jason:
[49:29] That's going to be interesting to see how it plays out you know one of the things that's always interesting to me in in
the market is still really early and it's did you adoption curve like alcohol and Spirits is right now is that you can have a pretty fragmented market right so.
Obviously been a bunch of time talking about drizly here is one of my readers that there's there's a ton of players trying to,
when I a piece of the spacing and you know each with a slightly different go-to-market approach from your standpoint Lane do you have to,
participate with all of them do you make some big bets on the ones you think are going to win like you know what is your strategy like early on when there isn't necessarily A.

Wayne:
[50:12] Yeah I mean we're still in that building phase of e-commerce for sure and in a lot of our time or the last year is just understanding.
What's happening across the market alcohol is in a lot of ways of Barry it's early fragments as you said but it's also.
Locally Tribbett so,
you know we we understand who is going to be the best strategic group to align with the New York but that might not also be this the best guys to figure out who the partner when is Texas in the West Coast,
the the play right now is continue to test and learn and I think that's,
that's really consistent with anything you here in anybody need Commerce is constantly test. Billy learning and you get ready to Pivot really quickly as things change.
But because there's no sort of clear National front-runner right now in in the space we need to figure out how to win it at every light at every level a lot of those levels are are hyperlocal.

Taylor:
[51:18] Come on Rainbow National front runner.

Wayne:
[51:22] The closest thing to a national franchise and about right now is is Total Wine.
But even they don't truly you know have a presence in all 50 states 00.
Yeah so we are we are definitely navigating the the ultra complex for sure.

Scot:
[51:44] Taylor have a start-up question for you if you guys have the school red bear as your logo I'm guessing why that's there but I don't want to make assumptions founding story about the drizly bear.

Taylor:
[51:55] I was why I was wondering when that question would come up you know that.
I can tell you the name drizly actually came from.
That is an option off the board as far as name goes and then very early on in life.
Get a branding agent has become in and give us some marketing tips and tricks and feedback excetera and one of the things that they came up with
shooting currently with this Presley
not a lot of thought went into it after the first logo iteration with the Jersey Devil is done and I think it's something that deep down no one's ever fully understood but at this point in our life is what were known for,
we've all become pretty pretty affectionate to the bear so the bear the bear will live on.

Jason:
[52:49] That that is awesome and is it works at that's going to be a great place to end it because it's happening again we've blown through all our allotted time but if folks have burning questions about the category let's keep the conversation going on Facebook and Twitter
as always if you really enjoyed this episode we sure appreciate that that five star review on iTunes and as a reminder of you want me Jason and Scott in person in Palm Springs next week you can do it at you tell West and then it'll be a promo code,
in the show notes for you but Wayne Taylor a real pleasure chatting with you and really grateful for your time today.

Wayne:
[53:27] Thank you guys just a lot of fun.

Scot:
[53:31] The end up before before we let you go if folks want to find you online are you guys realistic tweeters or snapchatters or instagrammers in any any business writing there that where people can find you.

Wayne:
[53:44] Can you find me an admin people on Twitter although I mostly just tweet about sports and things like that but what happened.

Taylor:
[53:54] When the big wings and I find him on LinkedIn meet me the same people in 86 on Twitter but we're we're LinkedIn.

Scot:
[54:02] Awesome we really appreciate guys taking time out of your busy day so join us on the show and.

Jason:
[54:07] Until next time happy conversing.

Feb 1, 2019

EP162 - Amazon Q4 2018 Earnings Hot Take 

Jason & Scot will be podcasting live from the eTail West which is held Feb 19-22 in sunny Palm Springs, CA. As a special gift to listeners, you can use the code JASONSCOT for 20% off.

This episode is a hot take on Amazon Q4 2018 earnings

  • Amazon Q4 Earnings Highlights
    • $72.4BB, which is a 20% y/y increase
    • $19.4B in Free cash flow
    • Amazon grew North America 18% y/y and International 15% y/y, for a blended growth rate of 17%
    • Unit growth decelerated to 14% from 15% in Q3
    • Revenue from brick and mortar down 3%
  • Amazon Web Services - Grew 45% to $7.4B for the quarter and generated $2.2b in operating income which was up 61% y/y
  • Marketplace
    • 52% of units, down from 53% levels in Q2 and Q3
    • Wingo GMV estimate -> 150B GMV for the quarter.  $450B GMV for the year ($300B GMV in North America).
  • Amazon Ad Business - grew 95% y/y  to $3.49B (Estimated $10B for the year)
    • Pivotal estimates $38B by 2023

Jason & Scot will be podcasting live from the eTail West which is held Feb 19-22 in sunny Palm Springs, CA. As a special gift to listeners, you can use the code JASONSCOT for 20% off.

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

Episode 162 of the Jason & Scot show was recorded on Thursday, January 31st, 2019.

Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer and Scot Wingo, CEO of GetSpiffy and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.

New beta feature - Google Automated Transcription of the show:

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Thursday January 31st 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with Scot Wingo.

Scot:
[0:37] Hey Jason welcome back Jason Scott show listeners Jason big question it's -50 there in Chicago how are you hanging.

Jason:
[0:46] I am enjoying the modern technology of central heating so I'm doing I'm doing terrific my dog who hasn't had a walk outside in like 3 days is doing less well for MacGyver.

Scot:
[0:59] Your dog doesn't have four dogs can't take minus 50.

Jason:
[1:03] I really like this is a rescue dog from Detroit that thinks he's like a Southern California dog like he goes on strike below about 40 degrees.

Scot:
[1:13] Got it Caldwell.
Earlier this evening Amazon announced their 4th quarter results that we've been on pins and needles waiting to see how they did so this episode is going to be exclusively Amazon news and we're going to give you a hot take on the result.
But first Jason are going to be live podcasting from etail West which is held February 19th to 22nd at Palm Springs California
and it's a special guest gift exclusive gift to our listeners you can use the code Jason Scott there's no and in there so j a s o n s c o t Scott with one t
looks like Jason Scott is another way to think about it,
for 20% off and we are going to put a link quick Link in the show notes for you to be able to apply for that and come to the show and see Jason I'd life podcasting would love to chat with you if you're going to be there.

[2:11] So with that housekeeping all the way let's jump into Amazon results first I kind of wanted to frame the discussion so the companies have already announced we had Facebook and eBay come out and,
Facebook really kind of exceeded expectations because they've been in this kind of
poop storm of negativity and controversy that was interested or expecting it to be bad because advertisers was bailed on them.

[2:39] Turns out if you have a way to get in front of customers people want then they don't really care about the controversy I guess,
eBay's results were below expectations so so kind of another e-commerce company there and was eBay's results or a lot of talk about this kind of.
End of 4th quarter slowed down
so if you recall we had camera from Adobe on the show and Adobe has come out and said look it really kind of fell off a cliff kind of December 15th
through to Christmas I needed to the back of the year they talked a lot about that where the holiday was semen along and then kind of died there towards the end which was interesting
so the net net of that for them is there Marketplace crew 1% if you exclude the impact of foreign exchanges so
a heading in and outs two days ago I believe I'm so heading into Amazon there's Otay people are a little kind of wobbly can I see some mixed results coming in to Amazon and where were they
so that set up Jason wants you walk us through the high-level pieces.

Jason:
[3:42] Yeah well spoiler alert they landed very solidly like they basically had a complete beat they beat all the the
analyst expectations so top line revenue came in at 72.4 billion,
that was against a expectation of 71.9 billion and was a growth rate of 20% year-over-year,
earnings per share came in at.
A little over six bucks and the expectations were like 5:55 so that was a solid beat.

Marker 02

[4:17] Last year they had a quarterly Revenue this quarter of like 60 billion so that means this year they added about 12 billion dollars in sales just in this one quarter so they continue to be clicking along.
So if you look at an annualized basis for 2018 total revenue from Amazon comes in at 233 billion.
Corso remind listeners.
Ecommerce the revenue isn't really the most important number we like to talk about their gross merchandise value which I'm going to let Scott break down and in just a bit.
But if you listen to Jeff talk.
She's not as big a fan of the sort of Revenue and earnings metrics is he is that free cash flow metric so.

[5:10] Yeah that's really the the metric the Amazon Rise Against is that hundred percent free cash flow and you know once again this was a good quarter for that,
free cash flow more than doubled from 8.3 billion last year to 19.4 billion this year.
So that's a first world problem you got to find a lot of place to spend all that loot.

Scot:
[5:30] Yeah but how's that possible Jason I thought Amazon wasn't problem.

Jason:
[5:34] Yeah it's almost like that some some misnomer from 10 years ago or something.

Scot:
[5:43] Fun fact I would call 19 billion dollars of free cash flow pretty not too shabby.

Jason:
[5:53] Yeah and the one I get now though to be honest I guess you're like a Amazon is not profitable what it What I Hear now which is also a misnomer is 100% of their profits from AWS.

Scot:
[6:04] Yeah yeah let's talk about that so is repealed the onion on on the
the 800-pound gorilla that is Amazon overall North America grew 18% year-over-year and as a reminder to listeners we talked a lot about the e-commerce Baseline of 15%
retail Baseline is 3 to 4%
Amazon has historically clocked around kind of 20 to 30% so this is where the first quarter is when they've actually slowed a little bit and part of it is the concert is getting monstrous in the fourth quarter you mentioned a $12 increase your rear which is you know.

[6:38] Adding a chunk of any other,
retailer but they are specifically in Q4 starting to see things slow down because they've created these massive comps your ear and things like
launch an echo now can create headwinds on that and then you also have to hide window when products move from one p to 3 p.
Prepuce growing faster than one PS4 creates a headwind on Revenue growth cuz they collect a lot less from from third-party
set also a like item going from 1 Peter 3 p as brands do things like hybrid that creates a little bit of slow down and rub you also.

[7:13] So that being said North America grew 18% year-over-year International grew 15% year-over-year for Blended rate of about 17% on the retail side
taking out a WIC etcetera overall they grew 20% but the retail pieces group of three bases 3% slower,
that international number was a little bit of an acceleration which was good to see that they've been kind of facing some headwinds there on the international side so it's good to see that and then profit-wise in North America that took
the 2.3 billion so the North America business inside of Amazon is profitable even so it is not true that that if you
all the profits come from a Tab S but certainly the Lion's Share do and then International is still losing business money
but it it kind of shrink the Lost 30% to 642 million so
even an aggregate if you add up the North America and international the retail part of Amazon is still profitable
including the marketplace so and that International Peace is on its path probability it's just so honking big is going to take a little while to get.

[8:23] North American margins ticked up 60 basis points and that was attributed on the call to getting some really good leverage out of fulfillment center expenses so Amazon 2018 was a. Of time where Amazon
you know they only Built a 15 to 20 centers
I'm a percentage standpoint that was a pretty low capital expenditure year for them so instead of adding all the capacity they needed to
to ship all the packages they utilize more of the film Center squeeze more out of them,
so that being said another thing that I always watch is 2% of units that come from third parties this is the
the the metric.
Give around third-party versus turtle useful that was 52% which is a tick down slightly from 53%
I wear it wasn't Q2 and Q3
reading the tea leaves that was probably driven by as a swing in the fourth quarter you know the the 1p kind of bumped up a little bit I believe because of all the private label that we
Racine going on I think there's over a hundred fifty private label Brands and then what you call owned Brands so things like echoes in the whole X family,
I think that pushes up that first party unit side during the holiday. I'm talking about 1% you're so not a lateral move.

[9:51] One area of a little bit of concerned that for Wall Street is they look at this total unit gross and that decelerate a tad
even at 14% that's down from last quarters 15% so
yo a lot people asking how can unit growth be 14% but then they totally grew 17% so what you have is unit growth in ASP mix coming out a little bit higher to multiply together to give you like the total,
so when Amazon on a quarterly basis doesn't give you the pieces you need to unpack the DMV
astrix and I'll come back to that so what they do is in their annual report which will come out and I think they have another 30 to 45 days to put in your Port out then they will provide the
mechanism for 410A backing into the DMV so.
But astrix is I go to a model I've used over the years that that is relatively close so so what that model tells me is now.
I'll say this is not an official number this is just kind of Scott napkin calculation to,
I just give you an idea of the scale but we don't have to wait for the annual report and if you take Amazon's overall Revenue this quarter of 72 billion.
AWS with 7.4 and you take that out and then if you also take out the other AD business you're left with 61 billion dollars of kind of retail Revenue.

[11:18] So I use that to back into a 1 p.m. to 3 p mix and what I get is 52 billion and 1 p
and then you're left with eight or nine billion dollars in revenue from creepy Amazon's take rate is about 10% so you have to multiply that by 10
so you end up with first party DMV of 52 billion third party DMV of 95 billion for a total of about 150 billion in the fourth quarter, global stamp
again this is an approximation and we'll have a lot more clarity when they're in the report comes out more working into one of our new shows
6 interesting is if you take sat and soaked it with those of you that have her to say this before you know Amazon's easily
twice as large as you think it is to take my calculations from q1 to Q4
I get an annual number of Total Gym v-force partying third-party F450 Glen Jason is you know Walmart is kind of it a 500 billion
your Revenue rates
we we talk a lot about how I think you agree with me but that's that's the better comp is Amazon's total gmbh versus Walmart sales and
so so Walmart is still bigger than Amazon but I do think the lines are going to cross in 2019
I'm so that's going to be the first time somewhere in 2019 probably you wanted you to.

[12:44] Yeah we'll be able to say that GMB to GMB Apples to Apples Amazon is bigger than Walmart that's going to be interesting to keep an eye on.

[12:54] Last little bit on the marketplace side is Amazon it's kind of funny that press releases now are like 16 Pages cuz they usually put like a little. Of some highlights through the year and they have so many highlights now it's like
12 pages of highlights are they really highlights.
I'm the only one that picked out of there that I hadn't seen release somewhere else I thought was hers would find interesting is the announced that 200,000 sellers on the third-party platform are now generating over $100,000 a year in GMT
so I pre nursing small business platform there where you know if that's an international number but I would imagine it's split price 60% us 40% International and then correlated with that I've been seeing a lot of.
Amazon's running a TV ad campaign and it shows a train out of an a bunch of Amazon Fulfillment boxes with third-party seller stuff on it so they're really kind of,
camping up the third party aspected left.

Jason:
[13:55] Yeah it's always chuckle to read those highlights because you'll get like one highlight will be like.
We added a PGA event to Amazon Prime video and then the next highlight will be and we sold a hundred million Alexa devices or so you don't seem seam
super ration.

Scot:
[14:17] Can we handle the trillion workloads on the AWS cloud.

Jason:
[14:21] Exactly.

[14:23] Yeah and the the Walmart Amazon is definitely becoming a horse race is pretty interesting and not just a reminder.
A ton of Walmart's revenue is grocery even with the Whole Foods acquisition very little of Amazon's revenue is grocery inside.
Amazon 30 crushing Walmart on General Merchandise Walmart's crushing Amazon grocery.
It certainly is the case that Amazon's probably growing grocery a lot faster than Walmart's growing general merchandise so if that doesn't doesn't bode well for for Walmart in the.
In the short term is those lines start to converge and then of course Amazon has all these other fabulous business so you know we mentioned,
the AWS gets a lot of the the buzz that's that's not entirely unfair cuz that you know that they continue to be going gangbusters that you're getting there the.
The clear market leader they have a huge weed over there their primary competitors Google and Microsoft.
Until you do when you're that big and have that much market share it's really hard to grow fast but AWS still grew 45% for the quarter so that was.
7.4 billion in revenue and you know much more profitable business so that that's been off 2.2 billion in operating income which is up 61% year-over-year so.
That is not a bad side hustle to have if your if your Amazon.

[15:52] And then of course they they have this other increasingly big category that they still call other the big chunk of other is this advertising Revenue.
Hopefully at some point in the not-too-distant future.
This gets spun out as a separate number but other came in at 3.4 billion which is up almost 100% 95% from last year and so you know.
If you think of that as.
The primarily that ad business is actually the growth rate is starting to decelerate so lightly as they do start to get a critical mass but it's still a huge.
Chunk of gross if you add up that the.
Portion of other for the last four quarters that are likely add sales it's it seems pretty clear that it's over 10 billion and add sales and.

[16:47] You know it is interesting it's like obviously becoming a much more important business for Amazon I think it was an analyst that counted how many times they mention the ad business on this call versus last year's call
and last year it was like 12 mentions this year was 25 mentioned so it's getting more mindshare.
And you know we're seeing all these wild projections of how fast I could grow so I think it was a new one out from pivotal research that said that by 2023.
Their ad business could be a 38 billion dollar business and even more so than eight of us.
Add business is hugely profitable and so you know if if they do grow that kind of trajectory is very likely that the ad business is is both bigger and more profitable than the AWS business in the next 5 years.

Scot:
[17:35] Yats commit arson to see if they can get it to be that size it at that pace it would be bigger than Facebook I believe without a SIM Facebook Stan.

Jason:
[17:44] Yeah it would be bigger than Facebook is now but yeah.

Scot:
[17:48] Episodes it's clear it's going to be a three-horse race so so it's going to be Google Facebook Amazon I think dirty bigger than Snapchat.

Jason:
[17:57] No I think they already are numbered if they hit 10 billion there they're probably number three.

Scot:
[18:01] Snapchat I think is a Twitter somewhere around there so hard like 6 or something.

[18:07] Another part that I we always look at kind of your lie is that was all the past and this is kinda looking forward so Amazon
you know the way they do things they don't give annual guidance so they do tell you how it's coming in the next quarter so their practices
so looking towards 2019s the first quarter so the first thing they did as they kind of gave an overall warning which said hey 2018 we didn't spend a lot on centers industry,
data centers and employees but we are going to ramp that up in 2019.

[18:48] Unemployed fact that hit 675,000 people so I think in,
the not-too-distant future in the next three or four years Out imagine to get to a million people unless they dramatically changed the the workforce switch to robots or something
zipper that perspective last year capex grew 12% iron grew 14% so kind of signaling reading the tea leaves are I kind of got the vibe that is going to be more towards the high teens on those numbers may be excited,
120 kind of get the feeling again this is just kind of reading the body language which is very hard with Amazon
to be totally wrong I get the feeling they almost felt constrained by fulfillment capability in the fourth quarter that the maybe maybe they left a little bit on the table cuz they
they just couldn't get as much product in and out or something let me just be me while I have to see if any of the Wall Street analyst pick up.

[19:42] So so that's kind of you know it'll be interesting I think the stock will be a little kind of muted because.
While she keeps it when he comes on goes into a spending days until the groceries up
so for fourth-quarter projections Amazon put out a range of 56 to 60 billion that was below the Wall Street consensus estimate of 61 billion that add.
I'm at the midpoint that's 13.6% year-over-year growth,
and the high point and gets up towards 15% then the guy did towards pretty much what Wall Street was expecting on.
And then there a couple other tidbits executed since I'm going to have a couple to you go first.

Jason:
[20:25] I did want to mention like one specific thing that came up a little bit in the
in the lower guidance was was what brought International is getting some traction there was recently a new e-commerce law that was passed in India that's going to be.
Potentially very challenging for Amazon and Walmart and so I and I think Amazon called out several times that there's some uncertainty about their their speed there.
Speed of growth in India as a result of this this new new regulation there.

Scot:
[21:03] It is such a size u.s. space companies can't do business in India if you've beautycounter read the headline.

Jason:
[21:08] Yeah if you like there's there's some ambiguity and how to get interpreted so people are hoping it's not that extreme but there's no version of it that's good news for for Amazon and Walmart who both invested a ton.
In that market and you know you know I'm not going to get that clearly has good access as they were hoping to that market so that's interesting but even with that that sort of.
You know what kind of muted level of enthusiasm that still puts Amazon's market cap white as of tonight at at like 840 billion and of course
you know they did briefly go over a trillion last year but to put things in perspective Walmart who you talked about.
Being larger than Amazon in terms of total revenue Walmart's market cap is like 278 billion tonight so so Amazon's market cap is the equivalent of the next seven largest retailers in the USA
they're the equivalent of Walmart + Home Depot + Costco Buffalo's plus Walgreens plus TJ Maxx and Target which is pretty mind-boggling of you
if you still think about it.

Scot:
[22:15] It's a girl thing so I Walmart overall I think Walmart's growing low-single digits is that right at all.

Jason:
[22:22] Yak like four.

Scot:
[22:23] So is that that's what it is it's you you look at one point time you know the order about the same size as best we can tell right now, Jambi perspective but you know what will she loves his growth and when you have a.
1 / 200 billion dollar business growing in the mid-teens there's not many.
Accept apple and an Amazon that if you know to do that.

Jason:
[22:46] Yeah dumb president is pretty awesome to be then.
So a couple other tidbits one thing that's getting a little bit of attention is you know they do not have a line item on the income statement for brick-and-mortar retail which is,
mostly Whole Foods and so this what is the first quarter when they now have a complete year of,
data from Whole Foods that is the first time that want the Amazon rather has his had sort of the true
look at same-store sales comps and the look isn't entirely favorable so it looks like they're brick-and-mortar sales are down 3% from last year.
And you know it it first you go huh does that mean Whole Foods is.

[23:35] Shrinking which Whole Foods West facing some some possible
but you know you also have to remember that that Amazon makes him aggressive price promotions in Whole Foods so the revenue from from some of those price promotions has some.
Some impact on sales but the the big item that that Amazon talked about was.
That when they do a by online curbside pickup from one of the the 60 Whole Food stores that supports that or they do delivery.
In one of the market that supports that that Revenue gets recognized as e-commerce Revenue rather than brick-and-mortar Revenue so for them brick-and-mortar means.
You you walk to the store and pick the fruit yourself instead of having a an Amazon pick our picket for you.

[24:32] And so they're they're alleging that that that contributed to the the lower sail brick-and-mortar sales some of that sales just shifted from.
From brick-and-mortar tab to digital in the in Amazon's version of the story but at the minimum it means.
Those stores aren't like wildly growing and it it also means that the fleet of other brick-and-mortar stores that Walmart has put out there the.
The increasing number of bookstores in nine go stores those still aren't having a material impact on revenue and.

[25:07] So that was interesting.
I did also you know it always comes up one of the big line items and cost in Amazon has every year and it always goes up by a big number is shipping so shipping cost went up 23% for the quarter.
I'm as you pointed out earlier they shipped 14% more units so.

[25:28] That accounts for you know a big chunk of that growth but also means their cost per unit had to creep up.
And it's it's always interesting to me a UPS had their earnings call today as well they actually had a good.
Good earnings call but but the.
The headline to me was that the CEO of ups for the first time and knowledge that yes Amazon's a big customer but they also are a competitor and we track them as such and that's a.
Basically a 180 from previous statements from UPS the day they really didn't think Amazon would be a competitor there's and that they purely saw them is.
A customer and I always like to talk about the fact that UPS isn't growing fast enough,
they're not growing a shipping capacity fast enough to accommodate all the
growth Amazon getting much worse want to get so it's almost imperative for Amazon to have some of their own shipping capacity and
really highlighting that I sort of backed into
do UPS as package number for 2018 and it looks like UPS shipped in in North America UPS shipped 1.5% less packages this year than they did last year so I wonder if UPS is ability to deliver,
some of their own packages which you know now they estimate that about 12% of their total volume if that's starting to have them internally impact on UPS.

Scot:
[26:53] When I drive to work I go through a couple interstates and on a daily basis I C 5 + Prime delivery Vans the stasis is crazy.

Jason:
[27:07] And I'm surprised like I mean aren't you in like autopilot and you're reading a book or something while you got so I'm surprised you can see them.

Scot:
[27:13] I'm counting I just kind of play Amazon smile bingo.

Jason:
[27:17] I like it.

Scot:
[27:22] Cook's one of the other tidbits to the more detailed Wall Street reports will come out in the morning I'll treat anything that's kind of interesting there
but the ones I saw they do hot take kind of thing as well I saw her folks kind of.
Reappearing in sang Hey we're in a we are really interesting are overweight or whatever they're the recommendation is so it looks like everyone's bumping up their price targets to kind of the $2,500 share range
which is it comes true over the next 12 months or so that'll put Amazon squarely back into that trillion-dollar club.

[27:58] Summarize I would say Amazon had a great quarter. It was a really nice worth quarter but it is interesting you know over the years having all this for a while Amazon's always been growing
accutest 3x clip of e-commerce and now at a 70 70 billion dollar quarter ton of a scale though the rule of large numbers is kind of catching up to them and they're starting to kind of
get closer into that mid-teens e-commerce procrit so you know it's munition to see,
what does Amazon do to accelerate that do they care a lot of noise around the healthcare business and some other things that the Amazon to get into you than just wrapped up that.
When you're when you're clocking along that at over 250 billion dollars,
you have to take big swings at at the plates are the kinds of things are going to go through and disrupt are going to be there got to be a hundred billion dollar kind of opportunities for them to really move the needle and get that growth going to be,
reversing the see what they do to recover.

Jason:
[29:03] Yeah I'm looking forward to watching it and podcasting about it and that's going to be a perfect place to leave it because it's happening again we've used up all our allotted time as always if you have any questions or comments about the show you can keep the dialogue going on our Facebook page or you can hit us I just got a ride up on
Twitter
of course we always appreciate those five star reviews on iTunes and is a reminder that there's a chance to meet us in person if you're interested in attending the etail West show
in Sunny Palm Desert this month so as a reminder for listeners we have that special promo code
Jason Scott Jason Scott and that'll get you 20% off on your mission it's shaping up to be a really good show and I will put a link for registration in the show notes.

Scot:
[29:53] Thanks for joining us everyone.

Jason:
[29:55] Until next time happy commercing.

Jan 29, 2019

EP161 - Verizon Enterprise Solutions GVP, Michele Dupre 

Episode 161 is an interview with Michele Dupre, GVP of Verizon Enterprise Solutions, live the National Retail Federation Big Show.  We cover a variety of topics including:

  • Verizon's Holiday Retail Index Findings
  • 5G and it's likely impact on commerce
  • Security

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

Episode 161 of the Jason & Scot show was recorded on Tuesday, January 15th, 2019.

https://jasonandscot.com

New beta feature - Google Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded on Tuesday, January 15th 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your.

Scot:
[0:37] Jason and welcome back Jason Scott show listeners we are joining you live live live from the floor of NRF 2019 Big Show here in the lovely Javits Center in New York City.
And we are in part 2 podcast Booth A and B I don't know what they're doing but they is where all the action is.

Jason:
[0:56] Yeah if they keep doing a good job maybe they'll earn their way up to Booth a at some point.

Scot:
[1:00] It's pretty much the gold tier here at at.
So we are excited to have on the show with us Michelle Duprey she is the group vice president at Verizon Enterprise solutions for retail hospitality and distribution.
So not only is she an awesome guess she has a longer title than you Jason which is just saying something.

Jason:
[1:18] That's our new private area for gas is only a guess that have longer titles than me.

Michele:
[1:22] Well there you go I think I fit the bill then.

Jason:
[1:25] Will you tell appreciate you taking some time out to talk with us today Michelle tradition on the show we always like to start by getting a little bit of background about yourself and how you came to your roll.

Michele:
[1:36] Yeah absolutely and again thanks for thanks for having me here today and then again we're really excited to be part of.
To be part of an Arab but where it where I started my journey with Verizon and just again the retail industry and how it's evolved.
So I do have responsibilities for the team that works with some of the largest and most recognized Global Brands not only in retail but also distribution and travel so,
you know again we service those clients globally we work with them to help them service there,
customers better but again my journey started with with Verizon a long time ago and it's evolved over,
yeah several years in different roles but really focusing on the Enterprise customer and you know again with the technology Evolution that clearly you see on the floor of a giraffe,
how you can see why Verizon continues to Young to evolve itself and continues to you no respond to the ever-changing needs of their customers.

Scot:
[2:33] Cool and then so tell a suit so I get Verizon Enterprise Solutions and it sounds like you guys are vertical eyes didn't in any retail is there article we want to talk about today.
So so I'll just ask him some newbie questions just kind of soda does that mean the Verizon stores themselves you work with them or know you're selling more stuff to retail.

Michele:
[2:50] No so we we go to market with in a retail meeting you know how we serve our consumers so the retail sector within Verizon I don't have responsibility for,
but again it's just that is becoming you know one of the test beds and again where we gain a lot of insight,
you know to what consumer demands are and do it all we've done a fabulous jobs over over the years just to get you no evolving and really working on providing that.
Yeah that great customer experience within the physical environment,
but also within our digital environment as those demands continue to grow to for the way consumers want to engage with our brand so you know we do a fabulous job and again it's a test bed,
I mean it's a great source of information for us to get our just again test the market and see what what what else is out there.

Scot:
[3:40] Kosama soccer guy so let me restate that so you guys have these Solutions in your Verizon stores,
and you kind of dog food them outright you figure out what's working there and then you can go to another retailer and say hey JCPenney or you know whoever hears some best practices around
obviously conductivity but yeah when I go to Verizon store it's really nice to have like that dude with the tablet so I have positional awareness of where I am,
you know I think the cash register kind of like they have them but they kind of anyone can check me out it is that kind of what we're talking about.

Michele:
[4:12] Yeah I mean I think it's two-fold I think it's exactly what you just said is that it's it's an opportunity for us to learn but it's also when we launch new products and services that we think are fit-for-purpose and again specific to retell,
Amino gives us the opportunity to do a sanity check to see are we on the market is it scalable,
you know beyond didn't and I think the other point about tablets that was you know getting Evolution that we recognized as a retailer very early on to get outside of you have behind the counter and get
in front of our customers and service that more effectively with a tablet and you know you look at retailers that continues to UNLV a widely adopted,
it'll application the way that they're serving their customers and brick-and-mortar.

Jason:
[4:55] So when the reasons I'm excited to have you today is wheat wheel update on the show.
Are not around holiday time we get data from a bunch of sources about how consumers were behaving butterfly in a lot of the data sets that we get out of it it's heavily skewed towards desktop to use.
And I know you guys published some some insight about a holiday Shoppers and I'm guessing you're going to tell me that your data set.
Encompasses a lot more mobile users as well.

Michele:
[5:31] Yes we did on the 5th year that we launched the holiday retail index in it and it does include you know focuses on the top 25 retailers e-commerce,
and attracts Broadband traffic so what I would say is that regardless of I think the mobile,
engagement continues to grow year-over-year I don't think that this Statistics behind how that consumers engaging really is you know it isn't any different so I think you know whether they're behind a desktop or whether they're on a phone
I'm again it's about the convenience but I think overall what the takeaway is is at the digital aspect of a consumer,
do you have their engagement with their brands that's where the the the traffic is significantly increased year-over-year.

Jason:
[6:14] Got you and what were some of the top line inside from the study.

Michele:
[6:17] Yeah so again like I said this is the fifth year that time that we've had the index in in what made this year very unique is just that.
The sheer volume of traffic that we saw starting November 1st so it was almost like you know Halloween was just a note in a dusted and over,
and right away came November 1st and every retailer had a full-on,
you know launch around you know just holiday and we also saw a heavier in again this is not associate with the index but again the other additional research that we do behind.
In a behind-the-scenes is that it was creating that experience for the anticipated and not coming holiday so that we saw the season get off to really really quick start,
I saw significant growth over you know 2017 and you know it.

[7:06] Throughout November we saw it you know just again significant growth patterns leading up to Thanksgiving which was a little bit unusual compared to last year,
of course Black Friday Saturday leading into Cyber Monday were really strong but that we saw significant weakness which again if you look at,
you know everything that's been reported on it's pretty you know it's consistent with what we saw you know early on in the in the holiday season so,
that continued and then absolutely we saw there was you know there's traffic and it was over the weekend she saw this you know that.
Natural Spike of when consumers are you know shopping and at home,
and then it kind of fell again petered off and then that last week right before Christmas just again it rallied up pretty strongly till the end.

Scot:
[7:55] I call that the procrastinator pop that's that's where my shopping list how about you Jason.

Jason:
[7:59] I'm super a proactive so I did everything on Prime day.
Add event listener believes that I have a bridge to sell you.
Do you have a I'm curious like so it feels like you're you're about eating some of the other day that we've seen that light.
The front half of holiday sort of over index versus previous years and the very end of holiday may have been,
under indexing versus the the growth we would traditionally expect.

Michele:
[8:29] Yeah I mean I take the the the front half of the Season again and I think the season I think for you know it starts November 1st I mean I think historically it's just everyone rallied and it started,
are the Wednesday before Thanksgiving and then let into that weekend and that was the end of the end I'll be off but again I think you see this constant beat of the drum of consumer engagement,
and I ate it again I think it was really strong the first you know what I'd say November and then again we just saw this with this law,
the other piece that was interesting when you look at the statistics in the den,
you know Sunday seems to be one of those days you know where we saw you know we didn't see strong.
Yeah I was down here over here so I think that that's a consistent pattern and and they get I think that the opportunity for all retailers just to really Digest,
you know what what did they now throughout the entire season how are agile were they to respond,
and then going into 2019 in the planning season which they obviously already are is like what can they learn from it what do they have to do differently.

Jason:
[9:32] Yeah I feel like one the ramifications we've already seen is there some retailers that like you know gave these like
midseason snap shots and they felt kind of Rosie and they probably raised investor expectations and now we're seeing the first rounds of like Ernie announcements and some of those earnings announcements aren't quite as rosy it feels like those retards are getting by.
A little extra punishment.

Michele:
[9:54] Yeah it ain't and I do think because they saw strong a gagement on the front end you know I take absolutely you know that you know you would have you would assume that it would carry through the entire the entire season.

Jason:
[10:06] So do you have a hypothesis for why I got a little softer like our people just Scott and I side more proactive and shopping earlier or did something happen that like there was less consumer confidence that I've talking to shut that I don't know.

Michele:
[10:19] Yeah I know there could have been some distraction just in general but again consumer confidence I tagged you know absolutely it was there and,
yeah I think what we're going to find at the end of the season is that they're they're absolutely there are.
Some have been reported is that they've had really strong holiday seasons and then you know others I think they were probably a little bit,
yeah I'm taken aback by the by the end results because of the do you know the the traffic they saw in the front end so I think it's it's it's how they pivot
I think it's that the challenge that they all have going forward whether you had a fantastic holiday season it's just like well how do you repeat that because then you have the challenge there is that you got to set the right expectations. Going into the full you now to 2019,
and you know how do you repeat that going into you know holiday next year what's your this year actually.

Jason:
[11:11] We call it comping the comp Center.
You might want to take a job after they had a soft here is my advice to listeners any thing that came out of holiday that like surprised you or that you think is a common misperception that.

Michele:
[11:28] Yeah I think the piece that surprised it again I think it's it goes back to how a retailer is getting creative around,
you know engaging engaging our customers and it again I spoke to it a little bit earlier about just that the preseason kickoff for that November 1st it was is,
yeah really launched it and either you saw a lot of retailers being creative with,
again creating that experience so a lot of you know push for HomeGoods secreting that great environment whether it was for you know Thanksgiving or even going into you know into Christmas and Hanukkah.
But then but then also it's just being able to deliver that great customer experience so they're really good at the creative aspect of how do you get a how do you engage,
you saw a lot of flash sale so that time-bound engagement.
And I think overall I think retailers are really getting to become more intimate with their customers and understanding what their likes our understanding what their you know engagement patterns are through loyalty programs,
any adoption you know in that space it just in the maturity and I think you know five years ago I think consumers were a little bit so you know.

[12:39] Some of the aspects of knowing them a little bit too intimately were creepy and I think for the most part I think consumers are way beyond that.
Any on the other pieces is that once you have someone engage you don't want to just keep that consumer and gauge for the holiday season you want them to become a brand loyalists.
Post Holiday Inn for you know it ternity.

Scot:
[13:02] Closer I get that you guys aggregate all the stated and you get some insights,
fur individual retailers can you provide them some some information that helps them to better so so it seems like you could,
yeah if you guys are running the network in a store you could say Hey you had this many people on the network and they were super active or.
They your network was too weak we need to up the bandwidth of the network and then such as like at the that layer even you know,
maybe Jason week we talked a lot about the mobile experience for a lot of retailers has a much lower conversion rate in when someone abuses their phone versus the website kind of a thing,
can you guys provide any insight stop retailer.

Michele:
[13:41] Yes send it so the index looks at you know it's it's at a macro level and if the data is on on am I so from that standpoint the top 25 it says it is it is what it is
but I think we're retailers have the opportunity and and you know whether it's through their agencies.
You know whether it's through their digital marketing team that they understand their customers.
And I think with some of the you know was a Technologies and in some of the the geofencing and in the Loyalty apps and they're able to make that that intimate connection.
So I think that there is a combination I think it's no one data source.
Will tell you everything you need to be if you're a retailer I think it's it's understanding your customers based on what you know and then obviously looking at you know the external data in a data sources that are available in really mashing that up,
and in determining what is the best you know engagement and how do you engage with those customers on an intimate and personal level.

Scot:
[14:38] Do you have an opinion about deacons they seem to be like hot five six years ago Starbucks have in every store and when I walk in there pops open the app but then I don't get that experience hardly anywhere else anymore at the seams like beacons are on their way out at.
I'm not an expert on him I thought you may know something.

Michele:
[14:53] Yeah I mean I think that they've evolved in terms of another they absolutely still exist without a doubt and I think,
they're being used you know and I think this is where 5G will come into play to is just the ability to do stuff to do create this connected environment,
I'm at scale and I think there was some limitations when you look at it you know the cost of the devices the cost of the chipsets like those are the things that I think will really,
help of all this connected community that your retailers will have the opportunity to do but to your question around there because I think what we're it's a vowel from being of knowing who you are cuz I think there's other ways that they understand who their customer base
you know any retailer understands who their customer base is but it's understanding the flow so I think that there's a lot of the location-based applications that retailers are looking at
you know where today how effective is a display within a store how effective is there merchandising strategy in terms of product placement,
so I think that that's really the beat of the behind-the-scenes where they've learned to Leverage,
it wasn't just a customer-facing application but now it's kind of how do I help.
Build a better store environment and is the planogram that we've did you know is it working and do we need to make any modifications based on where the traffic flow is throughout the store.

Scot:
[16:14] And you mentioned that the magic number letter combo 5G to Jason was just at Cs and here at the floor there's a lot of talk about 5G,
what started the thirty thousand foot level for for listeners that may not know what is 5G when's it coming and you know obviously five seems better than four or.
Is it 20% is it 20% better so and then not only is it faster but are we can get more coverage and maybe give us the high-level pitch on 5G.

Michele:
[16:43] Yeah absolutely so again where it you know if you were at CSU you saw Hans and hopefully you saw hands on the on the our CEO.
Take the main stage for a keynote so we we strongly believe that it is again it's the Next Generation,
and it's the Next Generation from Tuesday and Finds Its what is that it's a new not you know it is the next Generation Network,
but it also will be so connected to the Next Generation device and whether that's a you know smartphone whether it's a you know iot device but again that's the pervasiveness of how we see,
the technology being deployed you know I think that there is absolutely the opportunity to get a 4G is not going away.
I'm so I think it will be complimentary and I think what you'll be able to do is really look at aplacate at the application truly at the edge and take advantage of edge computer.
What you getting that and other environments it just it was prohibited to be able to you know to do that so we're super excited about where the industry is going we're absolutely,
yeah positioned ourselves to be you know continue to be a leader in you know with 5G and Innovation and I think you know this industry,
we see it just unbelievable opportunity for them to be able to take advantage of it you know in the very near future.

Scot:
[18:03] Stone example of like the edge thing is an autonomous car can do a lot of processing and then you cuz 5G so fast it can it can do offload more that to the cloud,
and you instead of kind of today those cars have to go doc overnight just to kind of get the data kind of give up into a cloud for processing and that kind of thing so it's is that kind what you mean by.

Michele:
[18:23] Yeah absolutely I mean it takes it because if you think about what you know it's everything has been connected and iot we've been talking about for years and.
And you know it's the latency in the speed so when you push everything out to,
I'm out to the yeah just like that's where that kind of all comes the intersection no pun intended to the car analogy but it just that's where it all comes together and you know that I think that we see what the future can bring,
but I think it was a challenge that we threw out to the community is you don't help us cuz they had and there's tremendous amount of incredibly intelligent.
Visionary people that are out there and again we want them to help us you know crafty yeah the art of the possible.

Scot:
[19:09] And then tell us what is 5G do you think mean for stores because a lot of stories I go into they have the Wi-Fi but it's like always a hassle right you have to go in find it and.
Does it connect you have to agree to terms and so it's not as seamless as you know if if I had not know if you know Wi-Fi level speed off of a of a network.
I'm totally against all that but then like what kind of store experiences are you a retailer thinking about that 5G will name.

Michele:
[19:34] Yeah I think I think what will enable them and again it goes back to their the technology exists today but you think about video and you think about just the ability to look at an analyzed again whether it's this get out of simple model of
understanding flow traffic.
I was in the store but then also looking for characteristics of you know again what consumers,
are they might be wearing and we have yeah we've launched the 5G Labs of which were doing a lot of different,
you know again elevation around what does it mean and in one of the applications that were showing there is again that's it there's two that I think a really that are that will take off will they all take off but the ones I think are really relevant,
I miss being able to identify someone who walks in a store and the example is that they have yellow logo to a sports logo shirt.
And being able to identify that and then going back to your you know your comments about engagement is like well how do you personalize we know that you like,
a certain brand of sports attire you know apparel so that they can engage with you and whether it's you have some type of promotional activity,
I'm just again making that much more personal I think is but is identifying what are the patterns that you see with that and you just you can't do that today it's got it just the.

[20:57] Requirement for bandwidth latency speed and just the cost of Entry is just it it's it doesn't it's just not there so we see that continually to to evolve.

Scot:
[21:07] Go to Jason walks in wearing his Lululemon pants and it says we see your Lulu enthusiastic come over to this part of the store to learn more.

Michele:
[21:14] Absolutely.

Jason:
[21:16] Alternatively it might say we see you and we women pants and willing to pay you not to.

Scot:
[21:20] Please check the store security security.

Michele:
[21:23] Fitbit could make product recommendations to the alternative the absolutely.

Jason:
[21:27] Exactly so I want to turn to win the last Topic in it.
It's a good-news-bad-news thing for the industry after you guys enjoy this particular a good reputation in the security space so so Verizon Enterprise Security Services but the bad news is.
The reason you're always mentioned is some retailer gets breached and then you that they didn't hire Verizon the problem I feel like I've seen too many press releases where like you were the dissolution.
Can you talk a little bit about where the security services are and what some of the trends are.

Michele:
[22:05] Yeah absolutely I'm an idiot I think it's you.
Looking at it from the standpoint of what you just you commented on we have an incredibly strong practice around helping you know organizations when you know the Anson couple happen so we're able to go in there and help them.
Intermediate and you know get back to get back to normal but on the front end and again I think that this is one of the important aspect of a good security practice is,
in a really understanding where your wrists are in the business so you know before the unthinkable happens we've created a really strong practice,
I'm at work with a lot of Major Brands not just hit retail cuz it got everyone susceptible to a potential you no compromise and breach in really putting salt leadership around how do we help.

[22:51] Be out the industry identifying you know the potential threats and attacks of the unusual it a traffic and visibility that we see throughout the entire network our Global Network.
And then also you know understanding the patterns that they know that's inclusive to their to their family and two there traffic correlating the two and then also looking for ways to it'll help,
prepare that when and if something does happen that they have the right practice in place,
whether it's notifying and working with the board of directors that's the other PR firms or Communications teams whomever that might be but it's again it's really just building that strong practice,
so when and if something does happen that you're well prepared but what retailers and everyone in the industry yeah they need to do they need to understand what information do they have what day do they have,
where does it set where is it in transit.

[23:45] And never let that information be accessible to anyone in the public and I think it's it's foundational to you no good security hygiene and I think that there is absolutely you know is that the Bad actors as we call them.
Is they continue to get smarter and and you know we have to stay ahead of the game and so does everyone else in yeah we really do work strong with them to do that so it's a growing field it's not going to get any smaller and I think when you look at.
It all Foundation lie to you know the leap from this connected environment that's going to continue to grow,
is it everyone needs to keep that in mind it's just whether year with 4G today and and you're going to create this in krino credible ecosystem of a disconnected environment,
everything you do today is foundational to the next generation of technology so it's really important that.
They know what they have in place today where it is and they have a plan that you know if and when something does happen that they can execute on it very quickly and stay out of the news.

Jason:
[24:47] We stay out of the news seems like it should be the slogan the it's one of the topics I've heard come up in a lot of the the presentations that the show has has been about this like.
Emerging awareness of trust and how important trust is for Palmer success and obviously these,
these security Miss taps our line of the the easiest ways to lose that trust and as you rightly pointed out.
As connectivity gets better and we moved to 5G and you know we only have more devices they're not part of the customer experience it's a lot more vectors for those Bad actors to attack so I feel like protecting that trust,
is more important than ever and also harder than ever.

Michele:
[25:30] Yeah I mean it's more complicated and I think it's just understanding you know if you create and live in a complicated environment it just you got to have the security practice.
Yeah the compliments that so you know again it's a 10 think we're going to live in this world if you think about where we were five years ago the adoption of smartphones
it just iot smart vehicle Smart cities you know I think that they would just security is just such an important aspect.
About Evolution and and you know again we're here to help and and will continue to be here to help serve our customers and and really serve the industry.

Jason:
[26:07] Michele that's going to be a great place to leave it because we have used up our a lot of time but we greatly appreciate you taking time off in the Florida come.
Talk to the listeners and as always if the listeners want to follow up on the conversation we encourage you to jump on our Facebook page and of course we always appreciate those five star reviews on I-10.

Scot:
[26:26] Michele thanks for joining us do you tweet or if if listeners want to follow some of the thought leadership from Verizon around 5G or security or some of the topics we talked about the retail flavor where should they go.

Michele:
[26:38] Yeah absolutely so you can go to verizon.com and you can see everything that we're doing across all Industries and I'll practices and we're here today on our Verizon Enterprise
so look for us out there and and yeah we are actively tweeting so.

Jason:
[26:55] Awesome until next time happy commercing.

Jan 19, 2019

EP160 - CES 2019 Recap, and NRF Update

Episode 160 is a recap of the 2019 Consumer Electronics Show, and an update from the Nation Retail Federation Big Show.

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

Episode 160 of the Jason & Scot show was recorded on Monday, January 14th, 2019.

http://jasonandscot.com

New beta feature - Google Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 160 being recorded on Monday January 14th,
2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your clothes Scot Wingo.

Scot:
[0:40] Jason a welcome back Jason Scott show listeners Jason's is one of those rare episodes where we are actually in the same room.

Jason:
[0:47] I know it's super exciting I've always enjoyed getting the opportunity to spend some real life time with you.

Scot:
[0:53] Collie time yeah yeah so we are live live life here from New York City I am looking out of Jason's fancy hotel room and I can see the Empire State Building which is home to many Amazon stores and fulfillment centers near in New York.

Jason:
[1:08] And there's a Starbucks in that building that delivers.

Scot:
[1:13] Leave it to Jason to know some Starbucks trivia.

Jason:
[1:15] I'm desperate to find a way to work in a building.

Scot:
[1:18] What is January weather in New York City that can only mean one thing we are here for the national retail Federation Big Show that are at Big Show and in that Spirit tonight's theme is trippy parts
are are fearless reporter Jason has been traveling the world to bring you the latest and greatest information about what's going on out there
I'm in first you want to cover he is you went straight back to back I think from Vegas to New York by past the family so
hi and bye guys and he is going to start out with ACS report and tell us what's going on there and then we'll jump it in her up so
what's good to talk Jason with what were some interesting things you saw at CES that had retail implications.

Jason:
[2:03] Yeah so I feel like there was a fair amount of retail specific stuff at CES this year while the number of retailers had boo,
and so a lot of the Chinese retailers in particular had big boost to TSO Ali Baba had a big boost there for,
Services they would promote in the US are like,
their supplier services in their B2B Services they have a an alternative to AWS in China that they would offer to Western companies that want need to host Platforms in China,
but the bulk and they had one novelty they were showing and a new,
voice translation capability that was real time audio translation so Google kind of made some Buzz at the show by announcing these this new generation of their,
translate that lets you talk in your phone at transposes it in another language,
but you hang your phone into someone they can read it in their language speaking their language and you can kind of hand the phone back and forth so Alibaba came up with this technology we're in real time you talking to him.
And the guy next to you here's a translation in his native language and speech back to you so I got to speak to someone who is in need of Mandarin speaker and like.

[3:29] It mostly worked it's not like the grammar is a little,
monkey but you could totally get the antenna.

Scot:
[3:35] Is like a translator where you speak and then you pause and it speaks and then the other person speaks and you pause so it's got like that and if you.

Jason:
[3:42] So that the Google when is the definite pause in this Ali Baba one if you're speaking long enough they will get the translation before you finish.

Scot:
[3:53] It's hard to like keep your brain going while the things speaking in a foreign language.

Jason:
[3:59] Intended for remote interactions they're demoing it in a you're standing right next to the person but you are kind of in a isolated Booth so you only heard.
But it's remarkable how well that technology is getting the Star Trek Universal translator is basically here.

Scot:
[4:18] Or the Babel Fish.

Jason:
[4:20] Absolutely so but half of Ali Baba's Booth was focused on,
predominantly consumer electronics and Home Products that Ali Baba designs manufactures and sells on the platform so in addition to being a retailer and a service provider,
Alibaba is a product manufacturer and then their own hand sets that are sold in China they have a bunch of like,
smart home appliances and things and their pitches.

Scot:
[4:51] Is there.

Jason:
[4:53] Leveraging all the data and warnings from their their voluminous shopping interactions to identify needs in the market and design these products,
and I into a half a booth was dedicated to promoting those products and potentially selling those products in New Markets,
and I say that because that's a amongst all these retailers so jd.com,
which is like the second biggest e-commerce site in China Alibaba zapier Marketplace they don't actually sell their own stuff other than those,
products that they make jd.com is primarily a direct seller so they're more retailer that,
sell wholesale products in China they also had a big booth,
same story half their Booth was dedicated to products manufactured by jd.com sort of reinforcing this theme that,
retailers that had the most intimacy with the consumers have the most inside that they can use to make the most relevant products,
what time is also showing some of the retail technology so,
in China jd.com is doing pretty significant amount of deliveries via drone in so they were showing all their drones.

Scot:
[6:11] The drum Vehicles usually say drown people.

Jason:
[6:12] Usually when we say drone people think of the quadcopter that's flying packages and jd.com.

Scot:
[6:18] Does have a like high payload quadcopter and they claim.

Jason:
[6:19] Does have a like high payload quadcopter and they claim that they make,
thousands of deliveries a day with these things in in remote villages,
but the way higher volume stuff is they have autonomous vehicles these little mini size Vehicles even smaller than like a smart car that are mostly like storage capacity and it's kind of like,
shopping cart the drive to your house and so those things are kind of interesting they were showing some of the,
version of Amazon go type technology so they have vending machines that use facial recognition and so you've you've basically like storage a WeChat credential,
and you walk up the vending machine you just open the door take whatever you want and it it authenticate you with your face and charges your tencent account.
For the purchases so that was interesting.

Scot:
[7:15] Alibaba has technology like that too for their The Coloradoan o and said omni-channel they call it online and offline 02.

Jason:
[7:23] Yeah online to offline and and Alibaba definitely has initiative facial recognition they have pay with a smile that,
like I Smile as a gesture after the face recognition to to initiate transactions I didn't specifically see them demoing that in their Booth this year,
definitely.

[7:43] The Chinese providers are like big ecosystems of of these interesting Services some oriented at Commerce of some sort of broader than that,
the third Chinese retailer there that would be even less familiar to listeners unless you spend some time in the Chinese market is,
I called sooning and they're the largest brick-and-mortar retail are in China there a conglomerate that owns a bunch of different kinds of stores,
the biggest chain is like 1700 consumer electronics and home appliance store so sort of like a Best Buy in China,
they had a booth and in their Booth they were primarily showing technology that they had developed for experiences inside of retail store,
they were showing produce displays for a grocery store that way all the,
the produce inside they detect when the weight on the Shelf changes so they know an apple got picked up for a banana got picked up and they have a digital sign that shows you,
product content relevant to that banana what form the banana came from how many days it'll be fresh all those sorts of things that a lot of in-store analytics so they were using video system to measure store traffic and I grabbed while time and all that sort of stuff.

[9:01] They had a,
at self-checkout experience they had a virtual try-on experience where your body was mapped in 3D and so they,
apparel on you that's not paper towels in front of you it sort of on your body and is you turn you see the profile and all that sort of stuff so they had all these,
different retail vignette showing technology that they had developed for their stores and what was interesting / peculiar,
a bunch of these people had badges from Palo Alto California from sooning I asked and they said they had a R&D lab in Palo Alto they have no,
that's out of Asia like they're mostly in China that a few stores in like Hong Kong there.

Scot:
[9:48] There depends in the booth.

Jason:
[9:49] There comes in the booth they're not trying to sell any of this retail technology to other retailers they're not trying to license anything outside of their home market and so.

Scot:
[9:58] It baffles me why they would send it.

Jason:
[9:59] Cuddles me why they would spend a bunch of money and have a booth at CES I mean it,
my Boost at CES just to generate PR going to be Western press.

Scot:
[10:15] Maybe there are a lot of people go to CS cuz there's the component that is good place to go get little Lego blocks right so maybe they were trying to get,
component vendors to say hey come up with a cheaper screen for our future digital self or something sometime sometimes those kind of conversations.

Jason:
[10:32] Totally viable that that would be a good place to like find new vendors and show them some of the things they're working on it.

Scot:
[10:38] Expensive way to do it so well these guys gaited in like a retail technology or like you stumbled upon them as you walk the moon.

Jason:
[10:46] Yeah mostly you would StumbleUpon I'm so that,
the Busa TSR sort of loosely grouped by use case so most of CES is into big venues the Las Vegas Convention Center which has three big Halls the North Central and South Hall,
and then the Sands convention center which is still called The Sands convention center but it's actually not connected to the Venetian Hotel,
the North Hall in the Las Vegas Convention Center is mostly Automotive so none of the boots I mentioned are there the central Hall is sort of the original CES Hall it's all the television and home entertainment and.
Berkeley the biggest longest running consumer electronic companies have boots and exhibited forever so that the huge Marquee booths in the central Hall are Sony Samsung and LG,
so Ali Baba had a very big boost,
in that Central Hall not quite as big as like those three but the next step down from those three,
The prominent location and I presume that was cuz they were trying to emphasize their home entertainment products predominantly.
Southall was computers audio technology drones and Robotics in their way,
retail Pavilion so none of the.

Scot:
[12:15] So none of the companies I.

Jason:
[12:16] Engine wear in the high-tech retail Pavilion the high-tech retail Pavilion was.

Scot:
[12:18] Small.

Jason:
[12:21] A small splattering of Technology vendors that had sort of Point Solutions so there was like,
vendor that was doing like virtual makeup there's a vendor that's doing geolocation in the store,
and some reason why even more preferred vendors of vendor that sells vending machines that clean your eyeglasses while you wait that they're trying to sell the retail stores.
In the most Buzzy thing in the in the high-tech retail Pavilion was a bread box in an autonomous Self Service vending machine that bakes the bread and then dispenses freshly baked.
So the bread. Was kind of a hot Buzzy thing but like if you walk this high-tech the billion at CES it feels.

Scot:
[13:12] Small subset of what you'll be here in New York at the.

Jason:
[13:13] Subset of what you'll you'd see here in New York at The Innovation Pavilion in inner mouth.
Invite if you're going to exhibit one showing you're one of these small vendors CES does not feel like the right show to meet a bunch of,
retailers that would be interested in your products so I didn't spend a lot of time there sooning and JD were in that Southall,
the so those were all the sort of retail Focus boost and Walmart does have a booth in that Southall that was sort of just outside the high the high tech The Village,
and it's basically their jet booth in it's basically recruiting sellers for the jet / mart Walmart marketplace,
for the first time.
Amazon had went from no real booth at CES that's in small presence in the past and.

Scot:
[14:09] We've had Marketplace boots where they recruit sellers.

Jason:
[14:12] Voice Booth before they've had like the treasure truck and then the last several years they,
if that works with Alexa in a million votes in the show 4000 both sent one gaze exhibit space so the first thing they did,
talk about it this on the show before but a gimmick than Amazon does the corporate headquarters is they give away free bananas,
2 employees and random people walking by their headquarters in Seattle,
exhibit hall there was a Amazon banana stand giving away free bananas that just felt like a brand building thing and they had like a social media contest where they're encouraging you to,
tweet out the banana stand and in Winsome Echo prizes.
Did I saw they did not have a Marketplace booth that a dedicated booth in the automotive section talking about Alexa for automotive integration,
I said I was in the North Hall it had the biotin which is a Chinese,
vaporware all electric car that was debuted last year that's a new models this year and Amazon had that in their Automotive section the outside of BMW in there and they're talking about cars that have heavy,
Alexa integration in the dash as the cabin 10.

Scot:
[15:32] Yes I borrow the Amazon Alexa Auto is supposedly shipping I don't know I couldn't I did not get invited to get in.

Jason:
[15:40] I confess I did not try I probably should have.
I feel something that I feel like you called me out of the podcast thanks for.

Scot:
[15:48] You really let here.

Jason:
[15:49] Exactly the first episode this year that you didn't.

Scot:
[15:52] Mock my title.

Jason:
[15:54] You're like mocking me for.

Scot:
[15:55] I think if you're a chief creative digital strategy officer you would have had this figured.

Jason:
[16:01] I would have figured out how to get a Amazon how to enter.
Prisoners of the Amazon Auto is a device you can plug into the auxiliary audio input in your car that that sort of,
is a OEM Alexa that you can add to your car the people are up ridiculous got her excited about,
so they had this Auto thing they were that was mostly probably targeted other car manufacturers to you know convince them that they should be using Alexa,
in the Sands Amazon had a huge exhibit,
demonstrating all of the devices that have Alexa integrated into them and that was a super high traffic Booth so Amazon had a huge footprint at the show through all these different booths.

Scot:
[16:48] That's how you tweeted a toilet from that exhibit.

Jason:
[16:54] I treated a Kohler toilet that has Amazon in.

Scot:
[16:58] That was not a.

Jason:
[16:59] That was not actually in Amazon's Booth it was in coolers booth that we do all definitely need this toilet has a automatic.
Open and close function in so you can use Alexa to put the toilet seat down which could potentially result some marital problems and some some relationships.

Scot:
[17:14] No problems in some relationships with the.

Jason:
[17:18] Use case is by.
Just to have an Alexa in your bathroom so you can do things like run the water set the mood lighting play music do you know it's more of a bathroom control than a specific toilet control.

Scot:
[17:31] But if you ask me it's a pretty crappy integration.

Jason:
[17:34] Balloon pump.
Fancy bday in it so you can do things like pre-heat your toilet with.
For people that live a different life than I I do.
Send anywhere couple other boots that had some like just interesting retail vignettes in them so Qualcomm is a big chip manufacturer there would have called ingredient company they make,
Epson ink a lot of the devices we use in their most famous for making Wireless chips that are in a lot of the cell phones for a long time they were in Apple phones but now there's a big falling out in so I don't think Apple phones use Qualcomm chips anymore.
Mom was showing a whole set of retail use cases that were.

[18:20] Enhance by the coming internet of things so they made a simulated music festival and they showed examples of digital signs.

[18:30] We're Dynamic can change based on the composition of the crowd they're using video Analytics,
image of the crowd and their departed and they're doing sort of artificial intelligence digital signage based on all of these these signals that the signs were in taking they Envision that you would have morrible beer carts in this music festival,
and all the mobile beer carts knew exactly how much beer they were on had left and they knew,
the crowd was in the area where the cart was in so they could do things like,
say hey we have too much beer over a year in this part of the Pavilion and there's way more demand over here but let's tell the cart to move to where the demand is order replenish,
I meant to do those kinds of things they were showing up pretty robust.

[19:20] Digital fact egg use case which I've talked a lot about my Affinity for digital fact eggs,
downsides of most digital fact exhibitions today is that use proprietary Wireless Solutions so you put these tags on your shelf and you have to buy a hub,
from that manufacture or a bunch of hugs that,
speak over proprietary frequency and protocol to all the tags to Qualcomm things hey these tags are big thing there ought to be a lot more of them but they out of use Open Standards like Wi-Fi mesh and Bluetooth sobaka,
showing some reference designs for that they're showing a lot of video analytics to measure the crowd and know how many people.

[20:02] I was enjoying the music or not and you know they had to use cases where they would change the genre of music is the crab is losing interest and things like that,
yeah so they were they were I wouldn't say any of the customer experience words were perfectly Polished but they were you don't thinking about how.
Well then you could change the retail experience which is which is interesting to me Panasonic.

Scot:
[20:27] I just wanted to detect when there's more than a hundred people in the store and caught more cash registers.

Jason:
[20:35] Obviously if you have those video analytics like they're certainly are simple people counters that are they exactly there's too many people in line at the cash register but your.

Scot:
[20:43] Got your right light.

Jason:
[20:45] The proactive way to solve that problem is know how many people came in the store know what the average dwell time is and be proactive like once once there's too many people in line it's kind of too late.

Scot:
[20:54] I feel like there's all these people cuz they're on the mountain they think about all these user experiences and women really nailed some of the basic ones yet down the kind of at the bottom of the mountain.

Jason:
[21:03] I think that's up for sure theme of these two shows is that so I could see to show a lot of the bells and whistles and there's still a lot of blocking tackling to be one,
Panasonic had a like an additional the Consumer Electronics they were showing a new pickup Locker so a buy online pickup in-store,
at a locker experience.

Scot:
[21:24] And they're trying to solve.

Jason:
[21:24] They're trying to solve a very real problem.
Walkers for produce so they had lockers that were refrigerated and lockers that were freezers and so they're in their Vision was,
you buy the groceries they partition your groceries into cold and Frozen,
put them in these refrigerated automated Walkers and so it sort of like Amazon Locker for perishables.

Scot:
[21:50] That's something that's like active in Japan and they're trying to bring to other countries or is it was.

Jason:
[21:55] I think the Panasonic probably isn't used anywhere I think it's a brand new product that they Envision selling to retailers so we'll see if that gets any traction they also had like.
A common theme in CES in a shiny bauble a lot of people talk about is blockchain so they had a.
A food cart that was an autonomous vehicle that drove the produce to your house and it had self checkout and it had blockchain for all the produce so you could you know know the,
you could verify the origin of all the produce in them anything was recalled or something like that a little silly and more forward-looking that interesting that they,
spent a bunch of the space and they're super expensive CES Booth to think of these sort of retail vignettes and then much more interesting to me.

[22:46] John always has a big booth there despite the fact that way,
Cameron sales are decreasing dramatically as everyone uses their smartphone but,
built-in their Booth a bunch of,
Instagram photo opportunities and you walk around CES and people were standing in line for like 30 minutes,
picture taken in a bathtub full of yellow ping pong balls or in a swimming pool full of rubber duckies or you know all these these different like super colorful well-lit vignettes and very much reminded me,
might there now he's dead a dedicated Instagram experience tours things like the Ice Cream Factory in San Francisco where people pay forty bucks to,
coincide a venue that has a bunch of pretty sets to take photos of themselves to share on social media in,
it's great experiential we talked a lot with retailers about creating opportunities for digital souvenirs for your Shoppers and it and the Nikon booth just seemed like a particular good example of,
of creating these these digital experience as a sort of mementos of your visit to the booth and it seems like a smart tactic for retailers to be thinking about.
We've heard of some retailers even using the amount of the social media that their physical store generates has a kpi which is interesting and then last.

Scot:
[24:15] And then last there's a.

Jason:
[24:18] Avenger there it's been there for a couple years called physics and physics is taking up the mantle of Google Glass so they,
glasses that you wear that have an augmented reality display that are primarily intended for industrial purposes so,
car mechanic to wear that has like schematics of the automobile well while they're working this year they,
they debuted their first consumer product which is $1,000 clone of Google Glass as a much higher res screen that's much bigger,
I wouldn't say it looks any better than Google Glass much more processing power behind it and,
not sure they're ever going to sell a lot of these but it was interesting the created a bunch of vignettes for how people might use them in one of the vignettes was a shopping vignette where you could put on their prototype glasses walk into the setup store,
and they would everything all the product packaging you look at.

[25:22] The physical packaging with digital information like is a gluten-free is a kosher all this sort of things and I do think that,
augmented reality.
A for product information is really interesting sort of thing people are way more likely to use their phones that they already own and carry with them than they are to use these for project glasses but it was a nice visualization of the con.

Scot:
[25:48] Yeah I wanted to tell me where on the Shelf to find it cuz my wife wants a very specific thing and then I spend like the bulk of my time finding that very specific thing.

Jason:
[25:56] They absolutely did have that use case like we caught wayfinding we're essentially.
You about a list in the the classes have sort of GPS directions saying turn left turn right and walk you to the to your wife's items so she that would definitely approve the wife approval factor in your family.

Scot:
[26:12] Awesome I need all that I can get.

Jason:
[26:14] Yeah so that was a lot of the stuff that jumped out at me as being particularly retail specific at the show.

Scot:
[26:20] Cool and so as you know I've been thinking a lot about the future vehicles and I saw there was tons of interesting news that came out of Cs around
autonomous vehicles in electric vehicles one thing that's kind of the summer I saw lead with the CEO of waymo
was out there saying
hey the sky prior to see us become admitted in an interview with reporter he doesn't see us getting to 100% autonomy so they've been running these vehicles millions of miles even like tens of millions of simulated miles
with the finding are they to do okay in perfect stereos but things like
tree shadows and then as weather gets bad like Randy Rhoads they do really poorly,
it's one of the things I saw out there was kind of more limited autonomous vehicles so shuttle service that will go from point A to point C kind of thing did you see any of those when you write CS.

Jason:
[27:18] So an interesting Cadence you Tennessee at CES is,
people show very early prototypes of stuff it's not going to be in the market for many years right tires used TV is the sort of example,
before there's ever any content or you could ever buy a TV that has 8K resolution,
there's a bunch of 8K TVs that are kind of Novelties so that when you're when you're you go there and it's like a magic there's a TV with twice as many dots as you've ever seen before you can't buy it for several years but it's cool though.

Scot:
[27:49] Look at this picture of an apple spinning with some cool water blobs on it.

Jason:
[27:55] Next year is it gets closer to reality there's there often are way less of those TVs because the the few,
being shown now are,
really store close to release and they're usually pretty rough because even though they've commercialize this TV in the ready to sell it and they have things they didn't have the year before like a price they still lack any content right there.
Of examples and almost feels like it loses traction as it's getting closer to commercialization and then you come to the show the third year and it's like,
ATV 8K TVs are ready for the general public now every TV you see is a k and that's sort of the the the Cadence so in autonomous vehicles last year felt like the year when,
everybody had autonomous vehicles just for the novelty of it and so like,
all the car manufacturers are showing and Thomas Vehicles a bunch of companies we've never heard of where showing autonomous vehicles and all the ingredient companies like Qualcomm and Intel were mainly talking about how their chips are driving autonomous vehicles in video which does a lot of the,
the heavy processing for the vehicle like everybody's talking about it this year.
Middle year there was less autonomous vehicle hype the autonomous vehicles shown.

[29:19] Completely commercialized or ready for Primetime that it felt like the vendors were having more practical conversations with them so it like.
TVs can probably iterate faster than a trama vehicles.

Scot:
[29:30] Very fast.

Jason:
[29:33] Saying you shall expect that we're all be driving autonomous vehicles next year but it feels like we're in the middle of that cycle so.

Scot:
[29:38] Cycle so.

Jason:
[29:41] The consumer car companies were away last emphasizing that autonomous vehicles the BMW's and in Honda's Ford Tollbooth last year was dedicated to autonomous vehicles that wasn't true this year.
A lot more B2B autonomous vehicle use cases were being shown and it was like public transportation people movers it was a lot of these autonomous drone delivery of package,
on public roads or in hotels are all these different use cases like that in the world bunch of commercials,
like use cases like there's a lot of people that are pitching like,
way before we have truly autonomous vehicles will have commercial trucks that are autonomous on the freeway and they hand over control to a remote operator,
when I get off the freeway for example and so there are more of those kind of use cases.

Scot:
[30:38] I think it's interesting cuz I'll be a freak we have the news on when I'm like working and I'll hear some talking head come on and say you know,
we should plan on vast unemployment in 5 years cuz of all these we won't need truck drivers and Uber drivers and everything,
we've lived the Commerce experience for 20 years and we're at fitting on whose numbers look at 15 to 20% penetration so,
I think you know I think that's a little bit further out than people think it is I think they're the kind of reading too much into.

Jason:
[31:12] Everything I say is not going to put truck driver like 50,000 truck driver short of what we need right now right away.

Scot:
[31:18] Same time.

Jason:
[31:21] I can't hire enough truck drivers in they're all like escalating pay and competing with each other and so the premises if the trucks can run at honesty in the freeway but then,
operator has to Take Over Control.

Scot:
[31:32] Take Over Control.

Jason:
[31:33] To drive it off the freeway to the the store or the DC you still need people.
A person can now manage more trucks they can essentially they have more delivery capacity for their labor and so the.

Scot:
[31:48] The premise is.

Jason:
[31:50] What's close the gap between supply and demand like probably doesn't like obsolete a bunch of jobs in the foreseeable future.

Scot:
[31:59] But even then I go back to like my previous statement like my cell phone drops out a lot right jack making calls and,
I get really nervous of some guy in Phoenix driving a truck across five trucks across country in,
is is LTE drops out when he's on the ramp there I'm not sure where you can quite ready for a lot of these guys take a lot longer than people think.

Jason:
[32:26] Absolutely well in there like they talked about like there's three fundamental technology platforms that need to happen that haven't happened yet.
They're all saying that like for their.

Scot:
[32:37] Brittany practical for there to be a lot of autonomous.

Jason:
[32:39] To be a lot of autonomous vehicles,
Gambia islands like the vehicles actually have to talk to each other and know where they are right and so not only do you need that good Wireless communication that you mentioned like you can't have the LTE but it's there's way more connections cuz I'll.

Scot:
[32:53] Way more connections cuz all the vehicles are two paragraphs.

Jason:
[32:55] And so the premise is that when 5G is Broad we deploy the next generation of Wireless technology.
Attributes that are more friendly to autonomous vehicles it's faster it has way more capacity for more devices and most importantly,
has way lower latency which is super important for like you can't you can't have the wireless going there's a dude in front of you and then have 130 millisecond lag before you hit the brakes.

[33:26] Where it where we see you're away from 5G being deployed at all much less like ubiquitously deployed and for your point,
maybe it'll work as well as promise maybe it won't there's a huge.
No One Believes that these things can be autonomous by just using cameras and sensors they all need this light our technology in the light our is kind of like a laser version of radar,
and there's a lots of controversy like the best working lidars are super expensive and have some negative side effects like,
potentially could blind people and they could ruin,
regular CCD cameras and so there's actually this big problem the vehicles need regular cameras and lidar and the lidar actually burns the the regular cameras,
signs of light are there way safer for devices and eyeballs but it has range limitations and things like that,
that's tough to be figured out so I totally agree like I think cars are going to have more,
amenities for easing driving in the near future but I like yeah I don't think we're just going to be like picking picking menus on Google Maps and and arriving there.

Scot:
[34:39] Switching gears pun intended
there another thing you touched on was voice and I remember last year you kind of proclaimed it was the year that Amazon kind of stole CES arrest reports that
apple with their Siri platform in a Google with their assistant platform
I tried to kind of catch up to Alexa at CES this year although Apple didn't have a booth which I think was one of the first time so how would you score those three kind of
contenders and how they did.

Jason:
[35:11] Why would I should go back two years I'd say 2 years ago.

Scot:
[35:13] 2 years ago.

Jason:
[35:15] Amazon had to show to themselves until they tell you what they didn't have a booth but they were,
embedded in their bunch of products that work with Alexa 2 years ago and last year the hand,
who's that work with Alexa turned into thousands of boost that had products that work with Alexa so again Amazon didn't really pay for a booth but they got huge buzz and footprint in their logo was everywhere on the show Google show,
last year but it was mostly with an advertising present so they had their own booth that they paid for the page.
There their logo on all the trans in Las Vegas and all the taxis until you're just looking around Las Vegas you go oh man I saw a bunch of Google.

Scot:
[35:58] Google logo.

Jason:
[35:59] And I saw a bunch of Amazon logos but I would argue Amazon dominated because,
all the Amazon logos were free and they were in products you could buy and the Google logos were mostly,
paid advertisements for for a handful of Google products that did not have huge penetration so now fast forward to this year and I feel like,
continue to make progress the Google is starting to catch up so the most common thing you would see now in a,
is in Words with Alexa and works with Google Assistant logos side by side it was on,
we agreed on the treatments and so there are lots of Brands where support for both products were in there to remind listeners which kind of two tiers of products there's products,
Alexa in it so it actually like is the assistant than you usually can talk to it,
and there's products that work with Alexa right like so a light bulb you know works with Alexa Smart Lock Works with Alexa a Bose or Sonos speaker,
probably has Alexa built into it the toilet odd we had Alexa built into it.

Scot:
[37:19] They're both so you can you just kind of switch conversations and haven't OK Google / Alexa conversation.

Jason:
[37:25] So they the ones that I saw mostly had an interface in you selected one of the other like I assume you could pretty seamlessly toggle back and forth but it wasn't like,
you could use either utterance and Trigger either assistant and way more common was devices that worked with both than that had both embedded in it like a lot of appliances like a refrigerator,
might have a smart assistant embedded in it that you actually bought one ski or the other you bought the Google Assistant version or you bought the Alexa version.

Scot:
[37:58] And I've noticed you haven't said Siri in this conversation.

Jason:
[38:02] So I sew a Amazon his net,
Apple has never had a booth at CES or at least in modern era has never had a booth at CES they many years they winzy yes because they launch the iPhone 11 years ago,
during CEO never one time and they sucked all the announcement out and Walt Mossberg was at CES and Steve Jobs called him and said hey we're having this event and I really think you ought to come mini cannons wall,
wces and go to the the first iPhone announcement,
and their many years when the most prominent product category at the show is stuff that worked with iPhones or that work with Apple products but Apple's never had a booth and again they did not did not,
for home pod this year so they still didn't have a booth I'm sure they had sweets where they were talking privately but there is very little.
Siri stuff embedded in products and to my knowledge I didn't see any products where it was like.
Google Amazon or Siri it felt like a two-way party the one place where Apple in are two places where Apple integration showed up heavily,
the the Sands has a hall dedicated to home automation and apple has a platform called home kits.

Scot:
[39:26] So that every exhibitor.

Jason:
[39:28] In the home automation section probably had a logo saying it was home Tech compatible and again Appleton have a booth in that section that homekit was definitely the most prevalent.
Call for home automation and then surprised that Apple pulled off at this show.
Who is famously sort of Walled Garden company.
A good experience you have to buy all our products if you want Apple TV you have to buy an Apple TV if you want Apple music you have to listen to it on the Apple product I'm so proud to show,
you saw those walls are eroding,
Apple actually launched a skill for Alexa that what you listen to your Apple music on your Amazon device which is unprecedented in shocking and then you got to CES this year and surprise.

Scot:
[40:19] Apple in embedded.

Jason:
[40:19] Embedded are play in most of the major TV manufacturers platforms so you now can get all the,
Apple TV content on a Samsung or LG TV without needing external hardware and the,
very likely is going to have a meaningful impact on Apple TV sales,
Roku is already destroying Apple TV in terms of market share in this will probably make it worse,
everyone's assumption is that Apple's about to make a major content Play Everybody expects Apple to have a pay-per-view video offering,
in the near future the complete compete with Netflix and the,
how has essentially as you can already buy individual content from Apple Apple is essentially made this decision that they can make more money,
as a Content publisher and they want to have his brought a market for their content as possible so they made this dream that,
from being a Walled Garden to being a open system that works with as many providers as possible.

Scot:
[41:26] We've talked about it seems like things are thawing between Apple and Amazon these know so let's see,
Prime TV showed up on Apple TVs I think was the first thing and now we're seeing them kind of so the skill being Alexa there's an apple music skill on Alexa,
yes it would be interesting to see you could you have one of these Amazon Alexa TVs and get to some apple content to say say to Alexa hey ask Apple to play.

Jason:
[41:57] Yeah absolutely seems like it's heading that direction the one that gets voted on and off the island a lot as there's a few Alexa devices with a screen like the Alexa show
and various X Alexis enabled YouTube to be on or off of those things in at the moment you can get YouTube on your Alexa show.

Scot:
[42:15] So anything else from CS that you want to hit.

Jason:
[42:20] So we touch on a couple of these in so I'm not going to Deep dive anyone but just us or the Highlight if you walked away from the show and said hey what.

Scot:
[42:26] Walk away from the show and said hey what were the.

Jason:
[42:28] Themes of this year show.
Underpinning in this whole show is there's this new thing coming that's not quite here yet called 5G and so falling that same kind of.
Nioh release actually released last,
a ton of 5G height with fake products this year there were fewer boost talking about 5G but they seemed very close and the the carriers have all announced that they have,
it's now and they're going to be doing appointments throughout the year and it don't have sort of meaningful penetration of 5G by the end of 2019 now that,
you can take multiple years to have the kind of 5G coverage that we enjoy the day with LTE which is the 4G network.
It really feels like we're at least a year away from meaningful consumer experiences and in fact there's like controversy.

Scot:
[43:22] Factors like controversy this the earlier.

Jason:
[43:24] IG this happens with every new iteration AT&T has rebranded some of their for G,
at work is 5G and they they got like a lot of funny social media Burns Teemo,
a funny video where they took a iPhone in AT&T iPhone and it showed the,
you have 5 bars of 4G LTE signal and they they wrote 5G on a Post-It note and like,
put it over the icon on the iPhone and said hang on a minute I'm doing a AT&T upgrade and it was sort of a joke that they just rebranded 4 G is 5 G,
so so that's coming everyone thinks that's going to be a huge game-changer when you can have a thousand times more devices connected,
and all those devices can have a hundred times faster bandwidth and they can have you know at 10 for a hundredth of the latency that we currently have its.

[44:24] You have to stop thinking about it's going to be a better cell phone and started thinking about,
no one's ever going to store files on the hard drive anymore by computers I'm going to need hard drives you're just like everything's going to be on the cloud and be able to come very quickly to your ubiquitous 5G signal and so,
the talk about other use cases that will change there's a ton of examples of leveraging improvements in visual search and video analytics and so there's a,
they talked about how I Google Maps spent a fortune,
turn cameras on cars and driving all over the country to get the images for Google Maps there's a company that sells the dash cams to all the taxi drivers.

Scot:
[45:08] And they're like.

Jason:
[45:10] We have GPS in the car we have all this dashcam video we can extract video from all the cab drivers in crowdsource better images than Google,
and so there's a lot of.
Qualcomm using video. To do crowdanalytix tons of Booth had this experience I hate where they they use video to try to infer the the mood of the,
the audience and hey we can show happy content to the audiences sad,
another number boost showing like we can tell old people and young people and sick people in healthy people and change the content there's a lot of controversy over that stuff.

Scot:
[45:46] What is clear the technology.

Jason:
[45:49] LG to quantify video and turn it into actionable analytics is like is incrementally improving and video visual searches is going to be a game-changer for a bunch of stuff,
so that was a big Trend a big Trend was,
a bunch of vendors shifting from their Walled Garden approaches to open system so Apple was the most dramatic but in the old days Samsung would try to make it use Bigsby and do everything with their smart home protocol,
felt like the manufacturer is kind of thrown in the towel on being walled Gardens and,
for several years there's been a connected home and a connected Health Hall at the Sands Hall but I tell people,
if you walk around the TV Hall the central Hall at CES it feel,
Legend Mall of America on Christmas Eve like it's super stressful it feels like you don't have enough room to breathe and walk and when you go to the Sands with this newer Technologies I connected home and connected health.
Felt relaxing because like there's more room it was West busy and this year felt like the year when those Halls flipped that like was much of.

Scot:
[46:56] Her comfortable and less chaotic.

Jason:
[46:56] Unless chaotic in the central Hall showing all the home video technology and it was wall-to-wall energy and Chaos in the connected home and connected health so very unscientific lie,
it feels like those categories are really starting to get some traction.

Scot:
[47:13] And apples playing that in addition dumb could have helped get right so what did you see a lot of your healthkit kind of stuff.

Jason:
[47:24] Homekit literally had a dedicated part of the hall so all the products that work with homekit when one place the connected Fitness area had a lot of,
products that support an apple healthkit a ton of apple competitors so I got to see the new,
new watch has an EEG in it and if you start having irregular heartbeat I'll be able to save you if I choose,
ton of ieg products and frankly some of them that make more sense like blood pressure cuffs that also do an EEG like so there was stuff that work for that ball there was stuff that competed with apple there were sensors for every,
Endeavor you could possibly imagine so if your baseball player we've got you know censored enabled baseballs they,
I can judge how well you hit it with the bad if your fisherman.

Scot:
[48:16] We'll put a Fitbit.

Jason:
[48:16] A Fitbit on your fishing pole to measure the quality of your casting whatever you want to do,
there's a way to quantify it and digitize it in a way you never could do them.

Scot:
[48:31] Anything else from CS.

Jason:
[48:35] It seemed like the big the big meaty stuff I know that's a lot of lot of content but it's it's the biggest trade show in the US it's a hundred and eighty thousand people.

Scot:
[48:44] It feels like there's more more overlap between all the worlds which is interesting you know five years ago there would be no retail kind of stuff.
So speaking retail to switch gears and come on over to NRF so did you get here Saturday or Sunday.

Jason:
[48:58] I came in Saturday.

Scot:
[49:00] So you have been here much longer than I am I was only able to come up today which is Monday so.

Jason:
[49:07] Wasted most of your day with me.

Scot:
[49:08] I did unfortunately so tell us what you've been I saw a lot of selfies and things from the show floor so so what have you seen here it interrupts the New Berlin kind of really into the show but what have you seen that you want to share with listeners.

Jason:
[49:24] Trans obviously Amazon go has a lot of traction and Buzz until one of the things you see here a lot are our alternatives to Amazon go so some of the.

Scot:
[49:34] Those are what I would call a legitimate Amazon go tape.

Jason:
[49:35] Legitimate Amazon go type experiences where they're sort of just walked out technology so there's a bunch of big exhibitors that have built little mini stores and can kind of demo that experience,
claiming they can do it with a fraction of the cameras and cost of Amazon go and it's really hard in these controlled environments to know whether there,
that's hyper or reality but a lot of vendors are claiming they can do Amazon go for a fraction of the cost and then there's a ton.

Scot:
[50:03] Wingo.

Jason:
[50:03] Climbing on Amazon GoPro alternative when really there a scan and pay alternative.

Scot:
[50:09] So which it is a useful and go.

Jason:
[50:09] So which it is a useful and good experience in and of itself I'm not knocking Scan & Go I get slightly annoyed when people try to say.
The equivalent of grabbing your milk off the shelf and walking out the store without doing anything is grabbing your milk finding the barcode launching an app in your phone a mean a camera at the park,
it's a it's a it's a either there different use cases but.

Scot:
[50:35] But they're a lot about I've seen tons of robots wandering around some of the same platform has been here for like 4 years now.

Jason:
[50:44] So there's like a lot of the traditional automation like most of it,
dedicated Logistics so we've talked before about Amazon has these Kiva robots there's now a lot of alternatives to Kiva the other,
fulfillment centers can use to automate them would say there's more of those this year and what they're now is is a bunch of robots that people are hoping you'll use in the store,
so there are robots for wayfinding you come into the front of the store,
you say my wife told me to get this specific item in the robots is follow me and walks to the store and gets it and there's multiple competitors they've been here the last couple years,
pictures of all the shelves and they do planogram compliance the Campbell Soup is where it's supposed to be we're out of this SKU we got to get more they're all doing some some,
liability compliance as well now they're taking pictures the floor to make sure there is not a trip and fall Hazard or things like that there's robots that will.

Scot:
[51:44] Robots that will.

Jason:
[51:46] Replace the instacart people in the store it seems pretty far-fetched to me.

Scot:
[51:50] Robot.

Jason:
[51:50] All around with the customers and grabs products out the Shelf to fill a shopping cart.

Scot:
[51:56] Robotic shopping carts.

Jason:
[51:57] Birds that follow you around so you don't have to push your own shopping card and use but items in the the autonomous vehicle that's chasing you around the store,
a lot of robots.
Mostly feel like super expensive kind of Ivy bells and whistles right now like some of the the warehouse automation is like,
super effective in high Roi for for high-volume warehouses but a lot of the stuff I think is,
interesting but not something we should expect to see in high-volume in stores in the near future.

Scot:
[52:31] That reminded me I kept seeing this video at CS of the Sluggers that would follow you around and then the video it literally runs into 4 people.

Jason:
[52:44] They tell you you can't bring on the plane.
If your luggage has a battery in it you have to take the battery out of your luggage so if you're,
luggage is also a Killer attack robot it seems like there's going to be some interesting, conversations with the FAA.

Scot:
[53:01] But yeah.

Jason:
[53:01] But yeah there's a lot of robot to CES like in terms of density robot,
he's probably even more robots at interrupt this year so the robot guys are here in full strength there's a.

Scot:
[53:16] Money is gravitating around.

Jason:
[53:17] Is gravitating around the problem of apparel returns so a big reason people return a pair.

Scot:
[53:22] Apparel is.

Jason:
[53:24] Is because it doesn't fit,
and tell you that they bought two sizes and returned one or they bought it expecting it to fit and they didn't so there's a bunch of companies that are using your smartphone to try to take measurements.
Help you pick the right size the first time there's a bunch of companies that are having you upload your image in your measurements so that you can be busy.

Scot:
[53:47] You can visualize the clothes.

Jason:
[53:48] You can visualize the clothes on your exact body type,
stuff like that that is a big Trend this year a lot of hardware and software around optimizing Logistics and reverse Logistics so vendors thinking about how to optimize returns,
a ton of digital in-store in digital shelf stuff,
so I every year say oh this is going to be the year of digital fact tags and so far I've mostly been wrong I'm doubling down yet again I think there's more reasons that digital fact tags will take off this year and little boys at Amazon,
is using them now and it's like I could open a bunch more stores where them in Sam's Club is using them in Walmart is piloting I'm in Best Buy's piloting on the streets trying to see some real traction from,
retailers that other retailers are likely to follow and the technology is getting better.

Scot:
[54:43] But there's a lot of other.

Jason:
[54:44] Digital shelf technology Kroger has developed a digital shelf that can run Co-op ads on the Shelf Edge until you think about what a big advertising platform Amazon is becoming,
has a lot of.
But in the store so they're trying to monetize that traffic by creating opportunities to run ads next to the real-time products so those kinds of digital shells or super interesting,
the same train we saw a video analytics at CES we definitely see here that all the traffic meter guys but there's a lot of other use cases now for,
analyzing video streams to do various things in the store and not so much on the show floor but in a lot of the content I was able to capture one of the big themes that's emerging this year that I really agree with is that one of.
Challenges we have in Commerce is an erosion of trust between the retailer and the consumer or the brand in the consumer,
I feel like,
yeah with all the negative Facebook press and you know the the never ending stream of breeches like there's a lot of reason to really be worried about,
the level of trust you've earned with your consumers and a lot of reason to believe that that's that's a limiting to your Market opportunity so I'm not sure anyone had the Magic Bullet for,
learning that trust back or retaining that trust.

Scot:
[56:09] I like the fact of.

Jason:
[56:10] People are starting to have a conversation about explicitly trying to solve the the trust game.

Scot:
[56:17] Call any us some good thematic stuff anything specific to specific retailers on the content side.
So I think you were at the big Gala and it seems like a lot of the winners of that Gala event or digital native Oracle Branson Center.

Jason:
[56:34] Has this sort of their Hall of Fame that they called the list and every year about 20 people get inducted on to this list,
and they're like influencers and power Brokers and innovators and disruptors that these different categories and you know most of those almost all of those awards are targeted at retailers and so on the past you have,
you know the CEO of Nike winter the CEO,
Macy's are you know all these these these sort of traditional retailers in this year the overwhelming majority of retailers that won an award where,
small are digital native Brands the two batters of Warby Parker where the power Brokers and the women from a way you know was a disruptor inside,
it felt like a huge transition from the the traditional Legacy retailers to the the digitally native Brands which is coming.
And then a bunch of the retards give key notes to be honest like it's mostly not that interesting to attend the key notes from the CEO of all these retailers because.
The job not to share secrets and you don't get elevated to that level of seniority unless you're really good,
that kind of Public Communication and so.

Scot:
[57:55] Kind of Public Communication and so.

Jason:
[57:58] Mostly commercials you know focused on Public Information and it doesn't feel like there's a lot of like secret new inside or advice or learnings that get shared by the CEOs of these kind of events,
I might be cynical.

Scot:
[58:12] Yes of the one-piece Contin I saw was a professor Galway or Galloway,
yeah I wanted like jump off a cliff. After that it was like super depressing.

Jason:
[58:21] I feel like he made you sit with.

Scot:
[58:22] Grab the Grim Reaper so everything is terrible and we're all going to die so thanks for that.

Jason:
[58:28] It's up here is not a retail apocalypse guy I think he felt like our government and our society was going to collapse.

Scot:
[58:33] But other than that retails going to be great.

Jason:
[58:38] Better-than-expected year.

Scot:
[58:40] Wow wow the whole society Falls.

Jason:
[58:44] Exactly what we'll try to find you some some Beverages and help you help you start feeling better about your future and that is a.
A place to use it cuz we have used up our a lot of time as a reminder of anything came up on the show you want to discuss further or you have any questions for us we encourage you to go to Facebook and will continue the conversation there as always the biggest,
appreciation you can give to us is to jump on the iTunes and give us that five star review I know there's still a few listeners that listen to the show every week that haven't made the truck over to iTunes and now would be a terrific time to do it.

Scot:
[59:24] Yeah thanks for joining us everyone and we will be back with the some more news from an RF later this week.

Jason:
[59:30] And until next time happy commercing.

Jan 9, 2019

EP159 - 2019 Predictions and 2018 Recap

Our annual predictions episode for 2019 and a recap of our 2018 predictions.

2018 Recap - Predictions made on episode 112

Scot

  1. Mallageddon 2.0 - We saw 7000 stores close in 2017, I think this accelerates in 2018 as the 30-40% of weak malls fail  closures. YES
  2. Amazon will NOT buy another offline retailer, triples down on private label. YES
  3. Amazon will squarely get in the last mile business in 2018 and compete with FedEx and UPS. NO
  4. Amazon’s ad group will get so large that they have to break out details about it and everyone will be shocked at how large it has gotten so quickly YES
  5. Walmart will make a big M+A - top candidates would be Instacart, postmates and eBay. YES
  6. Somebody acquires Magento, or they go public. YES

5/6

Bonus - Amazon comes out with Alexa powered wireless earbuds - because I want them. NO

Jason

  1. Grocery gets disrupted by digital (led by curbside pickup).  Digital grocery doubles in US, at least one delivery firm peters out.YES
  2. Drug gets disrupted by digital. NO
  3. AI Gap - biggest trend of 2018 NO
  4. Voice - Huge but not for commerce. YES
  5. Payments - Retail digital wallets die (except Starbucks/Walmart/Amazon).  Bitcoin tanks. YES

3/5

Bonus - Amazon launches a wearable. NO . 

Scot crushes Jason!

2019 Predictions

Scot

  1. At least 5k more store closures in 2019 
  2. Amazon - Prof Galloway is big on Amazon having to create a AWS spinoff and has moderated that to tracking stock. I’m going to predict Amazon doesn’t do either of those things. But this WILL be the year they break ads out.
  3. eBay/Alibaba - I think this is the year when the both need to do something big and the stars are aligning for a combination there. 
  4.  Shopify gets acquired by one of the big ad-based companies (facebook/google most likely) 
  5. Walmart stumbles in e-commerce

Jason

  1. Amazon store count exceeds 1000 stores
  2. Walmart buys a last mile firm 
  3. Another big  bankruptcy (going to be a tougher than expected year, JCP, category killers Office, BBBY, Neiman)
  4. Mobile commerce revenue passes Desktop - Aided by PWA’s, and payment API’s we see mobile gap narrow
  5. Fads (Voice Commerce, Customer facing AI, SocialCommerce, VR BlockChain)

Bonus: Amazon breaks out Prime revenue.  

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

Episode 159 of the Jason & Scot show was recorded on Sunday, January 6th, 2019.

www.jasonandscot.com

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 159 being recorded on Sunday January 6th 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:39] Hey Jason and welcome back and happy New Year Jason Scott show listeners Jason am I mistaken or is that some new music we have there at the beginning.

Jason:
[0:48] Yeah yeah due to overwhelming listener feedback that I finally updated the
the intro to the show it is the same song and the the same announcer but
you know you and I both both had some career accomplishments in that in the last year until now there are titles are updated and it's you know just kind of refreshed for the year.

Scot:
[1:13] Yeah and you how is the new gig going for anyone that missed for smashing on you if you missed any of our last couple episodes but Jason has a new gig will see if I can remember this Chief Grand Superior
digital retail Commerce officer is that the right now.

Jason:
[1:31] The for the second time in a row you nailed it exactly right.

Scot:
[1:35] Awesome my dad sometimes I drop a word in there but I think I got them all.

Jason:
[1:38] Yep and impacted cuz you mark that title so much in the last episode I had a ton of a client with legitimately fancy titles all making fun of me for the for the entire break so thanks very much for that Scott.

Scot:
[1:52] Awesome it's maybe that will be everyone's New Year's resolution is to give Jason a hard time about his awesome new title.

Jason:
[1:58] For for sure.

Scot:
[2:00] Coldwell we're post holidays here I think everyone's probably on the edge of their seat did you get any cool new gadgets.

Jason:
[2:12] Ya always tough.
Like in general there's an extremely narrow gap between my desires and fulfillment in so.
Like if I got some new gadgets for Christmas it's most likely because a new Gadget came out right before Christmas so I will say I did some refresh is I finally got the.
The iPad Pro the 10.5% sync you also have I haven't unbent version I've been pretty.
Pretty happy with that and because because of the new job I had to trade out laptops and so now I have finally have a in all USB C.
Ecosystem with the iPad and the the the laptop so I've getting those new gadgets of course cost me thousands of dollars in new adapters and cables in.
And all angles but I guess the one minor little toy I got is a new.
A video camera well I got a couple new vision cameras so I got the DJI osmo pocket.

Scot:
[3:24] Nice.

Jason:
[3:25] This is a tiny as in fits like in the palm of your hand you could you could hide it in your hand video camera with a a fully-functioning gimbal so it's,
pretty cool to have some some.
Funny pictures I'm looking forward to taking nap to the several upcoming trade shows that will probably talk about in a minute so that has been cool and I did a little earlier than Christmas get the new Nikon.
Mirrorless camera system so a Nikon Zed 6 if you're from your upper or a Z6 if you're in the US.

Scot:
[4:01] Cool house that is the mirror listen can you tell the difference.

Jason:
[4:05] Yet yet so Nikon has always had a great reputation for digital still cameras and great
image quality in low-light capability in the color rendering they've been extraordinary really horrible at video.
And I'm assuming I actually need a camera that's.
Okay it Stills and also very good at video so the fact that I've always own Nikon cameras and have Nikon lenses have been.
A constant pain point for me because my car's been so far behind on video and so there's some the mirrorless cameras in general are much better at video and this this.
Nikon's first mirrorless full-frame camera.
Really does a pretty good weed frog for video capabilities in a lot of ways so it's it's definitely the best.
Video stills camera I've ever owned.

Scot:
[5:01] Koba I know you're off to CES next week and we will have a lot more gadget news for us then you and I are both at the NRF Big Show so maybe we'll shoot some video do a live streaming or something fun like that.

Jason:
[5:12] I will bring all those gadgets why be using them to photograph any cool new gadgets that you got for the holiday stuff.

Scot:
[5:19] I I said William like you where I think I probably had caught up on my gadgets before the holiday suit so nothing new for me.
Oh yeah yeah I do think did you get the keyboard case on your iPad I really enjoyed that.

Jason:
[5:35] Yeah I did I've enjoyed that it's been it's my first iPad with a pencil so that has been it's been cool yeah.
Not permanently I I will concede to have misplaced it but it it does reemerged.

Scot:
[5:51] That an airpods have this weird like they want to get lots of gaple somehow his program them to is a margin enhancer to get lost as quickly as they possibly can.

Jason:
[6:02] I'm afraid to even talk about that because my my wife is so much more responsible than me and she's on like her her like 4th or 5th pair and I am still in my originals through some some like and Candy miracle.

Scot:
[6:15] Goodwill as is our tradition here on the Jason Scott show every year we kick off the new year with a recap of what happened in the last year
and then we have our predictions so the predictions are twofold last year about 365 days ago we made a bunch of predictions
couldn't remember so it's kind of fun to go back and look at those are super geeky and want to go back that was episode 112.
It's a method that means we did 47 shows last year so that's 47 hours roughly of Jason Scott if you if you have a week to burn if you have mono or something like that that you want to recover from and you need something to put you to sleep for 47 hours a week we have your cure
so we will be breaking the show into three pieces for going to do kind of a good bad ugly of 2018
and then we can go into recapping our predictions and squirm and then from 2018 and then we're going to put out some 2019 predictions so I think what you'll see from the 28th
predictions is we're actually pretty good pretty good at this thing after how long you been at this 3 for years now I think we're getting pretty good on the prediction game.

Jason:
[7:34] That's easier for you to say than it is for me to say this year but sure.

Scot:
[7:39] Without further delay let's jump into The Good the Bad and the Ugly Jason what order a couple of your goods from 2018.

Jason:
[7:46] Yep so I was really excited to see some of the new physical store Concepts and the very end of the year you know Nike open at House of innovation we talked about that in the last show
that's super exciting to me I think some of the Amazon Concepts like go and 4-star are are super interesting there's a lot of new
physical Marketplace Concepts like we've had beta on the show I've mentioned show failed before and then a lot of these mobile-first stores like the Sam's Club now so I think,
the you know we're really starting to see digital Impact Physical stores and drive new store Concepts which is awesome.

[8:24] On the platform front I was excited to see Adobe make the big investment in Magento in an e-commerce platform.
In many ways I feel like the the commercial platform space in the Enterprise platform space in particular that I play in is kind of.
In the worst spot it's been in in 10 years in terms of.
You don't really meeting the needs of retailers and clients and there's always been this this conflict between CMS systems that people like Adobe make and commerce platforms that people like.
IBM sap in Oracle make in so I'm very optimistic that adobe who who is dominating the CMAs.
Essbase then making a significant investment investment in e-commerce you know really could be the way forward for 4.
A lot of new new retailers in in Commerce entities that need an enterprise-class system.
And I say this with the one caveat Magento as it is is not the solution.

[9:33] Adobe's willingness to invest in Magento 2 me is historically a Dobby is always been a.
And aggressive acquire that acquired a bunch of stuff and you know it often takes them several years to really integrate the stuff so I'm not expecting Miracles this year per se but in the long run feels like.
Adobe deciding that Commerce is an important part of the stack is super exciting and then my my last good for the year.
Is kind of specific it was Walmart's investment in Flipkart in the reason I think that is good I think it is super smart for.
From Walmart to be aggressively fighting for digital in in the super important Emerging Market in India.
Some things happened late last year that make those Investments actually look a little softer is as a Indian regulation on foreign Commerce is has gotten more challenging but the reason I just think it's good overall is.
I feel like that investment that huge investment in digital for Walmart you know his is the most.

[10:38] Tangible physical manifestation of Walmart's absolute recognition that.
Digital is the way forward in the day you know that they have to compete with the Amazon than alibaba's of the world and can't can't abdicate any of that Digital Ground And so seeing them them fight for for that that
intellectual property you know I think is a encouraging sign for all of us in the future what about you what would it were you excited about last year Scott.

Scot:
[11:07] Well I'm always the guy that gets to say it wouldn't be the Jason Scott show without Amazon and Sonos surprised they're my good is crying it out with Amazon so
I thought was really interesting than Amazon you mentioned a little bit but they really expanded their store footprint so they had acquired Whole Foods back and 17 which obviously is a big splash into offline
and they never really expanded Whole Food stores I mean
2018 was a year of kind of adjusting that that acquisition they announce now they're going to start opening more here in 2019 so that's going to be interesting to see
I think the surprise for me in an impossible one was done to go experiments and
then just kind of really ramping that up pretty quickly you know I think they built another for 5 is that many more on the way there's rumors of wars and then
you're the one thing as I travel around not nearly as much as you but going to various malls and things
I would say pretty much every a mall in the US seems to have an Amazon pop-up store and
I think about all those people I don't know how many that is it's how many of these are out there but I think if we looked at.

[12:23] Your class A malls I think there be three or four hundred of them so I wouldn't be surprised if there was three or four hundred pretty substantial Amazon pop-ups out there so it's I think that's pretty interesting and really is a testament to the Amazon.

[12:38] You're expanding into kind of omni-channel world and get their products in front of more people.

[12:43] I'm done once asked on the front end of Amazon the back end of Amazon that was really interesting this year was what I would call it start a frenetic expansion of.
Delivery capabilities some of this is last mile so they acquire twenty thousand of these Mercedes Sprinter vans I'd be surprised if any listener at least the United States hasn't seen one of these I see you to a date at this point in my area.

[13:09] And they built a 1099 Network a very clever way kind of taking a page out of FedEx Grounds Playbook where they were actually kind of
put you in the business guarantee you rub you and routes and then boom you're off and running so I think they got those 20,000 sprinters out there delivering packages and something like
six months which is just pretty crazy about a lot of soccer capabilities so if you're a third-party now you can use Amazon soccer in your phone at Center
and almost be like little extension of FBA
Whole Foods we saw them can I ditch instacart and then layer and their their 1099 other 1099 network of Flex for that they've added a ton more jets that got to where are hubs coming and I attractive
distribution centers pretty closely
so in the USA in 2018 they added 46 more performance center assets and then another 23 in the rest of the world for a total of about 70
I am all in that's an additional 11 million square feet of space that came on line in 2018 and then that adds to the existing 850 or so globally and 250 million square feet so,
so it's a lot of people that I always
talk to you that the baby not in the industry but on the cusp there always surprise I'll say what how many how many from home as soon as you think Amazon has versus Walmart but they both have 10 and the number I think that's about right with Walmart but Amazon has.

[14:34] Tremendous amount of assets they built so it matters it's Amazon a so far ahead of anyone it is going to be interesting to see there.
My last surprise was becoming I think the economy did really well last year even the last
reported as of December on the job side was really really strong so that we're seeing a strong economy you know as the Fed
kind of Titans interest rates in the stock market with a lot of shakiness there but underlying economy.

[15:09] Then let's put it in the battle I'll start those so I think the bad was I was so surprised about how kind of negative to Amazon hq2 process turned out,
kind of ended in a in a thud you know it wasn't like this kind of I guess unless you're one of the two cities I think they're.
Pretty excited but even then there's a lot of protesting going on in the DC New York area that Amazon's coming and then it got these really big incentives so
yeah I think that's going to be interesting to watch and see what happens as Amazon is so large now that they can't just fly under the radar and I think they managed the back of that process kind of weirdly
not where it seems like everyone that are decided and then and then it's kind of pain a conspiracy theory if you believe that they were just Gathering data from people
what I'm concerned about a little bit you and I emailed about this just recently I kind of put it in the bad category in this is holiday 2018.
I'm so Adobe came out a couple days ago what their final report they said the holiday came in at 14%.
That's e-commerce so Little Debbie disappointing if that's true then you send me some data that showed MasterCard said all in 5.1
I guess you know this better than I do dinner or else was right around there and set right would that be kind of a win or a loss of your.

Jason:
[16:30] Yet so for all of retail that's that that's probably a win it's a little better than the recent historical averages but I think the.
That does averages hide the fact that you know it just was not equal 4 for all retailers and inside I definitely think there are winners and losers.

Scot:
[16:54] Yeah unfortunately don't think we'll know until Amazon reports there they're kind of the Bellwether I look at and you know,
Indus. Where they would have pre-announced if they had missed so they haven't said anything unfortunately Apple did pronounce look like they had a really rough calendar Q4 I believe it's there there
theraphysical q1i which is always confusing what companies do it that way
but that seems to be isolated to China with some of the tariffs and things in the Chinese economy that that I don't think we'll
Amazon has as much exposure to just really interesting to see where holiday 18 and zup and I think we'll know what covered on the show as we always do I think we'll know
by that first week in February however all the all the leaves fell and and what happened.

Jason:
[17:41] Yeah I'm looking forward to seeing how that all plays out so some of my bads.
Didn't get a ton of Buzz last year but I've been pretty disappointed in the outcome of the Supreme Court ruling regarding a internet sales tax and so you know,
basically the Supreme Court rule made a ruling in favor of a state that was suing to collect sales tax on.
An internet sales in Oxy like I'm okay with.
People having to pay sales tax for other online purchases I'm I actually think in general rather be Universal pricing and in.
You know you buy from the same retail online or in the store you want to see the same price and and that's a lot to be taxed in a similar way the reason I say that the ruling was bad is.
Because a bunch of the ramifications of the way this particular ruling plays out it just creates a lot of uncertainty in friction in the e-commerce space and so.
Which states you actually need to collect sales tax in which they tax you definitely don't need to collect sales tax in and which states.
You may or may not get sued by a state if you don't collect sales tax in right now is kind of.

[19:02] Thrown up in the air and it creates a lot of inconsistency and just a lot of.
A sort of effort and friction that isn't helping anyone and so I feel like there was opportunity for for Congress to solve this problem before dumping in the lap of the Supreme Court's and.
You know maybe that was overly optimistic so didn't happen until we're going to have to let this play out for now a number of years and.
Just like the unfortunate the other sort of bad one to me this year is we had some kind of ugly CEO exit so you know what we forgot about that this far end up but we had.
You know the very ugly exit at Lululemon.

[19:44] Early in the year I want to see February he was he was the CEO and chairman and got kind of forced out and he's now been.
In an irritant for them on an ongoing basis you know Mickey Drexler was.
Lasted less than a year of J.Crew and you know maybe not CEO of all but you know I see you judge executive term for some bad reasons it Nike.
And so you know that certainly to me as one of the the the bad blemishes on on 2018 from a Commerce perspective.

[20:19] And then my my ugly if we give it to the the really bad stuff for 2018 I just think it what I mean you're always going to have churning in retail stores are always going to have,
bankruptcies Doug mcmillon famous what he carries around this west of the top 10.

[20:36] Can retailers from my 1980 and there aren't a lot of those names that are that are still in business today so bankruptcies are in a shock but I feel like.
2018 hits is particularly hard with Toys R Us and Sears and then you know below them you had all these other guys David's Bridal Mattress Firm Brookstone Nine West Claire's Gymboree bonds.
Etc and so you know as a lover of Commerce and Retail and sorry to see some of those stories brands.

[21:07] You don't go away or get greatly diminished so that's only felt ugly and then right towards the end of the year,
we had a IBM sell their big Enterprise e-commerce platform Webster Commerce to US service provider HCL,
that to me is a probably super ugly for IBM clients that are relying on that platform and.
You know now it's fragmented from the rest of the IBM stacked and there's going to be a bunch of challenges there there's a bunch of clients that own the or just moving to the.
The cloud version of Webster Commerce which they didn't sell so that seems ugly I just feel like the the Enterprise Commerce platform space.
In general is in a bad space and it's most manifested by by IBM which was you know one of the top three platforms are arguably the top platform getting kind of dumped by IBM this year.

Scot:
[22:08] Call yeah I'm going to plus one or as my kids would say retweet on the bankruptcies that tear you when was painfully know is that it is a kid that grew up
Star Wars fan I spent many a midnight madness so you know.
Jedi Friday or whatever the column hanging out in t r u so that was disappointing then you.
Add insult to injury one of the shopping center if we go to a lot had a combined Tru Babies R Us like a huge one it just sitting there empty for the last last three or four months is kind of sad.
Yeah I kind of say you know in this top of the mall Denton,
so interesting stat here that came out towards the end of the year.
I mentioned it, he did pretty well but malls were there emptiest in six years from a tenancy standpoint no foot traffic is also down at malls this company RI sorry is I had a report that said that they're at an 8.6% vacancy.

[23:05] Again that's the highest it's been in 6 years and that represents 4 million square foot is the most available square footage in malls and then strip malls have been hit
chick really bad because you know I think Toys R Us is really kind of one of those strip-mall type stores that
it was an anchor for a lot of strip malls and and as we see in the enclosed malls when she loosened his anchors you get up into this death spiral kind of situation so
I would also Echo that on the ugly side
cool so so that was kind of the what was sawed in 2018 let's put it to our predictions in and see if how Clairvoyant we were on condos so I went back to Good Ol episode 112 and service predictions I'll go to mine and then you go to yours and then what kind of see how he did
sue her quickly I had five predictions and a bonus so number one Mulligan 2.0
in 2017 we saw 7,000 stores closed and I said it's going to accelerate into 2018.

[24:05] I ended up with 9,000 closures then my second prediction was that Amazon will not buy another retailer
this doesn't seem like people may think well why would you say that it's kind of obvious but back then we were on the heels of the Whole Foods acquisition in a lot of Wall Street analyst for like issuing those reports you know Costco's Definitely Maybe the next company know it's Nordstrom's know its Target so that's that was kind of the backdrop.
Predictions is really say these guys are off base I just don't think Amazon's could do anything big again in 2018,
in the corollary to that was that they would instead of doing that they would triple down on private label.

[24:44] Third prediction I ripped my prediction on Amazon Logistics they would be competing more squarely with FedEx ups and then number for this one turned out,
pretty good I said Walmart will make
big m&a instacart Postmates and eBay so, playing on Marketplace and last-mile their number 5 and said somebody would acquire magenta or they would go.
And then my bonus was the Amazon would come out with Alexa powered,
your butt's so I mentioned airpods the topless show I love my airpods but I am not a huge Siri fan and I everyday I wish Alexa what would hang out on my airpods instead of Siri so that was the Genesis of that production Warrior 2018 predictions.

Jason:
[25:30] Yep so I also had five in the bonus the first one was the grocery would get heavily disrupted by digital I think I called out specifically that would be wed by curbside pickup.
Number two was the drug would get the heavily disrupted by digital,
number three I said the biggest train would be talking about in 2018 was what I called that AI gap which was kind of,
the difference between the big players that could take full advantage of AI in the smaller players that couldn't necessarily afford to do it as quickly,
predictions for was voice I said it's going to continue to be huge and grow quickly but not for Commerce.
And then my V prediction was mobile payments was digital wallets I said a bunch of them with. I said Starbucks Walmart and Amazon when continue to thrive but a bunch of the other ones women's and,
snarky side note I mentioned that I expected Bitcoin to tank and then my bonus was.
Close to the same as yours I I said that I thought the Amazon would come out with a wearable in 28.

Scot:
[26:42] What did you what you mean by Rebel.

Jason:
[26:45] Army night.
Your paws were the most likely scenario but I just felt like they would find some way to get Alexa on on your body and especially because they lack the phone that seems like.
You don't like it could be some kind of widget that you you clip to your clothing or or carry with you but but or I wear something like that but I guess my biggest expectation was that it would be your pot.
And we will talk about the results of that moment early but I want to start off by breaking down how well you did
so now that we reminded everyone what we thought 2018 would look like in the beginning of 2018 let's see how we actually did so your first prediction was the store Mulligan what do you think.

Scot:
[27:38] Yeah I'm going to because I put a specific number in there of 9,000 I I I missed that one turns out it took me a while to find the state looks like there was 6235 closures
in hindsight what I should have done and there's no good data set for this is looked at the square footage of so you know when
I don't know when a mattress firm closes that's different than a Sears or JCPenney are Toys R Us closing right
is this really the square footage we care about so I would argue I would throw myself at the feet of the judges and say look at miss the number of stores but I think if you look at kind of what did clothes and yours juices
rundown of store closures in 2018 Toys R Us 735,
Walgreens 600 n Taylor Loft Dress Barn 500 Teavana 379 Best Buy 250 Mattress Firm 200 Gap
200 Children's Place 144 Footlocker 110 Kmart 109 Gymboree 102 and then let's goes It goes from there another kind of big square footage when Sam's Club 63 how big is a Sam's Club like two hundred thousand.

Jason:
[28:49] 100 weeks but yeah.

Scot:
[28:50] Honored yet so there's enough so it's all right I think if we looked as square footage I bet and I don't have a source for this unfortunately I have heard that the there was way more square footage in 2018 so.
Who does if you want to hold it till I rely on the stop.

Jason:
[29:08] Yeah I'm actually giving you that one because I would,
went out do I call the sources we do have the track store closures none of them claim or try to be comprehensive so they're they're tracking stores in a particular category or that made a particular criteria and saying they close that many but none of them for example are trying to keep track of.
Potentially how many mom-and-pop closed or those sorts of things and even there are a couple of sources of square footage in your right the square footage is more dramatic because we had closure is it a lot of big stores but even the square footage tend to be like.
People that are attacking mob a square footage in what the closures are so I just I don't think there is a definitive number but I think the spirit of your prediction came to pass and I think was the.
The biggest shrinkage of a store for stores in in recent memory.

Scot:
[29:59] Colton so we'll call that one in the sky cam.

Jason:
[30:05]