Info

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.
RSS Feed Subscribe in Apple Podcasts
The Jason & Scot Show - E-Commerce And Retail News
2017
November
October
September
August
July
June
May
April
March
February
January


2016
December
November
October
September
August
July
June
May
April
March
February
January


2015
December
November


All Episodes
Archives
Now displaying: August, 2017
Aug 30, 2017

EP098 - Zola CEO/Co-Founder Shan-Lyn Ma

An interview with Shan Lyn Ma (@shanlynm), CEO and Co-Founder of Zola. Zola is re-inventing the Wedding Registry for the modern couple.

In this episode we discuss Shan Lyn's previous experience including Yahoo and Gilt Group.  As well as Zola's business model and potential growth opportunities.

Shan mentioned a recent article written by Zola investor, Alex Taussig (@ataussig) of Lightspeed: Finding product/channel fit at Zola.

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

Episode 98 of the Jason & Scot show was recorded on Tuesday, August 22nd 2017.

http://jasonandscot.com

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

New beta feature - Google Automated Transcription of the show:

Transcript

Jason: 
[0:25] Welcome to the Jason and Scott show this is episode 98 being recorded on Tuesday August 22nd 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot: 
[0:40] Hey Jason welcome back Jason Scott show listeners Jason the day after the eclipse did you get to see the clips at all.

Jason: 
[0:47] No tragically I was on the airplane and I was sitting next to a pilot that was Dead Heading and I asked him if there was any chance we were going to see the eclipse and he told me that they would have to bank upwards about 45 degrees which seemed unlikely.

Scot: 
[1:02] Yeah but opted out of that the clips here in review of it and it was a lot of fun pretty exciting to have midday Darkness.

Jason: 
[1:14] Where you at I'm imagining you're one of the special people that had ordered a glasses well in advance and so you had them.

Scot: 
[1:21] That is correct yes and I were them and I didn't wear them more than 3 minutes I followed all the rules and as a result I have good Vision still so I'm excited to report that everybody.

Jason: 
[1:31] I am I'm very happy to hear that I was a failure in my family I ordered them a month in advance and they arrive so early that I lost them before the eclipse came.

Scot: 
[1:39] Epic fail.
Well you know summer is winding down here at the Jason is got show and we're heading into the fall so we are going to ram back up the interviews of e-commerce movers and shakers and tonight we have a special treat for listeners,
please join me in welcoming shan-lyn ma she is the CEO and co-founder of Zola welcome sham.
Thank you very happy to be talking to you both.

Jason: 
[2:08] We are happy to be talked to.
Sham what is a regular listener the show your pray for me or this but we always like to get things started off by.
Having our guests tell us a little bit about their background and how they came into their current roles and in in your case you have a very story e-commerce Paso can you share your background with her listeners.

Scot and Shan: 
[2:33] Shaw so I was mentioning to you earlier that I am a fan of this podcast particular because I am also an e-commerce nerd and,
that has come from what can you Nokomis at particular over the last 9 years in New York,
and.
I moved to New York from Silicon Valley to take a job at what was at that time a very small startup that had just launched cold Gill group,
that was 2008 join Guild as the first product person and it had just launched and so.
Joint when it was about 30 people about 7 million in Revenue a time and.
Was tasked with redoing what does gilt.com look like both,
from the front-facing user experience as well as what we want it to be out over the the longer term of the next they wanted to use as the business. To add new categories like,
Harmon's kids and what would eventually be added on would be things like,
Gilt City and experiences and travel and Bowl.
Ended up staying at guiltful for years which was a fantastic full use of very intense learning during that time I got to be the product lead on a lot of the new business lunches go to launch the mobile.

[4:07] And and then go to pitch in launch my own business unit within guilt which was a gourmet food and wine,
business that we called guilt taste and so then at that point really in,
my 32nd transitioned out of a product management role into more of a GM Mini CEO within a bigger startup kind of role.
Salina great deal there about all the functions outside of just product development.
At the end of four years guilt had grown from.

[4:43] Initial 30 people to be over thousand employees and at that time was probably around six hundred million in revenue and so really got a great sense of.
What's.
What would really write to see that Revenue growth so quickly and then what was some of the challenges that that business faced as it tried to.
Move towards profitability and an obviously following the company closely after that got to see a bit of perhaps you know what.
Mites that company what might we have done differently that.
Might have could have avoided some of the decline that it had in more recent years and so often I.
Wanted to do this. Up Jenny all over again and move to become Chief product officer of another New York consumer.
Text Atif cold Chloe & Isabel which is social selling and Jewellery.
Company start up and after being in that role for a relatively short amount of time realize that you while I had been putting off what I always wanted to do which was stopped something.

[6:02] Based on your kind of idea or number of ideas that I had I thought I could not delay any longer and.

[6:12] Decided to stop Zola with micro fountas and that you was 2013.
Which also happened to be the end of all my friends got married at around the same time and I was,
buying a lot of wedding presents for them from the different wedding registry sites online and was thinking you know.
I am surprised that these.
E-commerce experiences which is why the wedding registry really is I'm surprised that they're no better than than what I was saying online and was starting to talk to Nobu microfindr about.
Frustrations that I had as a gift give up shopping from their Registries and we started to think about how would we do it differently if we would have create a wedding registry from scratch and that was.
When we came up with Zola and and toes all was born and that was four years ago.

Jason: 
[7:08] Very cool I feel like that is a common story is that you no germ of a great startup idea being born out of need the only sad thing is if you would have recognized the need of your early are you could have sold it to all your friends.

Scot and Shan: 
[7:20] Exactly yes I am I'm often,
sad that now the precise time that I love to go to weddings is actually the time that I am no longer invited to living since most of my friends get married have already been married,
but every time I meet someone that is not married I secretly hoping they will at some point get engaged and invite me to their wedding which is user research essentially.

Jason: 
[7:48] Night yeah that's in fact I assume the gift you give are write-offs.

Scot and Shan: 
[7:54] I wish that is not the case however you're in combination with that when I should say is that I,
my my the quality of gifts that I give to people now is so much better now that I know the data around what makes a good wedding gift what is the average price point of a wedding gift this is all,
information I wish I had before 2013.

Jason: 
[8:21] And I should throw in usual disclaimer I have no Financial background and I'm not qualified to give tax advice to anyone listening.

[8:30] The.
You know you mentioned your experience guilt from kind of 30 employees through through a thousand and I think most listeners are probably familiar with the story of guilt but one thing that I feel like gets lost is,
that that gill really built a.
A fabulous e-commerce team and that Talent has spread throughout the industry are in an are in a lot of interesting position so you remember the pretty cool Alumni network in the e-commerce space.

Scot and Shan: 
[9:00] But I think that is one of the most exciting things that I've seen change in at least the New York,
technology ecosystem since I moved to New York in 2008,
when I moved here in 2008 I was new to the city and so I was looking for other product people like myself to come talk about ideas and best practices in the city and.
It was hard for me to find other people in that same role I found a few but,
you can compare that to today if you are trying to do that same activity there is,
hundreds and thousands of people that could probably find that so many meetups that are all stalking new startups and from the people that you meet that so it's it is.
It's changed since I've got started but.
Also when we look at the companies that have come out of Gil group alumni at last count there were around 20.
Startups that was founded by people that had previously worked a guilt and and said that alone even in the short few years that,
that's been possible to do is a pretty big impact,
Graco the PayPal guys call themselves The PayPal Mafia I don't know if they call themselves that but have you guys call yourselves like in.
Gilts Gilder you have a clever name for that is prettier.

Jason: 
[10:37] My money is on the guilty.

Scot and Shan: 
[10:39] Guilty.
We could we could just turn the show into Gill tons guilty as charged hello alright so Zola is,
in the wedding space 04 listeners that aren't familiar that tell us a little bit about the wedding space and and what's exciting.
To you about that space Zola is.
The fastest growing wedding registry around and we started as a wedding registry because we really wanted to solve this one particular.
Pain point that I described of couples getting married wanting to create a wedding registry that,
met the needs that they have today and so couples getting married today all the millennial generation and the the way that then needs a different,
particular relates to wedding registry is threefold so one is they want to register for products and experiences and cash all in the one registry they want.
Registry that is truly personal that they can personalize that reflects who they are at the couple and what they love and similar to the way that they post lies their Facebook page old Instagram and the third,
they want complete control over their registry as it relates to how it shows up at.

[12:10] When that gets a ship to them and they want to control on their mobile devices as well as on their laptops and desktops and so those three things and would not really,
available at all outside.
Zola so that was the starting point for Zola and we lunch with that idea and in the few years that we've been around we've seen it grow extremely quickly.
This past quarter we actually launched of a first new product that.
Speaks outside of the wedding registry which is the product code Zola weddings and what that is is a suite of wedding planning tools that helps couples plan their wedding.

[12:58] On top of their wedding registry so specifically it's a free wedding website guest list manager and checklist and.
Overall what my trying to do here is really helped a couple plan their wedding for the day they get engaged through the fs your marriage through all the different.
Tivities and toss that you have to do as you're planning your dream day.
Coin and I'll take a shot I don't know much about how it works but I'm guessing your business model is effectively,
I'm kind of like an affiliate commission model on the back end where are you you're as as couples kind of say I want to register for this and purchases are made you have a revenue-share kind of model is that how it works or is it more of an ad model.
X
Actually neither of those so the the best way to think about Zola is that we are a hybrid of a Marketplace and an e-commerce business so where am a place in the sense that we have.

[14:01] We work directly with over 500 Brands today and of the 50,000 products so if you look at the Zola store you can register for any of those products and we we partner directly with brands.
Zola in the same way that we pottanat directly with friends when we were in guilt.
The difference and why we have a Marketplace hybrid is that we are not taking inventory so we are in Dropship.
Business model and.
The big shift that has happened in the home industry which is the industry that registry operates within is.
Home Brands really started to transition to enable Dropship capabilities in the last 5 years or so so.
If we try to do Zola much earlier it would have been hard for us to do as a business and hard for us to have.
Best Dropship capability with the number brands that we would need to have within the registry,
and we probably wouldn't have done it if we had to buy all the inventory because with a registry you need a lot of skews and very shallow depth answer that that's the the komaki pre-flight component,
an e-commerce site in the sense that Zola is the merchant we are the retailer we have,
and developed a relationship with our customers which are a couple's we provide all the customer support and everything is captured through the Zola experience insight and so in that sense we.

[15:40] We look and feel like an e-commerce experience.

Jason: 
[15:45] Very cool and one of the things that maybe I just want understand a little bit better like so when I think of a traditional.

[15:51] E-commerce wedding registry it's a single retailer experience so.

[15:57] Like in general I have to decide upfront oh I'm going to register at Crate & Barrel in so I go to Crate and Barrel and I I go through there there specific.

[16:06] Registry experience in there I'm only going to be able to register for products that they sell and certainly not experiences or cash.
Products that they know self.
So you are what I would call a sort of a multi retailer registration through you I can register for a potentially much wider range of products I have that right correct.

Scot and Shan: 
[16:31] Yes and,
and we have all the brands that you might expect to find it any other department store so top registry Brands include things like lecreuset all clad KitchenAid and those are all.
Brands that we have and partner with on Zola and wee wee retail them like any other department store retailer does.

Jason: 
[16:56] Yep and so do your partner's 10 Dobby the product manufacturers as opposed to other retailers is that.

Scot and Shan: 
[17:03] Yes that's right.

Jason: 
[17:05] Got it.

[17:09] So do any of those those brand like so obviously some of those brand cell direct so you mention like la Creuset or All-Clad like they would have their own e-commerce site.
Do any of the manufacturers try to do their own wedding registry or is that just not not common at all.

Scot and Shan: 
[17:28] We don't really see that and I think the reason is because it from the use of perspective,
the use of the couple does not want to create,
ideally more than one register you don't want to set up a registry on Lake say and then registry on Old Clyde and then it registry on KitchenAid because all of a sudden you're sending your gas to light potentially hundreds are different sites so,
you want to do it once and he want everything in the one place it's convenient it's more straightforward for the couple and for the gas which is what the couple also has equally about.

Jason: 
[18:09] That makes total sense but then I saw recently that you had announced a partnership with Bat Country.
That's fascinating cuz you know that you wouldn't think of his the backcountry assortment as the.
The traditional merchandise for wedding registry but I suspect you're going to tell me,
that it's an in high demand in in the new Target demographic but they I think of as a as more of retail out of other people's products so it does that work differently than your than the manufacturers or or.

Scot and Shan: 
[18:44] Yeah so wait.
The way that we decide how we want to add products apartments or retailers to Zola is based on what we think the couple's pull into the registries.
Does m.
Couples can set up their Registries and add products that we already have within the Zola stole but they can also on top of that.
Add any products from any site online anywhere on the internet into the Zola registry as well and.
Similar to the way Pinterest has the pin it button we have the add to Zola button which just pools in that particular product into.
A couple's registry and so that for us as being the best insight into one of the products and Brands and retailers that customers,
once that we don't currently have on solar because they're pulling it in as a from day one we really had that day too driven approach to merchandising where we,
use this.

[19:52] Pull data essentially to inform a merchandising roadmap and the reason we added back country.
Is because we saw a lot of couple.
Registering for outdoor equipment and a wide range of outdoor camping gear.
That we didn't have on Zoll at all until we thought sociable.
If we would Apollo with that country it would allow us to add a lot of different.
Products to the Zola cement very quickly but also that's a brand that we know couples already love it's a retailer that I couples already love and so.

[20:35] Makes sense for them to if we will add it to Zola so that's one another example of a similar partnership we did with a retailer is Michael C Fina which is a New York.
Tabletop retailer that has.
It has a very storied history in New York's upper east side and they had a lot of high-end luxury brand,
tabletop,
that we didn't have on Zola and we did see that was some months for that and so we added that to the side and certainly that has gone very well and full couples that are looking for that really fine China from top brands.

Jason: 
[21:19] Very cool and prisoners every time I dine at Scott's house he always has a fabulous table set with Michael C Fina so that that would probably where he would register.

Scot and Shan: 
[21:30] It's not a great dinner without a great table top iOS actually have Star Wars plates and glasses.
Does that is that fancy.

[21:42] Well getting some Michael thinking that is the place where many children of presidents have registered for their wedding so it's not surprising that you would also have some of that fine china.
Cozy get started in 2013 give us a little idea of traction like gum,
have you raised BCE and and how much and any idea about maybe how many weddings have gone to the platform Registries or anything like that you can share would love to get us fuel for the scale that you're dealing with now,
Shaw soap since we launched we raised over 40 million in VC funding from.

[22:25] Great Venture Capital firms such as Lightspeed Venture partners and Thrive capital and canvas pensions and full Runner to name a few.
At most recently I lost round was the series C round where we raised 25 million,
into fall last you until be announced at that time we have had over 300,000 couples register with Zola and.
Quia multiplying each year.
Yeah it's great having race venture capital I have a lot of respect for folk stuff done that it's it's not easy so congratulations on.
Thank you and I agree this is not easy.
And then so,
you know I know Target Macy's and lot as other guys really promote their registry pretty heavily do they view you guys is a threat or are they happy to partner as long as kind of some of the sales go through their retail platform sword or do you go direct Brands pretty much most the time.
Right now the vast majority of our business is directly through the Brand's and.
What we hear from our brand Partners is that.
Zola is one of the few channels that is growing for them which is reflective of our overall.

[24:00] Very fast growth is a company and we are also deleting M text audible leading startup.
In the Online Registry space so.

[24:14] I think for the audience that is Young professional tech-savvy and working busy does not have a lot of time to.
Think about all the different places they can register but they want a wide range of things on their registry in Zelda has become the go-to place and I think there are the time we will.
Want to see a good reason to partner with more and more.
Retail is like the ones you mentioned and it will be determined by the day that away collecting based on what couples and pulling into their registry.

Jason: 
[24:55] Got it in one thing I do think of most of the traditional like single retail Registries is.

[25:02] A big and ponent I assume the overwhelming majority for most of the Retailer's is is actually in store and you know.

[25:10] I'm assuming you're exclusively digital like is there an omni-channel Ellen into the offering at this point or is it all via e-commerce.

Scot and Shan: 
[25:19] One of the really interesting things about,
the wedding registry is that unlike the rest of the e-commerce world so I think if we look at e-commerce,
total industry online shopping in general it's about between anywhere from 10 to 20% of total purchases online in registry,
80% of registry purchases are online and.
When you think about it logically makes sense because if you are a guest you'll going to a wedding.
What would you prefer to do if you're buying a gift for your friend do you prefer to go into the store.
Awesome to pull up the registry buy it in the store and then leave the store and that's it or would you prefer to do it in a few clicks online so the purchase thing is already online the thing that is.
Sometimes off line is when couples want to set up their registry and they want to see some products in person so.

[26:22] Full. Use case and Zola has,
what we call the Zola townhouse which is essentially a showroom or a concept or an experiment that we have set up in New York where couples can come in person see and touch and feel product that they may want to register fall.
However we do find that the vast majority of our couples.
At the end of the day end up just registering fully online and don't feel the need to come in to see something person it is something we're experimenting with.

Jason: 
[26:54] Got it and is there any um.
I'm almost wondering if there's an omni-channel component component in terms of the gift delivery right like so you mentioned dropships all these manufacturers are probably shipping the goods and in separate boxes of the couple of or some.
Long period of time is going to get boxes.

[27:13] Presumably in most cases they're not going to be wrapped or you know what you like so majun one of the areas or opportunities.

[27:22] For some future experiences to is to figure out the you know how do you recreate that experience of there being a Pyle of beautiful gifts at the wedding or maybe people just don't want that.

Scot and Shan: 
[27:33] No couples do not want that that is that is a.
I miss that that a couple's want that at their wedding so the actually win a Wii with first thinking about is even a good idea for us to start we interviewed many many couples about.
What the wedding planning experience was like what the registry experience was like and what really surprised us was the number one complaint that we heard was,
couples who have been through the registry process and had gotten married with saying when it comes to registry the worst part of it was.
As people were buying gifts from their various departments or Registries gifts would just start turning up at the house and they had no idea what was coming who sent it what's in the box,
if boxes were arriving for them on honeymoon or when they were at work and it was suddenly all the taking,
that lives the stress of having to track all these gifts that they didn't even realize what coming when they were coming and.
After hearing story after Story of this complaint we thought this is something that is easily solved using technology.
The couple should have control over when gifts arrived at home so the thing that we built into Zola from the start and that's.
Is is really the idea that couples can control shipping of their own gifts so we don't send anything to the couple.

[29:10] Until they say they're actually ready to receive it and.

[29:15] That the big difference is that actually couples most couples don't want to receive any gifts until after they've come back from there,
honeymoon they've often waiting until they moving into the new home that they move into,
between 3 to 6 months after the wedding and then they're ready to look at what will be given and what do we actually want to now receive.
So because of this feature which is controlled shipping feature and we have,
very low return rate we have virtually no returns because couples are able to determine if they really want something before it shipped to them and for that reason I'm couples tell difference you Zola because.
Eliminates this stress of getting gifts when you're not ready to receive them.

Jason: 
[30:01] That that makes perfect sense and frankly I don't want them to receive my gift until they've proven that they can at least survive the honeymoon.

Scot and Shan: 
[30:09] Well I've heard all kinds of horror stories of people who and your vote,
I have registered elsewhere and they said they can secretly took back the gifts because they wanted something else but then that.
And whatever registry that when using.
Refunded the person that gave them the gift and then the person was I why did I get a refund for this gift I gave you did it you like it wants to do and then the couple istick embarrassingly like tell the.
Fox we could you give that back to me so it's there's a lot of old Christmas around that that we are really try and we have we have avoided.

Jason: 
[30:49] Yeah and I am sure there that retailer appreciated being used as a gift card.

[30:54] The you mentioned earlier that the the the first expansion product could bend the wedding planning product which them that makes.

[31:04] Great sense I'm curious like so your first expansion is kind of a vertical expansion into the wedding event.

[31:13] And I imagine that the wedding space is a huge opportunity in and of itself is.

[31:20] Is that likely the continued to ejector e of Zola would you keep adding like looking for more wallet share of the wedding or like are there other significant gifting occasions that you could see expanding into like what's the.

[31:33] What what.

Scot and Shan: 
[31:35] Yeah yeah so this to a big expansions that,
that makes sense for us one is right now in the wedding registry space,
even within the us alone that's a 19 billion dollar a year industry so that is a big Market in itself with the lunch and soul the wedding what where,
dipping a toe into is the lodge weddings Market which is an additional 70 billion within the US and so that's an area of expansion for us that's very interesting and very deeply.
Tied to each other so because we now off of tools in.
Wedding planning checklist guest last wedding website and registry overtime it does make sense for us to add more and more based on what the couples are asking us to build for them.
Which we already had many requests.

[32:35] The next big step is then once you come back from your wedding couples are often moving into the new home they often need more things to set up the Newlywed life together and we already have.
Today on the 50,000 products for the home.
So you can imagine because we have a great sense for what will a couple's love in terms of the Brand's the price points that stop references similar to what Stitch fix is done and done in fashion we have.
Awesome Arkham level of intelligence we can utilize for home and because we already have all the skews we can think about how do we.
Move into being the place a couples turn to as they setting up then you home.

[33:24] Awesome if you had do you guys have some machine learning folks there that are starting to kind of look at those this correlations.
I think that's another if I told you I'd have to kill you kind of question however I will say that engineering is on biggest team and soda.
Yes good as an engineer we we appreciate that job job security.
So just to switch gears a little bit when you when you talked about how you guys are different you talked about you know your your couples and how they want that mobile experience what are some of the things you guys have done that the differentiate your mobile experience is it,
is it an app or is it mobile web and in what are some of the things that you do leverage any of the phone's capabilities and interesting ones.
Yeah so this two things that I think you might find interesting so one is we have at this shop the room.
Feature within Al iPad app which I personally love the most out of all the different features because it gives you an immersive beautiful editorial type of room.
Homescape and you can then click on the hot spots and Shop different products that you see now or add to your wedding registry from there so it's not.
Augmented reality in the way that the people think about it today because it's just it's a room that we have shot so it's not your own home yeah.

[35:00] But it is giving it is serving the the user need of inspiration and discovery of new products that is.
That is also shoppable so that is one thing that we've done that's really interesting that's experiment through our iPad up.
The.
The other cool features that is one of talk about that we have in Isola iPhone app it's the registry iPhone app and the feature we have there is cold.
Glenda which is essentially a Tinder for Home Products so it lets you can swipe through one by one.
Selection of products that we have in the Zola stall and if you swipe right you add it to your Zola registry and if you swipe left it dismisses it and you go to the next one,
so what's interesting about this is that it is the most popular feature on any of the Zola apps it is.
It is very highly used a couples love it and it's it's a very frequent activity that we see people using blender to.
Discover new products and add them to the registry which is interesting to me because it's certainly not as.
Immersive and emotional and beautiful as the previously tried just described but it is one that people while they described as fun and entertainment and so.

[36:30] We've learned a lot through that.
I wonder if they're sitting there doing it together or if she she goes and swipe rights on 8 things and he kind of like going to swipe left on these 30 off swipe right on these two other ones,
if it's like a dinner you can almost like that there be in there at you know me there's like a button or hit there and talks to,
potential newlywed therapy.
We do here a lot of brides saying that they are essentially the the manager of the registry so they approve oldest final decisions.

Jason: 
[37:11] So when you said they wanted complete control you meant complete control for the bra.

Scot and Shan: 
[37:15] No no that's not what I meant.

Jason: 
[37:23] I say no more so one of the things is going to be fun as you get to you get this like fascinating insight into how these young couples think like any.
Particular products that surprise you the people register for or any sort of funny funny trends that we we might not expect about how people are registering.

Scot and Shan: 
[37:45] Yeah so the biggest surprise for me was I am.
I did a lot of using interviews before launch and I was always asking what.
What do you do with a bride-to-be want to register full and I hope lot of fried say I don't need them.
Traditional registry items I want.
Cool new experiences to do together and I want cool unknown Brands and products so we did have a lot of those and we didn't have as many of the classic,
make registry items when we first launched Sola and what we very quickly soul.
Which was through this at Isola button that people will pulling into the Registries a lot of the classic registry items that people said they didn't necessarily want so very quickly we can see everyone actually does want.
The blender and the toaster and the iron and the vacuum.

[38:46] They also want all the things I said they want which one's the experiences and the cool Boutique items and so the takeaway.
The point which is kind of obvious in retrospect but not obvious at the time was that they want it all and I wanted to really reflect what that passionate about as a couple soap.
Some couple the very passionate about.

[39:13] Food and an eating and cooking and drinking wine together and said that you can really see come through on the registry of the couples,
very passionate about,
Outdoors hiking skiing biking together and said they have all those items on their registry but what is consistent is that,
everyone sees the registry is an opportunity to upgrade a lot of the items in the home that they might not necessarily been able to afford themselves so it's what everyone.
Does have some sort of blend a toaster or iron this is the chance that they can get the one that.
We'll lock them for another 10 years where they might have had that toasted that they bought when they were straight out of college 10 years ago.
Apps about his big surprise.

Jason: 
[40:05] I'm sad to report that next year's toasters are all going to have WiFi so the ones they thought we're going to ask them forever I'm going to be good enough anymore.

Scot and Shan: 
[40:13] Well I don't know if there was a going to still be the the top sellers because that the top sellers in registry have been the same top salads and many many years so I don't know his buying did the newest gadgets vote,
we see some of those on so well but it's not the vast majority of items.

Jason: 
[40:33] Sure in the actual answer to your question is who's buying the newest gadgets is Scott and I.

Scot and Shan: 
[40:38] Your Jason ready has the Alexa toaster.

Jason: 
[40:42] Yeah and Scott has an R2 D2 toaster so that does charity or philanthropy coming to play at Ridge in registry and all.

Scot and Shan: 
[40:52] Yeah so a couples can certainly set up a charity fund all up Prado at a fun that day then designate.
To a charity of their choice and so we really leave it up to the couple to.
Share and determine what charity is most meaningful to them and then they can add that to the Zola registry so that is a component.
And 1. And we see coming up it's very it's as you might accept a very personal charity or cause.

Jason and Shan: 
[41:29] Yeah yeah I have to say my own wedding experience was an epic fail.
Not hopefully not that the wedding I got married fairly late in life and so my my fiance and I were both lucky enough to like.

[41:47] Frankly you like own the aspirational version of most items in so I really didn't want to register I really didn't want to get gifts and felt like it was going to unnecessary until I.
Try to get that message out and all the guests were just angry at me.

Scot and Shan: 
[42:04] Yes you know we hear this actually pretty often in that it is.

[42:13] It is often ends up being dead guess who buy you a gift if they want to buy you a gift and so the best thing you can do for yourself is to give guidance and it makes everyone's lives easier.

Jason: 
[42:26] Yeah if I had it to do over again I would have taken that or if I had met you earlier I would have definitely.

[42:32] It taken that advice another topic that's interesting so you know one of the challenges and opportunities you have to acquire your own couples.

[42:43] So you know what what like what are the marketing tools that you're using to get customers are couples into the ecosystem.

Scot and Shan: 
[42:51] So this was one of the things that we learn from guilt and one of the reasons why we really would run to the idea of a wedding registry was this idea that guilt.
Cute benefited from a lot of what a mouth and,
and referrals because everyone was really excited to share Gill because it was beautiful because they felt like they were letting difference in on a secret date.
Dynamic that we liked with Zola was that it has that in built virality or referral,
within the concept of a wedding registry because when a couple gets married on average they invite about 150 guests to their wedding so that's the average in the US which means that you have.
150 people who are attending of which most of them will feel,
in some way they want to check out your wedding registry and probably buy you a gift and so those,
essentially eyeballs that I've been looking at Zola and if Zola is a betta will beautiful more compelling wedding registry they will then when I tell their friends.
O use it themselves when they get married so having that in built.

[44:19] Referral mechanism into the idea of a wedding registry has been the biggest driver,
evolve growth and so when it comes to acquisition we know that if we have a better wedding registry experience than anyone else we will.
Be able to grow with a company that's a bad has proven out now but so that's that's what's really driven.
Su tomorrow volcanic growth on top of that we are like many e-commerce companies always experimenting with all the online marketing channels so we experiment.
In Facebook Pinterest Instagram and those channels Russell interesting because they do have,
ways for engaged couples to flag themselves as engage the moment that you get engaged so we are able to Target and,
and and it really experiment with different campaigns to understand what what is most compelling for people to want to register with us.
What was Sabbath experiment with more recently is some out of a brand marketing so things that unless.
Easily trackable at we recently launched the subway advertising campaign in New York.
That we sent me advertising Bridal magazines and to oldies things.

[45:52] Interesting for us in in that Derek the the challenge for us is how do we get the most insight into the impact.
Friendly's marketing dollars.
Which is a different kind of challenge to to building the best wedding registry product but we are up to the top.

Jason: 
[46:12] Yeah it is interesting cuz you look at sort of the the history of the pure-play startups and certainly guilting a prime example but almost everyone bonobos Warby Parker jet whoever you pick it whatever scale,
there seems to be in every industry a finite amount of.

[46:35] Customers that you can very cost-effectively earn through all these digital tools so I can be a bit social or influencer marketing or digital advertising or search are all these things in in in every industry,
there come this inflection point where incremental customers.

[46:52] Start to get dramatically more expensive in and sew in in Moe's Industries that's where you see them start to.
Get more omni-channel to open Warby Parker stores or bonobos guideshops or you know or if it's not opening stores it's it's Outdoor advertising and things like that is.
I think of your industry is a little bit different like you don't just want to reach out of eyeballs like there's only.
A small finite period in the life of each each eyeball where it's useful for you to reach them so it almost seems like you you got to find some more.

[47:27] Targeted vehicles.

Scot and Shan: 
[47:29] Yes that's exactly right and that's that's why we found the online channels.
As it relates to allocating on mocking budget have always being strong performance for us because we can talk that group of people at that point in time very well online and.
And so it continues to,
be the most compelling place to invest where we do have budget but the bigger investment and by fall we are spending more time and energy investment on building out,
the product experience because we see that drive growth so much more effectively for us.

[48:18] Cool. You talked about how in the early days you did a lot of interviews what what kind of user-testing do you guys do now do you do formal,
watching people use the system or are you instrument it so you kind of know what they're doing they always get that question from are there on turnovers that kind of get a little lost once they get to a bit of scale it's kind of hard to get that.
Feedback.
Yeah so we we do we try to do as much as possible when it comes to use a testing so we do.
We do what you said which is watching people as they use the website talking out loud talking about what they seeing thinking,
these are people that are unfamiliar with Sola we also do face-to-face interviews which are more exploratory which tend to be,
tell me about what you think what you're thinking as you stopped to plan your wedding open-ended exploration all that's a lot.
Around new product development what we do that and then we do very regular,
online surveys to both people that have recently started a Zola registry as well as people that have gone through the entire Journey gone on honeymoon come back and then,
close to the end of their life cycle and so we want to survey them on that pole experience answer for each of these different.
Types of groups we're asking and looking for different things and.

[49:53] Constantly trying to understand what are the things that are causing them to.
Restless and promoters of the people and let's not never lose sight of that lets only lived double down on those things.
And on the flip side one of they saying that is making them hesitate about Zola.
Or making them I'm confused and how can we take those things out for future uses.

[50:22] Cool any any day do you can share on desktop vs mobile.
What's interesting for us is that it's not as much of a drastic shift to mobile as you seen on the e-commerce businesses and this is because.
Setting up a wedding registry is a more considered process than buying a.

[50:49] 10 old you're buying a shirt online so for a sexually the we still see.
A good amount they probably the majority of people creating their Registries on Zola through desktop however we do see a lot of,
management updating of Registries browsing new products adding new products to mobile apps so the initial,
experiences desktop and then the follow-on experience through the rest of the life cycle is mobile so for us it's important to be continually and innovating on both,
because I user is using both the true omni-channel experience going on there people going in and out of each each one,
two two quick wrap-up questions first of all other than obviously everyone should check out Zola and both the the app and,
the iPhone app that iPad app and then also the website but do you publish anything online that people could look at it or you popular on the Twitter or LinkedIn or in those kind of things.
You can follow.
Zola which is this at Zola on any of the social channels and one interesting,
article that is Canmore on this topic actually that one of our investors just published on Monday which people name,
your audience he might be interested in checking out is so invested Alex taussig at Lightspeed Venture Partners wrote a medium blog post on the concept of.

[52:26] Product Channel fit which is the next thing any.
Company Pinnacle e-commerce companies need to tackle once they've tackled product-market fit so that post.
Is critically interesting and it kampala's how.
Zola thinking about product Channel fit and talks a bit to just one prong of.
Yo what up marketing more acquisition team might look at to drive growth.
Sprinkle we will put that in the show notes and then last question got stepping outside of the wedding industry in and putting on your e-commerce biru hat you've been in the industry for a long time,
where do you see things going in the next 3 to 5 years what what get you super excited,
Innovations in e-commerce that I'm excited about and so one is,
I think very clearly everyone seeing the direct-to-consumer,
Trent answer the continues to be new brands in new categories that are emerging that I find very exciting both in the way they're thinking about product about selling and marketing,
the second big category is.

[53:45] Innovations in what I described as curated marketplaces or Target Market places that are serving a particular audience or need some examples of this might be.

[54:01] Caviar in food space oil and,
net-a-porter which is not quite a market place but it is a house of Brands Zola falls into this category of companies include your Rent the Runway which is a different take on on this,
Stitch fix danco or Unbound and then the third big category of innovation which I find very exciting and e-commerce is.
All the Innovation that's happening in the supply chain so technology that is.

[54:38] Supporting e-commerce companies all supporting retail Brands to.
To buy create a better user experience on the front end but also create.
Address of business operation end-to-end from the moment you think about sourcing your product right through to provide customer support through to reporting analytics Adams shipping.
So those three things I think I completely changing your even though.
Amazon is the thing that everyone wants to talk about there is this really true Innovation happening across the board outside of just how much on.

Jason: 
[55:23] Very cool in one bonus question that that we ask every guest if you were going to have to dress in a costume to appear on your company photo what what would you dress up as.

Scot and Shan: 
[55:38] Well I'm a huge Game of Thrones fan and we do take Halloween very seriously so my favorite Halloween costume retire.
Secretly don't tell Mom one twice is Daenerys from Game of Thrones because I have a dog which I like to dress up as a dragon so that would probably be the one that I would have to pick.
Very cool and then you yelled Rick Harrison the dog it's not spoiler.

Jason: 
[56:11] I know I was just reminding everyone.

Scot: 
[56:12] I haven't yet but I might try that this year.

Jason: 
[56:17] I think that'd be cool I have a little dog MacGyver and he doesn't much better Chewbacca than he does a dragon.

[56:26] Well Shan it has happened again we have used all of our lot of time but we definitely want to thank you for joining us sweet we certainly wish Zilla all the best and look forward to following your success I want to remind listeners that you're welcome to continue the dialogue on Facebook,
if you have any questions or comments about Today Show,
feel free to come over Facebook page and leave us a note we try to be very responsive and of course as always if you really enjoyed this episode jump on the iTunes and give us that 5-star review,
that's that's how we pay the bills at the Jason is gosh I was 5 Star reviews.

Scot: 
[57:04] Thanks Shan have a great evening.

Jason: 
[57:11] Until next time happy you commercing.

Aug 21, 2017

EP097 - Industry News

Congratulations to friend of the show Billy May, on his new appointment as CEO of Sur La Table.  Billy was a guest on episode 23.

Amazon News

Other News

  • US Dept of Commerce reported that e-commerce grew 16.3% in Q2  - half of that was from amazon.  Fastest growth since early 2012 - 12.1% of total sales.
  • TJX sales up 6%
  • Gap earnings slightly up; they announce new BOPIS test.
  • Dicks Sporting Goods, CEO, Ed Stack:
  • "There's a lot of people right now ... in retail and in this industry in panic mode," Stack added. "They seem to be in panic mode with how they're pricing, and we think it's going to continue to be promotional, and at times irrational, going forward."
  • Stack said he noticed heavier promotions and price cuts particularly on athletic apparel, electronics, and hunting, fishing and camping gear beginning around Father's Day this year. "And it continued to be very promotional — not only from retailers but also from some of the brands on a direct-to-consumer basis."
  • Walmart Online grew 60% y/y
  • Target acquired that same day delivery company Grand Junction
  • Alibaba 56% y/y growth vs 49% projected- Adj EBITDA margins of 50%.  Jack Ma talks about New Retail concept (such as Hema Grocery store)

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

Episode 97 of the Jason & Scot show was recorded on Saturday August 19, 2017.

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

http://jasonandscot.com

New beta feature - Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 97 being recorded on Saturday August 19th 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:40] Hey Jason and welcome back Jason and Scott show listeners we took a little break Jason was on vacation so I took podcast vacation.
And what we found is over the summer it's harder to put gas so we we took some breaks from guest So today we're going to talking about news but before we jump into the news Jason what's new with you.

Jason:
[1:00] I am super excited cuz one of my good friends launched his business in a new sitting this this month I wait that you.

Scot:
[1:09] Yeah yeah we.
Yep so the still involved the channel visor exec chairman but spending the bulk of my time at new company called spiffy which is on demand Car Wash and we launched in Dallas.
Early August so we're excited about that and we've already added something like Fifty office parks in Dallas so the Dallas folks the people of Dallas really love having their car cleaned apparently.

Jason:
[1:35] I'm happy to hear that hopefully some of our dallas-based fans will get a chance to try it out and they can leave us some feedback on Facebook about whether you're going to go to for two on your entrepreneurship or not.

Scot:
[1:46] Yeah yeah I would love to hear how they enjoy the service.

Jason:
[1:51] Awesome other than that I'm a Jeanette's taking up a bunch of times have been a good summer.

Scot:
[1:56] It has been yeah yeah kind of deep into back-to-school catch all the kids back to school so that was have two in college and one in middle school so lot of lot of variety going on at the back to school this year.

Jason:
[2:11] I have heard a rumor that there's this increasing trend of parents fulfilling all their backed of consumer purchase needs with this newfangled e-commerce thing did you try any of that.

Scot:
[2:23] We did a lot of e-commerce around the back to school time yes absolutely.

Jason:
[2:27] I'm happy to hear it that's important dress rehearsal for all of us for for the big holiday season but did you try any of the like back-to-school specific Services by chance.

Scot:
[2:39] Did not in one of the things that kind of feels at colleges their mailrooms aren't open until like a week dip in there a week so you can't just kind like ship all this stuff there and pick it up I'm fortunately ship it to your house and then take it with you.

Jason:
[2:53] That is fascinating I would have thought that problem is addressed and I think we're going to have some news tonight that's Loosely related to that.

Scot:
[3:01] Absolutely.

Jason:
[3:02] Cool I'll leave that as a spoiler to keep people waiting until after the banter is over and we get into the news.

Scot:
[3:09] It's a tease if you tell it's a spoiler if you if you don't then it's a tease teaser.

Jason:
[3:14] That's a fair point thank you very much for correcting me.

Scot:
[3:17] How's your vacay.

Jason:
[3:18] It was great we my family is all from the Midwest from the Detroit area my in-laws so,
the lady rent a beach house somewhere on the on the shores of Lake Michigan every summer so so we took the family up there,
got to hang out with all my nieces and nephews which was a lot of fun and is a fun week in Chicago because it's the air show so the Blue Angels are in town and they they fly directly over my condo so I got the,
here here and see some frightening Lee close together jets flying around.

Scot:
[3:55] And isn't that Michigan Beach week that week you don't have Starbucks and have you recovered from them.

Jason:
[4:01] You're going to have to give me more detail I I'm not aware there is a week when I don't have Starbucks.

Scot:
[4:06] I thought that's weak where you don't have access to start.

Jason:
[4:09] So there have been occasions where we were so remote that I was not able to have Starbucks and so I actually travel with my own Starbucks syrup,
accoutrements and then an espresso machine tool my own shots but this summer we've tended to move around venues and so this summer wasn't remote enough so I was able to go to.
A Starbucks in bedded in a Meyer that was only a few miles from our rental place so I got to spend some time and Meyer which is great Midwest Hypermarket the compete successfully with Walmart and then,
I got my full fix of Starbucks.

Scot:
[4:50] Good I was worried about.

Jason:
[4:52] I appreciate the concern and thanks for yeah that's funny that you remember that.

Scot:
[4:57] What do you want to do is send a shout-out to one of the friends of the show Billy may he was at Abercrombie he was on Jason can you have one of the interns look up the episode that Billy was on one of our most popular episodes,
and he has just recently been announced that he is the CEO of Sur La Table so congrats to Billy.
I don't know the specifics of it but Jason I'm pretty sure being on the show can give him credit for that clear move so.
Yeah I think once you're on the Jason Scott show your your career is on a meteoric.

[5:33] Rocketship kind of a think Peter Cobb is now on the board of.
Discount shoe warehouse so lot of Greg pulsifer is over at General Mills now so one of our Our Guest of moving up in the world Kevin or tell went to Nike.

[5:50] Just do it.

Jason:
[5:51] I do I feel like there's a basically unbroken string of your career catching fire once once you get on the Jason and Scott show and of course the loyal listeners remember that Billy was on episode 23 he was one of our earliest,
yes and wow this is statistically not true I've always promised Billy that I would say it was our most listened to episode.

Scot:
[6:13] Cool well let's jump into the e-commerce and Retail news with some Amazon news.

Jason:
[6:35] Yes a couple new interesting things on the Amazon blotter this this week or the last couple weeks that I think is per ticket interesting is that Amazon has announced a new.
A delivery method that they're calling instant pick up and so the notion here is that you can pick up items 2 minutes after you place an e-commerce order for them.

[7:02] And so when you first hear that you go wait a minute that's that's the Majestics of that are mind-boggling how would they ever do that.
And what it really is it the moment is there's a handful of pickup locations that Amazon has and I think they might exclusively be on college campuses at the moment so you reference some of the mailroom problems on college campuses.
E-commerce has been a huge disruption to college campus mailrooms and one of the remedies has been the Amazon his open their own pick up Depot in the number of college campuses which is this pretty fancy operation.
And so reading between the lines of the instant pick up announcement.
They're using those college campus pick up Depots and they're going to pre inventory in assortment of the most popular ordered items.
Presumably over time those will be the items that are most needed with with no weed time and you know they'll have sort of a walker type thing and once you place an order to go have someone that pulls that out of inventory and puts it in the locker for you.
Instantly so when you need a new.
Lightning headphone for your iPhone or a new battery or something like that you'll be able to get it right away and I almost think of it as sort of a big version of the.
The sort of Commerce vending machines that you see at some big businesses in airports that have like the you know the the most popular Best Buy items.

Scot:
[8:31] Yeah there's some food places that are kind of working this way now where you know there's a kitchen and they put the food into, the Walker system didn't you go to a noodle shop that if I remember that right.

Jason:
[8:41] And I'm not going to remember the name off the top my head but it's like a healthy Asian themed,
Bowl restaurant that's a lot of like stir-fried stuff in the Bay Area and it's a completely,
no human interaction you order on basically iPads and then your your food is delivered the food in a locker and you open that locker and you get the food shockingly quick and it's delicious and healthy and.
They don't have to pay a person to talk to you other than when I was there it was early and they had a few concierge's out there that were trying to teach you how to use the iPads of you put them figure it out.

Scot:
[9:22] Yeah Regal when when quick when I saw Amazon stock was down like 5% one day and you $1,000 that's that's.
Fifty bucks says a holy cow it's going on so couldn't find any couldn't find anything in that I looked and,
president Trump tweeted that you know I'm pretty negative Amazon tweeten I think what happens is he gets pretty cheesed off by the depressed,
and Jeff Bezos owns the Washington Post in creates this kind of feedback cycle so his tweet was Amazon is doing great damage to tax-paying retailers,
town cities and states throughout the US are being hurt many jobs being lost so you know wall Street's reaction to that is wow that increases the.

[10:06] Chances of some kind of a. Monopoly kind of thing so not clear what's going to happen there's obviously a lot of weird things that happen to Twitter world and politics and what not but that was interesting that meal for no reason,
that the stock was down pretty material amount and then it was ended up being kind of a tweet from from the White House.

Jason:
[10:25] Yeah I mean like regardless of how you feel that any of that there's at least one slight irony there a lot of people that deserve that that Amazon can basically drop,
a press release and Wipeout you know a huge piece of the,
the market cap of of any competitor and so it's at least somewhat humorous to think that there's at least a person that can drop the tweet and put a little dent in.
In Amazon's networth listeners probably know this but the.
Jeff Bezos does on the Washington Post Amazon doesn't write like that,
fake only gets mentioned in the in the Trump versus Bezos disputes,
but it's also pretty factually untrue that Amazon doesn't pay taxes like we we assume when Trump is talking about that he's talking about collecting sales tax which.
Again technically Merchants don't pay sales tax they collect sales tax that consumers pay.
But as hopefully most listeners know by now Amazon collect sales tax,
in the majority of markets that they're in so they cut deals with a bunch of states,
you know their various timelines for Windows will kick in those will kick in but but many of them have already kicked in in the big States and so Amazon's collecting an awful lot of sales tax and I haven't seen a lot of this yet,
but I would expect this year like based on some of this negative press,
I would expect to start seeing some PR from Amazon I'll bet you they're one of the largest sales tax collectors.

[12:00] In the country right so you know.
If even the us we were just talking about this you know there's lots of estimates on the gmv if if they're selling 120 hundred fifty billion dollars worth of stuff and if they're collecting sales tax on 75% of that.
That's going to put them in the top 20 sales tax collectors in the US.

Scot:
[12:25] Yeah what you could be talking about is corporate tax so you don't have his own doesn't have profits and then they have these very huge no else not operating losses from.
From the past so you compare on them to a Macy's or something they also have a much lower tax rate from a corporate tax respective.
Hard to know exactly which taxes being talked about.

[12:51] Yes true.

Jason:
[12:57] And this is what I missed from a little while ago but the end of them,
July Amazon announced the expansion of a program we talked about on the show few times the treasure truck so this is a truck that tends to stock one item it's based in Seattle and every day of your if you subscribe to this SMS list,
they they send you an SMS saying hey the treasure at truck has,
adeel 60 bucks for a Nintendo Classic this this today only and you can accept the deal on your phone and the truck will come to a location near you and you pick up the.
The item so it's kind of them buy online pickup at truck.
Experience so I don't know exactly how you pronounce that acronym bow pit Maybe.

[13:46] And that was in Seattle only I had seen them specific to a couple special events like the,
Consumer Electronics Show in Las Vegas and now it looks like they're expanding into six other cities in one of the cities of Chicago,
so I I have a signed up on the list and hopefully sometime this month I'll start getting getting a deal texts.

Scot:
[14:09] Hope there is some there's two kind of.
Dust up surround Amazon private label a editor at Quartz magazine was digging through some of the trademark filings out there and found in about 20 kind of unannounced private labels.
And.
As you know I do that Amazon escapes so I went through all these and some of them I would say about half of them we're right in other half you know what happens is Amazon May file these trademarks but then never do anything with him a big corporations have.

[14:39] If someone has an idea I'm sure that is far off an email the trade markets created and they may or may not use it.
So some of the ones that were mentioned in there weren't really valid in that they're not actually being used for for that or and then if you go to Amazon it's a big you see the things being sold when you dig into it they're actually different brands not the ones.
Believe me that was interesting and then more recently this week the.
The data company 1010data came out with some pretty interesting data around the private labels and some the ones that I know our listeners have been really interested in or some of the apparel items so.
The first time I've seen data on Lark and Ro button-down some of the newer ones Amazon Elements which is more cpg and.
For example.
The first half of 2017 this estimates and this is I think one of these companies that looks at the cash register receipts than in emails that people give them access to through some and.
What they're saying is some of these.
Like I lost pic on button down to about a million dollars in the first half of the Year seems low to me I just kind of surprised that low.
But then saw the growth rates of these are pretty tremendous in.
If some of the categories like batteries Amazon is really starting to get to be over half of of the sales of batteries online and things like that so,
continuing to watch private label something that that you know we can courage Brands and retailers to really think about how that fits in with her strategy.

Jason:
[16:12] Yeah and it it it does seem to keep,
expanding two things that kind of jumped in my mind when I saw that news number one there is this,
kind of gray area about what is an Amazon private label so I think one example there was a article that went around talking about,
how Amazon and launched a private label wine and then,
Amazon dog doesn't own their own own Vineyards and they don't have their own wine label maker that's making this wine so they're obviously.
Paying someone to produce this wine and wines getting sold on in some of their label and Amazon kind of denied it was one of their brands and that it's it's actually like a.
You know a seller that created a new brand that they were selling on the 3p Marketplace on Amazon.

[17:05] And so are the ones I as a one-piece seller to Amazon and so there it kind of is this interesting thing you know if Amazon encourages the manufacturer to make a product to fill a gap versus Amazon commissioning a manufacturer.
There you know there's kind of this this gray area that's it's hard for a Observer that just sees that.
That's some new new brand popped up on Amazon that that they're not familiar with is it a true.
Amazon owns brand or is it a Amazon and courage brand I guess is the the distinction there.
One of the things I was like to.
Joke with client about is I'm trying to get people to stop saying private label particularly in context Amazon right like a private label had this original connotation that was.
There's a national brand.
And then there was a private label in the private label was intended to be on the Shelf in the store next to the National brand and have a large e the same value propositional brand.
Without all the marketing at a lower cost and so you know the consumer had to decide am I getting.
Bear branded aspirin or am I going to get a generic aspirin for a little less money.
Many of the Amazon products are designed to have unique value propositions and so they're trying to not build private labels although some probably are fit the classic definition of private labels like amazonbasics.

[18:36] Let me know these brands are intended to be a stand-alone brands that have their own value propositions,
and you know have they have their own to me and then be,
the national Brands not exclusively on price but based on features and and other aspects of the product and the the most glaring example is of course their most successful,
in house brand which is Echo right or,
and so I'm sure of your product manager at Sony that's responsible for Bluetooth speakers you don't think of echo is a private label you think of it is a national brand that's frankly kicking their butt.

Scot:
[19:16] Yeah yeah it is tricky maybe we'll do a deep dive on this and come up with a new framework for people to think about it.

Jason:
[19:23] Oh no I have to think of some new thoughts and Edition ones I just shared.

Scot:
[19:27] Yeah yeah you can do it just had vacation your brain is fresh.

Jason:
[19:32] Thanks for the vote of confidence.

Scot:
[19:34] One quick one Amazon should have closed the Whole Foods deal by now but the regulatory kind of review of it is still underway so they've extended that and,
to my knowledge was pretty open-ended didn't kind of say a week or two weeks so that deal still has not closed.
And then there was another rumor while you're on vacation that Amazon's getting into event tickets that they see that as a,
an opportunity where the customer experience isn't very great and that they want to kind of get in there and compete with the ticket masters live Nations the world which I,
as a guy that buys a fair number of tickets I would love to see more competition in that space.

Jason:
[20:14] Yeah and I thought I read a rumor that they maybe even tried to acquire or partner with Ticketmaster and when that didn't work out that they now seem to be moving in the direction of building their own service.

Scot:
[20:27] I didn't stuff.

Jason:
[20:28] Not what I that time time will tell it certainly would not surprise me it certainly seems like it it fits the Amazon Mo and you know they want to be the everything store.

Scot:
[20:41] Yes and we just got to the end of earning season and there's some some new kind of July comps that that came out as well and I thought it was interesting I sorry for that,
there's a company that goes through all the different transcripts and looks for different indexes them all and they reported for the S&P 500.
Over 15% of the conference calls with Wallstreet mentioned Amazon in some way that's high-water Mark in it it's interesting when you kind of go through the day actually will put in the show notes we don't have time to do it but they go through,
if some of the highlights and you have the real estate companies all talking about it grocery cpg.
All the brands that are out there and of course retailers and then specialty stores like Auto Parts and things that nature in,
it's kind of interesting here that your point earlier that.
I would have to have an Amazon story all the sudden in it used to be just kind of a retail thing but now they're very just like the last 3 years there,
they're pretty spread so wide that a very large swath of that the public companies have to have kind of an answer to the Amazon question.

Jason:
[21:48] Yeah I wonder if UPS and FedEx were on that list of companies dimensioned of.

Scot:
[21:52] They have in the past I absolutely have heard that yet so I don't know if they were on the list or not.

Jason:
[21:59] Side note everytime our intern ask for a raise I remind him that his job could be to read all the S&P 500 earnings transcripts and count how many times Amazon was mentioned.

[22:14] So believe it or not there is some.
Digital Shopper marketing news outside of the world of Amazon in one of those is at the US Department of Commerce published their Q2 data.
Which is a very useful data set that we we always like to follow and I think they came out and said 16.3% growth for e-commerce.

[22:42] In Q2 this year.

Scot:
[22:44] Yeah yeah yeah tribute half of that to Amazon which is good so so when I kind of,
back to the math as we talked on the show here for long time a lot of lot of folks didn't take into account the 3p part of Amazon but now it looks like the Department of Commerce is actually Factory that in so,
yeah that's that's pretty good to see them kind of catch up to that.
They come to a lot of the shows the guys the team that does this I think that she doesn't the podcast so shut up to them if they're listening I don't know if you've ever talked to them but they.
Really nice group of folks and they are the come to all the shows and try to kind of tune the data based on what they're hearing and I have give them that feedback a lot so I don't know if it had any impact on them including that there but it's good to see.

Jason:
[23:30] Yeah yeah I'd be fascinated to hear how they sort of estimate 3p or what they're using is there 3p estimate to factor in there,
we should definitely have them on the show I have met a few of them as well I will throw one Counterpoint out there there there are a fair number of detractors that don't,
feel that the the methodology that they use for e-commerce is entirely accurate right and I think it would be impossible for it to be,
perfect I find it to be a super valuable data set and one of the things that,
in general is really valuable about it is they've been using this consistent methodology for a long time so you can kind of look at how things are trending in and shifting overtime,
but that their definition of e-commerce and what's in and out of that let you know has a few things that you know you.
You probably wouldn't agree make make perfect sense of you were inventing the categories from scratch.

Scot:
[24:27] Yeah and I've got a lot of arguments about this lately if not arguments with interesting discussions with people and you know so what what I also here and I don't know,
I haven't had time to take into this but you know the other kind of doubles argument about this data set is it's a business survey it's a small number of businesses,
the bulk of the businesses are kind of B2B kind of company so they're selling you no widgets and fasteners and cogs and gears and stuff.
So
So then my argument is while the come squirting is very highly correlated so it seems like it checks out their argument is no it goes other way comes grow actually use it as an input the Department of Commerce data so that their date is lined with it so,
I don't know what to believe Mabel get someone on the show and do a little panel where we can kind of get someone to talk about the veracity of this data.

Jason:
[25:19] That that would be great so we can get some of the the panel guys like comscore 1010data and the US Department of Commerce so we could have a shootout.

Scot:
[25:26] Yeah Jason and Scott show data wrestling match.

Jason:
[25:31] I love it.

Scot:
[25:33] The sum of the cops are out and one of the big Winners is TJMaxx they,
the cops are up 6% that's for July and so that's pretty interesting we will talk about this on the show where there's this kind of,
password if you are a value oriented retailer you doing really well right now so,
the dollar store bears are doing well all the TJ Max's Ross stores companies like that if your convenience oriented which tends to fall over towards the e-commerce side Amazon it's up to you doing well,
and the folks that are kind of stuck in the middle of your not value or convenience right now you're going to pretty bad spot so the Macy's.
The sports folks all those guys are really having tough comps right now.

Jason:
[26:19] Yeah and said that makes it all the more interesting like one of the categories you talk about is having a pretty tough time is apparel.
And GAP announce their earnings and they actually eat doubt some slightly improve numbers this quarter so I want to say that their profits were up 1% this quarter,
versus being down to the previous quarter so like that's certainly not letting the the world on fire but.
The you know you certainly always like to be more profitable than you you were the previous quarter and in a category that's that's you know super distressed.
That's an interesting data point I was I was joking around with one of the Forrester analyst on Twitter today.
I would not take that news you know they're up against a really soft comp.
And I would argue you know that a lot of the Peril in history and in gap is a perfectly good example of it.
Have a lot of institutional headwinds I'm not sure I would take that that.

[27:24] The nice up to get this quarter in and use that as a reason to invest in the in the category but never the less good news for the gap.
And an interesting subtext in there they announced they were piloting a new customer experience for them which is buy online pickup in-store.

[27:41] And for many listeners this show they might say wait a minute Gap wasn't offering buy online pickup in-store that seems like table sakes for an omni-channel retailer.
Gap has been one of the largest proponents and one of the earliest adopters of Reserve online pickup in-store so they're normal experience was.
We won't charge you till you get to the store I'm so you you'll reserve it will pull the product.
I have it ready for you and you know when the mean reasons you'd want to do Reserve online instead of buy online is because you like that customer to come to the Gap Store discover a few other things that they didn't know they needed an add them to the transaction.
And that's easier to do when you have a reserve online.
It also is kind of a lower threshold to get the customer to reserve cuz they don't have to put any money down up front and so they've been one of the big proponents of reserved online and what's not said and.
The earnings call that I'd be really interested in is.
Are they throwing the towel in on Resort online are they if they decided that the pros and cons of of bopis versus reserver.
I can tell you enough that they're now shifting to what is the much more common industry practice.
I don't know but I'll I'll certainly be digging to see if we if we can learn any more about what that shifts about.

Scot:
[28:57] Yeah I don't have any data but my bed is when you survey customers like reserve reserve and pickup is like a.
Like to wait in line which is not convenient so people want convenience and if you're if you're going to put your priority of go pick up more stuff we're not going to get convenient so you'll buy more stuff that that Jesus customers often today's world.

Jason:
[29:17] Yeah know I tend to agree and you know there's there's.
Execution problems with both but you know I think one of the challenges in a store like Gap is executing on these thing so you know when you reserve online do you walk in the store and,
and this product really have been pulled for you and it's the right products and they had in stock what they said they had in stock there there's a lot of things to go wrong and in some ways when it's reserved online there's a little less economic pressure on the,
on the store to execute and so that can then a road customer confidence in the service.

Scot:
[29:54] Yeah Absol.
When did I fall it really closely those pretty resting is so so we had the failure of Sports Authority and Dick's Sporting Goods,
down pre substantially after their Crow the results and the CEO is needs Ed stack he had pretty interesting quote here I'll read a couple exits.
This was in when he got into the Q&A with Wall Street there are they missed on the I think they kind of came in line on the top line but then their bottom line the profits weren't really there and gross margin seem to be under pressure and,
the CEO kind of win a little bit or rant kind of a no therapy session he said there's there's a lot of people right now in retail and the sports industry that are in panic mode.
In panic mode he said they they're freaked out about how their pricing how we're pricing.
It's going to be it's going to continue to be Promotional and at times irrational going forward.
Well you can imagine Wallstreet didn't like that word irrational so that that was not well-received and you know what I think I saw some notes that said it's going to be a structural change.
These guys where they're going to have to you know there.
The energy price matching with Amazon they're going to have to just kind of take much lower gross margins they had going forward so really big pressure there and then another little piece that listens would be interested in.
Is he kind of finished up and said it's going to.
It's continues to be very promotional not only from retailers but also from some of the brands on a direct consumer basis so.

[31:26] She had this kind of like this crunch scenario where retailers are stuck in the middle you've got online guys like Amazon and.
They are much more efficient and they can have a different model that that has lower gross margins lower prices passes amount of consumers and then you have Brands go Direct on the other side.
You specifically asked about Amazon having Nike selling on there.
He said you know I don't think you've seen anything we're watching it very closely we've talked tonight Nike a lot about it so pretty interesting going to.
Another in a crunch there with with retailers.

Jason:
[32:00] Yeah and I wouldn't expect to see a lot of a,
concerning behavior on Nikes part yet but what can definitely happen is you know all the all these other players win this when the retailer closes,
if you were Under Armour Adidas or Puma,
you are the forecast for the year and you built you you manufacture product based on that forecast and part of that forecast was that there be a bunch of Sports Authorities that would each have to buy a certain amount of inventory to put on their shelves,
and so when they stop buying at inventory because they're out of business or there's been retail consolidation or whatever,
and the market gets flooded with cheap product because some Liquidator buys the existing inventory that those things happen,
you as the manufacturer are suddenly not going to make your numbers and so that likely is going to trigger a bunch of other you know bad behaviors that ultimately result in mr. Stax observation right like you could either,
try to sell that stuff to direct a consumer and you could get more promotional to do it,
you could get more promotional in incentives you offer your you're surviving wholesale Partners to get them to sell through more stuff there's you know like there is,
second and third tier effects on all of this stuff that that create a negative spiral of momentum in the category.

Scot:
[33:21] Yeah two other quick ones in this kind of same bucket Foot Locker was asked about Amazon on their conference call and the CEO kind of pounded his chest that we don't worry about them we have you know the latest and greatest and sneakers come Dawson Amazon doesn't get them,
as long history of people that have said that they're not worried about him son and or Amazon can't compete that they're either out of business are going out of business so.
We should start a Jason Scott pool where you know people that foolishly.
Poke the bear the Amazon bear end up paying for it down the line and another one I did read article wear under armour,
to your point earlier they had some lines that were at a retailer they liquidated some of them to Kohl's and ended up really kind of craving this.
Bad cycle between I forget who the other retailer was Maven Dick's Sporting Goods the created some bad blood and and ended up that you know that.
The other retailer didn't want that product line anymore in the not all just going to have to go to Kohl's and more of a discount kind of a format so it's a lot a lot of.
Gnashing of teeth out there and in the Sporting Goods got over.

Jason:
[34:26] Yep and then I haven't fought a closely but I I think we're waiting to hear for regulatory approval on Cabela's Bass Pro Shop so that's another.
Like potential significant disruption in that space of those two guys merch.

[34:48] So another retailer earnings that came out this month it's to me super interesting is the largest retailer in the world Walmart,
they had another,
slightly profitable quarter in the stores so I want to say they were up one or 2% or someplace between one and 2% so that if memory serves that's like the 12th consecutive quarter of.
Brick-and-mortar growth for them and just to put that in perspective,
not very many retailers have had a dunwell 12 quarters in a row so there's an obvious inference to make that Walmart is.

[35:31] Benefiting from a lot of the hardships that other retailers are are experiencing and that there.
Well well position weather the storm with a little bit more Elbow Room than then.
A lot of other retailers but the super interesting thing is that they're online growth was up.
60% for the quarter from from this quarter last year and to put that in perspective.
Last quarter they were up 62% so that's now two consecutive quarters with astronomical growth.
Obviously it's much easier to grow a small number then a big number so you know it's almost not worth comparing that to Amazon even though it is much faster growth than Amazon but I'll remind everyone.
These guys are the second largest e-commerce site in the u.s. they're going to sell unipres north of 15 billion dollars this year,
and so you know if you think about the e-commerce Industries growing in about 15 to 18% depending on which numbers you use,
that Amazon is growing at like 25% and Walmart is growing it like 60% most of e-commerce isn't growing that fast,
if the two biggest players out there our way outperforming the rest of the market like usually in a mature Market you see exactly the opposite you see everyone else growing faster than the the guys at the top of the echo system so,
all super interesting and then I guess one other spin on that like.

[37:06] Walmart has acquired a bunch of companies that have meaningful e-commerce Revenue so obviously I mean jets in these year-over-year numbers but Moose Jaw ModCloth bonobos,
would all be new and so what the Senate could look at this and say oh will there.
Their e-commerce growth is way up because they through acquisition but they're claiming they claimed last quarter and I think they claimed again this quarter that more than 50% of their growth is organic.

Scot:
[37:40] Yeah yeah saw a Goldman Sachs report where they actually kind of backed into it and their estimate was 30% organic growth 30% from Acquisitions so they they kind of put it right at that 50% so I don't.

Jason:
[37:53] Yeah so even if so that still has them growing faster than Amazon.
One interesting contacts for this this is the the growth in the mark Glory when he took over for Neil and,
there is sort of the big shift in philosophy at Walmart like they Walmart really used to focus,
walmart.com used to focus on stuff you couldn't get in the store so I'll they,
they had a you know a couple million skews there they're mostly trying to sell the stuff that people wouldn't traditionally buy from the store so barbecue swingset things things that were inconvenient to buy from a store.
And the mark Lori era at Walmart is really about selling daily Essentials online and so that's a pretty big shift in philosophy you seen the skew can't go way up at Walmart and these these first two quarters tell me,
did that strategies really working and the reason I point that out is that's a really interesting shift and philosophies you know tis.
E-commerce best suited to to,
fill in the gaps that are hard to do and brick-and-mortar stores and sort of rounded out or should your e-commerce offering really mirror your in-store offering and cater to the the same customer base and it seems like at least an Walmart's case,
they're they're doing Best Buy by shifting to try to meet the same kind of needs online that they've traditionally men in store.

Scot:
[39:20] Yes a Star Wars toy collector I get to go to lots of Walmarts and one thing I've definitely notice in the last 6 months is a lot.
One more integration with online in the store so you know just little things like they have these poles out front that keep,
cars from driving into the Walmart I think now they have these kind of sleeves on them that talk about online,
online pickup buy online pickup would be in the very back of the store and it was never staffed now it's moved back to the front of the store couple of my Walmarts are really pushing the,
dedicate a lot of lanes for for grocery pick-up and,
you know I saw I haven't used that but I saw this one person get it in like for Walmart employees came out and we're like,
just yeah team loading the car with groceries it was pretty guitars like a priority that they had a lot of lot of Associates really working on it so it's definitely at the store level there doing a lot too.

Jason:
[40:13] Yep yep and that particular Zaza that pick up curbside experience and they they continue to greatly expand that so I know in California they added a ton of stores with curbside pickup.

[40:29] Which only works well for groceries in this or two things.

[40:34] And then when you talk about Walmart it's hard to not talk about Target and a couple interesting things have happened at Target lately they they've done a few interesting Partnerships we I think in the past I've talked about their Harry's partnership.
I can't remember did we talk about the Casper partnership on the show yet we did.

[40:54] Yeah and so you know they've been doing these these Partnerships with some of these digitally native brands.
In this month they acquired Grand Junction which is a same-day delivery service.
Which is interesting so they're there now offering same-day delivery for for a number a subset of their products.
Yeah they used to have this partnership with curbside and they they abruptly canceled that partnership and then they've turned out and acquired a same-day delivery so that's.
That's it interesting thing to think about it Target is it certainly seems like Target doesn't feel like.
Curbside pickup is the the best solution for them and and same-day home delivery is going to be a good solution.
And I forget what they caught but they also launched a new service with just kind of their version of Prime Pantry that sort of a a bulk replenishment service this month as well.

Scot:
[41:51] Yes starts with an R I can't remember the name either.

Jason:
[41:53] I'll go get our intern on it while we while we go on.

Scot:
[41:57] What are the last companies to report Q2 every year is Alibaba and it's because,
they are a Chinese company that has is held by us entity in Hong Kong it's it's kind of a complicated way that you have to do things if you're Chinese company so they came out this week and,
blew away expectations across the board so the stocks hitting new highs and there's a lot of really interesting things on that conference call.
One of the things that was interesting is their growth is really reacceleration Alibaba so while she was expecting 49% growth night that was kind of stretching it came in at 56%.
And they their adjusted ebitda margins are north of 50% so.

[42:43] Yo if you if you look at kind of the pure Marketplace model there's there's almost no.
Cost in there so so there's causes whatever it cost to push bits around on a computer and an over the wire and and then there's some sales and marketing and some R&D and that's about it so 50%.
Emergency pretty pretty crazy there cloud computing platform that competes they to be us is doing really well and it was a big contributor to that.
They also cited taobao which is their P2P Cana Marketplace they've changed the u.s. and Jason I thought you would find this interesting they did.
Big personalization project at Alibaba that rolled out and they said that that's driving a lot of growth where there they're learning more and more about their customers that are dropped by buying from the marketplace and.
What to recommend to them and get them to buy across the whole family of services and products.

[43:34] Nothing that that's really nursing with Ali Baba is just like Amazon they are doing a lot more in physical retail they've been buying some physical retail opening stores.
In a couple interesting things the CEO said he said imagine the store we can pick up items from the shelf and in the same time.
Be there stuff that's not in the store of the you can scan with your phone and then you just tell the store you know look just have everything delivered to my house and it just goes there because you have stuff to do after you go shop.

[44:02] Another example that used is a see you go to the grocery store and get something for dinner but then.
You didn't know you wanted for the rest of the week so you just want to order a meal online so what they're seeing from the Chinese consumer in and sounds a lot like the US consumer is.

[44:20] They're looking for a spot Navy convenience in speed and total flexibility that the favors the customer versus the retailer that's what they're really building towards they call that new retail.
And here's the quote on that with new retail satisfying ever-increasing consumer expectations is no longer an incremental game it's disrupt.
And in the same sense that we were going to have to.
We have to disrupt e-commerce first and embrace the physical world in and kind of just tear down all the barriers between them so is very flexible is kind of like Beyond even kind of the normal things we think about in omni-channel.
You seem us experiences between the on and offline world is what I Bob is trying to build in.

[45:00] What's interesting is as they go into the more physical store if they're kind of merging the marketplace in there so just like we talked about on the show it's that concession type model is really kind of happening in the physical retail World Air in China.
You haven't seen that the US but it is going to be interesting to watch that and see if that time makes its way over here.

Jason:
[45:19] Yeah for sure the the the new retail Mall of the Alibaba talks about it's not entirely hypothetical either they've actually opened a handful of these,
Next Generation grocery stores they call Hema and said there is actually some video tours of them available online I'll try to put a.
A link in the show notes but what's interesting is when you design a store from scratch for some of those experiences versus you know most of the stores were familiar with in u.s. was a traditional store.
That they retrofitted a buy online pickup in-store or a Home Delivery Service or something to,
it's pretty interesting to see how the store looks different when it's designed from scratch to do that so,
one of the the utilities that I found interesting is they they literally have this conveyor belt in the.
The store with these hooks that like pick up bags of groceries and lift on out of the store like into a Depot area for home delivery,
and so the ends are Shoppers run around they they use you know mobile phone,
get the list of items that they're going to ship home for a customer and then they like.
You know super efficiently just just hang these bags on a hook scan a barcode and that bag gets shuttled off somewhere to.
For a home delivery so couple interesting things like that they they heavily rely on barcodes in the store for product information so you can.
Need to scan a QR code to get you know the product information about all the products in the store China doesn't have the same.

[46:55] Labeling laws that we do in the US so there's even more need to learn about products for for Discerning Shoppers and in China so just some kind of interesting evolution of the store and for your first point.
They're making so much money that they have significant resources to invest in figuring out the future of retail.
And like almost everyone else they've kind of figured out that the long-term future of retail isn't exclusively online so they're they're putting some.
Some real resources and figuring out what the.

[47:27] Physical store of the future looks like in a digitally disrupted World them so you know I for one on and thrilled to see them trying to do that.

[47:39] And I think that that is all the news we had for listeners this this.
Week so as a special treat we have not wasted a perfectly good hours of our spare time,
but we certainly would encourage listeners to give us feedback so as always we have a Facebook page if you have any questions or topics you'd like to talk about her,
hope she like to hear from or just suggestions of what we're doing well or what we can improve we greatly appreciate it and of course of you love the show,
shoot over to iTunes and give us that 5-star review that's super important and we greatly appreciate it.

Scot:
[48:17] Thanks everyone and.

Jason:
[48:19] Until next week happy commercing.

Aug 5, 2017

EP0096 - Listener Questions Part 2, and News

Amazon News

  • Amazon now showing pics of delivered packages in app
  • AU fulfilment center
  • Amazon hiring day (50k new jobs)
  • Lots of new FCs coming
  • Sears to sell Kenmore on Amazon and build Alexa into products
  • New Amazon Hub Lockers
  • Forcing Free Returns on 3p Sellers
  • New Amazon  handbag private label launched - The Fix (Prime exclusive)
  • Stripe processing some Amazon orders

Listener Questions

Michelle Grant via Twitter:
Do you think Nike is one of the few brands that have the leverage to get Amazon to remove 3P inventory?

Steve White:
Hey guys, when I talk to brands they have this sense that they are going to be 'pushed out' or off the platform as Amazon develops products in their respective categories- my sense is that Amazon has never acted like a bully in that regard, just adds additional competition- thoughts?

Parker Block:
Who is right, @retailgeek ? Are disruptive forces going to drive retail consolidation (per @debweinswig) or fragmentation (per @klobaugh)?

 

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

Episode 96 of the Jason & Scot show was recorded on Thursday August 3, 2017.

http://jasonandscot.com

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

 New beta feature - Google Automated Transcription of the show

Transcript

Jason:
[0:25] Welcome to the Jason and Scot show this is episode 96 being recorded on Thursday August 3rd 2017 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 Jason you're you're at home the rear of the sign this is the first week this year you've been home so that's pretty exciting.

Jason:
[0:50] I am for those of you that are listening this would be a good time to up your investment in Chicago area Starbucks if it's possible the individual investor in the Starbucks branch.

Scot:
[1:01] Cool flowey,
you wanted to start off at the top of the show and congratulate one of our friends of the show Peter Cobb he was our first guest and he's founder of ebags and he has just announced today that he is joining the board of DSW so congrats to Peter.

Jason:
[1:19] Yeah that's super exciting I had a nun confirm report that his primary qualification for that job was that he was the inaugural guest on the Jason and snot ship Jason and Scott show.

Scot:
[1:31] Oh yeah yeah I think it's definitely Resume Builder will have to see who the second guess was and see if they rise to Fame and Fortune as well as well.

Jason:
[1:39] Exactly.

[1:41] Scot I feel like we didn't get to talk about it and I may have happened 2 weeks ago but they revealed all the information about the new Tesla and if I'm remembering right you have an option to buy one.

Scot:
[1:55] Yeah yeah I'm excited the actually the day they announced it I put into pre-orders so I was going to,
use one and give away or if I couldn't find some of that wanted I was going to sell the second one and,
it's exciting because they did just kind of update the website and show when they're going to be delivered.
And I find it hard to believe so I'm taking this with a grain of salt but it shows that both of mine would be one is to give you a 3-month window and one is October,
November December in the other one is November December January of,
1718 so I doubt that I will actually be that early but it's kind of fun to think like it could be possible.

Jason:
[2:38] Wow are you going to have time to expand your garage in time.

Scot:
[2:42] I don't know we will see.

Jason:
[2:47] That you talk about first world problems that is definitely a first world.

[2:52] I don't know if I ever told you this but that turned out to be my inadvertent brush with greatness do did you follow that there was this light controversy someone asked you on musk if he was going to get the very first one,
and he tweeted something about how know we have a strict policy that whoever fate pays.
The full fare gets the first one and so that belongs to one of our investors who subsequently gave me the rights for my birthday did you.
Did you see that story at all.

Scot:
[3:21] I did not know I missed it.

Jason:
[3:23] Yes it was like a internet thing for a day and a lot of people were questioning the veracity of that policy,
and so it became a little controversy on stuff but what was funny about that is,
the investors name is Ira iron price and that that sound really familiar to me,
it turned out he was an intern for a VC firm that was when the investors and when the reefers companies I was a principal for and so I get to work with,
I rather like the week he graduated from Stanford Business School and now he's giving Tesla's to Elon Musk.

Scot:
[3:58] Nice you should call him up and get on the list.

Jason:
[4:01] Yeah I don't feel like I would want to want to impose.

Scot:
[4:04] Yeah.

Jason:
[4:06] But I will share the story on the podcast for partial credit.

Scot:
[4:10] Cool actually I think it counts yet that is definitely a Forrest Gump kind of moment there.

[4:15] Two on let's jump into it on this week show we're going to cover some news from the week and last week we had so many listener questions we were swimming and listener questions we're going to.
Kind of swing back around at the.
Back half of the show and pick up some of that we were not able to get to so we apologize to those listeners that were waited on listening it with bated breath last episode,
we will do everything we can to get to the mall of this week so let's kick it off it would be a Jason Scott show without some Amazon news so here we go.

[4:50] Amazon news your margin is their opportunity.

Jason:
[5:06] Yeah so the first thing is I had several colleagues send me pictures this week from there Amazon app where in the the order tracking,
Amazon was uploading photos of the Amazon box being left at the customer's doorstep.

Scot:
[5:25] Yes the.
You tag me in one of those tweets and I logged into my account one morning and had like 60 notifications that's like what the heck the only time that ever happens to me as if Marc Andreessen his stop tweeting but when he was he retweeted a couple things and I would wake up and have like.
500 followers so it felt like that is very exciting for me.

[5:46] It's coming in a few I was kind of thinking through the logic there and so.
Obviously one of the standard carriers is not going to do that so.
So USPS so it's Amazon the bulk of crime goes through ups and then they leverage USPS in the needle little bit of FedEx so none of those three cares would do it.
But they do have this Care Network called Flex that not many people know about this started when they launched Prime now it's an Uber Rush type service so uses 1099 drivers and a very similar Uber like system but for packages instead of people.
And they developed this for Prime now so all the prime now products are delivered that way.
And then what we're starting to see is more and more packages out of the Fulfillment centers they're running some algorithm that essentially kind of.
Uses that same driver not work and I believe if people are close enough for the you can ommix work out that it's.
Cost-effective compared to the other options,
then they will get Flex drivers actually go to fulfillment center and deliver a package so it looked a lot like my guess was that that's what those package pictures were is the flex drivers like an Uber driver they have a very.

[7:05] I'm very specific Amazon after the download to be a flex driver in there they can scan packages and take pictures so seems like that's the logical place where that would be happening.

Jason:
[7:15] Yeah and I think partial confirmation that you're right at the first person to send me that picture was a co-worker of mine Jeremy lockhorn,
and he has a one of the Ring doorbells so after you you positive that theory that it probably wasn't a UPS driver Jeremy pulled the video from his ring doorbell and,
sure enough it was a woman in a tank top that look like.
Dropping off that that the box of the door.
Sheer in Chicago because we're lucky enough to be really close to some fulfillment centers we get a lot of,
same day delivery using those Flex drivers from the actual fulfillment center in Indiana and so it's my my building I have 12 Neighbors,
it's in our condo building is pretty funny we get two waves of Amazon packages a day like our UPS guy comes at about 1 in the lobby fills up with Amazon packages,
and then the Fulfillment center delivers All the Same Day deliveries at about 9 p.m. and are in our lobby refills up with Amazon boxes every night.

Scot:
[8:23] Wow you're just like Amazon sooner there.

Jason:
[8:26] Yeah there's a lot of good trend-spotting by just walking it with my neighbors order I will say I'm someone impressed by my neighbor's they they have some pretty eclectic e-commerce shopping witch.
Which always makes me happy but I think people Basque.

Scot:
[8:42] You're a child the look in the box feature to see what they throwing.

Jason:
[8:45] I have it as you probably know it only works with your own order.

Scot:
[8:48] Yeah I know I try to.

Jason:
[8:49] Which means I can never say anything because it's my boxes are always from my wife so they should have a family family plan for that somehow.

[9:00] Everyone on the plane Prime account you should be able to see or something but I think presumably the reason they're taking those pictures is to reduce fraud and you know false claims the packages when delivered that seems like that.

[9:16] The primary reason.

Scot:
[9:18] Yes there are some of the on demand economy companies make it part of their user experience to kind of show the delivery one of the one of the New Generation Flower companies called Urban style mistake they actually film a little video of the product being delivered and they send it to the sender as kind of a nice little wait to see.

[9:38] It's not as kind of boring as a package sitting on a porch.

Jason:
[9:41] Yeah it makes it makes the most sense in the world and you think about it it's it's kind of sad that the big flower companies can't do that cuz you would really like you never know what the product look like looks like that you purchased.

Scot:
[9:53] Yeah absolutely,
a couple other kind of quick hit lightning round items on Amazon news these are all kind of in the area of filament so.

[10:04] Amazon has long been rumored to be opening in Australia there was kind of definitive news that they have located a warehouse so that's interesting so their first fulfillment center in Australia has been located they've done a lot of PR around hiring for the holidays and they they did a job fair this week where they had,
50000 folks they were hiring and,
moose articles I saw actually wear negative because there's so many people at these events the lines literally went on for,
most people reporting waiting in the lines for eight nine hours it was interesting the financial press was kind of surprised because,
if you look at the data that comes out from the government it looks like we're at effectively you know neutral employment where,
almost everyone has it we have very low unemployment right now but then when you go to these events that they're hiring you know kind of.
10 $15 an hour kind of folks there are also a lot of people out there looking for working and they really would like to work on Amazon fulfillment center so that was really interesting in Amazon got a lot of,
there's ton of press around it.
A lot of it was negative not not really against Amazon just a line seem to be very long I'm the last one is we recovered Amazons.
Q2 earnings last podcast but.

[11:19] After we recorded some news came out that the CFO essentially said one of the reasons there was a lot of expenses kind of in the four projections was that 80% of the format centers are going to open this year will be in the,
back half essentially and Amazon doesn't really open fulfillment centers in November December so back-half essentially means,
July August September October so when I do the math on that it's kind of crazy it makes it seem like they're going to open.
Teen 220 performance centers and it kind of comes out on the high side of that so that's give me something I'll be keeping a really close eye on it is kind of the reading the tea leaves there made me feel like there are a lot of a felmet centers coming in the next 3 or 4 months.

Jason:
[12:06] Yeah and that's feels like that's now going to just be an annual cycle for Amazon so it's it's funny of your investor you should almost like you know grow to expect Q3 to be a low profit quarter as they they have these huge expenses for opening these things.

[12:22] Another interesting news bit do we didn't get to cover earlier is Sears announcement that they would now be selling Kenmore appliances on Amazon and that.
It was interesting for a couple of reasons but in recent months we've talked about.

[12:39] Honest to add previously said they would never sell on Amazon sewing on Amazon we talked about Nike that said Amazon wasn't right for the brand you know he's at least dabbling with some excuse on Amazon you know now we see Kenmore which is one of the you know.
Few remaining valuable properties that Sears owns.

[12:56] Moving to Amazon in every time one of those things happened like it had a derogatory fact on the rest of the industry and sure enough the other Appliance retailer stock went down.
When Amazon announced that they were selling Kenmore so you know I think we're seeing this new trend that.
Then Amazon can you know at least temporarily like materially affect the valuation of all their competitors just by issuing a press release which is.
Pretty interesting in one other thing it was interesting about this Kim ordeal that I didn't see as much coverage on but Kenmore also announced that they would be integrating the Alexa in a bunch of their appliances.
And so that's a you know another controversial one you know a lot of retailers aren't aren't big on Alexa being the default,
artificial agent in all these kitchen appliances because it obviously is giving Amazon this huge leg up and you know now for Kenmore to do it as is,
pretty big blow.

Scot:
[13:58] Yes I think it's you know that a lot of discussions about looks with colleagues and I kind of take it to this pretty extreme wear.
I think Sears could actually do better if they would shut down a lot enough all but maybe I don't know 50 stores or something and sell the real estate and then become a house of brands that sell other places online not only Amazon but.
Definitely Amazon good examples I think a really big mistake they made is they sold Craftsman for something like,
900 million dollars to I think a private Equity Firm note to Black & Decker and you know I think if they'd sold Craftsman on Amazon that would have been.
That line is got to be I don't know what its revenue is but it's kind of be a.
Billion dollar ear line is still quite popular out there with with tool folks so so it's interesting I don't know if this signals a change of that kind of thinking or if it's a last-ditch effort before they sell it or I don't know but it just to me it feels like.
If you could have kept Craftsman.

[14:59] Cheap Kenmore of the good couple other brands sell the stores and use the proceeds to go buy more brands in and I'm kind of a family of Brands there that may be a better future for Sears and kind of like what looks like this slow death that they've been barked on.

Jason:
[15:14] Yeah I know I certainly think you're right I suspect that some of the valuable Brands they've had to sell it been painful and I think they probably had to sell them because the stores are such a money sink that they just needed the cash and you know I think,
you know financial hardship makes you make some some short-sighted decisions and and Craftsman might be a perfect example of that.

Scot:
[15:36] Another quick Logistics one Amazon announced a whole new product called the Hub.
And this is a physical Locker it's a lot like Amazon lockers and even looks kind of like it but what's different is it's meant to go into residential location so at least case they talk a lot about is an apartment building,
or like your building where you are Jason sounds like maybe have a doorman so the packages are secure but pretend you didn't have a dormant then,
you would put this Hub there and you'll receive packages and,
the returns in there that kind of thing just like an Amazon Locker the difference is it now has a new brand called the Hub and if you go to the hub. Amazon.com you'll see a picture one of these and other really interesting difference is it can be used by Third parties so a FedEx delivery person could come in and they enter a code,
there's a sequence that they they can enter on the screen and say.
I have a delivery for Jason Goldberg and it would open the door and then it would know okay Jason lives in apartment.
Etsy and it would somebody would message you and I think you can set up,
as a resident you can log into there some software you can log into and and set some preferences of how you want to be communicated with so you would get a text message that would say.
Jason you got a package from FedEx tracking number X in the hub and then you would go get it and,
and you can even put packages in there and summon UPS let's say for a pickup kind of thing so it's pretty resting and.

[17:08] You know a lot of companies are working on these things and it just Amazon already is is kind of dislike their 5th generation attempted this it was interesting to see them taken more open approach which is kind of the closed public area Amazon Locker.

Jason:
[17:21] Yeah and I mean it feels really smart you you go to like the grocery stores that you know do the home delivery through a bunch of these services and what you now see is,
a bunch of Amazon lockers for grocery delivery next to a bunch of instacart lockers for grocery delivery next to potentially some third service,
and it's taking up a ton of real estate in it it just doesn't seem feasible and so you know you use scale that to these home buildings and it's not likely that FedEx ups and Amazon are all going to get,
get the locker space,
in the lobby City's building so it's it's pretty smart of Amazon to say hey wolf will do the landgrave pool get the space because we'll let you use it for everything.

[18:03] And I do also you know obviously one of the things this is a dressing as just as as.
You know we're being disrupted by e-commerce and so many of us are getting so many packages at home one of the real problems that's coming up is package theft and we're saying all kinds of.
Interesting and Goofy Contraptions being invented to sort of mitigate that but these Walkers are obviously.

[18:26] One of the best tool so so I suspect they'll get some success with that the next news item I saw.

[18:36] Got some seller Amazon sellers and a little bit of a kerfuffle Amazon sent out a letter changing their their returns policy for three-piece sellers.
All just read a little bit of the announcement dear seller Amazon is simplifying the returns process on items fulfilled by sellers.
Starting October 2nd 2017.
Returns of items that you fulfill and that fall within Amazon return policy will automatically be authorized customers will be able to print a prepaid return shipping label via the online return center instantly.

[19:12] There's another paragraph where they announce another future which is we're also introducing returnless refunds a feature of the tire you requested by sellers.
If you choose to do so you will now be able to set rules and automatically issue a refund without requiring an item to be shipped back to you.
So as a request this because in many cases it allows you to save on both return shipping and processing costs so the gist of this.
Is your three-piece seller on Amazon you're not using FBA.
Customer wants to return a product used to go through a process and the seller would have to authorize that return and now they're just saying hey we're forcing all sellers to take returns no questions asked.

[19:57] And there's a lot of small sellers then on the forums and on the the Amazon forums.
I really outraged about this because you know you know they feel like they're getting getting cheated by by these nefarious buyers that buy stuff and then.
Indiscriminately return it and I think it was even some confusion some sellers thought they'd be forced to use this this returnless refund.
And that clearly isn't the case that's really designed for products where you know it's more expensive to ship the product back than it is to just throw it away or something like that and so you know they're giving that as an option to sellers but.
I don't think this is news for anyone in FBA I don't think it's news for any of the big sellers but you know I do think it's.
An interesting play I understand the sellers being upset by it but as a customer I think it makes a lot of sense when Amazon is doing.
It's really confusing and complicated when the terms of service are different for every product you buy.
Based on who sold it to you right so I buy 3 things they may have come from three Cellars.
On Amazon I typically don't even notice that and so then if I want to return all three it's very odd that two of them are returned with no question to ask and one of them the return is denied so this seems like a.
A step to force more consistency in a more customer-centric.
Approach on Amazon and you know certainly at at some cost to Amazon sellers which I understand they they probably don't appreciate.

Scot:
[21:29] Yeah yeah a lot of small sellers view returns is kind like this.
Battle Ground and they the Dig and dig their heels and have these stocking fees and all this kind of stuff they try to turn into a profit Center and I think the larger sellers of kind of said look please.
Those days of Internet are over that's comic 1995 thinking let's returns are here to stay just got to make it in your modeling and that's not going to be the profit Center in whatever the cost is.
Put it in your business model and go forward you can't just,
can have that kind of thing and I agree with you it it's level sets to user experience that makes it a lot cleaner than than kind of the password to Congo reach every sellers return thing and go to the different rma's and all that stuff.
Another Amazon news item is I think one day in the future will look back on 2017 and it'll be the year of Amazon private label because seems like a new private label is launching every week right now so this is your for long time you had a couple out there anchored with amazonbasics and,
couple others pins on and and Stratford and things of that nature and then this year there's been like literally a new one is discovered,
every month so this month so you know.
Private label is called the fix and it's Prime exclusive so all these private labels are either Prime exclusive or not this one is a prime exclusive private label and its Footwear and Handbags so.

[23:02] It's got kind of a very floral bright kind of a look to it so it'll be interesting to see how that does.

Jason:
[23:11] Yeah you know I think there's some possibility that Amazon you know has been the Nemesis of Peter Cub forever and so what a coincidence the day Peter goes to work for shoe company Amazon start selling shoes.

[23:29] But yeah I do think it's going to be interesting obviously you know every industry looks at Amazon and then go oh man they're doing great and all these other Industries but,
but our category is much more more complicated and you know I suspect a bunch of people at,
a Vera Bradley in Michael Kors and you know all the other brands or you know waking up this morning and either.
Being being concerned or or not but but they certainly probably should be based on the success of some of the other Amazon brands that they've been able to build.

[23:58] And I just always like to remind everyone like we get in the habit of calling these private labels because they're their brands that are offered by the retailer but.
You know my joke is Alexa probably doesn't feel like a private label to the the product managers for Bluetooth speakers at Sony.

[24:17] Seems like they're full fledge brand.

Scot:
[24:20] Yeah and unlike kind of what I talk to other brands they kind of say well we've competed with private label for very long time which is true but it's.
Different because you know these are frequently tagged.
With Amazon Choice they're designed in such a way to be very diffi like mature Brands so it's not like Old Roy dog food where it's like clearly the the Walmart brand or something like that so there's a couple that are there's like wickedly Prime and amazonbasics obviously,
but you know when they when they do these apparel ones they slip them in there and,
you know it is as a consumer that's not familiar with every brand it is hard to tell so if you do a search for dress shirt or black dress and you will see I'm guarantee they'll be a strip of Brands up there and two of those are private label so it's kind of a I like to do this I go into a,
like you I present a lot I'll go into a presentation and and pull that page up and say what's the private label and I would say almost understand the time people cannot a hundred percent gas at the,
there's one that dough gas in it other one don't they will mess up so I think it's people should take these very seriously.

Jason:
[25:35] For sure and think about it like what the next likely plays are with all these brains right like Amazon guns going to use.
All their data on selling Handbags and Footwear across all products,
to identify the attributes that customers most want they're going to use the search results in the the non converting products and figure out where the gaps are in the market and so there,
they're going to be able to use this huge amount of data that they have,
dictate what you know how their product lines evolve which is a potentially big competitive Advantage now they're going to install cameras in a bunch of people's dressing rooms and take pictures of their outfits so now they're going to be able to help.
Help no much more so than any other manufacturer,
the exact fashion sense of all their customers and what products they tend to wear and how frequently they tend to use them so that's going to give him another big advantage over over the traditional Brands and then you know course they're going to roll all these products into,
the Amazon wardrobe offering and you know send free trials to customers to let them keep them if they want them like they're just building so many pieces of.
Ecosystem here and if your you know your attritional handbag manufacturer or footwear manufacturer that just makes products and tries to sell on you know.
You know I think you really need to think about it like you're not just competing against another skew your complete competing against a whole new echo system that that.
You know in the medium-term is likely to change how people shop for these products so that's going to be interesting to watch.

[27:06] The next news item I had I'll be honest I'm not sure what to make of and you you had a particular interesting Theory,
stripe made a press release in stripe as a,
very popular payment Gateway particularly with smaller Sellers and marketplaces in they made an announcement that they were now.
Providing an undisclosed conducting transactions for an undisclosed percent of Amazon sales.
So Amazon is now using stripe for some of their payment processing.

Scot:
[27:46] Yeah this was a tricky one cuz it was reported everywhere and it was hard to chase down the.
The source and its in a Bloomberg article will put it in the show notes and seems like the author saw Amazon's logo on their site and that was almost kind of the.
The Germ of the whole article who's winning pieces you know how they became a unicorn not stuff which is great but then you know it is weird because so stripe is.
Primarily used for mobile payments and I just got to imagine that core Amazon which one you think about amp.
Mobile is the the Amazon app I find it hard to believe they would use stripe but the.
Interesting thing about Amazon culturally,
is every team is independent and so the cost of that is you don't get a lot of reuse of sometimes nowaday forestry used to the the cloud platform called AWS which is kind of how they saw some of that but I have seen teams at Amazon just kind of like me,
their own kind of choices for things and dude.
Copies of things like for example in Prime now launched it had a whole different set of product images and taxonomy and things than Corey Amazon and,
traditional companies would say well why would you do that that's silly but Amazon favor speed over over efficiency so.
So my guess my first guess was while there's a team in the Amazon that wanted to move quickly if for some reason they didn't really want to use Amazon payments per se so they probably just use stripe then I was kind of thinking what.

[29:24] That be two ideas I had were,
so the treasure truck is really starting to scale up an. You can imagine that that's going to be one of those scenarios where you're going to need to be out there,
you're in the field with a point-of-sale system Amazon doesn't have anything quite like that and you're going to want to be.

[29:44] Having an individual process payments kind of a sales rep kind of thing so that kind of struck me as potential area and then another one is maybe like some of the Amazon book stores or something like that maybe.
Oster using has striping bedded and then you know the AWS team is kind of its own Rogue thing that I was thinking maybe they certainly are processing a lot of credit cards there maybe Stripes used on the B2B side there and some context,
yeah or maybe there's some other Amazon app haven't really thought of this launch in the last year that that used to stripe to as as as payment processed I just went to really hard to believe that core Amazon is using stripe unless you know this is some precursor to an acquisition or.
Did Solving some.

[30:28] You know it could be maybe an international kind of think so sometimes you know you're going to Sonny's markets and the it would be too expensive to add support for payment Type X and maybe stripe party has it,
those are kind of the things or maybe they wanted Amazon pay or Apple pay added to something and you know,
Apple present keen on letting Amazon into that so they stripe give him coming arms-length way to have that those are kind of my thoughts on this I don't think it's kind of what,
you know the kind of implied in that article.

Jason:
[31:05] Yeah I think any of those are possible like I greet with you unless it's a precursor to an acquisition it makes no sense then Amazon would just start using stripe as kind of a.
1/32 primer for people about payments like.
If your small pair a small seller and you want to start taking credit cards you're likely going to pay a 2.9% fee for credit cards and that's the,
the base price that striped charges to accept a credit card the more volume you get the better price you can negotiate.
And so if you're a huge retailer.
Only 10% of your sales are online so you're selling if you're Walmart you're selling 300 400 million dollars billion dollars.
In stores you're selling 14 billion dollars online.
You want to aggravate all of that sales together to get the absolute lowest credit card fee possible and that size you're actually going to install your own network and have a direct relationship with a bank.
Either a little smaller than them you're going to use one of these Enterprise providers like cybersource or Chase payment.
Amer maybe Braintree you know that these are all really common with the big Enterprise sellers.
And where stripe is really fit is for smaller Sellers and newer sellers because what with stripe uniquely did is stripe said hey we're not going to try to offer features that appeal to the CFO making the decision.
What service they're going to use we're going to offer features that appeal to the developer deciding what service to integrate.
And said they they have much better api's and documentation and implementation guides and you know if you're a small startup and you want to add Payment Processing.

[32:43] Million times easier to implement stripe then something one of the other payment providers I mentioned so they kind of grew viral RI some of those small companies have become quite large.
But that's really historically been there Niche the big Enterprise company retailers haven't been using them in the biggest retailers for sure wouldn't use them because they would just agregate up all there.
There their transactions so it makes very little sense for Amazon to take a small percentage of their revenue,
pull it out of their deal with a bank send it to stripe where they would almost certainly have to pay higher interchange fees it just it just doesn't.
Doesn't make sense unless there's something else going on like you you theorized.

Scot:
[33:23] Yeah and you just jog something for me one of stripes,
biggest benefits therapy eyes is not only are they good at charging cards but they're good at disbursements that ends up being something you need if you're going to be a Marketplace so Airbnb is large customer of theirs and so imagine you rented your apartment out to you would want to collect from the renter and then you would want to receive payment and that disbursement part is is kind of tricky because,
you as the person receiving the dispersement you may want it to an ACH on a credit card or who knows PayPal or something so then that makes me think,
the newest Marketplace in Amazon is Amazon Home Services where,
they are doing a lot of these you know installations of those kinds of things were there collecting frown when in and dispersing on the back end so that that's like another option I can think of is,
strike could be the disbursement platform for that.

Jason:
[34:18] Yeah yeah that totally possible so that that is going to be interesting to watch.

Scot:
[34:22] Cool and non Amazon news just a couple of quick ones,
Stitch fix has been widely reported to be close to following an IPO and then they actually have apparently file to confidential IPO.
In the way this works is there is a jobs Acton before the jobs act you would minimally familiar with this process you would,
you have to file your S one and then you would essentially put everything you're doing out there in the public so as you go back and forth with the SEC your documents are out there for everyone to see,
and you maybe the market goes to a rough. And you want to pull the IPO you've already kind of revealed all of your deepest darkest secrets so what the jobs I did is it allowed for companies with a under billion dollars of Revenue to file confidentially so you get a period of time where you can file you know you have to tell anyone you have seems like they have chosen to tell people they filed but it gives you this kind of air cover where you can work with a cc,
you can,
you can even cut an update the documents over a quarter to and essentially get ready for my PO and then do the timing.
Whatever works best for you can see how the market rolls out in it leaves alleviates kind of a lot of the risk and stress of the IPO process so a lot of.
Series out there of why they're doing it now and I do think if it kind of the math they were reported to be at like a 800 million dollar run rate,
I bet they were getting pretty close to the billion-dollar run-rate and you lose the ability to do this so you also see this kind of decision Point kind of at that billion-dollar run rate of your gosh we need if we're going to do this confidentially we can have to do it now.

[36:05] So I think,
I think that's to be really interesting to watch when they do take the covers off that US1 will report on it because a lot of people are very curious about what's going on under the hood there.

Jason:
[36:16] Yeah I hadn't even thought about that but then she'll risk that they go over the threshold that's that's super interesting the other.
A news tidbit I had was an announcement from Walmart and JD in China and for those that don't know JD is the largest.
Direct seller e-commerce site in China so you know we always talk about Alibaba which is Team all and tell about those are both marketplaces so jd.com is the largest kind of traditional.
Reseller of other people's stuff online and they have announced a pretty interesting partnership with Walmart to,
host a shopping Festival which here in the US would call a sale holiday on August 8th next year so that's that's going to be an interesting.
New play from Walmart in JD and China to try to create their own shopping holiday to compete with alibaba's single day on November 11th.

Scot:
[37:16] Yeah freak will be interesting to see if they're going to call it like all each day or double 8 answer seems kind of can't call it singles day.

Jason:
[37:25] No but I suspect we're going to have a podcast to cover it next year.

Scot:
[37:30] Absolutely.

Jason:
[37:32] So was you mentioned upfront we did we did listen or questions last week which were great and very popular but we didn't get time to answer all the listeners question so it is once again time for.

Scot:
[37:53] Questionnaire questionnaire question love the echo did you you must have done that one at the Grand Canyon.

Jason:
[38:04] Exactly I give that sound effect was a little shorter we would have had time to get all the questions in last week.

Scot:
[38:09] I never know if it's ever going to totally stop,
our first question this week comes from a longtime friend of the show Michelle Grant she's at euromonitor in this one was from Twitter and her question do you think Nike is one of the few brands that have the leverage to get Amazon to remove 3p inventory,
and that's what they're calling Marketplace skating so what you think Jason.

Jason:
[38:37] Yes I do think they're one of the few but I think it's a combination of things right like I think I think you have to be a big desirable brand and I think in in Nikes case the levers they had is that they,
we're not selling on the brand and they're one of the the most requested products on Amazon and Amazon you know didn't carry except through.
Through a three-piece hours and so I.
Like I do think that was interesting that they had the leverage to to clean up the the the marketplace by by draining Sales & Products Direct,
I wouldn't surprise me if we see a couple more of those deals but I certainly don't think they're going to be commonplace I certainly think in general.
Amazon's not going to be willing to do that and you know frankly as they knock down a couple of these top.
Top brands they want they're just going to bless less future brands are going to have less leverage to cut the same deal that Nike cut.

Scot:
[39:33] Yeah I agree I think there's literally 5 to 10 brands that could get this kind of treatment things going really interesting is how will this relationship work so yeah you can paint a scenario where.
Nike went into this genuinely wanting to sell more product and clean up the marketplace or you could say we'll maybe this was kind of a little bit of had faith in there like okay Amazon will sell some of our in Nike has a good better best will sell some of our good in a little bit of better but none of our best,
and you're going to clean up the marketplace and then you know the other part were not privy to as what is the pricing relationship so.

[40:13] Amazon hates it when they can't change the price of a product they will they will live up to map pricing.
But if you see it cheaper somewhere else they really like the flexibility to lower price so you can see this relationship being a little twisted if.
Couple scenarios so so let's say Nike has somehow negotiated Amazon can't do that that's going to drive Amazon crazy not being able to the price so that's one scenario where this relationship sours another scenario is where.
You know.

[40:44] Amazon goes and changes the prices like maybe Nike came in thinking we've got our pricing under control that's not a big deal fine change prices if you find it lower and it was on so good at that that that's a good may surprise it in my experience and I deal with their very surprised that,
Amazon so aggressive with pricing and then be when they call him on it Amazon can provide like a detailed report that says here's why we lowered the price it was you had it at,
in Iowa there was the store that had it in with a it was even cheaper per se but it came with a gift card and that's why we not to ten bucks off across the country so I think that could cause some friction and then,
Amazon is forgoing some a lot of Revenue and a lot of margin and maybe a year into this it turns out that,
3p was more practical than Nike I I don't know what the outcome of that would be but I got imagine Amazon has some data there so it's kind of interesting to see how this relationships going to play out over time at I think I see more scenarios where it kind of sours and then they cut split up then.
Baby come back together later or so we'll we'll see how it goes.

Jason:
[41:54] No I think you're exactly right and the 3p Marketplace is such an important part of Amazon success it just it seems like.
Yeah that's to be a really compelling reason for them to do something that that negatively affects that.
So the next question we got is from Steve White and,
Steve is a co-worker of mine on the the Commerce team it sapientrazorfish so no Steve very well and he he sent the question hey guys when I talked to Brands they have a sense that they are going to be pushed out of the,
platform is Amazon develops products in their respective categories and then he goes on to say my senses then Amazon has never acted like a bully in that regard just adds additional competition,
thoughts so Scott is are they going to kick off all the shoe companies now that they have private label shoes.

Scot:
[42:45] No no I think you know they Amazon love a couple things today love fast free shipping they love Amazon Prime and the kind of loyalty it builds and Trust the things they love on top of that or selection and volume so there's this classic Amazon flywheel,
Scot funny up and talk about this for 10 years now I run chose to flywheel,
in and at the heart of the flywheel is selection and value and that's that's where,
you know they don't really push Brands off so so I think,
what I'm saying is this really interesting kind of hat trick where you'll have a name brand out there so let's say.
I don't have Bob I was buying something that has buying some shorts so Columbia shorts are out there and they were like $80 maybe $60 for last year's kind of thing that was the name brand,
men's shorts and then there was an Amazon Brandon there and then there was a Chinese brand so so I think they they like giving consumers that option to say hey here's here's a wide price range of things you decide,
and they're all prime eligible and you decide what you like do you want,
us to have a cop put our brand on something and call it the Amazon choice and the private label do you want to take a little bit more risk on quality and whatnot with a Chinese kind unbranded Cellar or do you want to buy from the name brand name brand that has you know it's more expensive and you're going to get you.
Better fabrics and better this a together with that one so so I think I think.

[44:21] That brand shouldn't worry about that now would they should worry about those the slice of the pie because even though they're still on there we weave there's stairs.
Lots of case studies that we see everyday of these traditional Brands they don't really pay attention to their Amazon business,
and I'm not real brand comes in and soaks up like 80% of the Amazon Market overnight and that's hard to fight against even if your name brand because just the way they Amazon machine works with SEO and sales rank in the ad system in FBA and all that it can be very hard for a traditional brand,
did they have to make some really fast.
Big decisions that big brands are not good at making to catch up to that sir so I think the risk is actually that they lose a slice the pie,
and that's the entire Amazon Pie which is the very big pie.

Jason:
[45:10] Yeah once again I totally agree I think the.
There's very few things are going to do to get kicked off the Amazon platform I mean you know violating terms and conditions.
You know fake products stuff like that or,
selling stuff that Amazon can't make a profit on you know if you know you can fall into that category and get kicked off the project the platform but,
it certainly is unlikely they're going to kick you off the platform to preference their own Brands to your point.
Like it can be harder to win the buy box when Amazon has products but I don't even think that they.
Manually putting their finger on the scales in most cases.
For those private Brands I think they just know how to score better in rank better in there and answer the result they're going to win the buy box more.
And you know when those search results more.
And therefore it is you say get get a bigger piece of the pie I would say the one place work like this still isn't getting kicked off but we're probably feels like it's getting kicked off it is.
You know something like the echo is getting like so heavily promoted around holidays like Prime day and and Christmas and you know it could be.
Pretty hard to elevate visibility for your competitive product you know if you're competing against one of those.
Does core Amazon products but I don't think we're going to see that for all the private labels on Amazon.

Scot:
[46:44] Yeah and here is our last question this is from Parker block this one requires a little bit of setup so there were two articles recently out there another friend of the show who has been a guest Casey Low by he had an article out talking about kind of the fragmentation of retail so lots of Little Stores sign things and Brands going to react so,
Lots in this big kind of.

[47:08] Tons of choices for consumers at the same time a popular writer Deb weinzweig she used to be an analyst at Citi now she writes for Fung retail.
Sheeran article that said know there's all these disruptive forces going on in retail and we're going to see massive.

[47:28] Consolidation so essentially you're going to go from you know I don't know how many retailers but if you look at kind of Mulligan and you start tracking the number and they've been very good at.
That tracking the number of store closures and then projected store closures and all that it's pretty easy to convince yourself there's going to be.
Walmart Target and apparel company and,
or two or three in a couple luxury ones some dollar stores some clubs and then that's kind of it so a lot of the retail is going to go away and we've seen enough more bankruptcies this year than we've had ever so,
so that's a long set up so the question is and I'll let you tackle this one Jason,
are disruptive forces going to drive retail consolidation which is Deb's argument.
Or are we going to have fragmentation which is Casey does seem to be mutually exclusive outcomes so I'll I'll turn it over to you Jason to hear your thoughts.

Jason:
[48:22] That's very very clever I was actually hoping to hear your answer and then I was going to tell you whether you were right or not,
but well they seem to be mutually exclusive I actually think they're not and so I think the answer is both but I'll I'll.
Be a little more definitive than what I mean by that the.

[48:42] I feel like we're going to definitely see a consolidation of people that are segregating other people's stuff and selling it.
So traditional retailers that buy stuff from third parties mark it up and sell it I just think that's going to.
Increasingly be a hard business to be in in differentiate yourself in and we're likely to only see a handful of those product aggregators,
and you know obviously at this point though the one that that certainly seems to be winning as in North America is our friends in Amazon but at the same time.

[49:15] That we're seeing a lot of product manufacturers have lower barriers to entry to sell direct to Consumer than ever before I mean 50 years ago if you invented a product the only way you could get it to Consumers was to get it on the Shelf at retail,
and today it's it's much easier to sell that stuff to wrecked a consumer and increasingly.
You you would want to go from a margin standpoint and from a customer intimacy standpoint and from a data standpoint,
and you have to because that's,
tell me what you can control your price and differentiate yourself and you know not not just be you know and see if 100 million products on Amazon and so I think what we're going to actually see is.

[50:01] A fragmentation and sellers in the form of product manufacturers that are selling their products direct and we're going to see a consolidation of sellers in the form of aggregators that sell other people stuff.

[50:16] So so Casey Deborah you're both right.

Scot:
[50:20] You unpacked the mutually exclusive arguing very well the aldila controversial and disagree with you to some extent so I'm going to go consolidation and.
I put a star by that so let me come back to that in a second but let let me dress fragmentation night do you think it is interesting we talk a lot on the show about the digitally native vertical Brands but what's interesting if you kind of look at it.
They haven't scaled as big as you would think they would right so so the splits pick on bonobos they've been on the show great brand love them love Andy's riding and all that stuff,
but they sold the Walmart you know they didn't create kind of a 5 billion dollar brand and.
I don't never disclose sales but I think they sold for 300 so if we give them kind of a 1x sales or maybe that was to set put some between 150 and 300 million.
You would think with the vast audience online that they would have been able to just keep selling in Skilling online that I haven't opened stores but they ultimately had to open stores to get consumer awareness so.
So I think there will be Brands willing to sell direct but it's going to be hard because it's very it's a weird customer experience to not have them aggregated in some way,
and that's what traditional retailers have provided now back to my consolidation I think we're going to have consolidation but I pull astrix by it because I think the consolidator is going to be different than what we think they are,
tell me the traditional folks like an Amazon a Walmart kind of department store kind of thing but I think what will happen is.

[51:52] As these Brands want to get consumers to consolidation points will be where your attention is and.
China is a really good example of this where you know you have WeChat has become itself it started out as an app.
App for chatting it is become this portal or Channel now that people shot through so the app has become kind of the.
What's the web essentially so it has the tire web inside of an app and that's.
A form of consolidation so if it kind of project that Ford in the US I think what you'll have is you'll have some traditional retail points of consolidation but I think actually what will be bigger is going to be,
it was some the platform consolidation so I think you actually will have a fair amount of sales going through Facebook it's hard you know and I.
Put Facebook I put in stew and all that stuff inside of there and then also when you look at people where people are spending their time things like Snapchat Google and then maybe even at the device later maybe an apple or.

[52:53] Yeah it's kind of nother kind of consolidation point so.
That's how these brands are going to have to be able to get in front of consumers because they just can't do it through traditional channels and.

[53:07] Part of my thinking on all this is that we go to a much higher percent of sales that are online and that's kind of what's happened in China as well to drive that behavior so so I think consolidation but not just retail consolidation but.
No attention consolidation which may be a retail thing like Amazon but it could also be Facebook Twitter and yes those guys have tried all this but I think it comes back around in some form and that's the,
platform for discovery that I am you're if you're not playing on those your you won't be found on the internet.

Jason:
[53:41] That's very interesting.
I will totally buy that it can spend the fact that most of the platforms have had very little success today I I certainly agree that is going to be easier and easier to push the,
the transaction out to the point of Discovery so if if they're in a new points of Discovery they could ask absolutely be consolidation points,
so that that's a great call at Scott I'm going to Sweet Lee clarify my answer when I said,
brand selling director going to you know therefore be a bunch of pregnant at Sellers I suspect the overwhelming majority of those Brands still will sail with the aggregator so I don't mean no exclusively sell Direct,
but I think they'll they'll certainly you know do their best to earn as much of the direct businesses they can and you know particularly if you look at it through Scots timeline.
The other thing that's going to happen is a lot of the buyers for this stuff are going to be computer chips are all agreed them's that are doing Auto replenishment in your home and.
You know that the Samsung dishwasher is not going to care whether it buys your tide from Amazon or direct from Procter & Gamble and so you know I think that's going to.
Create greater opportunity for for those direct Cellars in a bunch of those categories.
To have a meaningful Direct business so would that said I have a follow-up question for you is a Marketplace.

[55:02] Consolidation or fragmentation right so on Amazon where I've got you know a huge number of sellers but a single cart is that actually.
Fragmentation of sellers or consolidation of carts.

Scot:
[55:16] I think it's consolidation because and I think their traditional way of thinking about.
Consolidation is front doors so that's kind of the approach I'm taking his like you're going to how many please it offline metaphor how many physical front doors do you end up going through.
That number will drop off line in offline I think now it's your counting the fragmentation is the number of buying entities or if sellers of record behind the front door.

[55:48] I think that's kind of a nuanced kind of view of it but I see where you're going with it but yeah I think it's the front door is kind of how I am I'm answering the question.

Jason:
[55:58] Cool Scott we we meet at we got all the way through or listen or questions,
and that is perfect because it is happen again we've wasted a perfectly good hour of our listeners time so we certainly would encourage listeners to continue the dialogue on our Facebook page if you love this episode we greatly appreciate a 5-star review on iTunes and feel free to use Twitter or Facebook to,
send this new questions and we'll agregate a bunch of them and do another listener question show in the future.

Scot:
[56:31] Yeah thanks everyone for all the questions we really appreciate it.

Jason:
[56:34] So until next time happy commercing.

 

1