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

Join hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder & Executive Chairman at Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: 2018
Sep 23, 2018

Sucharita (Mulpuru) Kodali @smulpuru is the Vice President and Principal Analyst at Forrester Research covering retail and e-commerce.  She has previously worked at Saks Fifth Ave, Toys R Us, and Walt Disney Company.

In this interview, we cover a wide range of topics including shop.org 2018, Amazon, marketplaces, holiday 2018 predictions, personalization, and the future of e-commerce.

Upcoming:

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

Episode 146 of The Jason & Scot Show was recorded on Thursday, September 20th, 2018.

http://jasonandscot.com

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

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 146 being recorded on Thursday September 20th 2018
I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:41] Hey Jason and welcome back Jason and Scott show listeners Jason were sitting here at episode warning 146 knocking on 150 and
there's someone we've been trying to get on the show for a long time but she is so busy
it's taken almost a hundred fifty episodes for the stars and the moon and the planets to align so we are really really excited to finally have on the Jason and Scott show the
Infamous and famous sucharita kodaly welcome to the show sucharita.

Sucharita:
[1:11] Oh thank you Scott and I'd only been waiting for years to even be invited to the show so this is my moment.

Scot:
[1:20] Usually the inter I give like a little blurb about people and I was like near LinkedIn and there was so many things you've done the the ones I'll just throw out there you've got tons of retailers at Walt Disney and of course well known for Forester so
so you're welcome to show excited to have you.

Sucharita:
[1:41] Thanks for having me I appreciate it finally.

Jason:
[1:46] Hahaha.
I feel like the weight is going to be well worth it as you know from having listened to a couple shows we always like to start by a kind of orienting the listeners with a little bit of background and sort of a.
A quick synopsis of of the scope of your roll now so I know you have a fancy title principal Analyst at Forrester.
What does a principal analyst do.

Sucharita:
[2:10] Yeah I'm pumped Forrester for for for those who don't know is a technology research company it said based in Cambridge
Massachusetts and we have a number of analysts to focus on different aspects of a technology research and I've focused for the 10-plus years that I've been at Forrester
I'm on the retail industry so that means digital retail omni-channel issues mobile Commerce
social commerce and anything and everything that really
involves a bit technology or the internet and I work with retailers and a lot of the technology
suppliers and Technology software providers that that support the retail industry.

Jason:
[2:56] Very cool and Anna Scott alluded to it but you you have a prodigious retail background before coming to Forest or can you share their listeners of the synopsis of how you got there.

Sucharita:
[3:08] Yeah yeah there would you pull just before I had joined Forrester I was at a department store so I worked at Saks Fifth Avenue for the saks.com team.
And the four sacks I worked in Big Box retail I was at Toys R Us for for a little while and then before that I was at a startup during the
first.com the late 90s and it was that it was a startup
that was in the e-commerce space selling baby products Baby Style and that was actually founded by a colleague who had worked at Disney
when I was when I was there so so that is that range of experiences except brands
internet start-up department stores in big box.

Jason:
[4:00] Awesome and that you Scott and I are part of the prestigious club we have we've all served on the shop. Org
board of directors and you and I were just at shop.org in Las Vegas last week.

Sucharita:
[4:15] Indeed indeed yeah that shopped out of work is where I think I got to know both of you.

Jason:
[4:22] So that alone is a good reason to be part of shop.org to get to meet fabulous people like Scott and sucharita and.
I'm curious I haven't had a chance to kind of debris that you sent the show any big takeaways or or.
I think thank you you saw or heard of the show that they stood up to you.

Sucharita:
[4:43] You know that the topics that seem to come up have been a lot of the topics I think that that don't have been
pretty popular in 2018 as you know Jason I know that you had spoken on that like a Ally and machine learning which retailers
I think we're just still trying to get their arms around what does it mean for their businesses and is there a flexibility and is there applicability really to amateur business that has a large sore foot
print where where is there an opportunity there and in how do they even know
think about leveraging it it to their advantage.
Amazon is always have Perpetual topic of it's almost kind of every conversation I have with a retailer it almost seems like it
I have done to that territory.
There was that that you know also I think I'm an interest in in just it as an extension of the Amazon discussion around marketplaces.
And that will likely be wanted
the topic said that will probably talk about today is that is that a Facebook and what it's doing with it
latest Commerce Commerce initiative those are definitely that that the teams that stood out to me that seem to be recurring that that came up over and over again.

Jason:
[6:09] Nice I actually feel bad because Scott wasn't able to make it this year due to the hurricane.

Sucharita:
[6:15] We miss you Scott.

Jason:
[6:17] I know it's not the same.

Scot:
[6:18] Is the first one I've missed and I think I'm going to say tennis shoes on it it was very strange not going this year but I've heard a recap so I saved.

Jason:
[6:28] Nice if you're doing the math at home that means Scott started going shop.org when he was a teenager.
But you gave it talk there's a secret session on the giveaway that the inside scoop is it shut that or there's a secret invite only session call Executive afternoon and Shop. Org.
Then all the fancy people attend and that's when they get all the big brains to present.
And you were one of the presenters at that section and you actually talked a lot about marketplaces and I was as I was listening I was thinking of myself.
Scot Migos toys.

Sucharita:
[7:02] Well this is wet that Scott's been evangelizing for for so long right is it is how much of the world is is now marketplaces how much of retail is now Marketplace is and the Forrester stats are that globally marketplaces are now.
50 more than 50% of all of e-commerce projected to be north of 60% in 5 years or so
so your call at has always been right Scot Wingo.

Scot:
[7:29] Thanks thank you I need to bring you on on all my meeting so you can talk.
I'll just put a quote then I'll just put on my slides Scot Wingo is always right situated so
you know one of the things we identified early in the Chow beiser was sweet we started going to China and realizing
you over there it's like 90% marketplaces to do feel like we're heading towards that kind of world or do you think you feel like that kind of balancing point in the 50 to 60% range right where do you think that goes.

Sucharita:
[8:03] Well I'm a large you're right I mean it's there's a large part of e-commerce that is China it is the largest e-commerce Market in the world and when most of the e-commerce in the largest market is marketplaces it's going to be skewed a little bit that figures for the US I think we have our life
more like 30 to 40%.

Scot:
[8:23] That was a global to 50%.

Sucharita:
[8:25] So yeah sorry I if if that wasn't clear
but that so so where is the saturation point for for marketplaces in the US and I think that that is a question that's all smelly
what's there to nuances I think that are important with that question 1 is how broadly we Define marketplaces once you get into defining marketplaces with travel or potentially with food or other categories
it becomes the penetration numbers change and it's actually even higher because there are certain categories that are entirely marketplaces like in a large marketplaces like ride-hailing.

[9:05] So so that is why I think that there's a there's a there's a very narrow definition of e-commerce that we have now which is about
30 categories of physical goods and within those 30 categories the future I think is ultimately I intertwined with the future of Amazon in retail and I think that's the at the big that's one of my big questions is given
Amazon's first-party margins which I don't I think are probably the lowest margins of all of its key category is that it does business in Risky Business says that it participates in I think it really begs the question of yet you know do they
do they consider do they lean into their
higher margin businesses like advertising or cloud or hardware and ultimately
give up on on some of the retail on pieces and they've become more of or they become more of a service at service provider and in that in in that scenario I actually think.

[10:13] We may see a cab to that market place to Unistaff.
Maybe we won't get to 70 or 80% liking somebody you know some of these other markets like China or north of that but.
But I did it for I think it's it's it's heavily dependent on your what sort of happens in the next five years with Amazon.

Scot:
[10:34] Yep so we we've already kind of jumped into it but it wouldn't be a Jason Scott show without talking about Amazon so it's a good Market Marketplace kind of approach
I had a 30000 foot question for you I were Twitter buddies and you know if I kind of look at the trend your your kind of.
Not anti Amazon but I get the vibe that you're kind of feeling like you know
maybe they'll come under more scrutiny around some stuff with what's going on there.

Sucharita:
[11:01] Well I think that it there a lot of people that think that I did you know there's there's no question that
there are there certain
things that happened on Amazon there are CEOs of companies like Birkenstock and Swatch that have called out you know that there are fake versions of their product on on Amazon so you have
counterfeit issues you have pricing issues there
yet you know there are issues related to the authenticity of reviews on the other number of products that I bought an Amazon that I'll have like 500 positive reviews and then you get the product and the packaging
contact this URL for support and it's it's a URL for some heat for a non-existent website.

[11:55] There is all kinds of there all kinds of issues with you know it's gotten to Amazon has gotten so big and even though they have some of the most Brilliant Minds in retail working.
There are there are there a lot of fraudsters in the marketplace that are
one step ahead and constantly you know it's it's a whack-a-mole situation for Amazon so so my so anyway my net-net of my
by my salon Soliloquy here is that I think that there are.
A few different directions that Amazon could be tackled it could be you know that you have State's attorney generals.

[12:38] Brett unipack reading some case with the but you no wonder that the guys of consumer protection laws we have
it another artist at the
DUI Mantee trust commissioner I'm just the other day who said that you know she's looking at some of the pricing issues with who or what the data that Amazon is collecting from Marketplace Sellers and does that affect
the pricing of UniFirst versus third-party merchandised so so there are a lot of different I think
constituents within government regulation that I think may have some some legs to stand on with respect to addressing these issues I mean that I can't think of other business that's had a first and third party Marketplace in.

[13:30] Piano ever and you know kind of that also has
instant transparency of information and
there there just no laws around this so it's it's difficult to retrofit our existing laws on topics like predatory pricing or price-fixing.
When it you know what Amazon May doing may be doing their site nuances to those to those issues.

Scot:
[13:58] Yes and hq2 you want to share Charlotte.

Sucharita:
[14:00] Might my guess what Charlotte was do was kicked out of the first round better shot.

Scot:
[14:13] Yep yep we're on the short list.

Sucharita:
[14:15] Write the short list of a my my my bets would actually be on Boston.

Scot:
[14:19] A lot of people are saying DC because of a lobbying thing which I don't understand at that tire lot of lobbyists 20,000 lobbyist.
So Jason I got in a vigorous debate with some people about Amazon go
they were they announced they were going to open a couple more people like this is crazy and stupid and then they announce they're going to open 3000 leakage that they may open
what would you think about the Amazon go store in the strategy there.

Sucharita:
[14:50] Well I think that you know when when things like this are said with Anonymous sources it
it does become more questionable that I want to see the lease it is and I'm going to wait and let you know I'm not going to speculate too too early because I feel like
we've seen this movie before you know when Amazon took out the lease at the Empire State Building everyone thought that was going to transform you know grocery in retail and
distribution in New York City
you know after they launch the bookstore's there was speculation that it was you know they were going to have you know hundreds of them throughout the country there by think 15.
You know when they even launched with Amazon Fresh you know I think that there was some speculation that they were going to be in you know hundred plus cities and
you know what a very short. Of time and that roll out spend a lot
a lot slower so I I don't know that I completely believe the rumors there's a part of me that that wonder is you know is it
is it somebody who's trying to short grocery stocks is planning these Rivers you know so I'm not I'm not I'm not sure that I fully believe it.
Also be the logic of of opening that many stores that do require such a high capital investment.

[16:14] I'm usually pretty small format stores.
Especially ones that are not selling high-ticket goods and you know a lot of what they're selling or these you know convenience store items are lunch for someone.
You're not talking about you know business that is like 10 or 15 million dollars per location and I'd be surprised if it was even that much so.
Terribly High capital investment for a business that ultimately
I don't know how much of an impact is going to have on Amazon's overall business at this point I mean the kind of bet that Amazon needs to make now now that it's like a 200 billion dollar plus company
it has to be really big and and I don't even know that you know kind of opening a convenience store chain is going to deliver.
Those kind of numbers for them.

Scot:
[17:14] Yeah and we like we like to say it's a trillion-dollar company just use the bigger number.

Sucharita:
[17:19] Google valuation versus Revenue right.

Jason:
[17:24] Yeah that is a very first world problem when you get to the scale where.
Buying a business is only interesting to you if it as a potential to be huge and an Amazon certainly has entered that phase.
Sign on Amazon go if the rumors are true and they roll a 3,000 there's an interesting question does that disrupt convenience stores I-80 is that horrible news for 7-Eleven or is it actually worse news for like.
GSR Quick Serve restaurants like Subway sandwiches and those folks because it really seems like the in the first few stores.
The the purpose people have her going to the store is to get lunch more so than you know get emergency convenience items.

Sucharita:
[18:09] Right right yeah I think that that's that the end up an unknown I mean that whether it ends up being more of a grab-and-go restaurant
dsmi restaurant semi going to pick up some Essentials I mean when I when I visited one time and they had meal kits
bars in a wine all kinds of eating it seemed almost like it was an experiment on you know what are what are things that people can can carry
consumed in the next few hours so so yeah it'll be it'll be interesting to see I mean I don't know that 7-Eleven and.
Gas station convenience stores are going to be necessarily that disrupted the reason being that you're fundamentally it's gas or cigarettes or the other some other driver of the visit to those stores
as far as as as Amazon goes ability to provide food I think yes they become essentially a new
at the dispensary to come like a new quick service restaurant in in the space
you know when it's I think that that's just the natural competition in the restaurant industry and it's so hyper competitive and it's so hyper competitive I don't know that any given quick service restaurant is going to feel the pain because there are
their players that come and go in any Market within the restaurant industry in a year's time any.

Jason:
[19:37] Yeah yeah it's it's really going to be interesting to watch the one thing it was interesting to me that you know they just open the third one in Chicago first one had a big kitchen in it second one was very close to the first one in Seattle and I didn't have a kitchen because presumably.
That kitchen was sort of a hub for spoke of a story but the first one in Chicago does in fact have a kitchen and so you know when you're when you think about it like that.
Well a lot of the traditional convenience stores may have some food but they don't actually have fresh food they're preparing on site.
And I think we did hear from one of the Amazon execs that that's so far that be my sandwiches they're number one's cute whereas like a convenience store it would be a beverage.
In the old days cigarettes.
It's going to get you some lunch another category that people are selling speculating Amazon is is on the cusp of disrupting is the pharmacy
I know they bought till pack earlier this year any any thoughts about Amazon's true aspirations in the pharmacy space and how that might play.

Sucharita:
[20:42] Yeah I mean it will this is it's a it's a fascinating one because going. To the point about they need to go after really really huge markets obviously Healthcare is one of the biggest and one of the fundamental advantages of healthcare is it it's a sec
actually growing unlike retail which is growing probably at the rate of inflation that Healthcare is growing.
Faster than inflation and to be part of that
probably one of the more scalable aspects of it in there on the prescription drug side versus on the provider side and by the way there actually let you know there was the whole announcement of Amazon with Berkshire Hathaway JP Morgan which is actually an experiment on the provider side too but on the
the prescription drug side of it makes it makes a ton of sense it's an enormous mark.
You know a hundred billion dollars plus there's inefficiency in that space and if Amazon is able to do to help support that.
And Chad make life easier for for everyone in the Echo System whether it's.
A medical provider or whether it is a patient that's that's a that's a transformational thing so so that makes actually a lot more sense to me because that's that's a market that
that that is one of those markets that could be meaningful to a company that is still 200 billion dollars in Revenue.

Scot:
[22:10] So just tap it a little bit when when retailers asked you what to do about Amazon what what kind of what are you.

Sucharita:
[22:17] I think that
there's a lot to learn from Amazon Amazon executes of course incredibly well they there they have they make
customer so happy with with their fabulous customer experience whether it's shipping or how easy it is to
return something or how easy it is to track
merchandize or you find whatever it is that that you're looking for I'm so so all of that I think is is absolutely worth emulating and you know I always point out that
one of our data points says that one of the things that consumers want from any website is just visibility until when you know when an item is supposed to arrive
and you're Amazon's been doing that for years but yet to this day most e-commerce site still don't have it so when the question is you know what should we do about Amazon my
first inclination is to take the best parts of it because you know they said some pretty good standards in.
In a great customer experience and so I think that that's that's that's one of the things that you can do there I think that there are our other opportunities from the standpoint of leveraging a lot of the information of a night I think that Amazon is one of the
largest open source product databases.

[23:35] And I'm going to expose a lot of what's actually selling on their site when you dig into categories and subcategories and Sub sub categories and I don't know that there are a lot of companies that
take advantage of that data to see if there are opportunities and trends that benefit them to
now it's light from from Dad I think that's one of the biggest questions that we got about Amazon are related to
well how do we how do we engage with them as a as a partner on do we sell on the Amazon Marketplace knowing that it is it could be
you know deal with the devil if you know where exposing everything from emergency to.
Velocity and dumb is that is that something that could come back to haunt us if they
Jordan shoes Deb to private label or or basically
take the best aspects owns of you know kind of merchandised universes do we go at it and try to sell something to sell our products direct-to-consumer through other channels and and that I think is those are those are tough act to existential decisions that
be at the right answer is going to vary from company to company it's going to depend on everything from your culture to what it is that you actually sell to you know what kinds of barriers to competition your brand is has even set up if any.

[25:00] But that but yeah it said it's a it's a complicated relationship I think the easiest answer is you take the best of what they've already established and and you know of an embrace it and
harder side it's a big kind of how do you how do you spell exist in this you know in a world where
online it such a dominant force and it is that it's it's it's proven to be.

[25:28] Front of me to at it too many Brands and retailers you know I used to work at Toys R Us and see it you know kind of a lot of that there was a big huge lawsuit in an hour more than a decade all of that when you go back and read
you know they're the ultimately wet that the judge wrote about it
you're so much of of what happened then when Toys R Us was selling on Amazon platform.
Still applies today in Amazon's approach toward its Partners so so that this this notion and this is concerned that their front of me is is absolutely.

Jason:
[26:07] Yeah one of the fun games to play on Amazon is sort of imagine what categories are going to disrupt next do you have any prognostications you care to make about about love wet wet the next big move might be.

Sucharita:
[26:21] Well I think that you know what I've been thinking for a while is I think they're going to make another go at mobile phones we know that they're their first attempt at the fire phone was loose a disaster but that was just a thing
wrong item wrong time you not the right
the right mix of value for for the customer but the Despicable phone being a space is so large and is one of
again those categories that would be meaningful to a company that's already 200 billion dollars
that it it almost seems that they would be foolish not to take the IP that they had development that's their playbook right is like you know nothing's a failure everything is
you know learning opportunity that you build on later I mean I'm actually more surprised that.
After all the failures and challenges with grocery which is such a low-margin category they keep going after that
whereas phones which are you know when you look at you know Apple's number is a really high margin category why
why they haven't Give Mickey why they haven't made another attempt there I think there are other categories like you know potentially you know Automotive or travel that are also substantial.
That they may tackle in some way shape or form.

[27:48] But and I'm actually in a frankly surprised they haven't already done something in in the automotive space but but I think that's hardware makes a lot of sense and also given.
So much of the unicorn of the credibility they've now built with with Echo.
As a hardware manufacturer I think that you know any attempt at a phone this time around will be more positively receive.

Jason:
[28:17] Yeah that's really the reason why I guess I'm hoping is wrong because.
We we do these forecast at the beginning of every year Scott and I are highly competitive and I think you may have just agreed with one of his his pics in the forecast so I just for the sake of me winning I'm I'm hoping that doesn't happen but I.

Scot:
[28:37] Sucharita is truly a genius.

Sucharita:
[28:39] What we're just going to link to one another Twitter Scott.

Jason:
[28:46] I'm actually going to go back to an Andre at at that show and I'm going to add a prediction that Amazon is going to get into the microwave oven business.
Cuz I didn't answer I see that one coming back I don't know if you guys got the news Amazon announced 14 new Alexa enabled products today and you know there's a microwave oven in a wall clock.

Scot:
[29:05] Yep I thought you'd be excited about the microwave it has a order more popcorn but I know you can't talk about you love the buttons being integrated so that's exciting.

Jason:
[29:14] So needless pivot off of Amazon for second and we could certainly talk about them all day.
Most other retailers that are definitely trying to compete with Amazon have a very unique attribute they have these these physical stores that Amazon doesn't have.
Any any thoughts about the best way to leverage those those stores and sort of omni-channel way as a competitive advantage or what what are you saying going on in that that's out of the fence.

Sucharita:
[29:43] Yeah it's so I one of those pieces at Forrester that I just finished up doing research on is retailer LED media networks and it's funny that because this Amazon actually the biggest of retailer let me in it works but there are actually a lot of meat media networks bad
that are less well-known but are successful growing profitable and really interesting engines of
profitability for for retail or so
Best Buy has one target has one Walmart has one and you know Credit Union there other players in retail that are in the Commerce Pace like Expedia that have had these media networks as well and the most successful ones are seeing double-digit percents of their sales
coming from these media networks and their.
Profitable been there for retail business so I said okay so what's the implication there and I think that the takeaway is that retailers have opportunity
take advantage of the assets they have and monetize them in other ways and for some of these large mass Merchants one of those ways is to see
what they have as traffic you know they the biggest Merchants have more.

[31:07] Captive visitors who are engaged for longer periods of time than most media
prettiest out there whether it's a magazine or you know what
a TV show or you know a movie I mean it's it's an incredibly powerful.
I said that they have that very few have taken advantage of and some of that spin just historically.

[31:30] They never knew how to take advantage of that into technology didn't exist to necessarily make it scalable there maybe like a TV that would be mounted in Walmart stores this is before
Cloud these things would break down and no one would know and it may take months before somebody figured out that it needed to be fixed and you know there goes you know the media that should have been
visible in that particular Store so slow but things are different now and you know I think.
These online media networks are proven that there is an ability to get alternative revenue and I I see this as an opportunity.
For other large mass Merchants whether they're hyper markets or.

[32:17] Even drug stores convenience stores that attract broad audiences of
so so that's one thing I think just the
overall mix of how retailers look at inventory the idea of stores within stores and Market places within storage and being more inventory light letting the brands be
more of the stewards of what's in that physical store I think those those are those are definitely things that have to to to be different I mean what I'm describing is more kind of you know play is Sean how do you monetize the store and how do you think about.
Destroyed from in a different financial model not just you know having a lot of inventory and selling it but ultimately all of that also needs to be wrapped
into a great visual experience and you know when you look at retail I'm especially the big National chains.

[33:17] Supposedly the most experiential like Mall based apparel Merchant the really for the most part haven't changed that much and you know that the Adena from when they started too often where they are now.
But the sector that I'll look at 4
visual inspiration is the ruler look at the restaurant industry I mean there are so many different
restaurants out there that cater to so many different demographics and you know whether it is the highest-end booty
the culture or whether it is you know kind of mass you know there's a lot of innovation in in the restaurant space and.
Part of that is due to Innovation and Yuna food and ingredients and menu items a lot of it is also in.

[34:06] The visual look and the inviting nature of the establishment and that's part of the reason that the restaurant industry which is.
For the most part offline I mean there's now online ordering but you know it's still an experience where people go to the
the venue for the most part and even in the age of seamless and all of the delivery space at the delivery company is I mean it's still the vast majority is is is still in the the physical store I mean that's a space that's grown like 30 or 40 times in the last few decades
and I'm it's because there has been innovation in the experience and if retailers applied that same Innovations their businesses I think.
You know me they would they would probably bring a lot more people back to the shorts.

Scot:
[34:55] People speaking of storage to every store I go to now is full of Halloween gear we're sitting here at September 20th Halloween will will come and go pretty quickly and there were looking at holiday 18 our friend Casey over at delete they just released their forecast and they're saying online growth
17 to 22% which is pretty robust I think last year they said
that they measure 18% based on the categories and stuff where where have you guys put out your Forrester report and and where where do you think that's going to end up.

Sucharita:
[35:29] Yeah we're in the midst right now of figuring out those numbers were not quite as a aggressive as Casey's number is our figures are in
the low-teens they've been about there for the last couple of years and you know part of part of that is
it is is you just kind of that historic Trend and so much of it is is about
the key holidays it's around that it's Black Friday Cyber Monday you know this person in demand that really generates so much such a high volume of the sales
there's one other big unknown and for this particular holiday season and that's what effect the terrorists are going to have on on retail I mean the the latest round which takes a fact.

[36:20] Any day now effects
a lot of consumer goods in a lot of holiday items like apparel accessories Footwear Consumer Electronics Home Goods so it'll be
it didn't even even though we're probably not going to be in a revised our forecast down for that reason you know we'll see and at the end of December and in January if there was any impact in if there wasn't
yeah we can he is a great sigh of relief for the holiday season but then
yet you know it. That just means that were delaying the inevitable and the impact will be seen in q1.

Scot:
[37:00] Got it so the tariffs are the possible Grinch this year that's going to a bummer.

Sucharita:
[37:05] Yeah yeah I mean what's that mean that the terrorists are 10% right on most of these goods and when you look at some of the mass merchandised particularly
you know in nabbed and HomeGoods are electronics that the margins are any then
stop by for some of those categories so the retailer couldn't even absorb it if they wanted to so
will you absolutely will see some of those eventually show up and in what consumers have to pay.

Scot:
[37:37] This actually brings up a topic that that kind of we hit on the show sometimes you know we will do these news reports and everyone's reporting so I can Amazon
Q2 was like 30% growth and Walmart was 40% and Targets this all the online numbers.
And then Target was like in a 30%.
But then e-commerce is growing 15% even even like shopify's GMB kind of an aggregate is growing at like 20 or 30%.
So have you have you thought about the site I kind of end up
there's there's some people in the industry that kind of say they think the number to 15% kind of off because it's Baseline to this government number and it's a survey and comes were bass lines off of that
it is a question I ask myself is if the biggest slices of the wedge of the pie are growing.
Twice a 15% than the ones were not talking about have to be something has to be losing Trinidad share for e-commerce going to be growing 15%.

Sucharita:
[38:43] Sears JCPenney
yeah I think that it's there is you know there's that psychological bias called survivorship by us that that we hear about which is that
yeah you know we could we talked about the 6s cases and 6s cases talk about themselves and what you end up with is
kind of have an understanding or seemingly and understanding that that that everyone's doing well.
But when in and I do see a lot of the the numbers from specific retailers because we.

[39:22] They still out our surveys and not everyone is is doing that well I mean there are absolutely do you know kind of some of these thieves.
Some of the big box stores this past year for the last couple of quarters have been doing fairly well but
a lot of small ones are not and Gina there are a number of companies that are that are dying you know a lot of
a lot of retailers in the big box space you know I mean Toys R Us great I'm Staples you know Office Depot you know there's so many.
Companies that are included in Indy's figures that you don't you don't always think about because they're not
really publicizing Derek their stats but that's that I think is an important piece to keep in mind there's also and I think they get the other prevailing pieces then.

[40:18] An e-commerce the big have been getting bigger which is ironic because e-commerce was supposed to be an equalizer right it was supposed to be in a zero barriers to entry and anybody can you can come in.
But you know what you are seeing as you know you're seeing company is like that like it look at you know Amazon getting more share Walmart getting more share getting disproportionate share to the growth of the industry and.
Neon we definitely know that it's harder to attract customers it's harder to let you know kind of gain mindshare on the internet these days and you know that could be part of
part of the issue 2 is that there are 800,000 e-commerce Merchants out there in the United States so you know this is many of them are or are not
piecing double-digit growth and I think that stuff you know likely where the figures that we see are coming from.

Jason:
[41:12] Yeah I certainly will buy that the survivorship bias light.
Affects how we do this I do still think though there's some goofiness and have and numbers are collected and reported by the the
the census Department
like there's actually some tangible examples that they report you can get the date of is IC Code and you know for example if you take the ssic code that Walmart sand and you look at e-commerce sales in that ssic code
total sales e-commerce sales for that ssic code are way lower than Walmart's e-commerce sales so there's
something's getting Miss coded or like it's even sales are getting attributed in a different bucket or you know it again.
In many cases of these are self-reported numbers to the retailers just have to make a mistake in order for the data it'll be wrong so potentially.
Simulation of of some of these weird data collections in this new industry and some of the survivorship bias that your your highlighting.

Sucharita:
[42:13] That's a fair point Jason I mean I think that the truth is and this is the dirty secret of a forecasting is that.
There's no there's no one knows what the right answer is because there's nobody has every datapoint
and you know as a as a result of that Unifour casts you no matter who puts them out or a combination of a little you know in a little bit of Art and Science so you know there is the date of points that you do know and do you have different
types of data points that you can gather some can be in Summerside data .7 could be you know retailer.
Yeah they're always questions around how accurately or how truthfully you know companies and people may be answering
some of these reported numbers and they're even very few even when you're talking about the census it's not getting figures from from
yeah the IRS it's getting again it's getting figures from a survey
defense is definitely has the ability test unit has the government behind it so you know there is presumably a little bit.
You know the sense of responsibility that people have to have reporting numbers truthfully but even they aren't going to get
every single data point so there's there's absolutely extrapolation and within that extrapolation there is a lot of
there's there's there's a lot of speculating and that's where the art comes in.

Jason:
[43:42] And we're not going to sell that on the podcast unfortunately.
But I do want to Pivot.
An annoyance I have and I'm just curious you you would have some sort of analogous conversations on with clients I'm sure I get asked a lot about these trends that in my mind are simultaneously like overhyped buzzwords.
And really important trends.
I got to talk about one of those a shop.org a I like you know I sort of my my POV was.
That it's grammatically overhyped in a lot of people you know her are trying to implement a I just to say they implemented a i
but in the long run it's going to have these really profound effect on on our industry and be hugely disruptive the one of those trends that comes up the most in my world is personalization.
I'm curious if you have a a point of view about personalization like is anybody doing it well or are we doing enough of it are we doing too much of it what your.
What's your thoughts.

Sucharita:
[44:42] Why yes yes it said it did yeah incredibly I probably one of the most frequently asked questions that that we get
I mean my perspective and I'd love to hear your thoughts too because I know that you'll have a point of view on it is that I don't know that people know
even what it means I think that a lot of people still think that personalization means the recommendation and Jen's there other people who think that personalization means getting as much data as you can collect
they don't have any plan for how they're going to use the data that they collect you know I mean some of the
the best examples when I
pink at you know kind of the heart of it what's great personalization is you know when a sales associate or somebody that you've had a business interaction with her some,
Commerce interaction with to send the thank-you note you know where they do something special for you.
In a bathtub a great examples of peanut butter personalizing an experience that's incredibly welcome but that type of personalization.

[45:49] Doesn't get considered in the discussions that that retailers are having about personalization.
I'm so I'd I think that you know there's it's your personalization data-gathering.
Big data analytics officer I think all of these terms get get co-mingled and there is not.
Even a great.

[46:16] Did you know there's not even I don't I haven't seen any great examples of companies that have have have truly you know kind of Taken personalization and created some unique strategy.
And have made you know billions and billions of dollars from it I don't know I mean that maybe I'm mistaken have you.

Jason:
[46:37] No I'm desperately looking for that example cuz we get asked for it all the time and I I'm sort of a I like mine with you I am fond of reminding people personalization isn't an outcome it's attacked it right and so
you know how I get annoyed when people say the goal is to have personalization because like your goal should be to use a packet your goal should be to achieve some some help come.

Sucharita:
[46:58] Exactly cuz then you're just checking the box right I mean you're not really you know kind of delay you're not doing anything for your business that's that's meaning for for your customers.

Jason:
[47:08] Yeah like so I would argue most person was it when people say personalization what they really the outcome they're hoping to achieve is relevant city right like is never more relevant experience that therefore connect better with the Shopper in in case of Commerce.
Like I know I can't think of any front in experiences that are.
Fabulously personalized should therefore be more relevant for the Shopper I would argue like a maybe like a stitch fix is a good example of personalization in the custom assortment they offer customers pretty personalized to them.
But not so much on that on the front end shopping.

Sucharita:
[47:46] Right right right and I think that you know sometimes some company is make it carried away with it you know this idea of relevancy doesn't matter as much if you have a small or limited product catalog you know it's like then you're over personalizing you know you just want people to see everything in your you know 50
product catalog and it doesn't make sense to necessarily you know go more granular than than that.
You don't make the tennis sounds if you have a catalog with you know 5 million products but I think.
You know that that's part of the the challenge 2.
Anytime within you know small product how I can get very nuanced if you know if it's a VW purchase or if it's a very complicated purchase but
but but yeah I mean there's there's often this the sense that you know personalization is some silver bullets and you know it's not.

Jason:
[48:41] Yeah and I 10% agree like you know sometimes you don't need personalization if if your product is super relevant to a huge audience you have a great product and you can make the same offer to all of them and I would argue that that's Apple for example.
And you know if you can take the best personalized e-commerce experience in the world and I'll take apple and I'll probably retire before you.

Sucharita:
[49:02] Exactly and I think also you know I mean maybe if some of the Holy Grail is is loyalty like how do we get
you know the outcome being in this store this belief that somehow personalization is tied to loyalty or tied to more loyalty and and I think that's where so you know there is a little bit of
fallacy because
the best loyalty programs out there it's not necessarily about personalization it's just that
they give you free stuff for her you know they just they just have amazing prices or perks.

Scot:
[49:40] Cool so we spent a lot of time kind of in the in the present may be stretching out the holiday but but let's going to go to 325 and maybe 10 years out what her what are some of the things that are on your radar that that you think retailers brands should be thinking about
our show is talked about everything from drones 3D printing to a rvr what what are some of the things that get you excited about the future of online retail.

Sucharita:
[50:04] I think that within Rudy tail the the biggest changes are going to be in.
Disrupting the orthodoxies of retail and what I mean by that is that retails fundamentally constrained by
a few things that
they've always done you know they've always owned inventory they've always you know hired store associates to do certain tasks and they don't even share those store associate with other stores in their chain they
did they have real estate that they have bought you skin a 20 30 year 50 year long leases that they're they're stuck with.

[50:50] And when I say the orthodoxies change I think all of that changes in the future so it may not be you know and in some cases technology will
will potentially in power and change aspects of that like for instance with labor force
differences in the most retailers now you know will have their store associates and they they
put them on their shifts and they come in and the store associates only work with
that particular store but there are companies out there there companies like shiftgig for instance that actually have a Marketplace of basically store for workers and as a store you can tap into that market place based on who's available who's
worked at your store before you know who has good ratings from their managers and who's in a potentially train to unload a truck
or he knows how to work the returns desk or whatever the task maybe that you need and that kind of nimbleness I think is is what
will transform
retail in the future it's really about rethinking how are things done now and are there ways to
change that dysfunction in the future for our for the better in the future.

Jason:
[52:13] I do agree I think that that is a very interesting for the evolution and you know how can we leverage that that in Star labor force across a bigger pool of customers with.
Telepresence is in all of those sorts of things.

Sucharita:
[52:27] Right absolutely
absolutely yeah the new question I think that you know me we've spent so much time in the last year talking about omni-channel but for the most part it's really still only in the realm of fulfillment issues and
it you know me there's any channel merchandising omni-channel customer service on. You know there's so many different places where
cross-channel present exactly like what you described and why can't I FaceTime you know somebody who knows everything about being a Sony.
TV's when I want to purchase a Sony TV like you know that's that just seems like that's a logical thing to do.

Jason:
[53:07] For sure and I hope we do see that in the in the near future I think they're actually may have even been a few vendors in that space in the Innovation Center in shop. Org.
Some of those guys will make it.
But that's going to be a great place to leave it because it has happened again we've used up all our a lot of time but if you have a burning question that we didn't answer on Today Show or you have a comment we
encouraged you to jump on the Facebook and continue the conversation there
as always if you enjoy the show the way you cannot repay us is to jump on to iTunes and give us that 5-star review it really helps us to continue to build our audience.

Scot:
[53:46] Sucharita we really appreciate you coming on here this evening and sorry it took a hundred 50 episodes for us to line up everything but let's let's have you back on in less than before
episode 1 300 your very active online where do you Journal edirect people if they want to see your your thoughts about what's going on up.

Sucharita:
[54:07] Am I I am a big Twitter fan so I would say Twitter yes my Twitter handle is an decimal Peru which is which is the name before I started using my married name is s m u l t u r u.

Jason:
[54:22] Awesome we will put that in the show notes sucharita as always it's been a true pleasure thanks very much for coming on the show.

Sucharita:
[54:29] Thanks so much Jason and Scot.

Jason:
[54:30] And until next time happy comercing.

Sep 10, 2018

EP145 - Industry News Amazon, Walmart, Apple

Amazon News

  • Amazon (briefly) passes $1 trillion market cap
  • J-Crew selling on Amazon
  • New Amazon Ad tracking pixel
  • Amazon Go opens third store (with more announced openings in IL, CA, and NY)

Apple News

  • New iPhones being announced 9/12
  • iOS 12
  • Ipads/AppleWatch

Other News

Upcoming:

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

Episode 145 of the Jason & Scot show was recorded on Wednesday, September 5th, 2018.

http://jasonandscot.com

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

Transcript

Jason:
[0:25] Welcome to the jason and scot show. This is episode one hundred and forty five being recorded on wednesday, september fifth, two thousand eighteen. I'm your host, jason retailgeek" goldberg. And, as usual, i'm herewith your coast, scott wingo.

Scot:
[0:41] Hey, jason, welcome back, jason scott, show listeners.
We're sitting here in early september and thought we would update you guys on some e commerce news in between our releases of some great guests that we had when we were in detail east on jason. I want to start off,you had a tweet, and i didn't understand really what you're talking about.
So your little grumpy, you're usually happy tweeter, so i wanted to pick your brain on this one, so that the tweet says, i'm so tired of talking about the r o i of a i based personalization client, quote, what's the r o i ofpainting my house.
Me, it depends, is your last paint job one day old or ten nailed. What color do you want to paint it?
End, quote and seen so tell us what? What does that mean?

Jason:
[1:26] So first of all, i've been watching my twitter analytics. And it turns out that when i'm cranky and i just rant about something that annoys me in the moment, it gets way more engagement than the like, superthoughtful, ah, well prepared tweets that i do.
So now i'm just i've just decided to try to be cranky. Jason. So that's, what that's really all about?

Scot:
[1:45] So it's, not a it's. Not ah, fake account. It's. Really.

Jason:
[1:49] It is the real me, although you did call me out. My my son did do some tweeting earlier this week, and you correctly identified that, too. Ah, which is pretty funny.

Scot:
[1:58] I think it was like left. Parentheses. Right brace at e. I was like, what is going on?

Jason:
[2:05] Yeah it was either my three year old or the president united states one of those too probably.

Scot:
[2:09] Yeah.

Jason:
[2:10] Ah but like so that i think what happened there and this comes up a lot of,
people are super well intentioned but like a client will reach out and they're trying to sell some initiative internally like hey we really want to do this new aye aye personalization initiative,
and we need to pitch it tio our senior executive our board of directors or whomever and so i get all these well meaning queries what's the arli of aye aye based personalization,
and i get why they're asking the question but it's an unanswerable question in my mind because a,
yeah based personalization is a tactic like you could do it well and it could generate a way better customer experience that had a huge improvement or you could do it super poorly,
on and have a negative experience and have it you know have ah negative return.

[3:03] And it's not a binary thing where you weren't doing personalization before and now you are right so you know everyone's starting state and in st,
are wildly different on dso that's kind of ah i think you you slightly mis read my quote like,
if you ask what the r o i painting your house is like the first thing i want to know is is your last paint job a day old there is a ten years old right because if you currently have a really crappy paint job.
The are lies probably hire for repainting it. Then if, you know you have a super fresh paint job and are you going to sell your house right away? Because then there's going to be a monetize herbal value for painting it?
If you're planning on living in the house for ten more years, the return is gonna have to be your personal satisfaction from that improve curb appeal, and you can have a four year old repainted or you going professionalpainters repaint it because that's goingto dramatically affect the outcome.
That's goingto ah influence that return. And so, ah,
i guess i'm i was just slightly ranting that people want this super simple number and, you know, if you google our ally on a base personalization, you're going to get some, like,
ah, be cg report that says that you get an eleven percent left if you do a i base personalization,
and so that's, you know,
it obviously totally absurd, but lots of people you know, go to their board of directors and say, hey, we're implementing this new tool because bcg says, we'll get eleven percent more sales.

Scot:
[4:33] Maybe it would make you less cranky if you just said eleven percent.

Jason:
[4:36] Yes, that's, exactly what the poor account manager asked me the question. Want this for me?
I just wanted that bcg study on. Instead, i gave him, ah, stupid metaphor about a house, and then i outed them on twitter.

Scot:
[4:52] They loved it. And hopefully they don't listen to the podcast because you get a double dose.

Jason:
[4:56] Exactly.

Scot:
[4:58] Well, i guess we should move on. Hopefully, hopefully, they weren't listening. It wouldn't be a jason scott show without.

[5:12] Use your margin.

[5:20] Well, it happened aah! Little bit last week and some this week.
Amazon is flirting with a trillion dollar market cap.
We've been kind of watching this race here on the jason scott show for a while, apple has been pretty squarely in the trillion dollar club now for about a month it's kind of flirting with one point, one trillion, and i'm sure,
with some new iphones there on tap, we'll talk about the minute that that will's further cement that,
um, but amazon, when their stock price gets over it's right around two thousand gets two thousand five or seven or ten something like that right in just over two thousand it gets into the trillion dollar mark.
So it's been flirting with that it's closed over in a couple days as we're recording this it's underneath it.
Um and, you know, i think who knows when they announce q three results?
We may see it kind of stay there if they have a solid q three, so i was thinking, i have to go back and look at our holiday ah,
guess is i was thinking amazon will get there first, but apple beat him, but it is interesting now that we have these two companies and, you know, kind of in the trillion dollar club.

Jason:
[6:28] Yeah, it's, super interesting. And i saw. I don't know that it's meaningful in any way.
But i saw this pretty funny analysis today on like jeff bezos, personal net worth has increased sixty seven billion dollars. This year is a result of that.
That stock climb. So that's eight million dollars an hour, that his net net worth is increased.

Scot:
[6:48] Yeah, and there's all these, you know, there's, a lot of politics now, kind of surrounding amazon and there's.
All these folks that say, you know, jeff basis, they kind of take his net worth and divided by hours or something like that. So it's just tons there, like he makes eight million dollars a second, and he pays his workers fivedollars an hour.
All that sounds kind of hooey, because, you know, jeff bezos has put all his capital at risk, and he sells very little amazon stock, so it's all paper money until he sells it.
So i don't know. It's apples emerges.

Jason:
[7:22] Yeah, i mean mostly only sell stock for rocket fuel, right?

Scot:
[7:25] Yeah, absolutely, yeah, most of it. Or, if he's going to buy a newspaper like a newspaper, like the washington, like the washington post.

Jason:
[7:33] Yeah, a lot of newspapers, exactly.

Scot:
[7:34] Yes, yeah, so that that's interesting to see, you know apple and amazon there, right in that trillion dollar club.

Jason:
[7:42] Yeah, for sure. Be interesting to see, like when they are safely over it, and it sticks. And if anyone is able to join him?
Ah, i did see that j crew is the latest kind of director consumer brand.
Ah, that has announced they're going to start selling their product on amazon, in addition to selling direct to consumer.

Scot:
[8:07] Yeah, that'll be good, it's. Funny. You know, i've kind of over the years. I think i've pitched everyone on this, and i've heard, ah, more, quote, i'll never saw an amazon in, quote.
Then i've heard, yes, i want to sell on amazon so it's, kind of gratifying to see these walls come crumbling down.

Jason:
[8:25] Yeah, i will say that what is interesting is at the moment, and they're the latest of a number of brands that, like at one point, would have said, will never be on amazon. And now they're selling on amazon.
The majority of those brands are doing it at a point of distress.
Right? And i think j crew's, like, pretty clearly a distress brand. That's, that's looking for cem for, you know, an infusion of life by potentially selling through these marketplaces.
What, what we haven't seen yet are like, you know, companies that sold direct to consumer are like cooking with gas growing really fast, and then are deciding, like amazon is the next distribution point.
So it'll be interesting to see, you know, when and if we get some of those examples as well.

Scot:
[9:10] And i think they're there. I think a lot of the d m v b s are on amazon.
They just don't make a big deal about it, like these guys are doing. It clearly kind of send a message to their shareholders that's, like, we're doing something, but,
you go look at the mattress category on amazon, i think could be surprised by what you see there and,
ah, you know, some of them, yeah, but no boast made a conscious decision not to, but you'll find all the mattress guys were there, and, you know, other categories have, ah, lot of the direct consumer kind of guys are onamazon.

Jason:
[9:40] Oh, to be clear, i agree, and i think i know there's a bunch of digital native brands on amazon.
And in fact, i would argue it's, the second most popular distribution channel besides direct to consumer for those young brands, it's, much more popular than selling wholesale through traditional retailers.
Ah, but i guess what i was more saying is the ones that were holdouts and for what, for a good or bad reason, said initially, and we're not using amazon is part of the strategy, like a warby parker or bonobos or someonelike that.
We haven't yet seen one of those go. You know what, we're drilling really fast. We're trying to reach more customers, and we were wrong about staying away from amazon. We want to add amazon. I just i don't feel like ihave a good example of that scenario yet.
But if a listener thinks of one, definitely drop us a line.
The big news, though, in my little corner of the advertising world, is the amazon is piloting.
I think, technically, beta testing a new program where they're offering a amazon tracking pixel for for brands to put on all their own properties.
So they can get a multi channel, multi touch attribution model for all their there at amazon media. And understand. Like what?
What? Actual sales on amazon are are occurring as a result of their various marketing activity.

Scot:
[11:10] Yeah it's kind of even a broader theme and we talked about allowed in the show i think we were we've been really early on this that you know we kind of have said that this is going to get,
out of another billion dollars kind of offering for these guys and if you track it out it will be his biggest facebook by i think twenty twenty two ah,
the mainstream media has picked up on it leased the business press so there's been a lot of articles in the wall street journal and the new york times loved don't really add anything but this was really pretty interesting so iwould just want to throw this quote out there our listeners,
they interviewed the new york times had a peaceful linked to it in the show nuts.

[11:47] Talking about um you know, just amazon moving in on the market and they had a quote from monica mcgurk and she is,
the chief revenue and e commerce officer that's nice title at kellogg's that's so cpg on and she said we can reach the right consumer at the right time using their wealth of data to target,
other traditional digital platforms do not have the level of purchase data that amazon has on their customers,
so you know that's pretty powerful in the same article had some quotes from verizon and,
geico and you know so pretty interesting and even i think some car liam's that are you know amazon, with their wealth of data, is starting to get some really interesting signals from people on where they are.
The purchase funnel. And i just don't think you get from other ad platforms.
So it's going to be be interesting to see where amazon takes this. And, you know, i think we've predicted it's going to be really big business. I think this is what takes amazon from a trillion to the next.
You know, several hundred billion dollars of market cap is, you know, this. This becomes another big pillar and a big business for them over time.

Jason:
[12:56] Yeah i agree and i feel like it works really well as one of multiple revenue streams i actually think that's a much healthier place to be than to be ah ah a pure advertising based business model like a google or afacebook in the long run,
but it is you know i remind people like for the majority of of history the majority of marketing has had really lame kp eyes and success criteria right like,
most most marketers are their success criterias how many people saw that the,
the marketing that they did or at best like how many people remembered my brand or you know, unaided recall or these kind of,
silly,
synthetic success criteria on and then you know you've got a platform like amazon where the success criteria is,
how much stuff you sold and what was the gross margin for the incremental stuff you sold right and so you can really look at the spin on that platform through much.

[13:58] Clear set of green eye shades than you can you know certainly that that super bowl ad that you bought and even more so than you can like,
top of funnel brand awareness advertising that you might do on a platform like facebook and so it is,
it is very different and i do think marketers get kind of giddy about like having these more tangible r o i kp eyes,
you know, it is to me slightly different form of advertising like i do think there is some value in some top of funnel brand awareness advertising.
But i certainly think it's much more valuable on these platforms, like facebook, google, amazon, where you can, you know, way more actually targeted.
And just put the content in front of an audience that's likely to want that content vs that ad. You run on the super bowl that you know, ninety nine out of a hundred people have have no interest in your your toenail funguscream.

Scot:
[14:54] Yeah, and if you're calling about a year ago, we had darrell juvenile on there and that's episode eighty six on one thing, that really kind of stuck in my mind from that episode was they talked about being able tomeasure downstream from amazon.
So not only could they get to your point that you're omar margin of what they were selling on amazon, they were advertising their products on.
Then they were seeing kind of a bump in sales at target, walmart, costco, other places like that where their products were, because, you know, as we you know, you have a little bit of, ah, disagreement on this.
But, you know, there's survey date out there that shows that amazons become the product search engine.
So, you know, you have an outsized impact by advertising an amazon, because not only are you gonna sell more stuff on amazon, there is downstream benefit out into the physical stores as well.

Jason:
[15:44] Yeah, for sure, and, you know, the site, the more mature platforms like google and facebook, they're actually spending a lot of time trying to come up with that that multi channel attribution and tell you like, howmany people are showing up in a store as a result of their advertising,
and they have to use really in perfect methods to do that like that, like, upload your own point of sale sales data, and we can match it up, you know, for the small percentage of your shoppers that,
that are known customers when they buy stuff at the cash register,
you know, amazon has has more than four hundred grocery stores, what you could imagine them adding an attribution model where,
you know, they told you how that that media you're buying on their platform drove traffic in whole food stores, for example, like theirs, lots of interesting things that you could you could see play out here.
That doesn't remind me of one adjacent piece of news that i'll just briefly mentioned here there were there was also an article that got a lot of people slightly perturbed.
It came to light last week that google had been buying personal data from credit card companies to do some of this this in store attribution on behalf of their ever.

Scot:
[16:58] On dh that's. Uh, so, i guess, that's. Just controversial because it's tracking you, mohr and everyone's freaked out about all that.

Jason:
[17:06] Yeah, it's, you know, it's all the personalization fears, and you know how much of your personal behaviour do you really want google to know, like they, you know, in their own ecosystem, they know a ton, andnow they're, you know, one one gap that they had versus amazon is amazon.
See stuff you buy? Google usually doesn't on dso.
More recently, we've seen google partner with a couple of big retailers like wal mart and target, who, for particular use cases, will share their sales data with google.
And now we're seeing that google is going out and buying, you know, credit card sales data as well, the kind of augment that database and and build that big,
in my world. That wasn't shocking at all, like, i mean, we've all known that that data was for sale.
And so, like when it became a big news item you're like, oh, people are upset about that interesting.

Scot:
[17:56] And you guys are getting a ghost. Where have you been today?

Jason:
[18:00] Uh it's it's not open yet so they did just this week open a third ghost door but they're all still in seattle so they're all in downtown seattle on the one that just opened two days ago i have not been to yet,
what's interesting about it is that it's the biggest go store so it's about twenty one hundred square feet,
which is ah an average sized convenience store it's not a huge store but why that slightly interesting is the very first ghost door that's you know in in the day zero building is,
eighteen hundred square feet and so then they opened a second one in seattle that was actually smaller it was fourteen hundred fifty square feet and they're a bunch of ah pundits are maybe i should say a few pundits theywere like ah,
amazon's having trouble with the technology and they're having trouble scaling in and they can't they can't even make it work in eighteen hundred square foot store so they're having to downsize,
to the smaller stores,
which didn't seem very accurate to me at the time and then you know two weeks later after all that that came out like they opened the third store and,
what a shock it's the biggest one right and it turns out more there's a variety of factors you used to pick a a store location and do a lease and you know you you have to take the size space that's available that means herecriteria.
And sometimes they're going to be a little bigger. Sometimes they're going to be a little smaller.

Scot:
[19:26] Yeah, it'll be interesting to see what they used extra three hundred square feet for, you know. Will it just be more of the same, like more prepared food? Or really introduce a new area?

Jason:
[19:35] The thing i'll be particularly curious to know so that eighteen, the first door had a kitchen and they prepared a lot of food in there, right? And so one of the nice i think they're number one selling skew is this b masandwich that's made on premise, and you can grab it and have for your lunch.
The second store does not have a kitchen, so presumably there they're driving prepackaged sandwiches from the other store or from some co packing facility somewhere.
Um, and, you know, you is easy to imagine that the food's not going to be his fresh and that it's not quite as good an experience when the kitchen isn't connected to the store, and so i'll be curious,
if that third store has a kitchen again or of the you know, they're trying to have a centralized kitchen that feeds the number of stores and, you know, i'll certainly be curious to see how the chicago store when it opens,which they haven't.
I've been to the site it's under construction, they've announced the location, but they haven't announced yet like any details about what actual size that is or when it's scheduled to be opened, so i just have to drive byoccasionally.

Scot:
[20:39] Do they security run you off when they see you milling around out. So.

Jason:
[20:43] No, i mean it's, it's, it's, literally in the willis tower building, which used to be the sears tower.
So it's, a pretty public space and it's it's on the ground floor.
And, you know, just the windows, air, all newspapers off. So, you know, you can't.
You can't see it. But it's. Not like you see a lot of robust activity from the outside, or guards or anything.

Scot:
[21:03] Yeah, cool that's, our amazon news summary. And then i know any geek worth their their street credit is excited about next week.
Jason know, you and i are on pins and needles, because it's going to be new iphone week next week. Or do you looking for?

Jason:
[21:24] Yeah well you know so i feel like a lot of the mystery has gone these days that you know, apple is amazing compared to most companies at keeping like these private development efforts under wraps,
but even for them has become next to impossible and you know apple in particular like to manufacture a lot of the phone so they can ship him shortly after the announcement so i feel like most of the major stuff has beenleaked,
and you know so now you watch the announcement to see like the ten percent that was a surprise or that they got wrong in the weeks,
but based on what has been leaked ah it's not super exciting for me it's it's what like i think apple has historically called kind of s year where they increment the,
the previous products rather than a dramatic change like the iphone ten was last year,
so i think it's going to be faster,
going to have a little more memory you know, i don't know what your experience has been but like one of mine pain points is not that the phone isn't kind of performance or that i'm doing some,
ah advanced math on the phone that needs more horsepower they're going to offer you and i both have the ten they're gonna offer a bigger screen size in the ten,
which yeah i don't know what i'm going to do you ah i possibly will get the bigger sizes just tow.
Have something more different. But what are you thinking about?

Scot:
[22:51] Yeah, i think the operating system will probably the big new things, so the less talk twelve will come out,
it's, one of these it's, kind of like an s release itself and there's gonna be a lot of just kind of tuning and performance improvements and that kind of stuff.
Um, yeah, i'm, uh i'm kind of there's, not a lot of e commerce stuff going on.
You know, last time we had this, who had apple pay for webs, that was a nice little nugget on the commerce side.
The only thing i can see that has a little bit of e commerce angle is some of the e r stuff is coming on, so this will be a generation on air kit.
I know you've speculated about three d cameras, and are we gonna get one of those? So, you know, i'll be watching for any surprises around that.

Jason:
[23:36] Yeah, i think from a period commerce standpoint like, you know, the,
the rear facing camera, the camera that you, you know, see that sees you when you're looking at the phone is a three d camera in the in the iphone ten that's what they use for the face, i'd,
and their couple retailers that kind of leverage that right away for some interesting e commerce experiences, warby parker can scan your face and use that scan of the face to recommend frame specifically for you, whichis pretty clever.
What would be really exciting is if that back camera ends up being a three d camera at some point, i haven't seen that b a rumor yet for this phone, but that feels like the kind of thing,
that they could sneak in, and that could be a surprise announcement, and if that were the case, you can imagine, like all the furniture guys would be super excited.
All the apparel guys would be excited because there's a lot of experiences that could be enabled with that that camera could be used for really accurate measurements of where to place furniture, art or,
what size apparel the wear is.
I'm with you, like, clearly, like a bunch of the things i'm excited about our inn, o s twelve.

[24:46] The like i hear that it's just going to perform way better, and so you know, even if you keep your old phone, your old phone is going to be snappier because it's it's much more efficient,
one features the camera now has native q r code scanning, so you know, for folks that are having to use a third party q r code scanner for any any use case you khun, you can now use the built in camera, so that is slightlycommerce e,
and this isn't commerce e at all, but the the feature on most excited about in the phone going back to jason cramer ginny,
they have a new feature called instant tuning, and what this what you do is when you get some annoying notification on your phone that you never want to get again,
today, what you have to do is figure out what app made that notification drill twelve menus deep into the settings things scroll through your three thousand aps tto find that app,
and figure out how to have a change notifications so that app doesn't, um,
notify you in the future, and in this new os they have this feature called instant tuning, which essentially means like you can click an x on the notification and that apple never notify you again, which i'm eager for.

Scot:
[26:02] Yeah, i love the feature. Where, when you have to, do, you know, dual off that the it'll automatically just kind of copy the codes, so for you, and you can split it. Summer. I spent a lot of time entering the stupidaccess codes. Consulate.

Jason:
[26:16] Yeah, so i agree with you i'm excited to slash i i guess i more recently have mixed feelings, so the the feature for folks that aren't super from there would do authentication,
so you type your password to get into some account and then as an extra security measure, they send a six digit code to your mobile phone and you have to type that six digit code in, so that verifies that you both,
are holding the phone and have the passwords.
So you have, you know, two factors of authentication.
Two factor authentication is way more secure in text messages is one of the common ways to do two factor authentication and so,
in os twelve there, automating that like you no longer have tto,
switch over to the texting and remember the six digit number to type it in like the browser can literally like automatically detect the code from text messaging, which so like you, i'm excited about that comma.
All the security gurus have told me that,
using the sms text message for your second factor of authentication is next to worthless because it's, so easy to fake your identity and hijack your sms messages,
that the security professionals really don't recommend using sms messaging as that that second factor and two factor authentication so.

Scot:
[27:38] One. So we're all just kind of like going through the motions. Makes me feel good. I feel so much better.

Jason:
[27:39] Sorry yeah, sorry to burst,
we're all doing more work for no extra security exactly.

Scot:
[27:47] Cool the there's. Rumors of some watch upgrades and ipads.
The one thing that's interesting. So apples, definitely doing something around.
More of a pr are kind of, ah, area.
They've got a bunch of patents. There aren't. Cos i don't think we're going to see anything here but there's, a lot of rumors going around that they are working on a pair of, you know, of a our glasses of some kind, so thatthat would be the big one more thing, if there was gonna be a surprise, i think.
But i think that's further off, and, of course, they're working on a, you know, a kn automated car, but again also far off.

Jason:
[28:25] Yeah, don't i like, is boring, but i probably will.
Ah, depending on what they look. I get one of the new ipads, like, i think they're going to have a lot smaller vessels. And my ipad's, which i used fairly frequently, are kind of long in the tooth, and they definitely haven'tbeen getting the same updates that the phones have.
Ah, and i kind of want a pencil and don't have. Ah, ah, i like the small format ipad, which had they haven't out heretofore, offered a pencil for. So if they make a smaller pro, which the speculation is that they will. Ah,that could be an exciting upgrade for me.

Scot:
[29:00] Awesome, cool couple lightning around things. Just make sure no one saw some of these news items.
Instagram, which is owned by facebook, has been flirting around with some shop bubble kind of options, and now they're going to roll out an app that really let's brands,
published their catalog and the instagram picture kind of oriented way, and then consumers khun just shop using that app.
S so that's going to be interesting. Are you hearing much from clients about the effectiveness of selling industry, um, over it, channeladvisor, we're not really hearing much about it, but maybe we're not talking to the rightfolks. It seems like it would be kind of really segmented in the fashion area.

Jason:
[29:39] Yeah, so there's, certain categories where influence or marketing is disproportionately affected, i would argue, influence marketing's, getting more effective across a bunch of categories,
but it, you know, it's it's, totally dominant in fashion and beauty,
and so definitely in those categories, people are excited about the richard commerce features.
Come on. Instagram is emerging as, ah kind of the darling of the social of the north american social media platforms for discovering customers with buying intent.
So it's kind of ah, taken over for pinterest in that regard.
So i think people are excited about it, you know, comma there's, there's, certainly no one that i know of that's making a fortune on it yet, or, you know, is, um, you know, i don't think there's a grand slam case study justyet.

[30:32] Ah related to that influence our marketing thing though,
ah you know i know all the westerners the show know that we like to spend a disproportion amount of time talking about the kardashian family um so kylie jenner who has a very successful cosmetics line,
has just announced that they're going to start distributing that product which was originally a pure direct to consumer play through ultra,
um so through a wholesale channel and that's interesting to me because there's this there's this really.

[31:09] Important divergence of influence or marketing like theirs what i'll call traditional influence or marketing or you go find these people that have a huge falling which kylie certainly does,
you know kim kardashian certainly does and you pay them a bunch of money to say something about your product,
and that advertising a super expensive and increasingly ineffective right because everyone knows,
that kim kardashian's a paid spokesperson for that whit bomb and doesn't really have any personal affinity for that whip on and so that kind of paid mega influencer stuff i'm not very,
excited about and have never particularly liked but what's working much better are these influencers,
that are making their own products and turk turning themselves into a brand,
on dso kylie cosmetics is certainly one of the best examples of that like arguably her her net worth has has surpassed some of her sisters because,
of this line and so you know now this is an example of a digital, native, vertical brand that hit some critical mass.
And now they're expanding to other wholesale channels and for our earlier conversation.
Kind of interesting that the next channel they chose was olga. And not, for example, amazon.

Scot:
[32:26] Yeah, yeah, it's going to be interesting to see. Do you know if it's going to be stores and online err are just stores?

Jason:
[32:33] So that is a good question. I would expect that it stores and online.
It is absolutely true. There are some cosmetic brands that give distribution rights to olders and sephora's for in store, but not online.
So there is, ah different assortment that those retailers have online offline.
But i would, i think, that's more and more rare. I think you know, older, generally doesn't want to sell anything in the stores that they're not allowed to also promote online. So i'm going to assume it's everywhere.

Scot:
[33:03] Yeah, another kind of ah na names on news.
There was an interesting kind of ah, kerfuffle with walmart. Soso walmart acquired moose jaw back in the day about a year going guess now on dh then they just launched a kind of a store within a store concept. Andwhat walmart's doing here?
It's quite classic mark laurie is, you know, they really want some of these kind of premium outdoor brands things that you would find it like an r e i or a back country.
But those brands say, you know, we don't want sohn woman.
So what they did is they acquired ms jo, which is a place where all those brands cell. Then they opened up a moose jaw store within wal mart.
Well, some of the brands were having none of that. So several of them there's one called black diamond and a couple others were like, no, we never agreed to sell our stuff on walmart. Please take that down.
So kind of a clever way of getting that product honey on wal mart. But i don't think the brands were really on board with that one hundred percent.

Jason:
[34:03] Yeah although i do think some of the reporting on it kind of misses the bigger point right like so there was this like,
i don't know what the conversation was with black diamond and why wal mart thought that they could sell it and then black diamond got upset and said they couldn't.

[34:22] But what what's interesting is that most of the brands that moose jaw cells are not on this premium portal on wal mart right like him very clearly wal mart didn't try to sell them so i know you read these articles andit's almost like,
oh my gosh they tried to take all the products they have permission to sell through moose jaw and sneak them onto the wall mars mark site,
and that's not actually what happened,
if you go to moose jaw and you moose jaw dot com and you go teo like outdoor jackets,
you're going to see like forty brands of jackets that they sell including all the aspirational brands in the outdoor space the you're going to see patagonia north face and um all of those those aspirational brands,
if you go to the moose jaw shop in shop on walmart which is to me kind of awkwardly called the premium outdoor store,
and you you go on outdoor you're going to see like two brands and one of them is the moose jaw house brand,
so it's not like they tried to sell all that stuff and only black john diamond stopped them like the majority of brands that moose jaw cells,
like clearly told wal mart way don't intend to be part of that, and wal mart didn't put them on there, so i don't know what was different about black diamond that caused,
them toe to be,
the subject of all these articles.

[35:51] You know, i think the leveraging that the brands that wal mart owns on their site, you know, is interesting and ah,
but but the shop and shop feels a little weird to me, like the way you get to this moose josh shop and shop wal mart is you go to the guided navigation and you say i want to shop for a peril on.
Then you say, you know, they're under the apparel there's a bunch of choice is one of them is outdoor apparel, and a different one is premium outdoor apparel, and when you click the premium outdoor peril, you get this,like moose jaw curated selection.
But it's it's, you know, the much narrower assortment of moose jaw stuff that's allowed to be sold on wal mart.
So, you know, it's, a it's, potentially better shopping experience, but do shoppers really want to self select between average outdoor apparel and premium outdoor apparel? I'm not i'm not so sure they do.

Scot:
[36:40] Yeah, and, you know, i guess if you're intrigued by that stuff, you could go over to moose jaw, so it drives kind of within family traffic.
I don't know, it's, hey, you know, you, you miss every time you don't take a swing.
So i think it's interesting to see him taking some swings of this stuff and tryingto you know what, what, what, what i would do if i was them, as i would say, the brands.

Jason:
[36:57] Yeah, and they do.

Scot:
[37:00] Look, we're selling your stuff on warrant. You misunderstand our customer, our online consumer, wants your stuff, that that's the thing i've never understood, like why brands have such a like, oh, my god, i wouldnever associate with wal mart.

Jason:
[37:12] Yeah, no, i i tend to agree. And if i were walmart, i'd be using the search query data and things like that to be making those cases,
you know, again like, to me, it's, a little bit of, ah, you really start splitting hairs when you're like, ah, selling via amazon's, not erosive to my brand.
But selling on wal mart is and selling through jet, maybe is. And selling through moose jaw, which is owned by walmart, for sure, isn't like the the lines just get really bored there.

Scot:
[37:45] And i have ten out list.

Jason:
[37:47] Yeah, and all by the way, all your stuff is like unauthorized versions of it are being sold on every market place in the world. So what?
Yeah, yeah, yeah.

Scot:
[37:54] And i saw last year stuff at costco.

Jason:
[37:58] So i feel like a little bit of that. Is people still acting like the old world economy in the new economy?
I will agree with you. I do admire walmart seeming willingness to test, and one of the things that's interesting to me is,
ah, moose jaw ends up being a shopping shop that's in the walmart, earl, they've watched some other new brands like all's well home, which is there, like premium home goods, and they watch that is a complete separatestandalone site on its own.
Earl. So you actually camp all swells a walmart invented brand that you can't buy on walmart dot com, but you can buy from the separate sites.
So could it be there, you know, trying to figure out what the consumers want and do it that way. And i like, i certainly think that's the right approach.

[38:45] Ah, so speaking of wal mart, like one of the big categories that they're all in on, and that there's been a bunch of news lately is ah, walmart, target and party, party, city air, all dramatically expanding their toyassortment,
as we start to approach holiday season and, of course, poison ruses and in the market.
So they're all fighting toe to capture that.
That additional market share that used to be owned by by toys, arrest. So that's that'll be an interesting battle this holiday, period.
But we're seeing things like thirty percent mohr toy skews than they've carried in past years.

Scot:
[39:22] You have seen it. I spent a lot of time in my local target and walmart. And they're they're definitely kind of bulldozing certain areas and putting up more shelves for choice. It's going to be be interesting to see whatthat looks like.

Jason:
[39:34] Yeah, it's. Interesting, like you have a utah me unique use case like you're looking for these constrain toys, like the star wars toys that go out of stock pretty quick.
And you've always had the smart strategy to goto, the less pop your retailer. So when everyone's in line at toys r us, you were in line at walmart.
Now, if wal mart becomes a primary destination, like, you know, maybe party city, that your new new hookup for star wars toys.

Scot:
[39:59] My my secret sauce is kmart there's one k mart, left open in.
Uh, no joking. They always get a nice, plentiful set of toys, and no one else is in there. But me and a couple of little old ladies hanging out, they're not in the star wars where they're out there getting urine and stuff.

Jason:
[40:17] I like it. They could get you a star wars sweater.

Scot:
[40:20] I may occasionally not one over on my way to the star wars while it's totally accidental.

Jason:
[40:25] I forgive you s oh in other news speaking of all these these retail own brands and what i call own brands which in my mind is ah evolution of what used to be called private label,
one that really caught my interest is kroger has a very successful brand called simple truth and it's actually the the largest best selling organic food brand in north america,
on dh to my way of thinking very wisely kroger has started to sell that simple to truth brand in china and hong kong on the various team all sites.

[41:07] And to me that's really smart like it it turns out it's really hard to be a retailer in one market and expand globally,
so you know best buys a super popular concept in the u s and they open stores in china and it doesn't go very well and targets you know very popular in us and open stores in canada doesn't go very well wal mart in brazilthere's tons of examples of,
retailers that are very successful in one market,
legal in germany trying to come to the us and when they try to expand globally,
it's very difficult but this new model of retailers having desirable owned product brands,
you know creates a new global expansion opportunity it's much easier to expand your popular organics food brands internationally than it is your retail concept internationally so i uh,
i don't think kroger will be the last retailer we see that, you know, takes there.
They're pop your own brand and tryto use that as the new tip of their spirit for their global expansion.

[42:13] Um, and hopefully that is a interesting topic to end on because it's happening again, we have run out of our allotted time,
but as always, if we missed something or you want to continue the conversation, please jump on facebook and you can correspond with us there.
As always. Have you enjoyed tonight's show? We sure would appreciate you jumping on the itunes and giving us that five star review.
Ah, there are a number of e commerce events coming up, so i think it's next week is the shop dot org's show in las vegas, so i will be there all week. I'm doing a couple presentations.
Eso if folks are interested, i would love a catch up and say hello. It shopped at ord on dh, then, because i can never get enough las vegas.
I'll be going back to las vegas in october for grocery shop, which is a brand new show focused on food and see pg e commerce, which i'm pretty excited about.

Scot:
[43:14] Awesome. We look forward to some detailed trip report from those on.
Then we have a couple guests coming up, and then we need to get some listener questions out.
So definitely jump on. The facebook will be collecting some listener questions and trying to work that in, as we have a couple of guests coming on the show tio to answer your burning questions about retail e commercepayments, or whatever's on your mind.

Jason:
[43:37] Terrific scott until next time, happy commercing.

Sep 6, 2018

EP144 - Tommy John founders Tom Patterson and Erin Fujimoto

Erin Fujimoto and Tom Patterson are the founders of Tommy John, a vertically integrated consumer brand in the underwear category.  They have recently expanded to include direct to consumer, woman's apparel and are now opening their own stores.

In this interview, we cover a wide range of topics including the origin story, direct to consumer versus wholesale, the challenges and opportunities of being a digitally native brand, omni-channel expansion, and the future of commerce.

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

Episode 144 of the Jason & Scot show was recorded on Tuesday, August 8th from the eTail East tradeshow in Boston.

http://jasonandscot.com

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

Transcript

Jason:
[0:25] Welcome to the jason and scott show. This episode is being recorded live at the detail east trade show and rainy boston on wednesday, august eighth.
I'm your host, jason retail. G goldberg. Unfortunately, scott had a personal conflict and couldn't make it, so you guys are stuck with me, but to make up for it, we have to really exciting guests for this episode.
Tom patterson and aaron fujimoto are the founders of tommy john, a a digitally native vertical brand in the apparel and underwear category.
Tom and erica, welcome to the show.

Erin:
[0:57] Hi, jason. Thanks for having us.

Jason:
[1:00] I am super excited to jump into it.
I know you've listened to the podcast before, um, and one of the things we always like to start with is getting a little background from our guests about how they came into into your roles. So maybe tom. We could startwith you.

Tom:
[1:16] Shirt mind was not a natural transition. I'm a former medical device salesman i got in underwear but frustrated with the fabric fit and function in my undershorts, buying fitted suits, starting my dress shirts, and icouldn't figure out why are all the undershirts bagging boxy?
So in two thousand eight, i had this idea and created some undershirts and started selling them online with aaron, and five months later, the follow it happened. I was laid off my medical sales job and i decided, you knowwhat?
I don't want to be this could've would've should've guy have this idea? I want to see how far it can take it and cash up my four oh one k savings used my friends that all the credit card companies that financed the startupfrom there, that is a very cool origin.

Jason:
[1:56] That is a very cool origin story and it's crazy. If you had just gotten in a more casual job, we'd all be walking around with annoying t shirts that don't tuck in.

Tom:
[1:59] You have just got in a more casual job. We'd all be walking around with that noise. You're totally right.

Jason:
[2:07] Yes, say. Ah, thank goodness for the formal attire in the medical sales industry.

Tom:
[2:12] There'd still be a lot of guys talking their undershorts inside their underwear, which is not a great visual.
So i think if i could be a part of saving that, i feel it's all worthwhile.

Jason:
[2:17] No, and thanks for putting that in my head.

[2:22] Very cool. And, aaron, how did you come to the.

Tom:
[2:23] Michael and aaron, how did you come from?

Erin:
[2:25] So i actually have no business being in the apparel in fashion space, either.
I transitioned from a career with jp morgan as a financial advisor, and i got the entrepreneurial bug when i was,
there, and i actually started a small website selling organic products, natural prague, skincare, stuff like that.
And i had a lot of fun with building that initial website and choosing all the products and getting the site launched.
And then when it came to the marketing side of it, actually promoting the site, i kind of lost all interest.
But, you know, tom and i had the entrepreneurial bug, and we're always idea ting on, what can we dio that could be impactful? What are some of our pet peeves in the world? Would what are some of the things that wehate?
And this idea of a simple undershirt that would stay tucked in and was fitted to the body, was the idea that took off.

Jason:
[3:18] That is awesome. And because scott is not here, i get to take advantage and just solve all of my personal problems on the show.
Some, some listeners, will know my wife is in the same industry as i am. So we always had this.
This ah dilemma that we, you know, both do our day job all day long. And then it's, the main thing we have to talk about when we get home after work on.
If i'm not mistaken, you two are also married, eh? So i'm wondering if you have any. Ah, tips or advice for working with a spouse, or how that, how that's going for you guys.

Erin:
[3:52] So tom and i have always had complementary skill sets.
And, you know, he used his medical device sales background as kind of just how to get this thing off of the ground and use his skills.
Teo, you know, pitch to buyers and broken to our first account. Neiman marcus and i was much more behind the scenes and kind of more on the operational side. Basically, anything that could be done on the spreadsheet.That was my job.

Jason:
[4:16] That seems like a good division. I have a similar division with my wife were very complimentary because she's talented and i am not so there's that that that was a shadow tow to my wife and her in laws of therelistening.

Erin:
[4:17] That seems like a good division.

[4:23] Uh

Tom:
[4:26] No, my wife and her in laws.

Jason:
[4:30] So let's, talk about tommy. John, can you give us, ah, feel for how big a company tell me john is today.

Tom:
[4:31] So, john, you feel for,
so so. We're a private company, so we don't disclose revenue but were ten years old. We turned ten years old in april.
Um, you know, for us, you know, we now disclosing, but i can tell you, we've grown five times since twenty fourteen.
We just sold our five million pair of underwear earlier this year, and we open up our first or last fall.
We're gonna be opening up our second brick and mortar store later on at the end of this month in august in charlotte, north carolina is so a lot of exciting things, um, that have happened, and still to come.

Jason:
[5:07] Very cool on dh. In the beginning of the show i introduced you is a digitally native vertical brand, this ah phrase that i think andy dumb done, the ceo, founder of bonobos, invented.
Usually, when we talk about digital native vertical brands like rightly or wrongly, most people sort of imagine that their initial model wass, we're going to sell direct to consumer in your case.
Well, i sort of do you think you're doing native vertical brand because you are all of those things?
I'm not sure that was your original model, right? Like when you first sort of i d ated the product problem and your solution to the problem.
Did you guys envision that? You'd mainly some director? Where you thinking about selling through a wholesaler?

Tom:
[5:52] Not at all it was really built to be a wholesale business and with my background being strategic selling to get in contact with the department store buyer was very similar to getting a touch of the hospitaladministrator a doctor, a surgeon,
but i think what we found is you know, wholesale as it started to grow, we couldn't grow as quickly as we wanted to in two thousand twelve we really started focusing more on that direct to consumer channel building adirect relationship with the customer.

[6:17] And i think that was a really in critical part because getting the insights and the data i'm the feedback from the product as a really allowed us to continue to innovate and deliver a better product to the customer and ithink what we believe that tommy john we really focus on fabric, fit and function,
and having your ear on the floor at a wholesale department store is great feedback from actual in store experience, which we did a lot of in the early days and we still do,
but we also have that real time feedback online that's immediate ce we look at the omni channel experience as a full three sixty feedback loop that helps us continue to improve the customer experience improved productwhere you may have some challenges on fit,
fabric, whatever but also thinking about what aren't we delivering the customer that they want or maybe they don't know that they need yet that we're going to bring in, deliver, too the next two or three years.
So i think the digitally native vertical brand, i think i hope that term will go away. I think it would just be it's a brand.
The brands in the twenty first century have to be on a channel. They have to be at all channels, where the customer is the end of the day, and i think what you're finding is digitally native on ly, brands,
are kind of their growth is becoming very limited by not having that offline experience with what we talked about, over eighty percent of transaction still happen off line at the end of the day.
And i don't think it's goingto flip in the next couple years, the opposite.

Jason:
[7:37] No, i would. I would till i agree. And i would at least hope the definition people have in their head. And i suspect this is what andy originally meant.
Will evolve. Like, to me, digitally native doesn't mean you have to sell online.
It means you were born in the era when digital was already an equal part of the eco system.
So you need to think about how you catered shoppers that air, using their digital tools to make purchase decisions, and all of those it's more to me. That's. What the d m means, then, necessarily, we have to sell everythingthrough a digital champ.

Tom:
[8:10] Yeah, i totally agree. I mean, you have to be digital today.
I mean, if you look at a lot of brands, every digital is the fastest growing channel for pretty much everyone today, yeah, for sure and it's.

Jason:
[8:20] Yeah for sure and it's funny like ah, i'm a fancy consultant and so you know, a lot of our clients have gone through this phase where they've hired a chief digital officer.

Tom:
[8:21] Funny. Like what fancy consultant and it's, you know, a lot of our clients to the space, but he hired a chief digital officer.
Um, well, bye.

Jason:
[8:30] And you know, we are i chuckle one of my own body my old boss is the chief digital officer at ibm i'm like, what is ibm need a chief did like who's not digital at ibm right?

Tom:
[8:33] My old boss is the chief officer of ibm. I'm like, what is ibm needed, chief who's? Not yeah, right, like and so do i think, it's. What?

Jason:
[8:40] Like um and so i do i think it's what?
Putting digital in front all this thing is one of those temporary things right?
And ah so i do have a point of curiosity though, so you have this original product inside that like, hey, you know, the ubiquitous product everyone's familiar with,
doesn't doesn't mean the need and you guys invented a great solution on that product and then you're going to go sell it into a bunch of retailers and the traditional wholesale model,
every week i watch shark tank and they make it seem like you can't possibly sell a product to a retailer unless you have a shark to make the introductions for you.
Andi, i have a hypothesis that that's that's sort of b s s o i'm curious like did you find like having ah great product did you find you were able the open doors and have conversations with merchants and sell it in or was itreally.

Tom:
[9:36] Up for sure, i think differentiated product is one thing that buyers look for more than anything else.
And so we already had a unique product that really stood out from everyone else.
And i think what you see today is a lot of brands air focussing in differentiating their business model,
and the product isn't often of forethought where the product is really from day one b been the be all and end all to our to our business.
And if we don't innovate in the product and keep improving on it, people will catch up and we'll become stale and that's. Something that we've always really pride yourself on is.
How do we not be happy with where we are today, but continue to improve and, well, there's.
The iphone five six seven eight we've also had different interational of many of our categories and in styles over the last ten years and building the pipeline out very far, much far further beyond twenty eighteen.
Where we are today is a really important part of building a longevity and lifeline into the business.

Jason:
[10:33] Very gold. Eso started the company in two thousand eight, predominantly with a traditional wholesale model in line two thousand twelve. You really turn on the gas about selling direct, primarily the website.
And then it sounds like last year you opened your first own store. Um, can you talk a little bit about, like, what? The mixes today of, like, direct sales versus wholesale?

Erin:
[10:55] Yeah so we are primarily online so more than fifty percent of our our sales are direct online and we still have about over a thousand points of distribution through wholesale,
our first stores in king of prussia and that we call it a learning lab because everything about it is just learning,
first of all you know to sell men's and women's underwear in a retail space and men's underwear specifically that's a kind of a unique experience for most men,
they just haven't had their own personal space in a store where they can go buy men's underwear,
so there was a lot of learnings and we knew we needed to make it a new experience so we have you know, local brews on tap per seco on tap and large,
so fun because we have a lot of families that she'd like to shop our brand and,
yeah we try to make it a real experience to walk through we have comfort concierge that walkies through and give you a guided tour of all the products that features and benefits because our products do pack a lot offeatures they're not just kind of standard you know,
pick pick anyone there's you know a lot of people have specific preferences and we've had a lot of learnings with our first retail space so we will be running,
plans to open more stores.
We have our next store opening in south park mall in charlotte, north carolina after labor day and more stores to come in. Twenty nineteen.

Jason:
[12:19] Very cool. And i assume that second story was located primarily to be convenient for scott wing go.
So, um, he he will appreciate that one. I spent a lot of time in the king of prussia mall, so that that totally worked for me. I've had to spend the night and that's that mall many times.

Erin:
[12:25] Oh, yes, of course. Special requests.

Jason:
[12:37] Maybe you guys did, too, when you're putting this door. Ah, but i am curious, like the original decision to open that store. Was it, um, i mean, what? What was the impetus that made you say up?
Now is the time, and like what? What did you hope to get out of opening your own store?

Erin:
[12:54] Well, i think, you know, just homes point earlier. We want to be everywhere that the customer is.
And while we have a lot of presence through our wholesale partners and you know it gives it gave our brand a lot of prestige and credibility, being behind some of these wholesale names.
But at the end of the day, we still want to have very close communication with our own customer. We want to own our own data, understand the data, understand how we interact with our customers, what our customersexpect to see from us.
And we take our customer feedback very seriously, whether that be around product, the experience, anything that they want to see from tommy john.
So those conversations are so important to us.
Yeah, and we also wanted teo be able to control the brand experience because at the end of the day, it's underwear. So we try to make it as fun as possible.
And, you know, we the only way to get that is either through our website or in our own retail setting, where we can interact directly with the customers.

Tom:
[13:53] And i think to the other things that we looked at it's, obviously lease availability is an obviously ideal. So you have to look at a handful of of locations and also proximity to new york city's. So we could have a lotof presents from our team at headquarters to really like aaron talked about a learning lab.
How do we have different teams there, testing different user experiences for the comfort concierge's team?
Two questions that we asked how the store's merchandised not really to see how good the beer tastes on tap that's not really important part of that, but it was it was early on, but not so much anymore,
but so, yeah, i think our criteria for stores of little different, too, and the fact that were, for the most part itself on a business, we really have to be profitable very quickly in a market and ideally, new york city would havebeen the market.
We opened up our store selfishly, because we're based in new york city.
But new york city rents are very expensive, and we really think our customers are all over the u s in philadelphia is a great representation of the u s and general,
versus the coastal city like new york or san francisco, where buying behavior and tourist concentration may be a little different.

Jason:
[15:00] Cool. And you did mention early on that being in the wholesale channel helped helped you get a lot of feedback from customers. You primarily had a lot of prestige retailers. So i i imagine that added some prestigeto the brand.
But now that you have your own store, i'm assuming, ah, that you like. The feedback loop is much faster and, uh, presumably richer.

Tom:
[15:26] For sure, i mean, early on, you know, the first two years i was pretty much in stores irn aaron at times, but i went over ninety north from stores.

Jason:
[15:34] And was busy paying all the bills.

Tom:
[15:35] Yeah, she was very busy in the spreadsheet. See, i was just checking facebook in stores, but going to ninety stores over a year period and spending full days on this in the store, talking to salespeople, training thesales.
Team's, talking to customers was vital to really where we are today, because what do you like about this? What would you change?
And a lot of our product ideas were inspired from that feedback from customers.
So if anything, and i still think you can learn more in a store in ten minutes and anywhere else today and that customer face face experiences really valuable.
So if anything, we really pushed our team being in stores our store more often because you can't it's, not all data driven a lot of it you just can't interpret.
We don't believe without that experience.

Jason:
[16:22] Oh for sure and it ah well there are tools but for the most part like the online experience the customers you have a best relationship with online are the ones that had the best and worst experiences,
so like they had some horrible problem and they called customer service you get to know those customers pretty well,
and the your most loyal customers that proactively reach out you might hear from but the overwhelming majority of those customers in the middle,
the online experiences pretty anonymous right and so you know it's harder like there are tools to kind of you know look at the analytics and watch how people are behaving but i'm one hundred percent with you,
being able to stand in a store and see how you know how people are interacting with mannequins how many products they're taking into the dressing room you know are they asking for help from a sales person are theynot all those sorts of things,
there's a rich source of insight that,
seems much easier to get out of the physical environment than the digital environment at the moment,
i am curious just ah from the boring technical stack thing s o we have a direct website i think you guys on shopify if i'm.

Erin:
[17:30] Yes.

Jason:
[17:31] Is that right s o so you're on shopify you're having released successful director consumer channel via e commerce now you open your first store and you need a point of sale system and the inventory system for thatstore.
Did you, like, try to pick some omni channel things, like, did you extend the shopify eco system to the store? Or did you just like, how did you?

Erin:
[17:54] That's. A tough one, that's, something that we're still working through, and that's.
Why we call our king of precious store a learning lab, because thes air, all the kings and it's it's a big, you know, i think many brands are probably struggling with us howto integrate online with the retail environment andit's, a real problem.
So e think there's a lot of opportunity, but, yeah, we're,
we're definitely looking into its hot on our radar and just teo integrate that customer experience so it's seamless, because so many of our customers do go back in force from retail to online and back again.
So, you know, we just launched a loyalty program. So how do we, you know, get them engaged on loyalty, to able to shop in any environment and take advantage of those parts?

Jason:
[18:38] Oh, and i actually want to come back to the loyalty program. But one question on the that decision is open.
A store that had physical inventory. And, like what you see, some new brands are opening the ah showrooms or, ah, guide chops from bonobos.
Nordstrom, who i think is, ah big partner of yours, now has some some white inventory stores in l a, the north from local stores.
Did you guys think about that model and all? And how did you decide?

Erin:
[19:08] Horse, yeah, way didn't think about it, and we did some focus groups before we did our actual opening store opening, and,
the focus groups, loud and clear, said that they wanted to walk out of the store with product and, you know, it's, i think, it's, that instant gratification of shopping and retell you want to touch and feel the product you wantto see.
Is this going to fit? You know, you maybe want to try things on, and you want to walk out of the store with it, right?
And the great thing is, is that if there were anything that was missing in the store, we could ship it to them overnight from our website.
So we have the benefit of being able to fulfill that way.
But at the end of the day, the customers still wanted to walk out with a bag in hand, get.

Jason:
[19:52] Okay, um, the and i there's something we haven't talked about yet, but i now realize we need to bring it up so that i can ask my next question.
You and you sort of alluded to it. Aaron, you guys on lee recently expanded into women's apparel as well, is that do i have that right, eh? So we'll come back to the women's apparel, but i'm i just wanna get the sequenceright.

Erin:
[20:08] Yes.

Jason:
[20:14] Did you decide to open a store and then later added women's, or did you know you were gonna have men's and women's before you open the store or didn't happen at the same time?

Tom:
[20:25] So i think we wanted to open up a store earlier ended up being pushed later but we knew women's would be coming down the five and be part of the brand and be launching shortly after so,
a lot of when we opened up the store we wanted we didn't want to lose sight of,
having men's and women's in there at some point some day making sure it's a unisex experience and the great thing is we had a lot of women already in the store buying for their husbands or sons for gifting,
and we were able to get feedback and really understand what was you know important to them in the shopping experience,
selfishly to point earlier i think having a guide shop where is really very limited inventory is much easier on a business,
it's much less of an inventory burden and i think most brands would be crazy not to do that if their customers are asking for it,
but i think we've always believed in the customer's always right and the customer really guide you towards the right experience,
and who knows we could be talking to you three years from now saying you know what we actually have virtual showrooms people don't need to try on underwear and t shirts and socks they could just come in touch feeland they can wait two or three days to receive it online.

[21:34] In the mail so we're always open to change but i think what we've seen is this the velocity of change today in our space, it's so much quicker than it was two or three years ago.
And i think, that's. The challenge of a lot of systems is a lot of brands invest in systems arguably too early.
And then they're outdated very quickly, where we would rather not painfully, but,
learn as we go before, we make a big investment, because first, we need to understand what stores means to our business at a larger scale than one or two stores, to really justify some of these bigger investments that aremore infrastructure driven.

Erin:
[22:08] Yeah, and as as faras our stores, we have tto learn very quickly and react very quickly, because our goal is, well, our stores have to be profitable.
Everything we do in our business, we're not heavily funded, were not happily vc backed, so we have to make our retail experience profitable as soon as possible.
So if we see that pivot, if we see the customers are responding in a certain way, we lean in very quickly, and our entire team is on board with that strategy of,
being nimble, maintaining nimbleness, always learning right cause even the environments changing so quick that things that we knew six months ago, let alone a year ago, are completely changed.
Like we have to constantly be testing and re learning and revisiting old things. That didn't work, you know, six months ago, because maybe they work now, and it means it leads to higher revenue.

Jason:
[23:02] And that that is a great insight. That's really hard to internalize, right?
Because, you know, you think about all the clients i walk into, and the most common reason that a client doesn't want to try. Something is, oh, we tried that once, right, like, you know, back in the day someone tried that.

Tom:
[23:11] Mine doesn't want to try. Something is, oh, we tried that, right. Like, you know, back in the day, right, someone tried that, and, like, access is about having the right idea, but also at the right time and your point.

Jason:
[23:19] And, like, you know, success is about having the right idea, but also at the right time and your point.
The customer expectation is always moving. So just because something wasn't right in nineteen ninety, by no means means it's. Not right today.

Tom:
[23:25] My expectation is always moving. So just because something wasn't right ninety nine.
Yeah, we may have fifty stores, and we'll still be calling him learning labs. You know, it may still be changing that quickly. Where we don't have a reform. You'll figure it out. Yeah.

Jason:
[23:41] Yeah, i do. So i have a personal wish for you. Having worked with a bunch of retards that start opening stores, the first door is a huge disruption to the business, right?
Because everybody's got a day job, and now they have to put their day jobs aside, and i'll get in the car and drive from new york, philadelphia, and you're like, you know, there with a sawed cutting store fixtures and figfiguring everything out,
and, you know the business kind of stops while he opened that store,
usually by the tenth store it's like, oh, we have a system now, right, like i pick up the phone and i call i call my store guy and i say let's, open a store in this market and.

Tom:
[24:13] All my store guy and i say let's, open a store in this market. And, you know, there's dedicated employees in the process.

Jason:
[24:18] You know, there's dedicated employees in the process, and it becomes much less disruptive to the to the business.

Tom:
[24:23] So i'm hoping that you're able to short circuit that a little like the second story. Still still probably pretty bespoke. But hopefully you continue growing twenty nineteen year able.

Jason:
[24:23] So i'm hoping that you're able to short circuit that i like the second story, still probably pretty bespoke.
But hopefully as you continue grow in twenty nineteen year able, the tow, have it not be such a big disrupt.

Tom:
[24:33] Have it not be such a big a great point. I think the second store has been easier than the first, just based off of simple things that we learned.

Jason:
[24:43] Yeah we were we did a show recently with the founders of beta which is this great brick and mortar,
concept that started out on the west coast it's in it's a shop and shop in macy's in new york now see you can check out but he was talking about like oh our first store the fixtures cost a fortune and they were all made out oflike exotic woods,
and he's like the second store the pictures looked exactly the same but they were laminating right yeah.

Erin:
[25:11] Oh, yeah, you learned fabrication really quickly.

Tom:
[25:13] Yeah, i mean those. Those were just kind of the common evolutions. You, you mentioned that they even were just a men's brand. Like we still have the care to female shoppers. That, to me, is always one of thefunny and.

Jason:
[25:13] Yeah yeah i mean and those are those air just kind of the common evolution's you you mentioned that he even were just a men's brand like we still had to cater to female shoppers that to me is always one of thefunny insights,
when you're talking to people about opening a men's store like and i'll make a joke about where the man chair is going to go right like and you know the man chairs this metaphor for where the dude sits down while thewoman shops and they're like we're not gonna have a man shareware we're a man store,
and i'm like yeah but you still like you're still gonna have couples walk in and the guy's gonna plop down on the chair while the wife goes shopping for him,
and so i was curious on your couch is that they were man couches or whether they're they're multi gender couches it sounds like.

Erin:
[25:57] Front, everyone couches, right? I mean, sit down, have a beer couch.

Tom:
[25:59] They've definitely been multi, multi, jenner. I mean, well, i remember black friday morning at like ten a m we had some,
eighty five year old woman come in and sat down on the couch and drank two beers well while her grandson was shopping or her someone shopping, so we haven't had to kick anyone off the couch because it wasovercrowded.
But yeah, i mean, i think if anything, it just allows people to rest and there's no pressure for their spouse to hurry up and buy your stuff so i could go to this store.
It could be on their phone and it's more of a comfortable experience, and i think that's one thing we've really tried do it because we're brand based on comfort, having comfortable furniture, comfortable sense.
When you walk in the store, we really try to think about the entire user experience from the moment you walk into every second that you're in the store, too, the moment they walk out.

Jason:
[26:47] Very cool. Let's. Talk about the decision moving.
Ah, tau women's. Where for a second, like you, you've built a well known, highly regarded brand and men's where, like his has that translated to women like.
Do women, you know, have a preconceived notion of your fit in quality based on the men's brand? Or you having to start from scratch?

Erin:
[27:08] Yeah, those were so the launch was in april of this year, and we sold out of six months of product in our first six weeks.
So we were out of stock for about two months, and we're now slowly getting back into stock, so you can say it greatly exceeded our expectations.
You know, there's, a lot of we knew that we'd have a strong customer following just with our existing customer base.
Like tom said, we have, ah, ah, pretty large, built in female customer customer base, already who's shopping for her significant other or family member on who's a guy.
But, you know, we we knew that that was going to be there, but overwhelmingly.
I think, you know, people just gravitate to the brand. I think we built a reputation much stronger than we knew, known for comfort and function and innovation, and really giving the customer what they want anddelivering on our promises.

Tom:
[28:05] And i would add that i think about five years ago we started hearing when you're going to make women's and every year up until last year it seemed like it would just become louder and louder from from womensaying you know i want to be as comfortable as my husband is and i think,
aaron talks about someone posted on facebook that this is what it's come to after where my husband's boxer briefs because nothing is this comfortable,
so that's when i think it really made sense for us really guard now is the time to do it and to the category and,
bring deliver comfort in a new and unique way that we believed in exists before in the women's category.

Jason:
[28:40] I feel like if you're going to really deliver on that brown brand promise, you're going to have to address shoes, because it's like that seems like the biggest disparity to me and men's and women's comfort in theworld, but, ah.

Tom:
[28:41] If you're gonna really deliver on that brown brand promise you're gonna have to,
but that seems like the biggest disparity to me and women's comfort for women's high heels and stilettos and stuff like that yeah.

Jason:
[28:51] Yeah, exactly, yeah, yeah, ah, that, yeah, women totally gets screwed on the shoot comfort thing.

Tom:
[28:55] That yet women telling it screwed on us you comfort i'm utterly convinced.

Jason:
[28:58] I'm utterly convinced, ah, but ah, and i guess one more point on the women's brand, that's interesting to me, like a lot of times you have a successful means brand they expend and women by inventing a new brand,and i actually think even buddha boasted that, like they invented a.

Tom:
[29:00] What and i guess one more point on the women's brand that's interesting to me like a lot of times you have a successful means brand they spend in women by inventing a new bird don't you think even boasted thatlike they a program for women.

Jason:
[29:13] Different brand for women that ultimately spun off, you guys decided to leverage the brand and sort of expanded, like, was that something consciously that you did? Or was it just?

Tom:
[29:15] You guys decided to leverage the brand,
and it was that something consciously that you did or was it just wait?
Yeah i mean it was really never thought to create a different brand. When the brands that we admire, whether it's, patagonia or nike or lose a lemon, they never created another brand.
You know, we've always believed that comfort doesn't matter if your men are manner woman.
Everyone deserves to be comfortable in their underwear and it's really hard to build a brand and to build another brand.
I think it's been very few and far between, where brands spun off and created a male and female brand that have been able to scale to the same levels.
We're for us. We felt there was so many center jeez in the men's business with the brand awareness, recognition and distribution that we have, that we wanted it, really. I don't think we thought about it. It came up acouple of times, but.

Erin:
[30:07] No, i mean, we definitely did our due diligence. And, you know, early focus groups that we spoke, you know, spoke with various women throughout the country, and just, you know, ask them about the brandname.
If that was going to be a turnoff in any way, or with that, steer them away from shopping, you know, for women's underwear with the brand called tommy john.
And, if anything is, it was funny. Wasn't a reaction that i expected. But they said they actually felt like there'd be more innovation because they feel like men's.
Clothing in general, gets more innovation on dh has generally has more technical and smart properties to the fabrics.
So if anything, they they liked it. Have it.

Jason:
[30:45] That's. Totally fascinating, it's almost the inverse you were seeing that sometimes in ah, beauty, like where men want want men's products, but they want them from aa company that makes women's companiesbecause they perceive there's a lot more.

Erin:
[30:50] City like where men want one minute.
Women's company.

Jason:
[31:00] R and d behind the the products.

Erin:
[31:01] Yeah, interesting.

Jason:
[31:04] I do want to pivot for minute. We teased loyalty earlier, um, and that, like, superficially, i go.
You know, when i saw that you offered a loyalty program. Have to be honest, i'm like what's. The frequency of purchase of of underwear, like you know, is like you don't have a huge breath of products to solve a bunchof different problems for the customer.
What what was the thought process behind loyalty and and how, how is that going?

Erin:
[31:30] We'll repeat, is such a huge component of our business, so, you know, starting out underwear, it's.
We want people to fill their door, would tommy john underwear, so and you have to replenish your underwear. You have to replace them every so often, and we wanted teo. We want to be the brand that people go to.
So that's always been a huge component to our business model and it's.
It will always continue to be so it's, very important to us that customers have a reason to come back, and that we reward our best customers for being loyal to our brand.

Jason:
[32:02] On one of the things i noticed about the loyalty program is it's. Ah, not exclusivity, rewarding people for purchasing the product. So it feels like there's.
Multiple triggers that can earn earn points. So it does seem like you're you're trying to entice people to engage with the brand.

Erin:
[32:17] Yeah, definitely. Definitely. The interaction is important. We want to encourage people to also write reviews,
you know, share just who they are, you know, i mean, and just kind of start engaging in and, you know, there's many different things that we can just kind of give, incentivize small points for just to get that initialengagement and,
kind of have them start navigating through the platform as well, because the more they use it, then they'll kind of know where it is and how to get back to it.
Check their points, how to redeem points, so it allows them to get familiar with the system as well.

Jason:
[32:49] Nice.
A question i have to ask on scott's behalf is about funding, right? So scott's, a serial entrepreneur, is, you know, taking several companies a company public, and been very successful.
Ah, and so he, you know, likes to talk a lot about the sort of vc legacy for companies. And you mentioned that you hadn't raised any money through a traditional vc.
Was that overt strategy?

Tom:
[33:16] Way haven't so so starting in two thousand eight during the recession i think we,
we start out where we had to sell the dollar for more than a dollar versus selling a dollar for say thirty five cents to build top line but we did raise a small round of funding of one point five million in two thousand twelvebut what was really important to aaron and myself was to maintain control the company,
and by having slower arguably slower, more profitable growth we're not chasing evaluation that we have to live up to and the pressures that that.

[33:45] That come around that where we really put pressure on ourselves to grow the brand the right way and built for longevity and quality and duration,
so our approach has been a little has been very different i think especially from a lot of the brand's you've seen emerging just the categories in general the last three or four years,
where you can grow in two or three years maybe what's taking us to grow ten years but is it sustainable growth is a profitable growth can they become profitable at some point a lot of that is still to be determined where,
it's a lot easier to spend someone else's money when it's not yours so we talked about earlier we had to be really thoughtful with our money whether it's stored we have to look at stores differently because they need tomake money,
when we look at building the products that you know, they they have to be able to support the infrastructure that we need to scale over time.
So we don't have a lot of pressure to grow. And, um, we we do like pressure to grow. But it really comes from ourselves. I think at the end of the day, if you have anything else to say, said.

Jason:
[34:47] It is interesting it annoys me a little bit like one of the challenges with the v c model is once you take that institutional money,
the successful outcome they're looking for is a billion dollar exit right and so like there really is no happy medium where your ah,
ah profitable company that's you know sustaining a bunch of employees making customers happy in your your you know, even half a billion dollars a year in revenue,
you're you're still not a success to your your institutional investors,
and to your point what we've seen a lot in these did you donate a vertical brands is,
you you build a brand promise that appeals to a certain market size right and depending on your product and the promise and the category that could be,
you know, one hundred million dollars a year with a business or it could be ten million dollars a year with the business or you know there's some sort of organic cap that your brand positioning earned you,
but if your venture funded once you hit that cab you have to keep buying more customers and that's usually the point when you start seeing people do really stupid things,
um like ah,
you know these crazy customer acquisition costs and you know i think there's been some companies and went public recently where they're paying like fifty one hundred dollars customer teo to acquire customers and itjust seems like like what's the payback on that right, like.

Tom:
[36:17] Yeah i mean you know as a business we don't we don't look teo enter a category unless it has ah replenishment nonseasonal component to it so whether it's underwear or t shirts or lounge where it's something thatpeople will need to continue to buy throughout their life for a,
or some of these products have ah repeat within five or ten years so we know that there's going to be a repeat revenue stream coming in so the customer turn is in this high as some other categories,
we also don't have tech valuation there's a lot i think there's been a lot of tech valuations in this space where it's not a nap it's not a software it's actually a product,
so i think they're coming back to reality now with how the evaluations of the companies in our space or being evaluated,
but it's been painful valuations or down rounds for a lot of the companies that we've seen in this space.

[37:02] Where we've seen a lot of brand to come and go over ten years you know?
So i just think you know, every founder makes a different decision for what they think is best to grow their business and they try to make the best decision they can with the information that they have at that time,
but i think what i've learned to a lot of conversations a lot of people regret taking so much money early on,
and if anything if they could do it over again they would have grown slower,
and maintain control of the company and try to figure out how big the business model was and helping the revenue opportunity was within that category where i think a lot of um i've just been over valued the market sizeisn't this biggest they think it is,
and then on top of that they have a lot of pressure to make it bigger than it probably is going to be ever,
where you know underwear is actually one of the few obviously we saw.

[37:51] Many products outside of underwear but underwear is actually the only,
category in the last three years that has continued to grow especially the premium space so,
um underwear doesn't last for decades we've actually found with some of our customers it does unfortunately,
but there is there again that whether it's underwear t shirt socks there's that repeat component which is really critical to our business,
but that was not white space that we identify before reap built his business by any means it is just something you know this business was created off from a problem that i wanted to solve,
we've really taken that problem solving mindset to other categories and use the learning so what we have um,
to continue to grow but also minimized the level of risk and inputting the business in a position where we may go out of business or we may need to raise a large amount of funding.
Tohave, a lifeline we've never wanted. Put the business in a position where we were exposed to something like that.

Jason:
[38:47] Yeah, no, i don't. I don't blame you. Um, i also have a perception that early on, one of the things that you used help build your brand was some influence or marketing.
All right. And the in my in my head, i feel like i've seen maybe too many pictures of kevin hart. Naked is that is that.

Tom:
[39:03] I mean i don't know where you're seeing naked pictures of kevin i haven't i haven't seen those.

Jason:
[39:07] Semi naked sigh in comfortable loungewear.

Tom:
[39:08] Say my name you know we've been comfortable way we've been fortunate to know,
a handful of influencers howard stern ended up getting our product and talked about how he's never been so comfortable but it was after he try the product we didn't even pay him we're now ah paid advertiser on thisshow,
but kevin ended up posting on instagram three or four years ago and someone in our office a tom here and check this out kevin hart to dancing around in our underwear with the shirt off,
not naked and he saw his underwear away span and,
i knew someone who could connect me to kevin sent him a note said hey i'm a huge fan congrats on all your success here some more underwear and a couple years ago he was in new york and said, hey, i'm a huge fanthe brand can i come meet with you i just want to learn more about the company,
and i just love everything you guys are doing so when we look at influencers we're not paying people,
to promote our product actually kevin paid us through through ah meaningful investment in the brand because he believed in this so much and as a result you know kevin has one hundred million social media followers.

[40:13] The most successful comedy tour of all time and is just this honest hardworking, funny, relatable guy it's also very thoughtful and a lot of things that he's done, and we just had a lot in common.
He's, like tom it's, taken me eighteen years to become an overnight success.
People think i'm this overnight success, but they don't understand it.
Been doing this since i was eighteen years old, and i think the way we have built tommy john, we had a lot of empathy for each other in the way he's built his business and hollywood not having any connections inhollywood.
Us not having any connections in the fashion, retail space and it's just been amazing partnership for us.
And we're actually launching our second, kevin hart to point online this october, the sex over with him, which is really exciting, and i definitely want to congratulate you understanding.

Jason:
[40:57] Very cool, and i definitely want to congratulate you on deciding put pictures of kevin and underwear on your website, and not howard i. I'm glad he enjoys the product.

Tom:
[41:03] Yeah.

Jason:
[41:07] I'm just saying, probably a good aesthetic decision.

Tom:
[41:07] Nothing, probably.

Jason:
[41:09] Um, the i am curious, the like they're so i totally get that and that's very different than paying a kardashian toe tweet about your product.

Tom:
[41:11] I secured the right there. I totally get that and that's very different than paying a kardashian to tweet about your problem.
Yeah, in my mind, that sort of payed mega influencer technique has kind of played out.

Jason:
[41:20] In my mind, that sort of paid mega influencer tactic has kind of played out.
I think customers see through that and know that that's, not authentic, but we're starting to see emerge.

Tom:
[41:26] I think customers that and know that that's, not antic, but we're starting to see emerge a lot, sort of.

Jason:
[41:32] A lot is these sort of micro influence, our campaigns, where brands partner with,
non celebrities that have, ah, you know, a niche falling in a particular category, like is, if you guys looked into that at all, is that something you could see being part of the,
the marketing mix at some point?

Erin:
[41:51] I'd say never say never more than anything when we pick any of our partnerships, it's,
usually comes from a place of authenticity so it's an authentic partner, somebody who's a true fan of the brand or were a fan of them and we see our great alignment and alignment and our values in general,
that was what was so great about kevin is that he came to us and just said, i'm a fan of your brand, how can i help?
How can i help you? Right? And that was his approach, and, you know, we were so stuck in our heads saying, well, you know, we don't we're not really looking to endorse anybody, we can't afford to endorse anybody wecan't afford it endorsed kevin hart, you know,
and he's had to really just shout loud like, look, i'm trying to give you my money,
i take my money and i want to help i want to help you guys grow, you know, and and we're kind of thrown back by that thinking, well, this guy's real deal, he actually just loves the brand he's a fan, he wants to be a partof it, he wants to be part of the growth, and,
those are the types of partnerships that we would look for very cool.

Jason:
[42:53] Very cool s o unfortunately wouldn't be a jason and scott show if we didn't talk about the book resellers in seattle.
Ah, amazon, right? And ah, you know is interesting is the number of years ago amazon sort of announced this like,
you know, shift to get into the apparel business, and back then there were a bunch of people predicting like, oh, apparel is way different than the other categories.
They're not going to be successful fast forward about four years, and it seems like the evidence is,
they're very successful in apparel, but it's a specific subset of apparel like it, it is the basic needs stuff, more so than the luxury fashion stuff at the moment, right?
Like, i'm i'm not betting against them, the jury's out on the long run on the the fashion stuff, but i'm curious is that scary to you?
Because you're in the underwear category, which kind of sounds like basic needs?
Or is the fact that you're a premium, differentiated product, like, really put you insulate you from some of that success that amazon's having, or are they a potential partner?

Erin:
[43:59] I think it comes down to you know, of course they're a threat just because of their sheer size, right? And and when you talk about market share, anybody that's competing on market share and taking that that awayis a potential threat.
But guess where we don't get so scared is that it's not necessarily what you do, it's, how you do it,
and i think we've, you know, prove to our customers, and we continue to prove to customers that we're here as the loyal brand, we have a strong line of communication with them.
We're here to serve them, and we really listen and take into consideration what they want, and i don't know, i don't know if amazon, if anyone's really been able to talk to amazon and tell them what they want,
you know, or if they have, ah, open ear to listen and unnecessarily here, that so i think what we've built as a brand and how we continue to communicate and engage with our customers is what separates us.

Tom:
[44:55] Yeah, i think the relationship is really important. You know, loyalty is something that we want to offer. We really wanna have a deeper, more meaningful experience.
And, you know, there's restrictions and guidelines that you have to work within within amazon, that we just don't feel are.
They just there. It's not fit for us at this time, but you never say never.
You know, things change and models models evolved, so i think we're open to the future. But right now, at this point time, it just doesn't make sense for us and awaiting question.

Jason:
[45:22] I want you and related question. Like, when you talk about the big market places, one for a brand.
One of the issues that always comes up is authenticity and counterfeit products. Like, have you guys run into that at all? Is that something you're having to battle in terms of?

Tom:
[45:33] Yeah, run into that and always battle with counterfeits.

Jason:
[45:39] Yeah, in terms of people knocking off your product or something.

Tom:
[45:41] Of course yeah i mean yeah i think there's been a lot of brands that have reinvented underwear since after we launched but i think it goes back to you just we actually embraced competition competition only makesyou better,
but like i think what we're always thinking about it what are different types of partnerships whether it's kevin hart i'm doing you need things with nordstrom how do we deliver value to our wholesale partners how do wedeliver value to our existing customers?
A lot of it comes back to the product and continue to innovate and evolve as a brand,
and you know and also i think what we've really enjoyed as as we've grown is we have a unique way of talking about a very uncomfortable topic underwear and a more funny in a funnier, more relatable way and that'ssomething i think,
brands need to continue to do is just,
i think authenticity is a very overused word everyone's talking about it you have to be yourself and you know it took us seven or eight years to really figure out what our tonal voices and really get it out there in a clean,concise way,
and that's really when the brand i think became much stronger and the relationship their customers hasn't is continuing to become much deeper and that just something you can't get on a lot of other platforms that re sellyour product and i think the brands i can figure that out.
Maintaining evolve. It are the ones that will you continue to outrun the competition.

Jason:
[47:05] Nice. I think that is going to be fascinating to see how that continues to evolve.
And that brings me to sort my last question.
If you take your sort of today, head off and think about how the industry is going to continue to evolve over the next four or five years, do you have a sense for how different things are going to be like?
Are we, you know, is everyone going to be a brand selling direct in five years?
Our, you know, you know it r is the shopping experience going to be wildly different? Do you have any guesses for, for the future of commerce?

Tom:
[47:40] I mean, no, i mean, if you told me you were going to be here five years ago, you like, maybe, okay?
I mean, i think a lot there's so much out there right now, and i think there's so many things that came into the market too early, whether it's like a i or chap pods,
and i think we're still we're not one of the earliest adopters, you know, like apples, never first to market, they kind of sit back and learn from the learnings from other brands.
That's, really, how we've looked at the market in general, let the bigger brands who have bigger budgets, more money or funding,
let them spend money trying to figure it out, and we'll come in and at some point well enough that but we're not really in this space of being the earliest of doctors unless we really feel strongly about it.
And i think it's been more on the physical product side that we've taken that approach, but as faras the systems and technologies we're not selling ourselves as the tech company, you have to be a tech company today to bein retail, especially, is it digitally native vertical brand,
but i don't think,
i don't know it's.

Erin:
[48:45] Yeah it's a great question it's of course don't,
very hard to tell where it's going to go i do see this shift you know,
there's a lot of the digitally native brands as we talked about you know going into retail going into brick and mortar so obviously that's a shift there's an opportunity there right where some of these,
big chain retailers just haven't involved right and they're not involving their experience or not involving their product and they're not involving with the time so,
it is a great opportunity for brands to get into that space and try to do something with that i think there's going to be a handful of brands that or do it really well and there's going to be a handful that kind of burnout right?
Because again like we've learned just was one store how extremely hard it is to make that store profitable and make sure that it's a replicable model that you can continue to roll out over and over again right,
and that's our plan for going forward is you know, twenty nineteen definitely expect to see more stores but you know it's because we're fine tuning that model we're getting closer and closer we know exactly how to,
turn these stores out and make them profitable and i think that's going to be the future is figuring out,
how to do these omni channel approaches in a scalable way right cause if it's not scalable if it's not profitable.
They're all going to burn out, and you just can't keep running at that rate. So, um, it will be interesting, and it'll be interesting to see how it all shakes out.

Tom:
[50:14] Yeah, i don't think there's a more exciting time to be in this space than today, just with how much change and the company's not being able to change quick enough, which is creating opportunity for brands like usto take more meaningful market share.
But, you know, we may be in that position someday. Where were too slow to change and that's something that i think continues to drive us is.
How do we maintain our flexibility and nimbleness at a bigger and bigger scale? And i think that's, the challenge that a lot of brands run into, and we embrace that because it's a it's a great problem to have at the end ofthe day because it means you've done a lot of things right.
You have to stay on top of all the changes so quickly, right? Since we spoke in the last forty minutes, there's probably been all kinds of stuff that's being talked about in our space that no, i'm already behind on because,yeah, because we've been doing this for so long, yeah.

Jason:
[51:03] No, i think that's a great point and it's funny, you know, when one of the clients i get to work with is,
the largest retailer in the world walmart and it's funny, but the guys that have been there a long time tell this story about how they remember being the young, scrappy upstart and they're like, you know, we always thought of ourselves as david,
trying to figure out how we were going to compete with these big ally it's like sears and target and ah, kmart and they're like,
we went to bed one night and we woke up and we're like, oh, no were to go live now, right on ly there's, way more david's, and they have way better slingshots, right?
And so i mean that's that's, the evolution of everyone and it's it's, it's wise to be aware of that.  And that's going to be a great place to leave it because it's happened again, we've used up our allotted time as always, we encourage our listeners to jump on the facebook and continue the dialogue there.
Of course. Have you enjoyed today's show? We sure would appreciate that. Five star review on itunes, tom and aaron, i'm assuming you guys are on the usual social channels can we find where can we find you guysonline?

Tom:
[52:05] Yeah, instagram, facebook were at tommy. John. Where is our handle and tommy john dot. Com. You confide everything there. Thank you guys very much for the time, really enjoyed likewise, thank you.

Jason:
[52:13] Thank you guys very much for the time. Really enjoyed the chat until next time. Happy commercing.

Sep 2, 2018

EP143 - Dell head of digital transformation Sarika Puri

Sarika Puri is a Senior Director and Head of Digital Transformation Acceleration Organization at Dell Technologies.

In this interview, we cover Sarika's background and discuss Dell Technologies journey to digital transformation.

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

Episode 143 of the Jason & Scot show was recorded on Tuesday, August 7th from the eTail East tradeshow in Boston.

http://jasonandscot.com

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

Transcript

Jason:
[0:25] Welcome to the Jason and Scot show. This episode is being recorded live from the detail east show in sunny boston on tuesday, august seventh.
I'm your host, jason retail, g, goldberg, and unfortunately, Scot had a personal conflict this week.
S o he's not able to make it, which means the listeners are getting twice as much jason for half the usual price.
Ah, the great news is, we have a terrific guest for you on this episode.
We have sorry ca hurry who's, the senior director and head of digital transformation acceleration at a little company you may have heard of in austin, texas Dell computers,
and i probably already blew it. Have a nice erica it's, not Dell computers anymore.

Sarika:
[1:08] Well, it's still technologies were not very, very big. It's, it's, delhi emcee.
But it'll all the seven strategically businesses aligned and of your big companies.

Jason:
[1:15] Hey, exactly. I'm trapped in this like old time warp from, like the nineteen, ninety five version of Dell it's, it's, it's. A little bit sad.

Sarika:
[1:22] Okay, yeah.

Jason:
[1:24] But before we get into that, one of the things we always like to do on this show is getting to know our guests a little bit and get a feel for how they came into their roles. So could you tell us a little bit about yourbackground and how you ended up a Dell?

Sarika:
[1:36] Yes, absolutely. So i started my career a Dell thirteen years ago, working on the Dell dot com commerce team.
As a programmer, i have been a programmer for many years and love building platforms.
Last year, i had the scenic opportunity to go lead the digital transformation off a future commerce platform.
And that is how i came about to this roll. And, you know, it's, been it's.
Been an exciting journey, being a Dell technologies overall, you know, i was surrounded by really smart people, good, great developers and and had a and that really sparked my interest in the commerce world.
And on guys. Consider this like a very glamorous world where you have access to, like all the technology choices that she could make to go drive that outstanding customer experience.

Jason:
[2:22] I totally agree, it's. Odd, because in my personal life, i find very few people that think my world is glamorous. So i'm i'm glad that we are of a like mind on dh were cruelly correct.
And as we're sort of alluding to before, like, you know, folks probably think of Dell as, ah, primarily a computer manufacture.
But as you alluded to earlier today, it's ah, huge portfolio of prada, b to c b to b products and services.
And so i assumed that part of the scope of that platform is toe. Think about all the different use cases for for all of that.

Sarika:
[3:01] Absolutely, absolutely so what's happened is when i was in wild, you know, buildings have been here thirteen years have been through several transformations,
and this this transformation is really about we're on being on this mission to go deliver a global cloud based omni channel,
commerce platform that enables our customers to buy a needle technology product line from anything and from anywhere,
and also established agreed fantastic work culture for our employees,
and that's the mission because we are dealing with traditional platforms, which are, you know, siloed across the different ecosystems,
were dealing with lengthy leases and inefficient it processes were also dealing with disconnected experiences across Dell dot com, premier amc and the other strategically line businesses,
our customers are no longer looking for a specific server or a storage option or a specific computer.
They're looking for solutions. They're looking to transform their digital future, and they're looking for entering solutions, and we're building this global common platform,
that can deliver that into an experience or customers have needs, and they're looking for art comes, they contrive the entire experience for them.

Jason:
[4:12] Very cool. And i'm curious. Weed. In my my day job, my practice, we talk a lot about selling and implementing platforms on behalf of clients and there's.
Always this sort of build versus by conversation, was that even in the dialogue, Dell, was it a no brainer that you guys were that your next generation platform was going to have to be built? Or like?

Sarika:
[4:34] Great question i think we go it's it's like a ping pong game right you go through barrier versus pie you make some by decisions and you realize oh my god not so good,
and then you end up going down the path to go build your platform and then you you realize oh it's not you know why am i building a platform if there is something that's already out there that can do the same thing,
and how can i innovate faster rather than going to have i have to go having to go bear the same functionality that could be just procured from the outside i think the key it's not really build verses by i think it's not the ideathat that really matters,
it's the execution off that idea sometimes we just don't have the patients to see it through,
you know sometimes by a product and will realize oh it's not it's too expensive or it's not something that we really want to go down this path there's too much custom work that has to be done what was promised is notdelivered,
and then you go down this path to go bury something and guess what when you're trying to build something there's just not off like for like functionality that has to be built,
and and you realise why why why is this so slow like i would like to innovate faster so it's really how you execute and i think the speed in how you deliver your software changes to production is the key.
And that is why i keep bringing up it's, not the idea. That's, so much that's. Bad that's. The execution of that idea. That's, that's, so critical to success.

Jason:
[5:49] That makes perfect sense. The only bummer, though, is that execution is like messi and boring, and it requires all kinds of hard work.
It's way more fun to just talk about the shopping and, like, oh, my god, should we go builds by some shiny bobble from one of these friends. They'll take us to a nice dinner, or should we hire a big team and develop ourown stuff?

Sarika:
[5:59] Yeah, yep.

[6:04] Dell wait we're changing that so we're changing i mean i think i and i said this before it's not just about you know delivering another platform,
it's about creating this fantastic work culture for employees so it becomes fun building a platform,
and we're using you know what some people may might know about this is pivotal labs methodology and technology that really drives employees experience so we're so centered around the customer,
will be bitter things that there are customers care about you're no longer building things that are customers no longer care about,
we're constantly validating it rating we're talking to the customers the entire team is talking to the customer it's not,
that you're not operating a traditional waterfall software life cycle where you have a team in the business that comes up with an idea and you have a team of product managers that figure out how to write rightrequirements,
and then you have another team of architects that who figure out all right how do you architect this entire solution and they handed over to a team of developers which,
could take months to go deliver something to into ah sit environment and then it might take you know, another few weeks to get it tested now all disconnected themes and it can get very, very boring and very frustrating,
what we've done is we've infused those dysfunctions do not go away we have infuse those functions within a within a very small product ing.
We're moving away from project. He esteems into more small product.
Hastings and and the steam is responsible for design.

[7:29] Develop and delivering changes to production and how to support those changes back in production is really changing that entire operating cycle, so we're going to actually be on this path to make it a fun exercise.So it's not going to be boring.

Jason:
[7:41] Nice. I think that is critical because, you know, we talk a lot about it is ten percent, the tool in ninety percent,
the people and on dso like putting those people in a position tau be successful and add the most value seems seems critical.
I don't wantto spend too much time, but just to get like, so transformation implies a current state to a future state.
So so the state you're moving away from, i'm guessing you had a number of platforms that came in through your various acquisitions in your legacy businesses.
And is it fair to say you mentioned that the aspirational state is a cloud based solution?
Is it fair that you may have had some class stuff before, but i'm guessing the bulk of your stuff was sort of on graham type solutions.
Yet so making the big migration to the cloud on then the other buzz word that i usually hear in that sentence that you did not say so i'm just curious if you were trying to keep it simple for my my ah non engineering brainmicro services are you?

Sarika:
[8:41] Oh, absolutely. I think that and this is where, you know we've been on this transformation journey for a long time.
And what's different about this transformation is, i think we took a big leap a few years ago where we were trying to deliver more seamless, online offline experiences.
And we went down this path to create heavy, service oriented architecture and and and that led to big, monolithic services that did too many things across too many different personas.
And it became very hard for us to deploy incremental changes to production at a faster rate.
So we are on this path to decompose those big, monolithic services,
into more micro services, again establishing more autonomy with these small product teams that owned these micro services so they can they can really leverage the speed in which they can deliver these changes intoproduction.
So absolutely, i think that's, a very that's that's, a very critical architectural component on how we go, you know, drive speed to mark.

Jason:
[9:38] Nice. And when you talk about those small, autonomous teams, i always hate toe draw analogies to the evil book reseller in seattle. But, like they famously coined this to pizza team term.
And it sounds like philosophically that's, a little bit. What you're what you're thinking.

Sarika:
[9:56] Yes, so what? Me, when i say high autonomy, i mean, you need tired on me across thes product teams, but you also need high alignment,
to ensure there are all working too well towards one singular purpose to deliver that one single customer outcome and on dh.
These are very small product teams. We don't call them project teams anymore and the three essential rules within the steam one is the product designer product managers, and then you have product developers who arepart of the steam,
and they will work together, and they were like i said, they're sitting very closely with the customer. The business is part of the steam.
We're no longer working on requirements to in in silos were very closely working with the customers,
validating every feature that goes out live to ensure that it's creating the out things that we want to go see from a business standpoint and continuously trading on that product.
So these are, like very small teams, six product developers, designer and a product manager on the same team. Dell.

Jason:
[10:50] Nice on dh, if you can say, are are you guys envisioning? This is something that would run on aa Dell hosted cloud. Are you guys thinking about leveraging the public cloud?

Sarika:
[11:01] Well, i think this is our i mean, look, i mean, Dell technologies is, ah, is a unique family of businesses that that provides all the essential infrastructure to help companies for their do digital future.
And we really have access to all this infrastructure in house.
So this is our story around. How can we deliver a modern, global cloud based commerce platform to sell Dell technologies on their technologies? So that's, that's, a that's, a key part of our success.
So we'll be looking at leveraging our in house, we, um, where e m c, cloud based solutions transforming our data center so they can act in a more optimized cloud environment.
And we're using our own technology and methodology to go drive our own transformation.

Jason:
[11:49] Very cool on. I do want to dive into the transformation aspect a little bit more.
But before we d'oh a sort of when, when you think of platforms for Dell, like one of the unique experiences that you would certainly think about is when you are selling that,
uh, made to order configured to order stuff, which i feel like a lot of your catalog, has heavy customization components.
You rely heavily on, ah, a configuration or experience on i'm i'm curious, was, is that something that you also felt like you had to develop yourself? Were you able the leverage to my p from the open market for that? Or?

Sarika:
[12:25] Well, i mean, if you focused on so we have, we have our own in house customer experience that enables the configuration of both from a front and a back and perspective again.
It's, it's, very it's. You know, we were dealing with again a monolithic application where your front and is likely coupled with your back, indeed a structures.
And with Dell a dmc the when the murder happened, we no longer can support those applications that just support one kind of product.
So there is there's, a huge effort going on around abstracting a product structures.
So regardless of what your product line is being able to go, go abstract, these global common services that support the configuration experience and can support configuration across any product line.
And i think it's been hard for us to go find something that can do that in the marketplace outside.
So it's really about establishing those services that can be abstracted away from these masters so we can support that frictionless and seamless configure experience.
And we can play around and experiment different configuration experiences against closely working with our customers and understanding what what?
What leads to higher revenue? What leads to higher conversion rates?
So that just gives us more flexibility with our own solutions as we develop them in house.

Jason:
[13:41] Sure, and it does feel like in the evolution of configuration.
Ear's in the old days, like the goal, was really just, ah, reduce friction and enable the complete complement of configurations and follow the business, like just the basic block. And tackling was hard.
It seems like today, in addition, getting on that block and tackling, which is still hard,
there's a lot of art to so which configuration do i present to each potential shopper by default on what's, the highest profit configuration, what's, most successful for that client and to your point, like,
the answer, isn't the same for everyone. So how do i split?
Test that and and all those sorts of things.

Sarika:
[14:22] Absolutely, i mean you're dealing with simple configuration, others that do not have too many validation that needs to happen.
The customer just needs a few options and few choices, and they can place an order in the cards so it's really about providing that seamless experience and focusing on each persona at a time,
you cannot bear something that applies to all personas and understanding what your persona eyes.
I mean, for example, we're also dealing with customers, for example, if they're looking to install her dupe a solution and they're looking for what are my small, medium high options,
and their customers were looking to install splunk in their in their environments, and they're looking for small, medium high options and that involve our products across the entire product portfolio.
It's no longer just legacy Dell legacy and see product product,
it's it's the combination of products across the entire portfolios it's, it's really, really depends on the persona that you're trying to serve,
again working, you know, becoming this customer centric organization, customer centric team and working backwards into utilizing all these capabilities to deliver the right experience for the right persona.

Jason:
[15:23] Yeah, you know, it's fascinating, a fun antidote from the last couple weeks for my life moves of my client's look a lot like you.
You guys would be a sort of a typical client for us.
But, you know, who's getting disrupted a lot at the moment are like food and restaurants. And so i have, ah, fast casual client, and they're our cages and quick question.
Should we be trying tto add cheese to the sandwiches, or should we be