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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: March, 2018
Mar 30, 2018

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

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

http://jasonandscot.com

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

New beta feature, Google Transcription:

Transcript

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Scot: 
[4:11] Small HDMI cable.

Bob: 
[4:12] Exactly the server room.

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

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

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

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

Marker 01

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

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

Bob: 
[6:25] Absolutely absolutely.

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

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

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

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

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

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

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

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

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

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

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

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

Bob: 
[12:03] That was so long ago.

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

Bob: 
[12:05] Absolutely.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bob: 
[25:17] What's feedback.

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

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

Scot: 
[25:47] That's be a balance.

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

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

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

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

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

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

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

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

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

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

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

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

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

Bob: 
[29:05] Yeah you're offering.

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

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

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

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

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

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

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

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

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

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

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

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

 

Mar 27, 2018

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

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

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

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

http://jasonandscot.com

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

New beta feature, Google Transcription:

Transcript

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

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

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

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

Luke:
[1:09] Thanks for having me.

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

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

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

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

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

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

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

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

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

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

Scot:
[3:33] Awesome.

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

[4:03] Jonas today.

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

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

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

Scot:
[6:38] Did.

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

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

Luke:
[7:12] It's almost basic.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Luke:
[19:51] By numbers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Scot:
[30:58] Thanks.

Luke:
[30:59] Thanks I appreciate it.

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

Mar 24, 2018

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

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

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

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

DisruptorDaily Top 10 Retail Industry Podcasts

BoldCommerce 16 Best E-commerce Podcasts of 2018

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

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

http://jasonandscot.com

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

Transcript

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Scot:
[8:22] Yes absolutely.

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

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

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

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

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

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

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

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

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

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

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

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

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

Scot:
[17:39] Sprinkle.

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

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

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

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

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

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

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

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

Scot:
[24:02] Yap exactly.

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

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

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

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

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

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

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

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

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

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

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

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

[31:39] The warmers.

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

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

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

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

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

[34:00] That start to where they are now and here they are today they fit 10 million items on the marketplace they've got over 20,000 Sellers and 40 million monthly active users so you know it's pretty pretty neat that they kind of just.
Really solve the problem and we're able to build a couple different ways of monetizing that on there he was interviewed by Alfred Lynn who was one of the.

Jason:
[34:28] Yeah that's a good question yeah I think he was there at the beginning I do not know if he's officially a founder or not.

Scot:
[34:34] Yep but he left free shortly after the Amazon acquisition and Joint Sequoia which is one of the.
List of blue chips are in the Bay Area so a lot of his questions I wasn't sure the retailers were rocking on cuz he's talking about MARC station strategies,
yeah he's like going kind of deep into the VC language they're so it's kind of interesting and then,
the last thing I thought was interesting was they did talk about you know,
they are so this is really big right now in the home category,
where you know you can not eat you can use augmented reality to look at a room and being a piece of furniture or a faucet or something like that or maybe in the cabinet you can kind of get a feel for how that's been looking so they have a million skus that are when I call a are enabled and,
this was one that will make sure that we caught that,
it improves your conversion 11 x when when people are using they are to look at an item,
so in my calculus I kind of said well that was conversion rate something like two to three percent so what is that like 33%.

[35:39] What your kiss makes sense cuz people going to be pretty far down the funnel if you're going to be like okay I'm going to go home,
I'm going to fire up the say our thing and I'm going to drop that widget that piece of furniture whatever it is into my room to see if it's it's so it's so I guess it does kind of like a really big bump to me.

[35:57] Does that jive with you.

Jason:
[35:58] It does and I think YG for the reason you mentioned like I don't think if you just took any random Shopper on that site and force them to to use an AR experience that they would suddenly convert.
11 x better so I don't think they expect you know why these friends probably is better is,
I don't think it it's this the magic Silver Bullet to cause everyone to buy.
I think you have to already have a much higher buying intense.
To be interested in trying they are Peter so you have to already be more attached to the item and you're investing more time and in kind of setting it up on your phone and walking to the environment where you want to use it and so it's it's,
it's one step below are on the funnel and in so I think it is a great tactic,
they are also that your web urging a something we talked about in the show Google and and,
Apple have both rolled out AR kits for their operating system that make it way easier to do this kind of stuff well and so.
Pals wizard of the pilot user of those two stacks the what people is usually underestimate when they implement this feature,
is you need a source of really good data to have the 3D models of all these items into the fact that they have a million items out of there,
their inventory of,
you know that they have good 3D models for is is to me pretty impressive and that that now is officially the big barrier for any other retailer that wants to add this feature is just how do you get the good 3D data and I I think in the long run.

[37:32] The brands are all you know in the same way that they have to provide a long and short description for a retailer when they want to sell something you know what the brands are going to have to start providing 3D files for for these things as well.

Scot:
[37:45] Yeah that seems like a very large number to me because you and I know most manufactures is a struggle to get a you know a human readable short description you know so they'll be like.
Wooden chair so I kind of was locking the logic I was like wow that's a million is like 10% that's why I would have guessed.

Jason:
[38:07] Generally these first-generation experiences it's more the retailer created the data themselves.

Scot:
[38:14] Yeah so they must be like you,
getting the products in and scan I know people will shoot videos and practice way there's these houses that get quantity one of these things to do that so I was thinking maybe they picked they have the benefit of knowing the top 10% items get them into a studio and then you can run a scan on them that was did you wrote did you walk to the same process.

Jason:
[38:34] Yeah and they didn't talk about how they do it that's and I would have love for them to Deep dive into that but that's exactly what I would assume and it does create this interesting thing so,
and house where is really weird category cuz a lot of furniture is.
It's not really branded Furniture it's like private label furniture that a bunch of different retailers all sell the same thing and call it something wildly different so there is some office case in their butt.

[39:03] If you think about it house now has that in owns that 3D data the manufacturer doesn't so when.

[39:13] Amazon or Crate & Barrel or some other seller wants to sell that same item you know they they,
they're going to eat at to spend the same money has spent or the manufacturers are going to have to go spend the money to do a 3D scan the file or,
go back to the designer and get the 3D CAD files from the designer in so it does it does create this new work stream this is how,
a lot of new attributes in e-commerce this is how they start the first time someone a retailer wants to use in the retailer has to invent them and once it becomes a best practice it gets put back on the manufacturer and eventually the manufacturer gets couldn't provide that mean the same as it is true a digital images.

Scot:
[39:52] It also made me wonder you know the wafer ones talked about a lot that made me wonder how many models they have and if they're doing something somewhere.

Jason:
[39:59] Yeah and if you think about it in this category is even more ugly like a,
the hardware the 3D scan these big items is more convoluted than then you know like simple tabletop items and so much of the stuff is drop shipped like if these were shoes that sat in a filming Center you can imagine sitting up shop and seeing a bunch of shoes in the Fulfillment center but a lot of these things.
You know you like it in the case of Wayfair they never pass through a Wayfair facility where Wayfair could scan them.

Scot:
[40:27] F R Anderson cool so after house we had a Google up and the Google one was probably if I was going to pick one that was my highlight of this would have been it and even then I think it was,
how what Google announced the show was largely misunderstood so I wanna spend some time on that because I think it's,
pretty important so what are the interesting things that's going on is the the guy that used to run retailer Google his name was John a furnace and he was he left to join Pinterest and saw him several times the show he was there with pry like 50 Pinterest people which I thought was interesting because,
you know I'm easily sink shoptalk in Pinterest so I just got this vibe that there's something going on there.
And I don't know what it is but but he's also like his official title there is SVP of ads okay so that makes sense and commerce it Pinterest so pictures has had when I would call some.
Pretty you know man e-commerce things that got rich pins they did a little Marketplace I kind of went about it in a weird way that was not very.
Customer friendly was easy to implement but not a great customer experience so I almost kind of like was wondering you know.
Why is Pinterest have so many people here why they hire Al Fitness e-commerce have answers but I just thought was interesting to see that so anyway,
Daniel is a great addition to the retail team so it's official title is president of retail and shopping at Google I talk to a lot of googlers and they were all really excited because this kind of the folks that are in the Google shopping side and they've been working on retail for a long time.

[41:59] I feel like retail is really elevating at Google and.
The person they talk about Daniel has been a senior leader Google for quite a while I think his prior title.

[42:13] I was stressing yeah he was like Global and strategic Partnerships so you know he he was quite a senior person and,
he's also well known a Google you know these companies like a Google or an Amazon aren't really known for their ability to partner with other people wear as you know I think he has led the charge in certain categories were partnering is going to be essential for the wedding so I was really eager to hear what he had to talk about he went through you know.

[42:40] I don't think whatever Google people get up there they have to kind of go through the rigmarole of,
we have seven properties that were billing users were Google where mazing here's the big trends we see the meat and potatoes of his talk to me was the announcement of I called this Universal shopping cart and I'm not a fan of that I've had these two spirit things at Google,
send it. Google Assistant which we know and love on the show they've had Google Express.
What started out as a kind of delivery service in a couple of areas and just think of it as kind of one hour type.
Product and then they've had product listing ads and so through a the pieles are a.
A shopping enabled kind of a not enabled e-commerce ad unit if you will so far.
20 products that has a price and that kind of stuff so they put them all under this umbrella now and they've actually.
The cool thing for me is I sent you they built on Marketplace on the park posting ads and that they taking a couple shots at this last time I was called by on Google and.
It was just so micro so it was like 5 merchants on Android only Angie had to have Google pay and it had to be enabled it had to have this that in you but time you slice all that stuff you're looking at like you know.
500000 users which which is nothing but in the world of Google with all these billion dollar properties it's like why are you so where she going after these like you know,
like slice of a size of a slice of a slice but unfortunately are not doing a great job of describing it I think about it is you can now take any SKU and have it available in a lot of different flavors so so first of all.

[44:26] If it's like what I would call an e-commerce Q me you're going to ship it either from a fulfillment center or a store so kind of like a two-day plus kind of a thing you can make that viable in a Google search result.
Is that product is near the user and available for delivery same day that's another option Source, these rings of availability.
And then also you can make that SKU available to Google assistant so example that they have used a lot is as you know target has a private label cpg brand called up and up.

[44:55] So they show this this detergent that has been enabled with this new ad unit that's called shopping action,
abled then there's three use cases so you can say OK Google,
buy up and up laundry detergent and it will it will know then.
Based on where you are if you can get it kind of same day or in an e-commerce kind of a Note 2 day type experience so you it will ask you and if it's available in both It'll ask you which one you want.
The baby shopping shipping fees and stuff there and then if you're in the Google Express experience you'll see that product because it is available at a local store and then if you're in a sponsored.
Pla you will see it there as well so there.
You know we are at Channel advisor we are in early partner on this and it I can say they said on stage,
Target and Ultra Ultra are seeing 20% left from that,
police unit and I can say there's there's several other people in there and and this is causing really good lift for folks in this is something I think it's been a long time coming,
there's certainly some attribution things in there but but I think happens if the desktop metaphor doesn't work on mobile the whole go search for detergent go in to target.com forget your credentials.
Get a password reset login put it in your Target card.
Then order Denver enter your credit card that's such a drag because up further in the stack the phone already knows who you are and you already have your credit card in the Play Store so why not just use those credentials so so this is another attempt I think at kind of.

[46:38] Elevating that transaction higher in this. So I'm excited about it and they went to Great pains not to call the Marketplace but my mind it's Marketplace.

[46:48] So so I took this to mean Google is getting a lot more serious about Marketplace and how do they surface this product and make it.
Yo and partner with retailers to two.
I think the big win here is going to be closing the mobile Gap and what did Al furnace did is he came from the Travel Group.
At Google where they did this to an Indus was controversial because some people thought they were kind of going around to Travel Systems and stuff but you can actually buy a hotel room right on,
Google mobile and dramatically increase conversion rates versus kind of like that again that desktop metaphor of OK Google says there's a hotel over here,
now let me go to that hotel site and then iterate through you can actually go by that room on Google Now I'm so so I think they seen some really interesting things on travel and they want to bring it here they did a 100 of it over the last 2 years that didn't get a lot of success and then this time it's feels like they're taking a much bigger at that swing.

Jason:
[47:46] For sure like I do think they're taking a bigger swing it's going to be interesting to see how it plays out.
Huge difference between travel and most of the sort of product Commerce you know,
in travel you're mainly trying to sell a room or a flight and if you can bundle other travel Services into that sell it's great but like the overwhelming majority of the time it's a win the book a room,
a lot of individual items that you sell an e-commerce are only profitable if you get the customer to buy more than one thing and so you know that the level of difficulty for Google is is much higher in the Commerce base than the travel space in my mind because,
it can't just be.
Click to buy button in search results because that that frankly is going to drive everyone a single item purchase is a oviso go down and you know the artiste rest.
Profitability in the in the whole ekosistem would get even more stress so it's going to it's going to be interesting to see how all that plays out to.
I I get so one funny thing the economic model is different than most other Google ads units in in you know most cases your you're paying for that.
That exposure in the ad world and you know Google is charging much more like a Marketplace hear your your you know paying at a crate on the on the stuff that Google help you sell or you know in the.
The ad business they call this a rev-share model and when the word got out that they were watching this format.
All the traditional SEO guys piano.

[49:17] Because they misinterpreted this as Google will now share the profits with you and elevate your listings in organic search so they.
They said it was a you know several days of panic on Twitter where it where that was sort of going around I guess one other interesting outcome of this is.
It also creates the scenario where you may not have paid to have a pla show up.
But Google me decide to place your POA extra times that you didn't pay for and take the rev-share from it and so that that's it in aspect of this program as well as the Google can Canal run Google funded pla.

Scot:
[49:57] Yeah it's going to be really interesting to see and I know we're going to type for time but let's talk about some of the implications in a future show.

Jason:
[50:06] For sure we had to run from that Keynote.
To another event that that they is sort of an event within an event Jason Del Rey from recode they they host a.
A dinner or in the evening at shoptalk they call code Commerce and so you know he he typically gets like about three interesting speakers,
you know at at this sort of show within a show and so we.
We hooked it from the keynote to join Jason's event and there's some interesting speakers there as well so the 1st guys up there.
Was Eric Nordstrom who's one of the three.
Nordstrom Brothers running Nordstrom's right now and who does not do a lot of public event so that that is kind of a cool get and he was on stage with.
This gentleman Don Kingsborough who's from a company called one market and I'll get into that in just a second so having Eric there.

[51:14] Would be cool under any circumstances but news and come out bad day that the board of directors of Nordstrom had sort of turned down the Nordstrom families offer to buy.
The company back and take it private and so the the you know according to the reports the deal is dead now.
And so you know that was obviously a piece of news that Jason went right at Eric about.
And which Eric had very little interest in discussing and probably let you know wasn't at Liberty to discuss it created some sort of.
A humorous for us awkward for Eric moments at the beginning of that interview.

Scot:
[51:54] God knowing you Delray didn't what up it kept coming up he kept on them.

Jason:
[51:59] Exactly and I kind of a funny line he's like you know I'd like to say I appreciate the question but I really don't.
That's what I heard of humorist in so he's he was on stage with this guy Don Kingsborough and Don is the CEO of a company called One Market.
And there are there a spin-off out of a incubation lab that's owned by Westfield malls in so I don't think.

[52:26] Westfield may still hold an interest in one market but they're separate entity now I think they probably figured out that nobody would want to.
Participate with one market if they were exclusively owned by this one mall and one market is kind of an interesting venture.
You know personally I'm a little skeptical on it but the the gist of it is that hey,
Amazon has walked up a big chunk of the market and then this huge unfair Advantage Amazon has all this data about the consumer,
they see way more of the consumers purchase behavior and more the browsing Behavior than anyone else and they're really putting all the traditional retailers at a disadvantage because no one retailer.
With the you know possible exception of of Walmart really has the the.
Date of his ability to know the customer as well as Amazon does and so what Market is an effort to say let's create a data Coop where all the retailers share everything they know about a consumer,
and then we'll make.
That data available to any of the retailers in the coop to improve their experience and they have to make that data available in a,
a very limited way like they can't share.
Personally identifiable information from one retailer to another and they they can't you know give one retailer another retailers customers but essentially if.
If you're a customer and you've done a bunch of shopping at coach and so coach knows you really well and then you walk into Michael Kors.

[54:02] And you know Michael Kors says Hey I just met this guy Scot wingo and he's in the coop database the the,
One Market would be able to share some of the the enhanced data they know about Scott Wingo that they learned from Scott shopping with coach,
and so so at at it. I don't know if I explained that very well but at the highest level this is sort of a customer data Co-op to compete with,
Amazon.

Scot:
[54:30] Yeah I have to say I've never met non-don before but he seemed like a really story guy it did like it has a really great since it like PayPal and places so so no doubt he can build with it he says Google but I honestly didn't understand if it about it.
I did I guess I didn't get to use case it's like I don't really care if I go to Southpoint mall and then I go to Crabtree mall and didn't know about me like,
I just don't understand,
but I couldn't really get my head around you space and maybe that's cuz I'm a very transactional Mall person am I going to the Apple store to get my airpods that's it I'm not I'm not like a browser baby but I don't know I kind of missed the use case.

Jason:
[55:06] So you you are so you are hitting on one of the potential liabilities of this model is none of these retailers are pretty good at using the data they do already have about all of us when we shop and so it's it's hard to say that their biggest problem is they don't know enough about us,
but it is fair to say you know the date that they are worried that they know less about us than Amazon does so I can I get that a big problem with this model is is,
anytime you explain anything like this model to a consumer they're going to immediately panic and get creeped out and it it just sounds like big brother,
and so it's.
We'll have to see if it's focused on the Legacy mall guys in a Dina retailers and of course they have a bunch of other headwinds that are unrelated to any of this so,
I don't know I'll be honest though I did get the impression,
the Don has a personal relationship with Eric and that the deal struck and by the way Nordstrom is one of the retards participating in one market so I suspect the deal struck was,
Eric will come onto code Commerce and talk with Jason Delray if he gets to bring down with him and gone gets to make a pitch for one market.

Scot:
[56:14] Yeah and they didn't talk about it but I kind of got the vibe Nordstrom Ava invested in that that entity.

Jason:
[56:21] Yeah that well so it's a it's a co-op I think all the retailers that participate are basically investors why do you own a piece of it so it's so absolutely.

[56:30] Until Eric had a vested interest in Dawn doing well and you know let me just say like I don't think Jason had a lot of super interesting questions for Don I think he was a lot more focused on what did you get out of there.

Scot:
[56:43] Absolutely.

Jason:
[56:45] So I am not sure it was a lot of interesting Nordstrom revelations in in this interview other than.
You know the plan at Nordstrom's to do what they've always been doing you know it's the fact that we didn't buy the company back doesn't change anything was kind of Eric's message.
I thought it was kind of a just a funny random story Eric telling the story about his dad Bruce Nordstrom that was in a former president of Nordstrom's and how whenever someone would call Nordstrom department store.
How Bruce would be really upset and say we're not a department store where specialty store and you know for the.

[57:23] You know if I was listening Nordstrom started out as a shoe retailer and they they still like have a lot of that DNA and.
Eric said if not you know I would be like whatever Dad where we're big store with a escalator so call it what you want and it just was a funny moment for me thinking of this I store a retail family like having these arguments around the Thanksgiving table about whether there a department store or not.

Scot:
[57:47] Yeah I'd never met at Nordstrom's that was kind of cool.

Jason:
[57:51] The other thing that came up a little bit which is interesting I don't think Eric Shirley new information but Nordstrom has the store in Los Angeles called Nordstrom local,
and this is a small a small store by Nordstrom's standards I think it still pretty big I think it's like that twenty thousand square foot store which a full Nordstrom might be why.
50000 square feet.

[58:14] And there is no inventory for sale in the store so it's kind of like a bona bus guide shop like it's either you know there's personalized customer experiences and shopping concierge and lots of mannequins that you can look at,
but then you you order the product in Nordstrom ships at your house and the talking point that Jason was focused on was.
I've heard a lot about the store in the fact that it's.
It's not profitable and isn't likely to be profitable in the in the near future and so this feels like.
Kind of a project or an investment for Nordstrom and you know aren't you worried about not being able to make those kind of Investments going forward since you you know you were unsuccessful in in going private.
And I think Eric's point was no we we paid for this without going private then we we do lots of things like this all the time so this is sort of business as usual for us is,
and we do some things we expect to be profitable right away and we do some things that we expect to learn from and hope to make a profit in the longer Horizon.

Scot:
[59:18] Call the sex would really quick so I was excited at shoptalk surely but also could Commerce there was a little bit more,
kind of of the different models out there this one I would put kind of squarely in the on-demand economy bucket which is I'm obviously pretty fascinated with,
funny company in this is in the food delivery category where there is a battle royale going on so they had the CEO doordash in his name is Tony shoe,
oh that's spelled XU and then he was on stage with one of the leaders at the Cheesecake Factory which is a very popular restaurant and they had just announced that they are doing a delivery food delivery for cheesecake through doordash.
And I didn't realize it until I saw eBay partnership,
from 2009 to 2011 so that was cool to see someone from the world of e-commerce kind of spread his wings and becoming an option or.
The one of the.
Big news items us and Kara Swisher did the interview here and she couldn't seem to get her head around the fact they just raised over $509 so they're there well beyond the Unicorn.
Status which is Sue sought-after in the Bay Area which means you have a valuation over billion I would Hazard a guess or pry a deck of corn which is a 10 billion dollar valuation so there's so there's aislers GrubHub which is actually,
public there's the big one that's really gaining popularity is ubereats and then there's many many more of these there.

[1:00:48] Pretend food did this is like prepared food delivery companies and if you widen the radius little bit to include ingredient make yourself kinds of things than the category it's even even.
Even got more crowded and so she's kind of hammering on like you know why would you waste so much money and that kind of thing.
This is I commiserate with the size opportunity and he's right you know this is a multibillion-dollar opportunity if they can get 5% of all restaurants business to be,
true you're just in the industry and they capture 30% of that that ends up being a,
a really really big number so any talked about I think you said there in 30 markets and they're going to get into 80 so there there's a geographic component of this,
yeah when funny question was she asking what are you scared most of these at the telephone and she was like.

[1:01:41] What you mean and you know it's just like that's the customer experience they're up against is they kind of have to be better than just calling the restaurant on the phone to do take out with witch and and then you obviously have to go get it but I thought that was kind of interesting.

[1:01:55] And then you and I is kind of funny you and I had kind of had this discussion around you know with these with this business isn't good for the restaurants in bad and,
there's an argument that the sex it hurts marching,
because you're already paying for that kitchen staff and everything and then if they're making meals for this pickup you don't get a lot of that up sell that you get in the restaurant is your same argument that they made with the Google marketplace,
when you went to people go to restaurant have a meal there's alcohol involved there's maybe a dessert that you didn't plan to have appetizers and that kind of thing,
Raz I think,
I would guess the ticket when you're doing takeout or delivery is much less and you obviously don't get alcohol sales which is where there's a lot of margin but they got to ask a question about that and the cheesecake guy I explained that you don't know it's really.
Incremental business so they already have the fixed cost of the kitchen and they viewed it as incremental and they therefore you know yes the margin is lower.
Then an end in a dine in guest.
But it's incremental margin so you going to help the prophet leave the restaurant so I thought that was an interesting argument you a lot of people that I talk to after.
Forecast skeptical about that so and then he did talk about at the Cheesecake Factory.
Like 2 years ago they had 8% take out and now it's kind of risen to 12%.

[1:03:18] Didn't ever say if this was exclusive because one of these guys do is they will actually kind of order as if their customer and then said their drivers so they don't have to have a you know a relationship with the restaurant so I know GrubHub does that for example so.
Part of that 12% is not only doordash but probably all the other delivery guys too and then lasalette said that they said that.
25% of doordash volume is from chains and then.
I thought they said the rest was for Independence but I think you took a note and tweeted 5% so.

Jason:
[1:03:51] No no no. That's a typo in your notes you are exactly right 75%.

Scot:
[1:03:54] He has a deep restaurant background I think.
I think he said his parents are restaurant for sure.

Jason:
[1:04:06] Is Mom still run the restaurant.

Scot:
[1:04:07] Yeah but then somewhere in there someone said I think he said his grandparents also had a restaurant I I couldn't tell it maybe his mom is taking over the enrichment videos.
You can't came back to his roots and,
I'm really understood the restaurant business deeply and then final comment when asked you know there's always competitors out there when asked how they're going to win I thought his answer was pretty clever he said you know we're really just focused on this we're not doing self-driving cars were not doing.

[1:04:33] You know building a whole delivery Network that separate were really focus on how do we deliver an amazing dining experience and you know how do we in the he said it was very Amazon way of thinking it out we measure every second.
Between when the order comes in and it gets delivered and how do we get the food there hot fresh so I left that you know thinking,
here's a guy that's really kind of gets it he understands the customer and he's going to Worcester 500 million so so I felt like he had a pretty good shot at winning and I was excited to see where they take it.

Jason:
[1:05:04] That I would also argue that he already has a considerably better customer experience than a lot of his competitor so I'd like some of that that focus and Care like is already very evident in in their customer experience.

Scot:
[1:05:20] Yeah one one example of that was even worrying about you when they deliver the cheesecake from the Cheesecake Factory making sure the slice looks perfect and it hasn't like flipped on its side or getting off stuck around in the container,
that's those kind of details that I spent a lot of my day on this site I really appreciated that level of detail that they think about.

Jason:
[1:05:38] Yeah for sure and I think that I would just you know mention that listeners this is an area to pay attention to the whole food consumption industry is going through major disruption right now and it's really unclear.
What the future looks like but you know when the friction to get food restaurant food delivered home is way lower suddenly those restaurants are competing with.
What used to be grocery trips when you buy ingredients and make your own dinner and they're competing with the Ready-to-Eat food at the grocery store sells and you know the digital enablement of all this thing also makes,
a bunch of the restaurants compete that didn't used to compete go so maybe you would have done to a fast food restaurant in the past cuz you only had a limited amount of time but now if you can,
place your order for Cheesecake Factory before you get to the store and know that when you arrive there's a table wet,
ready for you and your food is going to be there in 2 minutes and then when you're done you can walk out and not have to pay because you'll get automatically charged,
Southern you can eat at Cheesecake Factory you know in about the same amount of time that used to eat at a fast food restaurant so all of these digital is enabling all of these former you know different channels to suddenly compete with each other and it's it's it's super interesting.
OneNote on the cheesecake guy he kind of poo-pooed some of those experiences and he's like yeah we're never going to have tablets on RR.
Tables which is sort of taking a shot at like Applebee's and Chili's and some other chains that are experimenting with that because we just think the customer wants.

[1:07:13] A personal experience and interaction with a server in.

[1:07:17] That could be true and you could be right that's also a justification that you always hear from the slow mover when when his competitors are adopting stuff that he hasn't been able to adopt.

[1:07:28] So what's interesting space to watch.

[1:07:32] I'm sitting in the last presenter at commerce was Jennifer Heyman from Rent the Runway so she's another entrepreneur that has really killed that she invented this clever model of renting apparel versus buying it,
they you know by all accounts have ever grown rapidly like I don't think they've they've talked about their exit yet.
But that you know could could be in the Horizon the thing that she shared that was news to me and pretty interesting.
The original rent the runway model you know they really focused on.
Women that needed something to wear for a special occasion so it's your spring formal it's at your company party,
and you might rent a designer dress that you would you would never you know want to own and we're at one time to that event and that's really you know the First Market that Rent the Runway went after,
there for a long time they really been focused on this subscription model where they essentially get their Shopper their customer to pay a fixed amount of money every month.
And get a rental apparel to wear every month and depending on how how much you pay you get a different level of.
Frequency of new outfits and so the Unlimited all-you-can-drink Model is about 160 bucks a month.
And she and she loves you that they were having a lot of success with this Hunter and $60 a month subscription service and that the average subscriber that opted into that program is wearing Rent the Runway apparel a hundred and fifty days a year.

[1:09:10] And so she did not tell us exactly what their penetration was with that model and that would have been really interesting to know but if there's a cohort of women that are 150 days a year wearing stuff.
Did they rent it instead of own,
that that really foretells of a paradigm shift in the apparel business I mean that's that's a lot like you know half of all car owners leasing their car instead of buying it and so,
that was surprising to me that she got that level of adoption and that that I think that's pretty interesting and well worth watching.

Scot:
[1:09:47] I called then after that we went to the Google party which was amazing and you and I we are security folks were kind enough to let Wyclef Jean and we did a selfie with them so if you're,
Wyclef fan like we are you can check that out on Twitter.

Jason:
[1:10:06] Yeah he seemed really thrilled to get the picture he's I know she spread it all over social media I might even be his profile pic now Jack's.

Scot:
[1:10:12] I'm sure it is the other thing I learned as we need to like we need a posse we need someone to constantly Facebook living us and we need a social media manager and we need big Burly security guard so that on our wish list.

Jason:
[1:10:27] The other two things we need is a stylist and talent.

Scot:
[1:10:30] Yes yeah we'll listen to Posse first then work on this Earth.

Jason:
[1:10:34] Yeah I agree with you I think I think that the first thing same way easier to get.
And so then you abandon me.

Scot:
[1:10:41] Yeah I had to call the East Coast was the siren song so I had to head back,
to continue working on my day job but fortunately I have a podcast partner and I didn't have to go to the Wednesday content but you did so tell us some of the highlights.

Jason:
[1:10:58] So it's the Wednesdays for the half-day and you can imagine a lot of people went home I think they probably had better attendance then than they otherwise would have because a lot of the East Coasters,
got stuck here as a result of a snow storm on the East Coast,
so they were there three final key notes and I think they were good Keno so that way you know interesting to the catch the first one was a eBay keynote and they had two execs from eBay they had,
John Peterson who's the chief AI scientist at eBay in this presentation was mostly about Ai and then they had Scott Cutler who I'm guessing you know who is the SVP of America's for eBay.

Scot:
[1:11:39] I have not met Scott up.
A bunch of people have the he's out of Step Up which is cool because StubHub has proven that vertical experience is on eBay or good thing and I've been a big fan of so I'm optimistic maybe he'll bring that into the eBay world,
in a deeper way.

Jason:
[1:12:00] Sew-in in front of he it seem like he kind of cute it up he gave the,
the kind of high-level presentation on eBay and then handed it over to yawn to talk about some of the AI things and young may have been a little.

[1:12:15] Technical for some of the audience but they they did get you some of that aiu's cases that the eBay is using and that was pretty interesting in the the.
The most interesting one to me.
So AA eBay has some of the the augmented reality stuff that we were talking about with house there they're using.

[1:12:42] Image recognition to categorize a lot of pictures and that attributes to a product listings on things like that but the most interesting one is this,
feature where a eBay seller can decide what box to ship their item in.
By using augmented reality to visualize their product in the various eBay box sizes.
So this is you could almost think of this as a seller facing feature instead of a customer-facing feature and they they kind of demo mode you know how that the seller could use this tool to visualize the boxing picks,
pick the best box and ship last air and spoiler alert we we also recorded and.
Podcast with Bob Cummins from eBay and and he'll be talking a lot more about that feature on that podcast when we get it published.

Scot:
[1:13:37] Yeah I'm excited to hear that one.

Jason:
[1:13:41] So then that the next keynote was David Jaffe who's the CEO of a Cena group for those that aren't familiar with that name there another house of brands in a parallel space,
David got up and gave a very traditional retailer presentation talking about how the customer is changed and we all have to you know be more personalized and we all have to embrace omni-channel and stores are super important,
but you know we have to use them in these new wave.

Marker 02

[1:14:08] So the last keynote is a super cool company this is and I think I'm going to put mispronounces name unless you you save me Scott but is it I think is Shay.

[1:14:22] So he's the wrong I'm sorry so he's the CEO of boxed.

[1:14:30] The we've had box on the show right.

Scot:
[1:14:33] We have yes not Shay but one of the one of the folks there.

Jason:
[1:14:38] Yeah and the keynote for boxed was.
He started out by saying hey I came in this whole you know corporate presentation all about us and I kind of decided that if I were in the audience I would find that super boring so I threw it away and I just want to let you know tell you some stories about how we got started.
And so I think he won the audience over right away with with that and he he you know show them these pictures of.

[1:15:06] Him and his Dell computer and you know a pallet of cardboard boxes in what look like his bedroom and they talked about you know this is the beginning of boxed or as my mother-in-law called in unemployment.
Any shared all these stories about how his mother-in-law was horrified and you know they didn't think he was good enough for,
tracker for her daughter and how this business was not instilling confidence and then later they got traction and they moved to the garage and set up racks in the garage and eventually they have all these like storage pods.
At side his house and this is like a house in a typical suburb in New Jersey and how all his neighbors had assumed that that he was starting a drug dealing business.

[1:15:52] And it was just kind of a fun origin story about boxed.

[1:15:59] Yeah I'm not sure there was like a huge take away about their strategy he did like briefly touch on on you know their core value proposition which is.
You know e-commerce is tough to be profitable and when you ship you know a few things in a in a box it's it's definitely not profitable and so their whole model is based on you know getting customers to buy more and and shipping.
In bulk he did not touch on these at all but they're all these other amazing stories about other aspects of box.
I think Shay personally pays for all of his employees wedding so if you work there and you get married you know he gives you like a $10,000 budget to cover your wedding and I think he's paying for,
College tuition for the children of any of the employees and so he you know he's an interesting guy that obviously cares a lot about his employees he mainly promote from within so you know most of the management team are,
guy that started out in the the warehouse and you don't even use has in many cases,
people they're doing a great job off and you know that may not have even completed their High School degree diploma so.

[1:17:08] Interesting story fun to listen to I'm not sure there was like a ton of takeaways that you would go home and apply directly to your to your giant e-commerce business but he definitely is taking,
a slightly different path and I I'm sure he's engendered a lot more Customer Loyalty employee loyalty than the average e-commerce company.

Scot:
[1:17:28] Yeah one one tweet I saw and I wanted to verify with you is he somewhere in there he said that one of their top customers is Amazon doing test orders from them so they he showed like some screenshot where yeah it was test order one at amazon.com test order to test order 3,
so it seems like they are stair kind of secret shopping him a lot over there.

Jason:
[1:17:48] Yes I don't think you said it was one of their top customers but he did make a joke about one of his early customers that he really appreciated whose first name was tested last name order who lived in Seattle by the name of Amazon.

Scot:
[1:18:04] Yep this is a good time to do it so Amazon is just kind of change the price Model for they're competing me up for the pantry thing too so I wonder I wonder if that was her reaction to box.

Jason:
[1:18:17] Yeah it easily could have been and just just a recap for listeners that don't know like you know Prime used to be there was a minimum I'm sorry Prime.

[1:18:27] Pantry was essentially you you pay a fee for a box and then you get to,
put as many Pantry items in the in that box as as you like for a fixed fee and so it was sort of a model similar to box to get you to buy a big box of stuff but the problem with the Prime Pantry model was,
that you had to pay this this $6 fee upfront to start the box and so you know there was,
you would only do it if you knew you were buying a lot of stuff in there was kind of this high threshold to start the Box,
and so now the pivot in the economic model is you no longer.

[1:19:06] Pay for each box and instead you pay a subscription and I don't remember exactly what description is I want to say it's like 10 bucks a month.
I might be wrong on that.

Scot:
[1:19:17] Yep I guess like 999.

Jason:
[1:19:19] And so in the one on one hand it's a it's a higher bar to get someone to do a monthly subscription than it is to do like an on-demand thing.
Once you do that subscription there's now very little sort of friction to leveraging it and I think what Amazon found was that the the $6 per box was was,
you know a lot of friction for anyone to use the box that they weren't getting as much add option and that you know now they can sell this this subscription service and start getting more you know,
maybe a smaller group of users but much more frequent use of of the program in so that,
in that does feel like a reaction to box.

[1:20:03] And I'd say it's happen again with you start a lot of time that we've actually used way more than are a lot of time,
so is as you can tell from listening to that yesterday showing today show there was a lot going on at shoptalk so that's,
you know I feel like we did a fast recap and it was two and a half hours if people do have any questions or you feel like we miss something or you want to continue the conversation we'd love to hear from you on Facebook.
Scot and I spent a lot of time on this so we sure would appreciate that 5-star review on iTunes but thank you very much for you know the two or three Wisner that stuck it out for all two and a half hours.

Scot:
[1:20:41] I think they'll be more if this is riveting so last comment while we're at shoptalk we get some really great guest on the show and over the next 5 weeks we're going to be releasing some of yours from Johnson & Johnson 1010data eBay Walgreens American Eagle sub on top Hatter and Comcast Ventures so make sure you hit that subscribe button cuz we are going to have a lot of content coming out over the following weeks.

Jason:
[1:21:08] Publishing storm and until next time happy commercing.

Mar 22, 2018

EP121 - Shoptalk 2018 Recap Part 1

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

There is so much content at the show, that we've divided our recap into two parts.  In Part 1 we cover:

  • Macy's Keynote
  • Target Keynote
  • Amazon Go Keynote
  • Future of Grocery - Moderated by Jason Goldberg
  • Zia Wigner Keynote (Global Chief Content Officer for ShopTalk)
  • Ulta Keynote
  • Nike Keynote
  • Ocado Keynote
  • Pinterest Keynote
  • Fresh Direct Keynote
  • Facebook Keynot

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

Episode 121 of the Jason & Scot show was recorded on Monday, March 19th 2018.

http://jasonandscot.com

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

Transcript

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

Scot:
[0:38] Hey Jason and welcome back Jason Scott show listeners Jason and rare time when we're together and this is actually the second week in a row so pretty exciting where live live live here from the Venetian in Las Vegas.

Jason:
[0:53] I know I feel like I have won the lottery getting to hang out with you this much.

Scot:
[0:56] I know you're you're a very lucky man that's all I can say.
Show listeners we are we recording this at the end of the day on Monday consumed 2 out of 4 days of content so I can call this the shoptalk halftime show.
And the show this year is really dense and we thought it be important to give you guys, real-time update of what we're learning about the show some of the more interesting ass,
so that we can kind of have at least have two updates with me actually put a third depending on what kind of content comes out in the next couple days so.
Just a quick overview of the show this year it looks like the attendance is about double I think we decided Jason is that right,
so I think they're saying somewhere north of 8400 attendees definitely feels like it the show outgrew the Aria and is now at the Venetian,
I'm in I guess it used to be called The Sands conference in your butt and now they caught this fancy Palazzo or whatever it is Conference Center.
And another thing that's really interesting this year is they've added a couple of new tracks there's there's a grocery talk track which I know is near and dear to your heart so there's this kind of acknowledgement that groceries undergoing digital change really kind of in a bike.
Not only that but actually on the show floor and then there's a whole track around Ai and machine learning which is been one of our favorite topics.
The the big me coming from the vendor world the show floor is absolutely huge this year last year there was like these little mini meeting room kind of things and this year they went full show room and they've done it I don't know the square footage of that but it is as big as.

[2:32] Shoptalk it's as big as shop.org it's his maybe half the size of a retailer I would say.
But for a shows for sure you're having an exhibit floor it's pretty impressive I would say that.
You know they've done a really good job with that another thing I really like is it under that they've done is a lot of the food and then to get to the general Keynotes you have to walk through the exhibit floor,
I and the vendors are well aware of that and they are lined up and ready for ready for action that's who hugs so that's that's interesting and any other kind of,
the macro things you want to talk about that you notice this year before we go into the details.

Jason:
[3:12] I mean just said the one interesting thing the way they were arranged the the exhibit floor is in these sort of subject-matter Pavilion so there's like.
AI Pavilion that you know is largely companies focused on a and a grocery Pavilion so if.
If you're looking for a particular type of vendor they've sort of Consolidated those all together which I like I think it makes it easier to find relevant stuff.
And then.
If you're a retailer you could come to the show for free if you agreed to take a certain number of meetings with vendors so the program that other shows have done that I've never seen it done on the scale they've done here so they.
Paid for a bunch of retailers to fly here in the end their hotel rooms they arranged a bunch of meetings with vendors and as big as the trade show floor is there's a whole huge back half of the trade show floor,
they just all these meeting tables that are like speed dating between exhibitors and vendors and it's it's a little bit like Tinder,
the vendor had to say they wanted to meet with this particular retailer in the retailer had to say they want to meet with this particular vendor.

Scot:
[4:23] Double opt-in.

Jason:
[4:25] Exactly.

Scot:
[4:26] Swipe left swipe right.

Jason:
[4:27] Yeah and so the the BD people for my company we did several those meetings and felt like they were all all valuable in in favorable so.
It's approximately.

Scot:
[4:38] Does that come with the exhibit space or is it kind of separate.

Jason:
[4:40] Yeah there's a bunch of bundles you could buy that were like this amount of space in this mini meetings.

Scot:
[4:45] Is there a popular in Europe I know are European Folks at Channel visor participate in these meetings and always felt weird from the US perspective that you were kind of like.
Paying for the vendor to meet with you but I.
They've always worked worked out pretty well for your PIN folks it's interesting to see them kind of bring that over date they did just do their European show shoptalk I wonder if that's something a best practice they brought over as part of that.

Jason:
[5:09] Actually it does appear so they did a Europe shoptalk last year and it and they cancel that show so I didn't get to go I assume it wasn't.
Quite as well adopted as the u.s. won and now they're calling this the global show and they're trying to get all their European attendees to come here.
But you're you're absolutely right like they could have definitely lifted some of those best practices and I frankly I came here a little skeptical about the meetings because.
There there were some logistic hiccups weeding up to it like if a vendor opted-in and we opted in but it didn't fit in one of the time slots they had available.
I think we bought more meetings than we got so they had to give us some credits back and and not to sound too vain but where.
Better known brand than a lot of vendors on that floor so if they struggled give us the meetings we bought you could imagine some smaller lesser-known vendors.

Scot:
[6:03] But it seems like the space was constrained not the demand.

Jason:
[6:07] Exactly yeah and then like once we got here it sounds like it went real well so agree with you like this feels like one of the few shows in our space that's vibrant and growing.

Scot:
[6:19] Yeah yeah and that's what sticking to some of the content highlights I got in late Sunday night super late and then you were here all day so why don't you could get off and tell us some of the highlights from Sunday.

Jason:
[6:30] So I am in back taking residency here in Las Vegas I'm here for 16 days.
In the hotel room that you and I are sitting in right now so that's a new experience for me and Sunday night had some good key notes that I was looking forward to hearing the first one was Jeff can that who's the CEO of Macy's.
And so he was talking about some of their progress they had their first.
Favorable quarter and I want to say like 11 consecutive quarters and and so you know he was very optimistic that that they're there.
Turn around program that they called the North Star is starting to work since we talked about a couple of the the upcoming initiatives they have a program they're calling growth 50 which is essentially.
They selected these 50 Macy's store.
The Dare going to.
Put all of their best practices and capex investments into in 2018 in the idea is to see which of those things work best and deploy them into all there the rest of the Macy's Fleet in 2019.
So it'll be interesting to figure out what those 50 stores are and keep an eye on them.

Scot:
[7:40] What does 50 stores are and keep an eye on them and it goes Herald Square.

Jason:
[7:45] Seems to be somewhat shocking of that was not one of them.

Scot:
[7:48] Does that mean like the giving up on the other 50 is at Macy's shutting stores.

Jason:
[7:54] Closed a bunch of stores but they're still in business will check me on this but I don't want to say that it's going to be like 2000 store so that it's still a lot of stores and what you don't do is just.
Do a bunch of expensive things and I'll mm hope they work so so picking 50 stores as Pilots kind of makes sense.

Scot:
[8:11] , complex offline av-test.

Jason:
[8:14] Yeah as we caught a match Panel test actually but that's sort of the original Navy test.
So that's interesting they announced that they are deploying mobile scan & go check out to all their stores by the end of 2018 so what that means is.
You've installed at Macy's mobile app you you scan the items you want to buy.
For it on the mobile app and you walk out without ever having to get in the checkout line if there's loss prevention tags on the apparel which there is on a lot of the apparel.
You have to walk by a security desk show on a digital barcode on your on your phone and they'll remove your tags but that potentially eliminate.
What date Macy says is the number one complaint about Macy's which is hard to find a cashier or too long a wait in line.
So they were they were pretty bullish on that.

Scot:
[9:13] Surfin you're doing that or that's just like part of their point of sale and stuff.

Jason:
[9:16] They did not disclose that they were partnering with the vendor to do it it seems like something they built or not ganic Lee you are you are absolutely right there are third-party vendors that you can hire to facilitate that for you but.
I somewhat suspect that Macy's is not using a third-party to implement it another one that was interesting to me and I haven't seen the meteor really pick up on this year.
But he talked about their desire to clean up their promotional calendar and.

Scot:
[9:43] Sounds familiar.

Jason:
[9:44] That's retail code for we want to get away from all of the crazy promotions were doing and he specifically said we want to eliminate the need for a Shoppers to do quote on quote Macy's math.
To figure out how to get the best deal.

Scot:
[10:01] This is longtime listeners will know this is kinda killed JCPenney right.

Jason:
[10:04] Even more more funny it it absolutely kills Ron Johnson's 10-year JCPenney they were highly promotional he tried to dramatically clean up their promotional calendar and.
Just didn't work.
A time a lot of us criticize Ron Johnson because we were pointing out that retailers like Macy's had tried this in the past and it didn't work for them so it's even more ironic.
That Macy's that has frankly past experience trying to move away from from promotional pricing models is going back to it and we we talked on listener question shows about the fact that.
Everyday low prices seems like the future pricing and because of transparency these promotions aren't as appealing as they once were.
But it's really hard to shift once you have a customer base that used to promotional pricing.

Scot:
[10:53] Now so Terry Lundgren so he is transition.
His big thing was to add that discount store inside of Macy's but I didn't hear you saying about that is that stole,
is that the kind of makes sense if your have this discount like Dollar Store jammed inside of Macy's or TJ Maxx is probably more appropriate analogy then I think it does make sense to then you could have at least kind of a,
a way of balancing out the promotional things is that still tragedy but or or is that off the table.

Jason:
[11:21] I I think that still is a strategy Macy still does have these off-price stores that I think the most Perfect Analogy is that are you notice or to Nordstrom Rack equivalent but they were mentioned it all in the keno.
So either you like they didn't double down on it or say they're moving away from it you can interpret moving waste and promotional calendar that you know they're there.
Trying to Jack the margins up in the main line Macy's stores but you're exactly right like they could be to differentiate it from the discount concept Moore,
so we'll have to see how that plays out the next keynote was Target so this is Brian Cornell is the CEO of Target there another retailer that you could kind of say is in the midst of.
Turnaround strategy and he spent he did a couple interesting things about his was a little more.
West tactical in the Macy's keno and he talked a lot about.
The their migration to digital and how they've embraced digital and he he talked about this he didn't called The innovator's Dilemma.
That's essentially what it is he's like you know there's this natural inclination when you have all these stores in the stores are profitable in these new shopping behaviors come in to say you like why would I ever invest things that discourage.
Customers from going to the store that that's just your natural instinct.
And he claimed that like Target had overcome that instinct and was now short of embracing.

[12:55] Digital and they were largely converting the stores in to fulfillment hubs and that they they ship something like 70% of all their eCommerce orders from the store.
Brought on stage with in the CEO of shipped which is a logistics company they just bought.
You said that they bought them specifically because they wanted to be the first national retailer to offer same-day delivery in all markets.

Scot:
[13:19] And then just last week they announced they're growing that out and more stores.

Jason:
[13:24] So I think their intention is to get eventually get it in all stores that are also experimenting with curbside pickup which we've talked a lot about here.
So a lot of interesting things there and then he pivoted to another topic that I think is going to be very common this year which is there they're doubling down and reinvestment in owned brands.
And this used to be the thing we call private label the the purple an hour when they talk about own brand they're talking about Brands they created offense.
That in some cases they even sell it other other channels of distribution I'm so potentially sell on Amazon.
And target has been very successful own brand they're also talking about brand exclusives so we'll sell stuff from National Brands but.
Excuse that are only available in our store and will sell limited edition stuff so the stuff you know that there's a constrained Supply Target some what famous for that with promotions they've done for people with Lilly Pulitzer in others.
So that is one of their big plays that's most retailers big play against Amazon has to sell stuff that Amazon can't sell.
So that was kind of his big talking points.

Scot:
[14:42] So I know they room essentials is there like furniture brand and then what is a jack and.
Kids one cat jacket are there any examples where they sold those other places.

Jason:
[14:59] So I haven't as Machine Target sell their own brands in other places.

Scot:
[15:04] Costco has.

Jason:
[15:06] Costco very famous he does there's more Kirkland on on sold on Amazon than on Costco.com I think.

Scot:
[15:12] Yeah but there are other.

Jason:
[15:15] I'm trying to remember if Target invested in or owns method but method is sold elsewhere so there's.

Scot:
[15:20] I swear Dakota velvet with that a designer Michael Graves Sr. Do one of our interns to research them.

Jason:
[15:28] Yeah yeah yeah let me know how that works out for you so that was an interesting keynote and then.
Sort of the perfect transition the third keynote on Sunday night was to VPS from Amazon that are responsible for the Amazon go store so this is Gianna Parini.
Responsible for who started the.
The business leader for Amazon go and then dilip Kumar who's responsible for all the technology used in the Amazon go store and is also responsible for the Amazon bookstore.
So the very first thing they did which was just I thought hysterical after both.
Target and Macy's had mentioned kind of Scan & Go.
Amazon of course came on and threw shade at what a pain in the neck skin and go is and how we really built the store just because customers don't want to have to scan each item as their.
As their shopping.

Scot:
[16:29] Is that a learning from the book store cuz that's how the bookstore model works.

Jason:
[16:33] Yeah well I don't know specifically I mean.

Scot:
[16:35] Typically the kind of throwing shade at the bookstore.

Jason:
[16:38] Yeah and I would argue the bookstore is in many ways the worst version because you like literally can't find out the price without.

Scot:
[16:44] Face can't even find a price there's more scanning you would even get it at Macy's.

Jason:
[16:48] I told you it was not a very hostile interview so let me just say that question was not asked.
Either of them but it was a little bit funny this was the keynote I was most looking forward to Amazon Prime now was at the show last year and I felt like.
They shared a lot of new information about the prime now program that they least I wasn't previously aware of.
It was less through this time so I didn't do was not a lot of like major new disclosures normally trying to figure out his.
How to get a roll go out to more stores are you getting to put it in Whole Foods your new announcements like that at this it is Keynote.
They did talk about what some of the best sellers in the store was and apparently there's this chicken sandwich that's been there Perpetual number one seller but it is a lot of food stuff so that Amazon makes their own meal kits in that store in the doors are top sellers.
Fresh fruit is a top seller there's an odd thing about Amazon and fresh fruit.
This store is in the corporate headquarters in this corporate headquarters Amazon has way less employee amenities than almost any other big company.
So the rare amenity that that Amazon liked out a lot is.
Did they give free bananas to all the employees and apparently this has killed the market for bananas in downtown Seattle.
The smoothie shops used to charge to put bananas in the Smoothie now they let you bring your own smoothie your own bananas in to put in a smoothie because everyone in downtown Seattle gets free bananas from Amazon.

Scot:
[18:22] Does the banana thing so when Prime took on Arrested Development there was a big.
What is running jokes I'm not a huge Arrested Development person but there's a banana stand thing in there and I think they started it as kind of like to celebrate that it's kind of kept going is that is that true or did I make that up in my head.
What decimal burx Amazonian Institute election.

Jason:
[18:43] Or just is this odd fruit thing with Amazon so then I found it funny that like this.
The store which is largely the employee cafeteria is really what the Amazon go store is the number one seller is fruit so it made me wonder if they're going to stop by the bananas.
They can monetize the bananas in the ghost.

Scot:
[19:00] How we don't sell a lot of bananas in the guest room.

Jason:
[19:03] No I imagine that it's fresh fruit other than bananas but there were a couple other interesting things so delete was talking about like.
The ghost are we talked about a lot it's based on.
Very Advanced machine learning around computer vision so this is mostly done with cameras and the interviewer asked why they chose cameras there all these examples in Europe in elsewhere of people trying to do similar concept with RFID tags.
And they they felt like aspirationally a store model where they have to constantly apply tags and sensors to all the Shelf some product.
Wasn't very interesting to them they felt like that the much more scalable long-term solution was to invent this computer vision model.

Scot:
[19:49] Now I know you're very passionate about RFID tags how do you feel about that.

Jason:
[19:52] I think he's right I think RFID tags are item level RFID tags for products in a store.
Is a pain in the neck and unless we get to this thing called Source tagging where all the manufacturers put the RFID tag on in the factory it's it's never going to take off.

Scot:
[20:09] Can you do RF IDs for like a fruit and stuff.

Jason:
[20:13] Potentially yes so at the moment.

Scot:
[20:15] Yeah at the moment.

Jason:
[20:19] Yeah it there's a man.

Scot:
[20:21] RFID on my app.

Jason:
[20:22] So there's a sticker on every one of your apples now and that sticker could essentially be an RFID tag.
That sounds like a Farfetch'd example like there's an argument in the future of food that you're going to want to know a lot more about that Apple before you buy it like how many,
days ago was picked and all these other things and so like you you could imagine them wanting a tag each individual apple for a variety of reasons.
All that aside it was just interesting to hear them talk about how they debated tags versus cameras and went with the cameras.

Scot:
[20:55] Another nice thing with with cameras is once you get on digital then more law should kick in where RFID tags rising to this manual.
Process that is not going to change the scale and will always be subject to let you have a robot that can put the tags on her which.

Jason:
[21:12] What kind of software vs. Hardware really like an unlike General lease offers I have a lot more profitable because as as you scale at the the normal cost is very well.

Scot:
[21:22] Yeah then you have the the nurse's other acceleration I don't know so Moore's logic we all understand that you don't processing power gets doubled every two years but then,
you know I wonder if there's some correlated to that with machine learning like the system get smarter every X things that sees Pride another there's some pretty interesting thing there that also is.

Jason:
[21:43] Yeah I mean there's a couple examples of that like the the.
Accuracy of computer vision which is this specific subset of artificial intelligence this towards using has been improving faster than more as wise as a noun yeah.

Scot:
[21:56] You think it would yeah and then I hit some kind of like.

Jason:
[22:00] Resume wait I had some flat toe because it's unlike chips which could always get faster at some point your computer Visions perfect.

Scot:
[22:09] How do they tell like a chicken sandwich in a tuna sandwich but do they have to put different containers on it to help her.

Jason:
[22:16] So that was a good question that wasn't asked but there was a similar one that was kind of interesting so because there no sensors on on the items the camera has to recognize every skew in the reporter said like.
Do you struggle the tell sugar-free Red Bull from regular red bull.
And he's like yes we do it right like that those are the the the really difficult edge cases and I thought about that before they like different flavors or or subtle differences your chicken versus tuna sandwich being up in exacerbated version of that.
Would be really hard and then he pointed out of part of the problem I haven't considered before.
Not only do we need to tell sugar-free Red Bull from regular red bull the moment when we need to tell them is the exact moment when you picked it up and probably block the word sugar-free with your thumb.
And so those sort of obfuscate abused that they get is obstructed views they get in the product is also a pretty tricky problem.

Scot:
[23:12] No Amazon in kind of the play but they've done with frustration free packaging you can almost see them going back to the manufacturing kind of having you know,
air visionfriendly packaging where you make this one purple in this one yellow or something other than a small kind of text word for sugar.

Jason:
[23:29] And you've hit on one of the reasons like this works for ghost or the potential and other things everyone keeps calling at the ghost or a more accurate turn might be Go restaurant because they're actually is a big kitchen in the majority where they sell is food that is prepared.
In that store and search your point they can solve their own problem by using square boxes for the chicken and round boxes for the tuna or whatever whatever they want to do.
A minority of the skews in the store are National Brands so for their own Brands they can make the packaging distinctive enough.
It does have that problem where has much harder to do a whole food store or something like that.

Scot:
[24:11] Wonder if they could even do have seen some examples this in retail,
I want to take an overlay some kind of a machine readable but not human-readable thing on the packaging to write so the chicken in the tuna come in the same package but the machine can see maybe the UV level or something you know that something that very clearly you know,
2 blinking circles versus a red boxer and things in.

Jason:
[24:35] They can build cameras that seen in the infrared Spectrum or something like that yeah absolutely not discussed but interesting things to think about.

Scot:
[24:41] Did they talk about when they first launched we did a deep dive on that the.
They had a room right there in the store where people were kind of like both checking the AI and then also you know I'm sure they are kicks out and says does not compute and there's some air right there in a human has to go, like figure it out.
Do they talk about that at all but the air raid and.

Jason:
[25:04] Omelette no only very indirectly so they did not talk about how well the machine learning the Machine Vision is working or the Air Raids they were asked how many employees work in the store for any Dodge that question 2.
She talked about.
Three big classes of employees that they're like you seen how you been to the store you seen how many people are in the kitchen you seeing how many people on the floor helping and you've seen how many orange shirts there are.
An orange shirt is if you been to the store is code for these employees that are working in the back room looking at the video displays and training the AI in so the implication was there still.
An army of orange shirts watching a lot of people shopping and refining though I'll grow them.

Scot:
[25:54] It's a nurse and they don't use Mechanical Turk for that because I'm a janaz be real time so after like you.

Jason:
[26:00] Videos welcome to the store I bet you that video isn't like it was in real time going I mean it's a lot of cameras so even even Amazon would like love the 8 of us bills for doing that.

[26:12] So that was interesting I would have like to hear some.

Scot:
[26:14] I'd like to hear some way you should have been the interviewer on that one but Amazon negotiates these things very carefully so I imagine there's a reason so that things didn't go to where we would like to see.

Jason:
[26:27] And then the only other thing that kind of came up with a bit that was interesting to me.

Scot:
[26:29] I put a bet that was interesting to me as they did talk about.

Jason:
[26:32] They did talk about the fact that.
You have to have an app to be in the store cuz you you have to have the go app to register you so to walk through like a Subway turnstile to get in in one of the.
The peripheral benefits of that is did they allow Shopper feedback to be given real time in the.
And so unlike almost any other store went to Shoppers in the middle of the shopping experience and something doesn't go how the Shopper wants they can in real time.
Give feedback and that feel it feedback is tagged with a contact that Choppers in so that shows she said that that's been a surprisingly valuable.
Data stream for them to improve their operations in the store which.

Scot:
[27:19] You are using beacons they know where you are too or that the machine that visual stuff are knows where you are better than any bacon they don't.

Jason:
[27:25] Visually light and again it's a tiny store so I you're in front of one of three gondolas so like so it's like probably tagged with with that kind of contact information.

Scot:
[27:35] Now Jason Delray overtree code that you Commerce reporter he is kind of heard rumors are dug up some some data that indicates there's a plan to open for 5 more the stores and then did they talk about Whole Foods at all.

Jason:
[27:49] Only in that context that they said they have no intention of deploying this Whole Foods right now and said two ways to introduce.
Usually win on Amazon and play emphatically says they have no intention of doing something you should sort of assumed they're going to do it right like because they have no intention of offering a shipping service they have.
There's a lot of history of them denying something right up until the moment they do it in this case I think there's a lot of logistical reasons that Amazon go dozen.
Legacy Whole Foods Fleet of stores particularly well so I sort of do believe them.

Scot:
[28:27] Let's talk about this I think it's interesting so why why doesn't it work in a Whole Foods is it just the cost or what.

Jason:
[28:32] So in this very smart 2000 square foot store there's more than 50 cameras to make sure that they have complete coverage on the store and.
What they need to do is from the time you walk through that Subway turnstile they have to maintain line of sight on you at all times and have to maintain line of sight on every skew in that store.
I'm so there can't be any blind spots where no camera can see you in there camping spots where every camera in the store loses track of you momentarily because then even when they saw you again.
They don't know that you're the same person that had the app when you walked in the store right so this store was designed from the ground up.
The perfect lines of sight it's a very boring square store with no displays in the middle of the store in a traditional store you have this thing.
And those Donna was in the aisle obstruct your ability to see certain angles you have lots of displays that.
You know for fruit and things that like tree blind spots in the store you have vendor provided displays that aren't even provided by Whole Foods that block lines of sight in the store.
The amount of cameras you would need to eliminate every blind spot in a 25000 square foot Whole Foods is.
Almost mind-boggling and then you still have another problem you can't let a customer go into an elevator where they wouldn't be on a camera you can't let a customer to go to a bathroom there's a whole host of things that you know just taking off.

[30:06] The Whole Food stores that are D exist and retrofitting them with this technology doesn't feel very likely to meet could they build new Whole Food stores.
They're intended to be more compatible with this yes could they use this technology in The Limited ways in that whole food could they use this technology to make you not have to get your wallet out when you pay and just charge your Amazon account.

Scot:
[30:29] Or the most popular part of a Whole Foods is the prepared section in a lot people just go and have lunch at Whole Foods so you could see I'm kind of like yeah.

Jason:
[30:36] Panda Express portion you can have an Amazon go store inside of the the Whole Foods or for sure.

Scot:
[30:43] I bet that's kind of what he's hitting at because he said he also said something like stay tuned yeah we have no plans to put in Whole Foods but stay tuned with a lot of people took to mean either there an open more stores are there was some plan to do something at Whole Foods it's kind of like different than the question.

Jason:
[30:57] And to me the most valuable thing that you can do with this computer vision that they could very easily do it at Whole Foods is just putting the camera at forget tracking the customer.
Just putting the camera to see the shelf and to accurately track the inventory on the Shelf is hugely valuable.
For the store stores are have very poor inventory and they spend a lot of money to maintain that poor inventory and leveraging the computer vision system to have more actor and inventory.
That alone could be super valuable to Whole Foods.

Scot:
[31:32] That's the really bad part of the delivery so I'm a big instacart I've tried I use them all over it regularly now because because it's a maintained DC,
so you're having cameras that then watch them and Tori and see the last apples been picked by in-store customer so that me the delivery customer.
Or that apple and then get a stock-out you know that you're some really big wins on all side of the equation there I think you're right that's it.

Jason:
[31:58] Absolutely and I think that's going to come up again and some of the other Keynotes we're going to talk about as well.

Scot:
[32:03] Cool so that any other highlights from Sunday you don't hit any crazy off the hook parties where you were dancing on the table.

Jason:
[32:09] None that I'm contractually allowed to talk about.

Scot:
[32:12] Or that you recall that takes us to Monday and then I got in late late late Sunday night so I was able to hit some stuff Monday,
the way it works this morning is you had two tracks in the way they're running these tracks as there's five parallel tracks as a,
20/20 build these events and always frustrate people that that event planners do this but they do it for a reason it's designed so that you'll bring,
five people you in for friends from your company so and then they there they're very somatic this year I don't remember being as the Mac last year so they're there was a grocery track for example.
I was,
I attended the first track it was really interesting it was about Brands as in the grocery track that could have been anywhere and there was a VC there that invest in kind of nascent brands.
Consumer Brands 7-Eleven was there and and then another investor of his rule was entirely clear to me but he's really all about subscription kind of products.
I think there is when we hit on the show a lot where,
you notes create a brand used to be like a PNG level event where you would have to go spend $92 to kind of say here's this idea for a swifter and it can be this or going to watch on TV with a 50 million dollar campaign to do the Super Bowl ad now,
the world is swimming in Brands and in fact this panel was there so many Brands out there that,
everyone's really struggling to kind of like figure it out one of the more interesting things I thought you would like is you know the interviewer has 7-Eleven is all this digitally need a vertical band saw it bother you that she said no it's great because.

[33:50] Those companies you know once they get to certain scale we know they,
control like it's when I have to test it in our store and then we can help them because most times if they're doing well digitally against the cpg they're selling cases and large volumes,
they can help them a lot with itches and how to how do you single serve package these things and they talked about some they give a case that they wouldn't say the name of the brand,
kind of the vibe it was.
They are buyer how he said that one that they had a lot of insights Wednesday packaged it at 7-Eleven it did really well because the,
the consumer they picked up a whole nother set of consumer because,
there's folks that wanted to try it and they also wanted it served cold for their commute back home were or what not so it's really interesting kind of things there of they actually view the digitally native thing very positively because it actually kind of,
you know already jumped the hurdle didn't have to build the brand in their stores pre-built and it made it easy for them to cherry-pick it down into the storm,
then track two came along and that was your tracking for today I had a meeting and had to miss it but tell us about what you talked about.

Jason:
[34:56] So you made an excuse not to not to support.

Scot:
[34:58] Well I figured we would talk on the podcast I don't want to spoil it.

Jason:
[35:02] Got it okay fair enough so I did one of the the panels in the grocery track in this was called sort of.
The future of grocery our grocery Reinventing itself until I had three panelists the first was.
Kind bars and so that was a Jared who's the VP of e-commerce there and and this is a very.
Interesting traditional case for me that's a traditional.
Cpg brand that that mix products and very successfully sells them through wholesale so kind bars are you not very successful there in every Starbucks store and a Whole Foods and Amazon,
and they hired Jared and experience e-commerce gaido launch their direct-to-consumer offering.
And we talked a lot of brands that are interested in doing that in the big question is always why would a consumer want to buy from you cuz generally.
You have the worst with just sticks in you're the worst price for your product and so it's interesting to hear kinds of you about that.
The a big component is.
Assortment so they're offering exclusive flavors and skews that the wholesale Channel.
Doesn't want to carry or is out of our limited editions their heavily relying on a subscription program that a lot of the wholesale Channel doesn't offer and they feel like they have.
Unique brand promise and there's a subset of the kind consumers that buy into the be kinder to each other.

[36:41] Serta brand ethos in want to buy from the brand even though they're not going to have as good of a Justice or prices Amazon.

Scot:
[36:50] Yep I think kind is one of these,
classic examples of a new newer brand that's really kind of leveraging that assortment packaging everywhere you go it's different from a consumer sometimes it's like frustrating because you want to go to Costco and my wife likes a certain one and then,
either can't find it at one of the wholesale clubs are bundled with like some really crappy flavor you're not going to eat so there is very clever on the brand side but but I do think sometimes,
be a little too clever on some of that stuff that makes it really hard from a consumer to get what you want.

Jason:
[37:20] And I feel like there's a bunch of brands that think they have that position with a consumer and they really don't kind I think probably does sit in the next episode.

Scot:
[37:30] Did they say how much as directed like do they give you any indication is that like 5-10 15% of their business.

Jason:
[37:35] They didn't but I I suspected the last than that right now it's it's it's it sounds like meaningful Revenue but it's still pretty nascent compared to their wholesale Revenue.
So I would imagine it's it's south of 1% of their other two other total sales at the moment.
The next company with Chef which that spelled Chef apostrophe D and they are.
And some meal kids are at sort of an interesting part of the grocery echo system at the moment.
A lot of people that think it's a fat and then it's not really going to be a thing or a lot of people think it's the future shopping whenever you say meal kids Denny when they immediately think of blue apron and Blue Apron famously.
Has like apparently no business plan to ever be profitable.

Scot:
[38:27] But earlier go sits when their top sellers right now so I'm in there Snoop the Timbers like these things.

Jason:
[38:32] And shut his actual interesting that they do offer their own meal kits but what they mostly are.
Form from young cats so they're actually the private label provider for a lot of grocery stores that are now offering their own meal kits and they have a lot of Big Brand Partnerships to offer Brandon meal kit so I,
Campbell's is a major investor in Chef for example.
Inside there you know there are so so that was interesting he had a lot of.
Understanding and familiarity with that market.
He talked a lot about the pros and cons of home delivery of meal Kids versus grocery store pick up a meal kits and the two takeaways I I had from his his.
That were kind of new to me.
She's very anti subscription in meal kits and he thinks that you know he's a fundamental flaw with most of these meal kits and most notably Blue Apron is you cantilever a meal and then reorder which is exactly opposite of how most of us.
What are the spines in particular things we like and we repeat those over and over again.
And he also believes that we all need a lot more personalization than the mule.
Currently allow and so a big part of their platform is an infrastructure that allows highly personalized male cats and he eventually envisions.
The distance can be highly personalized even.
In the store on demand so you can get the the spaghetti with a lot of garlic or a little garlic and a lot of onions are all those all those sorts of.

Scot:
[40:09] And deserve their delivery remix.

Jason:
[40:15] They do have a a chef branded meal kit that they delivered recta home but mostly what they.

Scot:
[40:21] On demand not subscriptions.

Jason:
[40:25] Mostly what they do is facilitate a regional grocery store offering their own meal kit or someone else selling a meal kit through grocery store so it sounds like more of their stuff is in store pickup meal kids then home delivery.

Scot:
[40:39] And my regional it kind of makes it seem like they haven't cracked into the top five or six big guys is not like a Kroger or Harris.

Jason:
[40:45] So I think there is.
I think it is pot like he was not completely transparent about who is Partners were so it's possible that he is white labeling for a big one and that part of their agreement is that they that they don't disclose that.
, number of the big ones at this point now own their own meal.

Scot:
[41:03] So Safeway bought I can't remember who.

Jason:
[41:06] Albertsons bought placed plated plated thank you.
Which is one of the biggest wins in history of Shark Tank by the way fun story there but so some of these guys out on their own Walmart owns their own.
For just bought one car for the second largest retailer in the world they just bought one this week so.
The market for the really big guys is probably smaller it wouldn't surprise me if they secretly have one but he certainly din-din disclose.

Scot:
[41:35] I feel like musical chairs and some you don't want me the guy off without a chair and then the meal world have their own meal than his distribution mechanism is like maybe some A&P.

Jason:
[41:48] Exactly so that was interesting and then the third panelist is this company I was also not familiar with call Daily Harvest and Daily Harvest I decided that milk it sounded too easy so they decided to do something.

Scot:
[42:03] Getting harder.

Jason:
[42:05] We're going to do direct-to-consumer home delivery of frozen foods.
And so there's a strong.

Scot:
[42:14] Prison meals are like blueberries so I can make a smoothie.

Jason:
[42:18] Yeah so smoothie kits I think is the thing the best-known.

Scot:
[42:21] I think it's the thing the best known for so all the.

Jason:
[42:23] Show all the frozen fruit you need to make a smoothie but also like not not so much like complete frozen meals but like frozen fruit and produce that you might.
I'm using a meal they seem very focused on.
A lot of the altruistic we need to solve a lot of the problems in the food chain or we're all going to die of starvation kind of thing they talked about what you'd foodways there is in the world and how Frozen is a great solution to a lot of food ways.
Throw away a lot of fruit just because it doesn't look perfect and nobody wants to put it in their fruit bin in the grocery store so what's what the industry calls ugly fruits and apparently when you freeze it and no longer matters that that fruit didn't love.
Beautiful so.
The bruised Apple tastes exactly like the regular Apple a lot of famous restaurants now try to primarily use ugli fruit.
They're trying to turn around this trend of throwing away all this fruit that has cosmetic damage and so is interesting that they're they're trying to leverage ugly fruit as a big part of the next there's also this.

Scot:
[43:32] Ugly frozen fruit.

Jason:
[43:36] And another one was this concept that I never heard of called transitional organic.
Say you're a traditional farm and you transition to becoming an organic farm you have to adopt a bunch of organic processes but then you can't sell your food as organic until you've been following the those processes for a number of years.
Writer so there's a bunch of farmers that are in Linda where they're paying all the expenses of.
Producing things in organic way but because they're only two years into their through your program that they're not allowed to call their product Organa.
And so so she's buying a lot of this transitional organic.
Products so that that was somewhat interesting and then because it's frozen and they've invested a lot in the technology to pack the Frozen stuff in dry ice and ship it through common carriers like FedEx and UPS.
They're able to deliver nutritious food to a lot of places in the country that don't have convenient access to grocery store so we have a lot of these.
Areas we call Food deserts that they're able to cater to so so that was somewhat interesting but they had to.

Scot:
[44:50] Ugly frozen food to food desert that's the fish.

Jason:
[44:56] They were able to raise money on it so.
There's a investor for everything.
But it was interesting thinking about all these complicated with Justice of the cold chain and.
Yeah so hats off.
Talk to her and if you think about it if each of these things are popular they just wrapped up portion of the traditional grocery business right so you know she pointed out the the.
The Frozen I always the Wiest appealing part of a grocery store and that it discourages interaction with the product and I'll and all of these sorts of problems,
and by the way you buy this Frozen stuff and then you throw it in the trunk of your car and it's not frozen by the time you get it home so.
So if she's successful in direct-to-consumer with Frozen that potentially takes to rose out of the grocery store the meal kits potentially,
take a lot of the individual ingredient shopping that happens today so so some interesting things thinking about how groceries Reinventing itself.

Scot:
[45:58] Absolutely cool so after that after Jason second track there,
then we went into the Keynotes so kicking off the show kind of the the opening keynote if you will,
which kind of strange I think they realize that a lot of people come in Monday or Sunday zo winter who puts together all the content for shoptalk kicked it off,
I thought I was a pretty good good kind of Esprit shortest like 5 minutes but the summary was you nowhere in The New Normal which is kind of you know,
in in 15 and 16 and 17 we had all this disruption going on and when you're in the middle of it you figure it's going to be.
You'll go back to the old normal but they have that never happens and then she called The New Normal and abnormal is essentially where,
I know you're not really reacting to disruptive innovation it's just you've adopted it and said this is going to be happening going forward so she really kind of had two pieces to it for predictions,
where we going to go and Retail and you can tell this that shapes the content obviously,
the number one back in technology will create new efficiencies in expectations number to Shoppers will come to expect experiences that are Cutting Edge today I kind of took that to mean yeah once Amazon sets the bar at,
today one day just walk out than the customers tend to expect that I called a zero friction it's pretty interesting,
human thing I'm Number 3 start up some traditional businesses or more line where I think we're seeing that you know we just talked about several is very very big trending in our industry be a grocery retail where you have kind of the you know the.

[47:29] Analog dinosaur acquiring the digital DNA and smashing it together to create a new kind of,
no I was using her language a new normal kind of combination.
And then a wide range of new consumer product to hit the mainstream in this is kind of what was in the first panel where the cost to build a new consumer product is effectively gone down to zero and now you're going to see this huge swath of new products,
your micro products micro kind of tribes that they appeal to and then she said those predictions field 7 trends,
I never won the rise of Miss France number to the growth of experiential retail,
we had a show in the can where will have some really interesting kind of examples of that and then the next keynote talk a lot about that,
store associate will not go away but change what they do there so I can becoming an orange shirt or between prep and so check out and in the go example cashier list check out as a big thing automation to the warehouse,
more transparent Supply chains in this goes to there's a lot of concern around food safety in that kind of thing,
a lot of people talk about blockchain there I think there's a couple talks around that coming up in an explosion of AI machine learning.
So after after yeah we went right into office of the CEO of Ulta was there and I don't know if it even some of these.
These Keynotes they seem really interesting but then like there's kind of.
People 20 minutes so you can't get into much detail and then the format seems to be show a video about the company.

[48:59] Talk about some high-level stuff most people are dino and then talk a little bit about,
diversity and maybe the company's culture seems to be the kind of formula you lived up to that expectation couple points that they hit on,
and we talked about on the show this kind of your beauty is an area that's doing really well and,
then why you know she said they're 90% off Mall property so they were smart to be off ma that three different shaders the real estate location which is off Mall product mix and services,
and then talk about the benefit of the Loyalty program they have 28.
Million members in that program and it represents 90% of their sales,
and the other day it's pretty integrated between online and offline so it's omni-channel loyalty program and then the other day she talked about the consumer changing this is interesting you know she talked about,
gender fluidity and now that actually helps them so now you have more and more people wearing makeup regardless of their gender and it used to be all these social things around you then wouldn't wear makeup you and I wear makeup because,
podcast but now the so you know it's okay.

Jason:
[50:08] We're actually thinking about launching our own line of podcast.

Scot:
[50:10] The Chase,
spoiler alert,
forward facing cameras at selfies has really helped all these Beauty companies cuz now people take more pictures of themselves and they want to look good for those she didn't mention that those with a freebie that will throw in there.
The you know.
Today's consumer wants a personalized convenient experience I'm certainly living that with my new company where convenience is everything for folks and then personalized as well.
Nothing I thought was interesting to see where she broke the script a little bit she went out on a limb and really said that they know is in her she paid homage and she's talking about we couldn't do this without our Partnerships with Google Google Express Facebook and then Spruce labs,
I end up that was interesting that you went to Old diversity thing which was good you know that they have.
Have a board that has over 50% women which is great and then officers in the company are over 60% so makes a ton of sense you know you know kind of,
older middle-aged white dude song makeup doesn't make a ton of sense and I think this is a great example of both aligning with your customer and then also having really good diverse kind of input in the company to make it better,
then how the Nike net was up so would you take from that one.

Jason:
[51:33] So that this was Adam Sussman who's the chief digital officer at Nike I think he's really tripping you in that really don't think Nikki's had a cheap digital out.

Scot:
[51:41] He said he was the first.

Jason:
[51:43] And so the heater is it Nike.
When they spend a lot of time talking about was their membership program so they they have a thing they called Nike Plus Membership.
And they probably have over a hundred million current members they want that to be 500 million in the next five years those members Ben Forex what non-member spend.
And there's a number of specific experiences they have in the membership program that have even more dramatic conversion results so is interesting.
I would have said that the general Trend in in Welty was that.
The effectiveness of loyalty programs is kind of a roading in here we had to back-to-back key notes that were saying how successful their their membership programs are so I found that interesting.
He also talked about their conversational Commerce initiative which is launching so this is called.
Hertz on demand and you can use the Nike apps to have a text chat with a Nike brand expert that will give you advice and so you know.
You mentioned that you get your running shoe advice from attend time Marathon winner.
Probably doesn't want to be giving me advice about running shoes but but that's interesting in a bunch of the the conversational Commerce vendors that.
At at the show were thrilled to hear him him supporting that experience personally I think the jury still out on.

[53:17] Particular chat base conversational Commerce I'm not sure if Facebook's gotten all that the traction that they were they were hoping to get but but it's still early so we'll see.
And then they did talk a lot like his corporate videos.
Nikes done some really interesting product launches so that you know Justin Timberlake debuted a new Air Jordan Super Bowl.
And they made that available for purchase through their sneaker app like the second he walked off stage and it's sold out instantly a month later the next version of that screw came out and they launched it on Snapchat with a.
I really enjoy Innovative kind of want Commerce experience and you know he didn't explicitly call this out but one interesting point.
Used to be that they would watch all these products through their wholesale partners and people like Footlocker would sell these and kids with a line up in the mall.
And now he's talking about all these Innovative direct-to-consumer experiences that are owned by Nike.
And the drink late relationship Nike has with his hundred million users in their Affinity program so to me Nikes really the poster child for someone that's transitioning from.
Predominantly wholesale to the majority of their sales but but predominantly direct-to-consumer from experience stand for.

Scot:
[54:35] Yep sidebar I don't know if you fall or not but the average several Wall Street reports that to the shoe guys are really having a first company of tough,
2018 I don't know if if it's because they're losing a lot of these launches or what's going on but you're trying to see kind of the cause sneaker fatigue with with.
That model seems like it would never run out but it looks like.
The average Sneakerhead has X number of shoes that really interested in watches yet Brands like Nike moving that away from retail that could be sneakers have been kind of sustaining through them the retail apocalypse mall again so bit interesting to see if maybe the steps over.

Jason:
[55:09] Yeah yeah I think of the inside tip.
The thing that sneakers need to save them now is much wider angle front facing cameras on that smartphone because the moment you can't see your feet in the selfie.

Scot:
[55:21] Yeah.

Jason:
[55:25] So the next keynote I think I was the only one that said in on so I think everyone left after Nike but I was really interested in this next keynote this is Tim Stein or who's the founder and CEO of a company that.
To her listeners that probably heard of called a Cato Cato is a uk-based.
To Consumer grocery store so you order online they have fulfillment centers they they deliver the groceries to your home.
And there are quite successful they sell the equivalent of 2 billion dollars a year in groceries direct-to-consumer.
Is we talk about an issue and UK 6% of all grocery sales are are digital where is here were less than 1% to.
So I was super interested there that the digital pure-play grocery retailer in one of the most successful markets in the world.

Scot:
[56:16] Scot to be part of the UK but aren't there like I know our folks in UK almost they have like six people they can choose from that and some of her like Marks & Spencer.

Jason:
[56:26] Grocery stores all out for some Marks & Spencer Tesco as though which is Walmart in the UK car for they they all offer.

Scot:
[56:34] Is the only Pure Play.

Jason:
[56:35] Yeah but these this is the Pure Play and these guys are bigger digitally than any of those those other companies so it would be a little bit like what a Peapod sold more groceries then Kroger.

Scot:
[56:50] Amazon has a big mouth for Walmart.

Jason:
[56:53] And I don't know what their ownership structure is it if they're in play or not those are interesting questions but he talked a lot about.
The benefits of.
Being a pure being built from the ground-up to deliver groceries versus being a retailer trying to transition to groceries so,
I have talked a lot on the show about how I think curbside pickup is the ultimate winner in this space and largely because it's something that traditional grocery stores can do and so we have this concept in the industry called store pic,
and that's what the traditional grocery stores have decided to do is will will pay our employee to pick all the groceries instead of the customer picking it.
And then we'll make it convenient for the customer to get those that store picked order and so he like very self-serving lie but with some credibility.
Talking about how he doesn't think store pick can work in the long run and how these.
From the ground up for filament centers for home delivery are better and he alleges that they've tried curbside pickup.

Scot:
[57:59] Pick up for their system in the customer always gives.

Jason:
[58:00] For their system in the customer always gives is always choosing home delivery over herbicide pickup Which flies in the face of my advice by the way.

Scot:
[58:07] So it's the.
Customer experience not the economics of let me take this item put it onto a shelf in a convenient way for a shopper and then at Pea Picker to pick it in an inefficient way.
It's not the economic so you saying it's when you give customers a choice they will choose delivery.

Jason:
[58:25] Exactly at the same price which is a big caveat in this and so so one thing.
Is he talks about is he he showed the math and he took all the things that have to happen when you place an order with Tesco and they store pick that order and you do a curbside.
Tesco delivers at your house and it a typical order by his math take 75 min.

Scot:
[58:51] And then.

Jason:
[58:52] And then he does that same order in his automated grocery fulfillment center that uses Robata.
And he picks that same order in 15 min.
So hit his fundamental premise is where 5x cheaper in these purpose-built things so store pick you know is really cost disadvantaged.

Scot:
[59:18] And if it's what the consumer wants regardless.

Jason:
[59:24] And I I buy that the.
Purpose-built fulfillment centers are way more cost-effective than store picking in there other problems with store picking then we'll talk about in that in the next Keynote.
I totally buy that where I'm I'm not as confident as him is the curbside pickup versus the the delivery and that you could I believe in that his customers want delivery in the US.
We find lots of people aren't home to receive that grocery delivery and one thing he.
Very much points out as he says we are at Price parity with all the traditional grocery stores so we scrape all Tesco's prices and our price to deliver it to your house is the same as Tesco's price for you to drive there and pick it yourself.
And so no one in the u.s. does that everyone in the US that's trying digital grocery have all kinds of premiums and added cost.

Scot:
[1:00:21] Service is the dreaded Services yes.

Jason:
[1:00:24] And it's it's worse than just service fees it service fees and they charge more for the same skus when they pick them for you.
So so a big difference between the two markets right now so his presentation was super interesting.
Then the afternoon Keynotes there were three more so the first one was was Ben Silverman who's the CEO of Pinterest.
And I'm just going to be blunt.
That was the most boring keynote to me of the show so far and large he did a great presentation about how important visual Discovery is.
Which I agree with him it is there was no unique inside the weight like a very self-serving for you know the business that the Pinterest happens to be in.

Scot:
[1:01:14] The governor there Rich pins and they also had a lot of marketplace initiative none of that no retail kind of tie on them.

Jason:
[1:01:17] Talk about any like it was it was purely like people aren't going to discover new products via text they need visual Discovery and where we build a business provisional Discovery and it was literally that abstract.

Scot:
[1:01:32] Go back on the K2 or however you say it one of the intern just came in they are a public companies are independent and they're listed on the footsie the London Stock Exchange and they're part of the foot C250 and have a market cap of about 3.6 billion.

Jason:
[1:01:48] So that's a perfect segue to the next keynote is.
In some ways the u.s. equivalent which is much more company is Fresh Direct so this is Jason acreman of who's the CEO and founder of Fresh Direct.
Resurrect is direct-to-consumer digital grocery exclusively in the Manhattan area.

Scot:
[1:02:16] I was going to confuse with hello fresh with their meal delivery company.

Jason:
[1:02:20] FreshDirect is like Aikido a built from the ground-up to deliver groceries to your home.
The most thought of is a grocery delivery company which annoys Jason to know in because he thinks of them first and foremost as a food company so so the big thing that happens is.
He buy stuff from the farm and gets it to your refrigerator in half the time that Whole Foods does so.
Pressure it's going to last much longer they do these promotions like a lobster day when you order Lobster to be delivered to your house in Manhattan.
It's been pulled out of the water in Maine less than 12 hours ago so that so the supply chain is super cool.
Like Ikeda although I don't think it's quite as automated like they built this.
Purpose-built fulfillment center so they're avoiding store pics and Jason jumped on the same bandwagon about why store picking isn't going to work right and.
Hey price structure is problem number one.
Problem number to none of the stores have accurate inventory something we aren't we aren't we talked about earlier and so they just can't fulfill your order properly like they're missing stuff and they make mistake eggs.
Phone number 3 store pic doesn't scale and so his point is is store pick ever got really popular the customers in the store would be.
Derogatorily affected as they're competing with all those employee Pickers in the store so then the customers will get irritated that they're losing out on the.

[1:04:01] To the to the Picker and staying in line behind too many pictures in the cashier and.

Scot:
[1:04:06] This happened the other day I went to Harris Teeter Saturday night and there was more employees picking and instacart people picking,
then us and daddy's giant things that you have these relatively kind of pallet size cards that you haven't seen him and it is it is cumbersome,
I can tell our grocery store is also throttling so they have you know,
when I go like a Friday to get started delivery it's already sold out so I think they're really limiting the number of deliveries which is another bad customer experience you're stuck between you know who's going to have the worst customer experience in-store person or the outer person and that's a,
that's a tough tough decision to make for the customer.

Jason:
[1:04:46] For sure so that was all super interesting so this is two guys that were lobbying heavily in favor of dedicated delivery centers versus the the store picking model again there just are so many grocery stores that have all this investment like it's hard.
They're going to be the best they can with the model they have but then he had another Insight which I totally haven't thought about it all that's super interesting.
FreshDirect is launching a sub brand service call.
And foodkick is 1 hour delivery normally FreshDirect is next day delivery.
And so what are you wanting out is he said only about 40% of food purchases are planned purchases.
So I'm going to do my grocery shop I'm going to shop from the list and it's fine that all those groceries get delivered tomorrow cuz I'm putting it in the fridge and using them all week.

Scot:
[1:05:36] This could be a Manhattan thing I'll just put.

Jason:
[1:05:41] This thing and that could be.

Scot:
[1:05:41] Is all the bodegas everyone I know in Manhattan they like shock day then yes it's like.

Jason:
[1:05:46] Is like this as well by the way but.

Scot:
[1:05:47] By the way.

Jason:
[1:05:49] So he's saying 60% of food sales are unplanned meaning like you just decided that your friends are coming over and you need an appetizer and so.
Thick is this new business to deliver in one hour and it first you go why wouldn't you just have the same website and let.
Next day delivery prison wait one cost in 1 hour delivery the different cost.

[1:06:17] Quickly pointed out that I hadn't thought about is the shopping context is wildly different.
For that person that shot like how you'd merchandise.
The the plan order versus the impulse order and what you would wood products you would feature and what pictures you would show.
Turn out to be very different and so.

Scot:
[1:06:40] They felt the experiences.

Jason:
[1:06:41] Experience is different enough that it warranted literally a second sight.

Scot:
[1:06:46] So it seems like if you're planning your very transactional and I need broccoli for the meal on next Wednesday but then I guess it's more serendipitous Discovery for the song I need an appetizer and innocent people.

Jason:
[1:06:58] Swag to the plan shop is a lot more about the ingredients in your you're right like reordering off this list and all of these sorts of things.
So that was interesting and then he alluded to one thing I already knew but maybe interesting to a lot of our users the other thing that people lose sight of in grocery is social proof and how important they are an e-commerce.
Show ratings reviews are super useful for grocery.
The traditional ratings and reviews would be worthless you don't care how people rated the bananas from a year ago.
You care how they would rate the bananas that you're going to get today if you order a banana.
And so what FreshDirect is done is they've hired subject matter experts to taste every.
The produce everyday and rate that days produce so there's some poor dude who's bad job is the Taste kale every morning at 5 a.m. and say today is Kayla 6 out of 10.

Scot:
[1:07:58] Just seems crazy expensive.

[1:08:02] Why would you store something that didn't have good ratings I've ever had.

Jason:
[1:08:12] Question and I've actually asked Jason that question and the answer is sometimes you just need an ingredient in you're okay with it not being perfect sometimes you care about the ingredients.

Scot:
[1:08:22] So

Jason:
[1:08:23] You're making pasta and you need tomatoes.

Scot:
[1:08:26] Yeah you'll take.

Jason:
[1:08:27] I'll take the tomatoes even though they're not in the peak of season versus if I tell you that this week's tomatoes are the most amazing Tomatoes of the year it might cause you to decide to make pasta.

Scot:
[1:08:40] Caprese salad or something.

Jason:
[1:08:43] And so what they do is they will only promote on the site items that are highly rated but they still will sell produce that's lower-rated because sometimes it's just a utility they let the customer just needs a friend.

[1:09:00] Incident in the last Kingdom.
Of the day was.

Scot:
[1:09:04] Was.

Jason:
[1:09:06] And that that Keno ended up being a little bit of hijack by sort of the day's news they were forced to answer a lot of questions about Cambridge Analytics.
And so you said they did talk a lot about that maybe we'll do we'll talk about the podcast but it's.

Scot:
[1:09:24] Florida Lottery issues around Facebook and privacy and things that kind of derailed the whole let's talk about retail on Facebook.

Jason:
[1:09:33] Exactly but then they did briefly touch on this topic this very interesting to me.
Because launched this Facebook pixel that stores can you use retailers can use to do online to offline attribution and they it's been a beta for a while.
An out of beta but they talked about one of their clients that was using an in beta which was Michael Kors and Michael Kors was able to validate that they could buy a.

Scot:
[1:09:59] They could buy ads on Facebook that increase traffic.

Jason:
[1:10:02] Increase traffic in a Michael Kors store by 11%.

Scot:
[1:10:06] And this is probably is not a pixel is it is this like their device ID thing where they can track you across every device and and did it does this they had a beacon program that seems if it's a surprise.

Jason:
[1:10:17] It's a very internal facing reason they call it Facebook pics of your rights are they basically they're using an ID graph.

Scot:
[1:10:24] But the one thing they don't have in the.

Jason:
[1:10:25] They don't have an ID graph is the customer in the store.

Scot:
[1:10:31] Facebook.

Jason:
[1:10:31] So Facebook pixel is there like net.

Scot:
[1:10:36] 44 let us.

Jason:
[1:10:37] Let's put our pixel in your store it's it's actually not a pixel.

Scot:
[1:10:42] That's like what.

Jason:
[1:10:43] Them in a great where does integrate into your POS system.
We can identify which is.

Scot:
[1:10:50] Cleveland weather put a pixel on your side it's funny so pixels become almost like this this name for tracking versus like it's technically actually specs.

Jason:
[1:10:59] So this is obviously all these ad platforms have a really vested interest in proving that they influence offline sales and so.
After a lot of money in helping many marketers believe that they can do it.
But it also is a really useful piece of analytics for a retailer to have and at least in the case of Michael Kors that appears to really be validating some of Facebook's claims.

Scot:
[1:11:26] Zack gets us through the halftime just,
I know we've used a lot of time we appreciate that a lot of content of the show I think it's important that if you weren't able to, or even if you were here,
hopefully we picked up on some things that will help you kind of summarize that I know a lot of people come to the show and they get tied up in meetings or the very long Starbucks line so just quickly looking for.

Jason:
[1:11:48] Starbucks twice during this podcast.

Scot:
[1:11:49] Subsequently looking forward,
the next two days we're going to have some key notes from Unilever others to be really interesting Jason Del Rey interview with Mark laureano in Indy done open oboes he doesn't ever pull punches so that'll be fun,
there's Amazon talking about some International things house another Google or I guess this is the first Google Keynote,
and then there's a Code Commerce event where Jason has a sidebar kind of a conference and does some really interesting interviews there will be reporting on.

Jason:
[1:12:21] I think is in that one this year.

Scot:
[1:12:24] And then looking forward to Wednesday on eBay will be talk about some things they're doing with machine learning and AI box that's interesting one cuz he's been all those reports that they've been looking to be acquired in one I saw.
Yeah I saw they turn down a 400 million from somebody so that's going to be interesting hopefully you're over that was a smart decision on their on their side.
So so a lot to look forward to hope you enjoyed this halftime report after the show we will be doing a second-half kind of overview to catch you up on all the things that happened at those Keynotes and tracks that are coming up.

Jason:
[1:13:01] And I just like to remind our listeners that we're living in Las Vegas for 16 days so you don't have to so until next time happy commercing.

Mar 21, 2018

EP120 - Negotiating with Amazon with Andrea Leigh

Andrea Leigh is the Vice President of Client Services at Ideoclick, Inc., an Amazon managed services agency.  Andrea enjoyed a 10 year career at Amazon where she served in a number of Buying and Category Leadership roles. 

We caught up with Andrea at the PathtoPurchase Summit, where she gave a key-note on selling on Amazon.  We covered a variety of topics including:

  • Andrea's new role at Ideoclick.
  • Amazon's presence in grocery and relationship with WholeFoods vendors
  • The language of Amazon metrics
  • Best practices in negotaiting with Amazon
  • Brands selling on Amazon

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

Episode 120 of the Jason & Scot show was recorded on Monday, March 12, 2018.

http://jasonandscot.com

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

New beta feature, Google Transcription:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 120 being recorded on Monday March 12th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here cuz Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners this is continuous are segments here Live From the Path to purchase Summit where we have some beautiful background music from Grouplove one of my favorite bands.

Jason:
[0:52] Great now I have to pay a royalty.

Scot:
[0:53] Is there a Panda sounds like.
And anyway so we're really excited to have back on the show one of our most popular guest Andrea life Welcome Back.

Andrea:
[1:07] Thanks for having me glad to be here.

Scot:
[1:09] It is a quick reminder to fix your ex Amazonian and you are an expert on negotiating with Amazon cuz you were on the other side of the table I'm so this is why it's always such a Hot Topic you know what all the secrets car cards are the Amazon has.

Andrea:
[1:23] Exactly or at least some of them.

Jason:
[1:26] Does that mean they don't like you.

Andrea:
[1:27] Well I mean I like to think that we help clients find a win-win I mean that's the goal right it's defined areas where the brands can Excel and Amazon can continue growing the business.

Scot:
[1:39] It's been about a year since you're on the show so give us an update on what's new with you career-wise.

Andrea:
[1:43] Wow it was that long ago it feels like it was yesterday well.

Scot:
[1:47] Yeah these podcast it's like dog your stress me.

Andrea:
[1:51] So I think when we last met I was working with Melissa and Lambert Eric and Andre Kaylee Consulting.
Working with brands on their Amazon strategy in September actually joined up with my husband that I do click and I'm the vice president of Client Services there.
And I do click is a managed services provider so we offer software data analytics reporting Consulting and advisory Services item data management marketing AMS management.
And I have been there for about 6 months now and we work with clients across all categories but tend to be a little more focused in the cpg space so Grocery and health and personal care.

Scot:
[2:31] How's it work with your husband.

Andrea:
[2:32] It's so much fun we went to grad school together and have sort of had been in the same space for a long time so it's actually like one of the best things about.

Scot:
[2:40] Does he ever do that joke raise like talk about sleeping with his coworker it's classical today's world is great.

Andrea:
[2:43] You know he does he really enjoys finding inappropriate jokes and he hasn't thought of.

Scot:
[2:50] I need to I've got like yeah okay.

Jason:
[2:52] Why I'm presuming the regular Wisner so now he has.

Scot:
[2:54] Yeah actually it just that one of our interns just ran up and told me that you were last on the show May 11th last year so it has been about a year.

Andrea:
[3:01] Wow well thanks for having me.

Jason:
[3:05] Thanks for being here.
You mentioned cpgm grocery in a feels like groceries one of those areas where there's been a lot of progress in the last year and the groceries are thinking a lot more digitally.

[3:19] Obviously the Whole Foods announcement amongst others have you seen the grocery space what's going on in grocery.

Andrea:
[3:25] I think the biggest thing we're seeing is that you know where a few years ago Amazon in particular and the lot of e-commerce players were really just trying to grab customers and growth and sell a lot of grocery products.
The focus is really shifted to more about being profitable profitable and sustainable growth which means that for a lot of our clients in a lot of Brands out there.
Selling on Amazon has become really difficult because there are a lot of product categories that just aren't super sustainable online you know given delivery economics.
So we're starting to see a lot of Science and and then seeing folks in the space really starts in Sebastian capabilities Direction,
to Consumer on their own using 3pl focusing on.
And so I mean I just seen kind of the most I think the pace of innovation is really set up the last couple of years.
As Amazon in other e-commerce players start to push some of those profit concerns back on the brands.

Jason:
[4:24] Yeah I think I've seen all that as well and I keep beating this drum that everyone seems to think I'm wrong on so I'm going to.

Andrea:
[4:33] Try me out.

Jason:
[4:35] Amazon can't be hugely successful in grocery but because of the delivery economics I actually think that the dominant model for digital grocery is actually grocery pickup.

Andrea:
[4:46] Totally totally agree with you you know I think is going to be is huge.
And for a lot of these brands that I think God on the Amazon bandwagon early you know I hope they haven't abandoned some of their wine Amanda live in Bandon but I hope they haven't deprioritized some of their initiatives,
with brick-and-mortar because the brick-and-mortar space is heating up around click-and-collect and grocery pick-up and so you know I think that I totally agree with you I do think that sustainable model for e-commerce is something that looks more like Amazon's Pantry model,
where you try to get the average ring up.
And you're able to spread those delivery and shipping economics across the larger number of items and send it kind of the slowest ship method,
not only does it help with the delivery economics but it helps with forecasting when you have more time to be sort of more of a just-in-time inventory model.

Jason:
[5:38] Yeah yeah and speaking of pantry did you see the news that they've decided we change that model of this month so.
Country used to be a paper drink thing so.
599 per box and then you you put as much stuff as you can in the box so they're doing away with the 599 ft and it's now in new service you have to subscribe to for five bucks a month and then you can use Pantry as much as.

Andrea:
[6:03] That makes sense.

Jason:
[6:04] Yeah into the theory is as as opposed to having that big friction of taking $6 out of your wallet every time you want to use it that it just gets tacked onto your your Prime membership and you stop thinking about.

[6:18] Casper drinking you're more likely to use it more often.

Andrea:
[6:21] Yeah I mean I think that makes sense Amazon has had like wild success with all of the subscription models you know for fresh and for.
Obviously Prime and you know there if they have all these Prime add-ons now across their portfolio so it does really increase the stickiness I think we've all seen the metrics around Prime and how much stickier,
those customers are,
but I think that's really interesting and I do believe that in the next couple of years we're going to see a really big shift at Amazon from you know the traditional amazon.com grocery category over to Pantry more push to Whole Foods more precious to pick up.
To help really help the profitability it's a sizable enough category at Amazon now that it's extraordinarily painful for them.
You know to be to be unprofitable on.

Jason:
[7:06] I wanted to make changes this month is Dave there they're not doing a bunch of pilot cities where they're delivering literally from the Whole Foods until there's even was a funny article about like the instacart guys getting like.
Moved out of their office into the hallway to make room for the Amazon employee setting up setting up shop to do delivery they haven't announced it yet but I think it's it's inevitable.
The dab.
Logistics infrastructure get used for pick up as well and then ultimately a bunch of Whole Foods end up being pick up Depot Amazon Fresh pick up locations.

Andrea:
[7:39] Yeah I spent a number of years working in the grocery category at Amazon and also working on Amazon Fresh and delivery economics for fresh food are really really challenging.
You know density of supercritical you know being able to hit multiple orders in an hour.
It's a really it's an extraordinary Lee challenging business and so I think you know it makes sense to focus on a limited sort of version of that I maybe there's an opportunity for Amazon to get scale and then as they are able to grow that they can kind of.
Encourage customers to do more pick up.

Scot:
[8:14] We surprised by the Whole Foods acquisition.

Andrea:
[8:16] I was actually you know a lot of people ask me about.
About it and if I'd heard any Rumblings and no like it was completely silent and and I was really surprised although it makes sense right I mean.
That's if you in order to really be I remember Jeff or maybe it was.
Jeff Bezos Demetrius Jeff will he saying something in the earlier days about if we really want to be like a true,
you know everything store we absolutely have to have strong penetration in grocery and in fashion does R22 normous Industries groceries like the biggest industry so.
They've really got to figure out how to get that right and I think they were I mean frankly based on sort of the.
At the public sees like all of the projects that are launched in our successful in a scale but there's so many Pilots that happened in Seattle that,
where is interesting to everyone and if you look at all the fits and starts of this thing over the years it doesn't surprise me that they went and purchased someone who is doing really well.

Scot:
[9:17] Then you think so I can sleep at the store footprint one of the things I was surprised how quickly they worked on was getting the private label that was called whole 365 getting that into the other platforms very quickly that seems like almost.
Day one that that got you know I saw it in my Prime now and it was featured and then obviously they done a lot in the stores with the lockers and selling Echoes everything.

Andrea:
[9:38] I mean I'm sure that was one of the I think that was one of the probably if you were list out like 5 or 10 main reasons Amazon bought them access to their private label is a huge one,
you know they really dislike private label its assortment they can't usually have on their site,
they can use sometimes get it through resellers near we were able to get some of the Costco stuff through resellers on the third-party platform bed.

Scot:
[9:59] Amazon is the largest seller of Kirkland.

Andrea:
[10:02] Now there.

Scot:
[10:05] Costco doesn't sell it.

[10:08] It's a little bar but they they jump over it seems like as they integrate Whole Foods lb you know it seems Amazon's very efficient.
Right now there's finally a different buyers and things do you think they'll consolidate that what are you hear anything about that.

Andrea:
[10:23] You know I think it'll be interesting to see what they do with the went looking back at some prior Acquisitions like diapers and Zappos they were really slow to integrate some of those teams,
you know what I think I think they're probably a lot of reasons for that I expect this will happen quicker mainly because it's a category they have got to get,
you know they've got to get more profitable on.
So focusing on those classes and getting transparency there quickly is going to be important I just said something this morning about how.
They've reached out to some Brands and I've invited them to some kind of like Summit or meeting next week.
Whole Foods has to talk about I think it was to address some of the concerns that have been popping up in the vendor Community probably specifically around cost.
But the article is also speculating that.
Amazon was going to try to do away with traditional grocery Brokers which I think is a really that's really interesting and potentially like try to recoup some of those that funding for themselves.
Desert of cutting out the middle intermediary.

Scot:
[11:25] Give me the NADA grocery what's the for dummies on grocery brokers.

Andrea:
[11:29] So it's a lot of Brands work with traditional brick-and-mortar through what are called Brokers so third parties in negotiating,
negotiating for Shell space the brands are often like really involved in that process but the broker actually.
Stop managers that relationship and for Amazon they work within.
You know worked with more grocers in the earlier more brokers in the earlier days but have had really tried to kind of do away with a lot of that,
I mean in some ways you could look at it as an aunt pretty Antiquated model like brands are pretty sufficient self-sufficient in their ability to negotiate now and you know and negotiate for shelf space and figure out how to navigate,
a brick-and-mortar store it's not like a novelty anymore they know how to get into Costco so.
I think that's a model that's kind of ripe for disruption anyway it'll be interesting to see if this encourages it more quickly across the other brick-and-mortar channel.

Jason:
[12:25] What one.

[12:28] I've been trying to figure out we have this overlaps but like so if your craft you know how to sell to grocery stores and you have all those infrastructures and you you probably are already aren't using a broker or you're not getting on a value for the broke his heart.
Carried a lot of much smaller nascent Brands often at the local level right and so you can imagine your Amy's Bakery.
When you make baked goods in your kitchen and you're selling on through just the Austin Whole Foods a broker could be helpful in an opening that relationship because you don't know the kind of perms you should be doing all those hearts.

Andrea:
[13:02] Bright.

Jason:
[13:04] So part of me goes oh that's where they're taking the broker out but I actually think Amazon has already taken a lot of that local buying Authority away from the Whole Food store.

Andrea:
[13:13] Yeah I mean I think it's a model of those sort of deteriorating anyway and then I mean there's so there's Brokers which sort of like managed the deal but then there's also Distributors which actually procurar the product and then resell it.
And that's another Avenue that a lot of those smaller Brands used to kind of get into some of the channels where they couldn't it was in make sense for them. Feels team setup for all of those different channels and so working through like a distributor broker.
But you know it's more cost but and it's more profit that can be had by Amazon so I can see why they would want to get rid of that third party.

Scot:
[13:48] Go to this is Switching gears out of grocery this is the time of year when vendors get their their kind of notice from Amazon that it's time to negotiate which seems like it's probably a.
Not exciting notice to get so imagine you get you get a lot of calls on this kind of time and you're giving a talk here today on this and you talk about it on the last show.
What to do in in the world of negotiating with Amazon.

Andrea:
[14:13] Yeah I don't know if it's really new but growing is the concept will obviously always more automation every year there's more automation more and more of our clients even some of the larger ones now or getting through these automated email ask.
So more busherts Automation and then the other more recent it all in his hands always had for some categories sort of.
Professional negotiating teams and that's that.
Arm of Amazon is growing so we have more more clients who are being asked to negotiate with like essentially it's a third party with an Amazon so not the retail buyer.
They've traditionally worked with but instead like a professional negotiator which I think is interesting for Brands and some ways they lose.

Scot:
[14:56] Is it William Shatner.

Andrea:
[15:00] I think it's really interesting for Brands because in some ways it's a complete disadvantage for them cuz they're dealing with someone who like.
Highly skilled highly skilled negotiator but in other ways it's to their advantage because they possess a lot more category knowledge than The Negotiator does and so.
Thanks figuring out how to work with that team as that team grows and starts interacting with more Brands is going to be critical.

Jason:
[15:28] It's I don't know this is a fair amount or not but I in my mind I imagine it's a little like the.
The car dealership model where essentially the they they make you negotiate with the individual sales person who very intentionally doesn't have any Authority artonomy inside there intentionally.

[15:46] Aggregating you disarm mediating you from the decision maker who's the the the dealership manager in in the same way.

[15:56] Professional negotiators are just intermediating the brand from the the merch.

Andrea:
[16:00] I would imagine that the unprofessional negotiators at least what I know of them from our clients have a very very narrow window of what they can actually approve.
And you know agree to and then everything after that Pastor go is probably escalated like is far as we know the category leader is still the ultimate decision-maker so it's important to make sure like your social your large man you got access to that person,
but smaller brands that we work with are typically doing a hundred percent of the negotiation over email.

Scot:
[16:31] How does this go so your Brand X on the go she ate or I start off and I say Brand X you've been a great partner of the Amazons we love you you're awesome we need you to come down 20% does that sound like how it starts just.

Andrea:
[16:43] Yeah you'll get an algorithm to the brands are given algorithmically Drive-In email that is looking at basically a day to file and saying in order for us to.
Be profit positive on frayed for example we need extra sent and Afraid allowance and sometimes the figures I don't make sense to our clients of gotten messages like asking for you know 15 and 20% rate allowances which is not tenable obviously.
So it's it it's an algorithmic Lee Drive in email me look like it's coming from your buyer it's probably not.
Probably coming from a machine or up and it's in there some machine learning in it so if you're if you send back some responses we kind of had tested and learned on this with some of our clients you know some some responses generated,
some responses back in some responses get kicked out into an exception and then typically at that point especially if you're small brand your Kik to an offshore team.
But all that will conclude the negotiation.

Scot:
[17:35] What's the best way to like mess with a I would have your like that's too we would like to offer a bigger discount or can you just like start cussing at it.

Andrea:
[17:43] So we have found that for some of the critical negotiation components like Freight and marketing accruals continuing to just say no over and over again may result in the brand.
Amazon not ordering from the brand anymore so we've seen a couple instances of that happening where the brand took a pretty from line there were like no and then the person wrote back you know it's the auto thing it's like.
That is not an acceptable.
Like term for us and then no and then that's not expensive and then there was a threat so read the email carefully if there's a threat in there that Amazon will stop ordering it's important to dress like an CERN.
The address be asked but you certainly don't have to give Amazon everything they're asking.
You don't have to agree to like that exact term you can agree to something more than what you're doing and typically make it through the process.

Scot:
[18:29] Does it start like real macro like we want 12% and then is it a good strategy to kind of start to just try to get it to be more like at least category askew or down the street level cuz it seems like on the other side you have all these different.

Andrea:
[18:40] Yeah and we'll talk about this today see you but I think the two things that I would really keep in mind when negotiating with Amazon are.
First of all focus on win-win so you want to see if you have to give Amazon more money you want to figure out how to do it in a way that grows the business not in a way that just helps their bottom line so an example of that might be,
you know coming forward with investment in a program.
If crosstalk is great for you cuz it saves you money should be in if you were for some in centers it might make sense to invest in that program with Amazon because it also helps their economic so it's like a win-win or.
Bringing forward a plan for an increase in marketing spending specifically Roi driven marketing like I am a story.
You know helps you grow your business also helps Amazon's bottom line by giving more for things like marketing accruals or giving Amazon money for you know merchandising placements on the site that are sort of ended us.
Isn't always necessarily a win-win so making sure to choose those battles really carefully and she's those spot.
And then I think the other thing I would keep in mind is you know you don't you don't have to give them everything that they're asking for and if they're asking for increases in terms like free or damaged allowances ask for the supporting data that shows why the costume.
Right you might not get it but at least it shows that you're your auditing and you're and you and you may be able to drive as a stalemate through that.
By saying oh you want an increase in the damage Lance tell me what about my products or what specific products are showing higher damage so I can actually go fix the problem.

[20:16] Instead of just giving you a higher approval for that.

Scot:
[20:19] Is this one Amazon will ask for different packaging or you know just like frustration-free or or or like do a bundle of 2 or any.

Andrea:
[20:29] This is something that is very frustrating to me in earlier years Amazon would certainly do that and as as when I started in 05 as a senior buyer that was certainly a part of the annual negotiation you would say,
these items are profitable let's talk about how we can make a more profitable can we get this to a cheap Pack and change the packet me we would it would be more of a.
A coaching exercise but now it's just so much easier for Amazon to ask the brands for money and especially when the negotiation is either automated or handled by a third party there's no vested interest in.
And no knowledge really like expertise to help a brandy that so we have more and more clients that we work with it we're doing that with.
Playing that role that the buyer used to play in helping them figure some of that out.

Scot:
[21:12] Doesn't Amazon use so you should be you have your Warehouse pricing and I was over here kind of separate and then I know.
This may not be part of negotiation but no Amazon's now looking at that kind of thing while you're selling it on in Costco at you're the equivalent of this many dollars per ounce we want you can either bring that to you over here.
Or the turn ski we have we would like to see it at the same dollars per ounce is that is that these negotiations or that's more of just price parody.

Andrea:
[21:38] Yeah I mean if you're that kind of comes up in like a crap situation or Amazon stream free can't realize any profit where they say William Walmart selling it for this price how are they that look that's below our cost so how are they doing that and I would advise Brands whatever you do do not share,
your cost that you have with other retailers with Amazon I mean that's like a big that's a big No-No because you can't ever roll that back right.
Amazon's aware of your cost structure to other brands it also makes it so that you can't throw to move the beans around when you need to it's just a level of transparency you don't ever want to go.

Jason:
[22:13] And I think I mean Scott might be willing to there's like a specific version of the dynamic pricing the brands are really afraid of you know you sell a can of Campbell's soup on on Amazon it's a 12 oz cans to the price per ounce is whatever.

Andrea:
[22:26] Yes right so.

Jason:
[22:27] Salad case pack to Costco.

Andrea:
[22:30] Amazon is getting so much smarter about that I mean it used to be when we watch I went through many Revolutions of Brands divots doesn't like spending a lot of R&D on designing different pack sizes I think the K-Cup Industries a great example of this,
where they you know sold at this packsize to Costco in this tax ID Amazon this one to Target and they will never know that it's like all the wrong the same different prices.
They will price match each other but Amazon figured that out real quick and started matching perk up and then they started matching per diaper per White.
Per ounce a lot of categories have the / something rolled out by now and if they don't have it.
You know they will so trying to circumvent price-matching through different pack sizes may buy us some time.
But it isn't a long-term solution.

Jason:
[23:19] You mentioned a couple of terms when we were just talking about the certain negotiating strategies like Freight allowance for example it feels like there's a hole.
Different vernacular at Amazon and I know they they said these are.
Metrics and they really Drive everything to those metrics can you kind of educated so like what are the high-level Brands need to learn about to work.

Andrea:
[23:44] Well I think he's kind of two questions like what are the terms you're going to negotiate about and then what are the kpi is to manage your business but the terms are and actually don't I mean I don't know if these are really different from other retailers that don't have knowledge about,
you know about brick-and-mortar as much but you know they're typically looking at some kind of marketing.
Come up is a high-level term that refers to any money you give Amazon so often Play Straight payments accruals whatever it is all Co-op.
I'm better at least that's how Amazon Defiance Co-op it's typically a marketing accrual.
Or some kind of basic rule for base allowance there's a damaged allowance and Afraid allowance if Amazon is paying the freight sometimes the client for the vendors paying the freight.

Scot:
[24:26] These are all expressed as some so if I'm spending.

Andrea:
[24:29] They're all rappers.

Scot:
[24:30] Amazon to buy a million and I'm going to do co-op dollars at 10% is 300000 in addition to that and these are all that's kind of how they're all measured.

Andrea:
[24:38] All percentage of cost of goods sold all off invoice and then there are definitely get subscribe and save allowance depending on the category you're in there may be a mark.
There could be like volume incentive rebate.
There might be like straight payments you agreed to you throughout the year you might be paying for your talking about your SVS of your strategic vendor services.
Representative during this time of year that's like a headcount you can buy at Amazon that just works on your brand.
So all of these things going to come together to be the annual terms negotiations and son is when the automated tasks include everything that you're actually doing with Amazon so it's important to use a Tracker like Bill.
So that you got it all up you.

Scot:
[25:25] You have a free one that I've heard you.

Andrea:
[25:26] I do yeah it's on my website yeah it's on my website Andre Kaylee consulting.com will be adding it to be I do click sites soon too but it just allows you to swear to fill in.
Your sales and the last year's turns this year's terms and then it auto calculates all the actual dollars spent printed look at the actual dollars,
it's one thing to know that you're giving Amazon a point more this year and it's another thing to actually understand based on your gross right how many more dollars are actually giving Amazon anyway.
Because a lot of brands are going really quickly on Amazon and they're doubling their spend with Amazon without actually even changing their coop.

Jason:
[26:03] And then you mentioned so those are some of the terms you mention like their specific API.

Andrea:
[26:07] Yeah so some of the key so it's important to speak Amazon when working with them especially if you're sort of pushed one of these automated channels.

Jason:
[26:15] Side note I was thinking the way to work around that way I haven't tried this myself so you're on your own but is only negotiate in a language that their natural language processor doesn't understand something like Klingon or Jeff Bezos it probably doesn't.

[26:30] So I might be Swahili.

Andrea:
[26:32] About you know if I can get if I can get a willing client with a sense of humor that might be somebody that might be something to try.
But there are a set of Casey eyes that are important for understanding and running your business on Amazon if you can get a good command of them and understand them and have some benchmarking available to you,
you can run a really successful business on Amazon without ever interacting with a human but it's important to know the kti's sales sales growth obviously,
it's really important to look at a lot of clients who work with even big ones tend to look almost exclusively at,
orders Amazon places from the brand you really need to be looking at point-of-sale data that is the true indicator of Simeon,
that helps you understand how effective your marketing and promotional activities are so that POS state is really critical so shift cogs.
Gross gross and units gross revenue again really surprised how a lot of clients will only look at Revenue which you lose a lot of the transactional nature of the Metra.
Understanding like how customers are transaction with your units looking at the in stock and inventory rates I think.
Time and time again we work with clients where they're like why is my business not growing very fast Amazon you luck in the products are good and they are,
getting pretty good search ranking but they're only the brand is only feeling like half of the purchase orders like they're not willing to come and see you,
you have to have product in order to sell it so keeping track of some of those metrics getting your handle on your own metrics around this is important Amazon reports on a metric in Vendor Central called Fast Track in stock.

[28:02] Its sales waited and glance product may be going to eat there but it's Lance he waited you should just really know of all your items available how many.
Haven't been trying have any doubt it's a much simpler metric it gives you a much bigger picture and more complete picture.

Scot:
[28:17] So the sales rate is it is it does some indexing to get tire sales rank items and how fast are field.

Andrea:
[28:22] You get a bigger good guy if you're in stock on the top seller and you don't get a bad guy at all if you're out of stuff done something that is like a really low seller.

Scot:
[28:30] When does so when they come in sizes brands are frustrated Amazon's not buying their buying less and less of their swetman when does that come up in this negotiation or it sounds like it really doesn't sounds like the buyers know if I was going to buy these are the terms.

Andrea:
[28:45] If you're in a position where you're negotiating with a machine you've got to find another way to sell this product on Amazon through third-party so so it'll be really hard for you to get like.
Automated system or the team in Indiana to like respond to a request like that but if you are in a position where you got a live person you certainly should bring that into the negotiation.
Why aren't you buying all my products I'll give you this Co-op if you commit sore during my whole assortment and you know a lot of times you can talk to them about how.
That is certainly may not be performing very well because it hasn't been in stock it performs very well at other retailers like giving all of that data and information and can help Amazon make decision.

Scot:
[29:23] But not your custody with other retailers.

Andrea:
[29:25] But I think everyone knows that but that is important to mention I was surprised when I was a buyer how many Brands would be transparent about that.

Scot:
[29:34] I've never been offender son learning a ton.

Jason:
[29:38] You're lucky man last time you went to show we talked a little bit and you wouldn't do it earlier they have this.
Unhappy status can't realize a profit.

[29:51] AKA crap which great great back back story and all that about how that all came into being.
Scot mention vendors that are frustrated that they won't carry the whole line my perception is almost always that at the beginning of the relationship and tell me if I have this wrong.
They actually do carry the whole line and then products get crapped out and they start curating what they carry it is that largely true or or is it the case that they might only.

Andrea:
[30:21] So yeah usually am is it is depends generally speaking Amazon Lori thinks that customers look at so customers don't look at it they probably won't order it.
But if you if you just cover your whole assortment isn't available on Amazon there could be a myriad of reasons why that is it could go back to like item setup issues maybe Amazon tried to order from you and you didn't fill it.
You know maybe it's just not getting enough product gland to use.
Or maybe it's crap and we seen a lot of movement and interesting developments in Amazon's crap program over the last year.
The biggest one being that now they're showing the crap out products that are just little margin not negative margin used to be the zero was the floor.
Now if they're not hitting some Morgan emergent targets are requirements for the category they're essentially not ordering those products from.
Client there from the brands anymore or crapping the products out.
And I think that's a new development another new development is Amazon's kind of shifted the conversation from profitability to Pure product margin their PPM.
And I think the reason they're doing that is when they start crapping out products and communicating what products does our it allows clients and Brands and their parties to reconstruct Amazon's cost structure.
And so focusing on here product margin which is just the different at Pier product margin which is the difference between the cost of the product Celeste any marketing accruals or any Co-op.
And the retail selling price really helps them focus on products where they're having to do a lot of price matching and where they want the brand to take some ownership over that issue.

[31:55] Which might mean you know going to your other Retail Partners and saying stop selling at these price I mean that's what they want you to do right by you to go back to Walmart and say stop selling online at this price.
Which actually some of our clients who died and it has her mixed results with that which is been interesting.

Scot:
[32:12] Meaning Walmart said no and then there are stuck between a rock and a hard place.

Andrea:
[32:16] The biggest thing for noticing is that why maricon in Walmart stores have different prices and it's lower online cuz they're trying to drive Amazon low and then get them to Walmart online.
Walmart.com in brick and mortar from what we learn from our clients are like completely separate entities so if you go back to the econ team and you say and in typical answering very little business on an walmart.com so we had a few clients go back to Walmart and say.
Don't sell it at this price anymore or I will stop shipping it to you and Walmart income.
Raise the price so it actually has been effective for a few client that hasn't been effective for everyone but for a few of the players that we've worked with they had sex.

Scot:
[32:56] I think they're trying to normalize that have one buyer for both but.

Andrea:
[33:00] Right now there's still a gap you take advantage of it.

Jason:
[33:02] Yeah and I would imagine there's some flexibility about what you sell to them for online if it when it comes down to having to go to Walmart and raise the price in store I suspect that's not going to go well.

Andrea:
[33:15] Oh absolutely and I don't I mean clients wouldn't really it wouldn't be in their best interest to do that they're doing so much volume there,
but only time it's a different story we've also heard he, walmart.com will take whatever product I can get.
I'm there less selective about it and so potentially you know suggesting different products versus what you're selling on Amazon might be a good strategy.

Jason:
[33:35] Going back to that kind of picking the line that Amazon curious though why.
I guess the model and I had is that you're selling apparel right then you go calling Macy's and you bring a bunch of mannequins and you show me all the dresses and some Merchant at Macy's goes.
That one's pretty that one's pretty I don't like that one right and it's their subjective expertise around the category.

[33:57] My son says there's no Merchant in Amazon is going to subjectively try to pick winners and losers.

Andrea:
[34:03] I think there's some exceptions to that the biggest ones being the pantry program where they are choosing products you can just put anything in pantry it goes through an approval process now,
the people making those decisions might not know might not be as educated as maybe like a a Walmart in-store brick-and-mortar buyer,
but they are making assortment decisions and so Brands record making some recommendations there can really help move that process along the other space were seeing that is in fashion,
I think Amazon started trying to carry all the assortment and quickly realized I mean first we have a couple,
fashion clients that sell Alberta 10,000 skews and you certainly can't carry all that ass for me have to build Smooth Sailing Center so they did they have invested internally in.
What they're calling more tastemakers to actually choose assortment and and make those types of decisions.

Scot:
[34:53] Well I know we're running up against a lunch here so why don't we go ahead and wrap so that you can have some lunch before you have to talk.

Jason:
[35:01] Yeah so if people do have further questions or welcome to jump on her Facebook page and will continue the conversation if yeah if you enjoy the show we'd love to see you jump on the iTunes and give us that 5-star review but thanks very much for making time for us and the listeners today.

Andrea:
[35:16] Yeah thanks for having me guys.

Jason:
[35:18] Until next time happy commencing!

Mar 17, 2018

EP119 - Amazon expert Melissa Burdick

http://jasonandscot.com

Melissa Burdick is the president of Pacvue, and a former Amazonian who was involved in Amazon’s entry into the CPG space.  She’s one of the most popular guests on the show, so with all the changes Amazon has been going through it’s a great time to have her back.

We caught up with Melissa at the PathtoPurchase Summit, where she gave a key-note on selling on Amazon.  We covered a variety of topics including:

  • Melissa’s new company Pacvue and their Amazon advertising automation tools
  • Brands strategy on Amazon
  • Amazon private label
  • Advertising on amazon
    • Amazon SSPA – Self Service Performance Advertising
  • Brick and mortar retail

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Episode 119 of the Jason & Scot show was recorded on Monday, March 12, 2018.

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

New beta feature, Google Transcription:

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 119 being recorded on Monday March 12th 2018 I’m your host Jason retailgeek Goldberg and as usual I’m here with your hoes Scott Wingo.

Scot:
[0:39] Jason welcome back Jason Scott show listeners.
We are live The Sounds different to you we’re live from the bustling show floor here at the path to purchase Summit in big beautiful Schaumburg Chicago which is pretty close to downtown Chicago.

Jason:
[0:55] It is it is thanks everyone that coming for coming to my hometown I appreciate it.

Scot:
[0:59] Yeah yeah so this is one of the rare times not only our Jason I love but our guest is life as well.
This show has three days packed full of mostly cpg content around how to how consumers buy things Jason tell you the history of the show he’s he’s kind of.
But what we’re doing today is an Amazon day were talking about Amazon so we are going to bring to you some of the top speakers from that program.
And we’re excited to welcome back to the show Melissa Burdick welcome back muscle she is one of the Keynotes here today what are you speaking about at Today Show.

Melissa:
[1:35] We are doing Amazon Insider tips with that Danny Silverman from clovis and I have a long history with Danny actually.
I was his buyer to Amazon launching Johnson & Johnson and he was leading e-commerce at J&J so fast forward I don’t know how many years later 10 12 years later and here we are.

Scot:
[1:55] You’re still on speaking terms that’s pretty impressive usually usually Amazon buyers in the other side aren’t really on speaking terms. So okay back then back when you were there.

Jason:
[2:05] Cool so this is your second time on the show a lot has changed since the first time you were on the show do you what’s been going on.

Melissa:
[2:19] So a new year new company.
We have a kind of rebranded to a company named pack you and have added significant add technology expertise to accompany a kind of.
Changing with the time so we still do the same thing strategic Consulting and advisory services and advertising marketing strategy for Amazon,
but with Amazon opening up some of their apis still in beta for for some but we have access to them.
It was really necessary to bring in some significant adtech expertise to be able to build what we consider the best in class at platform for Amazon so I have a new partner is actually the CEO of our company called Joey Tang.
And he was one of the original members of Microsoft ad Center being a.
And then he went on to find a founder of a company called add Sage which is largest FTM in China.
And has brought over a lot of those supper Engineers really understand dad text and so with my Amazon expertise that we have really built the Great a platform.

Jason:
[3:23] Very cool inside this is a tool that would be used by brands or by agencies.

Melissa:
[3:28] Sweet we use it for ourselves we also license it for agencies and Brands we have several using it right now so yeah it’s gray.

Jason:
[3:36] Predominantly around placing both AMS an EMG Style.

Melissa:
[3:41] Well the goal the goal will be ultimately Angie when the apis are more readily available,
right now there aren’t many apis available within Angie so ultimately we want to get all of marketing in one place for Brands make it easy right now it’s really building out the Automation and programmatic bidding for paid search,
and making it more e-commerce sized then other so what I mean by that is.
We want to do things like when your competitor runs out of stock being able to bid on their Brandon keywords and being able to get more of their share.
We also went to integrate real-time sales into a platform so that when there’s times of Greater conversions we can been more when there’s times of less conversions we can fit less.
So we went to integrate kind of e-commerce into our platform and that’s what that’s what we’ve done.

Jason:
[4:35] Interesting in it so some of the those triggers that you just mentioned are things unlikely to come from the Amazon apis that almost sounds like you would tie the kind of insight that you mentioned clavis earlier that.
You get from a service like that with the ability to take action on it very cool.

Melissa:
[4:51] Yeah and we’re so crossing our fingers that Amazon will ultimately launch my pee is in those areas but they haven’t yet.

Scot:
[5:00] Hope so let’s start high-level what are some of the trends you’ve seen since last being on the show that you want to share with listeners.

Melissa:
[5:08] I think a lot of the trends are so last year there and there’s a big difference between kind of the traditional big manufacturers and then these Niche smaller brands are coming Alliant online and I work with all of them,
that’s really interesting to to work with all these everyone has their own different challenges but I would say for the traditional manufacturers.
The biggest differences last year it was about building the business case to think that e-commerce is becoming big and they need to Big build big games and so I think that that box has been checked and people are now starting to invest,
building teams I probably get a recruiter call each week.
Asking me if I want to be VP of you know some brand or if I know someone that wants to be in a leading e-commerce other brands I think that there’s really this heightened.
Focus on e-commerce this year,
where is last year it was kind of like building that business case Tuesday we went to start really focusing on it and then this year it’s about execution finding the right partners and starting to implement.
E-commerce and making it kind of blowing it out so I think that these shows keep getting bigger people keep learning they keep hiring more people into this area so I see this big kind of Titans.
Focus on it.

Scot:
[6:28] What’s up.
What’s causing that the kind of that when I call Mulligan or have companies just kind of work through when when brands are trying to figure this out there’s this internal battle between like the sales department and.
The offline guys and online who gets credit and all that before you kind of want to have a VPS kind of works to that is just a life cycle what was causing it.

Melissa:
[6:50] I think there’s a lot of data points I think one is here people are tired of seeing those graphs where e-commerce is growing at such a high rate and you know store sales are declining.
I think it’s just a lot of these business cases that people put together around they see their competitor starting to invest at Procter & Gamble so they point out some of the other big guys that are starting to do these things they’re starting to see that,
then losing market share in e-commerce to other Niche players because they’re not investing in it.
So I think that there’s just this combination and culmination of all these data points that have finally gotten people’s attention.
And I think that regardless everybody agrees that they need an e-commerce strategy weather there.
On Amazon or not they think that they need to have a strategy anyway because they’re on their whether they want to be or not.

Jason:
[7:44] Yeah and to me it feels like.
It’s almost a double whammy like all these companies are waking up to an important it is to do well on Amazon and The Exorcist on the changing so much.
That it’s it’s not even easy to necessarily for someone new to this pace to even know what to do or like find the Playbook that worked last year is unlikely to be very relevant this year.

Melissa:
[8:11] Exactly it’s when I when I worked at Amazon and even now the pendulum swings it’s like this year to the strategy and then the pendulum will go the opposite direction and if you’re not already kind of understanding the ecosystem and what works.
And the kind of basic principles it’s really hard to keep up with that kind of environment.

Jason:
[8:31] For sure so when you get a new client that’s sort of knew where to that promise I was trying to invest in their presents on Amazon like are there some fundamentals you recommend they start with like is there what’s the high-level advice that you give people to start thinking about.

Melissa:
[8:45] Absolutely and that’s actually part of our presentation today there’s really some fundamentals that are critical to be able to start with.
And it’s it’s these basic retail e-commerce principles of having the right assortment.
Which is actually harder than you think it is especially in the Amazon because they have so many different platforms.
Fresh pineapple Pantry Pantry just change their business model Core Business and for each of the different platforms they have different economic models in different assortments that kind of work.
And so what happens is off by manufacturers Just they put their offline assortment online and they kind of square round Peg square hole does assortments and so that’s one of the biggest challenges,
being in stock is also a bigger challenge than you think and it’s what drives people to create hybrid accounts with third-party Merchant backup offers.
Does having the right assortment being in stock.
At continent is here I’m working on a big digital strategy project with a large manufacturer and it is so much harder.
Then what you can possibly think it would be with all the legal approval so you have to get.
You know it’s always this battle between SEO optimizing titles and content and what is actually approved and it’s things that are to us maybe.
Seem like it’s an easier not very risky thing to get approved but to a legal team it’s pretty hard so.
Those are at those are really the critical building the fundamentals and having those things in place and having the technology like a pem you know just integrating all of that stuff.

[10:24] Is is difficult and that’s where actually everybody’s really focusing a lot of time and tension on right now.

Jason:
[10:29] Yeah and it is interesting if if you were to start a brand new brand today and you knew.
Your presence on Amazon the super important they’re all these sort of best practices you would build in your culture so I like when you named your skews.
You be thinking about Amazon friendly SEO in your skin names.
Most of these companies were not born yesterday in that name is probably getting made by an in an Erp system by some supply chain person whose main concern is how it how it gets to Walmart.
And so like bridging that Gap from those those are the names and all that content getting created you no way Downstream for some other purpose and sort of morphing it into something that works in these digital platform seems like one of the big.
Expensive challenges at the moment especially when the brand has a lot of skews.

Melissa:
[11:21] Yeah actually one of the examples we have is with that she’s at the Cracker and yeah you know how to spell it.

Scot:
[11:29] Cheez.

Melissa:
[11:31] Yes but the misspelled version of that the misspelled version of that actually ranks higher in search then the correct spelling,
the people misspelled it more than they spell it and so that’s an example of all the misspelled Miss spellings of the word needs to go into the hidden Search keywords in the back-end data.
I have a word of a of a detail page of an item.
And that’s just like a small little thing but it’s you know it’s just these things that are so on a shelf that you don’t even think about it.

Scot:
[12:00] Yeah the Google group is probably already figured all that out but they’re not going to be talking to the Amazon group so they Amazon groups got to go bigger all out again.

Melissa:
[12:04] Exactly.

Scot:
[12:07] Sharing the common Channel kind of things.

Jason:
[12:10] But when they when they figured out a second time that means they pay a bunch of people in the Echo System a whole second time to help them so we’re okay.

Scot:
[12:16] True I guess you.

Melissa:
[12:19] Actually funny because when I work with a lot of Brands sometimes they’re getting the same information from like three different partners same thing since your point that that is happening.

Scot:
[12:30] One of the so one of the naysayer things about a brand selling on Amazon is what you put your brand on Amazon they’re just going to mind your data and they’ll come out the private label that just effectively competes with you.
What you say so there’s a lot of data out there that shows private label is really hot on Amazon they’re creating tons of new screws all the time there in almost every category what do you say to that.
That argument then we can kind of peeled onion on private label even further if you want.

Melissa:
[12:56] I think it’s true and one of the things I did I mean private label is kind of a challenge everywhere but on Amazon it’s it’s a hyper challenge because there’s so much e-commerce happening there and then.
On top of that Amazon has some unfair treatment of private-label in terms of they have special content that the private label brands have access to them.
Access to special widgets that other brands don’t have access to and then like you said they have access to data.

Scot:
[13:23] The break between Amazon Choice I’ve noticed it.

Melissa:
[13:26] And they’re very yes exactly that too I had a client where they had a product.
Amazon came in and basically kind of pretty much a very similar products same colors in the fashion space and half the SPF.
The price and so you know all the sudden their demand when was cut in half basically and I think it just pushes manufacturers to,
keep an eye on their quality in their price and their reviews and their star ratings as much as they can.
And then you know talk to Amazon about not being so aggressive on their detail pages,
which is what they actually talk to them about because it’s hard for brand to say we’re going to pay Amazon a bunch of coop and money,
Burnett Drive traffic to our pages and then they’re going to see a cheaper you know version of our product on her page and so that is.
Big Challenge to Brands and so.

Scot:
[14:25] So should bran just avoid Amazon because that like what’s what’s your advice to brands that are not selling on Amazon and they’re worried about private label.

Melissa:
[14:32] I think that.
I mean I’m a little bit biased because of what I do but I think that Brands need to be on Amazon because that’s where the traffic in the eyeballs are but they need to focus on building the reviews and their star rating and having good pricing and having good products.
That you know maybe Amazon copies but if they’re better and they can still be there that’s what they have to do.

Scot:
[14:57] And it’s way it’s kind of existential argument right so if if your brand and you don’t believe your brand that’s enough value to stand out against private label then why are you even a brand is kind.
That’s why I can never get my head around in that argument but I understand their concern.
Does does Amazon just kind of sit there in mind how does Amazon come up with private label ideas is it.
I’ve always thought of it from a they’re so focused on the customer that they’re trying to identify these gaps and selection and price points and it ends up colliding with a lot of things.

Melissa:
[15:30] I didn’t so I obviously don’t know but my guess is one of the things that we specially in the grocery and CBD space that’s so constrained with margins and profitability.
My guess is that they look at these categories were they have a really tough time making money with the manufacturers and go private label so that they can make the margins that they want to make so I think that’s one of the the big opportunities for them.
And they just they definitely have a prioritize list that they’re kind of working through based on a bunch of different criteria of demand the category size,
the data that they have collected and then where the profitability lies.

Scot:
[16:08] Being a native satellite I think one time you told me that there’s like a really hot group with an Amazon is that still kind of a hot group to you working for the private label area or videos when Elsa.

Melissa:
[16:19] You know I think I know I think that that group has definitely grown but I think that there is also other hot groups like Alexa like the shiny new penny is definitely a kind of the AI and Alexa and Amazon go groups.
Seems like that that’s you know there’s always kind of this Rush maybe private label has continued to grow but these other groups going to be a little bit more popular.

Jason:
[16:41] The M Amazon alumni group seems a little more popular than it used to be a lot of lot of like pretty high-profile defection.

Melissa:
[16:49] Yeah yeah it has been I don’t know maybe this stock price today hit a high and people cashed out and ready to to move to a new place I don’t know.

Jason:
[16:56] I was assuming it was some big trunk show of options that finally vested or something is what I was guessing but going back to the the brand conundrum for a minute it’s it’s interesting I want to unpack a couple things like.
I almost desperately try to avoid calling it private label with clients because private label has a particular connotation that.
Brands are aware of and that they’re not overly concerned about like the private label mono was.
Retail is going to make a carbon copy of a branded product and not marketed so the marketing is you walked up to the store to buy the brand and product in you.
Stumble over the private label copy and some percentage of the audience will opt to pay less for that private label product right.
That was always erosive to some.
Some portion of the Brand’s Revenue but what Amazon is doing and frankly what all other big retailers are doing now is not private label it is not let’s make a carbon copy of the national brand and just.
Put it on the product detail page next to the the national brand its let’s create a product.
Has its own value proposition in a mini cases has competitive advantages versus the national brand and then let’s Market the hell out of it and make people want.
Answer to me it’s it’s an owned brand strategy it’s a strategy that were retailers are making brands that are explicitly trying to out brand the brand so.

[18:27] Hey I am at score I’d say the brand should be more worried than they potentially are but then the flip side of this is.
It’s not just Amazon its Walmart its Target its Costco.
And it’s Amazon and they’re all creating these Brands if you’re in a world where the only way you can survive is if no one else can peace with you.

[18:49] Then you’re just at the end of your life like that model doesn’t work anymore there used to be this explicit deal with Brands and retailers the brands.
Created the product and they traded interest at the top of the photo in the Retailer’s found the traffic and traded interest at the bottom of the funnel and they had this at the alliance.
That Alliance is now gone and so I would say two brands.
You need to be everywhere where the traffic is in the traffic is certainly on Amazon but you need to have as a strategy to win in an environment when they’re all these great competitors trying to knock you off.

Melissa:
[19:20] Yeah and they’re so what you’re saying I mean I totally agree they’re they’re really building their brand they’re using all their marketing vehicles to do it.
And so I like to study their private label so I am a student of you know Harley doing their content what are the marketing vehicles are doing how are they.
It’s a route how are they boxing their products had the you know I did a whole workshop on how Amazon does private label and actually bought all the products and show people how their packaging it is it’s the perfect way for people to learn understand the best way to do it.

Scot:
[19:48] I love the battery packaging it’s like having spent you know 8 hours stabbing myself trying to open up the the Duracell and Energizer they’re just opening up a nice cardboard box and just right there is this pretty hen.

Melissa:
[20:00] And batteries is actually isn’t the Private Label Amazon Amazon Basics like 70% market share or so.

Scot:
[20:07] According to 1010data it’s really out selling all the all the Branded products and I think we are going to show it is also baby wipes if I remember like some batteries.

Jason:
[20:16] Yeah but you’re at right there that the market leader Amazon elements batteries are the market leader right by over 10% market share over Duracell.

Melissa:
[20:26] One of you notice too and some of the widgets I was talking about they attach their amazonbasics to a lot of these other devices within consumer electronics it’s you know it an attachment that you can add to that again kind of one of those.
I’m very Replacements potentially but that’s you know it it’s interesting.

Jason:
[20:45] It’s a podcast so I know I wasn’t as can’t see it but every time someone says unfair to Department of Justice attorneys like pop up right behind her and they’re like.
Furiously scribbling notes it’s crazy I don’t know what that is I’ll leave it.

Scot:
[20:58] Did she say Monopoly.

Jason:
[20:59] Yeah I have no idea what’s going on there but that sounds interesting that we have a showing that the one thing I have noticed a lot of these brands that historically have been holdouts and maybe even public kind of public about their lack of presence on Amazon it feels like.
Like there’s any news over the last year that a lot of them are starting to have a presence in that like one that comes to mind for me is Nike any.
Is this just an edible that we’re going to start seeing all these guys on there anything interesting about the strategies your scene from those kinds of brands.

Melissa:
[21:29] Yeah I mean I think I think it goes back to the same everybody whether they’re on Amazon or not they need to have an Amazon strategy,
I think Nike you know they got a lot of news and attention and then other people are who are not on Amazon yet or kind of seeing them as the first one I think other ones will fall soon thereafter.
But it’s one of the nicest thing was really about them controlling their brand on Amazon and having a partnership because they were tired having such a lack of control.
And so I think that we’ll see more of that happening where they come in and and try to control their brand more.
And I think what Nikes doing is really interesting to outside of the Amazon where they were using more experiences with Instagram and in other mediums to bring more of the experiential part.

Jason:
[22:18] I snap I think was the big block that they want us to new shoe with a cool snap.

Melissa:
[22:23] If they had the whole Super Bowl with Justin Timberlake write that was Nike word then you could buy that product.
So I think I think Aunt people want to use Amazon for scale you know and and maybe come at some of the some of the basics but then having some experience is like that to really drive the brand to.

Scot:
[22:40] Yep there’s a lot of tacos Nike selling on Amazon really just control the third-party Marketplace at some point Amazon’s got to look at the numbers and see if what they lost from third-party is not as big as what thank you selling I don’t imagine.

Melissa:
[22:53] 08 why I guarantee you it would be way more if they didn’t have that relationship.

Scot:
[22:58] Yeah yeah so you’re a bit of an advertising Guru on Amazon what are some of the trends there we maybe give folks that there are new to it high-level overview of the offerings and then what you’re saying people take advantage of.

Melissa:
[23:13] Yeah so Amazon has basically a paid search offering which is cuter based cost-per-click you can bid on keywords similar to Google AdWords.
And then they have a CPM display advertising Network across Kindle mobile desktop and Amazon advertising platform.

Scot:
[23:31] Amazon advertising platform is for like off Amazon so some of those damn zyalix or something that will follow them kind of retargeting within starting at the Amazon ecosystem.

Melissa:
[23:40] Yes and just be a little bit more complicated actually you can leverage it ASAP Amazon advertising platform you’re basically leveraging Amazon’s audience.
And targeting and you can actually Target them off Amazon or on Amazon to Andy on Amazon is maybe less or inventory but you it’s a cheaper way to get onto desktop.

Scot:
[24:01] Got it and then so then one thing it’s always been confusing is what’s available to first-party and what’s available to third-party any news on them.

Melissa:
[24:11] Yeah so you traditionally 1p and 3p have had very different offerings but they’re really starting to come together.
Much more and have much more parody so they’re still a slight lack of parody within paid search there’s one one ad type with in paid search that they don’t have access to which is that,
practice play I’d which is right underneath the buy box on a detail page so I still don’t have access to that they recently opened up headline search ads to third party.

Scot:
[24:41] That’s that’s that long vertical strip that kind of takes over the top yet.

Melissa:
[24:46] And then display advertising has always been available to third parties,
it’s just that a little bit more expensive and maybe they they haven’t wanted to to spend money on it but it’s definitely a bigger focus with an Amazon now is reaching third parties with Angie.

Scot:
[25:03] You told me there’s a new acronym floating around what’s that new one.

Melissa:
[25:06] Overpaid search it’s so.
Paid search is called a mess for when he Amazon marketing services and then it’s been called sponsored products or 3p but now there’s actually a sponsor products I have Lancer Chad’s it’s super confusing.
So now they’re referencing it as sspa which is cell service performance advertising.

Scot:
[25:26] So sspa is the new name for EMS or just like for a sponsor.

Melissa:
[25:29] The new name for search.

Scot:
[25:32] For search and it was in there you have the banner thingy in the thing under the box and the sponsored listings sponsored Prada.

Melissa:
[25:40] The products and product display ads all of it.

Scot:
[25:42] And it’s agnostic to one p3p.

Melissa:
[25:47] The term sspa is agnostic that yep they like to call it search and display just to be super simple.

Scot:
[25:54] Got it.
And the SS supplies more cell service so I guess a lot of brands are there more using agencies do you think that.
That’s negative three agencies cuz now the brands can come and go to the cell service or are they always just do it self service and you think they’ll need help.

Melissa:
[26:13] Question so Amazon in general is a platform is more more self-service they want paid search and they really launch pit search to be a completely self service.
Capability and they.
I think Amazon’s pretty agnostic as to whether an agency runs it or whether a brand runs it although they’ve always had this feeling like they want to cut out their parties because they had that money that they’re paying a third party they they don’t they feel like that’s wasted money.

Scot:
[26:42] Your margin is mapperton.

Melissa:
[26:43] Exactly.
So you know if you cut out that third party in a brand could just run at themselves and they can have some more money and paid search that’s that’s probably an Amazon mine better but the reality is at Brann’s is that you need that person with the expertise to be able to run it.
If you lack the expertise you should Outsource it.

Scot:
[27:02] Yeah this is Ernesto Google kind of famously was anti brand for very long time and Tide Agency for a long time and then it kind of swimming around and realize I had to embrace it you think Amazon will go to that or just like not part of their culture to embrace the partnering kind of them all.

Melissa:
[27:16] I think Amazon wants to embrace partnering but they don’t know how they’re to me they’re kind of in between Google and apple and where Google super open and apple super close,
and then Amazon somewhere in the middle where they’re date they they are really trying to figure out agency Partnerships Ashley have a whole team dedicated to this Outreach.
And they’re what they’re trying to build is,
Automation and scalability with agency Partnerships so they want to create a portal where they can’t you can come and get all the content information you need and never talk to human potentially more they can do that the more they can scale.
But that’s I think that’s kind of the vision but it hasn’t hasn’t happened quite yet.

Jason:
[27:58] It seems like they want to accomplish that in every aspect of their business.

Melissa:
[28:00] Yeah automation is the way to scale.

Jason:
[28:04] Yep yep.
Changing topics just lately there’s been a lot of brick-and-mortar news lately and mostly negative potential super tragically for me it looks like Toys R Us might not even emerge from there.

[28:20] Their bankruptcy I bet that went after all then I’ll be crushed if I don’t even ever learn to the song.

Melissa:
[28:26] Do you go to Toys R Us with him.

Jason:
[28:27] So I haven’t yet I’m eager to my wife is slightly less eager but I feel like that was the first song I learned as a kid so it seems like you should I’m not super nostalgic about all this retail stuff.
But that would leave a huge hole in the toy industrial be interesting but I’m somewhat curious.
Like as as someone that like predominately plays on the digital side and then obviously like you know so much expense in Amazon what your POV is on the.
On the retail side of this just inevitable as as consumer Behavior shift to digital or what it what do you how do you think about retail Armageddon.

Melissa:
[29:03] I think I think the interesting about Toys R Us in the one that I was really sad about was Claire’s,
I’m where I got my ears pierced and my daughter got my I told my daughter his at 8 that Claire’s is probably declaring bankruptcy and her first question to me was where all the girls going to get their ears pierced she was very concerned about this.
Think that you know when they are still there right about Toys R Us that that I think one of the executive said was that kids are changing their not playing with toys anymore.
And maybe it’s true that there’s so much more digital content consumed with.
Unboxing videos on YouTube but I feel like these retailers need to bring more that experience their stores to drive more the traffic there and that it’s just about the same products you know what the price for it.

Scot:
[29:48] The same time as new brand is just really taking off like Melissa & Doug which kind of implies there’s demand for toys are just like not being found them out missing them they went through more like the booty toy stores because.
Toys R Us toys and then they prove there is a market for.

Melissa:
[30:05] And I know Melissa & Doug thought of Amazon his big strategy for them to.
So you know I think if you’re just selling toys and there’s nothing else you know that store trip is less convenient I need to provide a reason for people to keep coming back to the store.

Scot:
[30:24] Absolutely yes, surprising that they missed the event an opportunity again so why can’t you have birthday parties at Toys R Us in all kinds of different things just kind of like the Mist experiential side of.

Jason:
[30:36] Interesting late and I seen how well played. But like one of the Retailer’s he’s talking about like beating up their toys to try to fill in that Gap as you mention events is Party City.

[30:45] I’m so that that would potentially be a new audience for them I’m not sure it’s like completely synergistic but but funny that you had mentioned events.

Scot:
[30:55] Back over to Amazon what are some of the other things you see them experimenting with these days that are interesting that book should learn about.

Melissa:
[31:04] One of things I think it’s interesting and on the last show I think you guys ask me a question like what you did Amazon get into and I said I think they should offer Healthcare to Prime customers and if you remember that.

Scot:
[31:15] Yes very prescient on your.

Melissa:
[31:18] And then now they want this whole Health Care initiative they also have this ability to create a private label drugs I think to like medicine over the counter drugs yeah.

Scot:
[31:28] And if registered as a pharmacy in like 20 something States.

Jason:
[31:33] Equipment.

Scot:
[31:33] Yeah and equipment.

Melissa:
[31:35] I think that with all their experimentation with a I like they have such an opportunity the healthcare industry had is so not transparent you know when you go into surgery have no idea how much you’re spending.
I think the Amazon has such such such a big opportunity in this industry to really disrupt it.
And make it better for consumers so I’m really excited about what they’re doing there I think the Amazon Go technology is really cool have you guys been to the ghost or I know you have right.

Jason:
[31:59] I haven’t been to it since it’s legal.

Melissa:
[32:01] Okay.

Jason:
[32:02] It’s it feels I could take some of the fun out of it when there’s like no danger of you being arrested.

Melissa:
[32:07] Yeah I think that I think that go Technologies really cool actually.
And I say they’re opening a new Amazon building in South Lake Union and I think that PCC is going in there which is kind of interesting that another go is not going in to another Whole Foods or something like that is not going to another building.

Jason:
[32:26] For those that are not seattleites PCC is local co-op grocery.

Melissa:
[32:34] Yes maybe they’ll adopt maybe the License To Go technology.

Jason:
[32:38] Potential yeah that that brings up a good question there’s someone of a Honda bait amongst go followers weather.
Joe is a another technology platform that Amazon does license to third parties on Amazon web services or shipping with Amazon all those sorts of things or weather.
It is potentially something that Amazon would keep proprietary do you have a like what you would you expect to see them license go.

Melissa:
[33:06] I think so I think that they would license it cuz I think that people going to build their own technology anyway so you know then they can control people they can get the data.

Jason:
[33:17] And it seems like it follows a pattern of so many of the other technologies that they’ve done interpointe.
There there’s I can find 10 companies that have similar technology that maybe further or last so long but it’s not unique to Amazon and so.
Like why wouldn’t you it’s not like no retard will be able to do it if you don’t license it so it’s not a huge moat but there is.
There is an interesting school of thought that most of the things that Amazon license have this sort of acceleration affect other parts of their business that’s the last likely.
This was obvious go. So I was just it was going to be interested in it will be interesting to watch how that plays out but the big question the most important question everyone seems to ask about Amazon which I.
Being totally sarcastic cuz I think it’s way over played hq2 any thoughts about where.
Where the the first non Seattle headquarters is and as a Seattle and are you even allowed to talk about that or is it too depressing to talk about.

Melissa:
[34:18] I think it would be really great for Seattle because of traffic is insane and out of control so I think most people want a separate hook orders to like lessen the traffic burden.
My wishful thinking I don’t know where but my wishful thinking with the Austin because I’m a Texan and I would move their back there in a heartbeat if it where Austin Whole Foods is there.
Jeff Bezos is from Texas from Houston although I heard he bought a big huge house near Washington DC so.
I think Austin’s in the running I’m I’m rooting for them what about you where do you think it’s going to be.

Jason:
[34:52] So I think DC I think there’s a there are these cognitive biases that we all have and one of them is we all think whatever we’re from or whatever we live is the best place in the world to live.
Until the Austin thing is totally fair and.
And I think would be a good fit in a variety of ways but like Scott Galloway who like to talk about it a lot like he keeps predicting New York and I joke that like only people that live in New York think New York is the.
Best place in the world to live I just think all the all the other factors.
That there need to be closer to 4 lobbying and the very big risk that some of these some some version of.
Amazon Google Apple likely get some antitrust challenges and like need really strong government relations in the next few years I just think you had all that together and it’s like.
Washington’s most likely and if for no other reason there’s three cities in the mix there so I triple my chances of being right.

Scot:
[35:53] I saw an interesting Wall Street report this morning from an analyst and they had a firm that has a machine learning AI kind of thing and they sucked in all this data.
And it’s been out Boston and when they kind of dug into y.
It was looking at all that Amazon job openings and they have so many machine learning AI job openings which is kind of like I don’t know if they I scooted this way which makes me like freak a little bit but.

Jason:
[36:17] AI has AI biases.

Scot:
[36:18] Yeah and then what it had done is it had looked at kind of the you know the it had some demographic that she evidently Boston is very high most likely I would imagine because of a mighty in a talent in machine learning, so that does come interesting.
Unbiased review of it I thought it was was.

Melissa:
[36:36] So is that your pic what’s your pic.

Scot:
[36:38] I go Austin First DC 2nd and Austin get some clothes to Whole Foods witches they made a really big bet on and it is.

Melissa:
[36:46] And also is very similar to the Seattle culture just way way hotter.

Scot:
[36:50] Yeah the negative in Austin is at the flights in and out of really bad I don’t know what build a direct for you guys but I bet today there isn’t a Seattle Direct.

[37:01] List of places you have to go in to DFW and then hop over.

Jason:
[37:07] I will point out getting Austin is a bit of a challenge but getting a Bentonville is a huge challenge to and that doesn’t seem to have just waited the big companies in Bentonville so.

Scot:
[37:15] Yes little different recruiting perspective I don’t think you would pick them Bill if you had done what you needed machine learning calendar.

Jason:
[37:22] I’m not I wasn’t for most I wasn’t from running Bentonville although that would be the most.

Scot:
[37:27] There’s a reason. Com is not there.

Jason:
[37:30] Surprise Bentonville.

Scot:
[37:31] That would be fine.

Jason:
[37:34] We buy Tyson chicken and we’re taking over.

Scot:
[37:36] One thing you didn’t mention in one of Jason’s favorite thing is voice Commerce or conversational Commerce are you think it’s too early for Brands we think about that or or should they be thinking about building an Alexa skill or how that impacts our world at all.

Melissa:
[37:51] I think the biggest thing that they can be thinking about is improving their relevance and start drinking so that when people ask boys.
What they should buy that they’re at the top of the list but in terms of building.
Skill specific to a brand I think it’s so early because nobody’s downloading that still there asking Alexa for music.
And some of those things I talk to someone at the Alexa team who is working on.
New technology building you things and what they said was really interesting which was they wanted make Alexa so important like.
When you if you walked into his house and you took his kids cell phone away the kid was like murder you before you left the door and he wants to create experiences like that that are so important so things like.
You know any gratian’s into your car or you know like really important experiences and your day and so I think Brands he was thinking about like how can they.

Jason:
[38:57] Set a recap he wants to elicit childhood murder.
Tendencies more so than South.

Scot:
[39:03] Get weird friends is all we need is more addictive devices we’re already seeing a backlash on that.

Jason:
[39:08] That’s because that’s one of the big problems in the world is there’s not enough devices to attack children.

[39:15] Another thing that came up in the conversation I want to do it back to you real quick is you admitted to a change in the Prime Pantry program and I was wondering if you could say a little bit more about that and and like what if anybody giving two Brands to take advantage of the nuisance.

Melissa:
[39:29] So that yeah this just came out and I think it was now instead of so there was a fee per box that was shipped use it was like.
599 or something we build your box and it’s 599 to ship it to you and now I think they’ve come out with is it $5 a month subscription program and then is it I think it’s all you can you just you just subscribe to it.
And it shows that it just shows that they’re constantly playing with this business model to try to make it work and I think it’s really interesting because.
Prime Pantry has been this place where when you can’t make your assortment work on the core platform in a bigger size you can typically.
You know sell your products in smaller size quantities on the Prime Pantry platform because it’s more of an Market Basket building exercise and there’s no better margins associated with it so.
A lot of Brands actually that are not fit for the core platform can actually sell more they’re serving Prime Pantry.
But Prime Pantry is always had this problem of adoption and trying to get more people to buy their so I think that this is one of those.
Opportunities to drive more traffic to Prime Pantry and to make those Economics work better.
So I think that it’s it’s good thing for a lot of these companies who are putting this offline assortments online and trying to get more sales of that so.

Jason:
[40:58] I think you’re exactly right I think it’s like ultimately Prime Pantry is more a solution for vendors than it is for consumers.

Melissa:
[41:06] Exactly.

Jason:
[41:07] Obviously to be a good solution that has to get consumer to adopt it and the $6 per drink charge was a big burden like you had.
Super interested in building a box before you’re going to take that $6 out of your wallet it’s kind of like.
When you pay by the hour for internet people that use the internet a lot and when they switch to.
All you can use model of course it became much more addictive and so by switching to a and all you can get model on Prime Pantry maybe look at more option and it’ll be even better solution for the vendors.

Scot:
[41:40] One last question in this is a big story of Amazon’s culture and we talked about that on the last show so I.
I found the leadership principles I’ve got a copy of that that’s really good reading I really enjoy that one thing I still can’t understand is so Amazon has like six hundred thousand employees and I deal with a lot of big companies in Channel visor.
They just go so slow like there’s groups like your head and injuring group they want to go fast and then legal gets in bar called rhri rpr.
How does Amazon go so fast and avoid that that that problem were like damn his own legal team comes in and grinds at 12 like.

Melissa:
[42:16] They don’t have a legal team I’m just kidding.

Scot:
[42:18] I almost wonder like you know one example is the prime now lady has been she spoken at shop talking.
You know where they opened one and then they got green light and they open like 20 in like 6 months or something like that you could never do that in any other company because there would be the team of lawyers that would come up with all the reasons that would be a terrible thing to do how does Amazon.

Melissa:
[42:41] You know I’m.

Scot:
[42:42] Does each team just like its own little Independent Business and they don’t have to go through Amazon corporate legal or is like corporate legal is just so bought into the day one thing that they just let you do there they’ve got the risk scale slid way over tomorrow to start a pecan place.

Melissa:
[42:56] Well I think one thing is so the legal question is that mean they definitely do have layers and they definitely have to approve everything but the other thing that Amazon does is they launched things at 70% like they never wait for it to be fully baked.
I’m in which is you know kind problematic for a lot of us working on these tools because they have literally bugs in them that you know are true bugs that don’t work.
But one of the things is there speed-to-market that they’re able to accomplish through really escalated processes and so they they do have a legal team that does have to approve things but I think that they just.
Jetway faster and don’t have as many you know their risk profile maybe a little bit higher I do I don’t know.
But I mean I definitely we have there’s a lot of legal.
You know approvals and place but the other thing I think that enables them to go so fast is that they never wait until things are completely baked they don’t have to have this long.
In a business case to to have it they’re able to just move very quickly and it’s actually the number one thing that my friends have left Amazon and now are working at.
Other companies especially manufacturers they complain about is this speed.
Is so much slower it’s like they feel like they’re Turtles compared to the speed at which they’re used to being able to why do people are just getting a lot of autonomy.
And I’m Stephanie Landry who’s the you know she’s amazing.
Really has that by fraction is that big principle one of those principles were talking about.

Scot:
[44:31] Again I come to the car crosslife companies that are bigger and have despised fraction but then like some parts at work just like Yang some.
BJ’s legal almost makes me think like the legal team must have some SLA with the rest of the company that they have to respond quickly like it’s nothing illegal says no it’s just like they don’t respond and it’s like 6 months ago.

Melissa:
[44:50] I think there any they’re pretty responsive and I think the other thing too is that they try to lessen the dependencies and bottlenecks from other team,
which is why you kind of got the toll pass for when peeing 3p going different directions because they were built on toy different platforms they didn’t have to wait for each other other now that’s coming back around but that’s why.
That that happened.

Jason:
[45:12] To me it it it feels like part of this I call Amazon a very object-oriented cultural I called all these individual little parts are tried to.
Be maintained is autonomously as possible and they just Define the inputs and outputs to each little team and they don’t have these big staff meetings that we was invited to and ever.
Just feels obligated to kind of Pile in iFunny I’m curious.
I have the opposite problem I hire all these X amazonians and I’m always super excited because I feel like I’m going to get all these employees that are reading these well-thought-out 6,
grease on everything we want to do and apparently they throw away Microsoft Word as soon as they leave Amazon and they send me a bunch of really crappy PowerPoint that they haven’t used in the last five years of their career so I’m super curious,
if you guys are mainly a PowerPoint culture now that you’re not an Amazon.

Melissa:
[46:02] Sadly I think that because I’m so quiet like I work with so many clients that PowerPoint just happens to be the format that works really well.
And also actually at work a lot with most of our bed software development is in China and so it worked out with the WeChat.
That’s the first thing I had to download and get used to it as we chat but so word is is maybe a little bit less in my culture these days.

Jason:
[46:29] Cool well that’s going to be a great place to be there because it’s happening again we’ve used all of our a lot of time in the special path of purchase Summit edition of,
Jason and Scott show so if you have any questions about the stuff we discussed or any other questions for Melissa feel free to jump on her Facebook page and will continue the dialogue there,
and as always if you enjoy this episode this is a great reason to jump on the iTunes and finally give us that five star rating that you’ve been withholding its driving Scott crazy and I I’m really starting to worry for the mental health,
and told that I will see you in the next Shell.

Scot:
[47:05] Yep yep definitely does ratings and thanks for being on the show mall so we appreciate it.

Jason:
[47:09] Until next time happy commercing!

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