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

Join hosts Jason “Retailgeek” Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Founder and Executive Chairman of Channel Advisor, as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
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Now displaying: December, 2018
Dec 20, 2018

EP158 - NYC Holiday Store Visits 

We're in the peak of the holiday season, which means Jason is going to be visiting stores.  This year he went to NYC and visited 33 new or updated store concepts.  If you'd like to follow the tour yourself, here the Retailgeek NYC Retail Map.

Some favorites this year included:

  1. Nike
  2. Dyson
  3. Allbirds
  4. Amazon 4 Star
  5. Casper
  6. Covergirl
  7. FAO Schwarz
  8. Glossier
  9. Google Hardware
  10. Macy’s (especially the B8ta shop-in-shop)
  11. Showfields

Some disappointments included:

  1. Restoration Hardware
  2. Saks
  3. Apple
  4. Away

Amazon News

Other News

IBM sold its commerce platform (Websphere) to HCL

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

Episode 158 of the Jason & Scot show was recorded on Monday, December 17th, 2018.

Happy holidays everyone... talk to you in 2019!

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 158 being recorded on Monday December 17th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host.
Scot Wingo.

Scot:
[0:42] Jason and welcome back Jason Scott show listeners Jason it's been like 10 days but your life has changed a whole lot since we last talked so you you had a birthday happy belated birthday.

Jason:
[0:55] Thank you much it's depressing the type that even bigger number into the the elliptical machine at the gym when I am frequent occasions when I use that.

Scot:
[1:05] WG&R on verify so go ahead and round down.

Jason:
[1:10] Yeah I don't want to only be cheating myself and I feel like my my I don't know if the math actually works out this way but in my mind I mean year older so it should be more impressed.

Scot:
[1:22] And then you have an exciting new gig or title something like SVP of digital Commerce retail payments and chief strategy officer.

Jason:
[1:37] I think that's exactly my title I've had to go to jumbo size business cards for the three people that still use business card.

Scot:
[1:44] Or hang out 3 like a like a tweet storm you have a business card storm.

Jason:
[1:48] 1 of 2 of 3 of I like that.

Scot:
[1:50] But in all seriousness you are now the chief Commerce strategy officer tell us what's this entail and the upwardly-mobile thing what's going on.

Jason:
[2:03] That was a lie the very least would like to think of others agree but yeah it innocence for the last six years have been working for
a particular agency that was originally razorfish and then you know we merged with Sapient and became sapientrazorfish.
But that agency is part of a much bigger a holding company called the pupusas group and so essentially,
took a new role at the group level so you know hopefully I'll get to keep working with a lot of the.
The colleagues and clients from from sapientrazorfish that I've always enjoyed but I'll have more responsibility and work opportunity to work with.
A broader selection of group clients across a bigger geography and.
Like most of these holding companies were a little more Silo then we should be done to best serve customers and so a big part of my job is to kind of.
Pull together all the the capabilities within the group to better serve our Commerce clients and so.

[3:15] That should be fun and you may know it was important that I get that promotion on my birthday because.
When you have a birthday on LinkedIn you get a lot of well-intentioned well wishes.

[3:34] And annoyingly LinkedIn won't actually send you emails with your mail from LinkedIn though just sending you an email each time you get something saying,
go to LinkedIn to read this one sentence can the message and so basically on your birthday your email is is,
put under a denial-of-service attack by LinkedIn and so that also happens when you change your your job and so I felt like,
smart to do both on the same day so that like I might email would only be down for one day.

Scot:
[4:05] Cuz it's me you give me like a bull in a china shop in there tearing down silos and making people work together.

Jason:
[4:14] Hopefully it's a little more carrot than stick
wouldn't be the first time I was inadvertently a little overly aggressive so I shall Endeavor to find the right balance there are a ton of
of great capabilities and in groups in pupusas and it's it's,
as far as I'm concerned I went from the the 32 pack of crayons to the hundred pack of crayons and so you know it's going to be fun to paint more colorful pictures.

Scot:
[4:47] I know it's hard to put a number on it but would you say over 80 to 90% of getting this new gig is related to the podcast should we thank listeners for their contributions.

Jason:
[4:59] Possibly that's slightly conservative.

Scot:
[5:02] We forget individual performance I think the the pr halo effect from,
this kind of cited ever that we have this is probably responsible for most of your career trajectory hear the last at least 58 weeks.

Jason:
[5:19] I feel like that's absolutely true I feel like the listeners absolutely would have put me over the top but you alone are so influential with all the the leadership in Paris that I feel like just you putting in a good word,
was was enough to drive the new promotion so thanks very much to Scott and thanks very much to all the listeners for supporting me.

Scot:
[5:40] I said you listen up French dude Jason needs promotion and he doesn't need one of these like.
Everyday sea-level gigs he needs to be a double sea level and they came up the new tunnel ccso your CC level you like c-squared level.

Jason:
[5:58] Etsy I like that c-square that's how I'm that maybe it's cuz I'm more sort of exponential growth than I am linear growth I like that I like that alot.

Scot:
[6:08] I didn't go to the sea level meeting cuz I'm c-squared level.

Jason:
[6:13] Exactly I feel like the one negative ramification as we are now going to have to do a deep dive on the Peter Principle.

Scot:
[6:20] Well you hit the ground running and you have been in New York I've been watching your tweets my favorite is your Covergirl tweet that was a little.
It's surprising and shocking to see on the cover of Covergirl so congratulations on that.

Jason:
[6:37] Yeah I feel like that would be
more than any person needs to be thinking about but then I got in a Twitter conversation today with with some of our favorite journalist talking about the latest trends in women's fashion and
now they're all super excited about seeing me where like flare denim at dinner cropped flare Denim and interrupt this year so
so sorry for all the Twitter followers that had to read that.

Scot:
[7:07] Yeah that's going to be good with there will be pictures I will take them and post them.

Jason:
[7:12] But in all seriousness it is sort of a annual tradition than I have around my birthday is I pick a city that has a bunch of retail going on and I like to do a bunch of store visits around the holidays is is,
people will know or might imagine.
There's a lot of in addition to the sort of all the Evergreen retail there's a lot of popups that they Brands open around the holidays and if you're a retail and you're going to watch a big new flagship it wouldn't be uncommon that you try to get it launched.
In time for Holiday Inn so usually it's a good time of year to see some new new retail Concepts or at least see the evolution of some.
Some retail Concepts so this year I went to New York City for a couple days and I walked about 14 miles and visited 33 stores.

Scot:
[8:02] Give us give us the highs the lows The Good the Bad the Ugly how whatever kind of format you want to do.

Jason:
[8:10] So I mentioned 33 stores there were 11 that really jumped out at me as.
As irrelevant and interesting for for one reason or another there were kind of for that I.
I'm putting in the doghouse that were disappointing for one reason or another and then you know the rest I kind of characterizes middle of the road,
the reason I pick New York this year was specifically was because Nike had just opened the new store on Fifth Avenue at flagship store called House of innovation 0:01.
And now there's been a lot of buzz in our industry that this was a super Progressive omnichannel digital first retail store and so I had read a lot about it and I wanted to make sure I had a good.
Good first-hand experience so that was kind of the anchor that pulled me to New York and then I put together a list if anyone is super masochistic.
What I tend to do is put all these things in in Google Maps which little-known feature of Google Maps is great for custom maps.
And it works on all that the apps on all the different mobile platform so I can actually put a link in the show notes to my Google Map and you can you can see why these doors are if you happen to be visiting New York and one.
Want to check any of them out but so jumping into that Nike store I felt like it really lived up to the hype.

[9:35] So this is a big store on Fifth Avenue you know some of the most expensive real estate in North America.
It's a 6-story store and some of the Marquis experiences they talked about are these kind of.

[9:51] Blend of digital and experiential.
So for example they have a great Reserve online fry in-store experience you can if you live in New York you can shop on the mobile phone,
I find some shoes in a size you want to try on and someone will pull those shoes and put them in a locker.
Waiting for you and so when you get to the store you can use the mobile app to unlock the locker try on the shoes if you decide you want to buy them you can do at self-checkout on the mobile app and so essentially you can.

[10:30] Get stuffed Asian in dressing room try it on.
And buy it without ever having to have any interaction with an employee if you don't feel like you needed employee.

[10:41] And said to me that was like an interesting sort of.
Improvement in the frictionless reserve online try and store experience another Marquis Ranch they had is this mannequin shopping so you knows is a lot of folks might know.
Apparel that you put on mannequins tends to sell dramatically better than the apparel that's just on the racks or on the Shelf.
But it often can be tricky to shop the outfit on a mannequin cuz you see something on the mannequin and you don't necessarily know.
What model that is or where you can go get that particular Peril in that you're the one thing the store can do is they can put the exact apparel on the mannequin on.
On an end cap or display right next to the mannequin but then that creates all kinds of problems for the store where the inventory is fragmented some of its out on that is custom display and some of its in line in the rack and,
when someone does a boat is order or something else now they can't find the apparel because it's floating all over the store.
And so what Nike did is they actually put a QR code on every mannequin and you can scan this QR codes with the Nike app and it opens up.

[11:52] At the digital experience with all the.
The apparel that's rest on that mannequin and again you can click on any of those things to have them sent to a dressing room in your size you can self-checkout or you don't get help from a sales associate but it,
it's kind of a cool digital way to shop the look on mannequins in the store.

Scot:
[12:16] I've seen some of the shoe stores are now doing some of the 3D printing word out of separate experience.

Jason:
[12:29] Yeah no no no Nike is all in on customized and custom products so.

[12:36] Nike actually has a Big 5 store in Tribeca did the bottom floor is totally dedicated to customization and it supposed to custom shoes and custom jerseys so I can round the World Cup.

[12:46] Like embroidering your name on on your team's Jersey and stuff like that in real time was huge and this.
House of innovation takes that even a step further in this store you actually can have your your shoe models custom ink.
I mean you literally wait for the ink to dry and then they give you.
That the completely custom product in the store so the ground for the store is totally dedicated to custom.
They have all these kind of experiential components to the floor where you can see like.
The embroidery shop they have all the people like sewing on the machines and you can watch him making the custom product they have the die shop and you can you know these that you can look through the glass walls and watch all the people handcrafting.
Your custom products and they have a bunch of digital stations where you can work with a sales associate and design your own shoe from scratch or.
You can pick a custom-designed shoe that was designed by an influencer that you're aligned with so that could be a celebrity or it could be.
You know some some talented independent designer that Nike had partnered with so if you don't want to just.
Pick a random design from scratch you can you can rely on the talent of someone else to still make a shoe that's kind of unique in that everyone doesn't have and that isn't available at Foot Locker.

[14:12] Yeah so they're definitely in on custom.
They also at another store we've talked about it with Nike is this Nike at Melrose which is in Los Angeles,
and it's big spin is it's localized so they pay close attention to what people shop for and that store and change the assortment really rapidly.
In response to the the Nike Shoppers in in Los Angeles and so the bottom floor which is a sub-basement for and this this store is called Nike Speed Shop and it is essentially is dedicated to the best-selling.
Products in New York City and again,
yui you walk in on you see like that you know fastest selling items while the changes you know quite frequently depending on what the popular items are and you you can scan a QR code and how many of those items popped into a,
a self-service Locker for you so again there they're kind of leveraging the the crowd generation and the the seamless.
Self Service experience you can self checkout for anything in the store so you don't you don't have to get in line at a particular cashier they have self-checkout station throughout the store where you can like get bags and things like that.
The.

[15:27] So overall I'd say like this store does a better job of seamlessly integrating digital in a physical environment than almost any other store have been in and it's pretty exciting for that.
The downside is.
Most of these experiences are not ones that Shoppers are already used to and so the sales associates are having to do a heck of a lot of Education that teach people how to use all these amenities in the store.
And it's kind of a cannon to when Banks first ride rolling out ATM machines you know they had to staff the self-service ATM machines with the last app to teach people how to use them or you know when the airlines you step to teach people how to use.
That the digital boarding passes you know the Hope Is overtime everyone learns how to shop that store and use those amenities and they can cut back on the amount of staff that they need to train customers but then on the flip side.

[16:18] Fifth Avenue is like one of the the highest tourist traffic shopping areas in the United States and so.
You know the frequency of visit is probably a lot lower it's probably you know the one and only time a bunch of these people are going to shop that store so I think that the.

[16:37] Education think could be an ongoing Challenge and one of the sort of pet peeve or suggestion I would have for Nike is the.
All of these digital experiences are totally dependent on you having the Nike app which I.
I hate having that app dependency because it's really hard to get users to download the app and to help users get their password and to get users to consistently use the app.
And you know these days with Progressive web apps we could have all the same experience on a web experience.
All these QR codes that are all over the store the the Apple phones now natively Sant scan QR phones in the app in the the camera app so you know you could have.
Given the customer 90% of the same functionality with an iPhone with no app in it and Nike intentionally chose not to do that so when you scan any of those QR codes.
That work in the Nike app with the the iPhone camera for example instead of giving you the the digital experience it takes you to the iTunes Store and tries to get you to download the Nike app so.
You know they're there I can understand their goal to try to get good penetration of the app but I'd rather see him give him more seamless experience to the customers.

Scot:
[17:51] Yeah cuz the apps are pretty beefy and you know you're in the store on cell and is 4 Wi-Fi never really works it's always get glitchy and yeah.
Talking to it and it just kind of creates a lot of friction.

Jason:
[18:07] Yeah I know and you know getting their stores that are worse like that Amazon go stores that you'll see a huge queue outside these doors that require an app to shopping.
Yeah they they call him frictionless doors cuz it's just walk out technology and the irony is they just move the friction from the the cashier to the front door to the store.

Scot:
[18:26] Yeah it is one time that which is good.

Jason:
[18:28] No totally true. I mean I overall super favorable impression on the Nike store or I'll be excited to watch it continue to evolve as always anything new it's pretty easy to find a,
a few refinements and and you know hopefully Nike works for those overtime
if you go to that Nike store literally right next door to that Nike store is a Dyson Factory Store and I haven't seen this store talked about very much but this to me is a great store,
in terms of experiential retail so
like obviously Dyson is super premium product like that you know tend to be at at very premium price points to their competitors in the marketplace
and so it requires it's already considered sale it requires a lot of explanation and demonstration about why the products are better and so this Dyson store does
a really good job of,
immersing you in all their products they show you exploded you know versions of all their product so you can see the inside and you can see all the craftsmanship and design in the products and Wyatt's.

[19:32] Better and more expensive and then they do all kinds of clever things to let you experience the product so that the world's most expensive hair dryer as far as I know and so in the back of the store
they have a Blow Bar where you know if you want you can go in and have your hair styled and they'll blow it out and dry it using that Dyson product info,
you know you get this kind of great story that you you went shopping on your vacation on 5th Avenue when you got your hair done at Dice and then you got to experience this,
this one-of-a-kind hair dryer and and hopefully it sold you the hair dryer if you want to buy a vacuum.

[20:12] They next to all the vacuum displays they have like a complete assortment of.
For treatment so they have carpet and tile and hardwood and they have a funny wall of.
Different desserts that you can pick so you can you can like literally grab a beaker of dirt or a beaker of confetti or rubber balls or whatever you want to test and throw it on whatever kind of floor surfaces you want an,
and literally vacuum up those those products and so I just to me it's a great example of experiential retail and really.
Helping customers understand the value proposition in kicking in this,
this a psychology we called the endowment effect where you feel like you already own the product in the store and and you feel like you have.
Remorse if you walk to Home walked out of the store without taking the product.

Scot:
[21:06] Did you take advantage of the dry bar the blow dry bar.

Jason:
[21:09] I did not I do like sometimes it's funny I try to go in and test products that are maybe not,
not targeted at me but I did not have time to get my my sending unit 3 centimeter hair.
Can and I kind of think it would have dried in the time it took for my hair to get off the base into the chair so maybe when it worked anyway.

Scot:
[21:34] Yeah that have I think they're sold out of that hair dryer that I mean it is very expensive but it's quite popular it's kind of the the bee's knees.

Jason:
[21:43] Yeah I actually am thinking about getting hair extensions just so I have a reason to get one of those hair dryers.

Scot:
[21:49] I think you should definitely do that before then our attic so so we can all I'll see you with your I think I'm imagining a mullet I will look.

Jason:
[21:57] Not that hard to imagine there's probably some of your book somewhere.

[22:03] Not not true so hit a couple other stores on 5th Avenue and maybe we'll talk about it later but then I shot down to Soho in Tribeca
and Albert just had a pop up
there for a while that do I frankly was not a very interesting store and they just open their first.
Permanent store and I think they also did a terrific job I call Brazil courses a.
A shoe brand that's that's doing particularly well but very similar to Dyson.
They did a beautiful job I call the visual merchandising in this store is great but they really did this Rich storytelling about all of the materials that are used in all the Auburn products and they really kind of immerse you in the war of the products.
And just you know much more so than like walking into a Footlocker and seeing a wall of sneakers you feel like you get an origin story for every material that then is used in every shoe.
You know and you know they just made the product feel really aspirational and they try to use sustainable products in the shoe and they like you know really made you believe in the purpose and I just thought it was really,
well design store from a visual merchandising standpoint like they're not relying on a lot of digital technology in that store but I felt like.

[23:30] That's for combined with some of the other stores that I visited that are kind of newer I'll call them digitally native Brands although that's debatable in the case of all birds or Dyson,
and I really felt like like some of the best retail we're seeing right now is from these new emerging brands.
And an Auberge was another good example and a huge progression from their prop up to this permanent store so definitely congratulations to them on that.

Scot:
[23:55] They do a lot of really cool kind of seasonal exclusives in City exclusives like.

Jason:
[24:09] Yeah and exclusive that are
the trigger scarcity is a huge play across a bunch of these brands in a bunch of these products and really really smart you know again
in a world when you're a teenager that has to act cool amongst your thousand followers on Instagram you know.
Getting the same product that's available in every mall in America you know does not fly very well but being able to get you know something that's exclusive or scares
you know that's super well and we're seeing that and you know all of these these you know unique
limited edition shoes from Adidas and supreme and g-star and all birds and all of those brands are seeing them in the super young kids toys all the laugh out loud surprise toys I know you buy a bunch of these Star Trek,
Kinder surprise toy or Star Wars excuse me that was a horrible,
not for a DM but a horrible swppp.
The I don't know it maybe it's Friday and in some super weird creepy way that we don't want to get into.

Scot:
[25:15] Klingons.

Jason:
[25:17] Yeah but yeah scarcity I think is super smart are you are you a big all birds guy.

Scot:
[25:24] I think I have one pair but if I like him.

Jason:
[25:30] And that store is now like literally across the street from the Amazon forest our store we we've talked about that's or a lot in the past I did go back to that store I was interested to see how it involves since I was there on the grand opening
and obviously that's a story that's.
Allegedly completely curated by customers and so I walked in there in a very curious to see how much of the assortment had really changed since the last time I was in and I was pleasantly surprised that.
A lot of it had changed like all the feature displays that you see when you walk in the front of the store were prominently featuring,
different merchandise than they were at the Grand Opening and even a lot of the product categories.
In the store had changed or evolved and so you know my my early indications are you no props.
Amazon for living there promise on on sort of.
Frequently and rapidly changing the mix in that store based on on customer curation.

Scot:
[26:31] I wonder if they do it or if they just kind of like close down and reshuffle for a day or if they're just kind of like nibble away at it, like you know 2% a day.

Jason:
[26:40] No it's a great question and I I don't know the answer.
But yeah I would have to live there or visit a lot more frequently 10 notice that but I did I took a ton of pictures the first time I was there and I retook all those pictures and so on.
I'm probably going to do a deeper dive in comparing the two sets of pictures but anecdotally it definitely felt like a lot of stuff at churned and obviously we're much closer to Holiday now and they're all these right.
Seasonal products for holiday that are selling really well so not surprisingly those products all moved forward.
You're secretly I feel like that store is first and foremost designed to sell Amazon branded products and those are kind of the Evergreen product that did not change.
Oh, there's some new product since last time I was there so that the first time I got to see the microwave in person.

Scot:
[27:29] I'd like it.

Jason:
[27:30] I was surprised it's smaller than I was anticipating it does not feel like I feel like that was a load capacity microwave them then I have so I would have been a little scared to.

Scot:
[27:43] Talk out at the gym have Alexa make you some popcorn.

Jason:
[27:46] I did not I was pleased to see that it was plugged in so you could infect talk to it but you like they did not give you product and give you a chance to actually.
Cook anything in it and I'm curious if the demo unit even had that hopefully it did not have them element in it but who knows.

Scot:
[28:03] The at this is a little bit off topic but the switching of the storm made me think of everyone's in retails favorite store in York stories did you get swing by there.

Jason:
[28:14] I did not swing my story I always love to go to this is story about the it just wasn't geographically convenient with all these other stores I did go to Macy's.
Macy's is now a minority owner of story and I was curious to see if they had a disa story iteration in Macy's.
And if they did I was not able to find it but the.
Beta who's been on the store has has the shopping shops inside of Macy's and I went to that Macy's expecting.
Then I go down to the basement where where they historically have put a lot of these Concepts and I was actually constantly surprised the beta store.
Is like prominently featured at the front door in like one of the highest traffic entrances and so kind of smart around the holidays since a lot of the beta product is.
Is very holiday gift friendly items but that all of the pods in the the beta display inside the Macy's were really hopping and it felt like.
The exact same experience you'd get if you walked into a dedicated beta store and then.

Scot:
[29:22] Call Diem one of our interns just handed me a note make sure we reference episode 139 when we had beta founder the boo on telling us all about that.

Jason:
[29:33] Yeah absolutely and if you do remember that episode of Yuri wissen he'll tell you a story about how he called me early on in the evolution of that concept and I gave him some stupid advice,
is his version and my version is I told him that in the long run,
that he would be funded by a bunch of retailers and he would be shopping shops inside of a bunch of these stores,
and your side note almost all the betas are now in Macy's and so I'm saying I'm right here saying I gave him bad advice you can judge for yourself.

Scot:
[30:06] He is not a c squared executive Teresa CEO.

Jason:
[30:12] He just has the one one see you in like Risk a bunch.

Scot:
[30:14] Yeah it's your on a whole nother like you're in another orbit like.

Jason:
[30:17] Yeah he would tell you this lame story about how he left his cushy job at Google to take this big entrepreneurial risk and worked really hard to build something and all that but you know as opposed to just like telling other people what to do and then running before they actually do it.

Scot:
[30:32] Helios One C drop the mic.

Jason:
[30:36] Potato potahto exactly.
The also sort of in that that area I visited the Casper store you know again
another great kind of showroom a store that has a bunch of experiential components like they have all these,
design house vignettes where you can in fact,
close the door and sweep on all these various mattresses but they even had they actually have and they have a cool branded term for it that I'm going to not remember unfortunately
at the back of the store is is actually dedicated to a service where you essentially can rent a in isolation pod with a bed in it and take a nap,
and if they've done like a really good job of creating this like super relaxing atmosphere and you know it.
The hustle and bustle of a busy City you can come and take a timeout and catch up power nap and then kind of recharge I looked at that thing and said man like these guys up to be partnering with we work like you ought to have one of these.
Nap stations in all the the work on demand.

Scot:
[31:50] If it's at Casper ride to go people are always surprised how many skus they have I think everyone kind of Associates in with kind of essentially
once you a mattress live really expanded the offerings have got some pet stuff now right and they've got pillows and sheets.

Jason:
[32:09] Yeah betting and so that they have all that but also I thought you're going is they have a variety of different.
Material treatments on the mattresses so there is a pretty good diversity of mattresses you can buy a different price points and so you can imagine,
people wanting to to actually try those out in the United States they talk a lot about how you know retail and trying is an important part of their.
Their growth strategy that that you know they like the pure digital experience and obviously they're kind of original Innovation was the ability to make a UPS shippable mattress and bypass the store but in the long run like
you know the total addressable Market of people that are willing to buy a mattress sight unseen is much smaller than the,
you know all the households in the US and so even these retail showrooms have been,
become a big part of their growth strategy I can't remember if I threw it up on social media or not but they also have kind of a
social photo booth in the store and that's why I took a picture in the Casper store and to me the,
that these these instagrammable scenes inside of retail stores is another strong retail Trend like we talked on the show little bit in the past.
There are these dedicated Concepts to instagrammable moments like the ice cream factory in in San Francisco and idea here is.

[33:38] Pay a significant amount of money I 20 to 40 bucks to go into what amounts to a bunch of like unique photo sets to take your your selfies and all these you know unique and interesting ways.
And there scarcity because that museum goes away after a couple of months and it creates a cool,
sort of photo that you can share on on Instagram in a bunch of retailers have jumped in on this action and so the the Casper score was one,
you mentioned earlier that cover girl had a pop up in Time Square and they had a great social photo booth so you got to go take,
a glamour still Anna and impact video in the store and so I use that that glamour photo booth and put my shepherd girl picks her up,
it's super smart as they capture your email address which you give them in order for them to send you the photos and you you share those photos on your social channels and amplify it and become an influencer for Casper CoverGirl,
or a bunch of the other retail brand so I feel like that was a common trend.

[34:46] Also up near 5th Avenue Rockefeller Center FAO Schwarz reopen.
So that you know they were longtime icon on 5th Avenue their space is now being used for Apple.
They went out of business but a new company bought the brand and they reopen the toy store in what used to be the NBC Experience Store in Rockefeller Center.
And I.

Scot:
[35:13] Does it have the f e o clock in like that same kind of vibe that the old one.

Jason:
[35:17] Yeah it totally does it has all the iconic displays that the old store has it has the cost you and Toy Soldiers dancing outside the store and taking selfies with everyone and again another one of these instagrammable moments.
And you know a round holiday in Rockefeller Center this was the busiest store in the area and had a shoe deal 9 to get into the store and so again like,
you know creating scarcity just buy,
you know you go to Rockefeller Center to check out what's going on and look at the ice rink and see the Christmas tree and blam there's a huge line of people waiting to get in somewhere and it instantly makes you want to get in there too and it it it.
It seems like there's definite evidence that the debt brand still carry some weight with consumers and at least around holiday.
Seems like it was doing terrific.

Scot:
[36:07] Did a baby geek get like a drivable little Rolls-Royce Wraith.

Jason:
[36:13] She did not I have as I think documented on some of these other shows already made the mistake of buying him some drivable Vehicles like only two.
How to get home and come to my senses and realize that I'm now paying for a separate City parking space for my son's truck my three-year-old son's truck yes.

Scot:
[36:33] Five of them in one city park.

Jason:
[36:35] Yeah that's true I probably could fit more but we don't need to tell him that.
So glossy are is another great digital brand is doing really well in the beauty and cosmetics base and they open the store in Tribeca again.
These guys do a lot of custom assortments instead of the whole store is really a showroom and you shop the store you you,
you know try Cosmetics you pick stuff that you want and then you go to a will call window and actually pick up your custom,
serrated bag with your name on it of your Cosmetics you can do that online and they have a a pick up station at the very front of the store for for online orders or or you know they have an in-store pickup station,
for folks that have shop the in-store experience and this door was hopping like there was a line at almost every display for people to check out,
and again a big chunk of the store was dedicated to both them like doing your makeup and glamming you up and taking an Instagram photo in you know a bunch of staged.

[37:42] Scents that they had and so you kind of Sharon amplify The Experience so another good example of that.
Google has a pop-up store in Chicago and New York called Google Hardware I visited the one in in Chicago earlier and talked a little bit about it on the show The New York one is sort of a,
bigger better laid out version of the exact same store
again a great place to experience a lot of the Google hardware and get you know live demos and some real-world vignettes but the whole you know downstairs of the store again is dedicated to,
taking cool photos of you in a unique environment
and sharing those on all your social platforms with all your friends and so for Google it's a double win there
they're getting you to take advantage of this social photo booth experience or catching an email all the same things as all the other retailers but they're also getting to demonstrate some of the unique features of the Google pixel
camera and as a speaker called best shot so essentially
they put you on this way cool interactive swing set and take a bunch of pictures of you and the AI in the Google Phone app,
looks at all the photos they took of you and pics of the two or three best photos and shows you though so kind of a double win there.

Scot:
[39:01] Did you agree with the ones I picked.

Jason:
[39:03] Yeah it seems optimized for obvious thing so you know I picked the ones where you're smiling and looking directly at the camera and that are in good Focus I don't know that I took enough pictures to.
To pick up beyond that what it's it's criteria were but definitely the the photos it recommended were keepers.
And yet it just a cool well design kind of theatrical set like it's in there cases funny cuz you walk up and it looks like a really Bland background with a bunch of wood paneling and a swing and you sit on the swing in there I have this doesn't seem like all that interesting of a,
have a background but then the guy triggers the display and as the swing starts moving,
all of the wood panels drop down in there all these colorful animated things moving around and it becomes a Thun Thun set for a photo so it's just fun. Watch the surprise and Delight moment when.
When that happened to other people as well.

[39:58] And then the 11th of my my favorite retail stores is a new store.
In kind of the upper end of Tribeca called show fields,
and to me this is a similar concept 2 Beta so this is a a Marketplace store it's a permanent store that.
Emerging Brands can rent a Pod in all of the pods have facilities for live demonstrations they all have digital signage,
until you got a bunch of like digitally native products you know that each had their own kind of,
shop and shop inside of this Schofield space then I guess the one thing that was different about Schofield from beta is,
the beta store is staffed by Beta employees and all the displays are largely self-service except for the beta employees most of the Schofield vignettes were actually staffed with branded employ so when you went to each of India,
you are likely to get a representative from the brand that was in that vignette talking to you.
Yeah so it seems like the the.
Marketplace at vacation of physical retail is continuing the happened so Scott. You may have been right that marketplaces are a thing.

Scot:
[41:23] Yeah the other they're catching on.

Jason:
[41:26] Yep. So we're super deep into the show project more time than we intended on the store visits super quick,
for they were a little bit of a letdown for me Restoration Hardware has this great reputation they move their store to the Meatpacking District,
is there a flagship store New York went to the store it's a beautiful piece of visual merchandising and has tons of their product in it,
but I just really think that it's a hard store to shop there's no way finding others no way to know what inventory is in the store I could keep that a lot of folks have a Restoration Hardware is.
You know you want to try this furniture before you buy it,
they have a website with all these different formations of all their products but no one on the website can you find out which store has the products you want to try,
and you just kind of have to pop into the store and you're going to see one sofa that represents a family of 10 and not get a very good story about the other nine so,
I just feel like it was a lost opportunity for a Restoration Hardware to take their retailing a little further than they had in the past and it seems like they stuck with.

[42:31] Beautiful visual merchandising and architecture but not really anything new or interesting and customer experience so that was a disappointment to me,
on 5th Avenue there's a the original Saks Fifth Avenue they made a bunch of hay earlier this year about doing a huge remodel to their Beauty Department which of the second floor of the store
are you walking the store on the ground floor and they're all these signed same check out Beauty 2.0 on the second floor and they really hype up this beauty 2.0 concept.
Until you know it frankly raises your expectation that they are
inventing a better way to shop for cosmetics and beauty and you know when I got up there and Shop did it felt like a very traditional department store Beauty experience to me like the.
The again the fixtures in the visual merchandising might have been a little nicer but you know you work at like all the exponential stuff going on at Sephora or an Ulta or the ability to shop based on
a use case or need instead of exclusively by brand you know they're all these opportunities to kind of reinvent Beauty and to me,
like sacks raised expectation by calling Beauty 2.0 in it it to me it was Beauty 1.1 Maybe.

[43:46] I hit up about for Apple stores in New York City and you know I continue to have this,
this impression when I walk in Apple stores that they had become to me super boring and the problem I think is
did they have curated down they dramatically diminished the amount of third-party product they offer in an Apple store and so,
you know it's almost all first-party product you know most of us know all of Apple's product before we walk in the store so we're not going to see some new Apple branded product at school or that we want to see you except maybe once a year
and you know that the stores always super busy but it's also always super busy because there's a bunch of people in line at the Genius Bar to get help getting their iTunes password so they can download the Nike app for the Amazon Go app
it that stores really become a customer service door and they're just really isn't a lot of.
Serendipitous Discovery or surprise and Delight like you know I just don't feel like I have a reason to go there and find anything that's going to be exciting for me I don't know,
Scot do you still go to an Apple Store when you're in a a new shopping district.

Scot:
[44:54] But Jason it's a town hall don't you just go there to meet people diet ice cream
I used to I used to get the most joy out of kind of a few know looking at they had a kind of robust drone section and all these wacky accessories like
Golf Club thing you can play with and I save if they've taken that stuff away I do think it's Dimension
a part of it is once they get into the headphones Beats that's a big section out.

Jason:
[45:23] Yeah they kicked over all the third party headphones out and yeah.

Scot:
[45:26] Yeah so so it is a bit of a bummer because like you I think I pretty much have every product covered so there's no new Apple product I really need to discover.

Jason:
[45:37] Same same deal so if I forget to pack a power supply I might pop pop in the Apple to get a replacement but
yeah I miss the surprise and Delight moments I hope I hope they find a new way to bring those back and then last store in this is sadly for me cuz I really wanted to be excited.

[45:57] My raspberry award is going to a digital native brand that folks on the show are probably familiar with all the way which is.
Kind of a great digital suitcase that's doing really well.
And the reason I'm disappointed is I had visited their pop-up store and thought it was fabulous right so,
you listen to the founders talk about the away brand and they say like hey we recognized early on we do you want to be about selling suitcases we wanted to be around selling aspirational experiences and destinations and so you went to the pop-up store and it was,
merchandise to be all these exotic locations that you wanted to go to and it just so happens that there was a luggage in each one of those locations that you could check out and it made you want to buy the luggage so that you could go to,
to Milan and you know have the experience,
and I thought that was really smart and it it you know the you know their presentations at Shopkin and shop at Oregon places like that you know they told the story that really kind of match the retail environment so,
now they've opened a permanent store and I and you go me and I like the pup I'm expecting you know some big stuff out of the permanent store and I feel like the permanent away store took a giant step back and it's a bunch of shelves with suitcases and no storytelling and,
and none of that destination merchandising or aspiration like it did have kind of a a like.

[47:23] Unremarkable Cafe inside the store but mostly it was you know it it felt just like your typical Mall luggage store that just happen to have a bunch of away suitcases on.

Scot:
[47:33] I am a proud owner of a real of masochist.

Jason:
[47:37] Do you get yelled at every time you get on the plane that you have to take the battery out.

Scot:
[47:40] I know it pops I got the later generation that works pops right up.

Jason:
[47:44] Yet so
I think that's most of the products but there is a slight slightly unfortunate thing that one of them are key features if they have a smart suitcase that has a big battery in it that you can use to charge a lot of your gadgets
and there must have been some bad experience on the airline somewhere because like it's now built into the FAA announcements on a lot of planes
but if you have an away branded suitcase you must take the battery out before you come on the plane
and again away his design the suitcase to allow that so it's not a big deal but I'm online from a brand or erosion standpoint it's.
Anime be favorable maybe negative that every single time you get on a plane they make an announcement saying like you have to do something with an away suitcase or you're not safe.
Maybe it helps that they're reminding everyone that there's this new pool suitcase call the way.

Scot:
[48:31] Yeah it's not nearly as bad as when they said if you had a Samsung Note they would just like grab it. Off the plane.

Jason:
[48:38] Exactly incident I guess the last take what's a bunch of great retail I do feel like a bunch of the new emerging brands or are the ones that are really moving the ball forward a lot of the
the start of.
A long time retail Brands I feel like I'm seeing glass Innovation out of them even Nike you know I mean arguably they been in retail since 1990 but as a major retailer
like they're moving the ball forward and and you know the Saks Fifth Avenue's of the world not as much.
That one other kind of antidotal take away I have talked a bunch of times on the show about electronic shelf labels and you know I would point out of the 33rd
three stores I visited four of them now I have 100% electronic shelf label so you know potentially we're starting to see the
the slow Evolution to this more real-time updatable Dynamic pricing retail environment so I hope we see more of that.

Scot:
[49:37] Well we just give me the last show of the year so we want to give you guys kind of the double bang for your buck so in addition to Jason's detailed report we're going to do,
quick 10-minute news run and it wouldn't be a Jason Scott show without.

Jason:
[50:01] The news your margin is there opportunity.

Scot:
[50:10] Cool so briefly the big news for Amazon right now here we are in the heat of pizza delivery time is not surprisingly deliver you were in it so there's been a bunch out around delivery.

[50:23] I can see light interesting stuff on Amazon Jason by frequent Amazon order this time of year for estimator and
it's really interesting they're kind of my Prime orders are defaulting to to de-flea a message in there that says
choose one day and you'll get your item tomorrow and it's really it's a really weird user experience like why
why are they making me choose it there's no extra cost I did notice a day I didn't order and it did that and I chose it and then it did this interesting math over on the side where it said your shipping charge is $20 and then
Midas out the shipping charge almost to make me feel like you know I was getting 20 $20 worth of value it felt like some kind of an A B test there
but that's just been pretty unusual one here in Chicago you've probably already always had kind of same-day delivery in and next day
but that's pretty rare North Carolina so you know I'm definitely seeing that they're using language like.

[51:27] Using our express shipping partners and stuff like that so and around this area I'm seeing a lot of the Prime vehicle so I will talk about that little bit
so since it's been pretty interesting as a user
the Bloomberg had a friend Spencer super over there I had a great peace out today about the Amazon delivery Network and you'll notice he's there around delivery.

[51:55] Very intimately familiar with these various platforms most famous and well Love's truck platform is from Europe in is the Mercedes Sprinter
and so Amazon in September a news article came out that they had ordered 10,000 of these thousand and what they've done very rapidly is they have out the field but it feels like a lot of them
they have set up people in their own businesses these 1099 businesses
I am they will guarantee your route though rent the truck to you very inexpensively and this article had some really interesting case studies profiled someone that had a 42 and 70 drivers they're doing 250 deliveries per day per driver
I am making $1,000 a month in profit so
if you're interested in that kind of thing will put in the show notes and I definitely recommend you read that and then you saw one to Jason.

Jason:
[52:53] Yep so inside notice there's a slight irony to me the same time you're seeing all these Amazon branded Sprinter Vehicles showing up it's also the time of year when UPS and FedEx don't have enough trucks until you start seeing a lot of Enterprise rental vans
with with UPS drivers getting out of them in the course there's always the problem of,
people thinking they're not not legitimate UPS drivers when they roll up in the in the unmarked white van.

[53:21] So you like people going in different directions there is an interesting thing that Amazon did this year you know there's always this battle for free shipping amongst retailers and who's going to lower their,
their threshold for free shipping and what they're going to charge and so you know Walmart does free 2-day shipping for any order over $35,
Target came out for holiday and said hey free shipping on anything and you know it's always curious,
Target made this better shipping offer than Walmart would Walmart match him in Walmart didn't,
and I I kind of thought that was interesting and that would be the end of it but then Amazon surprised is all about coming out with a new offer for this holiday that they were offering free shipping,
for the holiday even without a Prime Membership in this this is not their 2-day shipping but that it was interesting that Amazon was getting more promotional around holiday we've all been watching to see if that might Force Walmart.
To react so far we haven't seen that but now they're extending this free shipping and they're starting to really promote their,
they're cut off date so you know I think tomorrow is the last day to get free slow shipping from Amazon but as you pointed out they've beefed up there.
Their same-day delivery options in a bunch of markets and so you'll be able to continue to Christmas shop up to the 24th in a lot of markets and still get them.

[54:47] As you mentioned Chicago was one of the first so I for a long time I've had this experience where,
you order something that's available with one day delivery and then in the cart it defaults to 2-day delivery and it goes you can get it's Tuesday you can get this on Thursday for free or you can cook this to get it Wednesday for free,
cuz even though it says same day it usually is after the the early morning cut off so you get it the next day and so you know you constantly have this thing where of course why wouldn't I pick,
to get it a day earlier for the same free price of a new thing I just saw this week on on my own Amazon experience in Chicago
is there launching some new service called Amazon weekly delivery and it seems like they're trying to incentivize me to bundle more of my purchases
and have them delivered one day a week instead of on an ad-hoc basis and so it almost feels like Prime Pantry for.
Non-prime Prime Pantry items so I have to dive into that and get a little more details but that was a new GUI I had never seen before.

Scot:
[55:54] What's the incentive.

Jason:
[55:56] Yeah so that was part of the problem it did not like it was a new button I could put
to put it on my weekly delivery which to my knowledge I didn't have a weekly delivery but it did not seem like there was any monetary benefit to do that so it was again it was weird it was like
free same-day delivery get it on Monday standard 2-day delivery to get it on Tuesday or put it in your weekly delivery on Wednesday.

Scot:
[56:21] They will there be there always playing around with incentives for slow shipping so I've noticed now they seem to have detected on my pretty heavy Prime now users they're offering me kind of somewhere between 5 and $10 for slow shipping at all do in a prime now single use coupon,
iPad audible coupons Whole Foods
variety of different free song a free app to put around look like a thousand things on that side.

Jason:
[56:49] Yeah no for sure and I agree with you I think they they seem pretty smart about seeing which offers you're most likely to accept and then turning up the volume on those offers.
I do an audible and I keep getting more and more audible offers on or better offers on that regard stuff
definitely get that you link to an article this morning about Amazon's new air hub
in the Fort Worth airport so that his listeners that will probably already know they have a big air Hub in Cincinnati now they're adding a second big Hub in Dallas
and again you know these guys are getting more airport capacity and more planes and and it just seems
totally obvious that they're their bulking up there their internal delivery capacity and you know it it's it's hard to imagine it's not a competitive threat to our friends at UPS.

Scot:
[57:48] Amazon names are fulfillment centers after the airport so for a long time there are us tracking this and Phoenix had the most so they would do like PHX and
when they open the second one they Rebrand the first one to one and then they start new muriatic so Phoenix had like PHX 1 2 3 and 4 in the Dallas for long time didn't have anything there then suddenly when the span of like four or five years David have
all the way from DFW 1 to 6 and then and then they expanded out the rest of the day of the Houston and Sentra so
no it's it's a it's a huge state for Amazon so I imagine you know that that's going to be a busy Hub and then it's interesting cuz they diagrams for the kind of have a book helps Earth Day
kind of building the supply chain that looks
it's kind of a hybrid of like what Walmart Walmart does to get stuff to a store and what FedEx UPS do so they have this kind of benefit of Products near you and then if it goes out then it goes to this other level and another level up there it is really fascinating how they're the kind of layer to supply chain,
elements on top of each other maybe we'll do a show where we get a supply chain Guru in to explain that privately digested.

Jason:
[59:05] Yeah and I would add just one thing like these are not just hubs where they're like shipping Goods to then drive them to your house this is mostly about moving Goods around between the various for filming Center.
And there
they're just getting crazy Advanced like I literally think we have a pop-up fulfillment center in Chicago right now so it appears Amazon his rented
all the parking under Millennial Park and they like literally staged a temporary fulfillment center in downtown Chicago for holiday.

Scot:
[59:36] Brickell lots of machine learning lots of data.
Longtime listeners will enjoy this article because it's pretty much a topic we spent a lot of time on a I didn't think there is much you in there but it is paid gated tarp a waltz
and it really talks about introduces the concept of crap can't realize a profit and that you know it makes it sound like news that Amazon's pushing back on manufacturers to to change their packaging and figure out how you solve this problem of
you know that these items that are too bulky you too heavy to low asp2 to make money who's a good read good summary of of kind of what Amazon's doing but,
I kind of made it feel new and and we know that they've been doing this for years.

Jason:
[1:00:26] Yeah I didn't think I'd almost argue that there's a slight trim the other way there that I feel like Amazon's been progressively getting more and more aggressive about targeting crap and more recently liked
in last few months and feels like they they may have loosened things likely in some category.

Scot:
[1:00:44] Yeah yeah and then there was a smattering of Amazon go you touched on it and your your trip reports what are.

Jason:
[1:00:54] Yeah so they're there is some rumors that one of the use cases for Amazon go could be airports and that is one of the categories where it seems like you could,
Amazon go would be a really good fit so I really fast grab-and-go Self Service experience in an airport and as we talked about like a lot of the go merchandise is food and so you think about,
man what happens a lot of airports you have a limited time to get something to eat before you get in the plane and you know you're not going to get served anything to eat on the plane now and so
seems for a lot of reasons
the Amazon goes strength online really well with that airport use queso that that made a lot of sense I won't be surprised to see that deploy and deploy fast they also open their first.

[1:01:45] Small for my Amazon go store so this is like a hundred square foot store and it is kind of like a self-contained shop and Shop,
where you know you can have a bunch of quick grab convenience items,
in a you know Anna is self-contained pop up store format and you know from the first time I saw I go one of these cases I always thought of was like the hotel.
Gift shop for the hotel snack shop kind of thing where it doesn't make sense to staff the store with the
a person but you know you can sell a lot of snacks to the guess that just check in and they're going up to the room and so this the small-format store seems like a perfect fit for a potential Hotel use case for exam.

[1:02:30] And then I think go is now going to the UK so we've seen like three new new retail for mastering Amazon open up in in London in recent times and now they're going to get their first ghost tour.

Scot:
[1:02:42] Cool it's everyone laughed when they said they weren't there could be thousands of these so you put 10 in each airport and 50 in each City and boom you're there.

Jason:
[1:02:52] Exactly so they are not sitting still there doing a lot of interesting stuff it's been fun to follow them.

Scot:
[1:02:59] Awesome so I know we're up against time but there is that concludes our Amazon news there was one big news item that I wanted to pick your brain on and is there she might this kind of slid under my radar I'm sure you were really
you're attracting it but there was this announcement that IBM sold a bunch of software stuff to this company called HCL I don't know who that is and the ones that made the headlines I saw where I was he Lotus Notes and just some kind of,
old stuff that seemed
then I saw a kind of kerfuffle on LinkedIn where several of the smaller e-commerce platforms were really kind of riling up retailers and saying you know,
where you going to do now that IBM no longer supports websphere which is there their kind of you know their e-commerce platform that a lot of the largest retailers are on and.
Turns out that they have sold that whole platform to this company HCL what I'm sure a lot of our listeners out there
I'm sure if they're on websphere they're they're painfully aware this but I was a little shocked about that what do you what do you make of it does this mean IBM
just as getting out of the retail game or why would they sell it and then what do you think it means going for.

Jason:
[1:04:14] Yep it's even potentially more confusing than that so it's totally cut me out of left field the,
you know if you'll get the last call at 5 to 8 years in retail there have been these three Enterprise platforms that have emerged as sort of the most competitive,
platforms for launching your e-commerce site so you know IBM has had Webster Commerce which is one of the products they sold the ACL Oracle has that a product called atg was originally stand alone company Oracle bottom,
there's originally a German stanaland company called hybris the sap bot
and so you know if you were a big retailer or you wanted to you know be selling hundreds of millions of dollars online,
you likely were going to pick one of these three platforms to launch your website and and you would likely have a shootout between two or three of them,
and you know that pay a company like razorfish millions of dollars to to implement it for you and and pay the vendor,
you know hundreds of thousands if not millions of dollars a year in maintenance on that platform and so in some ways like totally shocking IBM which you know.

[1:05:27] Arguably had the biggest retail market share of those three platforms.
So the entire websphere business to HCL HCL is a very large integrator and so you know frankly from my standpoint,
whatever traction IBM had in the marketplace that platform is totally going to lose now that a single integrator,
because you know all the other integrators in the world are not very likely in to be promoting and implementing a platform,
it's owned by one of their competitors so you know usually when an integrator buys a platform it's kind of the end of life for that platform and it just becomes,
an in-house piece of Ip that that that integrator uses you don't becomes much harder to see other third parties.
Integrate that's an IBM had this Rich echo system of integrators that were aggressively selling their stuff so there's a ton of customers that are on it it's but yours was super fragmented about this.

[1:06:31] They sold the on-prem version of the software 2hcl at the moment IBM still owns,
the cloud version of the software which is the newest version but the cloud version is based on the on Prim codebase so if you're one of the few customers that bought the,
Cloud version of IBM or you were thinking about migrating now you have to ask yourself.
Is HCl going to keep updating that code base so that IBM's Cloud version continues to stay.
Competitive or contemporary or what's going to happen there IBM owns a bunch of other retail software that a lot of retailers still rely on most famously they own order management system called Sterling.
It's still doing really well and they did not still sell sterling so in the old days.
You know I didn't had a lot of success getting people to use their o&s and their web platform together because obviously most most businesses need order Management in and then you conversate.
Now those things are getting split up so at the moment there's a lot more questions than answers.
I probably already taking too much time but the one thing I will say is in my mind all of these Enterprise platforms are losing momentum and losing customers and so you know the likely reason I'm selling it is.
They just feel like the super expensive enterprise software is kind of end-of-life because.

[1:07:54] To me what's happening is the very largest e-commerce sites are are all largely on custom and house built stuff.
And increasingly the biggest customers that were on these Enterprise platforms are.
Writing more the software themselves and using less of the Enterprise platform and negotiating to Payless licenses for that software.
Everyone wants to move to the cloud and none of these products are particularly graceful at offering a cloud version,
and then every new business that's been born every new brand that's been born in the last eight years that was more likely to be digital natives,
probably started doing e-commerce on something like Shopify or Bigcommerce and they're actually finding that those those platforms continue to meet all their needs even as they scale and so
you know even if you outgrow Shopify
once you're used to paying $10,000 a year for your eCommerce platform you know it becomes really hard to pay for a you know orders of magnitude more for that you know and then orders of magnitude more on top of that to implement it just became
a tough value prop for these old Enterprise platform so
a lot of us in the e-commerce software space have a lot of nostalgia for IBM at the you know they were definitely King Of The Hill in retail for a long time but you know I do
probably selling them because you know it was becoming a financial loser for them and and it does not seem like that's where the growth is going to be in retail.

Scot:
[1:09:23] Feels like Financial.
Kind of yeah she'll games though too. Maybe a negative phrase but maybe I'm just wanting to show Wall Street more SAS Revenue so that's probably why they kept that piece
but you know you can't possibly
do well if you're not enjoying the underline code and if I'm an integrator I don't want to make this a surgeon that are so seems like there's instant misalignment there that
possibly work out well.

Jason:
[1:09:50] No I think there's multiple layers of misalignment now and to your point like
you know if you had a long in the tooth version of IBM and you were debating whether you should upgrade to the latest version or go to the cloud version you know I can guarantee you the day after this announcement you added some new players to your consideration set.

Scot:
[1:10:06] Who wins Miss.

Jason:
[1:10:09] Well yeah so in the in the short run on the the low end you know I think those
the smaller platforms are are winning a bigger share of a,
the e-commerce dollar so I think those got the shopify's in Bigcommerce is continue to kind of get away from the bottom and it the top again you have more people building the stuff and so they're all these tools out there to help those companies
build their own things that are all these toolkits of microservices that you can buy to expedite your own development and
that's a really fragmented space right now I can't point to one and say oh my gosh.
Commerce tools is the one or Symphony Commerce is the one you know there's a lot of these players but it seems like ultimately
that that kind of native cloud-based microservice toolkit
retailers that want to build a little bit more of their own custom platform at a more economical price point is likely the way that this is going.

Scot:
[1:11:14] If only people had a chief Commerce strategy officer they could call too bad no one is earned that title yet.

Jason:
[1:11:22] Yeah I heard those guys.

Scot:
[1:11:23] There is only one there is one.

Jason:
[1:11:25] Few and far between.
That's got that's slightly more than a good place to end it we should have ended it about 30 seconds ago
but we completely overused are a lot of time so I apologize to witness for the extra-long episode but hopefully people found it valuable and it's a great way to
kick you into holiday season so
as always if you had any questions or comments feel free to jump on Facebook and leave us a note
if you struggle through this entire episode we'd love it if you jump on iTunes and give us that five star review and man I sure would like to thank all the winners for 4
a great year and wish everyone a happy holiday.

Scot:
[1:12:09] You think someone happy holidays we will be back in 2019 with a lot of fresh content for you and we really appreciate appreciate you listening to the show and leaving us those reviews.

Jason:
[1:12:22] Until next time happy commercing.

Dec 17, 2018

EP157 - Bain & Company Partner Cesar Brea 

Ceasar Brea (@cesarbrea) is a partner at Bain & Company, focused in the Advanced Analytics and Marketing practices.  We cover a variety of topics related to the disruption and future of commerce.

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

Episode 157 of the Jason & Scot show was recorded on Monday, November 19th 2018.

Transcript

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

Scot & Cesar:
[0:38] Hey Jason and welcome back Jason Scott show listeners Jason we have a really exciting guest on tonight show our good mutual friend Rob Schmaltz said hey
have you guys ever thought of having Caesar Brea on the show
and we said who is that you said you need to get him out of there ASAP and when Rob talks we listen
so we're real excited to have Caesar on the show Cesar is a partner at Bain & Company where he is in the advanced analytics and marketing marketing practice welcome to the show Cesar.

[1:12] Thanks for inviting me guys a pleasure to do it.

Jason:
[1:15] We are thrilled to have you in a Caesar if you've heard the show before you know we always like to start off by having guests give us a little bit of their background and how they sort of came into their current role so could you give us that the recap of your trip.

Scot & Cesar:
[1:30] Sure so I am a.
Several time vain person actually the last time I was here was in the mid-late 90s I was doing a lot of work in high-tech and and software and I left to help build a couple different software companies.
Ended up at one point helping to run sales and marketing at razorfish and then later on I built a marketing analytics consulting firm.
And a couple years ago I got invited to come back to beIN and I've been back in a couple of years and I'm really enjoying this this latest iteration.

Jason:
[2:08] That's so you're basically a boomerang.

Scot & Cesar:
[2:11] Yes I am kind of I guess one way of putting that as I can't hold a job very well but but I'm really glad to be back at the firm.

Jason:
[2:20] And you mentioned that one of your previous roles was at
at my current employer razorfish which book make me super excited but it's also kind of sad because I feel like that's a a storybrand and name in our industry that
is a falling under decreasing use as a all the agencies in the Pacific group sort of merge together.

Scot & Cesar:
[2:43] Yeah it's true I I I'm a proud razorfish Alum it was a privilege to work there I got a chance to work with some incredibly talented people
Bob Lord is now at IBM as an old friend than a and a former boss and he originally asked me to come help out there and.
Got a chance to work with really some incredible people that to this day I started following and keep track of intimate touch with.
I still learn a ton from so it's I feel the same way about it and it was really amazing place and but that's the way a lot of things work out so.

Jason:
[3:20] Indeed add a fun fact on Bob I run into him occasionally at industry events and my my favorite thing is to for those that don't know Bob is that the
Chief digital officer for IBM answer my favorite question to ask him is why IBM needs a chief digital officer I always am I who's the chief digital officer at Facebook or Google.

Scot & Cesar:
[3:43] Yeah I think the premier that's a thinly-veiled excuse to to have Bob Lord so they're lucky to have him and whatever whatever will make sense doesn't matter so that's why I look at things like.

Jason:
[3:54] No I I totally agree to it until I agree but it's it's fun to needle in a little bit as he also was my former boss though it's and it's safer now.

Scot & Cesar:
[4:05] Cesar what is so analytics and marketing are near and dear to our heart muscle bit more about what that entails.

[4:13] So the simplest explanation that I have for for folks who say what the hell do you do is I tell people I help big companies use big data to spend really big ad budgets better.
How's that is that!
Yeah yeah I like a I like to do so big around budgets especially in terms of what we,
get involved with here it really is what I've been doing it ranges pretty widely it said everything from.
Turn reduction programs to assortment optimization to media mix optimization.
Really just a demand forecasting really just a whole range of things that were that were getting involved in to help our clients do better,
ghost sounds like someone in your company is engaging with a company and they they need an analytic ninja to come solve some really hard problem and they call Caesar what happens
well I would ya like but I guess that's part of it more broadly typically the the work that we do involves sort of tackling in a bigger issue for which analytics is kind of one part of the overall solution
so I think that's you know to distinguish it from situations where you might just hire say a modeling firm to build you a model or you know her or something like that.

[5:39] Yeah seems like you're solving acute problems with data and and getting to Solutions certainly are it's a lot of fun it's a great time to be in the business.
How much is there is a pie chart of kind of the verticals that you company vertical see you interact with how much of that pie chart would be what we would think of is retail and how much is something like I don't know the travel industry you're the finance industry.
Yeah so you know that's that's a varied a lot over over my career I've actually worked in lots of different retail settings big and small here I would say that.
You're probably about a quarter to a third of what I do is retail get involved in cpg a lot and then the rest of berries could be everything from Telecommunications.
Finance any number of different categories but retail is certainly now and then certainly over the course of the years I've been doing this.
A big piece of it principally because that's where a lot of the action is right it's generally speaking a less-regulated place.
People that the margins are spinner so being good at data and put it in a lytx is more existential for four people the other you know that the people that can do that tend to survive in the people that can.
Don't so so it's it's always been a part of what part of what I've been up to over the years.

[6:57] Call will just go ahead and go to the big elephant that's always in the retail and increasingly other Industries rooms is the Amazon elephant what do you have you put any thought against Amazon and how retailers can either inoculate themselves or protect themselves
even just plain survive in a world where Amazon has become so first of all the first thing to observe is is it really is amazing how.
How they are beginning to go into places where you know historically you you didn't think of historically thought of Amazon is okay you know I go and buy stuff online but now when you think about it there.
They're moving into customer experiences into a physical retail into into social of kind of formats and everything.
And also on the back and on the product side you know that what they've done in terms of beginning to take over product categories with you know what their private labels.
That's that's really extraordinary so it's interesting you know Baynes done a lot of research into how.
What what Amazon is doing and how how to try to in a build a strategy that that.

[8:09] It will let me not be Amazon proof it actually gives you a better shot of competing with them no one at one of the things that.
That you think about is you kind of have a couple of choices when it is you know do I.
Do I try to find a place within their orbit where I can actually.
You know through some form of coopertition kind of you know coexist with them and the other is you know can I can I try to build some ability to.
Distinguish myself or at least you know you have a business in places that are that are sort of less susceptible to the Bezos flywheel.

[8:45] The examples of the former would be.
Things like you know best by deciding to sort of carry Amazon Fire TVs or Kohl's deciding to
accept Amazon returns because it brings people into the store and then they can sell them other stuff that they sell at Kohl's right those are those are kinds of kind of examples of of people trying to
coexist and then on the other side you know there's the question of well you know and this is kind of been the subject of some some research we've done.

[9:17] About how do you how do you actually in a carve out a space where where you can survive so for example you know you if.
At one way to do it is through exclusive things that they don't otherwise selling Amazon right and historically I would have said Apple was an example but it's all recently now that they're you know more and more there their they're actually beginning to do.
First-party distribution through Amazon I guess that the new iPhone x are is going to go through there now it's all an announcement against in the last week on that.
There there are if you're big enough within a category you can actually be cost-competitive good example is you know tonight.
If you go on Walmart.com you can buy the Viva paper towels 12 pack for like under ten bucks in the same things on sale at Amazon for 15.
We're close to 16 actually so that you know if you're if you're a player like Walmart that buys a lot of paper towels or stay Home Depot that buys a lot of you know stuff 240i wires.

[10:22] Chances are you you know you can you can compete on cost but it but that's that's going to be tough another example of a company that I think.
It is that's really interesting to me is Wayfair here locally in Boston they
I think do a really good job on analytics on actually helping people discover what products should have go with which products
you know in the long tail of things that they have in their product offering and doing a really good job of certain Fina putting together rooms and kind of cross-selling different products to people and so.
You got to find some way.
And if you think of the Beezus flywheel is kind of Fino selection and cost and experience you've got to find some way to think okay how am I going to.
And run what they're doing in one of those places at least.
Abacus you can't if you if you if you just try to sort us a while I'll just try to keep up you know you're you're going to get crushed so that's I think a productive way to sort of unpack that problem and think about maybe what your strategic alternatives are.

Jason:
[11:30] Yeah interesting and obviously everyone has to ask her to find a different vector
to compete with them I'm curious you mentioned up front that a lot of your analytics work goes towards helping people optimize their their big advertising spends and you mentioned you work with cpg so it's
in that that segments it's interesting because it seems like,
the cpgs are both having to compete with their advertising spends against Amazon who I think is the largest spender on Google for example
and then increasingly Amazon isn't it.
An important advertising platform that cpgs are spending on so I like how do you how do you think about that and are you saying budgets shift to Amazon and and you know what how do you think that's all going to play out.

Scot & Cesar:
[12:21] Yeah definitely it it's.

[12:25] You know being being on Amazon if you're if you're a cpg you're being a frankly if you're in the other consumer
Products company that with products to be sold there is now got to be a part of the of the strategy I insert when I said be on Amazon being being there from an advertising perspective
earlier this year acquired a,
digital agency that would work with for many years from called forward out in frwd out in Minneapolis and that that has a lot of experience in these areas and that's you know helping clients figure out.
How powder.
How to make that work is now a big part of what we're doing in our marketing practice and and the other things I think their mind therapy people talk about you know analytics but in this case.
News limited history right so a lot of what we end up getting involved with his actually testing this stuff and setting up tests programs to you know to to figure out what was actually going to work.

Jason:
[13:24] Yeah and I I guess I'm curious about that like does Analytics.
Mean a lot of sort of attribution modeling and figuring out.
You know how to spend the next s dollar and immediate mixes and those sorts of things or is it more Predictive Analytics and and soda programmatic AI based bidding type stuff or both.

Scot & Cesar:
[13:47] I think I think the answer is I think the answer is both but but I think I think.
One way I break it down in terms of thinking what you're getting at I think for my for my perspective is actually
thinking both macro and micro and end here here's here's a point of view on this that might be useful.
You know a lot of people a lot of marketing organizations and up
doing a lot of wonderful sort of micro optimization whether they do it themselves or they do it with Partners you know they'll figure out like you know how can I tune my by search budget or how how can I how can I figure out a way to get lift over control on my
I might display budgets with programmatic and then there's you know tmp's and cdp's and everything they're using to do all that stuff with.

[14:36] But what's what's interesting about that is if they typically are missing big opportunities at the macro level that they tend to sort of get down once a year and say okay our overall Investments going to be actually going to split it roughly this way across the channels and then we tend to sort of
your ossify during the course of the Year about about no power going to sort of allocate that money across across different channels
a lot of cases if if they're using TV for example to just go out and say all right you know The Weeknd
car. This amount of money and we're going to go buy it as cheaply as possible at the upfront and then we're just going to go run the campaign for the year and will report it each week as we go but there's not any meaningful you know sort of movement of budgets are testing or anything like that the top.

[15:19] And so you know a lot of people see historically this kind of.
Down media mix modeling approach in the bottom of attribution approaches kind of In conflict and I actually see them as as you know.
Pate yin and yang of of of of what we're trying to do in marketing where
it is very important to be doing kind of within a channel specific optimization
certainly want to take advantage of those opportunities for example you know when search let's say you know D average in your spend and maybe doing things by day week or by day part or across your keywords whatever but
but equally important is actually to have this macro view where you say you know like at any given point in time
is my bottleneck in my business you know attract engage convert or retain
and how should I be kind of disproportionately Shifting my attention and my resources to solve things you know at that bottle neck and in the latest month in the latest quarter
and once I saw that there.
Then I can throw to move on to the next bottle and I can figure out where my where my attention out of be as opposed to just sort of saying okay we're in 6 channels let's be as sophisticated as possible in each of them and optimized to a fare-thee-well at the micro-level miss the big.
Mr. big pictures.

Jason:
[16:38] Yeah so I can definitely see that and I'm particularly interested in that sort of macroview why do you Tennessee clients.
Getting more sophisticated about how they do the macro View and I mean to me it feels like the media mix modeling is several decades old now and it seems like that's still the
the predominant and I'm just it's hard to believe that that still the best the best approach.

Scot & Cesar:
[17:03] Yeah you know so I think I think we need to distinguish between the analytics and the politics so.
There's nothing that you know media mix modeling course is only as good as the data goes that goes into it if you don't have any variation you know in your date if you just keep doing the same plan all the time you really never going to have a useful model because it's not going to tell you much.
If you do have some of that there's there's certainly lessons that you can draw from the data I think what.
What happens though is that a lot of organizations are in was that old expression about culture reading strategy for breakfast the if you have a.
A way of doing things that has led to the creation of a certain sort of an organizational structure and collection of Partners and agencies and so forth those things all have a certain momentum associated with them.
And I think actually you know the well there are certainly opportunities to improve media mix models through creating.
You know tests and creating and just artificially creating more variation your data to help you you know that would sort of the statistical significance of what you're looking at I think they're much more important thing for people to really look at it to try to get people on the same page about.

[18:22] Where are the opportunities might lie and and what they could be doing about that and and not try to get fixed on Unser to some holy war between you know one analytic techniques versus another.

Jason:
[18:34] No that's that seems like great advice.
Speaking of Holy Wars I want to transition to a buzzword that seems like it comes up most often especially when you used
Big Data three times in the same sentence and that's a artificial intelligence and in particular machine learning and.
You know you go to any of our industry events now and you know you'll see a hundred vendors claiming that there
in ml base solution like including the custodial Services seem like they're machine learning based.
And that feels like a little bit of hype to me but at the same time it seems like they're there really is something there I'm curious how you think about Ai and machine learning and is it is it really being embraced particular by Rita.

Scot & Cesar:
[19:20] Well a couple of thoughts first of all.
IU know that movie Fight Club right in the first rule of Fight Club is we don't talk about Fight Club we we have a saying around here which is the first rule of advanced analytics is we don't talk about Advanced analytics we talk about results and.
For me all this stuff you have any conversation that you have about AI or machine learning whatever has to start not with well you know.
Do you have a squad of phds and are you using tensorflow and you know yada yada but but really.

[19:56] Is the Baseline performance of the business process and the statistical metric associated with that business process that you're trying to improve off of and what progress have you made in the last you know three six months whatever on both of those things.
And so I don't care whether you get there with a simple algorithm or a or a you know neural-net or a three eyed pigeon.
Yeah that you keep feds underneath your desk I think the important thing is that these conversations have to shift from from talking about the thing to talking about the result.
The second thing that people need their kind of Bear in mind when they think about AI is that
AI isn't a tool so much as it's a process right you need to think in terms of you know picking the right question making sure you have the right data for it
you can't do real sort of.

[20:46] AI without really big data and you have to sort of maintain a data platform be able to do that you know and then and then you kind of got to make sure you can do something about it right so if you have some great insight,
if you don't have the you know the marketing infrastructure let's say to a sort of act and we'll talk later by personalization but you know if if you can.

[21:05] If you discover that you know you can turn it down to an individual level and distinguish people's preferences if you don't have the sort of digital asset management system of the content management system is so far to be able to
handle Communications about level granularity you're really you're really kind of you know not getting anywhere and so I think I think we see a lot,
is is people pulling together components of of an AI or an ml solution
but not thinking about the full system it so they don't get the full value of it,
I'm familiar with one company that you had one group that actually went out and bought a DMP but they hadn't really hired the people who new kind of what to do with something like that so basically sat on the shelf for about a year until
you managed to come together and actually help them apply at that you know to something does something useful get a result and then actually get some enthusiasm for investing and all the pieces they need to do to take advantage of that and that's it that's a good example having said that.

[22:06] You know there's there's exciting stuff happening with with AI in the world of RetailMeNot you know one example
there's nobody like playing around on tracks that you're probably familiar with you know that
that basically use image recognition to help you kind of keep your your you know your shelves kind of the way they need to be and and then and then help you tune that and that's,
no that's that's actually a you know there's there's applications like that that I think have enormous potential obviously to
the kind of reshape the category but it all starts with having a clear idea what problem you're trying to solve it supposed to just for the talking kind of you know breathlessly about Ai and how in all the intergalactically wonderful things that you can be able to do with it.

Jason:
[22:49] Yeah I know for sure I doubt that the the company you mentioned that that invest in a DMP with no plans for using it was alone by the way in that.

Scot & Cesar:
[23:00] Don't know what happens all the time right it's it's just you know and I think I think it's a symptom of this idea that.
We we have confused the means for the ends where
people are pursuing these things as you know things to be bought initiatives to be you know undertaken as opposed to sort of viewing it from a results and performance perspective and saying you know.
How well am I how efficiently and effectively am I out there you know attracting engaging converting customers and to what degree does a DMP powered solution actually create some sort of lift Over Control.
You know over what I had before.
You know and at what point do I get diminishing returns so I don't need to worry as much about the tack and need to worry more about say the content I have or the offer that I'm making or something like that right.

Jason:
[23:51] Yeah I know for sure and I mean we on the show we talked about a lot is sort of the the shiny bauble problem that you know some some board member goes to a conference and then come back and sent a note to the VP of e-commerce what are we doing in machine learning and 3 months later they've got this
cool data Lake that's doing propensity modeling with you know zero plan to act on that or to change any customer to experience as a result of it.

Scot & Cesar:
[24:17] Now that's that's that's true story, night you know
you got it only seems you got a Target better and Market better right so if you only do the Target that are part and you don't have the ant the engine to kind of do the market better part you're you're not going to get there.

Jason:
[24:32] Yeah I'm just the one example you you gave was I sort of think of is back-of-house optimization sort of improving inventory and and shelf management
I've heard a couple people theorize that the
in the short term that the biggest opportunities for machine learning to make really you know practical impact on on retail
are those kinds of things that it's it's inventory optimization and cost avoidance in those things more so than necessary necessarily
dramatically do new or different customer experiences.

Scot & Cesar:
[25:08] Yeah I I I think.
Prefer not to generalize too much about it I like to find itches to be scratched right so
in a 1-1 company that I'm familiar with you know looked at it from the perspective of having a chronic problem with over ordering for you know for the sales they had never variety reasons why this happened
you know a demand forecast it wasn't as accurate as it needed to be they had kind of a hard to learn ordering application they had organizational structures that a grown up the you know to compensate for that that introduce a lot of bias into the system
and and so in that case you know we.
You know what we we were able to help him basically reduce the forecast error that they had improved the order management interface and actually,
what kind of change some of the organization and operating practices that kind of wrapped around all that
and and what's what's interesting about that is is that it's for me all these things come up from very specific
use cases II I would say.
I just prefer generally not to you know not to sort of right off one.
One category or another every conversation that we have in our tries to start with tell me tell me specifically kind of what.

[26:37] You know your date is telling you about where the problems are in your business and and then through work up from something specific that we can get our arms around that that's proven to be kind of a.

[26:48] You're generally more more successful way instead of tackling the application these kinds of Technologies.

Jason:
[26:54] Know that that seems I totally fair and wise and I hundred percent agree the three-eyed pigeon under Scott's desk has way too much open to buy and is definitely over spending.

Scot & Cesar:
[27:04] It's one thing I kind of.
What is machine learning stuff it feels like as a startup guy kind of like the next Network effect right so you're you're getting more day that you're getting smarter that creates this
nonlinear advantage over competitors and then I started looking well
then is it true that companies with the most data win so so then I kind of come to this place where no one's and have as much transactional data as the big guys like.
Ecommerce side Alibaba Amazon
yeah babe didn't even on the ad networks you know we all thought these ad networks would create this huge democratization of had platforms,
but now they're really just kind of Ogle opoly with Sprite there's two of them exactly so so does it mean kind of game over because those guys have all the add data and the car or stay there or is there hope
if I am a smaller independent company that could mean you'd like in a Best Buy in this this world were talking about yeah.
Help me understand that it is kind of an outsider of how you're thinking about them yeah so.

[28:20] One way to a take to process all this is there's no there's no question that.
The types of sophisticated machine learning algorithms things like in a deep learning and neural net approaches and things like that.
Those really begin to shine when they have a lot of data to work with you don't you know a lot of people misunderstand that that unless you have a lot of data in general the performance of one of those will you know.

[28:51] May not even be as good as what you get with and it was some of the you know some of the more conventional machine learning approaches things like you know.
Gradient boosted trees and things like that so what I would say is though is that.
It isn't just about how much data you have it really it's really back to this idea that you want to think systemically you want to be performance-oriented been think systemically about
about what you're doing and in terms of you know being aligned and where the opportunity is at any given moment
being at you having the access to the data to work with it but then also having the the kind of
the operational flexibility to act on it I actually think that the people that are winning and winning less because they have big data and more because they actually just have cultures that are data-driven that are Nimble that are better to
and and and that you know frankly are just
you know they're wired tube to move in a more agile way then then their traditional folks are that and in the proof of that pudding actually is
just so you know if you look in if you look in sort of the cpg world for example and you look at where all the growth is Ben it really is coming from these insurgents that are so much smaller then.

[30:12] You know than the than the traditional than the traditional players in the categories that they happen to plan but they just move faster and there you know they are more,
analytic by Nature even if they don't have access to the massive datasets some of the you know some of the bigger players you know.
The gravis if they had the inclination to do it.

[30:33] Cool so let's set some kind of best practices of The Cutting Edge to backtrack a little bit you've got a long history of seeing this what are some common pitfalls folks fall on when they when they kind of think about.

[30:47] Using data and analytics to solve a problem well I think the
Alpena kalpana scenario you see a lot which is
company X hires firm why they give him all their data the guys go off site they build models they come back they present an answer and nobody understands the answer
and so they don't believe in so they don't do anything about it right the biggest the biggest so what what's the so what out of that the biggest so what
is that there is an enormous opportunity to get more out of your
modeling efforts by making the process of understanding the data that's going into it something that's much more sort of shared there's famous
a famous statistician named John tukey who invented of a field called exploratory data analysis
and one of the things that we're very keen on is kind of exploratory data analysis for the masses and so what do we mean by that right so like.
What that means is rather than let's take the in the media mix modeling context rather than sort of waiting for the firm to come back and tell you that the marginal Roi of searches you know is Aksum that of TV is why.
Let's just go through some basic line charts up on the wall.

[32:07] And look at what happens when you spend more in TV to do searches go up dude you know dude site visits go up to conversions go up and just begin to have a conversation as business people about what we're seeing actually in the data
before we actually turn it over to the modeling firms to actually go process that and crunch it and come back and tell us you know what it all what it all meant if died of an aggregate
in a statistical measure perspective because I think that,
you doing that really empowers marketers it did kind of takes analyst and marketers you know who typically you're kind of at this passive-aggressive relationship and turn them into collectively analytic marketers and that.
That part of the process I think it's highly underrated as as a really valuable.
You know part of the whole machine learning process that that the companies are trying to take advantage of.

Jason:
[33:01] I'm sensing a trend that it almost seems like in general it's wise for for businesses to start to have a practical well-grounded macro strategy before they jump right into crazy tactic.

Scot & Cesar:
[33:15] I think I think it just certainly I think what I see a lot of is companies that a fact.
Couple things I've seen this week basically we're people have kind of a product out report out kind of way of interacting with their data and decision-making where they say all right you know we we have
Project X it's week,
you know end of the year compared this week with last week and you know in the context of the overall media plan we change the creative this week.
Either they're basically just thinking insert a very static kind of.
You know we already are just reporting on what they're doing as opposed to saying you know.

[34:01] What is what is the bottleneck in our business if you ask that question you say okay where is the bottleneck and what are we doing about it that that.
Drives you to go you know explore the data in different ways and if you're just basically saying you know how did this week compared with last week or how did this quarter compared to last quarter a year-on-year whatever comparison you're trying to make and that that we find is a.
You know healthy lb access it's really important is it it's an accessible way of thinking about the problem.

[34:33] Which is which is important in a world where even though obviously data and analytics are more important there's a lot of you know marketers retailers e-commerce errors out there that that.
They didn't grow up that way and then or just coming to this.

Jason:
[34:49] For sure and speaking of not growing up that way and having having to evolve
the question we get asked on the show super frequently is about omni-channel attribution right and I'm I'm curious if you have any sort of thoughts or best practices and you know if folks are starting to break
the silos in.

Scot & Cesar:
[35:10] I'll tell you I'll tell you what not to do and then I'll back into what may be some some things to do work what doesn't work is
the classic okay let's gather up all our data let's throw it into one big you know repository and then try to big one one big honking attribution model out of it even if that's down at the granular level what you're saying okay you know.
Idx saw this ad you know 30 days ago and you know came back and and so we'll assume that that at work.
That is.

[35:40] That kind of like throw it all into one big pot kind of approach I think cuz has been most people that sort of realized they know that that.
That doesn't work in the work that I've done that had the opportunity to work some really you know of strong people in this.

[35:58] In this category give me example.
The guys are visual like you were my first landlord back in the day when I had my old company in those guys are pros and they they know what they're doing.

[36:11] When we work together one of the things that we did was we tried to First Look at the kind of macro categories of lab results and spending and so forth and figure out okay
which are the dominant channels that we need to optimize against each other in this overall mix and then just focus on just getting like one
one pair of in a couple of channels working together productively right so so if their mix had you know say.
TV and search and then and then you know from there though obviously the conversion through the through the vine Channel we try to just.
And I try to get
DBA search Optimus together if it was Search and say I wish this play in Search and you're just trying to basically say okay to what degree does display spending Drive such a subsequent search behavior let's let's get you know let's get bad
kind of taken care of and and so the the smart approach was in a sequence to it was picking you know,
prioritizing the channels that mattered getting those two working together you know well seeing what kind of lift you got in terms of the results there and then recycling both the results in the lessons Into The Next Step at you take as opposed to this kind of Dino throw it up throw it all into one.
Big pot and I hope the best.

Jason:
[37:30] That that's what I make sense it's funny when I went over to ask her about omni-channel attribution I find the.
There's even dramatically different dimensions that people are thinking about like often their thinking about the
the various advertising Vehicles like television versus search for example which I think is that first thing you took sometimes they're talking about the channel attribution.
You know when when someone does a mobile check out in that stores that are online sale.
Store sale no starts at things and sometimes that you're talking about a touch device attribution when someone browse is on that tablet and then consummates the purchase on that desktop how do we how do we do that sort of things.
And the one that I'm most interested at the moment as we were right in the throes of Black Friday and it's it's going to be the most
digital sort of holiday we've ever had both both online and in the stores any particular thoughts or or pitfalls or best practices you're seeing in terms of that the actual Channel attribution the
that online to in-store and vice versa that kind of stuff.

Scot & Cesar:
[38:46] Well what's really interesting is what I'm seeing a lot right now is
people trying to jump the gun on the on Black Friday all the Black Friday deals that are now being trolled kind of you know in advance and
and I've been tracking a few things just both for professional and personal interest.

[39:13] And watching the you know the prices come down
and and and and seeing whether or not it's almost like we're almost watching sort of like Airline pricing happening in sort of you know retail world now where you're basically you know you have this
attempts were to drop the price and see if you can actually get.
People to you know to buy before Black Friday at the Black Friday price or something close to it because it's really it's really in its if you think about it it's a it's an experience nightmare
right to try to cram everybody into the store at a specific time have people trampled to death
and I was you as you as you go in and answer anything you can do to basically sort of smooth and and optimize the
yeah. The flow of demand into your channels and your ability to fulfill that is actually going to be,
it is actually going to be something that's to the benefit of the business so to me that's the most interesting thing about this particular
addition of a Black Friday and Cyber Monday is to sort of watch kind of the you know the sort of.

[40:25] Sort of like the back in the old days the Oklahoma Sooners who were trying to jump out ahead of other people too kind of stake their claim and and it's not unlike.
You know airline seat pricing now I think is what we're beginning to see happening in in retail
yeah. So one of the big battle areas is cpg and in your sounds like you're involved in there to some degree and grocery where do you think that's going to wear seeing Walmart really kind of triple down on
curbside grocery there's a lot of people experimenting with delivery of groceries and then within cpg you know you have,
so what's going on with these new Challengers that are our kind of digitally native brands
you got the old guys trying to react to that may be acquiring some give us some thoughts on where you see this phone well so.

[41:23] You know that the the question here is very often at what point do these insurgents you know gif.
Buy the bigger players because obviously the bigger players do you know bring a lot of advantages to the the table in terms of distribution in terms of
yeah I was just in terms of their ability to also on the back and provide a a supply chain to actually get things built at scale that a lot of these folks can't you know can't manage as they're trying to grow so.
On the other hand all the groesten and pretty much all the growth in cpg over the last few years is Ben from these that should have been searching players that are for building these
at least these are these new brands go out of authenticity and everything in them.

[42:17] What one of the things that's interesting you know his historical e in cpg.

[42:21] Yuri may be familiar with the kind of a felony in Byron sharp who basically said for a fast moving consumer goods it's really all about mental and physical availability right so it's not it's not about loyalty so much for segmentation that's about just making sure that.
You're out there reaching and repeating and then that you have distribution in the stores and the basically that's how you want in that category what.
What we're seeing now is sort of a a movement away from that we're certain brands developer loyal followings you do in fact segment more than you used to
and I think we're bending the sea is this kind of weird middle Zone wear.
You know the the the new folks and the old folks would have need each other it's kind of a symbiotic kind of thing where you know the the cpgs need these Insurgent brands.
I will acquire them to to drive growth to begin their kind of expand their opportunities but at the same time be Insurgent Brands and a really need.
The the the half-ton the scale in the distribution of the bus on the manufacturing side of the distribution side that a you know that is step one of these large cpgs with their big sale sources for example and I can bring to bear.

[43:33] And that it was probably that sort of interplay between you know.
Those those those two kind of types of players is probably the most interesting place right now.
I see you've all been particularly in a world where even as that's happening the distribution channels are evolving right everything from from you know drone delivery to you know to Amazon is an advertising channel to yes but that's.
That's what I kind of Zone.
There's a geographic term for that that that's not coming to my but that's that's I think where we should watch for a lot of interesting action if it was next couple years.

Jason:
[44:16] Yeah I told you I think it's going to be a really interesting category to follow cuz I feel like the disruption is is really only just getting started there at the moment
I wanted to give it a little bit to another.
Potentially interesting topic that comes up a lot but also has a a buzzworthy component and that is personalization so you know again lots of lots of folks get get directors from their board members to have a personal
Malaysian initiative how do you feel about that and what what sort of best practices are you saying there is that a real thing.

Scot & Cesar:
[44:54] So again let's not confuse the thing for the result right when people talk about this the question I have is.
What degree is personalization are we talkin about right and end are there is is is everybody sufficiently different.
That each person should actually have a materially different
you know offer or experience presented to them in order to generate the kind of lift that over over some more aggregated approach that
you know that you need to see so in general yesayya what we know they're there been
their studies out there that basically say that you know compared with a plain-vanilla US offer the same thing to everybody you know that obviously up personalized targeted segmented approach
is actually get Kratom lift but is it really is a question of degree there are certain.

[45:52] There's certain things that are also easier to personalize that other things so for example you know you can you know to the degree that it's legally
Bob permissible you can obviously very upright at very low price relatively easily in an offer but executing creative sometimes can be you know challenging and you certainly can't necessarily just you know
kind of like morph the product itself on the Fly for every individual customer maybe in some age where we have you know
3D printing in a widely-distributed you can you can kind of do that sort of thing but we basically.
You know beat the other there limits to what you could do on certain dimensions and there's possibilities there's more flexibility have another another dimension.
I think that the way to approach personalization
is through having a really really strong program of experimentation and kind of test test results test for learning where you know you're constantly sort of testing whether or not.
You know that extra sort of bit of variety actually provides enough economic lift that it's worth the incremental complexity that adding and is it said in some cases the dimension that you're burying The Experience on what is actually much more flexible than than another
a number in a digital you know.

[47:14] A degree of offer a promotional discount in an email is much easier to bury than even the creative this wrapped around that.
At least at the moment it may eventually be that we get to automated creative and so forth but that's we are beginning to but but for the moment it's it's.

[47:32] You know for most companies are there limits to just how how finally they can slice things
cool so we're up against time but we we love to ask kind of more of an out there question we've been kind of tactical here and I've seen you guys really interesting tweets about
AR VR and you just mentioned 3D printing and Jason I love to think about some this stuff sometimes just kind of get out of it the day today where do you see the future of Commerce and feel free to kind of
Go Out 3 5 10 20 years would love to get your thoughts on them wow well you know.
I think I think one way to think about this is is is that we
in the end we buying things and consuming them as sort of a means to visit to meeting physical and emotional needs right and and so to the degree that technology involves.
We will were ultimately need to think
yeah we ultimately need to think in terms of how we're sort of doing you know doing those things as opposed to the products that happened to be the this word of vehicles for fulfilling those those objectives.

[48:47] Let me not not to be like super esoteric about it but you know it if if I am,
let me know let's take for example clothing right you know if if if in the world of,
Evo VR and so forth I can begin to sort of project an avatar out there you know then then basically you
your way of sort of interacting with people may change and if your ability to sort of you know shift your shape on the Flies revolves it it means it has heard implications for the whole sort of you know fashion industry rights I don't want to.
To intergalactically distance on this but I think the main point is to basically say that we,
should not confuse the means for the ends we should think about the future of.
Retail in retail technology as something that serving these physical and emotional needs as opposed to figuring out how to get specific product X to you you know more more quickly or or give you a different perspective on it.

Jason:
[49:57] Well that's a great perspective it's going to be interesting to watch it all play out and that's going to be a great place to leave it tonight because it's happen again we've used up all our a lot of time but if listeners have any comments or questions about today show we
encourage you to jump on our Facebook page and
continue the dialogue there as always of this show is valuable to you we sure would appreciate it if you would jump on iTunes and give us that five star review.

Scot & Cesar:
[50:23] Cesar folks want to learn more about us some of the topics that you covered in and see what you're you're talking about on social media where should they find you.
Sure Caesar Brea Mall when were done both
Twitter and Linkedin so I'll certainly post dust up there with some of the stuff we talked about here and and hopefully that'll be useful fucks, put a link to that in the show notes and we really appreciate you coming on the show thanks for joining us
thanks very much for inviting me I really appreciate it.

Jason:
[50:53] Is internally our pleasure thanks very much Caesar and until next time happy commercing.

Dec 4, 2018

EP156 - Profitero's Keith Anderson Holiday Recap 

Keith Anderson (@KeithAnderson) is the SVP of Strategy and Insights at Profitero.  Profitero is a leading global provider of e-commerce analytics for brands and retailers.  As head of strategy & insights for Profitero, Keith leads Profitero's product strategy and global analyst team. 

In this episode, we discuss Keith's insights around last weeks Cyber-5 as well as 2018 in general.

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

Episode 156 of the Jason & Scot show was recorded on Thursday, November 29th, 2018.

Transcript

Jason:
[0:25] Welcome to the Jason and Scott show this is episode 156 being recorded on Thursday November 29th 2018 I'm your host Jason retailgeek Goldberg and as usual I'm here with your toes Scot Wingo.

Scot:
[0:40] Hey Jason welcome back Jason Scott show listeners well this is the third and final part of a three-part series around our holiday 18 quote-unquote halftime coverage
in the first episode we covered a lot of the news that came out of the holiday then we had Tamara Gaffney from Adobe to share
sure do love how their day that was shaping up and we are excited to welcome as the third part,
property Rose s VP of strategy and insights Keys Anderson to the show.

Keith:
[1:12] Thank you Scott thanks Jason great to be with you both.

Jason:
[1:16] It is awesome to have you I've been wanting to get you on the show for awhile Keith I'm a Avid follower of all the content you put on the internet so I'm excited to have a lot of conversation about it tonight.

Keith:
[1:26] Well likewise whenever I mention did I have a podcast people say I would like the Jason Scott show and I said yeah yeah I've always enjoyed it so good to be a guest.

Jason:
[1:37] That's a fabulous compliments so as you know from listening to the show when we have a guest on we always like to start by getting kind of a
a brief synopsis of how you matriculated in your career and came to property row so what was your story.

Keith:
[1:53] Up my whole career has been in retail and consumer goods Consulting and Industry analysis and now,
product management profitero's so started at kantar,
Consulting is it sound known in in those days it was a company called MPI and then help start another industry Analysis company called three telnet Group which is now part of,
Edge by Central and in what while I was there,
my practice was really focused at the intersection of Technology with retailers Brands and consumers both in-store and in out of store,
import of that work was helping some of the brands cope,
even in those days this is seven or eight years ago with the proliferation of Technologies and Solutions in all of the inbound email that comes with the business development teams those companies,
and there's a lot of noise and folks saying.

[3:00] Which types of capability should we be exploring who's good
until I had to have built up a view of the landscape
and have been doing work with some investors and as it turned out the investors and profitero's,
work with us that I had met before and really admired and they asked me hey we are thinking of trying something new what do you think,
and I don't think they were expecting five pages of notes but I had a lot of ideas and they said well.

[3:37] That actually sounds like a pretty good plan do you want to do it so I've been here for about 5 years and,
in that time we built a global performance analytics platform for brand manufacturers so it it's been a nice way to apply,
tell me what I know about the work in and apply it in a pretty different business than anything I didn't previously.

Jason:
[4:06] Nice you can quickly Avail me of a misperception if I have one but I
I think of you guys as one of the Pioneers in a new category of analytics that I I tend to call digital shelf Analytics
and is a a is that like a good description to you is that too narrow.

Keith:
[4:29] I think it is we we sometimes say performance analytics because we in a grade.
At least for Amazon traffic conversion tail share data but you're exactly right one of our court date is at this correct collected directly from,
the digital shelf it's public domain data on Amazon and any other retailers site or mobile app that tells you how your position than search.
Is your content completing compelling do you have enough reviews did you get a negative rating yesterday.
That needs a response are you available in stock in an ultimately you know what's the score in in why are you winning or losing so,
I wouldn't necessarily say we pioneered digital shelf data wait we've got,
great piers in the industries that were there first what we may have done first is connect some of the data points or data sets that allow you to look a little more holistically and we think make better decisions fast.

Jason:
[5:39] And that's why I said you know one of the pioneers and so in my world and I'm super old and so in the old days of traditional Shopper marketing
we used to partner with brands that would spend a bunch of money on in-store displays and we would actually pay school or college kids
to go visit stores and take pictures of shelves and we would look at things like with our share of shelf in the house our product showing up on the shelf and all these sorts of things and so I sort of think of,
that digital shelf is the
the way better Modern equivalent where you guys are are essentially sending Bots to all the product detail Pages for these major retailers in your collecting all this super interesting,
structured data around how everyone is merchandising their their product on on the digital shopping.

Keith:
[6:27] Yeah that there is definitely.
An alignment of some of those disciplines you know for p and and shelf management disciplines in and some Shopper marketing concepts that definitely translate from brick and mortar.
To this domain and some of the benefits of using technology or obvious you can collect a lot more data more frequently more accurately and having been.
What are the people collecting data like that manually in the store a lot more efficiently so so that is one of the benefits I think now where we sorta see things trending.
Ultimately those are Audits and audits are great for telling you whether you're doing what you think you should be doing but given the the pace that.
E-commerce and an Amazon continues to evolve at in and out Dynamic it is a lot of the questions are about what should I do and how do I do it.
So one one key Elementos what tools like these I think,
can help you do it is they keep evolving is certainly see whether what you think should be there is there and things are being executed the right way but it's it's definitely moving deeper and deeper into optimization I think.

Jason:
[7:52] A long lines of optimization tieu you reference some performance analytics data beyond that the periodic can you just talk like in a little more detail about like what kinds of data that is.

Keith:
[8:03] Sure yeah and I think.
What's important to to distinguishes some of the data sets that all describe now,
we can do on Amazon but we can only do it on Amazon and there are a couple reasons so we can,
show up I mean you fax your daily glance fuse for their Paisans on Amazon we can show him there conversion we can tell I'm not only there,
volumetrics that is daily unit volume and and.

[8:37] Sales but we can we can also ask them ate their competitors daily unit volume and sales and then ladder that up to a category View,
aligned with whatever hierarchy they may be accustomed to report again there's two reasons we can do it at Amazon and only Amazon one is Amazon's site structure is is revealing,
there are things like best-seller ranks and who's winning the buy box that are observable in the public domain and with with one of the other inputs to Armada,
which is actual sales for Branson products where we don't have the specific data points we need we can model them really accurately a nation level everyday.

[9:28] The natural question is when can you do that for any other retailer in in I think God's are slim that,
it'll work the way we do it at other retailers but there are companies that operate panels of different kinds in a browser and and device monitoring and,
a receipt modering dead that can also,
provide similar metrics for a broader set a Retailer's too I think the real value is in what we do is at least in in Amazon's ecosystem having those status at seamless integrated,
with workflows that are that are oriented around.

[10:12] The tassel you got to do that's one of the ways that that it comes to life in our world.

Jason:
[10:19] . it's just so I make sure I'm I'm tracking like Amazon because it's so so rich gives a bunch of signals about how products
sell or perform relative to each other so you notice all those signals and then you know I was your client tell you what my actual sales are for my products and then you can use that as sort of the seed to them say alright well here's,
people that are performing acts and not better than you in X-Men worse than you and you can kind of interpolate,
the whole category using my my data and all the signals that you noticed is that.

Keith:
[10:55] That's a that's a pretty accurate explanation.

Scot:
[11:00] Jason,
Smiley paying attention so let's it sounds like a great set of Daedalus let's jump let's go swimming in their start with holiday at a macro level what are you guys seeing here at about half time of Holiday 8.

Keith:
[11:15] I'd say there are two things that I've noticed we had actually just done sort of a 3-month study of of prices at around 20 Us online retailers,
in generally what we see is that Amazon is is the cheapest across,
a broad set of categories both hardlines offline discretionary,
NN consumable what with exceptions on some items in in every category and in occasionally entire categories where they get beat
what it looks like over the period from November 21st to 26 the basically just before Black Friday it into,
today after cyber monday it looks like Amazon was really aggressive with similar price gaps to a lot of the the same retailers that,
that we compared in the last study but larger in in a few cases.

Scot:
[12:17] So during the holiday so it's a lot of people don't realize on Amazon it's like a real time stock market for products right products are changing
channel. So we have to replace her so we're probably part of the problem you're the
the solution depends on how you look at it I'm sure you guys see this a lot right does does that like go crazy during the holiday where it's usually like an 8 out of 10 and during the holiday you're just seeing these retailers react to each other more fever space or doesn't settle down during holiday
what do you see what's kind of in the day that you can tell us about that.

Keith:
[12:52] We see definitely more Dynamic pricing especially on the 3rd party seller so I'd soak.
As you know on the one piece side as with any retailer all pricing decisions or at the retailers discretion it is dynamic an algorithmic.
But the Brand's get no input into Amazon what while nobody really knows how their algorithm Works across the board.
They have been from what we what we've observed.
A little more selective about the items that they don't want to be beat on or that they really want to win on I think that.
We did a study of hourly pricing a few months ago and I unfortunately don't have it pulled up but I think we saw orders of magnitude more intraday price changes.
From the third party seller side and that's what we see over holiday to what one of the things that we've seen a lot of retailers.
Last year but especially this year is what appeared to be somewhat constrained Supply so that's one of the other reasons you may not see.

[14:11] As aggressive price matching between retailers during the promotional period because if they're not promoting the item they probably don't have to supply and so I think they they are getting to the point where.

[14:23] They'll consider matching on items that are.

[14:28] Key items for them or that they're promoting but the rules engines are getting sophisticated enough that there's less of the Brute Force price-matching across the landscape.

Scot:
[14:40] It it feels like Amazon's everyone's being particular aggressive on toys because this is the first holiday where we haven't had a Toys R Us and then the Adobe folks were talking about Dad and Amazon called out apparel and toys in their press release
can you see you talk about this kind of macro view of Amazon compared to other folks can you look into your data and say,
my gosh they're going crazy on toys or any other kind of categorical stuff there that was interesting.

Keith:
[15:08] Yeah and toys at Walmart looks like they're being aggressive although a little less aggressive than they were in the second quarter on price,
and in jet actually looks like they win.
Much less aggressive but it it certainly makes sense there's definitely a vacuum that's been left,
you know we've seen some other supply chain related
complexities in in some of those categories over the same. So I'm really looking forward to the the final read on what the cell through was just to see how that compares to what we see in our pricing and promotion,
data as I I think everybody wants to win those those Shoppers looking for their Toys R Us substitute.

Scot:
[15:53] Aromatic wants to have plant their flag and toys this holiday so they're they're being super aggressive.

Keith:
[15:58] Yeah we also saw a lot and in baby which I think is sort of a similar idea just not a seasonally aligned,
but naturally when you went when your family expands especially For the First Time suddenly you're looking for new products that you've never bought and doing a lot of research and that makes you more receptive to.
The Retailer's so I think some of what we we saw in the baby category was was potentially related to it too.

Scot:
[16:26] Cool swim if it's kind of already covered toys do you want highlight the Mack.

Marker 05

Keith:
[16:31] I do electronics I think was was pretty competitive with Walmart and Jet being most competitive followed by Best Buy Best Buy was was 15% more expensive jet.

Marker 06

[16:45] 10.4 Walmart.
5.9 appliances not quite as is closed Amazon but Walmart.
Closest Home Depot 2nd close closest in in tools and Home Improvement or another one where.
What one of the rare ones where a specialist in the category really,
let our price in that case I will not let Home Depot's a little more expensive than Amazon but Home Depot is less expensive the Walmart so it's been interesting to us to watch,
it is we've seen over the last decade with a lot of the brick-and-mortar category specialist in their online counterparts.
Feeling to find a a point of difference,
you know do these players eventually capitulate and try to compete on price or do they give up I haven't mentioned Staples but they're commonly 35 to 50% more expensive,
so when I see Home Depot or somebody pricing is close to parody with Amazon as it looks like they did over this. It's sort of notable.

Jason:
[17:58] Interesting is it what category that I'm particular interest in then and I'm curious of it
if you had much visibility in your in your data so I know you guys are really strong in the cpg space and obviously cpgs the
a category that I feel like is quickly getting disrupted by digital like there's not huge adoption to sales yet but it's it's Rapala daily involving and particularly on food I feel like coming into this holiday.
A lot of the retailers have really muscled up there they're digital food capabilities he had
Walmart with 2,000 stores you have Target with the whole ship infrastructure you had,
Whole Foods doing a digital orders and rectal home and you know of course she had you know instacart continuing have a strong present so in my mind
this this Thanksgiving was really the the first holiday that people had a very likely had an option to do there
their Thanksgiving meal shopping as curbside pickup or home delivery and I'm curious to see if it it look from the data like like there was traction in that category.

Keith:
[19:06] I don't know that are dated will reveal if we're talking about fresh and perishable groceries are they won't reveal it from a sales perspective,
I think you're exactly right it's clearly been an inflection point this year with with massive expansion I mean the last two years but this year especially massive expansion of availability.
Click and collect and delivery models.
Especially in some of the the tier-2 tier-3 you know less less Urban parts of the country that.
Prior to models like instacart really scaling meant that.

[19:50] Let you know any previous Thanksgiving for the last 20 years you could have ordered online groceries if you lived in Chicago New York Boston and a handful of others,
big metros but what I think is really notable is almost anywhere you can buy groceries you can buy them online now that the,
gross trajectory that you'll see though for online grocery is pretty different at least local on my groceries pretty different than 10 for typical e-commerce there are a lot of.
Surmountable but but important hurdles to triggering or prompting that first order in so I did see.
Retailers like Amazon and Walmart doing some interesting promotional stuff at some times with their suppliers in a komarketing.
Campaign trying to trigger that that order with either waived delivery fee or you know discounts if you if you buy in bulk.
To a few different ideas but my suspicion is it's going to take a few years of.

[21:09] Extended exposure to persuade you no more than a quarter of the the Target shopper base in any of those areas to try it once they do try it,
if it's a if it's a good experience then they start shifting some of their stock up trips and some of their there.
Routine grocery consumption to that model and that's where things get sticky I do think you know things like instacart lowering their annual membership fee to put it now actually a little below.
Prime and definitely below Prime including Prime fresh.
Where where before they were more expensive you know there's definitely that eagerness to.
Drive drive trial and then through those membership models which not all the online groceries have try and unlock a household in.

Jason:
[22:03] Yeah it is one of the thing that's been fun for me about grocery is that it's both familiar and feels a lot like traditional e-commerce and then it's it's very different in for him anyway
and one of those Pig ways people have talked about it all that much but for most categories of e-commerce
what super important is the capture that second order from a customer
right bike so it is actually not that hard to get a customer to make a one-time purchase but until you get a second order from that customer you really haven't formed at
Habit in it you can spend much money to acquire the customer selling something wants and not be very successful so you have to work really hard to get that second order in
groceries potentially the one category where that flips its so list based that it's super important that you be the first brand that gets in that list because like it's very likely that you better,
had it thanks for that Chopper they're going to continue to to reorder off that list and Serta manicure that list rather than,
like make new product decisions every single time.

Keith:
[23:08] Yeah that's exactly right and I was thinking even from the Retailer's point of view you know part of that.
Complexity is the larger order size that there in the average amazon.com order there's between one and two items.
But a typical grocery in in online grocery orders or even larger,
will have 25 or 30 items under 20 or $150 and that that take some planning in in a little deliberation to build that basket.
And as a result there's a lot of Abandonment of the online carts when you add three or four of your items and then.
Say you know what I know exactly where those items are if the the Stop & Shop.

[23:58] Three-quarters of a mile down the road I can get down there and get in and out and just have this stuff in the kitchen in an hour so you know there's it and then all the concerns about.
Produce freshness and I want to pick my knee and and all those things and in a lot of those things are some out of all but yeah once you get the Shopper to try on my grocery from the Brand's point of view you're exactly right.
You know search still matters but it it matters,
Less in the online local full basket models then then on amazon.com and that favorites list is a big part of it in there there have been some clever things folks have done,
like letting you link an in-store loyalty card to your online account so that they can pre-populate your first online order.

[24:48] Based on what what you typically Buy in their stores so people for years has had a a feature called guess my order like that and I think that's clever and we're actually starting to see,
at least a b testing or or piloting if not full scale.
Roll out of sponsored products in shopping list and Registries and some of those things you know just this week we were noting that some of the baby registries on Amazon are are.
Displaying inline sponsored products alongside what the the new parents are actually asking for that it's getting very interesting because there's all this disk Clarity that.
You do need to be on the list but.
Getting on the list is much less straightforward than how you drive traffic to a product page or a lot of the things that other brands have spent the last decade or two optimizing for in a.
Spearfishing amazon.com style model.

Jason:
[25:55] Yeah and you did highlight I think one that that getting a lot of covers this week I want to see Wall Street Journal may have ran an article exposing some of the,
the Amazon sponsored listings in in baby registry and I have to say that feels and looks to me like particularly oil.
Like literally what's happening is is Shoppers Bill the registry list they send it to all their friends and Procter & Gamble has the option of spending a half million dollars to have,
to add their own products to your list with in a very settled sponsor branding and it it it literally says on it you know zero of one purchase just like any other item on that,
gift registry and so your friends are buying the stuff out the Procter & Gamble ad because they think you've requested it and if you know Amazon to me is a very good shopper friendly,
company that like you know claims they always really focus on the user and this is to me one of the most over cases where,
like they could we are not focusing on the user and that in that execution.

Scot:
[27:00] Yeah it's hard to say what's going to Sticks Amazon is like you doing multi-grain testing counseling so web see if something like that 6 I think but it feels oily Amazon is typically done a pretty good job of pulling back on it but we'll see.

Keith:
[27:14] We obviously see a lot of the knot,
unit test by test what's what's being tested but we were like like Channel advisor would be wear on their side all day and in the testing is really escalated this year and a lot of it has been around sponsored products,
every week you see an article about not only the gross but the importance of that Revenue to there.
To their profit model so I think they are really just testing the boundaries and not only saying what works but listening for the reaction and seeing out.
Ruffles feathers that doesn't around the ecosystem.

Scot:
[27:57] That was a good summary of what your scene in Holiday lets this kind of pull back up to 30 thousand foot level 1 of things we've been wanting to get you on the show to talk about is just the more general pricing
I report you guys put out there,
give us a an overview of what you're seeing and kind of more of a macro Sensa and any interesting highlights you want to call out we would love to hear.

Keith:
[28:21] Sure bite I think by this point it's it's evident that most retailers have some.

[28:32] Competitive intelligence and repricing capability and the the margin compression.
That that has resulted in when it's not widely deployed I think he has become a big topic so I mean the tactics I think you're really important but we we just did a big,
survey with kantar Consulting of 200 brands.
Globally and in the number one challenge that they cited above all the other challenges was pricing and profitability,
I think one of you mentioned you had seen the the recode story about the big shift.
It seems to be underway between how Amazon had been.
Essentially tolerating this emerging one p3p hybrid strategy that some suppliers have been operating are exploring what what what Amazon basically did was,
Crackdown and say if you're doing business with us directly is a vendor we want you to be a first party vendor and even if you've identified and authorized reseller,
is trying to enforce that authorization against unauthorized resellers.

[29:54] We we need you to consolidate on the one piece 5 in and you know when you hear some of the commentary and that record article from folks around the industry,
it's pretty alarmist or at least it sounds very alarmed but I think innocent it's a fair characterization.
You know this is not a particularly new problem but is the growth is compounded especially in these low-margin hot high velocity consumables category.
That there quickly Awakening to.
The supply chain in and unity conomic realities in realizing boy we have to,
contain cause and we have to raise a species until what where that leads us is wheat we definitely see a handful of retailers competing aggressively,
everyday shelf pricing on the items that everybody carries in common but there's also been a big escalation of.
What I think I was more strategic investments in in either value or non price point of difference.

[31:09] An example would be something like jet smart card which I'm not suggesting is widely adopted or or loved by shoppers but it is a way to make the economic trade-off that,
impact the retailer explicit to The Shopper so that they can align interest and say,
hey if you waive the privilege of overturning the product that saved us so will pass some savings on.
But much more investment in private label and exclusive Brands very aggressive Push by Amazon over the last few months in what in some categories might be a bit of a pivot from.
There their previous private label.
Strategy to more of an exclusive strategy a lot more tie-ups with some of the.
Direct-to-consumer Insurgent Brands and a Target is been partnering with a lot of those brands that.

[32:08] Built a little awareness through direct consumer model but then hit a ceiling and needed a partner to scale so I don't know if that's exactly what you had in mind on the price something but what I'm going to harden to see is.
That the retailers are starting to think of ways to transcend,
Brute Force matching hourly on every item regardless of other impacts cuz I think we can all see that's not going to be sustainable for five years.

Jason:
[32:42] Yeah I know it's early as a race-to-the-bottom maybe a close cousin or lated to like you know all the the,
Dynamic pricing and and controversies there is just sort of General product visibility right like so a super common narrative all have is
every three piece our thinks they're being disadvantage invisibility versus stuff that Amazon selling directly so they they think.

[33:09] Amazon somehow cheating and making one p product more visible than their 3p version,
and like increasingly as Amazon has more more their own products all the all the you know National Brands feel like there,
there somehow disadvantaged invisibility versus Amazon zoned products and the the newest iteration of this I've heard is a lot of them,
there's several of my clients that are from very large Brands like have asked if,
I believe that Amazon is disadvantaging a large brand versus smaller digitally native Brands because their perception is,
that that
sort of small Challenger brands are emerging and and doing really well with his ability on Amazon and their their perception is that it must not be a completely Level Playing Field like my overall reaction all that is that it's,
Amazon has a pretty fair system and they just know the system best of the they're able to take most advantage and there's not anything nefarious going on there like I mean.
You guys have about that.

Keith:
[34:17] I definitely have a few thoughts I think Amazon.
With their own labels we've seen a couple a B test that they seem to be running only for their brands not for others so that you might argue could be.
Putting a thumb on the scale but I generally agree I think it's a pretty fair system overall and I don't think that big brands are necessarily disadvantaged I think they just don't.
Have some of the Scale based at Pantages on Amazon's platform. They're accustomed to in brick and mortar where it's a lot more relationship-based and things like,
category management are really relevant whereas,
they are relevant but less so at the end LaSalle I do think though you know when you look at some of the inherited limp inherently limited selection.
Platforms like Prime now in Fresh & Pantry those are certainly biased towards.
Mainstream National best selling items so it in some of those areas they have the benefit and I think as the.
Is the sponsor product in any Amazon advertising.

[35:43] Options continue to expand and grow in importance again he who can pay is going to play so I think there are signs that.

[35:56] Yeah I think it's a Level Playing Field in the broadest sense but there are Pockets where brands of any scale can can get it banned.

Scot:
[36:05] Cool see you talk a little bit about sponsored products what kind of things can you guys either can you can you see like lift that brands are getting from doing this or or anything like that in any interesting
Abe.

Keith:
[36:24] Yeah yeah I mean I think we see things like who's sponsoring which keywords.
What which is is always interesting because Amazon is a lot more Wild West than thing Google is at this point and in some of the targeting you can do just week by week seems to get,
more interesting.
You can Target competitive products brands that there's a lot that's interesting but we see it at least where it's our clients product.

[37:01] You know traffic conversion in that gets really helpful.
When you're trying to optimize campaign spend because some of the the internal reporting doesn't tell you things like you can pay to drive a lot of traffic to this page but.
Nobody buys a product it doesn't convert so I think some of the brands are are just trying to ramp up as quickly as I can understanding.
How the platform Works what are all the metrics and interesting time because in that area in particular is we've been,
repeating it it's becoming so important in most companies we've encountered it was manage historically.

[37:49] Bye-bye the Amazon team.
Where it can be argued it should naturally live cuz it's a lever that drives growth but it's not the only lever the trash growth on Amazon but because the work is so similar to sem.
In traditional search engine a lot of the marketing teams are really starting to get interested.
And and I think it's just going to be interesting to see how how the work ultimately gets managed and and whether this ends up being more of a,
lever among many,
in the context of growing on Amazon or is Amazon media Network.
Transcends Amazon properties and in more more resembles a Google Network it's just going to be so interesting.
Who ultimately does the work are you going to merge sales and marketing.

Scot:
[38:45] Yeah I think we can you and I can both agree you wouldn't want like one of these ad agencies to do it or you know like this like a sapientrazorfish or anyone like.

Keith:
[38:55] No it should definitely be the analytics companies.

Jason:
[38:59] I feel like the on-demand Car Wash company should really be doing it.

Keith:
[39:03] I was wondering how we were going to work that in I will say something Jason that make you may find hardening when we ask these 200 brands.
What are you spending on it what are you going to spend on you know thankfully e-commerce data analytics and insights was number one but search agencies and product content agencies were number till 3 so.
The Outlook seems somewhat Rosie.

Jason:
[39:32] Yeah well I mean I feel like there's headwinds and Tailwinds and and I'll ask you a question that like potentially highlights one of the Tailwind,
are headwinds weather at the moment it does be like most brand Outsource all this work like they Outsource a lot of the content development work for optimizing digital shelf and they optimize a lot of the the Amazon media works
sponsoring visibility on the site what I run into a ton is usually their Outsourcing both of those pieces of work to two different entities.
Disappointed maybe their traditional paid search agency that they're having do they Amazon marketing stuff or or they may find a specialty friend that does that and they have someone else focusing on on Rescue optimization,
in the long run it won't surprise me of a lot of that work comes in house cuz it's quarter their brand building and,
you know I think Amazon has a vested interest in building a tool set that's easy enough for the,
the clients to use directly but at the moment we're the Outsourcing it I feel like it's a tragic mistake to to divide those pieces of work because in my mind if so,
critical to have Synergy between like you both need glasses on the products and then you need conversion on the products right and so.
Don't spend much money on visibility for excuse that that you haven't optimizing are going to be able to convert and vice versa don't spend a bunch of money optimizing excuse that no one's ever going to see.

Keith:
[40:59] Yeah no I like you I'm a big fan of not covering one eye when you don't need to and in a lot of how we structure our analytics is trying to.
Give me the complete picture so I think if if you're.
So specialized that you're you're doing great work in a narrow domain that has implications for the rest of the flywheel.
You're never going to.
How to execute and you might end up causing a lot of problems and we do see that scenario sometimes where the left hand isn't talking to the right and you have wildly different creative below the fold.
The contrasts with.
Clearly heavily SEO optimized above-the-fold content and you just look at his page and you're like what is going on.
Was there nobody that had final sign off and looked at this and said this is not coherent.

Scot:
[42:02] So you're you guys have this survey data and then like the pricing data
maybe just kind of top-of-mind what are some things brands are doing right and wrong that you see obviously don't call out any friends and stuff wrong and then any other you know
maybe there is a certain brand AC that is kind of like
the case study for for how you knock down all the best practices in anything like that you can share with us.

Keith:
[42:29] Yeah what one thing that we noticed in some some other research we did was there's been an uptick in the.
Especially the high end of the consumer products industry that is the largest companies.
Doing things like corporate venture capital and either technology or brand accelerators and going back to the sort of unfair Advantage discussion,
we were having as it relates to Big brands of small Brands I think you know that gets.

[43:02] Interesting because there are some disadvantages that a big brand has not because of a decision Amazon is making but inherent to that.
Retail model in other words in a drugstore there's four feet of shelf space and very limited Choice I've been a lot more Choice than one might need but.
You know limit of choice so you can manager for peas and really get unfair advantage.
But at the endless aisle whenever shop researches differently that there's no question the demand curve is not going to be is concentrated at the Hat.
And that.
That I think is going on a lot of the big Brands who have seen the share shift to Insurgent or emerging brands in a realizing we need to.
Think differently about building Brands and and watching friends and I see him moving with more jiloty so you know what an example is setting up.
Essentially a standalone business unit that has the autonomy to go and then decide.
All facets of it what they want to do we see about 16% of Brands doing that that's one thing that I think it's is interesting I think the biggest thing that they're missing although some of the.

[44:29] Smart Ones in the ones that that have been directly impact that are getting really serious about supply chain and unity economics and that means you know deeply involving.
E-commerce in the R&D process and new product development process so that you're thinking of product form and packaging and pack configuration in summer even to jointly funding.
Research and automation both Warehouse in in last-mile automation both of those are areas that are just seeing tons of capital.
Inflow right now and I don't think there's at least outside of the warehouse there's no clear model that is.
Dominant but but I think you know not not paying attention to the unity candle makes it is the biggest Pitfall I can see.

Jason:
[45:22] Yeah it's it's not hard to imagine why that's not a good practice keeps running up on time I want to get one more question in before we we do wrap up though
maybe kind of,
taking our head out of some of the the minutiae and the tactics like big picture how do you see all of this.
Hannah playing out over the next I don't know you know 3 to 5 years are we still.
Do you sell see a market that has a similar number of competitors with a consumer with a similar market share that we see today or,
you think it's going to feel a lot different.

Keith:
[46:03] I think you know I interviewed Liza landsman when she was.
I think Chief customer officer a jet in this was about a year after they launched and she said.
Everybody thinks that e-commerce is going to be a winner-takes-all market just like most technology markets we think it's not we think it's going to be a binary Market with two dominant choices and we're going to be,
one of those two choices and it's starting to look like that you know I think from a Marketplace perspective.
It is winner-takes-all in the broadest sense most countries or regions seem to have one dominant,
Marketplace in a lot of niche market places but I think it's plausible that you'll see Amazon at Walmart.
With dominant share in the US I think you'll see Alibaba and JD.
In China Inn in scenarios like that I do think because of.

[47:14] The capital intensity of owning and operating the infrastructure.
There are advantages that that scale brings to an Amazon or Walmart that is time goes on it just gets harder and harder to to catch up without renting some of that infrastructure Pro.

Jason:
[47:34] Yet no I wholeheartedly agree I feel like we're currently moving towards a lot of duopolies the smart alec Amy has to wonder was that Liza interview before or after the jet acquisition because I sort of agree with her where we're probably you know part of a duopoly
after the Walmart Acquisitions but I'm not sure jet was well-positioned to be but one of that part of that duopoly before the Equus.

Keith:
[47:58] If I recall it was before but I interpreted her to be sort of projecting.
Into the distant future that jet either independently or perhaps as part of a larger entity like Walmart they thought they had a Playbook that would.
I think fill in the space at the opening price point in really price oriented.

[48:24] Value equation that that Amazon had frankly seated a little bit with a lot of its bundling,
you know baked into the idea of we want Prime membership to be so valuable it's irresponsible not to be a member is we're just going to keep doing some stuff for you,
that you may not know about care about value and I think Mark Lower.
Well you know we can just go back in at the low end and and we can beat them on price if we get creative,
so I think there's there's value there I am always watching with the hard Discounters like Aldi and Lidl who are are quietly doing a bit,
online those folks are always interesting at least in the grocery and tpg contact and there's more more chatter about Alibaba coming to the u.s.
It in a much different way than they have so far and what that looks like everything is just going to be interesting but it's it's hard when the market is at this stage.
To enter from afar and make an impact I don't know we really haven't seen it online outside of Amazon.

[49:46] And in some of their International expansion but we definitely saw him brick-and-mortar and and I think there's been a lot of,
retrenchment retrenching over the last 10 years following the 90s so it'll be an interesting 5 years.

Jason:
[50:02] Yeah. For sure to me that is one of the fun Parts about being in the industry right now is it does not feel like the play book is written or or certainly not set in stone.

Keith:
[50:14] No I meet you at just think of all the new I know you said we have to wrap up and I promise we're almost done but think of all of the new devices and user interfaces that are actually starting to,
materialize
any voices the big break out and it's not really there for e-commerce but I think is it continues to improve and people get more experience with it.
It's going to open all kinds of environments in contacts to.
Commerce in a lot of other things as May augmented reality it if it reaches.
Mainstream adoption so I think when you look back at it how.
Markets gettry architected especially in technology markets whenever there's a platform shift like that it tends to Crown their winners so it if ways continues to expand and becomes a bigger deal.
Whoever owns voice is going to be interesting and I think there's going to be a lot of surprising new hardware coming over the next 18 months it's going to keep us all fascinated and busy.

Scot:
[51:25] Amazon said that 10,000 people working on the Alexa team.

Keith:
[51:30] I saw that there's a robot rumored to be launching and I have a new love of robots so that's one of the things I'm looking forward to.

Scot:
[51:40] Jason be all over that.

Jason:
[51:41] Yeah it's a double win like not only could those things drive more Commerce but just acquiring those things will drive more calmer.

Keith:
[51:48] Exactly right.

Jason:
[51:49] It's another flywheel 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 if you were itching to make a comment or ask a question feel free to continue the
conversation on our Facebook page and will be monitoring that as always if you enjoy the show the
that never went on the Christmas list for Scott and I this year is for you to jump on the iTunes and give us that 5-star review.

Scot:
[52:14] Keith thanks for joining us I know you're super busy we really appreciate it where can folks find you online.

Keith:
[52:19] They can reach me at Keith's at profitero's. Com for just find me on LinkedIn thanks God thanks Jason big fan and and really grateful for the invitation.

Jason:
[52:30] It was entirely our pleasure keep thanks very much for the time and until next time happy commecing.

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