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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: 2019
Oct 10, 2019

EP191 - UNTUCKit Chief Digital Officer Lockie Andrews

Lockie Andrews is the Chief Digital Officer of UNTUCKit (@untuckit).  In this broad-ranging interview, we discuss UNTUCKit origin, Omni-Channel strategy, customer acquisition, Amazon, and challenges and opportunities of scaling a direct to consumer business.

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

Episode 191 of the Jason & Scot show was recorded on Wednesday, August 21st, 2019. live from the eTail East trade show in Boston, MA.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from the etail East trade show in Boston on Wednesday August 21st 2019 I'm your host Jason retailgeek Goldberg
and unfortunately Scott was unable to join us today so you're getting twice the Jason for half the usual cost and if that weren't a great enough deal I'm sweetening the pot by asking a request to be on the show today so this morning were talking to aqui Andrews who's the chief digital officer
untuckit welcome to the show lucky.

Lockie:
[0:59] Thanks for having me.

Jason:
[1:00] I am super excited to have you for listeners that may not have experienced the life-changing,
advantage of owning an untuckit shirts can you give us the to the Reader's Digest on who you guys are.

Lockie:
[1:16] Absolutely thank you again for having me and it's super exciting to be here to talk about until,
untuckit was started by Chris Rock a Bono and Erin San Andres they're still actively involved in the business which is amazing and they had a simple idea of creating the perfect
untuckit shirt as some of you may not realize it but the traditional shirt is not meant to be worn untucked
and it actually looks a bit sloppy so they had the great idea to design a shirt that would make men feel and look sharp even at their most casual.

Jason:
[1:48] I feel like that was a great Insight were they in the apparel business and so this was like a new thing or or did they have that insight as a user and have to figure out how to get into the apparel business.

Lockie:
[2:01] Totally as a user and they were not in the apparel business but notice that now traditional shirts are just designed to have longer Tails so by having the
bright idea to actually design something that didn't exist at the time they took it upon themselves to design at shirt and it took them several years to prove
but now we're in a movement wear untucked shirts are a real thing and we're excited about it.

Jason:
[2:25] Yeah I know I definitely think that a real thing I feel so I work at a big digital agency and there's there's kind of this up for the men there's kind of fishes uniform which is like
jeans and a sport coat and I I feel like we're right at the Tipping Point where you're it's possible to show up at a client meeting she's me in an untucked shirt,
and so now it's it's like a little boy that's my question to my like account manager before I go visit a client like at his talk to her on top.

Lockie:
[2:59] Yeah and it's it's been going on and it's been a good Tailwind for us when they started the brand they actually didn't think that it would be a brand that would extend past now the Millennials The Pool Guys in the off,
but what we find is with the casualisation of America and general,
and the fact that body shame so our average age is actually 2260 which was really surprising but part of it is your body changes and we designed shirts for all bodies which is something that the traditional apparel industry had not thought of.

Jason:
[3:29] Awesome well I'm glad it's going well I want to dig into your business a little bit but before we do how did you come to untuckit.

Lockie:
[3:38] Yeah I bet.
Actually a client so I have a consultancy that focuses on digital transformation and I've been working in the industry for 15 years as untuckit and and the great Founders had their insights they built the business,
I haven't necessarily invested in technology and they're now at a point and have the size and the with VC backing,
that in an effort to make sure we become the billion-dollar unicorn that we want to be at we needed to invest in technology so I started out in a Consulting role and
really love the brand love the people love the culture and the inclusive mentality that they had and at the start of the year they asked me to be Chief digital officer so I except.

Jason:
[4:19] Wow that so that puts a whole new stress on the invite you had to get them before you took the gig that you're like.

Lockie:
[4:27] Yo absolutely.

Jason:
[4:28] Wait a minute if I take this job like I'm have to see that advice through which is the secret of the Consulting industry is that we usually don't.

Lockie:
[4:36] Exactly yeah and then because I had my background is mostly in networking with venture capital or private equity-backed brands,
I'm always held to Tasca those relationships run long when you're working with a peer Avicii fun so from time to time I actually have to implement I've got to eat my own words so to speak so if I make the recommendations sometimes I have to actually come in and implement it so this is Ben,
perfect segue into untuckit.

Jason:
[5:01] That that is terrific so you were on a piano lady till yesterday and if you like your panel title had a little bit of attitude.
So the first half seem like super conventional omni-channel is table Stakes but then you you throw in the what are you serving.

Lockie:
[5:18] Yeah yeah.

Jason:
[5:19] So there were few retailers on the show a friend of the show Chris hard to see from now Clark's was one of the panelists and for our listeners that weren't lucky enough to get to attend the panel
can you start to give us a high-level about what your POV was on the panel.

Lockie:
[5:38] Yeah I'll meet you in the lobby is overused and it means different things to different brands to different customers but we really tried to break it down obviously at the heart of omni-channel is a single view of customer at a single view of inventory,
and if you're at a legacy retailer like a Clark says it was some of our partners were it's a lot harder than when you had to digitally native brand like untuckit and we're starting from scratch so we were sharing some of the pitfalls in successes that we've had but it,
all comes back to data and I don't think big data is overused an overplayed because it is real,
and part of that is having to Technologies at a cost effective to be able to draw insights from that data and so we spent a lot of time talking about.
Everything from getting a CDP a customer data platform to building out the foundational elements of an Erp enterprise resource planning plan so that you can get,
360 degree view of your customer this is all hard stuff I think we all agree that is not easy and there's very few who are actually getting it done appropriately.

Jason:
[6:41] For sure and it's one of the interest in contrast to me on your panel so it was a lot of conversation about data and that single view of the customer you're a digitally native brand,
this far as I know exclusively sells direct so both online and in stores but you but you own the customer in all cases
and of course there are two or more traditional Brands Clark's in Novato.
Who are like for the most part disintermediated from that customer so when they're thinking about both what date are they can collect and what date are they can act on.
That data is much rarer and more precious for them and I would argue it's it's an ordinate Lee hard to get it right even in your shoes where access to the data is probably not a primary problem in so you think you you.
He already one of their shoes and you really have to start getting clever about how you use aggregate data on what you can do.

Lockie:
[7:39] Absolutely it's hard for all of us out here it's not an easy effort to get omni-channel but at the end of the day it's the customers were demanding it and whether it's hard or not we have to do it.

Jason:
[7:50] For sure so let's unpack that untuckit when they first had this Epiphany and they they.
Figured out how to make the dish first product did they do any kind of Market validation or did they just go all in and say where we're putting our,
our life savings on the line and we're going to open a website or how did that work.

Lockie:
[8:13] The great thing about having to Founders is we had one founder who was definitely all-in chips all-in on the table and another founder who actually was a little more reserved and that's the brilliant balance that we have as a startup and we started with a one store in the website
and both the founders worked in the stores and actually did those customer phone,
Roots one online working in the stores and understanding how to fit could be better they also mind all the customer feedback that they got through the website so if there were,
plants are returns they were the ones responding to it so is your digital Founders story,
but It ultimately we took a while before we kind of hit the gas to say let's do this let's open up what we have now 75 stores across the us we perfected it from 2015 to 2017 and then.
Up and to the right it's been a really exciting Journey once we got the fit right and understood our customer base.

Jason:
[9:10] That's awesome and I've already learned something so I made a false assumption so many did you need to bring ends course the easiest way to sell stuff from,
level of effort and cost standpoint as the ones that website and so most it's only two Brands start as a pure-play e-commerce Venture and ultimately
like discover that there's a lot of benefit to opening stores as well but so know you guys open the store simultaneously of the website lets it you're based in New York today was that first store in Manhattan.

Lockie:
[9:43] Yes it wasn't so how it's the store still there on Prince Street.

Jason:
[9:46] Got it which is a super uncompetitive retail section for people that both apparel retail and Soho.

Lockie:
[9:53] Yeah and we're also headquartered there so that helped as well so having the headquarters in your the store and making sure there was a split between when we launched the website which would have been in 2011 versus when we actually open the store which was in,
15 but ultimately getting that consumer feedback in that real touch point I think they noticed.
Hopefully sell that having stores is the best thing that you can do is a digitally native brand so we we definitely understood that very early on.

Jason:
[10:21] Interesting and I want imma get back to you in just a sec but the so assuming they didn't have a ton of experience in e-commerce or retail in additional peril mean you're not in Wise wait podcast it's hard to see the knob,
just teasing so.
Did they like I'm trying to think 2011 Shopify would not have been like a super well-known platform at that point like today.
What like how to divide do they hire someone to build a custom website today what would you know what they did or.

Lockie:
[10:53] Fortunately Shopify was in their sights
and we are actually still on Shopify plus so part of the beauty of it is our Founders are very conscious of dollars it was their hard-earned money that went into the business early on cuz we waited some time before we took outside Capitol and they grew it very wisely bootstrapping it and Shopify was and I believe very strong and it's a great
a platform to launch especially now a new brand.

Jason:
[11:17] Yeah I think it might like today it would be pretty easy for a brand to find Shopify and it's super easy to launch a site my recollection from 2011 they existed but it.
It would not have been an obvious slam-dunk there would have been a bunch of other choices with equivalent Buzz that might not have been so successful for them so,
so they said they made a good a good fit Choice there watch that side and so then fast forward a couple years they open a store adjacent to the corporate headquarters and.

[11:49] If there's a bunch of mistakes you can make launching a website way more mistakes you can make opening a store but the awesome thing about having even that first store is.
You can you have to interact directly to customer in your to your point like they both worked in the store so it's almost unavoidable that you get this customer feedback this voice of the customer and it creates this.
Opportunity for a really good feedback loop that bothers tools to capture the voice of the customer online.
It feels more disassociated.
If you was more like data you get after the fact it doesn't feel like a human being standing in front of you telling you their problem with the washer they bought or finding a shirt that are all those sorts of things.
So I suspected that was a nice Advantage for them,
but now they're selling online to the whole country and they're selling in-store out of one particular store,
were they in that you're aware they shipping from that Supply do they have one inventory in New York and that's where all the the shipments went out.

Lockie:
[12:54] We actually had a local DC so it was very small and Connecticut and we,
since then to have being a major Nationwide Global 3pl with logistic.
It's at the early start it was all bootstrapping so a very small supplier who is helping us out and shipping we didn't do it ourselves because our Focus really was on perfecting the shirt.

Jason:
[13:17] And that gun shop if I didn't have the omni-channel feature set in the POS so you probably.

Lockie:
[13:22] I'm close to that yes.

Jason:
[13:22] Probably had to pick some other stuff and figure out what was important to integrate than in all those sorts of things so good news that works it caught on and yusuke how many stores did you say you have.

Lockie:
[13:36] 75 stores right now.

Jason:
[13:37] Yeah so so in all in the US right.

Lockie:
[13:40] All in the US and Canada and the exciting news is that were opening to stores at the end of the year and let them.

Jason:
[13:47] Oh my gosh so that'll be your first International fanchon and will you launch a UK website.

Lockie:
[13:53] We Will We Will spin up a new UK website and we're also spitting up a Canadian website to give the Canadians their own product and we are moving inventory and Country both Canada and the UK this is an exciting time for the brand.

Jason:
[14:05] Is global expansion exciting opportunities / all sorts of new interesting challenge.

Lockie:
[14:12] Yes yes we love challenges.

Jason:
[14:14] Yeah boy be boring if you just did easy stuff.

Lockie:
[14:17] Play slam dunks all day long.

Jason:
[14:18] Exactly yeah I myself cannot dunk but I've I've been told that it's.
Exactly exactly that room is way up there I don't know if you know so with a fleet of stores and e-commerce.
You know you mentioned that single view with the inventory when you're talking about on me and channel like that becomes more difficult to maintain.
Do you have unified systems today and you have a single view of inventory across 220 stores and your your fulfillment center.

Lockie:
[14:52] We do it's not fully mature and we're laying the bricks one by one to build on and bolt onto a core system,
right now in the US we do offer our customers and ability to order through endless aisle and we have a mobile POS system with new store,
which is definitely state-of-the-art and revolutionary and next-gen all those,
things rolled into one and it allows us to have the customers actually be able to provide feedback and I'm building the connections is the CTO to make sure we get that view from both
call center too as well as Merchants they want to have an ability to log in and see if their customer complaints about our shirts if there's a fit issue or quality issue,
so we're building at 360 degree view as well as giving technological enablers for that feedback loop.

Jason:
[15:38] Not your enemy your panel you mention you do have a CDP in place.

Lockie:
[15:41] We do we do and so for our marketing team driving those insights of which customer segments were,
Express how can we and sent them to come to our stores or to shop online whichever they like and whatever we would like them to do so you leveraging Ai and machine learning to be able to
do. In a predictive manner as well as driving insights about those customers and what they want from us whether we also offer not two shirts we have pants and shorts and other things as we complete the look and
all in an effort to make our customers feel and look great but to be able to do that you definitely need technology.

Jason:
[16:17] Yeah so I want to Pivot to customer acquisition you alluded to it but before you one more question like there's one more piece I feel like to hear your sales make so we got the stores we got the e-commerce like you are also a three-piece seller on Amazon.
And it wouldn't be a Jason Scott show we didn't bring up the the Amazon so I meet a lot of entrepreneurs dinner,
on Amazon because they think it's a great customer acquisition Channel and I'm happy to be there and they're investing in it I mean other entrepreneurs day.
I'll characterize it as like it less but feel they have to be so I'm like where are you guys in the spectrum is it.

Lockie:
[16:55] I'd say we're probably in the Middle where they're not in a major way
but we recognize that we want to have learnings from the channel in case we do decide but as you noted early on with so many other things on our radar right now we are really focused on keeping control of our brand and the messaging,
is a lot of competition out there and we want to make sure we protect our Earth our patent so to speak on the untucked shirt.
And as we do that going into new channels just presence obviously Newberry has new issues new obstacles so we're being very cautious as we roll out with Amazon.

Jason:
[17:30] End it over his nose like it potentially could feel oily or not but the reality is,
there's a ton of Shoppers on Amazon they're going to type searches that are relevant to you in their search engine,
if you're not there at all there's going to be a bunch of squatters that are going to figure out how to show up in the top of the search results and
very often Brands will put a limited assortment on Amazon
just to win that search battle I not have their brand be usurped if you do have some IP protection there's many more Tools in Amazon has to protect your IP,
if you're a seller and of course the path you take him where you're selling yourself on Amazon as a three-piece seller.
I wouldn't see you get to control the experience as much as you'd like but you for example get control over pricing which is a very big deal.

Lockie:
[18:19] Absolutely.

Jason:
[18:20] Yeah so not uncommon strategy but it doesn't sound like that was necessarily like your highest priority pass the growth was the about your shift from your own store website to Amazon in the world would like on fire for you.

Lockie:
[18:33] Exactly exactly.

Jason:
[18:34] Okay so let's give it to that customer acquisition and how are you finding new customers.

Lockie:
[18:42] How are we not finding new customers I I'd like to Big that we we participate in everything and I think that again goes,
to the strength of our founding team and recognizing that with a brand that,
in addition to men's we also have women's and a lot of times women are also shopping for the men in their lives or maybe it's Grandma buying a gift for her son so we kind of needed to be everywhere to understand the
extent of our reach and we're everywhere in print ads I enjoy coming to conferences like this where most people tell me they actually discovered Us in the airline magazine.
Which is very cost-effective but the how have you heard of us has been very tremendous on that series of Airline ads we do social paid social Billboards television hopefully some of you have seen RR.
But we also think of our stores actually as a great way for us to have marketing,
365 so part of where we want to go is understanding who we can appeal to and then through all this great technology we're bringing in will be able to segment them.
To them in the way that they like to be on that one to one basis.

Jason:
[19:49] Yeah that's awesome the stores is an Acquisitions and I feel like it's kind of settled territory now that for a long time that was very controversial,
in there there's a ton of data that what you open a store in the market and your web traffic in that market dramatically picks up picks up and conversely if you're one of these retailers that's atrophying,
closing stores.
You take a big hit to Brand awareness and e-commerce traffic and it's I'll be honest like you walking or retailer this planning on closing stores and almost always the strategy is working to capture those customers digitally.
And you don't have to like not only are you not going to capture those customers digitally you're going to lose other customers that discovered you because of your stores.

Lockie:
[20:33] 100% you nailed it and I'm part of what we find now and this new omni-channel world where we're really creating the rules is you actually have to change your match.
You can no longer simply look at sales online and sales and store because customers are shopping across channels so you could ultimately make bad decisions because your customers now splitting their revenues so we look at revenue on tomorrow
faces and when we open a store to make sure we don't get to a point where we are cannibalizing our sales,
we want to make sure we're growing within market for each of the customers who live there and then of course customers travel so having that
technological stack that we can look and see well Jason actually flew to another city Austin maybe I maybe stopping to Copley Place in purchase there how is all of that impacting our brand overall.

Jason:
[21:24] Yeah as someone who travels every week I feel like I am the high stress on the cdp's of a lot of the brain.

Lockie:
[21:29] Oh yes yes.

Jason:
[21:30] I use cuz I'm not I'm almost certainly not the customer Journey that's on their whiteboard.
Like that attribution thing is a super challenging thing to do.
Have you guys adopted like a particular like approach to attribution and are you like to have a notion of customer lifetime value and any.

Lockie:
[21:53] Definitely notion of customer lifetime value and thinking about it and cutting the data and many different ways to drive those insights,
yo attribution we're working on some models internally with a with external partner Partners boat as well as looking at internally how can we measure it,
obviously last-click is not ideal and ultimately we want to be able to double down on those things that are working but it has to be an integrated View and there are some really exciting Partners out there some of them are here at this conference
we're starting to think about the world in a real life scenario with all these integrated points versus how the world used to be which was very siloed so we're still working on it it's exciting to be in the in the game and trying to figure it out for the untuckit brand.

Jason:
[22:34] Yeah I think in your panel you you omitted to one of the marketing escapes and it's like the number of vendors is just exploding.
And I feel like one of these areas is attribution so in the good news like there's a lot of smart people out there thinking about the problem in the bad news it can take a fair amount of bandwidth,
talk to these guys and figure out what's going to be the best,
fit for you which are you smarter than the exploratory phases or if you found some vendors you really like that that have already yielded some results for you.

Lockie:
[23:07] Yeah that guy coming to conferences like this is amazing as you get to drop in really quickly and understand from a cultural fit perspective as well as from the.
Who's where and are we aligned and how we think and so we're still in the exploratory phase as we do have a short list of vendors that were talking to but if someone else drops out with and it just takes one product release right
for a new feature to come out into really help solve some of the challenges that we have given that we do have stores we
do you have an online presence and we do send catalogs so that's a very difficult model for some people to understand and ingest but I'm at least building the foundation so from a date of birth
after we can unify it it's cleansed it's normalized and then it can feed whatever algorithms their they're developing and a pretty rapid real-time fashion but it's really hard work to be able to get there and those vendors are not there yet.

Jason:
[23:57] For sure.
So you're you are clicking much to say that you got the CDP you have a broad range of customer acquisition tools are you at the point where you're activating any of that customer data to
Serta personalized those outbound marketing activities are using it primarily to Target who gets what activities or using a taxi change the the content in those activation.

Lockie:
[24:23] We're at the start of changing the content because I obviously requires some Partners who can an able that Dynamic rendering that would be necessary so we're not there yet
but it's definitely on our Horizons and so part of what we're doing now is just understanding from lookalike audiences perspective we have the CDP were able to look at our most.
The customer is our highest lifetime value customers and then understand how we double down on them by leveraging the lookalike audiences on all of the social class
forms and we've seen tremendous return on investment in a very short time and I I believe in that wholeheartedly having started out on Wall Street in my career I want to make sure if I'm bringing on a new vendor that they're going to prove out
from a revenue increase or from a cost reduction for.
In a very short amount of time and so that's the selection criteria that I use and bring it in but where it would starting at we can definitely see the momentum.

Jason:
[25:13] Yeah so I want to give it to a way I can sometimes be a difficult conversation so that you guys would have to having racing money I think last year right or late last year maybe or,
2 years ago okay and your aspirations Richie that unicorn status that that billion dollar valuation,
lots of exciting things about being in that phase of growth,
but you're now in the situation that like if you can't that she's that kind of growth it's not a success for the investors right so you just kind of taking off the table the option to,
be a successful medium-sized company.
In inside like when you're in this situation where you have to keep scaling one of the things that's really interesting as we see Watson of these digital-native Brands hit when I called the the d2c plateau.
Here's my promise and you tell me if,
if you guys already passed it or you think my promise is wrong or if you have a hypothesis but essentially.
Go pre-digital go 2007 if you had some new idea for a product and you launched it could be a great product.

[26:24] There were millions of people that wanted to buy and it would take you five years to get the word out to those millions of people.
So your girls would be very slow and steady right even if it was up again a phenomenal product that had a big Cam that was desperate for your product just,
the vehicles available to you to Market that product where we made you weren't going to be able for broadcast television it first and so you'd have this nice when your scale,
today you got this fabulous idea to revolutionize the shirt industry and you have these wonderful digital tools to reach that that core audience immediately and so the growth that would have taken you five years,
you now potentially get in 6 months or a year,
and so there it looks the first year of your business as a in the digital era looks vastly better than the first year of businesses in the pre-digital E Roblox but the mistake is a bunch of companies go oh my God.
We're going to keep scaling like this forever until we hit that billion dollars and we're going to go sell it and live on a boat in Nantucket and the reality is.
There was some addressable Market that really wanted your product and you just find those guys earlier and so to keep Drilling.

[27:36] The next you have to pay that and now fine.
These customers that maybe you have to evangelize more you have to educate more or you know that are just less of likely to be your customers than that,
that first tranche of growth was and so we see a lot of dtc's with this nice hockey stick and then it flattens out
and they've got to figure out it didn't flatten doesn't mean they're doomed it means what got them there is not the same tactics they're going to have to use to that next phase of growth so they have to dramatically change their customer acquisition are you guys,
see nothing on and on and all you feel like that's already in the rearview mirror and you're blowing past it and my high and you.

Lockie:
[28:18] No not at I think it's a brilliant inside having worked at a startup for 6 years.

Jason:
[28:22] Can you be my sound bite for the.

Lockie:
[28:24] Have you worked at a.com in the early 2000s I completely agree with your assessment and that's why I'm super excited to be with untuckit now because the cost of being able to scale is come down dramatically and the tools that are out there exactly as you stated
fortunately we haven't hit plateau and I I think it's the incredible insights of our team that's very strong and grounded many of us have work
the.com era and we took those lessons that we got from there and have now apply them to this business but got in a while we're still growing and now building the infrastructure so that we can leverage and start to think,
and the great thing is we're experimenting and iterating all along so I think part of the reason why we haven't found that,
cytopoint yet is because we are out there doing things very smartly staying very close to our customers making sure our store is which are possible within the first six to eight months which is
pretty incredible so as we double down on that and get smarter about how we measure different markets
measure the different segments again women shop very differently than men so we're in understanding the female purchase behaviors which may vary when do vary from how many hours
purchasing from us and the messages that we put in front of them so I doing all of that at the same time we're ensuring that we maintain if not accelerate our growth rates even as we grow.

Jason:
[29:43] That makes total sense you one of the things I'm curious about because you have this level of customer intimacy you know your customer super well you're clicking on the state up
when are the traditional problems in the apparel space in particular is returns and like the I don't you can't sell apparel without having meaningful returns unfortunately which is just
you know it's an extra expense to doing business but I do have a hypothesis that if you know the customer well there's more you have more levers to pull to mitigate returns and I'm curious do you feel like
your data is like is a competitive advantage to help you manage returns and keep those costs manageable or do you see that as an opportunity.

Lockie:
[30:26] Yeah we have done a lot of work in that was part of the early years that Chris and Erin spent and perfecting the shirt is an understanding from a sizing perspective.
What works for men and as part of that I think in our store is the brilliant Insight was to have the try on shirt in store,
so once a guy comes in and he locks into his size,
it's golden he may never come into a store again but my own 30 some shirts because he knows what he likes and he can simply go online after he had that first experience in,
yeah baby you got a glass of bourbon while he was in there too but he enjoys the brand and how easy we made it for him and yes we still even with that have
pre return partners that are helping us because we're experimenting and we recognize that customers are going to exchange they're going to return product that's the nature of our business,
so we try to make it as seamless as possible and then if we get a return to work with 3pl so I can clean the Prada.
Back on the shelves as quickly as possible or get,
out to customers through online so we recognize that is the dirty side the Secret side of a retail but there are tools out there to help you make it a little easier for you to manage.

Jason:
[31:37] Yep and you would have just Partners is that some of the the happy returns of the.

Lockie:
[31:42] Is that happy returns narvar returnly all of them are here this week and they're doing great jobs in different ways and ultimately I think is that,
edited set shrinks,
will understand ultimately how our customers like to behave with us and as we have more stores will take a look at it because what ends up happening is some customers would like to bring it into the store again we need an opportunity to streamline that process and get it back on this
floor for a sales associate to be able to sell.

Jason:
[32:10] Yeah I think that's super smart and I I really like the I feel like those vendors have hit up front upon a real problem statement that there's real economic incentive to solve Soh.
So that's exciting I did I wrote an article I think last week,
talking about like the challenges of e-commerce profitability in and specifically around returns and I found this old quote I had forgotten about for Mandy done when he first started bonobos and it was like.
E-commerce as awesome as long as you don't care about Eva.
Which have you like isn't isn't always true but it's important cautionary tale like it turns out it's not just throw the stuff online and you're guaranteed a profit.

Lockie:
[32:51] Exactly while fortunately we are chasing profit so that's the.

Jason:
[32:56] It sounds like I want to put it to the Future before I do want to close the loop on one thing on storage because it just makes me super happy untuckit is finally opening a store in Nantucket.
So I feel like that's very melodious.

Lockie:
[33:11] There you go and we want to do that for sure.

Jason:
[33:14] I know I know that that was a high priority.

Lockie:
[33:17] Absolutely.

Jason:
[33:18] Although you have to be careful and I know you follow the Nantucket news lately but they're shark-infested.

Lockie:
[33:23] Oh yeah look at that sharks in the water we put some on the shirt you know just go with it might as well go with it.

Jason:
[33:29] I feel I just embrace it like if you want it if you do a local shirt that would be the shark warning.

Lockie:
[33:34] There you go.

Jason:
[33:35] Shirt.
Thank you sit I feel like we're in a super fascinating time like the best tactics that word when you guys want start playing at the exact same best tactics. I wear using today there's a lot of trial in the morning you reference a lot of,
the different vendors and tactics that are available at shows like this,
if you try to put your futures hat on and imagine coming back to this show in 2025 how do you think,
the industry is going to have all but which of these problems do you feel like,
maybe we've solved and what do you think the new the new problems are do you do you have any POV about where like it would be in 5 years.

Lockie:
[34:17] Yeah well again putting on the future as head you never know no one has a crystal ball I actually feel like there were many things we learned in.com 1.0 and that we forgot somehow and now we're here talking about the butt
hopefully we continue to double down on the lessons we get I think an advance on some of the benefits we give it's a.
Of the product and right now there's so much
access inventory out there for whatever reason it's not selling I'm excited about a future where we can leverage technology and data to be able to get there and obviously Stitch fix Rent the Runway they're all looking at
different components and attributes of products to understand how do you get the product that this customer will like based on their preference,
as well as getting the manufacturing tolerances of these products down to a point where you are actually getting what feels like a custom fit.
But is actually off the shelf.
That's where we're going to go if we continue this trend of leveraging technology to get better which equals last waist in the world which I love her no more landfills closed because we're producing only what will get sold so I'm super excited about that future.

Jason:
[35:26] Yeah why when you put it in terms of saving the earth now I have to totally jumped on board on your vision of the future as well,
lockie that's going to be a great place to end it for the day because it's happened again we've used up all our a lot of time,
but folks are eager to keep the conversation going you're welcome to jump on her Facebook page
follow us on Twitter as always if you enjoy the show wheel of that five star review on iTunes but more importantly lucky if folks want to find you online I can do you hang out in some digital corner of the universe.

Lockie:
[35:58] I do Twitter and Instagram at lucky Andrews. Com you can find me anywhere I speak a lot of conferences but please reach out to me and thank you again.

Jason:
[36:07] Awesome I will put those links in the show notes thanks again for all your time and really enjoyed chatting with you until next time happy commercing.

Oct 4, 2019

EP190 - Marketplaces Deep Dive

 

This episode is a deep dive into Marketplaces.

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

Episode 190 of the Jason & Scot show was recorded on Monday, September 30. 2019.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 190 being recorded on Monday September 30th 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners hey Jason do you know what kind of show we are going to do today.

Jason:
[0:46] I'm guessing a deep dive,
Jason and Scott show.

Scot:
[1:02] That's right we are going to do a deep dive into everyone's favorite topic will at least mine marketplaces.

Jason:
[1:09] I sort of assumed that you assumed whatever your favorites were where everyone else's paper.

Scot:
[1:15] Of course yeah and so we've done deep Dives on Amazon well done a couple other topics in marketplaces come up a lot.
I thought this is a good time to talk about marketplaces cuz there's actually a lot of innovation going on in market place has a lot of changes and then.
The ratchet here together and I'm speaking on at a B2B show tomorrow called B2B next and I'm talking about marketplaces and how that impacts B2B folks.

Jason:
[1:41] But it should be said that you probably created a bunch of fascinating unique content just for the podcast and you might reuse it but you're not just giving us the.

Scot:
[1:50] Oh no this is totally custom for our listeners.

Jason:
[1:52] William you of course are the marketplace Guru but so I am super excited to hear your latest updated take on how marketplaces are doing and where they're going so take it away is God.

Scot:
[2:05] Yeah yes it is the first thing I want to do is just
the down-low backgrounds are all on the same page and the number one question that comes up is what is a Marketplace and I think everyone out there has their own definition I have a pretty broad definition of marketplaces because then I think.
That helps us not talk about the different flavors and.
You know some of the pros and cons of those flavors some people have a really tight definition of marketplace is a lot of times it's funny you get into these late-night over beer discussions around well is that a Marketplace or not.
Azure me simply a Marketplace.

Jason:
[2:37] People in the world get into a late night beer conversation about.

Scot:
[2:40] You'd be surprised especially at the people you and I hang out.

Jason:
[2:45] Imagine if the channel advisor conference is that happens a lot but yeah.

Scot:
[2:49] There's actually Prime more discussion around what's not a Marketplace and what is anyway my kind of loose definition of a Marketplace is a venue where buyers and sellers come together to meet and buy stuff.
The meeting is just part of the fun of it all but it's really a a way for buyers and sellers to meet each other or transact and and.
How many conomic kind of exchange is that that you're definition.
What will talk as we go into different types of marketplaces so we can kind of talk about you the different flavors with in that room.

Jason:
[3:23] No I don't that's not a controversial definition to me I guess the Nuance buyers and sellers come together to buy stuff like I probably would say buy stuff from each other like to me that's the.

Scot:
[3:36] Exchange so what's interesting is when you look at the data out there.
The trend is marketplaces are growing faster so marketplaces is Corinne Gartner a growing 23% year-over-year in the US versus kind of 15% of eCommerce now they're part of that 15% so it's actually probably like.
12% or 10% - marketplaces the number of marketplaces exploding if you look at markets like China
over there over 90% of transactions are on a Marketplace so you hear the US were at something like 55 60% and
you have a lot of people would would predict that at some point we may actually get because marketplaces are growing so fast in there so many new ones popping up maybe we'll look more like China down the road so that begs the question why are these marketplaces so popular
and I can look at five areas where marketplaces add value
in in today's world in this kind of layers in with changing consumer behavior for the consumer has changed more in the last 10 years in the last hundred
so consumers Love convenience what were my favorite Jeff Bezos isms is people asking you I'm starting a company what should I.

[4:49] What should I bet on and his recommendation is
bet on things that won't change so instead of picking something that's like the hot new thing that on something that's not going to change and this is why I consumers like marketplaces because they bring elements that that you know
people are just going to love more of down the road so convenience no one.
People dye their time more and more so convenience is a good one selection so if you're going to go to Avenue B at a physical location or website or an app for what not you know the more you have to buy from assuming you can navigate it the better off
I'm people of Valium so in addition to convenience bball is love to save money
I'm and then the those are pretty tangible and we can measure them the ones that are little bit harder to measure our trust.
So a lot of the value provided by marketplaces is giving the buyer and seller this kind of trust umbrella to to make sure that if something goes wrong in the transaction and can be unwell
and then.

[5:48] You another thing that's really helped the surge of marketplaces is the increase of mobile traffic so a lot of bubble places we'll talk about have elements that they give mobile kind of the Titan with the phone
that's obviously helped Amazon and eBay so when he when you're when you're
we're out and about the more products in your hand the better off so mobile has been another area that's really cause to search here and then the creation of a lot of the new marketplaces can be put back.

[6:19] Mobile the surgeon mobile
the last one the last trenda I spend a lot of time thinking about it and we've had Casey on the show is that this bifurcation this is value or any consumer versus the convenience or any consumer and what are things that I think a lot of.
People I talked to in the industry that don't get is you like okay convenience I get it
but then there's like this addictive element of convenience so you know you and I are big Starbucks user so once you've used the mobile app
functionality of Starbucks then the next time you get in that Starbucks line even though I happily waited there for years before the mobile app came out.
When should when you get back in that line it just feels like it's taking 10 times longer than it should
server example I checked into my hotel hear the lock didn't work they sent for someone to come they didn't come in 5 or 10 minutes it felt like an eternity so I just went it was easier to go get a new room then then to the Other Extreme tips of people are
addicted to zero friction and decreasing friction and that's going to be a theme that you'll see when we talked not openly about why are marketplaces so popular vote but wire what are the next wave of marketplaces.

Jason:
[7:30] I totally buy that song like the focus on these sort of a bum Evergreen benefits.

Scot:
[7:37] So those are the benefits that marketplaces Bluebird by a lot of people are familiar with this kind of Amazon flywheel I was one of the first people to use it now it's kind of overdone but
yeah it it shows this is one of the reasons marketplaces are growing so rapidly is you have this this virtuous cycle a lot of people call it Network effects where you know you.
If I will get started off with selection is anger point so he could to resolve selection that brings more consumers in
that means more sellers come to your platform cuz they're going after the buyers and that brings more selection
that's one leg of the flywheel and then the other leg is once you get enough selection you start have overlapping selection now you have competition prices go down that's kind of this classic flywheel this built on these consumer preferences that that are causing marketplaces to
grow faster than individual consumer things.
Cool so you know if you're most of our listeners are kind of what I would classify as retailers or brands of all sizes why should you care.
The boy that says it's kind of largest segment of e-commerce it's growing and we want to do on this one is actually kind of turn your head sideways a little bit and talk about Sony's new models and then I think that will help you
dick even most retailers are already kind of
cross the chasm of thinking about should I sell on a Marketplace or not there's a couple of new ways to think about marketplaces I wonder who's here if they will talk about.

[9:06] Let's talk about the the types of first of all let's listen to these couple terms so we talked about marketplaces one of the things we talk about is we use this slang
one piece repeat.
I'm a third-party Marketplace is a Marketplace like eBay where just sellers are are there and it's only sellers involved.
I'm a first party transaction is where is a traditional retail transaction.
So Amazon's one of those marketplaces that's kind of unique in that you have first party meeting Amazon is departing and third-party meeting through other sellers.
I'm so we would tend to use more talk about marketplaces as an industry we tend to use this one p3p kind of language.
I'm your specific to Amazon a lot of people within just Amazon Silo Amazon has two platforms vendor Central and Seller Central so vendor Central is the one p platform so if you're going to sell on Amazon to use that.
I'm in the 3p platform is vendor Central those things are emerging as as a popular strategy has become to do both which is even kind of more mind-bending.
So it's those are just some binoculars to make sure one understands cuz we'll start to use those
another common language is gmv gross merchandise value or volume depending on who you talk to
I'm in weird catching there is just like the payments world you have kind of two measurements you have Revenue but it's a derivative of the transactional value going to the system
I'm in the payments roll we use TPB a lot of times is that.

[10:36] Kind of a transaction processing volume and then gmv is the value of the goods going through the marketplace and then the formula is the most Mark marketplaces have a a commission. Take rate
are there a lot of different names for I prefer take rate the fees they charge for transacting on their platform
the revenue is is essentially gmv X take rate equals the revenue of the marketplace so those are bunch of terms I just wanted to lay out there.
Jameson.

Jason:
[11:07] I think it's the big ones a question I often get and I'm curious what your answer is is what happened at 2 p.

Scot:
[11:15] Yes or some people call Dropship to pee so so that would be second-party yep so you know if you want to kind of stretch at you can you can kind of say a Dropship relationship is is kind of a 2p.

Jason:
[11:30] Yeah I just like to say it's it's not it's not a sequence it's we're talking about first party things and third-party things not counting.

Scot:
[11:37] Yeah yeah there's no fourth party stuff there could yeah I don't know if you have to
the types of products are the types of marketplaces so so,
I just mentioned so eBay is a pure third-party Marketplace a lot of people are familiar with some of the Chinese marketplaces like tmall and taobao all those are all pure third party
then you have your Amazon introduced this idea of what I would call hybrid Marketplace so you have some first-party some third-party
all the other retailer type marketplaces are like that so Walmart Sears Etc they would be this hybrid kind of a thing there's.
If you're on a Marketplace and you can't tell you no it's a market
Place item but you can't tell who the seller is I call that a Dropship Marketplace yeah there's probably some other way there to Brand it where the seller is masked so you're essentially you know you're buying from this these kind of sellers back there but they're not identified in their own way
that's how all Overstock works for example in a couple of the new marketplaces will talk about.
What are those all of this stuff I just described are what we call two-sided marketplaces so there's a buyer and a seller.

[12:49] What are the interesting things in The Last 5 Years in this is kind of
probably part of the Advent of of the rise of the smartphone in the mobile world is 3 sided marketplaces so you add this third side
I'm a classic example here is the food delivery companies so you have the buyer who is the hungry consumer not like you and I right now it's around dinner time and then the seller is typically restaurant it may actually be a commercial kitchen is kind of coming up as another thing.

[13:14] That's two sides of the marketplace but the two of us unless we're going to go pick up the food the two of us can transact until we have that third side which is
typically the delivery Marketplace so a lot of this was born from realizing with the ride sharing apps Uber lifting the big ones and then Dede in the.

[13:35] In China's accident D D D D D D anyway.
To that created this this kind of ability to say hey there's there's a fair number of gig workers out there that are willing to move something from point A to point B.
Plug them into this Marketplace and now we've got a three-sided Marketplace that's one example you're now seeing.
Obviously ubereats kind of participates that in themselves but now you're seeing furniture delivery
all kinds of marketplaces now that are on this three sided so that the third leg that most of you they're familiar with product marketplaces is new is the the middle infrastructure Logistics kind of marketplace to get to plugged in on that side.

Jason:
[14:20] And is I can imagine that a little bit of a gray area like.
How much value that that middleman provide sort of designates whether it's a two party or third-party market like cuz you you could look at Amazon and say.
Like even on their third party sales when they're doing fulfillment by Amazon and adding all all this value to the sale that that could be a 3 of 3 sided Marketplace.

Scot:
[14:47] Where to get super technical at kind of think if if if the buyer or seller is providing the logistics it's a two-sided Marketplace.
But an example where would be a three-sided Marketplace is Amazon does have Flex which is a driver Marketplace so so if your order came through Flex I would argue that's a three-sided Marketplace but if Amazon was employed
the drivers
now on Amazon does have this hold delivery program which is kind of sin cholita 99 so yeah so so if I think increasingly more and more of it is three sided.

[15:19] Yea nice things blurry over time,
so that's kind of where we are and that's the history so it said you can look at the size out there the biggest Marketplace operator I put elastics here cuz why these China Chinese companies that when they report these DMV numbers
their there they're not gaap accounting there's a lot of craziness that goes on in the China market around did a transaction really happen or not.
I'm and there's there can be a bigger disconnect between the DMV and the actual Revenue the company silver example Alibaba has a Marketplace called.
A cowbell where and in an Ali Baba itself to be to be Marketplace really buyers and sellers meet and it's more of an ad platform and then you know they make some assumptions and say that's the gmv they're not actually collecting.
A rake.
Take Kratom from that Marketplace so I think I actually just recently taobao.
What's London's weeaboo tencent.
So so tencent Alibaba and JD depending on your kind of which day do you look at and believe there there's a largest ones out there and
and that's because you have the Chinese e-commerce markets already bigger than the US and then 90% of its marketplaces and and the others there's there's a kind of race they all have to,
put out bigger and bigger DMV numbers hard to tell how much of that is true.

Jason:
[16:45] I sometimes think of it they now LG is like a Craigslist where.
Craigslist probably classified ads like facilitated a lot of sales but Craigslist wouldn't know.
Exactly how much sales they they fulfilled so you can imagine them reporting some estimate of how much sales were generated then there may not be perfectly at.

Scot:
[17:08] Yeah what they do is just the way you and I we were kind of napkin diagramming this we would say well yeah we had this many what you do know is traffic numbers rights we had this many listings in this many buyers come through let's assume a conversion rate of.
X percent somewhere between 5 and 10 probably and then an average order value of 75 bucks and then boom you know Craigslist does 50 billion dollars a year.
Those numbers you have to take a grain of salt,
then as we as we go down a level on Teen Mom which is another part of the Alibaba that one is actually you know you're required to use a Lipe and everything it has at a crate so there you can see that you.
It's relatively large and even just tea Mall itself is effectively.
To Amazon's in an eBay so it's huge so you know it's kind of the scale we're talking about here so there's a bigger marketplaces in the China area,
I'm did you come down to the US Amazon has grown to be larger than than eBay kind of north of 100 billion and then you have eBay at about 90 billion
and then you come down and and you have a bunch of smaller marketplaces.

[18:15] I'm so glad all this up and it's about 50 to 60% of transactions you guys are going through I'm by by gmv dollars transaction dollar amount are going to marketplaces.
So so definitely a big opportunity for Brands to consider and and and think about as well as retailers.
Let's talk about some of the new trends in marketplaces so
some of the new marketplaces that have hit the scenes so Target plus I think it's one of the biggest ones that's been announced in the last year that hasn't gotten a lot of PR so
you know full disclosure I guess I should have said this at the top but I started a company in 2001 called Channel advisor we went public in 2013
2015 I moved from CEO to Executive chairman of still chairman of the board there
but I'm not involved in the day-to-day but I didn't know we're one of their launch Partners at Target plus and that's been a big.
From what I understand that's been really successful for those sellers on there now a lot of times when when folks.
Get into the world of marketplaces they they rightly do so cautiously nothing Targets in that camper I think it's an invitation only type of a Marketplace but.
I'm right here it's doing pretty well.

[19:33] The end in one of their they're interesting Innovations is using that store footprint when we have conversations with retailers about launching of marketplace one of the big concerns is
I am so someone buys a pair of sneakers from Jason sneaker shop and they try to return them to the Target store you know what it what the heck is the sales associate going to do.
I'm Target to the lot of chair with their Marketplace tube to really kind of tie that whole experience together and in my understanding is it works really well where you could buy anything on the market place and return it in the store on your next Target once it's kind of a neat.
Differentiator that have their Walmart obviously has had kind of ups and downs with with marketplaces so
they had their own Marketplace in the acquired judge Mark Lori who came along with that acquisition is a big believer in marketplaces and he was at Amazon for a long time.
He started Quincy which didn't operate a Marketplace but sold was very aggressive selling on marketplaces and leveraging them and we mentioned you mentioned on a recent new show that they're kind of doubling back down on marketplaces at Walmart,
you you point it out to other new marketplaces that you wanted Highland.

Jason:
[20:43] So I sign in malls has launched the marketplace and appreciate that make is a head-scratcher but then you realize Simon has traffic that comes to their own website and they've.
They're trying to drive traffic to their own website and they want to be able to sell all the.
The goods that their tenants in their mall would offer it right and so what what's the solution for having a.
You know website owned by Simon that can sell goods from all these different tenants from their brick-and-mortar properties it's essentially hosta Marketplace
where are those tenants can sell their goods to the traffic that comes to send them all so they're kind of created a digital version of there.
Their physical malls I know and this was interesting to me because Urban Outfitters is sort of a vertically integrated set of brands that mostly sell their own stuff.
And they actually the last year launched the marketplace and sort of expanded their assortment which is interesting because I don't think that they were a big wholesaler outside of the marketplace.

Scot:
[21:55] Yeah and then another Trend within marketplaces is to go really vertical so you know if you're a buyer of a certain category the generic experience you get from an Amazon or Ebay or Target or Walmart
is your maybe you have some filters by size or something like that.
But let's say I'm a comic book collector and I really care about you is this graded by a commercial Grading Company and what is that grade and
you know what series is this thing I maybe if I go to eBay looking for that item I maybe it's kind of going to 5000 listings to
try to narrow it in that maybe and then I can't really get my handle on if it's really kind of what I'm looking for so you're seeing this kind of explosion of what I would call hyper vertical
experiences for folks one that's kind of a really interesting one is house so this is in the in the.

[22:50] Home home home improvement category, how started out is this really cool way to husband and wife team wear
I think I did was a kitchen remodel I think they did a remodel part of their house they realized that there was no tools for really kind of visualizing it in and putting together the whole project.
So you know being I think one of them are there both Engineers they they said there's a need here so I think they kind of.

[23:16] You know I necessity was the mother of invention that created this tool
I'm in for a long time it was just that and then what they realized is if you go through the steps of saying alright I want a new bedroom and here's the drapes and the bedding and the mattress and all that stuff
and you could print a shopping list when I go that last kind of step and say
hey here's a little Marketplace of your now you're at the bed Choice selection now you can see a Marketplace of beds you can see a Marketplace of wall coverings whatever it is so that's really interesting one where
you know you would you wouldn't have to think of a Marketplace being plugged in that way but it do,
I've actually seen them on the IPO watch list recently that this the GMB from the marketplace component is is by far the largest part of what they do and it kind of.
You know that that tail is wagging the dog now where the remodeling tool is become just a driver for sales into the marketplace
one of our favorite guest and listeners Jason Del Rey is really into the sneaker area there they're called sneakerheads so there is a huge I don't know how to size this was all so funny about the internet and then they become.

[24:28] Five ten fifteen billion dollar niches because
once you kind of get in there to find it in proven experience it can explode on you so there's a company called goat and they recently merge with Fight Club
they're effectively a Marketplace for new and used sneakers really kind of putting out a grape by her experience for that sneaker collector
I'm which can imagine you know notify me when you find this item I've been looking for in my size and this condition again the things that are really important to these folks have a different differentiated experience.

[25:01] On the show we've been talking a lot about real real recently that's essentially a Marketplace for these kind of higher-end items that need a verification stuff.
So if you're going to go and make a an investment in a $500 Louis Vuitton bag or a certain piece of jewelry you don't want that to be something that was sold outside the Theater District on a on a sidewalk if you want someone that is an expert in,
identify certifying and verifying that these are real items that are are you know from the manufacturer.
So so those are some of the interesting things Trends there another Trend we wanted to talk about was.
Marketplaces kind of going offline so it so there's a couple we had date on the show that's a good example of you know you could call that a
krog Marketplace but sky like a real estate Marketplace in the way to so your Betta is gone out and and
adult stores and they have these brands that are kind of like Mike releasing some of the real estate inside of their crate this really interesting unified experience for people to discover products what are some of the other up-and-coming physical marketplaces.

Jason:
[26:11] Yeah but I think that's physical marketplaces are really catching on there's a neighborhood Goods which started out in Dallas and I think they just did.
A reasonable size raised in my head I want to say like 10 million.
And they've announced a few new stores like there might be one coming to New York right now there is a store in New York called Schofield fields that has some like interesting spins on the customer experience they offer for each one.
Macy's has a.
A separate section of the store they called Macy's Marketplace which is powered by Beta so uses the beta technology but it's it's Macy's property and they essentially lease a space in that and those are.
I'm starting to me all examples of these emerging physical marketplaces.

Scot:
[27:01] Yeah and Alibaba is actually gone on record in and that's their biggest strategy for the next five years as they call it Ono online and offline so taking
all these things they learn in the marketplace online we have infinite shelf and then boiling it back down into a physical type experience.

Jason:
[27:16] And I forgot to mention there's a.
One of these physical marketplaces in the Mall of America which I think it's called four corners and then Mackenzie the Strategic consulting firm just announced they were going to open their own brick and mortar store as a.
Certified living retail lab also in Mall of America and my understanding is that is basically a brick-and-mortar marketplaces well.

Scot:
[27:43] I think we need a road trip to Mall of America. Maybe we'll go next July I don't I don't go to Minnesota past October.

Jason:
[27:50] Probably smart and I'ma have to you may have a tough time adapting to Caribou Coffee in Minnesota that will get moved.

Scot:
[27:56] Okay I can make the coffee change its the minus 10 degree weather that doesn't sit well with.

Jason:
[28:00] Fair enough.

Scot:
[28:01] So that's kind of an interesting trend is in the end product marketplaces is kind of going it from online into the offline world
a couple other big trends that we're seeing in product marketplaces put into two buckets
what is friction reduction in this is kind of an that your convenience bucket that we talked a lot about in the other one is advertising Marketplace hybridization so
I did the things are Blended together the site of reduction of friction
you know one of the sets of Facebook has been quite active in the marketplace category in there taking a couple runs at this that that haven't worked if you remember Way Way Back you should be able to set up your company pages and have a little store in a tablet
I'm weeks terminal out with that with folks and knowing whatever they could barely find your company page much less the antelope Marketplace tab.

[28:51] And then then Facebook kind of just created what they saw was all these people forming their own little groups so we have one of these in my neighborhood where it's just kind of a
the Facebook group and then it it tends to very quickly have a little kind of product section.

[29:05] Play Private Eyes that with something called Facebook Marketplace which is really more that Craigslist kind of a vibe
but now they're they're doing a lot of experimentation around that to make it and inviting real sellers in there that are not just kind of know hey I have used cops for fifty bucks kind of a thing they're they're putting the kind of
tiptoeing into a seller platform payments platform in those kinds of things and then also.
Also within that world Instagram has been quite aggressive on this and just rolled out Instagram check out
and that is seems to be getting a lot of focus from Facebook and in a lot of nursing directions they could take that so
what interesting direction is if I'm an influencer could I recommend a certain product and have you know almost like an affiliate type relationship there where
I promote you I have a picture of this item and it made its cool pair of shoes and you know.
You can buy it directly from the brand but then I get some kind of a revenue share from from promoting them so that's the only really interesting and they seem to be putting a lot of a fair amount of effort into the Instagram check out then
so far it seems to be going really well didn't you want to add on the Facebook Instagram son.

Jason:
[30:22] No I mean again I think those are definitely.
Interesting experiments at the moment like it you know it big controversial question is that that model has worked really well for a long time in China so far it hasn't had amazing success in the US so it's I feel like it's interesting to.
Keep watching that and see if it gets customer.

Scot:
[30:46] Yeah absolutely said so the there's been way more failures here than than successes in the US to Twitter had a buy button Facebook how to buy Button as well as part of the ad format.

Jason:
[30:59] Yeah I think Pampers at online store on Facebook in 2007.

Scot:
[31:04] And you know what I would is a Marketplace person with a lot of these Market.
Please continue to get wrong is the user experience so that order one for example you know and we were we were one of their Partners on this.
You know it's pretty easy to put a buy button out there but it's really hard to answer questions like well where is the product detail Page live.
Yeah what would a lot of people that want to do a quick and dirty Marketplace also don't get right is inventory so you know the Twitter answer was will people will go buy the stuff and then the retailer can't all of it was out of stock
let's see you do that twice is consuming your life.
Forget the Twitter by button because you know it's totally not helpful things like sizes so and then if you get another calories categories to get into
a parent-child relationship so you got like colors and sizes and then you get into fitment in so so a lot of a lot of times people say you know this kind of Go Fast and break stuff and BP culture
I'll Chris he's really bad user experiences and I would argue a lot of these guys have not made it into the marketplace world because they've got so many corners it was really bad customer experiences early on.

Jason:
[32:17] Diana it gives me I just in general with marketplaces what are the magic you have to get right is you you have to make it work for both audiences the buyers and the sellers and if you like you know some people are really good at.
Appealing to the buyers.
But they don't offer nothing manatees to the sellers or you know some people are really good at offering amenities for the sellers but they're not graded attracting buyers and it seems like the trick to all successful marketplaces is.
They're they're able to grow their value prop on both sides of that Marketplace in relative Harmony so they they don't end up with a.
Ton of buyers and not enough stuff for them to buy and they don't end up with a ton of inventory and not enough consumers that want an inventory.

Scot:
[33:02] Yeah yeah Dan and I you know how to start a guy get approached by a lot of people building marketplaces and analogy like to use is it's like rowing a canoe or a kayak
if you if you only roll on one side yours can go in this endless circles and,
marketplaces great when you get it up to scale but it's really hard to get it up to scale because you're essentially building to businesses you're blowing the buyer side in the seller side and you've got to have enough capital and hotspot and then also.
You know there's this balance in the force kind of a thing that you have to do on on both sides of the equation to build the marketplace right and most of them do fail because they'll,
they want reason of capital they'll they'll row on one side of boat and not the other or you know that they won't nail that.
User experience in the middle or they won't have enough value a lot of times you just kind of introducing a buyer and a seller isn't enough you have to really kind of had that.
Trust factor and you know that serendipitous Discovery and in some of those things that are really hard to nail 100%.

Jason:
[34:07] I was going to say I don't know that you'd call these different kinds of marketplaces or not but two that are coming up a lot and my conversations so I'm starting to have a lot of what I've been calling B2B marketplaces.
A business that usually is the manufacturer of a product that historically did not sell that product to direct direct to their there.
In business user that they had a an intermediary distribution Channel and so is the world is gone from physical to digital and they stop taking fax orders and move to a website.
They still don't want to cut out their distribution channel so.
Traffic for the product is going to the brand manufacturer But ultimately the brand manufacturer wants.
One of their value-added resellers are there Distributors are there dealers or whatever their framework is to be the person that sells that product and so.
Marketplaces a perfect solution.
For that so I'm trying to see a lot of businesses like she would Packard Enterprise where you know one about the servers at hpe. Calm and then by the server from.
A bar that's essentially a seller on hewlett-packard's Marketplace.

Scot:
[35:25] Absolutely yes so this is where we can I take this Marketplace concept and most people think of it and I should I saw an Amazon or not it's kind of like they're big Marketplace question
but if we turn it on if we turn it 90 degrees how can you use marketplaces to make your business better so so using it as a way to using a Marketplace as a way to
you know navigate Channel
conflicts is one opportunity another one that we see a lot of and it is kind of what you see with the targets and Walmarts in the world is
exploding Out product selection so let's say,
you not like to argue about the away suitcases for example so it's always built this really great audience of Travelers and if they want to really explode out there skus
sure they can go to the old school way of of kind of building a bunch of them themselves but what if what if they just want to
you have some recommended products that work well like maybe some Bose headphones or something like that for travelers or.

[36:22] Hello I'm selling that they probably wouldn't build they can go to that old school way of going and sourcing people to EDI and all the stuff
or would it be more effective to effectively just kind of hanging a travel Marketplace off of their website so it's another thing that's kind of interesting is you know and then.
And you don't have to again when it when you bring that up a lot of people like oh you know I don't want people to buy toys from my thing you can you can
because you can control this you can control the rules of engagement right so even in your B2B example A lot of people will say why don't want.

[36:56] Tell her one and tell her to compete with its that's fine you don't have to.
Marketplaces that. Just have one seller and maybe it's by geography whatever the Rules of Engagement are of your Marketplace
it have there but what you're doing is you're part of that that ethos of the Ring a Marketplace is.
Everyone having a great user experience giving the seller tools to manage things on their selves versus you as a company taking on all the ownership of that management of things so it's a much better shared responsibility
and your supplier will be happier when when they have cell service tools cuz they can make a bunch of decisions themselves versus you kind of forcing them on them within the Rules of Engagement.

Jason:
[37:40] That's why make sense the other use case that's come up a lot I don't know if it's just.
Accord have timing or there's a lot of these these these kids is out there but is a Marketplace solving a regulatory problem and so by that what I mean is the automotive industry for example
like in most cases the manufacturer is not allowed to sell the cars to a consumer so a manufacturer makes the car.
A dealer has to sell the car to a consumer and so even one of the solutions there is at the manufacturer's website via Marketplace and have the Dealer's be.
Sellers on that Marketplace and in much the same vein is illegal for the the alcohol product.
Creator to sell the alcohol to a consumer so drizly one of the most popular alcohol delivery services.
Is really just another Marketplace you know they're they're not the seller of record selling alcohol and having to deal navigate all the.
The issues with alcohol licenses in distributor licenses versus dealer license is there a market place and they allow.
Retailers that have a retail distribution alcohol license to sell on their Marketplace.

Scot:
[38:54] Yeah and you can imagine you know what's used automobile dealership because it's kind of near and dear to my heart
you know you can imagine will who gets the lead well let's say you're in you look like our region of Raleigh-Durham there's like four Toyota dealers within like a kite area
well now it now you can use those Rules of Engagement to create the right Behavior so you can say who gets the highest scores on there
their service department whose sales reps get the highest NPS scores and you can kind of
change the the flow of leads are our sales into the the dealership based on these kinds of Rules of Engagement and drive the behaviors you want so
you maybe have a bunch of dealer saying that vehicles in stock and they don't suit so there's all out of stock in the stock thing a lot of the same kind of things we we see in the world.
I guess cars are product but they can have in the widget world could be applied to the vehicle thing or or.
Or even alcohol which alcohol store gets the order could be based on you know.

[39:58] How update are you on this then you can start to create all these interesting new monetization mechanisms you know like
you know the dealers made us an ad platform you could learn them so that's another one of things we're going to talk about the second is is this is interesting way to layer in advertising into marketplaces in and have a whole nother layer of
you know self management in letting giving the marketplace seller participants pools to let them hash it out figure out what the right thing is for the consumers.

[40:30] So then so the two biggest Trends in marketplaces that were seeing kind of here around 2019 I talked about
reduction of friction so so we're seeing people trying to do that in Social and a lot of times what we're doing is we're bringing the transaction up
right so let's use Instagram as an example so you see this exciting new shoe on Instagram now you go to Shalom some shoe site and then you have to login create a thing you know all that stuff,
and then re-enter all your payment details so bad by pulling it up and getting getting a bunch of clicks it's going to make it better for everybody
that's whatever it's got going for the Holy Grail and as you mentioned has worked in China but not the US ship was in that vein Google has been chewing away at this for a long time and their own kind of version 4 or 5 of this on the latest iteration is Google shopping actions
and that's where you do a search for something and you'll see this little icon and that effectively you can buy now right from the Google ad on your mobile device
I believe this is Android only right now but where are you know,
again. Lozier child as a partner in the sand I think we're seeing some really good traction from folks that are in this program because you can imagine
you know you go from a
you all right I didn't add I got to click then I had to have a converging and all that good stuff to now I had an ad and I got to convert so you take all these steps out of there it's going to
be better.

Jason:
[41:59] Just less friction between the purchase intent and the purchase.

Scot:
[42:02] Yeah.
Yeah and you know what's interesting is the travel industry is ahead of us in the e-commerce world so Google travel has you can buy a ton of stuff right from Google travel and I think they're taking a bunch of learning as they've got there
I'm weird that song Like a Virgin 600 and they're bringing it over into the product world so so I think you know with all the Google smarts going on and they seem pretty committed to
this all the way up to company so so that's why I want to keep an eye on
and it would be a Jason's not sure if we did talk more about Amazon sew in April this year Amazon announced one day Prime so you're just when everyone thought that they could kind of catch up to 2-day Prime now there's one day Prime and
you know I seen data that shows increasing late that day since April they've really been dramatically delivering on this and ramping up their delivery program kind of in in front of holiday
so it's something like,
about half of the products now Prime eligible products are also eligible for one day Prime so so I think my holiday next year will have you know almost.
All prime deliveries will be 1-day except for certain regions like Wyoming or something.

[43:11] Another big Trend in marketplaces is this ad Marketplace hybridization and Ali Baba was way out in front of this show
so taobao for example almost all the revenue on taobao comes from ads because
that's a person-to-person Marketplace and they're not collecting at a crate a really is is they make all the money from ads say to bestie mad
Mormon put in tea malt in about half the revenue and tmall is from a transaction fee in the other half is from an ad
you have to do is we have to be careful is just when you throw ads in there it can do no do spam right cuz a lot of times the person that can spend the most on an dad.

[43:49] Actually may have the worst product offer for consumers because they've got the most margin to spin on a Stanley add Amazon is very clever way around this is you have to own the buy box which means you got a great value
then you can do an ad so then as we talked the Amazon ad functionality is a
exploded a bus for vendor Central and Seller Central in overwhelmingly a large percentage of the pixels on the screen are sponsored or advertising.
So that has been a huge Trend and now we've seen Walmart replicate that and I think you're going to see a lot of other people look at this marriage of ads and marketplaces
makes it hard as a vendor in this world be at 1 P r3p or even hybrid cuz now you got all these.
Just give you this whole nother set of levers should I reduce the price on my product and nickel or should I spend more on Advertising
is it really how much of its accretive like
truly additional and how much of it isn't so that you know you're still a lot of thinking going on around there and I'm sure you guys think a lot about that as well.

[44:54] Set and then also you kind of brings crashing into the world all the agency guys now and product guys are like hey what are you guys doing here go
do some TV ads or whatever it is you guys do so it's really interesting that that that intersections causing a lot of friction and and a lot of resetting and Mini Market Place examples back to
you're thinking well I thought I knew it all I was on this Marketplace let me rethink that figure out how how do I leverage this advertising piece and how do I think about the ROI on that.
I always keep an eye out side the World Of Products on marketplaces to see what's going on there's a lot of really interesting things they are going going down one of the biggest ones is
you know for a long time investors love these kind of zero asset marketplaces so eBay 0ass at Marketplace it's a bunch of people in San Jose just kind of guiding the marketplace and all the buyers and sellers.

[45:46] Get involved with the company Amazon is more full stack because they do get involved at the 1p Parton to get involved in the shipping,
that's a big Trend so as companies have started to try to have a better customer experience they are they're going deeper.
Classic example you a lot about is in the real estate industry so in the early days you had Zillow and Trulia those two companies.
Merged and
you know they would essentially they're kind of a lead Marketplace for realtors then accompany kind of came out and said you know if we if we did really good data analytics and we just bought the houses for kind of
turn to 20% below market and then flipped him very quickly we can have a much higher take rate so the average take rate in a real estate market place is like 10% but these guys have like at 33%.
Take right now. That's one that's kind of the the bullish example the bearish or negative example would be
by really loading up on a lot of real estate if there's a recession you know who's going to be the last person kind of in the musical chairs there so it's so that it remains to be seen what's going on there we work gets pulled into this because I effectively kind of.

[46:59] Kringle market place where they go and take long-term leases and then they're kind of real estate Marketplace inside of that lease
Airbnb is a great Marketplace for vacations and where you want to stay there going why it is so there is trying to put together unique experiences that kind of say
all right you know you you want to have a fun family outing we're going to put you in a treehouse and along with that Randy horse riding and and and that kind of thing.
Last one I'll point out is this is where Uber and Lyft are doing some interesting things and this is anchoring around the customer and they're saying my customer wants transportation
and they came to me for cars what other Transportation can I give them so it's this is called multimodal in the transportation world so they'll say all right Jason you want to get from this location in Chicago
2 and location in New York you're going to scooter from here to the subject of the what he got caught the L
I'm here in Chicago and that's going to take you to the airport and then that's going to take a New York and then we're going to have Lyft pick you up and take you from point A to point B I'm in and maybe in there you'll you'll ride
other
mix mixes of Transportation so so taking the consumer and trying to grab more of their journey is a really interesting kind of thing and then that world you call it multimodality
I'm so kind of fun to Think Through what else can we do in their product world for people around this stuff you know if are there signals that we get from these products where we could tie in.

[48:26] Maybe a trip somewhere or travel or who knows what else we could try in there.

Jason:
[48:31] Even just like that installation services and stuff that you see marketplaces like Amazon start to bundle with sales feels like a a permutation of that.

Scot:
[48:41] Yeah and then the last one if you if you are interested in learning more there's a lot more material out there about marketplaces when I remember it was kind of lonely in 2001 being the guy screaming it
top of Mount about marketplaces but now the good news is there's a lot more content out there one of the best ones is
they're Dilaudid PCS that that it really almost got Focus to the exclusivity on marketplaces one of the biggest ones that that loves marketplaces is Andreessen Horowitz.
Search Marc Andreessen founder of Mozilla and Firefox and then his partner Ben Horowitz It's Kind of a Funny Thing.

[49:26] You eat your so the word internationalization has would like 18 character says i18n
so use that same saying Andreessen Horowitz there's 16-character so I think it's a16z
I'm so you go to a16z they have a lot of really good content around marketplaces
the two folks that really publish a lot there or Jeff Jordan and he was the CEO of eBay and PayPal for a while and then he focuses a lot on marketplaces
and then they just recently brought in a guy Andrew Chen and he does a really good job of pontiff Hughes from Uber.
I'm in on their growth team so so a lot of really good content there and when you go you may say Scott's crazy while I think about this but you have to kind of connect the dots and think
all right.
I have a certain business problem in your B2B examples a good one could I use a Marketplace here in a different way that I'm thinking about marketplaces which is the normal should I sell on eBay or Amazon,
so a lot of interesting
some of this content is how do you solve that two-sided problem of building two things you know how do you how do you fake Demand on one side how do you fix a play on the other there's a lot of really interesting he said he's now in conton out there so
what will link to their their blog a landing page and then they also have some good Twitter feeds that willing to in the show.

[50:42] So we're getting tight on time so hopefully that gives you a good feeling for marketplaces and some of the different flavors out there and what's going on in the product Market Place world.
Some action items so you know if you really
one thing I wanted to One Last Train I want to talk about is this is kind of in that category of things becoming marketplaces you wouldn't think,
this is maybe even a little bit early prediction for for our prediction show Shopify is an e-commerce platform press and bees and they just recently announced that they're building their own FBA like shipping capability well
you know one thing.
Shopify lakhs to be a Marketplace is a unified or four people come in and say I want to shop amongst all the Shopify Merchants so so for me that's really interesting one where you know I think we're going to see
Things become marketplaces you would have never guessed someone Shopify does it does it then why wouldn't Salesforce all the platform companies you're having this kind of vinaigrette interesting
interesting way of taking on Amazon by having a unique shop amongst my Merchants kind of a capability I think we're going to see a lot of.

[51:52] Innovation in the next 5 years around that I action items to thanks for making it this far so
I'm a big believer that you have to really Embrace these marketplaces they're not for everybody but in the in the kind of the obvious use case figuring out how to sell on them should you sell on them
if you're if you're not going to you're going to miss kind of half the opportunity out there.
Another one is everyone is very siloed and I think about advertising in one bucket and then where to sell your products in another those worlds are colliding you need to have kind of that capability integrated on your side
the the table Stakes of convenience of getting your products out there are very high so you need to be able to partner with someone to help you with those delivery times.
The good news is because Amazon's raise the bar
a lot of people I've talked to said why I went to a 3pl and you know it was like five days and three times as expensive or more
Partners out there that can do this I mention Shopify Zone Network.
FedEx UPS Wise Guys now have programs that are very Amazon FBA asked not only in their cost but in their service levels.

[53:09] You know you can't say enough about data quality we we we we just talked about personalization earlier and and.
The Venn diagram of data quality overlaps for pretty much everything on site merchandising.
Yeah that is the one topic you see people don't invest enough in product data so so that's one of those things you get kind of 10x when when he invested really rich product data the same shoe for marketplaces cuz you're going to want to go to sell on Amazon or build your own Marketplace
and you're not going to have the right taxonomy and way to do this
this is a whole new way of thinking about things so there's a whole new set of measuring and kpi is to develop their and then the last one we talked a little bit about this is consider applying a Marketplace to a part of your business that that's not
maybe immediately obvious could have been offline thing you do could it be a way of dealing with suppliers in a much more efficient self-service type way this more scalable and then has some yo.
Add-on benefits that that you wouldn't get if you just kind of did it the old school way.
Should you have your own third-party Marketplace there's a variety of vendors out there now that will help you set up a Marketplace so they can plug into most of the platforms the one we've talked about on the show before is Miracle they just raised a pretty sizable around 6 to $89
you were smooching there's a couple other than yours out there.

Jason:
[54:31] Miracle is I think I've is sort of the original enterprise-class solution and it's it's spelled peculiarly for her listeners that I've heard it before it's a m i r a k l which I'm sure they thought was cute but it's kind of been.
Yeah yeah and in fact it was the French version of best by fnac that these guys wrote an internal Market play software for.
And I thought oh my God like other people need this besides fnac we should turn this into a product until it's either so that's how a miracle was born from.
From a fnac but we have not seen a platform.
Have native Marketplace functionality yet which is interesting like you you might expect that to come but we have a miracle has done enough traction and with the fundraising we seeing the number of.
Newer competitors emerge that can be sort of a plug-in Marketplace like miracle and so one that I've seen in the US a lot recently is one called marketplacer.
Which I understand is started out as a European provider in and there are some small or ones that I personally know less about but I do see in the marketplace there's one called near me.
There's one called Iceberg there and then when I seen a number of times it's called arcadier and some of these are.

[55:55] Flea product I solution some of these are code bases that you can use to add to sort of cells maintain platforms like Magento in a few of them I think are even plugins that are available in the Shopify App Store so you can kind of.
Pretty easily add them to your to your existing Shopify installation and then kokorico is the funnest one to say.

Scot:
[56:18] Coco Rico.

Jason:
[56:21] I don't either but it's it is another one of these like a startup software service mark.

Scot:
[56:28] Did you have any other action items for folks on marketplaces that you've seen out there.

Jason:
[56:32] No I do I think your advice not to overlook.
The customer experience elements that it's not just about the offer in the customer I think it is very relevant because I feel like a lot of the.
The marketplaces that we've seen not succeed and not every Marketplace in the US has succeeded.
It feels like it often comes down to that customer experience at execution until I I I certainly.
I'm sort of agree with with that point but yeah that sounds like a great west of action item.

Scot:
[57:09] And with that we are we hope you've enjoyed this deep dive on marketplaces.

Jason:
[57:14] And as always if you have further questions especially hard questions for Scott then I highly encourage you to visit us on our Facebook page or hit us up on Twitter.
We'll try to stump Scott on the marketplace questions I'm if you have any easy questions I'd be happy to weigh in on them as well.
And of course if this show added value we sure would appreciate it if you'd get on iTunes and give us that five star review iTunes being another example of a Marketplace.
Until next time happy commercing.

Sep 27, 2019

EP189 - Code Commerce and Grocery Shop

This episode was recorded right after Jason & Scot received their iPhone 11 Pro Max's.  Jason mentioned a new iOS feature to take full page screenshots.  Here is how to take full page screenshots in iOS 13.

Event Recaps:

Amazon News

Other News

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

Episode 189 of the Jason & Scot show was recorded on Sunday, September 22nd, 2019.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode 189 being recorded on Sunday September 22nd,
2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scot Wingo.

Scot:
[0:39] Jason and welcome back Jason Scott show listeners.
Jason it was we got a lot to cover tonight we'll see what get a couple trip reports before we jump into that I'm dying to know did you get your iPhone 11 on new iPhone day was September 20th.

Jason:
[0:58] I did I was traveling during the week that it was an out so I was like at code Commerce secretly listening to the announcement.
In the audience and then that Friday I was still in New York so I super convenient for my Apple they made it 5:30 a.m. 8:30 a.m. East Coast time so I got to pre-order.
That that Friday and I my phone arrived this is Sunday my phone arrived on Friday.

Scot:
[1:30] Look at it all moved over and everything's rocking.

Jason:
[1:33] I did I think.

Scot:
[1:35] Pictures senior pictures.

Jason:
[1:36] So I suspect we got similar if not exactly the same models I got the 11 Pro Max screen.

Scot:
[1:46] I got the same thing yes you have impeccable taste sir.

Jason:
[1:50] Yes twinsies and I would say the upgrade experience continues to get smoother and less glitch free so,
in general it was super easy one wrinkle I was using a unpopular feature of the 10 which is dual Sims.
And so the way in the the US they don't have two SIM ports so one of your Sims is virtual and one of them is a physical Sim so I had to
a work phone account in a personal phone account and in the upgrade Apple convert your former
esim to a physical Sim so now I have two physical Sims and I can't fit them both in my phone so I'll have to go back to an AT&T store and get a new esim.
For all those people that want to have have a new definition for first world problem.

Scot:
[2:47] Watches get two phones.

Jason:
[2:50] Yeah not a fan I've carried a lot around a lot of phones and it's much easier to have to I mean I have one in the to send feature actually works quite well.
Articulated there different carrier.

Scot:
[3:01] How to upgrade.

Jason:
[3:03] Except for this week I mean I'm still fine I'll I'll still be able to travel with the
with the once a mint I can swing by and AT&T store last time I did this no one in the AT&T store never heard of any ECM but I have a feeling they've got it all I'll Donald in by this time.
And so I don't think we need to cover a lot like it's you know mostly well-known,
new features like you know why she related to camera but there is one secret e-commerce TV feature that I'm I'm kind of happy about 4 maybe only be relevant to his nerves of the show.

Scot:
[3:40] I'm trying to block what is it.

Jason:
[3:43] So
in the the Safari screen capture so when you you do the combination of buttons to take a picture of your screen.
You can now and now gives you the option to grab not just the visible part of the screen but the entire webpage all the way to the bottom.

Scot:
[4:05] Nice so you can get your lung checkouts.

Jason:
[4:09] Yeah yeah and so when you're taking pictures of mobile experience is to illustrate two teams or clients or things like that which is something we do a lot in the old days what you had to do is take a bunch of pictures and Stitch them together.
And so now this is super seamless in it actually works in Safari and male and a couple other programs that weren't as relevant but they're for web pages that's a handy little feature.

Scot:
[4:33] If I'd call that an e-commerce feature as much as it Chief digital strategy retail officer feature.

Jason:
[4:39] Fair enough fair enough a ux,
u.s. benefit I guess and on the flip side I feel like the last three years I've been waiting for the stupid true vision camera to go in the back so that we can finally get our shoe size right but I'll have to wait at least another year for that was.

Scot:
[4:55] Did to get the little pixels and also that we can.

Jason:
[4:59] So that front camera that does your your face recognition has it's an advanced measurement device that measures in 3D in it
in the few retailers that are they use that for clever e-commerce experiences like Warby Parker will measure your face and
recommend frame specifically for your face and it it it's like millimeter accurate so we're there to be a camera like that on the back of the phone you could imagine
measuring a space to make sure that the refrigerator would fit the opening in your kitchen or the sofa would fit in your living room or
exactly what size shoes you should order from a particular vendor Nike watch that feature without the fancy camera but it would be much better with this this hyper accurate camera.

Scot:
[5:47] Yeah he agreed and while you were traveling will you get a pretty cool recognition.

Jason:
[5:52] We did we did that must have been you because I was busy not focusing on the podcast.

Scot:
[5:57] It was snot me I think it was it was so it was just people someone out there likes our content.

Jason:
[6:05] Are the Luminous body of work.

Scot:
[6:07] What is a if you know how many hours that people have to listen to us.

Jason:
[6:11] We we yeah we're about 200 hours.

Scot:
[6:16] That's a it's a lot of us out there in the universe.

Jason:
[6:21] Yes yes so if you ever have The Misfortune of hearing me speak in person I usually open up by saying in the highly unlikely event you don't get enough of me in the next 30 minutes there's 200 more hours of me on the interweb.

Scot:
[6:31] Google I got a lot to cover let's jump into it first when I get a trip report from recode decode that was held in beautiful New York City September 10th how's the show.

Jason:
[6:46] Yeah it was awesome so we waited to that in the last segment but this is
code recode the the publication which is now owned by box them a very fancy show that I went too early in the year that they call
code conference and Jason Del Rey there has been enough that show a couple times is the Commerce
correspondent for them and he is started the series of events called code Commerce so used to be,
like an evening event on top of other shows where he would have like three speakers and now for the,
third year in a row he's had his own Standalone two day event in New York city so this is the third annual code Commerce,
and I like it it's a conference more than a trade show so there there's a few exhibitors but.

[7:38] It mostly is a single agenda of speakers everybody sits in the room with since to the same speakers,
there are no presentations that are all interviews with journalist mostly Vox journalist interviewing the the gas so it's a pretty dynamic.
Dialogue and you know sometimes people you know that stuff out that maybe they didn't plan to,
the audience is allowed to ask questions and so I got a little fired up at some point and ask some some questions and some of the speakers,
and so I just really like it they get a really good collection of speakers.
And I feel like the format lends itself to getting really useful stuff it's small and intimate so the networking was great I got to meet and talk to a lot of.
Listeners on the show I got to meet a couple of guests that we've had on the show that week we did not have in person so.
That was fun so all-in-all a good thing that one other thing I should say is in addition to that,
that's her speaker format they also have a half-day of off sites where you pick one and let you choose your own adventure of these I ate different offsides and they take you behind the scenes of a of a retail or e-commerce business.
And know that those can be cool to I had a complex so I didn't get to do that this year but in.

[8:57] Let's see what's hot in 90 seconds or less there's probably 18 speakers at the event so there,
there's a guy Kim Downing used to be the chief creative officer at Neiman Marcus
he moved to a mall of group in the New Jersey called triple five and they're they're famous for having taken over this mall development in New Jersey called The American Dream It's At Nigam all owned by the same folks that own Mall of America
I've been trying to open it for 20 plus years it's supposed to open next month don't hold your breath based on their past track record
openings and not doing it and I have to be honest like like these guys seemed totally disconnected from reality like there
just talking about what a great experience it is and how everyone in Manhattan is going to want to go to New Jersey to escape Manhattan and you know go shop for other necessities at this this giant mega mall and it's
you know it's the anchor tenant in the mall is Barney's who's already bankrupt you know all the other tenants are tenants that have eight other stores in Manhattan and it just it just seems like,
yeah he came up there pitching a small development like half an hour after Scott Galloway did 45 minutes on why malls were dead.

[10:14] So not super exciting.
They we had Jason Drogi who's the vice president of uber everything so that's all the services at Uber besides
the car-sharing so he does all the restaurant delivery
that you know food is a particularly interesting area for me it was an interesting interview at the end I got up and asked him if his service was good for the the restaurants because I like,
there's a lot of evidence that.
That all these delivery services are disaster for the restaurants cuz the margins are super low the customers are super opportunistic and the restaurants can't sell liquor in most cases which is where they make most of their profit so I had a premise that.
That these services are a disaster for the restaurant and the services are not 20% of all restaurant consumption so that's a pretty big.
Inflection points and Jason did not have a kid a very good satisfying answer for why he was he was good for the restaurant business.

Scot:
[11:15] Do you lease disagree with you.

Jason:
[11:17] Like she did not make a strong argument we were talking about that after the fact he kind of like pivot away from the question.
And talked about you know what like you know how they could be good for restaurants but not like the underlying economics of it being tough.
Scott Galloway did a couple things he recorded a podcast the final episode of Land of the Giants with Jason Del Rey and he did a 45 minute presentation
I most enjoyed it I've sometimes been critical I think Scott is super funny and has a lot of insightful things to say,
but he has a tendency to be highly repetitive so if you seen him once and then you see him a bunch of other times.

[12:01] It's a lot of the same content which is maybe something all I'll public speakers struggle with but I would actually say most of the content in this show.
Mabon thoughts I'd heard of his before from Twitter or what. That was the first time you put them together in a presentation so I thought that was good and interesting and he was.
You know he's been super negative on the wework IPO and you know so we spent a lot of time talking about those guys.
He's eating a kind of a bullish on breaking up Amazon so he shared his POV on.
And that whole thing and you know just.
Had some sort of interesting controversial povs which is what he's he's usually known for he also pointed out.
That light from his perspective the mall business is just totally dead and the specialty apparel business is next to go after that.
That voted poorly than for the American dream project which is a mall full specialty apparel.

[13:04] So next up Jennifer Hyman from Rent the Runway so that's,
awesome story she's one of the three really well-known female entrepreneurs in our space and that was an interesting conversation talking a lot less about the the original model and more of their.
Their monthly rental model and and you know some of that the new competition that's emerged in the rental space so that was an interesting conversation.
David Kahn the CEO of Birkenstocks Scott you'd be familiar with him because he's he's had he's been one of those outspoken controversial positions on Amazon they were selling a ton of shoes on Amazon.
Century pulled off the platform completely because they felt like they couldn't protect their intellectual property.
Now they're they're back on Amazon in a very conservative mild way they've authorized a few resellers to sell an Amazon but they don't sell Direct.
And David was prominently featured in the episode of Land of the Giants that focused on.
Why Amazon could be bad for companies and potential should be broken up so is interesting to hear from David and I was joking with you before the show.
You know what brand like Birkenstocks you you kind of expect that hippie would like long hair and Birkenstocks to walk on stage and he can't you know he's like a witch I could bank or in a in a like custom suit so it's kind of funny.

[14:25] So then we had your favorite brand on a BofA Steph Korey and Jen Rubio from away until they talked a lot about their.
There a growth strategy and and you know some of the success they've had in their retail strategy moving forward and that was all.

[14:45] Someone interesting Max Webb Gin who's the founder of a firm which is an interesting payment model that a lot of e-commerce sites use their.
Sort of an interesting financial model they're there like a no fees lending system so you get charged no late fees.
There's some really interesting novel things about it and he he was sharing that we had Marie.
Myrna Levine who's the VP of global Partnerships at Facebook and so she was mostly talking about Instagram and in Instagram checkout which is.
Something near and dear to do e-commerce smokes and a little bit about the Facebook Marketplace.
And again you know she painted a pretty Rosy picture I got a chance to get up and ask her a couple questions I asked her you know if.
I said hey there's a bunch of from my perspective yqx problems with Instagram check out that make a not very appealing to Brands like most notably you can only sell one product at a time.
And ask if they plan with all of that and she she said that yeah they still consider Instagram check out a real early beta and that they would expect it to evolve a lot before General release,
and I said you know bigger picture you talked about how important it is for consumers to have stored payment information to make things like this work.

[16:08] You know is it realistic that customers are going to ever trust Facebook with their payment information by giving your your track record and she totally dodged that question and talked about like all the great security features they were using for payment.
Which was not the point right like obviously I'm sure Facebook is using the best.
Encryption technology in tokenization but it's at the point is there there a damaged brand when it comes to trust in.
It's going to be really interesting with it I can get a bunch of consumers to give him payment information and give her a chance to answer that and she she was not a very compelling enter answer.

[16:45] And then wrap it up probably the big Marquee interview was Mark Lori who's the president of digital at Walmart Jason did written,
that's somewhat negative article that was like super popular a few months before so.
How to take props to mark 4 for coming into the lions den and facing him.
And I not shockingly well polished Walmart exec did not break a bunch of news in the interview.
But it was interesting to see him there and you know there are few questions where would say like.
He did not seem as enthusiastic as you would expect someone to be that was,
I'm super fired up about the role like I think Jason you know like tried to grill them on whether he was going to leave Walmart at the end of five years
and you know Marge answer is it like absolutely I live like committed to be there and she seems like wait are you staying because you love it or because you made a commitment.

[17:44] So that that was really interesting generators one of the co-founders of Harry's that's a great idea to see story Julie rain Wainwright is the CEO of Rio Rio was.
One of the most colorful interviews of the show so that was cool and then
Tara walpert who's the VP of agencies that use Google who's mainly focus on YouTube and so she talked a lot about like how how there,
they're expanding influencer marketing and expanding Commerce features on YouTube so
pretty rich robust lineup that had a in a bunch of different stuff for different people and I thought it was well worth the time.

Scot:
[18:27] Code to seems like Lori had bet a lot on grocery kind of going to show with the pickup and then also all those Acquisitions they did on digitally native brands for loose stool kind of
your gear just harder or had the blue kind of come off that Rose.

Jason:
[18:44] I think the answer is yes or no so I think they're Walmart is Super Bowl champs grocery part of Jason's article was Mark tends to get a lot of credit for digital Grocery and apparently that's creating some
conflict because most of the digital grocery work actually happens in the stores and you know Mark was like
hey it like that's totally fair like this the stores are killing it on digital Grocery and yeah we probably do get disproportionate amount of the credit totally understandable that digital groceries going awesome so he like I would say he had a good answer and double down on digital grocery
digital native Brands if it was a little bit like
yeah I originally we bought some Brands and that's no longer the strategy that were much more bullish on incubating brands from scratch in house then we are buying Brands and he confirmed the rumor that Jason Delray had heard that.
One of the Acquisitions ModCloth that they're there might even be discussions going on to sell it back to someone else.

[19:42] So I think Mark like with Express that he was still bullish on the space,
but that's why you know they had to learn at Walmart that like buying a brand and integrating it was was probably a challenge so he pointed out he pointed till I come
all is well home which is a de jure need a brand that they incubated in house and then there was kind of a third category that they were talking a lot of a little bit about and you may have seen some news
sort of you know turning up the the focus on the marketplace which is probably near and dear to your heart and I think they've announced the pilot of fulfillment by Walmart which for the first time there duet
they're not that helpful products for some of the third parties and that they have an interest in dramatically improving their tool set and you're improving the experience for third-party sellers so.

Scot:
[20:33] Seems like a one theme with Rent the Runway and maybe a way would be diepio Market to that come up because diepio Market's been somewhat open with Chewie getting out and,
real real and a couple of other folks and those guys are kind of both could be on in the pipeline the Jason drone to a month.

Jason:
[20:54] He did yeah yeah so there was in the pre-ipo companies were mostly pretty koi which You is kind of what you would expect
the date you know they're open to it in aren't you know I'm close but that they don't need to go public and that's not that you know they didn't start the pump the company to necessarily
go public Julie Wainwright you know who's at the real real and they they finish their offering already right am I.

Scot:
[21:20] Yeah they been out for all the done really well.

Jason:
[21:23] Yeah and so she you know she had a lot more sort of insight about what either the the pros and cons have been on the other side and.
And you know how there was some interesting conversation about.

[21:40] The impact of competitors and their successful IPO you know bringing more people out of the woodwork she also has a totally fair an interesting POV about being a,
female entrepreneur and some of the challenges raising money and she's like you know she talked a lot about how like.
Should have been a lot of time convincing every male investor why,
that the business use case was even appealing to women and she's like you don't know nobody that we work at Uber ever had to explain to an investor,
that white small businesses need office space or people need a ride right but but she often would have to convince someone that that.
You know that women would benefit from buying these used luxury goods and that often authentication was a super important thing in so she she told some funny stories and,
I felt was a sort of appropriately cocky she talked about 1 BC that like.
So I didn't get the pitch and like felt like all the money they were investing in in selling authentic products was
was a waste of time and now that they've had the successful IPO that VC has funded a new competitor and is like publish blog post talking about the importance of authenticity,
and I think she's like whatever dude we were here before you and will be here after your death which is kind of nice in both.

Scot:
[23:07] Yeah I've heard the Rent the Runway and the Stitch fix lady's house somewhere story where a bunch of mail DC's wouldn't invest because they didn't understand the concept or they would say I don't know if I don't think my wife would use this.

Jason:
[23:18] Yeah and I think that sounds like the common Trend right is that everybody's market research as they go ask their wife and that you know that's pretty small sample size.

Scot:
[23:26] Yeah cost of the new zip from there had a mini Starbucks and went to Vegas for grocery shopper.

Jason:
[23:33] I did I would load it up on Starbucks order my phone and Jen it out to grocery shop which is in Las Vegas so is reminder this is the second year of grocery shop grocery shop is a a show by the folks Miss founded,
shoptalk that's focused primarily on grocery in cpg and so.
Drew really fast it was maybe 1,500 people last year was 3,000 people this year
that it was at the Venetian and felt a lot like shop Taco Shop talk and grocery Shopper moving to Mandalay Bay next year for people that care about their Las Vegas venues there Starbucks at both so it's kind of neutral to me.

[24:17] The end it was also a good show I'd say it in a different way so most of the the Keynotes at this show were Marquee brands,
but the content was less interesting to me because for the most part their brands aren't allowed to come up and just give a commercial for their,
their business and that you know there weren't like critical questions or necessarily new content so well.
You might have been interested in a lot of the companies in the Keynotes there are folks like Target and,
beyond meat and honesty and ortado in Procter & Gamble that were giving key notes Coca-Cola Sam's Club.

[25:04] Either wasn't a ton of like interesting new useful takeaways
in that contents but the the 3,000 + people that attended the show where all
industry insiders there a lot of the breakout panels that were where super interesting and they were just that I just had a ton of useful conversations,
at the cocktail parties and you know at the Starbucks between sessions and just felt like that the networking was super valuable for me so.
Kind of the opposite of a recode it was less about content and more about networking.

[25:43] I did host a couple of panels so I was the MC for two panels I did.
A panel called preparing for grocery Commerce that was kind of targeted at people grocer that are just getting into e-commerce and I had three panelist on that session I had to,
a Stephen Raymond who's the VP of e-commerce at Hain Celestial which is a house of brands most notable for their Celestial teas,
I had Wayne Dewayne who's been on this podcast he's the VP of e-commerce at constellation brands.
Which is a bunch of alcohol and Spirits brands,
so we actually drink some Coronas on stage while we were chatting so that was a big hit.
And then I had to Dan Bracken who's the VP of consumer Insight at Church & Dwight which is a.
A big cpg so they each kind of gave their their learnings and best advice for new people entering the e-commerce grocery space I got good feedback that that was useful.

[26:38] And then on the second day I did a more advanced panel on connecting customer data points so far this one we had kind of to Keynote panelist.
We have to bring in a retailer so the retailer is a Steve Henning who's the VP of digital.
For Wakefern Food Group which is a big Co-op of of Grocers.
And talked about where they are and in data and what their customer data strategy is and got an all the bits and bytes of,
add emps and.
All those sorts of things and then for the brand perspective we had Doug stranton who's the chief digital Commerce officer at the Hershey Company so
got got his perspective and Doug has a bonus that was also the chief digital officer at Unilever for number of years so
so it was kind of their in a lot of their formative so a lot of interesting insights from both of those guys you know when you're getting into the hardcore
management of data and activating that data for customer experiences.

Scot:
[27:43] The so.
What's kind of the meta Topic at grocery is it still curb versus home or is it Amazon jump the shark with Whole Foods or more.
Almost feels like maybe Brands going direct his kind of.

Jason:
[28:03] So this show like so it is.
Like there's a lot of groceries at the show but there's a lot of cpgs at the show so one big thing is the whole disruption of cpgs right that the there's a lot of digital native brands that have lines that are like competing with income in cpg,
and you know I'd say a year ago the dialogue was like this is a huge disruption in this year like there's more evidence that those brands are,
you can achieve a certain level of success but then are really sort of plateauing,
the the incumbency Bee Gees have not successfully launched a new a lot of new products and so there's a lot of dialogue,
about how those companies are doing things to get more customer intimacy and get better connected to the customer
and watch products that are more relevant to customers and then they're there was an awful lot of talk about the sort of third approach in this whole thing which is retailers launching brands,
and how those those retail brands have been successful and how they've evolved a lot from the original,
start a private label and in fact one of the the Keynotes Stephanie winquest use the EVP of food at Target.
You know they launched a major new grocery brand for Target but basically at the show so.

[29:24] So her keynote was a lot about this new food brand in that.
The that the Retailer's sort of competing with the the incumbent and Challenger cpgs is was a big conversation at the show.

Scot:
[29:37] Yeah and then I'm watching your Twitter feed it seems like there is some interesting Target kind of talking going on there with what did we learn from Target.

Jason:
[29:46] Well I talk about that you like so Target is maybe the poster child for being the most successful at that strategy so they want to strike 5 brands.
Now sell over 2 billion dollars but one place where they haven't been big as in grocery and so in fact,
like grocery was a newish strategy for target maybe we'll call it seven or eight years ago and well a lot of categories at Target or any kind of known for surprising and delighting customers and having these.
You know premium products that that the customer wouldn't expect.
Grocery was always sort of the me to category for Target like like if you needed something that they may have had it but it wasn't something.

[30:24] You were excited about acquiring.
Inside out you know a lot of this conversation was about Target doubling down on Grocery and you know trying to get to the point where they're surprised is.
And Delight for grocery in the same way that they they are four other categories and they said they launched a new owned brand for food called good and gather they kind of retired a lot of their older brands.
And you know this is a a focus on.
Simpler products fewer ingredients non-GMO mostly Organics in so it's not so much a knock off of a of a national brand but you know what a set of products that they think I'm particularly targeted at the.
Target guest and they're forecasting this will be the the biggest.
I'm on brand that Target has which is pretty big because you know some of that apparel brand cell cell 2 billion dollars each a year so.

[31:27] So if they hit that forecasts that that will be somewhat impressive so that was a lot of the the target conversation I would also say you like shipt.
You know there is a lot of conversation about curbside pickup & Home Delivery Target owns
the company in that spaceship. And there's a lot of talk about how successful that's been for Target but ship still is in the business of providing the services for other party so shipped had a big.
Presence on the trade show flooring was a big sponsor and said there's there's a lot of talk about Last Mile in the Bears pros and cons of the different meth.

Scot:
[32:00] Code for their highlights from grocery.

Jason:
[32:06] For me those were a bunch of big takeaways I got to sit sit down with a couple bucks and record a couple podcast that will get out of here in the weeks to come so I mentioned Doug Stratton who's the chief digital officer at Hershey
you and I are both chocolate Advocates so like we wouldn't miss the chance,
to get a podcast with him and then I also got to sit down with a zebra car while who's the VP of Shopper marketing at the Coca-Cola Company in,
can I talk about how coke is thinking about digital and what what they're doing in in digital which is interesting you know it is interesting like we are now.
Grocery is a very low margin business,
the average sale price for a lot of these products or the Brand's is super low and so historically these have not been very digital categories you you don't think of.
A big digital investment to sell dollar candy bars or cans of soda,
but you know now these guys are you know front-and-center focusing on digital because it's really starting to impact their business.

Scot:
[33:09] Wrinkle in the other Megatron to uncover before we jump into some news.

Jason:
[33:13] Nope nope I think that's a ton but if you're in that space I would definitely think about putting that on your on your wrist for next year and come visit us at Mandalay Bay.

Scot:
[33:22] I forgot to ask when you're in New York did you get to see the new Apple store or did you miss me.

Jason:
[33:28] I didn't sit at the Apple Store at you open this Friday so I've done some video walkthroughs you and I are going to be back in New York Knicks next month together so maybe if schedules permit would be super fun we should go visit the store together.

Scot:
[33:43] Awesome I look forward to that Coldwell wanting to lose last couple minutes to talk about some news and it wouldn't be a Jason Scott show without some Amazon news.

Jason:
[34:00] Amazon news new your margin is there opportunity.

Scot:
[34:10] To a lot of news out there on Amazon some of it I was going to put into the political bucket before we talk about that though you're one of the things that kind of hid in my world it was interesting was they made a big investment
and Order of electric vehicles Tesla has competitor called rivian,
and ribbons coming out with trucks with electric platforms so Amazon announced not only
they invest an undisclosed amount that they were part of a $700 round and they were listed first which kind of flies are the largest but they ordered a hundred thousand electric delivery vehicles from
Caribbean and they're saying they should have prototypes in 20/20 start volume out in 2021 and have them all on the road by 2024
this is kind of interesting because Amazon has not really said much about a green lot of Amazon employees have been.

[35:09] Rallying internally Jason Del Rey has written about this so it was kind of a
pretty big vote for our insert limit their carbon footprint as a company and then it's also interesting because
they are propping up a big rival to two,
Tesla in the form of rivian and you know Elon and Jeff are going at it as latest Rockets So Alive people kind of said this is kind of
another way for Bezos to really kind of get under a Elon Musk in by supporting a competitor.

Jason:
[35:41] Interesting so we might see some Amazon high speed trains in the near future to them.

Scot:
[35:49] Whatever the Rival to boring could be.

Jason:
[35:55] Exactly the thing that toy strike me about this which seems like Amazon's exact Playbook is I want to say they made this huge announcement the day before there was a big scheduled
like green demonstration and a bunch of Amazon employees were planning on walking out to
Tess art of advocate for Amazon embracing
adrenal footprint and so do I get Amazon has historically been very good at these like proactive PR moves and it seems like this was
they were totally able to leverage that this time.

Scot:
[36:29] Yeah yeah. They have a picture of the Prototype van will link to it and show notes it looks really good so it's going to be interesting that the big question is really the range on these things so,
you know the I don't know how much it typical Prime band drives a day but I see him on the road constantly so be interesting to see if they have to come up with some clever way of rapidly charging these things are or they're going to ship them in a different way or something.

Jason:
[36:54] They each do half a day's delivery so that's why they had to get so many.

Scot:
[36:57] Yes it could be it could be part of it so I don't I don't know the ranges.

Jason:
[37:00] Quick clarification question for me so like obviously Tesla makes a bunch of electric vehicles and I know they've talked about business vehicles and trucks but as far as I know they don't they don't have a,
like a van form-factor I feel like Amazon's about Sprinter vans in the past which is the big,
Mercedes V8 like is it obvious that this is a trivium's a direct competitor with like is this worse news for Tesla or is it worse news for Mercedes.

Scot:
[37:26] I think it's probably worse news for Mercedes
Elon if this is a tweet or live interview I've seen him talk about how he really likes the Mercedes Sprinter and they should work together on the electric one
he always has little twinkle in his eye and you can't tell if he's just basically crazy or if there's something going on there I think Mercedes a Tesla have crossed licensed a lot of technology to
I wouldn't be surprised if this doesn't Force something go on there between Tesla and Mercedes to get the Sprinter platform Electric.

Jason:
[37:59] Got you and I assumed that like the Des customer will then be FedEx.

Scot:
[38:05] What FedEx use it so UPS actually has a big electric thing going already and I don't know who they are platform is on that it's,
maybe I don't know I don't know what UPS uses but I've seen them them talk a lot about getting to carbon-neutral pretty quickly and they have some electric fans out there.

Jason:
[38:30] That's going to be an interesting space to watch if only to a podcast about that kind of stuff.

Scot:
[38:34] We will will keep track of it here and then also on the vehicle to podcast where it's been even more time talking about that
Scot vehicle Trends going on how about on the political side there's been a lot of negative stuff out there on Amazon and so I'll turn to you for this the highlights on that.

Jason:
[38:51] Yes I know. Scott loves talking about the political stuff it's his favorite thing to do so it's a big big,
generosity on his part time to pass it over to me.

[39:05] So you know there continues to be a bunch of Niger negative sentiment you got all these Democratic candidates talking about breaking up Amazon without.

[39:16] Necessarily obvious reason why the last couple weeks there were some actual that government announcements about like
looking into antitrust issues in the one that affect an Amazon was that the FTC was talking about probing some of the 3p practices and in the one that comes with the most is,
Amazon,
disadvantaging third-party sellers in favor of their own practices so essentially like the The Narrative goes you can't both play in the game and be the referee it's not fair,
that you're selling products in competition with your Marketplace Sellers and you,
control things like whose product shows up in Search and how visible every product is and so,
that's a big narrative like the counter narrative is like this is in a remotely new idea retards have been selling their own products for over a hundred years
they always put their own products and favorable positions and they charge brands in order to have have good positioning in the store said that like there's,
there's nothing particularly new that Amazon's doing that Walmart and Woolworths before then,
didn't do but it is getting a lot of visibility and one of the the big articles that came up there was kind of interesting is Wall Street Journal.

[40:46] Actually like ran an article where they they talk to some Amazon Engineers that like,
confidential confidential admitted that Amazon had changed their search engine to intentionally by us their own products and so again debatable whether that's,
illegal or immoral in any way and I'll leave that to others to decide
but one way it's interesting is Jeff has always talked about being the most customer-centric company in the world and wanting to have the best experience for customers and
it's super controversial if you search for Energizer batteries like
pretty obvious what your intent is and you would imagine the best experience would be too quickly get you to Energizer batteries but when amazonbasics batteries have higher visibility on that search term then Energizer batteries,
like arguably like you're trying to boost your own profits at the expense of being customer-centric and so it's kind of a.

[41:49] A pretty tangible example of of where Amazon might be drifting from their their idealistic morals,
and so that that's been a little interesting to follow that,
that exact issue is one of the episodes of Land of the Giants and a former guest on the show Charlie Cole who's the the chief digital officer at to me and Samsung by cheat he very explicitly said it is like look,
I don't mind competing with Amazon that's totally fair they can make products to compete with me that's totally fair but when people search for my product on Amazon and they intentionally put their products in front of them
that's not a good customer experience and just don't lie and say you're trying to be customer-centric when you're doing stuff like that was gonna as blunt as Charlie put it so
an interesting space.

Scot:
[42:39] Yeah I guess cleaners and go to watch them navigate through this stuff and you have the counter argument would be well retailers for doing it for years and.
Old Roy,
dog food in a Walmart is in front of the Purina dog food that kind of thinks sometimes you know these the physical arguments don't really translate to to the digital where you know it
customer is clearly expressed a brand new you should get them their quickie soap to be a lineman.

Jason:
[43:08] Yeah yeah like a little less controversial but like you know there's some labels like Amazon choice and and some new labels that they're testing and people are like is Amazon gaming nose and I I may have made a smart a tweet at some point where I showed like staff picks from Trader Joe's and I'm like
oh my god do you think some of these might not actually be stabbed pics.

Scot:
[43:29] Go in any other needs any other Amazon usually cover.

Jason:
[43:36] I think those those were the big things I know we're running short on time so let's let's get to our last genre.

Scot:
[43:46] We haven't talked to her about Mulligan lately but I was reading some reports that a we've already had over 7,000 store closures heading 7300 as of September 1st I think that's more than we've ever had in any previous year
and we still got three to four months ago,
another world retail you kind of if you can make it through October you you're probably not going to close for December that thing's going to be pretty pretty bad if you're going to close for those two months
so I think it will slow down but I think we have a chance of hitting 8 or 9 K hear some of the
this is based on data from video so some of the top store closures are Payless with 2,300 stores Gymboree with 750 Charlotte Russe.
And then on the watchlist they have several companies that are our kind of they look at this kind of load of
ducks to assets and then also are they losing money making money in kind of protective time when there may be a chapter 11 events Forever 21 is on there a JCPenney at send a Pier One in Francesca's chokes,
I'm surprised this didn't include more mattress worse cuz around me you know we still have like eight thousand mattress stores just in Raleigh-Durham and they're pretty much all closed all the sudden
I wonder if this is under-reporting a little bit and I was kind of surprised that mattress stores weren't one of the big contributors.

Jason:
[45:15] We'll see that's a great point because it's something funny came out about all this so
I think the macro points are totally true like that we are seeing more store closures in a single year than we ever seen before there are actually like we'll see if they come to play or not but like that
on that watch was the one that they're like strong rumors are really preparing for a
a bankruptcy which would be somewhat surprising at this point is Forever 21 because prove your point like.
You know you really wouldn't want to go in a bankruptcy right right before the holiday season and there are there rumors that,
if they did that the malls might be a potentially bail them out as they have,
I've done for at least one of their apparel retailer in the past Aeropostale so that's kind of interesting but I I see the inside baseball I found an interesting study also,
so this instead of you just said it is from video and they did a bunch of their own research so most of their store closure information came from,
public disclosures so
it's public companies that said in a 10K or an investor call that they're planning to close X number of stores.

[46:28] And so that's that was their data source for the store closings and like I'm sure all the stores are closing video also cited the source that we see most commonly for tracking these store closing closings and openings
which is core site which is a research firm that does this really useful
can a weekly tracker on how many stores are closing and how many stars are opening a bunch of stores have open this year not enough to offset the closings and that
that would also be a first so while there been a lot of closing in the last couple years that I've actually been more openings than clothes XO,
this could be the first year we had a net negative and course I may have had a net negative last year even that now that I think about it but.
Here's what's interesting about that so all of these companies are arbitrarily picking a list of well-known retailers in tracking.

[47:20] The opening and closing and said there's another market research firm out there IHL that does a bunch of retail research.
And they conducted a lot more comprehensive study and they said hey we are going to look at every retailer that operates 50 or more stores in North America and track how many they've opened and closed.
And we're going to estimate where they don't have public disclosures or we're going to call them and ask and we're going to use real estate records and so instead of just kind of.
Tracking press releases we're going to really do the math on all this and,
they not surprisingly they found more store closures then then video or.

[48:02] Coresite but they found way more store openings than either of these companies so pretty this IHL research that came out,
there are still more stores opening then closing it just interesting to think about like I,
I think our macro points are
totally true that retails not going away that were way over stored in the US that we we do need to be closing stores in our closing stores in there that's a
a necessary adjustment but it is interesting I feel like
in the Echo chamber of our space like this coresight research gets its reported and recited and blended into other people's research on the time and was kind of funny to see this I shall study come out and explicitly point out that.
Coresight research is not particularly rigorous and somewhat random so it was like a little inside baseball research fight.

Scot:
[48:56] Yeah and I wish square footage is what really matters right because you know Closing one JCPenney is is like I don't know.

Jason:
[49:04] Yeah you have to open off a lot of the way stores to make up for a JCPenney.

Scot:
[49:07] Yeah yes that's what really matters and I've never seen anyone really be able to track that very well unfortunately.

Jason:
[49:12] No no and I unfortunately like we've all seen the summaries of the IHL I'll confess it's inexpensive study to buy so I haven't actually.
Bought the research but I don't think they have the the net square footage in there but just anecdotally if you look at the list of stores that are open and closing you're absolutely right like in general
there's there's more bigger stores closing in smaller stores open.

Scot:
[49:37] One one last thing to make sure you put on your your calendar the Disney plus subscriptions it opened up so you can go ahead and pre buy that so on November 12th,
and they have exciting new Star Wars TV live action show called The Mandalorian that off and up is pretty excited about to make sure you sign up for that Jason.
Star Wars fan listeners.

Jason:
[50:02] And before any listeners Panic Scott and I promise to pre-record a podcast so that we don't have to skip a week while Scott is binging the Mandalorian.

Scot:
[50:12] Yes sadly I don't think they're going to do a bench so I think they're going to do it's hard for traditional TV people to get their heads around it but they're going to have kind of really someone a week or something so I have time to podcast.

Jason:
[50:25] Good news good news in like slightly related there is this interesting thing
Target in Disney have announced that they're opening these permanent shopping shops
and so you're going to see a bunch of unique Disney merchandise at Target
I think that is potentially going to be beneficial to you Scott but I seen speculation that the Disney plus service could be one of the things that's heavily merchandised in that.
In that assortment.

Scot:
[50:55] Cool hopefully I'll have more Star Wars Target exclusives those are those are the good ones.

Jason:
[51:00] Exactly what was in that is a great place to wrap up this new show cuz we've come out perfectly use the a lot of time as always if if I wasn't Earth have a question or comment
feel free to hit us up on our Facebook page or on Twitter
as always if you have time we sure would appreciate if you go to iTunes and finally give us that five star review that we've desperately been begging for
but we have a we sure appreciate your time today and we have a bunch of great shows in the pipeline so appreciate you keep listening.
Until next time happy commercing.

Sep 20, 2019

EP188 - CarMax CMO Jim Lyski

Jim Lyski is the CMO of CarMax. In this broad-ranging interview, we discuss the keynote Jim delivered at EtailEast, "CarMax Goes All-In On Omni-Channel: Building, Scaling And Deploying With Speed", as well as discussing the digital disruption of the automobile business, and where it might all be going.

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

Episode 188 of the Jason & Scot show was recorded on Wednesday, August 21st, 2019. live from the eTail East trade show in Boston, MA.

http://jasonandscot.com

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

Updated 9/23: Fixed editing mistake in audio file (sorry!)

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show
this episode is being recorded live from the etail East trade show in Boston on Wednesday August 21st 2019 I'm your host Jason retailgeek Goldberg and unfortunately Scott was unable to join us today so I'm solo,
but I'm making up for it by having a great guest on the show welcome to the show today Jim whiskey the CMO at CarMax.

Jim:
[0:50] Thank you for having me Jason.

Jason:
[0:53] I am super excited to have you on the show and I suspected most of our listeners are familiar with CarMax but may not fully perceive the scope so can you kind of give us the soda elevator pitch.

Jim:
[1:07] Sure like where the nation's largest retailer used vehicles and we're basically Coast to Coast with over 200 stores and we sell three-quarters of a million cars a year.

Jason:
[1:21] That is awesome and full disclosure for me I spend some of my formative years at Best Buy until I still like I can't hear CarMax without thinking the enemy at Circuit City.

Jim:
[1:32] Yeah yeah we were a spun out a Circuit City in 1994 so.

Jason:
[1:38] I'm dating myself I know that that is awesome.
You are the cinema what sorta is the scope of us Eno at a company like CarMax like what what sort of things do you get involved in and how do you spend your day.

Jim:
[1:54] Yeah well I think you know the CMO rolls a little different every company but that CarMax I'm ahead of all the traditional brand things so I can advertise in Communications PR
as well as strategy marketing strategy and Analytics,
and then an additional. I also had a product organization so the product team focuses on how we represent ourselves digitally as well as in the stores.

Jason:
[2:21] Got it so that whole in-store experience are in dealership experience and the digital version of that is all in your scope so it sounds kind of like a part-time job then.

Jim:
[2:31] Yeah exactly.

Jason:
[2:34] And how did you come to CarMax what was your background prior to CarMax.

Jim:
[2:38] Well I started off my marketing career at FedEx been about a dozen years there ended up heading up all u.s. marketing for them eventually,
then I went over to Cigna Healthcare Nationwide Insurance and most recently Scotts Miracle-Gro.

Jason:
[2:54] That awesome so you know we talked about e-commerce allowed on the show and there's this book retailer in the in Seattle I Amazon the comes up periodically and so,
FedEx makes a lot of cameos on the show and we're talking about logistics but lately the big news is they sure to boldly,
fired their customer a little bit in an Amazon as a impassioned Observer do you follow that all is that stuff.

Jim:
[3:22] I think everybody in retail I last saw that and being a former associate FedEx it was particularly interesting.
I don't know why they did it but that's pretty smart company so I'm assuming they weren't making any money.

Jason:
[3:37] Yeah I know I tend to think you have a finite amount of delivery capacity and if you sell all that to the,
company with the most leveraged in the world you have to sell it at the the lowest price point and I have a feeling FedEx wisely figured out that,
they can sell their capacity Elsewhere for more money at the same time that an exit probably Amazon's probably investing in their own capacity pretty aggressive.

Jim:
[4:03] Yeah Amazon I don't know if you go through any neighborhood in America now you're going to see those Amazon trucks everywhere.

Jason:
[4:09] Oh my God the trucks to now and soon there's now a San Francisco to Seattle it's the drones on that these on the sidewalk there is crazy.

Jim:
[4:17] Yeah well then FedEx has her own little robot making deliveries to so I think it's going to be a dangerous place here pretty soon.

Jason:
[4:25] I know I know my poor four year olds going to have to learn to skateboard somewhere else I don't know how that's going to happen the FedEx drone is even cooler though cuz he can climb stairs and stuff.

Jim:
[4:34] Yeah it looks pretty cool.

Jason:
[4:36] Yeah yeah I like that video so you know I have to tell you before we jump in any further or Coho Scott is super bummed to not be here with me today is where both e-commerce guys Scott founded,
well known company in Tipton public in e-commerce paste but he.
Started a new business a couple years ago on demand car washes.
And today he's now expanded into like 13 states and raised a bunch of money and so he's become a total car guy so I know I just wanted to spiritually give Scott a shout out that I'm here and you're not.

Jim:
[5:13] Yeah and he's really going to be pissed because we're going to go on a test drive and in a Ferrari F40 the right after this interview.

Jason:
[5:21] That you went you didn't I just bet that I can I drive around in the black one.

Jim:
[5:24] Level of a little race.

Jason:
[5:28] Yeah exactly yeah she's a guy and he's going to point out that like potentially in a straight line the test I can take the Ferrari but I'm going to point out that is long as we put a curve in there we're in great shape.

Jim:
[5:42] Plus you and I are going to look a lot cooler than sky.

Jason:
[5:45] Yeah well that was true even without.
I love it when he's not here to defend himself that's my favorite thing so.
Tomorrow you are speaking in detail in your session title your keynote is Carmax goes all-in on omni-channel building scaling and deployment speed,
and so I'm assuming you've thought about what you're going to say tomorrow or you going to work on that after this.

Jim:
[6:10] No I thinking if you have any words of wisdom I'm going to incorporate that was sent to my speech tomorrow but I have an outline at least.

Jason:
[6:16] Yeah well what has mostly made a success for me is making fun of Scott so I feel like.
Did they send you do that on stage you'll you'll be ahead with the audience no matter what.
I promise not to let any of us Tomatoes audience listen to the show in advance can you get a sort of a high-level about what your POV is about like what it what do you mean by going all-in on omni-channel.

Jim:
[6:39] I think it's pretty clear across all our retailers that the consumer expects to be able to conduct business with the with Brands both online and in-store with retail brand and I think you see brands
that are traditionally brick-and-mortar going into the online space and vice versa right so,
Arctic is going to be just how did we excel at both.
Make it a seamless experience and then scale at out Across the Nation we're right in the midst of rolling this out or we're not in about 45 States right now and
by February we'll have more than 50% of our customers on our omni-channel experience that stuff is really just about
like how do you do that how you take a massive company and and make this pivot really really quickly.

Jason:
[7:28] Yeah and I know it's it's doing pretty easy right you just sent out a memo and everyone changes behavior in.

Jim:
[7:33] Yeah we didn't we only have 25000 Scioscia it's on the front line so I think they should be able to modify Behavior within a week or two.

Jason:
[7:40] Yeah that seems like I mean maybe give it three ways to be safe yeah
so I think of Carmax as being sort of an original disrupter of the car shopping experience but now the Choppers are used to all of these digital amenities and how many channel has has become
prevalent and I assume
that different said all the consumers have shopping unit doing buy online pickup in-store at at apparel store or a consumer electronics store now impact their expectations,
when they shop for a much more expensive higher consideration I don't like an automobile.

Jim:
[8:15] Yeah I think you're pretty spot-on on that the the major major difference is that this is a very considered purchase so far lot of our customers this is the largest purchase they've ever made an and four others maybe it's the second largest so,
the a buying journey is as nonlinear and it kind of starts and stops and it's squirrels a little and so being able to,
give the consumer a lot of you know full credit for everything they've done online.
Or when they eventually walking to the stores extremely difficult but but absolutely critic.

Jason:
[8:51] And so it's digging in that little bit like there's two things I'm always interested in so one is.
The customer-facing Experience so I've done a bunch of research on your website before I ever go to the store probably let you know evaluated your inventory and I you know I probably should have preferences and I might have even there all day
Pacific Beach vehicle before I land at the store.
Does anyone in the store know all those things I did or do I have to start over with that sales associate in the dealership.

Jim:
[9:19] Yeah so last year you'd probably have to start all over but this year are we rolled out across all of our stores are CRM platform which is salesforce.com,
and we take all the information and all that work that you've done online make sure that's readily available to the customer and the associate both,
and so we try to make it like I said very seamless experience where you don't have to repeat the effort that you re put in and you actually get credit for it and you can progress quite quickly so,
if you progress pretty fully online that you can walk into the store and get the keys and drive off in about 15 minutes,
still have to sign some papers each State's a little different but 15 minutes 14 minutes is the fastest we've done one so far but,
that's quite a different experience to walking it a dealer spending all afternoon they're getting put in an office with the finance manager and you know,
eventually walking out feeling like I don't know if I got a good deal.

Jason:
[10:24] Yeah yeah you're almost at parity with the guys that steal the car now.

Jim:
[10:27] Elvis.

Jason:
[10:28] It's almost as frictionless.

Jim:
[10:29] I got it I got to trim five more minutes.

Jason:
[10:31] Yeah hopefully we'll make it so personal us that they'll stop wanting us to you
I would be ideal and then the other thing is interesting to me is the attribution so you mentioned it's a considered purchase so you probably invest in a bunch in marketing vehicles and probably not very helpful to focus on the last click attribution and see how many people.
Immediately transacted so do you guys have a notion of a omni-channel attribution model to try to understand how how your marketing is impacting.

Jim:
[11:01] Yeah absolutely Remy we do multi-touch attribution and we we.
I do again.
I'll just I can answer you have to repeat if it's a question if you don't want to.

Jason:
[11:15] I'm going to just put a little Mark in there go ahead.

Jim:
[11:18] So yeah we do multi-touch attribution analysis and being able to figure out exactly that customer journey and what was influential in the making the decisions has been pretty critical to our marketing Investments.

Jason:
[11:34] Sorry now I'm getting distracted yeah I'm just going to cause for one second they're sorry.

Jim:
[11:39] Yeah that's good it's hard.
Little quips painful for both of us.

Jason:
[11:58] If that's the most painful thing we have to endure will be in good good shape.
And how many dealerships did you say you had or how many.

Jim:
[12:13] Storefronts Wacom stores so we're at what are we up to and we're almost at 2:10 am I supposed to know.

Jason:
[12:24] What you just did you at we on vacation during his last tour opening.
They're probably kind of persnickety about accuracy.

Jim:
[12:32] I think Lubbock Texas was 208 I think.

Jason:
[12:41] Awesome.
So that is that certainly makes sense with you have over 200 stores now are there any particular challenges with a doing omni-channel at that kind of national scale or is it actually easier when you're covering the whole country.

Jim:
[13:00] Yeah I know I don't know which would be easier but but it is been pretty challenging because it's a behavioral change for our Associates and so.
We were in kind of the original disruptor in this industry we rolled out no-haggle pricing,
and you know and that allow the consumer to have a great retail experience in the used car industry nobody did that and it was highly differentiating.
The backbone is delivering that experience are our Frontline Associates that are in the stores and so we have about 25,000 of them and
if we're going to roll out a new experience to the consumer we first have to make sure that are sociopaths are very aware very comfortable and very well trained on it,
because we're not going to take a step back in the end delivering an awesome experience.

Jason:
[13:48] Yeah I know that makes total sense in Dysart have a philosophy that most of these customer experiences are about 10%
technology and Platforms in 90%,
people in organizational change management so I'm guessing when you deploy that CRM 25,000 Associates last year that was a big cultural shift that you had to be a sort of embraced and reinforced was.

Jim:
[14:13] Yeah absolutely,
I think it was one of those who Moved My Cheese kind of moments for them and so you had to show him how they're going to be more successful,
how they're going to be able to provide an even better experience at maybe a little bit more personalized experience to the consumer are Associates that really care about delivering a great experience and.
I don't know if you know this but,
all of our sales consultant for example if they are on a flat commission they don't care what car you're in so they're not in Center to put you in the car you can't afford there and send it to put you in the car if that best fits your needs,
and anything that we can do on the technology side on the data side to allow them to better fit you into a great vehicle,
the happier they are until once we show them how how salesforce.com was able to provide them information that allowed at personalization they bought in holy until,
we've been able to we've been very pleased with the experience that we're delivering right now.

Jason:
[15:15] Yeah that's awesome and I can imagine there's a little bit of the internal communication to sort of evangelize those benefits to those those internal Associates it's it's funny cuz in a lot of retail categories
people now experimenting with self-service technology UI digital you know amenities or or you know experiences on the phone that the Shopper can use themselves,
and it it's always the case that the most cost-effective way to deliver a digital digital experience inside of a store is to digitally enable that,
sales associate turns out it's really hard to get customers to download your app and I'm not going to say it's easy but it's easier to get those 25,000 Associates using your app.

Jim:
[15:57] Yes absolutely.

Jason:
[15:58] So what do think I'm curious about is on the title of your your topic you qualified it at speed,
and I suspect this is somewhat relative like what does feed mean at Carmax is that transformation you're trying to change over a course of years is it something this year like what what is the the speed goal.

Jim:
[16:21] That's an interesting question I never thought of it as a speed goal but the way I've thought about it is that.
We are the industry leader we have a good distance between us and number two,
and I want to extend that distance so when I intubate I want to get it out faster and faster faster I want to do it at a pace that nobody else can keep up with so when we think about speed.
We think about delivering those objectives every quarter.
And then you know we obviously plan out years and one year and multiple years in advance but it's really kind of,
orienting our product teams about delivering that next iteration or that next Improvement in a relatively short amount of time usually in about a two-week Sprint site.

Jason:
[17:07] So what's pivot a little bit to the car buying experience.
Categorize things in a two experiences there there's the used vehicle experience and there's a new experience in WoW,
like York really known for used vehicles I think you do own some new car dealerships as well a few,
so but that gives you enough of a taste to the maybe you can weigh in on this little bit.
The new car buying experience in u.s. like I would argue totally sucks
and a big part of the reason why is there this multi-tiered distribution system right so there's got you not coming to manufactures the car and they have to sell it to a local dealer who sells it to a consumer in so give
the expense is going to improve.
Every local dealer has it independently decided they're going to improve the experience and sort of deploy it out like the manufacturer can't do something at scale and dictate that that all these dealers do it,
in the used car business you don't have that multi-tiered model you guys on the inventory you're on the hook to sell the stuff and you're on the hook to invent the experience across.

[18:16] Your 208 stores to deliver that experience,
so as customer expectations Elevate and I bought a used car and I had a great experience or I bought you know some some something else,
it was a tie bought a wedding ring or some other high considered item I did Julian had this great experience and now I'm going to buy a new car for the first time and I have this sort of could you experience the website that I'm doing research on can't even give me a price because.
Mercedes website doesn't sell car hairs and a night you know the,
refer me to a dealer is kind of a I don't know what to email marketing for him or something you know they're all these these frictions that consumers are increasingly not used to is
is there any hope that that's going to change in the u.s. is economic like art are we going to figure out how to deliver a good experience through that multi-tier distribution model is.
Are consumers ultimately going to put pressure on the model and you know I know there's at least one car manufacturer that's trying to.
Disrupt that like what what are your thoughts about the evolution of the new car buying experience.

Jim:
[19:21] Yeah yeah I think it's got a modify for a few reasons so one I'm a big believer in macro trance and is certainly a macro Trend around customers expectations,
customers expectations have never grabbed it toward gravitated south has gone up and up and up and so the consumers becoming every year,
less willing to put up with stuff that suboptimal buying a car is going to be no different secondly.
All the oems desperately would love to control the experience all the way through but these dealer groups have a ton of power I mean I can
only imagine the meetings where the dealers come in and they are unveiling new makes and models and new commercials and,
you're not telling telling the marketing department that he hate the commercials and I me I can only imagine how those go because it's crazy how much power that they have,
and they don't do what they don't want to do know some of them are very Progressive and they get right in line and they see the big picture and but most most,
dealers in my experience are really about extracting as much money out of your wallet as they can,
and that just doesn't align with the consumers expectations so I think they're going to have to modify in and when things like,
autonomous vehicles and things come out in the future I think it's just going to put the increasing pressure on that bed modify.

Jason:
[20:44] Yeah no for sure another macro Trend when were taking American census been interesting to me.
The people in the buying used cars I assume for almost as long as there have been cars
it's a high high capital expenditure for your point and it it like it's not a new paradigm that you would buy used car it's not a new paradigm that you buy a used home but I'm noticing is,
previously owned products are becoming more popular in many more categories so I in a parallel we now have,
you know monthly rentals of business attire from Rent the Runway and we have
the real real just going public with sell all these previously owned luxury goods and thredup has been on the show and all that you know as consumers get more and more used to,
getting a better value from these previously owned things does that make it like,
even more likely that they're going to make a decision to a used car versus a new car or I had the had those sort of go-karts already played themselves out.

Jim:
[21:48] You know I I I hope it does but I don't know if I will but I hope it does cuz the difference in value you get from a lightly-used vehicle in a brand new vehicle is monstrous if you look at the depreciation curve Cindy years 1 and 2.
Nuts and for some cars that's it's significantly nuts.

Jason:
[22:08] Oh my God yeah I know I mention Scott's a big test with man so I just let him by all these new vehicles every time they come out with the new color he has to buy one and then I I just tried to buy his old ones off of them witches has worked out.

Jim:
[22:19] Yeah you're saving about 30% probably.
So I think so I think you know that's helped the train keeps going that way as consumers get more and more comfortable with it I think that one counter to that is,
that a car is still a status symbol and haven't you know be like Scott and you want the latest and greatest the shiniest in the most gadgets and,
yeah you're willing to pay for it and there's always going to be a subset of the consumer that does that which is great for us I mean you and I who don't mind buying one and two year old car that has all the latest gadgets and is awesome.

Jason:
[22:55] Yeah I know for sure once more so because you just highlighted something like there are all these,
like a pretty different missions that different car owners might have right in for some people it's utility to get to work for four other people it's a you know part of their identity and a status symbol,
when you're thinking about marketing and driving traffic to your stores,
I do have a sort of persona base model and you do different kinds of campaigns for those those different personas or if you figured out how to.

Jim:
[23:31] Yeah I know we definitely have a Target I think I'll great marketers know where the bullseye of the dartboard is and that's where you aim that doesn't mean you aren't going to get customers outside of that as a bull's-eye but you always have a bullseye in so we have one,
I always tend to be very considered purchasers like they're they think about,
the value that we just talked about of a used vehicle they think about the functionality they also think about you know it's just something they like and want to,
I want to have you know kind of represent them a bit so they're very very consider they do a lot of research,
and appreciate our cars have been really well conditioned well kept in on 90 day warranty is all that stuff really matters to them and so that's our Target we go after them and I and we did a lot of others outside the target.
That's that would be the Persona we go after.

Jason:
[24:26] Don't you in are there any like particular marketing tactics that you feel like are the bread-and-butter that have been most successful for you that you.

Jim:
[24:35] 04 us.
I don't think any particular tactic other than talking about value I think value is a strong tactic like, I don't know if you know this we don't have sales.
We'd obviously don't have a call that's you know that what we are founded on we don't give discounts to different,
user groups or anything like that it the prices the prices the price and so we've never in a broken out Labor Day sale and you know Mother's Day sale and God knows what the next one's going to be but,
but we've relied on we feel that this is a great value that we're offering and so we try to educate around that and it's done pretty well for us.

Jason:
[25:18] I sort of think of you as having what I would calling everyday low price So Pro,
and it's funny in if you survey all retail through edlp retailers tend to do better than promotional retailers the the one caveat is once you become promotional,
it's virtually impossible to recover your edlp position until we've seen some bad examples in recent memory of our friends that like Macy's or JCPenney trying to.
Make that shift and have it not go well.

Jim:
[25:49] Yeah definitely be careful how you condition your consumer.

Jason:
[25:52] Yeah it turns out they will learn and that's one of the most fascinating things to me about all these in this reason I think it's absolutely true in yours.
The traditional model used to really rely on what I'll call in information imbalance like the the traditional not highly regarded used car dealership,
had a lot more information than the person buying a car so only the dealership new the history of the car and what the true value of that car was and likely all the information the buyer was going to get.
Was the information that the deal are deemed appropriate to share them which was,
likely to be self-serving information today we have this massive transparency we have all these information sources and it feels like,
there's nothing that could be known about that vehicle that the consumer isn't going to know if they choose to before they,
they buy the car and so I know that site in your case,
you make a lot of that information available so I let you know you can get that information from your own digital tools you've enabled your salespeople digital tools so they have a bunch of information and then they're there is a bunch of third-party tools,
that the consumers can use as part of their consideration process as well do you view those third-party tools as a good thing because they help,
consumers figure out what the right vehicle is and you know you have the right vehicle at the best value or.
Would you prefer that you could keep that customer in your own Echo System more.

Jim:
[27:17] Oh no I think we prefer having transparency in this industry we think if it was fully transparent and accurately transparent we would do a even better than we're doing now.
I think some of those tools are partially true and partially not I mean when you look at things like.
I get onto the site and says all this vehicle is a good deal and I would ever great deal good deal what you don't know what you know what they don't know and hence the consumer doesn't have frame damage.
And that's not a good deal with a car with frame damage or this car may have an electrical issue going on,
it's still get salt we have some markets where where the average price of a liked like vehicle with our inventory is actually below hours.
But when we look at the cars and we We examined over 2 million cars a year we look at the cars we.
Passed on buying those cars to retail because we knew there's something wrong and now we're watching them being sold at these other dealerships and think there's no way the consumers really going to know that even when they use.
All these third-party tools they just look at something and say oh great deal okay.

Jason:
[28:35] Got you so I think so some of those tools are bring to our surprising deals with like you know I can't imagine like that does arm the customer with some some new tools that they didn't have previously,
think of there being tools that give people a pretty detailed history of the car,
are you saying that those like his reserve or imperfect in terms of like identifying the potential flaws or evaluators of the vehicle.

Jim:
[29:03] There definitely are two also you can go and look at vehicle history and those tools are better than not having any,
and they are not 100% accurate by any stretch and sew what they know so some of those tools use you no police reports and DMV data will not every DMV Department reports and whatever,
police reports and other shoes other kind of data and it's just imperfect and so.
They do catch some things for sure like if I was on one of those sites and I sawed this car has electrical issue or it has a toners or something like that would be like all right that's definitely a no,
so I know that's that's it you know not a good car but there's some false positive there's some listed is clean it just are not clean.

Jason:
[29:55] Sure and I can imagine a lot of them seem like they're based on public record so the car has been in an accident rate I know that if the frame is Rusted or it was mistreated in some way that didn't create a police reports,
that's where like you you need to like have significant car knowledge or a smart friend.

Jim:
[30:13] Exactly like I could you know I could get in an accident in my car you know a single-vehicle accident and I'm not going to report this to the police write a report that happens all the time.

Jason:
[30:24] Shirt go go trade it in the CarMax and get a new one.

Jim:
[30:28] Yeah we buy any car any car.

Jason:
[30:30] Yeah but you probably are pretty good at evaluating the True Value.

Jim:
[30:34] Yeah I have all the cards that we buy which is in a four hundred thousand a year even more like six hundred thousand year only about a third of them make the cut to get retailed again the Russian we auction off to other dealers who are going to sell them to you.

Jason:
[30:48] Got you all right show me a pivot to one more macro Trend I keep hearing that
teenagers are slower to get driver's licenses in a lot of Metro's in the like obviously they're all these ride-sharing services that make it,
more possible to not own a vehicle at all.
I'm inferring from that that potentially like car ownership may have Pete and I'm just curious why am I dead wrong and we're buying more cars than ever or or is growth slowing down like what is the overall status of car ownership.

Jim:
[31:22] Yeah I know we look at this pretty closely in the overall status continues to grow so we look at a stat that is a number of vehicles per household and that's actually increased over the last decade,
with the Advent of ride-sharing and all of that still moving up and then obviously the United States continues to grow in that household so,
are we see vehicle gross till we haven't really seen at Plateau it may be plateauing in new or something or subcategory but overall,
it's been a very minimal effect in some very dense markets it's probably more exact exacerbated but,
across most of America's it's a minor thing.

Jason:
[32:03] Great all my in-laws from Detroit are now going to Ward over me that I've been wrong when I told him that that.

Jim:
[32:08] I'm glad I could help you.

Jason:
[32:10] Yeah probably more important than you help my in-laws than me anyway so,
Swiss turn to the Future for just a second if you could put your sort of future has had on we get in that time machine and go visit a CarMax store in 2025.
Is it going to feel a lot like the the experience you're rolling out right now or do you feel like it's going to continue to evolve another any particular areas you're hoping it involves in.

Jim:
[32:38] Yeah I know,
I as I mention we're going to be rolling out this Omni experience to most of the country by February but that still leaves another third of the country to go or so and so,
with about 5 years from now it'll feel mostly similar I think we're going to continue to innovate aggressively and iterate
they offering I think the consumers going to get more and more comfortable doing more and more online so I would Envision that the visits to the physical stores is going to continue to go down in time,
I mentioned we're already down to about 15 minutes that doesn't mean everyone's 15 minutes,
but we think more and more will move towards that sub our level 30 30 minutes or less basically so I think that's I'll be the primary feeling that you would see if you walk if we walked in the store five years from now.

Jason:
[33:32] There's a lot of other categories that retail that have been disrupted by digital and the the store is role as a,
Discovery in browsing his is greatly diminished but it's its role as a service and fulfillment center for that shopping experience has expanded and it sounds like like you're anticipating to see more of that same progression in your space.

Jim:
[33:55] Yeah I think they're still be a strong merchandising aspect to this because you're going to buy a car you're going to be sitting there for hours and hours,
ever used car we are Iowa State ever used cars like a snowflake everyone's different they had a different owner different miles different conditions you just did somebody smoker not smoking all this you just like want to sit in it,
and and will bring the car to you will let you test drive it at your house but a lot of consumers just want to come see you in a couple different cars make sure that you know the Honda Odyssey is the car that they really want and
all the different car seats and everything fit in it and,
I don't think that's going to change too much I think more Marvel by sight unseen but largely.
We want you to test drive it before you buy this it means a lot of money.

Jason:
[34:45] Yeah and there is right I'm perfectly fine with people buying something digitally but there is this some fun psychology element there's a thing called the endowment effect in like once you you try something,
you now imagine yourself owning it and so now I frankly the psychological promise is am I going to get this car back to the gym or am I going to keep it right so literally
like it's a loss aversion like one once I imagine owning that this and now in effect kicks in and it's it's you know frankly much,
much more likely that they're going to buy so I like I certainly feel like there's there's always a role for that that that physical Tryon and for that endowment effect to kick in.
You highlighted one thing I want to just follow up on a little bit like every car is a snowflake and that it could be so again if I may use a new car dealership I have this merchandise.
1 car,
and hopefully the dealership makes a bundt or the manufacturer makes a bunch of them that are exactly like that one car maybe with some different color paints in your inventory,
you you could have a large quantity of the exact same make model but each one is.
For your point unique and might have different value based on its attributes and all these different things.

[36:02] How do you try to meant like I meant I could imagine as an e-commerce guy I'm like oh my God that's a pain in the neck like every SKU.
Is is quantity wine and when however much I'm going to invest in the digital shelf for that skinny one stack ourselves that investment goes with it so I.
Why are there some particular digital amenities you think about her how do you think about like.
Telling the story of each individual car is it just kind of value that you can afford to invest a lot in each one or.

Jim:
[36:33] How is like I don't I don't know how many Nissan Altimas I sold last year but it was a lot.
Literally in the tens of thousands and I took.
Pics 30 pictures of each one of those 360 degree pictures on Interiors Stills exterior shots.
And you know I'd highlight if they had new tires or or what-have-you we describe all the features and we did that last year over 750,000 times,
so I wish I could take one picture of one Nissan and then say it represents all but that's how it's not as transparent as we like to be,
so we invest in it because we think it's the right thing to do and you know we're hunting for way to do it more and more efficiently but we spent about.
Then I'm probably every 14 minutes we produce a new car in a store right self-storage taking cars reconditioning,
trading L replacing parts that are worn touching up paint,
waxing and polishing pictures all that every 14 minutes they're rolling out and we do that across you know dozens and dozens of our stars and so it's just the right thing to do and we invested time in the money to get it done right.

Jason:
[37:54] That is interesting and I mean I certainly agree with that approach in the apparel industry there are these off-price retailers in
they get very thin inventory
of items but they're high value items right and so I think I'd like a TJ Maxx for example in until they you know often they talk about their store experience as a treasure hunt there's,
there's one really good Jewel in there and you're only going to find it if you come visit that store,
and there's a lot of talk they just had an earnings report in their way behind on digital and they would say yeah because digital is not important to us you can't have the Treasure Hunt online we can't create a great digital experience for all these,
unique items that we have no depth one of inside they've kind of said oh digital is for selling other stuff in addition to the the treasure hunt you find in our store,
I feel like you're you're sort of an extent but the fact that that's not necessarily true or sustainable and I you know I feel like there's a bunch of advantages to the,
transparency of having all that inventory online and and you sort of do Evan online digital treasure hunt.

Jim:
[39:02] Absolutely and I think you know I like I can't imagine saying you know being able to do that you know when a digital Treasure Hunt is impossible when you got companies like eBay out there that's,
all it is is a digital treasure head right so,
yeah we believe we believe that it's worth it and we believe that's what the consumer wants I can't imagine not aggressively digitally merchandise in my view.

Jason:
[39:30] That makes a lot of sense and that's going to be a perfect place to leave it because it happened again we've used up all our listeners a lot of time so if folks want to continue the conversation you're welcome to jump on our Facebook page or hit us up on Twitter,
Jim is the listeners want to get in touch with you to hang out somewhere on the Digital internet like LinkedIn.

Jim:
[39:52] Other than spying on my kids yeah I think LinkedIn is probably the safest place to hit to sniff me out.

Jason:
[39:58] All right well hopefully with your kids won't listen to this episode and we'll put your LinkedIn profile in the show notes I bet you I really enjoyed our chat and I really appreciate the time you took today.

Jim:
[40:08] Thanks for having me it's been great.

Jason:
[40:09] And until next time happy commercing.

Sep 13, 2019

EP187 - Euromonitor Michelle Evans - Commerce 2040

 

Michelle Evans (@mevans14) is the Senior Head of Global Digital Consumer Research at Euromonitor Intl. She recently published a new report, "Commerce 2040: Revolutionary Tech Will Boost Consumer Engagement."

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

Episode 187 of the Jason & Scot show was recorded on Wednesday, September 4. 2019.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 187 being recorded on Wednesday September 4th 2019,
I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo.

Scot:
[0:39] Hey Jason's going to be back with you welcome back Jason and Scott show listeners
Jason the folks over at euromonitor recently released a really awesome report that's right up our alley here at the Jason Scott show it's called Commerce 2040.
So if you're doing the math on that is 2019 when recording that so it's about 21 years in the future
it's a broad and Really Brave look at where retails going by 2040 as well as some of the intersections of Commerce in the home and entertainment.
And help us walk through it here on the show we have the report's author Michelle Evans Michelle is the senior head of digital Global consumer research at euromonitor and joins us live from Chicago.

Michelle:
[1:28] Thanks for having me.

Scot:
[1:29] It's great to have you Michelle on the show I just want to report Jason has four words in his title and you have six so I believe you should get paid 50% more so we'll we'll discuss that after the show how the correlation of,
titles word titles and compensation should match.

Michelle:
[1:48] I appreciate the appeal for more.

Jason:
[1:53] Michelle you're Taylor just one of many reasons you should probably get paid more than you.
That kind of time on the show but would you always like to kick out the show by getting a little bit of syrup for your background for a guest so can you tell us a little bit how you found yourself in the.
The consumer research world.

Michelle:
[2:14] Yeah actually I started as a journalist initially in my career and during the recession
I had a come-to-jesus moment beside it probably wasn't the best for me a long-term so I started looking for other jobs so I was last at crain's Chicago business which is a business publication in Chicago
operates other places as well they have City pubs but,
I started looking at research jobs PR jobs that kind of thing euromonitor was actually looking for a former business journalist and so I joined I started focusing first on payments
I dream about 9 years ago did that for a good four years and then I brought to leadership
Nigeria to launch a product called today and we covered did Chelan are more Berkeley German offers from
retail too Foodservice to travel to a beauty and personal-care but I thought we could do something more for our clients provide
Marvel 360 look at the digital consumer so it launched in February of 2016.

Jason:
[3:28] That's awesome and for our most loyal listeners they're going to be somewhat familiar with euromonitor because you are actually the second Michelle from euromonitor that's been on the show.

Michelle:
[3:38] Correct.

Jason:
[3:39] But Michelle Grant was on the show number of years ago back in episode 34 when we're still figuring out how to do it so now that we've got all the Kinks worked out.
We're at we're excited to have the Aging.

Michelle:
[3:55] Work work side Reebok.

Jason:
[3:58] So for folks that they don't have that episode fresh in their mind can you refresh everyone's memory about sort of who your monitor isn't what you guys do.

Michelle:
[4:08] For sure so you're a reminder we're based out of London we have 15 offices globally and we are market research firm we have
we do both strategic and and now have to go research
our history has been in more strategic planning so we have data and Analysis to clients subscribed to,
as part of a syndicated offer then they also made you custom work with us as well to answer a specific business question for them.

Jason:
[4:43] That is terrific in the end Michelle Grant had to focus on a particular industry segment which is retail and you have a focus on this particular.
I don't know we call it a demographic but the the digital consumer so you're looking through the lens of the consumer's life where as she's walking through the lens of.
This this one particular shopping Mission and a consumer has do I sort of had that right.

Michelle:
[5:11] Yeah you're pretty close so we have within our syndicated database different systems Pages a client subscribe to so there's a
30 + that are more industry-driven so retailing being one of them travel food service and then we have some
but are we block them either on their economies or consumers are in my case so what digital consumer we are thinking about it
more from the
customer vantage point in more like our motto is to think about how Tech is changing Commerce so really it's
Commerce that happens you know maybe it's in a store maybe it's online our retail system looks at the sale of goods so
in general consumer were thinking about those type of purchases but also travel Food Service entertainment I'm kind of that.
Consumer-facing Commerce experience.

Scot:
[6:13] Colorful next to the background sounds like you got a lot of ground to cover and we were really excited to see the report so you want to jump into that the report probably looks it when I think of his kind of three use cases so you talk about entertainment venue kind of the home and then retail store and I thought just for fun because you told it in that sequence we would actually go the reverse so so
because we really Reach Out focused here I thought we'd anchor on that and start without me so the first question I have is you
here we are 2019 and there's a record number of stores closing in Mall's closing at least the US and think it's kind of a global Trend and feels like there's still a lot more stores that are going to close side if you read some books a like 30% of malls will close
so so I guess my starting question is do we even have stores in 2014.

Michelle:
[7:03] I think for sure any of the key part is that stores are going to evolve so obviously through the history of retail there's always been changes where you know people in the USA might have
lived in shop downtown
you know several decades ago and then eventually went to Suburbia specialty retailer is Rose and popularity and you know now we're seeing them to Klein so I think there's a natural kind of
evolution of things have happened in terms of what you know clearly it's more of a kind of a.
Probably a generational shift it feels more severe what's going on.
Certainly some economic factors and Technology playing a role and I'd say you know though we see.
Online sales obviously from gross Sandpoint outpacing what is Boston Store you also when you when we serve a consumers you ask, why do you shop and store and it's a c
Lexi lore touch things before they purchase some so 47% of global consumers say that
they'll want to go in store I just think stores are probably going to change around those.

Scot:
[8:21] Do you think we'll have them all, format or is it going to be more of just kind of individual little Standalone stores.

Michelle:
[8:30] I think the mall format cuz it could certainly be feasible and I think what we're seeing as malls today is If you,
consider some of the department stores are closing and some
you're more of like entertainment Concepts that are coming in more of the restaurants there is a.
Little shopping center in Chicago in the north and Clybourn area
it's it's small it's not a huge mall by any means but it opened the last couple years
and I am always struck whenever I go there because there is a grocery store so I might have more frequent football there there's a jewelry store
remember like a candy shop that kind of thing there's also
pleather of entertainment options so there's a cinema I think there's some other entertainment and then
also a lot of food service options so giving you a variety of reasons to go and enjoy yourself and as your lingering perhaps shopping then.

Jason:
[9:34] Awesome and I I want to dig into that but before I do I just wanted to compliment you over on the report I think it's super smart.
To forecast the future 21 years out Scott and I do these forecast every year and then annoyingly a year later Scott likes to do a show where he reminds everyone of all the things I forecasted a year ago.
And that never goes well for me and I'm thinking that like.
Bye-bye doing at 21 years out your way less likely to have people pulling out your old report in 21 years.

Michelle:
[10:07] I hope so that's my that was my makeup there.

Jason:
[10:11] Going back to our original theme of ways in which Michelle is smarter than Jason.
Reading between the lines when you were describing the report in the the specific missions that people would still have in brick and mortar stores,
I made an inference and I'm not sure you explicitly call that which is maybe retail isn't as.
Maybe physical retail isn't as important or replenishment as it is today and that you know it more has this roll around these these special missions like like something you want to try before you buy,
when you just want to serendipitously discover some.

Michelle:
[10:49] Yeah so when you think about different
sort of purchases I think you've hit the nail on the head we talked about this a little bit in the home environment which. Rob is going to talk about in a few more minutes and I think dads were the replenish
Amazon you obviously iot is starting to take off Smart appliances and whatnot so the idea of your washing machine belt.
Shade or inform you when you need to charge it those kind of purchases could be outside of mice more so in terms of
physical Outlet which is what we talked about in the in the retail store section we think that there's going to be kind of suppose by categories that there would be a convenience store for those those purchases that are
Shirley just impulse buys I'm where you're walking down the street and and you just want to water or you.
You know we're going home to make dinner and you you know you need milk or whatever that item is there that you don't want to have delivered and then the other type of
storefront there would be would be more of an experiential Center I'm so this gets to that point of consumers Battle of touch feel,
experience products that require oftentimes more consideration so maybe it's something like Furniture maybe it's apparel,
beauty products I'm also come to mine.

Jason:
[12:18] Yeah and in a report when you talk about these sort of experiential centers.
It sounds like the bar is significantly raised over like what we think of is experiential retail today so I today you throw a coffee shop into a retail store and now it's it's experiential retail but like what what are some of the examples of.
Of the kind of experiential Center that you guys are envisioning and 24.

Michelle:
[12:44] Yes or no example that we included in the report is around the idea of a sports apparel store so you might have and I think there's there's flavors of this that an Under Armour my do in a flagship store
were you you know you can go in and let's say
there's treadmills where you might try on shoes you know trying to see how they fit what we're talkin about also in that scenario is why does it have to be a treadmill if you're trying to buy cleats because you play soccer why couldn't it have more of a substance that's more like turf or grass something I've seen in some stores today is this notion of taking a shower of concept in game if I in it so obviously you could go in there it could be for trying on the product or it could just be
are you competing against yourself for 6 months ago or competing against a friend
and I think a big saying is also like the kind of testing areas so you see some of that with with beauty products today and you'll leveraging AR to kind of see how that.

[13:53] Shade looks on you and that type of thing what we are talking about in this world is a room that's sort of changes
and you see some of it with changing lighting but we're even talking about change in temperature or changing to rain so a story that we talked about in the report is,
this lady is preparing for a trip to Patagonia because I went Patagonia this year so that was top of mind
and I you know needed to buy a winter coat so she's prompted to go into the store because
they have this type of information on her interest her she's able to go into this room with this winter Co and see how it would truly feel because we know there's,
I was like think about when you you know by clothes that they need to keep you warm and it's.
70° in a store it's hard to to kind of get that sense of how it might work and then the other big element that we talked about.
With this particular example is this idea of.

[15:00] Very much a game that you can play and we think for those retailers that really kind of nail and experience and make it unique that they could certainly even charge entry
2 to allow consumer Steven to play this game so what we've
outlined in the report is the idea that
you know maybe LeBron James is your favorite player and so you always dream about playing him in NBA Finals so we have some imagery in the report and so there is in the image graphic
ran or holographic representation of LeBron.
You as a consumer you have the ball and in your getting ready to take the game-winning shot so if there's those kind of experiences that really.
Bring to life something that you might not be able to experience I'll swear you know perhaps that's something that a consumer might be willing to pay to build experience.

Jason:
[16:02] I like it and just a clarification for listeners that LeBron James she's talking about is LeBron James jr. who will be the.

Michelle:
[16:09] In 2040.

Jason:
[16:13] And I came back you might be coming up on the end of his career by that but I'm I'm pleased to hear because you know for people that believe in global warming I'm I was somewhat worried you might not need a coat in Patagonia in 20.

Michelle:
[16:27] Yeah that's that's touch-and-go right now you have a good point there.

Scot:
[16:33] So you're on the show we're big fans of AR VR 3D printing and some of those things that when Jason I talked a lot about them retailers kind of glaze over because they feel really gimmicky and and
not like they're not going in Back to Future I was excited to see those mentioned in the report how do you how do you see those fitting into the store of the future.

Michelle:
[16:53] Yes I think you're right we actually do
an annual survey of Industry professionals globally where we ask them about Technologies and where they're investing right now
like looking out 5 years a eyes number one I'll choose number 2 but seems like 3D printing.
Still fairly low arvr is kind of middle of the pack so it it certainly mirrors what what I hear as well and I think you know in that survey we asked them all so well why are you not investing in the topic,
the top reason back of tends to be a lack of a clear business use case so I think we're still going with how this,
you know how smooth the business forward arvr is certainly something that comes in quite a bit in this report for sure.

[17:49] I think you know where this,
a r I think about the use cases even today and terms of you know you know the being able to try on makeup.
Being able to you know see.
Clothes on yourself made it when you're not in the store the sizing getting more accurate sizing that type of thing and hopefully you know when we think about VR and we think about
those kind of headsets I'm across the worlds we we keep calling them world's or environments in the report
when we talk about VR and we think about the headsets we think about them being that more
Spiffy's and something like the Google Glasses that we've seen in the past something that.
You know you might actually wear that it would be a fashionable piece of I wear it wouldn't be maybe as intrusive as well
time to bring things to life 3D printing is something we talked about in the retail store area and I don't know that we're,
that it would come to a place where you know everything is printing on-site what we've talked about is
if if you're trying on a shirt in the fitting room and in maybe it's a V cop that you want to run to cut maybe you can make small adjustments like that and have it printed.

Scot:
[19:16] Call how about I think you talked a little bit about kind of to use your Patagonia example where if you were trying on something you could you could see yourself and kind of us an AR mirror so we can see how,
maybe they don't actually have the Garment there in the store and you can see how a different color would look or something like that you see that kind of
technology being in the store or more kind of in the home.

Michelle:
[19:41] Why thinking both places are certainly and we can talk about it probably more in the home but,
we had a pretty detailed imagery and in the report where we talked about a woman trying on
product in the mirror and in what the experience around now with the you know I do think smart mirrors.
In the retail environment have been around for a few years for sure and where we're seeing them more and more I think there's definitely a strong use case for those in terms of how they can.
Kind of extended use cases and and helps it move.
Bring different colors or Cuts or whatever it is to life for a consumer.

Jason:
[20:33] Yeah said to me it's like there's an it's hard to talk about each of these three things separately because in some ways I feel like they do overlap a lot and since you are.
You know I'm kind of taking the the perception of the consumer that makes perfect sense.
You talk a lot in the report about like increased demand for personalization and I feel like that's one of the areas where.
You know some flavors of this 3D printing make an awful lot of sense is it like it's probably not true in 2040.
That very many people are all walking around wearing a carbon copy of the same thing.
Like we're using the same thing right like it you don't you don't have the same glasses prescription and it just feels like by 2040.
There's going to be much more opportunity for for everything we use a known in life to be much more tailored to us and our unique.
Differences in taste and flavor.

Michelle:
[21:29] I think that's entirely accurate and
personalizations a common theme across the report certainly what you're talking about is is more so that product we bring home and the ability to kind of slice and dice it
so what we want which I think is going to be certainly more feasible and it is probably,
you know what I was describing with that 3D scenario is that if you're trying it on in a fitting room a certain shirt and you can see different cuts of it you can see different colors of it you know maybe this is a shirt
today that's only sold in two colors in one cut but in 2040 could be in 03 * 8
Bridal 24 different versions of it that could be slightly different not to mention just the cut of the shirt you know like the way it fits you write the nobility we would have some more Taylor it,
to a consumer as well.

Scot:
[22:28] 2 with the store of the future it wouldn't be a Jason Scott Shofu didn't talk about Amazon is is Amazon play a role in 2040.

Michelle:
[22:38] Will it be around in 2040.

Scot:
[22:43] For they are they what's Amazon look like in 2040.

Michelle:
[22:48] Are they serious.
Yeah that's that's quite a ways out I would say if they continue on the same trajectory and
and I'll continue to put the customer first and
adhere to that sort of business principal than in theory they would still continue to be relevant obviously the world is fast changing so any number of things could happen you know I think with Amazon.
And in the in the society that we live in as opposed to somewhere like a China just the sheer amount of of size that they have.
Their tentacles so many different areas know they are the antitrust thing also comes up in what they might look at look like come in but you know I think Amazon also knows that,
I can't fall asleep at wheel because.
You know there's a lot of players like a like a Sears or a blockbuster Kodak they're all classic examples of people that were top of their industry and then.
Lost Focus.

Scot:
[24:00] Yap's alethea you have to kind of self self innovator or else you'll get an intubated.

Jason:
[24:10] Yeah I do.
I mean obviously I could go either either way but I do that you know Jeff Bezos has this quote that I admire,
no Empire has successfully predicted it done to my eyes,
he seems much more aware of How likely it is that bite by keys I just got a question of if Amazon well.
Go pass relevance win and then he has the funny one liner I just want to make sure it out as me.

Michelle:
[24:41] Yeah and I think they kind of their other strategy is Bill in that defensive mindset right like they're they're always coming out fighting from their regard.

Jason:
[24:52] I do think it's going to be interesting I do you know I think it's easy to kind of bifurcate retail into the like all that you just sort of Need for filament replenishment and.
That's obviously the the way the area that Amazon's dominating and leaning and then there's all of this sort of.
Experiential you know personalization all these sorts of things that Amazon doesn't plan as much like I think it's rather Complicated by these non-retail businesses than Amazon's really selling at so like you know.
Maybe they're they're the backbone of the internet in 2040 and in retail has become a boring industry that they don't Focus.

Michelle:
[25:33] If you if you think about Amazon.
If we assume what I'm talking about Commerce 24 it comes to fruition and we think about Holly Amazon layers over it obviously they could dominate when it comes to kind of that General the filament of a
replenish our products that I talked about in the home area you know maybe in a retail store maybe it's questionable I was so they pushed into stores more so and they certainly could do more
I think a big area when we talked about their future as with Alexa
and if they're able to win that battle to you to be one of the default choices for consumers because certainly across this report I talked a lot about that kind of voice first
mentality.

Jason:
[26:19] Oh for sure like part of me is like I'll be thrilled it by 2040 they finally know which lights I mean when I say.

Michelle:
[26:26] Stars of things to be worked out for sure.

Jason:
[26:32] That's a video of machine learning is it like you're going to incrementally get better every year for the rest of life like I'm like you know the human brain which like does not end.
Over over the Long Haul so yeah I know I do think that's interesting and I'll just be at the moment like in some ways they're they're much smarter about trying to make their technology open in ubiquitous.
There's like some interesting news about just how much renewed effort they have in winning the the car dashboard and how far they're going to go to give away the voice technology to the car manufacturer or something like that because I.

Michelle:
[27:10] Well it's it it's the operating system of the future right now is it going to be it feels like the next generation of like the Apple iOS kind of battle.

Jason:
[27:23] Yeah for sure and I do I'm going to go back up I'm not I'm definitely not going to get in the business of predicting and Amazon's demise but I will say like one thing that is interesting about.
You know so today personalization is a lot about personalized they experience and I do believe that increasingly is going to be economically viable to personalize products as we already talked about.
And so-so For Better or Worse one of Amazon shoe disadvantages in retail is.
They've just invested orders of magnitude more in their fulfillment Network than anyone else since they're able to,
hold more good closer to the customer and get it to the much faster and cheaper than anyone in their orders of magnitude ahead of everyone so they made this huge investment.
It now gives them this huge advantage and service-level I'm which is all really smart but one thing that's interesting is it the world does go to.
Products that are made to order and made on demand a lot of that existing an investment gets depreciated.
So it it just either that is one of the things that you could imagine sort of.
Being a little bit of a equalizer and reducing some of Amazon's competitive Advantage if it is a place.

Michelle:
[28:41] Well I'm thinking about you know even if it doesn't go that way to like how fast can it get you know it is it you know they're down to 1 hour for some products can they really get it to me faster it feels like.

Jason:
[28:57] Oh yeah the patent is they're going to have it waiting in your basement before you know you need it.

Michelle:
[29:00] Going to be creepy Leo living in my second bedroom or something.

Jason:
[29:05] I mean the picture of your basement.

Michelle:
[29:08] Oh that makes sense then that's those people work down there.

Jason:
[29:16] Bebe cool iron is in 24.

Michelle:
[29:18] Yeah I just feels like even on that front that other retailers could catch up I guess it's my point.

Jason:
[29:27] Know for sure it's going to I hope I'm I do want to pick up a little bit though we constantly talk about today and you know his butthole.
Digital disruption and like in particular like everything's omni-channel like all these debates about how you measure sit like.
Is that all gone away by 2040 like is there like a people still talking about these channels is different things and you know are we still.
Segmenting sales by like people that deliver online and people that deliver and store what it what is omni-channel mean in 20.

Michelle:
[30:05] Well if we're going to get to this Vision I would hope on your channels and non-existent I think that's what it's really about is.
Is not looking at it by these various channels and drawing these lines as much as it's about just being you know having a product.
When the consumer wants to shop for it and where they want to buy at excetera excetera so if it's picking it up on their way home from a convenience store location or if it's having it shipped from that,
that store to their home you know I think that's probably what really holds back retail and additional era today it's those kind of / it started because.
Digital camera on 2nd right is so I think you almost have to get past that in and look at solving it from where the consumer vantage point from their point of view.

Scot:
[31:05] William I'm excited to shop in the store 2040 hopefully we can all do a repeat of this episode and we'll just on January first week of January
E-40 we'll get together and I guess Chicago would be convenient for you guys and we'll go see the store of 2042
anniversary this episode so let's go home because you do paint this picture where you know today I don't really think much about shopping at home you've got them really kind of all integrated Ruston Way
and when you described that house the future actually reminds me of Jason's house cuz I think he's got like 50 Alexa's
you can see through his refrigerator and it orders things is espresso machine knows he needs an espresso every 10 minutes.
Self self espressos for those of us who don't already live in the house at 2040 give us a walkthrough of what what you think that looks like.

Michelle:
[32:00] Yeah for sure so I think we are starting to see some of those Technologies come in as you describe it
20/20 starts we come up the volume higher because that's when several different Appliance manufacturers say that,
all lines of their products.
Will be connected so you'll see more of that come in at home so you know as we think about it you know voice is Paramount across all these worlds where we talked about it
and then you know when the home certainly plays a role certainly the the the speakers are
hearing a voice like we should Google home and Alexa as well
you know there is an imagery and Aaron Imaging report where we have a connected fridge and it's still the same set up sort of idea that you might have stay we can make a list or order something I didn't see about.
You know the 2040 version is the level personalization that comes in is what we're talking about is that it ties in to that individuals Health System let's say you know what maybe you're.

[33:11] Wearing something like a Fitbit is tracking your exercise you know tracking your food and and when you go into the fridge at 8 to grab whatever it slaps you on the rest and says you know this is going to know your calorie count or what-have-you we also show
a lot more screens couple different places in the kitchen in the bedroom so.
You know anything about the interaction screw in the kitchen how you could monitor different levels or whether is energy temperature security excetera.

[33:45] In the home or I mean in the the bedroom specifically we have is interactive mirror and this is
one of my favorite parts of the world to kind of imagined and wrap my head around is that we have the same mother she's just trying on outfit for the morning
two interactive mirror so she can quickly see what's in her closet kind of
you using the technology just throw it on or there's ability using social media of tomorrow or private communication channels
picture send it either sure girlfriend that she trusts will actually give her an opinion or to a group of random strangers and then there's an element where you could invite a holograph brand rep.
Into your home now I don't think this is something that's going to be.

[34:35] I'm not going to be invited to every brand into my home but I'm thinking about someone
like an apparel retailer in the US whitehouseblackmarket that's a place that I shop at quite a bit it's a place and I'm comfortable buying online because I
I've shopped enough in person that I know they're Cuts so I would know what sizes fit me best
so if they're also very like a commission driven so there is no stylist there right on top of you when you go into the the outlet and in terms of helping you so I could see someone like that. Kind of
Grand where they they already provide value in your life when you shop with them so you can invite them into the home to help you
finish out a certain look so you have the skirt but what about a top that would go grade or a certain belter or what have you.

Jason:
[35:33] Yeah one of the things that excites me about that vision is today as a retailer.
You get a lot of data about what consumers own but very little data about how they actually.
Use what they write so,
yo like it's it's a very but it's very binary like they have skinny jeans are they don't have skinny jeans they have it at you. But there's no contact and so you know when I read that sort of,
homes in REO in ueno now like you don't give the customer Ops in and you know all that everything aligns you cannot share with that brand.
Analytics on what you know what's actually in your closet and how often you wash it and how and how often you wear it and what you wear it with.
And you know you could imagine the the AI recommendation engines of the future.
Things bad with that much with your data source could be you know much more accurate at.
Sort of you know truly finding things that made my life better than than the kind of basic recommendations that we have today and things like that so.

Michelle:
[36:43] Yeah and I don't want to creep out your entire audience face by any means I I don't think this is going to be every brand it's going to take a certain,
there's a certain trust you would have other brand like that alright to give them that kind of information but once they've established that trust,
I could see that type of thing.

Jason:
[37:02] I think one of the interesting trust ones to play out is the whole and you you paint a little bit of this in the report to is the whole integration of bike shopping and health care right though.
You can imagine again that that facilitates a lot of better experiences if.
Your grocery store knows that you have diabetes like like forget just like telling you if you're buying your calorie counter not like are you buying doctor approved items and are you know all of those kinds of things to come in a play but they're right there are potentially some.
Some huge trust barriers enabling some of those experiences.
But I do want to keep the audience out and so.
The the potentially cool or creepy part to me is you got you seem to be pretty in on the robotic assistance so it like is are we straight up Jetsons are we going to get a sparrow.

Michelle:
[37:58] If they can fold my laundry I'm all about them coming so we talked about robotic-assisted from the idea that I might share one
there could be different business models like maybe the outright own maybe they're leasing renting that type of thing there's a screen on its belly and stomach where we can see.

[38:25] Show me the interactive screen where they able to talk to him or you know maybe they see entertainment program Maine
or maybe Brands actually are able to push out messages through there but throughout our images as robot.
Plays a role in one of them he.
You know gets the products that were delivered that day and bring some to the kitchen in the one.
In the bedroom on Mom's getting ready he's playing with the small child so he's not outright the babysitter mom still in the room but it's
he's playing educational games with the kid and the scenario where describing here is you know it's a small kid they're playing blocks and the kid says
you know where we are.
You know what we're bubble he says Mom I'm bored in Oakland by the next Edition so what we're talkin about here's the idea that you know if you have
you would.
Police are out right on this robot and then you would buy in a certain packages so in that case maybe you bought the package for a two year old to three year old and now I need to upgrade to the four-year-old package something like that.

Jason:
[39:37] It's going to be interesting are you familiar there's a uk-based television series called humans.

Michelle:
[39:49] No I'm not but I need to watch it at.

Jason:
[39:51] Stay awake I think it's on AMC in the US and it a door a couple of Seasons or one season has was dislike.
Somewhat distant future when like households were just started by affluent household could now afford the the Schumann eyes robots,
and of course they're getting better every year and said they're all these financing plans and if you're middle class family like.
You know do you make the financial sacrifices to invest in one of these things or do you have something symport you know and I.
Because it's DJ's are psychos off the rails and ultimately you can't figure out like who the Androids are in the humans in.
Driver bolt and try to of the pilot is very much in line with with a painted so you should know.

Scot:
[40:50] Clear you are in the report you suggest a lot of bran ways Brands inject themselves into the house you've given us a couple of those examples you Yeltsin reduce this kind of concept of passive consumption
explain what that is and why connected home ring set alarm.

Michelle:
[41:06] Yeah for sure so I think we're starting to move into the air like I said 20/20 is a key or where there's a lot more appliances
in the marketplace Mass consumers naturally upgrade things these appliances will be connected so the kind of Pastor consumption you know it's going to tie to those were punished for products I don't think.
Any of us get up in the morning and work
like super excited to go buy Tide laundry detergent so those kind of product choices are product decisions purchase decisions that we could just
essentially automate so we we see
technology today now that it's going to be even better into these machines you know it's able to measure consumption rather than purchase history that the retailer would have so some of this could be
I'll try to my settings are still a question if the consumer want to be removed entirely or if they want to be paying down their phone to okay a decision
but I think long-term is we think about this idea of passive consumption is certainly starts to.

[42:14] You know shake up the retail industry as we know it consumer Appliance manufacturers with with.
Attack in these appliances are able to get closer to Consumers offer things like remote monitoring maintenance kind of things to keep that relationship going you know what,
just because.
You know it's going to notify you need me more laundry detergent doesn't mean a retailer has to fulfill that there's a potential potential probably for a brand to do that as well so I think it starts to change the whole paradigm
and it has a big impact anything about loyal to two because,
you know you're a lock into a decision so there's less opportunities upon which a cpg brand like a a P&G could influence you to buy Tide
I'm just switching by that versus what you might have been buying before.

Jason:
[43:11] Yeah I I D I think that's.
Interesting totally viable in my in my mind that is another scenario that potentially causes Amazon to have to order the Amazons of the world.
To have to Pivot right because,
again there they build their business to try to be the world's most customer-centric business customer kind of.
That their customer Persona today is a human and you know they built they invested in all these warehouses in this huge assortment because they feel like customers like huge assortment and they like to get the goods real fast.
If the customer of the future is the LG dishwasher and it is ordering its own soap.
You can imagine some of the things Amazon's investing and being less important right like the LG dishwasher might run a reverse auction and buy the soap from whoever can you know provide soap that has meat specs.
They can provide it the cheapest and unlike the human that doesn't notice they're out of soap and told her out of soap and they needed in one hour the LG dishwasher that knows exactly how how frequently you've been washing dishes for the last 10 years.
Can can order the soap well in advance and wants the cheapest Zillow soap that can be delivered on a very slow cost-efficient method.

[44:31] I do think that that's going to be another that that's a potential another interesting.
Curve that that some of the players of today might have to think about but I was more excited in your home thing you saw their super practical problem there's no porch piracy in 2014.

Michelle:
[44:49] I'm glad I did that.

Jason:
[44:55] Write like in CNS because the the delivery Guy waits until they know you're home and then they deliver the.
Stages of close to you and then using this all the spectator they do it when you're home which I think is bad I do want to Pivot the to the entertainment venues in 2040.
There are a bunch of a cool ideas and it seems like a VR plays a super prominent role you want to talk about that a little bit.

Michelle:
[45:22] For sure so you know I live in Chicago I'm actually a Cubs season ticket holder so we go to a ton of games and so when you think about.
Dad experience that you have at the stadium today and then what am I be in 20 years you kind of have to just start to.

[45:43] Weber jetting more technology to add to that in-stadium experience
because it's already commented home I I was in a conversation with friends this weekend and someone was talking about the upcoming Bears game and how much a ticket cost and I don't want to deal with parking and all of that nonsense
and I can just watch it when I can watch it at home on my 80 inch whatever TV so you know obviously.
The stadium operators are competing in a new way you know against
against the streaming services and in the technology you have at home to bring it
Sabrina game The Lies We talked about is a are so think about those cool glasses that I described earlier that we would naturally have so how can we take AR and Leo over the action.

[46:38] Deep in it
so an example might be like from the baseball realm a key stat they often throw around you know what a picture is how many pitches is it you're on the game and you know that's going to start arrest come out as he hits a hundred or hundred five why have you
what if you had all their stats because the players.
When you could see their endurance level as something else is happening in the sixth inning he's just getting worn out because he pitched on three days rest.
What other factors come into a horse's Commerce Elementary as well where you can order food
to your seed order it too kind of a click-and-collect kind of location and then also Tynan to you watching the game the ability to order
pre-order merchandise as well you know based on what players you might be taking an interest in.

Scot:
[47:34] Cool one of the things we haven't talked about his drones and there's a little bit of drone delivery in there but but here in the entertainment world you talk about this kind of cool you could be sitting there watching things and then switch to a different camera from from the Drone is
how do you see those playing into the whole event situation.

Michelle:
[47:55] Yes I think it's just about you know.
Angles on the game that you know so you know I think about it in terms of
what you might see at home that you don't actually see when you're in person at the game from your seat currently you know if you guys I'm sure
you guys have been probably Wrigley Field it's going through a lot of upgrades right now but if you think it back a few years ago without the jumbotrons without
Cheap Eats around the stadium the idea of being able to see a closed play you know you want to re-watch it you want to build understand how it.
What is the Players really say for whatever the scenario was so I think that's another way another kind of layer to it.

Jason:
[48:43] That like it's going to be awesome to live in that world Michelle in that's actually going to be a great place to me baby cuz
once again we have used up our a lot of time for the show but if folks have a burning question and want to continue the dialogue we certainly encourage westerners to jump on our Facebook page or hit us up on Twitter
Michelle is Whispers you want to contact you what's the best way to to find you online.

Michelle:
[49:11] For sure I am on Twitter and also linked Denso on Twitter it would be at Nevins in Evans 1/4 and then online Michelle Evans.

Scot:
[49:26] Cool we really appreciate taking time out of planning our feet are 21 + years future so to come on the show.

Michelle:
[49:35] Thank you was a pleasure to be with you guys.

Jason:
[49:38] Until next time happy commercing.

Sep 5, 2019

 

EP186 - BottleKeeper CEO Adam Callinan

 

Adam Callinan is the co-founder and CEO of Bottlekeeper (@thebottlekeeper).  In this broad-ranging interview we discuss Bottlekeepers origin, their experience on Shark Tank, Amazon strategy, protecting intellectual property, and challenges and opportunities of scaling a direct to consumer business.

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

Episode 186 of the Jason & Scot show was recorded on Tuesday, August 20th, 2019. live from the eTail East trade show in Boston, MA.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from the etail East trade show in Boston on Tuesday August 20th
2019 I'm your host Jason retailgeek Goldberg and unfortunately Scott was unable to join us so I am so low today but I've made up for it by to juuling a great guests to join us on the show Welcome today Adam Calhoun and he's the co-founder and CEO of bottlekeeper
welcome to the show Adam.

Adam:
[0:53] Now you're having me.

Jason:
[0:53] We are super excited to have you as you have a great story as Messengers are going to get in just a minute but for those that haven't already had the life-changing experience of owning a bottlekeeper,
what it what is the elevator pitch on bottlekeeper.

Adam:
[1:09] So it is a bit admittedly it's a bit challenging to just fully explained it is a very visual product but I'll do my best.
Bottlekeeper is effectively it's a stainless steel bottle like a water bottle that we've all seen for 20 years,
and the base of that bottle screws off and so the inside of the the body of that bottle is is insulated with neoprene so that you can put a beer bottle inside the body of the bottle screw the base back on there's a built-in bottle opener into the cap,
I've been a seals being closed bottle and does all these great things will also helps to keep your beer bottle which is now enclosed much colder much longer and it's protected from what we say is gravity induced explosions,
I lie when you drop your beer bottle on a pool deck Kubota Beach Etc broken glasses bad.

Jason:
[1:53] So so I have heard so if I called it a beer cozy on steroids would that be offensive or is that.

Adam:
[2:00] It's important, defensive and me to tell in 1981 was the first patent for the super old-school thumb is he so it was time for redo.

Jason:
[2:13] Time for an upgrade right so we get massively better cold we get the bottle protection I'm not sure you Market it this way but there's potentially a stealth elements to the product.

Adam:
[2:24] I need a wee wee Focus pretty heavily on that keep it cold and protected live there.

Jason:
[2:30] Fair enough and I feel like most of our listeners have imagined that their dream job would be to be a CEO of a company in the adult beverage base.
I was going to ask his it's like are you going to ruin it and say it sucks and you were like 80-hour weeks and it's super stressful.
Or you can nice.

Adam:
[2:49] Now it's amazing I mean we we were very very intentional early on in starting this company my co-founder partner Matt Campbell and I about doing,
ignore my previous world was a lifestyle that was built around a business and so and going into bottlekeeper and launching and I wanted to do the polar opposite that was build a business around a lifestyle in my lifestyle,
living in Southern California I spent a lot of time in the water and on the beach and traveling with my wife and so we built that mentality into the framework of the business which even now and we launched in 2013 even now six plus years later.
It's fun I mean it's really casual it's really relaxed we have you know our team has unlimited vacation we have mandatory work-from-home Fridays because I literally I was trying to get people to work from home on Fridays and they keep coming in so now it's like.
You got to work from home on Fridays so it's just it's a very fun casual flexible products.

Jason:
[3:45] That that is totally awesome and I know you guys have a pretty funny origin story like how did you come up with this idea.

Adam:
[3:55] Yeah so my cousin again co-founder partner Matt was sitting on the beach drinking a beer out of a red party cup.
85° outside we know how the story goes right it's warm in 4 minutes and drinking warm beer is about as fun as having a tooth pulled,
so he at the same time he's also,
that particular about drinking beer out of bottles that's just something you would always prefer to have a beer out of the bottle so he's looking around he sees people drinking out of we're just normal off-the-shelf water bottles with her everywhere today.
And thinks himself why can't I just take one of those and put a beer bottle inside of it and really the only way to do that is by cutting it in half,
so he went and purchased a bunch of off-the-shelf water bottles a handful and Vise grip them to a table hack saw them in half,
cut up some old neoprene College Koozies and super glue them inside and his favorite beer bottle fit perfectly,
and what this did was it created an opportunity to keep a beer a lot colder a lot longer while simultaneously protecting the bottle because again he's on a beach he lives in Phoenix Arizona has a pool is all these places where,
it's hot and glass you know, doesn't make sense in this was the quick and easy solution to that problem.

Jason:
[5:06] That is awesome so we made a product for that and I heard a rumor that you you did a quick and dirty test to find out if there be a customer demand for the product.

Adam:
[5:20] Yeah when when you know we started doing this together we we burn it up in early 2013 we,
I was not admittedly super I thought was a really really cool product to fit my lifestyle gray but I wasn't overly convinced him particularly have never been in the consumer product business before that we could sell it that we could get people interested enough in the product
to sell it at a real price point NADA this is Hobby price why put a real price on with real margins so I built a website
just a landing page with a video that I shot on a GoPro and plugged an email capture system into a MailChimp and,
you know basically I spent $500 on Google AdWords in and sent people to the website they just basically said if you think this is cool and you want to know when it comes out leave your email and it converted reasonably well and it wasn't a 5% but even at 1% like we'd at least prove the people that were,
you know we're interested enough in it not knowing what the price was to go on to the next phase which R Us was crowdfunding.

Jason:
[6:18] Play up first. That is totally cool it wouldn't have been that much earlier that it would have been super expensive than unfeasible to even do a basic test like that.

Adam:
[6:29] No question and that's when you look at these sorts of things you know you can it's really in hindsight it's really easy to point out that the things that were really lucky and one of those the timing I mean had we try to do this in 2008 it would have been a totally different story.

Jason:
[6:42] Yeah and you're not the first entrepreneur on the show to say hey we
we put up sort of a faux buying experience even before we knew how to make products in fact I think we had tuft and needle on the show and he literally had a bye but and took an order in the first day.

Adam:
[6:58] That's awesome yeah we didn't take it quite that far but I can send there's a lot of Value Inn in doing that particularly when he basically combined what was Frost Phase 1 and Phase 2 he combined that into one phase which was can you get people out of the credit card information and click by.

Jason:
[7:13] So they also not available 5 years earlier would have been that that crowd crowdfunding component can you talk a little bit about that. I said you had any experience doing a crowdfunding project.

Adam:
[7:23] I mean I was pretty guy come from the medical world at that point and Matt is a also not turn over but has been in the alternative fuel conversion space since college so neither of us have any experience.

Jason:
[7:34] Kickstarter or Indiegogo or one of those.

Adam:
[7:36] We used fundable we actually got declined from Kickstarter at the time they were I guess we're focusing on our projects and things like that so I I met somebody who was a Founder CEO of honorable and they were super helpful and got us off on the right foot.

Jason:
[7:50] Awesome so then that's Circa 2013/2014.

Adam:
[7:57] That was the about September 2013 was the beginning of the crowdfunding it went on for 2 months.
Was really successful for us not in the amount of funds raised it wasn't super expensive to start this company so that wasn't the point but we we set up a low goal,
we
more than tripled that goal and it was it the real proof of concept that we can get people to enter their credit card information and click by and having these people not be like our parents in front of him.

Jason:
[8:23] Yep but it and it's only gave you some sort of Market validation that you had a.

Adam:
[8:27] 100% of men. That is the validation right we had something people were interested in and we're willing to pay real money for.

Jason:
[8:33] Yeah yeah so now you so now I assume you start chewing up and Manufacturing you fulfill those orders was it easy to grow organically from there or how did you say.

Adam:
[8:46] No.

Jason:
[8:48] I was being slightly start a.

Adam:
[8:49] Yeah it was not easy at all I mean it with this was like a funny side project for almost a year and not because we didn't love it and think it was amazing we just haven't figured out how to do it yet.
Sew-in yeah we we did that I built a real website on I think I'm bored press if plug-in woocommerce to it and you some funny Dragon drop that it hurts I don't have code.
And we started taking pre-orders at the end of the crowdfunding cycle so we had started doing some testing on actually being an e-commerce business in the fall we ship those orders in the first week of January 2014 barely missing Christmas which is awesome.
And I'm just literally just fumbled along for 8 months.

[9:30] We are doing two or $3,000 a month in Revenue I had two other kind of side project things I was doing maths in a running as fuel conversion company,
I'm so we're still doing this we're trying to do it we just haven't figured out how to make it work yet.
And something really important happened for us and that was in in about August of 2014 Facebook launched their video advertising platform,
so I thought of you again I'm not a videographer I'm not never done this before so I just took you off the shelf Camera DSLR that I had from some previous trip.
And propped it up on a backpack in the sand and had this sort of demonstration video that was abusively long in today's standards of digital marketing at least with respect to Facebook and things like that and put it on Facebook and it exploded.
Just went from you know 5 or so thousand dollars in August to like.
10 in September to 25 in October to 50 in November to 60 in the first seven days of December and we saw a lot of product cuz we had no expectation that this was going to have.
That was that was the point of which you know we were.
Clearly earlier on may be in September after like holy hell is actually working and then it just continued to work because with Facebook if you just keep putting money into a particular when you're at the smaller scale and you can achieve the same results.

Jason:
[10:46] Yeah that's awesome so during that that run up as you started getting that heavy Traction in this volume started really getting up did I did like WordPress break and all that sort of stuff and did you have to migrate I'm assuming.

Adam:
[10:59] Oh yeah we were we were in.
Way over our heads and by we I mean me my was responsible for the front end of the business the tech The Branding the marketing OSF mats with multiple for the back end with the inventory is the manufacturing or financials on this important stuff so yeah I was weighing over my head I mean we.
Do we couldn't ever get enough bandwidth to support the girl that we were doing and we Band-Aid patched it for.
A year easily are removed to Shopify which was one of the smartest things we ever did in the summer 2015.

Jason:
[11:30] And then fast forward a couple of years and you guys were on Shark Tank.

Adam:
[11:39] We were in the November of last year.

Jason:
[11:42] I'll put in the show notes but it's like season 6 episode.

Adam:
[11:48] It season 10.

Jason:
[11:51] Episode 6.

Adam:
[11:51] Season 10 I think it's episode 6.

Jason:
[11:54] Sex so so we'll put it in there before you get you can get on the show as a regular follower I sort of thing marked even as an unbroken record of investing in every Beer Company.

Adam:
[12:06] There might be a theme there.

Jason:
[12:08] So I don't know I don't know if you targeted that at all but just a side note.

Adam:
[12:12] Yeah he had this great quote and up one of the Publications that came out of that nose actually became the title of this article it was something to the effect of every time I drink a beer I invest a billion dollars.

Jason:
[12:22] Well I hope he's got a good Roi on that that could be an awesome investment strategy if it's working,
so you're so happen to have a guest shark A-Rod and in the beginning of your pitch to demonstrate the protection element of bottlekeeper you,
I handed him a baseball and let him throw a baseball at your product and I'm actually thinking I would be in your shoes terrified at this moment because if I make a rod look bad.
He doesn't like it at flush.
Like this could go totally sideways so luckily there's no listeners on the show so I guess we'll never get out did he nail it in the First Take.

Adam:
[13:05] He did I'm in the guy's a Hall of Famer.

Jason:
[13:07] Yeah.

Adam:
[13:08] It was surprising how I mean he nailed it dead center in the middle 60 plus miles an hour in a full business suit and dress shoes on a hardwood floor from 30 yards.

Jason:
[13:18] Which.
Yeah I mean he's there I got to do it but you still is I feel like it's impressive nonetheless so you took a risk until I paid off and on the show you Altima got a deal with Mark and Lori,
like pretty meaningful valuation when the fun things to me is a lot of people come on that show,
very early revenue or pre-revenue in like asking for sort of a wack evaluation and they get beat up,
I almost got the impression they felt like you were a little silly until they found out about your your existing Revenue run rates and then it became a different kind of gum.

Adam:
[13:57] Yeah which any of that was is,
very very planned out right I mean our goal it wasn't our goal wasn't to go on in and look silly but it was to go on and then get to the point where 3 numbers and have them all,
set up in their chairs and even even with you got to structure all these things right even with a rod drawing we designed that around having a run on the show we didn't say we want to do this experiment that all the time we have a run it was what do we need to include in our patch so that we can,
so that we can guarantee they will air our episode and it's like you have a rod throwing a ball on National Television there's no way they're not going to.

Jason:
[14:33] Yeah it's too. It's brilliant and I've been told by other shark tank entrepreneurs on the show that one of the things that can be frustrating is you don't actually know when your shows going to air.
Until I can be,
dislike again you're likely to have a big bump in in demand from the show in the band planning and hardening your systems can all be a challenge in your case I think you got a really lucky air date did you not.

Adam:
[15:01] We Dad we are the night before Cyber Monday.

Jason:
[15:03] Oh my gosh so tons of demand a peak time in you already on Shopify at that point so did things hold up in.

Adam:
[15:13] Yeah I mean from a from a texting Point yeah every everything that I'm in the fortunate thing for us in that experience was that we had already been in business for,
five or six years we've already done millions of dollar in route dollars and revenue we had,
you know we had put all the pieces in place through other learning mistakes and we were around that we've been on other TV shows prior to that's the we had these huge bumps in Things Fall Apart and so we got to patch all those holes
in advance and the other part was we had we work this great deal there manufacturing group where they were basically they would create,
I think it was it was up to 10 containers of product on their dime and basically hold them in a facility in the US and we could draw from them as we wanted so that really D risks,
our inventories going into Shark Tank cuz you're right we find out three weeks before it was going to air that was going to air.

Jason:
[15:57] Wow that's awesome in my distant past we used to do some work with Oprah Winfrey in like early on in her list she would literally put these entrepreneurs out of business cuz she like you create so much demand and like so,
you would have had to invent all these new disciplines about how you handle this this one ridiculous spike in your business that's a first world problem though my friend.
So so you're on the show the product looks gray By Carolyn season on the show you get this nice bump and I think you said like,
like a 300% increase in rent do I have that.

Adam:
[16:33] Yeah as of that night and then grilling to Cyber Monday we had we were already up W Revere so then we basically increase 300%,
the night of and it lasted through the subsequent week minute tell off a little bit the beauty of TV now versus TV 10 years ago did you get this huge Spike spike lives on a movie still
something like temperate not sock. It's slower it's like 5% of our traffic today we can still point of Shark Tank,
start in November of last year it reared in Des in January of this year but even then this up lives on.

Jason:
[17:10] The rears its the DVR now and on demand you get this nice a long tail.

Adam:
[17:12] Horse HD streaming systems.
Over the course of the week following the Airing weekend directly attribute an additional million dollars in Revenue just to Shark Tank nuts customer acquisition free which is a beautiful thing.

Jason:
[17:27] That that is awesome so that could be is valuable for being on the show you raise some Capital which I assume you were able to invest wisely and that's valuable I'm.
An argument that sharks off and make on the show is
did they have special skills and they'll help the entrepreneurs and so I'm always curious like I've done some math it's kind of funny
Mark has done a bunch of deals and he's like oh I will help you with your website and take care of all that and I hurt your back is done a bunch of those basically they're putting people on Shopify in Magento.
If you don't know about that.
Yeah that's why I'm just like to the extent you can say like you like do you get intangible incremental benefit from a shark investor versus you know like sort of anonymous money from a Visa.

Adam:
[18:19] Yeah I mean.
Anytime from our standpoint we're end up into this point we've had no investors are. So we've always looked at taking on Capital as a means of taking on,
assets that go far beyond Capital what do we you know what is the person bringing to the table outside of just money cuz we don't necessarily need the money that bad now it's part of the pushback we got with going on Shark Tank,
I was worried it was relatively apparent that we weren't there only for the money which a lot of companies go there for cuz they're about to die.
So each of them has a different skills that each of them has a different.
Thing they can they can contribute teams of people that can contribute I'm I can't really speak to them specifically prank their deals on going so,
we don't have a ton of experience in working with him directly but you.

Jason:
[19:08] Yeah it's going to be interesting to follow and it certainly is a fun story I want to turn the O2
what is often done fun part of the School entrepreneurship which is the whole hassle around knockoffs in protecting your IP
and this came up on your episode even a little bit like it is and I I get that they film this long for our thing and they added it down to 30 minutes,
that would like 8 minutes or whatever and it's
but like it almost seemed like you came on you totally shocked them with your Revenue run rates and you have good margins of good unit economics and then they're like we'll how much of you netting and it wasn't a huge number in it
it took awhile to figure out they like oh we've been spending a fortune protecting r i p,
so tell me a little bit about that.

Adam:
[20:07] Yeah it's.
United consumer product world where you have to deal with patents and knockoffs it's just a very unfortunate and mind-numbing part of the business but it but a reality so,
we we started to see knockoff products show up in on Amazon in 2015 late 2015 it exploded in 2016 and although we had patents filed they were still pending or inactive so you can't do anything about you just watch this happen which is brutal,
through that explosion in 2016 we we had over a hundred companies on Amazon selling fake they're not saying they're bottlekeeper so it's not counterfeit product released Amazon takes up are really seriously swear able to deal with that because of the trademark something that we had but,
when are patent did go live in November of 2016 we had to get really really really aggressive with defending the brand we had to make a decision,
are we going to grow more in Top Line and effectively bottom line.

[21:04] In 2017 or are we going to take some money out of marketing and aggressively Defender Brandon we did the ladder we know we're in this for the long run we spent a lot of time your building what we,
you know very much believe in and then and so we spent about a half a million dollars in 2017 and lawsuit suing a different companies.
I'm getting consent judgments and doing all these important things as part of a strategy that will and update thought at least at the time that would put us in a position to better Defender patents moving forward which worked in Heights at work really well but it was really expensive,
when you can take in the you know what I'm talking about that on the show that half million dollars we have to take out of her marketing Budget on retained earnings were Castle business,
so how to come from somewhere in the only place I could come from was was marketing so.

Jason:
[21:54] So I should have asked before but were you already selling on Amazon prior to the counterfeiters or did the counterfeiters show up on Amazon before you.

Adam:
[22:04] They should open Amazon before us that's why we went on Amazon.

Jason:
[22:07] Yeah I was going to say okay so you're selling direct if I have this right you filed a provisional patent before you really started selling the product or early on.

Adam:
[22:19] The provisional is something and it said this early I'll preface is that I'm not an attorney so talk to you later but the provisional something that you file that's kind of like a placeholder it's an inexpensive patent it last for a year,
and it basically like puts your place in line if it ends up working out and you want to come in I want to file a utility or a designer whatever patent on top of that so we had a provisional in place I mean frankly before Matt and I even came together and decided to do that.
We filed the Utility Patent didn't think December of 2013 and it didn't go live until November 2016 is it really long.

Jason:
[22:52] Yeah not fun either so also not an attorney on the side but like in general the,
super important thing about those patent filings is your filing date,
right and so you don't cost a certain amount of money and and both filing fees but also just to prepare a patent and so instead of spending all that money to file a full patent you can in fact,
take this cheaper path which is a provisional patent but the provisional patent gives you that all-important filing day,
I'm so if you have a bunch of money provisional patent actually not a good idea you should just go right for the patent and save the thousand bucks from the provision.

Adam:
[23:32] I mean I haven't even believe in that if you're testing a new concept as we come out with new stuff the first thing we do is file a provisional patent we're not sure it's going to work I mean our first and that's not like a small.

Jason:
[23:46] No no that's it shoot.
So so you get the date from this provisional.

Adam:
[23:53] That's the important part.

Jason:
[23:54] Yeah and then when it converts to a full patent application that still retains the provisionals date so that's the whole point of the provisional patent,
it's totally unpredictable how long the pageant can issue in it,
it comes down to a bunch of luck about the examiner you catch and if there's a lot of questions and you have to do a lot of defense and you know do additional primary and all that stuff so you could issue in a year,
and you could issue per your point in 5 years or longer so in your case,
people say you selling direct knock it off and start selling the knockoffs on Amazon under a different brand before your patented issue.

Adam:
[24:38] Yeah an end of the challenge there is that weird.
Heavily marketing bottlekeeper spending millions of dollars your marketing bottlekeeper on Facebook and all these other channels so why we had to be there is because people were then going to Amazon searching for bottlekeeper and please knock offs are coming up so we had to be at the top of the list for Bobby's reason.

Jason:
[24:55] Yet so you had to show up in their search
I won't make you say it but many people would also say that a lot of the amenities that Amazon does offer for brand protection,
are easier easier to Avail yourself of if you're a seller on Amazon
so like frankly a lot of people become sellers on Amazon specifically so they can do brand registry and and eventually get a wrap and have some recourse is for some of this.

Adam:
[25:23] Yeah I know the kicker there is he that doesn't happen till you get to a significant amount of scale.

Jason:
[25:28] Yeah which feels kind of oily, it's also like,
repeatedly how it plays out on most of the international market place is so you know you're trying to be on Team all at Ali Baba you know again has a lot more,
IP protection tools when your seller then when you're just a disinterested third party,
so so that prompts you to move to the Amazon platform so now you're playing at a crate
on the same sales that you in the past would have captured direct but presumably also exposes you to a bunch more customers so you may not have gone on Amazon for,
necessary the best of reasons but in hindsight.
Are you sort of neutral about being on Amazon like you feel like there is an at economic Advantage if you like is a disadvantage or not prepared.

Adam:
[26:22] Oh man how much time do we have.

Jason:
[26:23] I'll do a long show forever talk.

Adam:
[26:27] We if we look at the from a consumer brand if we look at the overall picture of what Amazon does for us is consumer brand I would call a negative.
You're right that we get exposure to new customers but the problem with our product is it's really hard to sell in a still image it's really hard for someone to look at it that doesn't know what it is and go I know what you do with that you put a beer inside of it
so it's not like we're selling socks,
yeah I mean when someone goes to Amazon looking for socks and we're one of the results that comes up and they love our socks and I wish it was it was that it was that simple I mean,
that be a beautiful thing but unfortunately it's not so the other challenging part is that in the customer that purchase
purchases from Amazon is Amazon's customer is not your customer that our customer we don't really know who that customer is they don't get to experience any any part of our Brandon
and buying Direct in the processing funny copy and follow-up emails that are super fun and engaging in personal thank-you note every single customer that buys from her site gets from me personally that comes from my address
they respond to it it comes to me and I respond every one of them. That's a really really important part of our brand that's how we get tremendous feedback that's how we design our new products,
so we've.

[27:41] We're hoping with some of the things Amazon is has put in place and we need to give them credit they have put in place a number of things that have been tremendously helpful like the patent infringement portal and brand registry which they just launched in the fall of last year that has been tremendously helpful.
But from a consumer brand stamp when it's really really really hard to invest heavily in acquiring customers on Amazon when they're really not our customers.

Jason:
[28:07] Shirt and you can act like if you think about it there's two kinds of traffic that's hitting your PDP like there's people that got exposed to your top of the funnel marketing activities off Amazon,
and so I want to hear funny YouTube videos or the television ads you're not doing which will get you in a minute,
are all these other things and like you already created an intent to buy
they go to Amazon and buy it instead of to your website and buy it and so it's lower-margin I didn't ask but you're probably also fulfilling via FBA and paying all those fees.

Adam:
[28:41] Yeah maybe actually Mark the product up on it was on the weekly or so to cover those please number one and also to give the customer incentive to come back.

Jason:
[28:50] I like it in that still gives you that visibility in search but protect you from some of that Marginal Road and that's a great tactic if,
the product still Converse at that high price I promise if you price at to hide and no one buys it then it actually doesn't show up in search.

Adam:
[29:06] So it's it's funny when,
when we first launched the product we launched it and one color one size and it didn't have the built-in opener wasn't powder-coated didn't have all that sort of bells muscles that it now has.
And as we launched colors and then when an Amazon we did it with our what we color 1.0 product.
That one for the product we were selling our website for 24 1999 $20 and you're selling it on Amazon for 25 but it was selling perfectly well on Amazon a 25 which was kind of that light bulb of did we underpriced are Prada,
and that is we launched new bells and whistles and things that came directly from feedback from our customers,
we looked at that pricing auto very differently and priced it well above what we thought would be reasonable and realize that we have not yet got to that pricing ceiling yet,
Amazon for helping us figure that out.

Jason:
[29:54] That that is a terrific unintended benefit I guess.
But so you have that version of the traffic in that converts and it's great but,
that again we'd rather you don't get to meet that cuss around that thing and then you have people that maybe didn't know they needed your product Discover it on Amazon and prove your point,
when those people at your PDP they probably don't convert near as well because your your storytelling and you're you're sort of want to buy contact content on Amazon is less compelling than it is on you.

Adam:
[30:27] Yeah it's it's significantly more limited.

Jason:
[30:29] So now I want to Pivot to another thing that I was actually expecting the Sharks to beat you up about and the Beast in the final edit it it you got a total pass on it,
you mention what a boom Facebook video ads for you were,
it sounds like it one point in your Evolution like you were you were very dependent on Facebook that that was your primary marketing via.

Adam:
[30:55] Yeah I mean even through today we're still dependent on Facebook we're just being very aggressive and diversifying that Revenue.

Jason:
[31:01] Yeah and for your point,
early on it's like as much Capital as you have you can buy more more profitable eyeballs from Facebook with that that capital in your Capital constrained.
There comes a point though when the cost per eyeball starts going up as you have to buy,
broader and broader audiences and as Facebook just as the monitor talk about their their cpn's are CPAs,
while they going up over time and as they scale and if that's your primary marketing vehicle you you have to worry that you're eventually going to hit some inflection point when.
We can't keep growing the same way you were and so like what are you doing or what hat what are you trying to sort of diversify that the customer acquisition from Facebook info sorry,
super long question when we're saying Facebook are we primarily talking about classic but Facebook or do you mean Facebook as sort of Facebook and Instagram.

Adam:
[32:03] Separate the two so classically Facebook we treat those two channels differently so looking,
I mean everything you said it sounds like crack the bigger you got the harder it is to generate Returns on Facebook now.
Combined with that is the fact that today you know Facebook isn't growing like it used to grow up really domestically at least which is where our main consuming audiences and.
The number of marketers advertises on Facebook is up significant let me know anybody with a harpy can go in and create an ad account on Facebook and sell their Wares.

Jason:
[32:37] Even I could do it.

Adam:
[32:38] I could do a lot I mean I figure it out,
the kicker bass simple supply and demand economics at least flatlined Supply and increase demand just gets more expensive,
couple on top of that we have Facebook removing a pretty significant amount of targeting as a result of all the scandals and things have come out which just means it's more expensive for us to go and find,
customer that we know exactly who that customer is and if we can Target them based on these Civics then then we do have to go to your point go broader which just makes more expensive naturally so we're focusing heavily on,
we do advertised on Instagram that doesn't convert that's a great brand building getting eyeballs to a but hasn't has to work we can but it real well for us.
We advertise in some capacity on all the socials Pinterest has worked really well for a tickly seasonally in and around Father's Day and key for the one that really surprised me and our marketing team is TV.
I'm TV is at a place where there is a lot of additional technology that wasn't there 10 years ago.

[33:45] TV ad-buying so the technology is not only in being able to attribute a sale to somebody saying.
Adam TV commercial on a specific Channel but it's also being able to buy the space on that channel now they're these live auctions that are all you know automated that
a really good TV buying company can go and get really inexpensive ads based on really good channels during great times a day that are in and I'll say the third position in a channel lineup rap commercial instead of the first,
but it's like $200
for an ad on Hallmark Channel during the holidays he was the sort of thing it could be really really really inexpensive when it's done correctly and combining that with the fact we're doing all around creative in house,
we can crank out high-quality creative and test the hell out of things before we hit need to go and put real budgets behind them.

Jason:
[34:34] And so it would be great if I said like that there this nice combination of there's way more inventory of Television than there's ever been before and there's slightly less competition for that inventory and so.

Adam:
[34:46] Yeah I mean if people are moving the advertisement for the attribution when you can just get it's just so much more clear.
TV gets less expensive I mean there's not necessarily less viewers there's less linear TV viewers
but even in the in the Digital streaming advertising and Digital streaming TV is great because you that's much easier to track that attribution issues IP matching and that's crystal clear in the linear side where it's somebody you know I'm sitting down watching TV.
Yeah you you kind of got to follow him a little bit one of the ways that we've been successful doing that as is with a simple hear about us how'd you hear about us and our checkout funnel and being really specific.
To the name of the channel in that dungeon feel like TV cuz if you're advertising 10 channels you're not going to know which ones doing well cuz I'm going to do really well in summer like any normal advertising Channel.

Jason:
[35:34] Yeah I think it's the old I want to make a quote half my ads are working I just don't know which half the,
so TV has been good the I also heard a story that you were doing at least an outdoor,
pilot it's a week like normally we've got digital outdoor and that means you're buying like a digital billboard or something that you are buying a digital boat.

Adam:
[36:02] This is Mike's American are a head of marketing is really really really smart guys I was coming up with these funny.
Interesting things to test a nut wheel of testing stuff so we
starting earlier this Summer started testing a bottlekeeper add video that's on a digital screen on the side of a boat that just drives up and down the coasts I named Ali in Florida and a couple other states as a
5 or 10% off discount code on and try to help us track conversions and it works really really well
the challenges scale most of these marketing things that work really well as getting the scale and it but I was another pleasant surprise.

Jason:
[36:36] Yeah yeah and did the guy that pitch that happen to own a boat in like.

Adam:
[36:40] Yeah it was like this is this guy's belt that's that's the downside of this is It's not like there's one company that does this it's like Joe's boat in Miami Jimmy's boat in Baton Rouge like it it's quite desperate see if we work them individually but it is an interesting.

Jason:
[36:54] And eventually one of those boats is going to hit a manatee and there's going to be all kind.

Adam:
[36:57] That'll be the end of it.

Jason:
[36:58] Yeah yeah I hope I hope that doesn't happen to you so lots of stuff in flight for customer acquisition the other big change I heard is you are now if he's piloting some retail.
So hot like talk to us about how like how you come to the why weren't you in retail in the beginning what changed that made sense for retail now and how's that.

Adam:
[37:21] Yeah you know what the beginning from my,
prior 10 years in the medical world experience was really labor-intensive and really hard to manage at least from a logistic stamp why there was lots of just stuff people in multiple States and delivery vehicles and warehouses and all the stuff,
she couldn't get away from it so when we started bottlekeeper the idea was to do the opposite of that let's think I said earlier let's build a business around a lifestyle,
the sort of like Drop Dead question when we looked at opportunities was do we need to hire people to to accomplish it if the answer was yes and we just didn't do it,
one of those things as retail as we started you know murdering people hammering stuff on Facebook with millions of dollars on Advertising retailers,
none of that and they are start sending an enquiries and interested in whether it's a big retailer with small Roots retailer we didn't know what to do with them cuz we couldn't read that just set that we're not doing this.
You know I was looking kind of at the GoPro model where they went completely direct-to-consumer for a long time and by the time they went to retail they got to make some,
in a pretty decent demands because they had the consumer yeah they had way more leverage and I always made sense to me and it sort of fit my my operating model of let's do this without people so.
Fast forward a couple years we as people retailers were coming to the site we were just saying hey we're not ready at between this waitlist and we'll let you know when we are so we had.

[38:40] 3000 us retailers on a waitlist,
we had a significant in the the how did you hear about us on the waitlist was customers coming in and saying why don't you have this which is really important piece owning the customer which was back twice challenging to design Amazon is a huge part of the puzzle,
so come 2017 or patent infringement staff gets largely cleaned up,
I'm 2018 we see the writing on the wall with Facebook we're starting to hit that point at which,
you know our Yang and yang with expense and return it starting to get out of alignment we're looking for other Revenue models,
so that one we were we have historically been a pretty seasonal business we do about a third of our Revenue during Father's Day and half of Revenue in the last 6 weeks of the year,
so that gives us 9 months of the year that we know have low sales were losing money and some of those,
I mean as we continue to grow our losing money in a lot of those,
I mean that's made up for in these other two seasons so it just got to the point where retail we had enough demand we needed to try to level out a revenue throughout the year and not be so dependent on Facebook and our other social channels doing marketing,
and some retail started to make sense so we actually this all started when a sales and he's now our director of sales this guy that had been in the the consumer space retail space for a long time.
Reach Out blindly ends at Ace Hardware wants you.

[40:06] And one company that I will totally plug happily that we've always looked at as sort of a model of brand building Done Right is yeti.
It's an amazing job building a brand on relatively limited amounts mean I know they have a huge patent portfolio now that early on they had a couple of Pattinson,
and protective of their drinkware lines in the sort of stuff that's that's hard to patent cuz it's that's been around forever yet,
they build this following where people will go and spend 50 or $70 on a cop that you can buy for $5 literally anywhere else and I mean they just IPO they were filling the dollars,
clearly that works for them so.
Is a store that Yeti is heavily in so that was the first big retailer that came to us and they were you not saying we want to work together you want to sell your products that and then it started to make sense so we,
brought on this order for Versailles who's awesome and what he does
and started that conversation we started opening up Ace locations they have four thousand or so domestic stores,
started opening that up in the fall of 2018 so by the end of the year we had two hundred or so stores,
started explaining to a bunch of a very select retailers,
and as of the first six months of this year we're going over 4,000 domestic store so we're growing rapidly into retail and now with launching new products and stuff just on our our big pipeline we get to add to those shelf the Shelf space that we now have.

Jason:
[41:28] That that is awesome I'm curious you you mentioned earlier on that like the product really needs the video demonstration to sell so one of the challenges of that retail shelf is your problem actually looks a heck of a lot like a Yeti water bottle,
on that on that shelf like a bee are you thinking about or if you experimented with any like video pop or anything to try to tell that story in retail.

Adam:
[41:53] So this is this is a huge consideration in launching into retail my nightmare is that
bottlekeeper ends up in the hydration Isle of a store sitting with all the other water bottles it will get lost so the benefit of having a bit of Leverage and going into the retailers that are saying please please no I'm not I don't know me to oversell it
they wanted the product and we had enough leverage to be able to say I'll kill you can you can have it if you do these couple of things and one of those is used our merchandising that we created,
I mean our counter display has a physical bottlekeeper unit broken open on it like glued to the front of this would display so you can't miss what this product is.
It's like they have to use the kicker.

Jason:
[42:34] Yep and is it like do you try to get merchandise in the beer section is that.

Adam:
[42:40] It just depends on the store I mean our again our sort of no-go zone is is hydration yet this is cousin doesn't but in
entrance doors yeah I mean we have like,
Meijer a great you know high and grocer that's perfect to be in the beer in the rear section I mean on a couple of sets a Whole Foods all these places that have grape your collections it works really well.

Jason:
[43:02] Awesome the I forgot to ask International so are you guys selling much International now is that in the expansion.

Adam:
[43:13] It is a big part of the expansion we have we actually physically launched into Australia in 2015 were some really good learning experience.

Jason:
[43:21] Then think about that but that's like one of your fate area would be where is it hard to keep beer cold.

Adam:
[43:25] Yeah and Australia versus a lot of the other places you can lie.

Jason:
[43:27] Like Greenland probably not as high on.

Adam:
[43:29] Yeah UK is not quite up there either but I mean Australia it's hot most of the population lives on the coast they like beer speak English,
it made sense to do that really good learning experience you know we sold physically they're out of a warehouse that was contracted and had a physical presence there learn quickly that there,
Amazon doesn't have quite the hold their that they have here so consumers aren't quite trained up on e-commerce,
so having a physical presence there is really really important over in the midst of working with Distributors to go the more traditional retail route as well as in a bunch of different countries yes is the really long answer to your question.

Jason:
[44:05] And obviously I'm sure you're ahead of me on this one by one of the sake things is of course all that IP work you did in the US you now have to start thinking about duplicating time what time is potentially a lot.

Adam:
[44:19] Yeah I mean there's you know that,
the downside of the very beginning of the company of not going in raising a bunch of money is that when it came time to file patents lien filing patents in all jurisdictions is phenomenally expensive and so there's some places that we just don't have coverage we just have to rely on the fact.
Certain countries really enjoy using American brands and.

Jason:
[44:44] For sure until we're getting we're running up on time I want to give it to the last topic
but I would be remiss if I didn't point out one of the funniest things of the day so you were funny only to me but you were on a panel at detail on Startup founder stories,
until they were like three three great Founders that had you each had heard of a wildly different story that you all share it and I feel like there's actually a bunch of,
useful practical learning that the audience probably got from all three of you but the one thing that all three of you had in common that it seemed like there was violent agreement on was that you should do all this marketing and concentration in house and that agencies
don't work very well and I don't know if you know this but I work for a giant agency,
so I'm laughing I'm thinking of my French overlords listening to this podcast and they're like nice TV is coming back we have a hundred and twenty thousand people that know how to produce great TV and then the next thing is but,
it's now easy enough and there's a bunch of significant benefits to do it in-house which I would totally agree with.
Yeah so I just wanted to get that out there for all my co-workers listening to the show I think the takeaway was agency sock was kind of.

Adam:
[46:01] No I buy my ticket would be that there is there's a time and we do use agencies were multiple points throughout our growth there's a time and a place,
and even today we are TV buying we're not doing RT to buy internally like it would be impossible for us to do that so we still do use agencies in a couple.

Jason:
[46:17] No I die till I get I just thought it was funny so I'm having fun.

Adam:
[46:20] Glad the other guy Adam really got into that one so you can lay down.

Jason:
[46:23] T it sounds like a couple of the other guys had some like particularly bad rebranding experience,
what does not hard to imagine so pivoting forward you put your future hat on in your imagining 2025a.
What does the world at bottlekeeper look like a view.
Dramatically expanded product lines have you like so this business to somebody in your living on the beach with like a concierge to bring you cold beer so you don't care anymore like what's the.

Adam:
[46:55] I mean we're not we're not even remotely close to where I would think of the acquisition time there's a lot of stuff you want to accomplish and we're certainly in it for the long haul I mean
you know we we spent a lot of time internally part of the downside of naming the company after your first product is launching your second product becomes kind of interesting so we spent a lot of time internally,
being able to better articulate why we as a business are doing this why is we we as a group of people are coming in and doing all the stuff everyday and as we get to better articulate that
I'm at we are getting a lot better at articulating. That will allow us to expand into other.
Verticals that I can't even imagine today I mean again looking at yet either a good example they started as a cooler and I was all a dog bowl expensive dog bowl,
so it took 10 years to get to that or what not but but there's a there's a lot of a lot of room for growth.

Jason:
[47:47] Yeah it's a crazy story like that you.
8 years ago they were primarily super expensive cooler manufacturer that was like known as are the niches today that they had this like super powerful brand and a Scraper on a product some people are like wow overnight success you did all this stuff in
5-day years there 23 year olds.

Adam:
[48:08] Yeah I was definitely not 5-day ears that's for sure.

Jason:
[48:10] Yeah I mean it's like it's it's the age-old story everybody's an overnight success 20 years it,
will listen am I super enjoyed talking to you about this is going to be a great place for us to leave it because it's happen again we've used up all our a lot of time but if listeners have any burning questions or comments and they want to continue the dialogue they're totally welcome to join our Facebook page
where you will see a lot of bottlekeeper ads I did some research for the show and your retargeting is now stalking me.

Adam:
[48:43] Perfect it's working.

Jason:
[48:46] Yeah yeah yeah and I'm a good guy so I clicked on every one of those ads for you.

Adam:
[48:50] Okay yeah thanks thanks for that.

Jason:
[48:52] Yeah I'm here for you maybe I should buy a product after I click on that. I don't know if that would be better I'm kidding,
but that we would love that as always if you enjoy the show please give us that five star review on iTunes Adam if people are inspired by the show and want to get in touch with you like what's the best way to,
to reach you.

Adam:
[49:12] I mean you can find me on Twitter Adam underscore callanan out. I will tell you in advance I don't use it a whole lot much to my had a PR sugar in,
I mean our bottlekeeper accounts of the best way we're still a small team super connected so if something comes to that I'll definitely about it.

Jason:
[49:28] Awesome I will wish those social accounts in the show notes and Adam really enjoyed their conversation thanks very much for making the time until next time happy commercing.

Aug 28, 2019

Amanda Tolleson, the Chief Customer Officer at Birchbox.  In this broad-ranging interview, we discuss Birchbox's core business, their price increase, their personalization strategy, and their new partnership with Walgreens.

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

Episode 185 of the Jason & Scot show was recorded on Tuesday, August 20th, 2019. live from the eTail East trade show in Boston, MA.

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from the etail East trade show in Boston on Tuesday August 20th 2019 I'm your host Jason retailgeek Goldberg
and unfortunately Scott was unable to join us today so I'm solo but we made up for it with a great guest,
on the show today please welcome Amanda Tolleson she's the chief customer officer at Birch,
Amanda just finished a keynote here I know you mainly came to talk to us on the podcast yeah but super generous of you. Also.

Amanda:
[0:56] Squeeze me and you know to talk him.

Jason:
[0:59] Exactly which I think was wise of them because it seems like the audience really loved it and the topic was a tracking a customer who's inherently not looking for you.
So I want to talk a little bit more about that but before we do I measure most of our listeners are somewhat familiar with Birchbox but in my experience people,
don't always have the exact right perception about your business model so can you kind of give us the the updated elevator pitch.

Amanda:
[1:27] Absolutely and you're very right people usually know one thing about us but not the full story so far Xbox is a beauty and grooming retailer,
I'm really focusing on a new way of discovering Beauty and grooming Surly Discovery at the focus of our business model but still we have the full purchase model,
so you can actually buy full-size products from us as well as Beauty and grooming instead of beauty but we have grooming as well,
I'm so what we're best known for is the subscription box right kind of picking up the subscription box economy which is taking over the world in some ways.

Jason:
[1:59] You guys are sort of the Birchbox up Birchbox.

Amanda:
[2:01] Yes exactly yes yes exactly where so I got to stay until we get a lot of fun free press where it's like in the Birchbox of blank just launched it sucks or it's just sex toys I get some fun ones in there for sure so there's some like
pros and cons that we definitely have kick-started that industry.
Things are best known for that but we're definitely not in the business of just building a subscription box company or the business of it being away a better way to discover Beauty in particular because,
beauty is so overwhelming the internet options on the internet and an easy way to
explore discover products has to have a personalized set of products you thought a profile personalized that a product gets into every month.
You can just cover them in the ease of your home beauty regrouping and then we have an easy path to purchase where we have anything that you get from us in your sample box you can then,
purchase for full size on our website complete that pass,
and then we also have a focus on someone physical details we've had a physical retail store of Our Own in New York in this will get into we have a partnership that slave focused on that,
how did the end of the day what we're really trying to do is create an experience for the Casual Beauty consumer so this is a consumer that.
That really is not there by the industry beauty is not their top interest they don't spend a lot of time it was going to be easy efficient delightful exciting. There's you have more questions but that's kind of Genesis of Birchbox.
Is it serving a consumer or a better way.

Jason:
[3:27] Awesome and like today all of these these subscription Discovery boxes and different things like sound like kind of common but you guys are 9 years old,
and it was a completely foreign concept when you first launch so I'm just curious I know you haven't been there for all nine years you're far too young but the.
If you know like what was the origin story was that like a super scientific evaluation of a gap or.

Amanda:
[3:54] Yeah so actually do know it even though I know as I am so young in my teenage years,
it's hard to imagine that I wasn't business school at the same time as the cofounders answer to my best friend from business school and I was their marketing friend as they were like launching the idea explore ESO actually do have inside so really it was a mix of things are kind of the same or the business,
the business Insight story in the personal Insight Stories the business is a story is when we were in business school there's a lot of,
a lot of industries were having your seen massive growth in the penetration of online shopping I'm happening so clothing Etc right and what they noticed was,
beauty is not having that it was not having that grow within online it was but others were in the question was going to fly,
I was at not happening so the insides are being well because of key part of discovering Beauty the sampling is trying to products right so,
if I'm just picking from images online how do I know if that foundations going to work with me I don't even know what a Serum is right there's a huge part,
a critical part of the shopping experience for beauty that was missing in the way it was set up for copying the way other online retailers for other industries were doing it had to be something new and different enemy.
Unless it was just for replenishment which is basically what a way to the time is only replenish my shopping for beauty so instead of Discovery shopping in the personal Insight was just like who you know.

[5:12] That they are the two co-founders alien kathi are not that this beauty obsessed customer they're not they weren't like obsessive beauty industry wanted to get in it was more than,
they had a friend Molly who's the co-founder Force employee Birchbox worked at a magazine and she basically had access to a sample closet,
and she would send samples to Haley on the co-founders at business school with a note that was like oh I saw this I thought you'd like it this is why I thought you'd like it,
and that so those that like personal experience of like well this is a great way to discover Beauty basically someone slightly more knowledgeable than me who knows me well enough just any product
I trust and I'm willing to try even if it's something I've literally never heard of in my life so that's kind of like that that was an amazing experience okay can we come by in that inside of a,
a true Human Experience that was beneficial with this industry inside of why the hell is you know what can I say hello massari.

Jason:
[6:06] I guess just go market as an explicit show on iTunes.

Amanda:
[6:09] That's exciting.

Jason:
[6:11] Exactly your kind of risque.

Amanda:
[6:13] So the kids the kids won't get my insights I guess it's too bad so buying out with the industry inside that's that's how I was born with those two four two two things happening at the same time.

Jason:
[6:25] Very cool said she was getting Birchbox before there was virtually.

Amanda:
[6:28] Exactly they couldn't part of the experience before it and then like it was kind of how do you how do you grow it how do you make this so you know it's 7121 right so we have like an algorithm for example that takes your profile and how do you Skillet to be,
millions of people you can have that same Personal Touch experience.

Jason:
[6:45] My next question was going to be why isn't Katrina a South Korean influencer but now now I totally understand it makes perfect sense.
Now you are the chief customer officer of Birchbox which is a I'll call it in emerging tight.
So what what does a chief customer officer is it a better paid Chief marketing officer or.

Amanda:
[7:11] I'll take that back as a to-do on my to-do list for Converse.

Jason:
[7:14] Yeah that's your kpi.

Amanda:
[7:15] So really it's something I've seen happening a lot adidas D deciso direct-to-consumer businesses where.
At the heart of the Insight is about a consumers that a consumer need and ultimately the whole business needs to be focused on that consumer in building an experience with marketing is thinking about oh here's a customer when a Target,
and the rest of the company is not involved in that write the best marketing the best way to engage a consumer is pretty product for them that's really resonant is it mean
feels good feels their needs and then we talked about it so it's really to make it was really to elevate that concept of like we we as a company or focus on his casual Beauty consumer has repeating grooming consumer the entire company every single function in some way,
need to know about that understanding and using Corvette in their day-to-day decisions of what they're doing and there's a core part of our strategy rather than in marketing.

Jason:
[8:10] Awesome that makes total sense and it should clearly be paid better.
Then see him out. There's anything wrong with this email we have plenty that our friends the last question and you you maybe give us a little ready but how did you come to this role what was your free Birchbox experience.

Amanda:
[8:29] That's a pretty Birchbox I was on the Consulting side so this is my first quote on quote in new client side job I still some.

Jason:
[8:36] Congratulations on escaping as a as a current consultant people like you give me hope.

Amanda:
[8:41] So I I could have had but mix of jobs in Branson salting and customer research so did a lot of work around what is your brand stand for who's your Target customer
how do you take your bread equitation it into new lines of business from all different types of Industry
ended up I loved I still let you know I could totally end up going back to that side like that the intellectual.
Diversity essay of kind of those different problems that you got to get you to talk into all different types of people and companies is really interesting but had this,
you know urge to see like how do you follow it through all the way through the execution and what does that feel like and so,
ended up jumping into Birchbox really not and I am very much a cash app you can sing or not cuz I was looking for a beauty company job by any means but I think when you're moving to something new in a start-up the biggest to me the biggest turtle as we trust leadership,
even if it's a great idea if you don't have great leaders and you don't have good decision-makers then if they say doesn't matter so I knew obviously copy and Haley from business school so it gave me great confidence,
but I didn't have kind of I started the director brand marketing,
and then I'm going to see about overtime and then as I took on this job now Chief customer officer where I'm over the marketing team still but I'm also over are experiencing which is digital product creative content Community social as well as engineering.

Jason:
[9:58] So that is awesome and then as I mentioned of your topic today was attracting a customer who's inherently not looking for you,
so I'm dying to find out I'm teasing I already heard it so I know I know what you were talking about but I'd love for you to share Their audience time and what the the key points were but I I will start by pointing out,
like you upfront you have to admit there someone in the world that's not inherently looking for you what shockingly like some companies struggle with that that realization.

Amanda:
[10:28] Yeah yes it's really hit me as this focus on his casual Beauty consumers only we have to admit to ourselves is that,
they're not the it's not the thing they're most interested in their lies about that's it that's it in definitionally who they are they're not the video says they are there's a beauty obsessed with most of the beauty industry focus is on which makes sense because they're hyper engage hyper users that are
is there hobby is their passion and they're going to spend way more per person but they're really only maybe 15 to 20% of the total people engaging with UD,
and there's this huge white space of people which we call the council meeting is about 70%.

[11:05] And there. It's not like so what some people get confused when I say that's we're not going after Beauty and engage people that's another 10% or something on the bottom that they're not they're literally like give me my soap and that's it don't talk to me about it we're not trying to push a
boulder up the hill but we are trying to change perceptions of the industry beat for me they were trying to overcome this customer,
mostly it when they've engaged with a beauty experience they got into a beauty retailer are they've seen a beauty influencer let's say on Instagram they felt like this is clearly not for me.
This is clearly not designed for me as a consumer which is okay maybe I'll run in that store and try to find something but I don't I didn't enjoy it you know it's not for me and so the concept of beauty experience can be designed for them.
Is foreign is an Uber, this is very upfront that we have to get over and we have to think a lot about how do we look and sound different from other Beauty retailers in our advertising so that they will pause and look at our Instagram bad,
Atwood most of the time they're not going to look at it are in the influencers right now but we don't work with beauty influencers even though that's,
how to learn to do as a beauty company because our customers are not following Beauty influencers are following lifestyle influencers are food influencers and so those people can talk,
you know they already had the loading they can say hey.

[12:19] You and your beauty is not my top priority either but I found some interesting stuff via Birchbox it really improved my life and then it's just about being.
Where they are witches we can get into like the kind of partner with Lorraine butts just like,
we found once they find out that we exist in who it's for people love it our best customers are the customers who were not with this casual you can actually write us letters and say oh my God I can't.
I never thought of company could be for me if UTI discover these pot never heard of a serum I've never heard of dry shampoo but they,
completely change my routine in this amazing way but we have to get process that hurdle of getting over just like getting them to stop long enough to pause long enough to believe that this experience can be design.

Jason:
[13:04] Awesome to you perfectly framed a kind of daunting marketing challenge so how do you sell that marketing channels what were you talking about today that was a clever tactic in that way.

Amanda:
[13:13] So when is this is the view still a sheet for some Beauties offline so we are we've been online for most of our.

Jason:
[13:19] Wait there's an offline.

Amanda:
[13:20] There's something called offline it's new.

Jason:
[13:22] I'm totally.

Amanda:
[13:23] Is there a new and so you don't online a lot of it is like you have to drive the traffic to website right so that's Dino
I have to like an odd or it for shirt like a huge weight is just like customers like you they talk to their consumer but there's something is very active that needs to happen to come to your experience
I VS1 power off line is just as a passivity about it either they see you in a store window walking by and they stop in or
example just being in a place people already or shopping for our consumers are you shopping for beauty so and thinking about that we have partnered with Walgreens,
where are for sure the Casual Beauty consumer we listen lots of our studies like it's shopping drugstore Brands right there shopping at the drugstore for their
Beauty and if we can have a space right there the feels comfortable and welcoming and inviting and replicates all the amazing person experience we've all mine physically.
It's an immediate overcoming of that barrier that we have of getting attention because they're there right and they it's interesting and they're going to go check it out.

Jason:
[14:22] Very cool answer this is a sort of exciting new thing that you that's alive now that you haven't experienced inside a handful of Walgreens to start.

Amanda:
[14:32] 11 we started with 6 Plus December we just opened five more.

Jason:
[14:36] Got you in I know there's one in my hometown of Chicago other big cities that was nurse could find one.

Amanda:
[14:43] Yes we're in New York and Chicago and LA in San Francisco.

Jason:
[14:47] Perfect so you've got a bunch of the big Metropolitan is covered and what is the experience going to be when I walk in the store when am I going to see you different than a traditional Walgreen.

Amanda:
[14:57] Yeah so a couple things we focused on we're making sure that it felt something new right both knew but also,
self aware of the space it was in so if I knew I mean how can we bring the Birchbox brand to life in the space so we thought about what are the things that are.

[15:15] Most important in the experience of our consumer that they love about her subscription box are all 9 website I'm so things like I feeling warm and welcoming and,
not intimidating to this consumer so even in the design of the space I'm thinking about the colors we using Brighton friendly
lots of woods we use a lot of Home elements like wallpaper and like the tiles that you know the backsplash on your kitchen will use that element in part of our design is to make it and we've heard that we've had we've done some intercepts in the store people feel like,
warm is your friendly ass feels welcoming but also making sure that it felt,
it wasn't cut off from the rest of the Walgreens store so we're not trying to create this a store and sore feeling in the sense that,
oh I'm walking out of a Walgreens into a Birchbox as much as Walgreens and Birchbox are together presenting this experience that is you can very easily your shop across both.
Frosty of prestige brands on the table to bring it to the store for Walgreens and then also we definitely expect the Casual consumer to still be feeling her basket with him or drugstore Brands so making sure it felt like there's an ice floe,
and a key part of that too if there's a beauty consultant,
that we're only in stores that are the woods called their beauty differentiator storms the Walgreens has invested a lot in this beauty strategy to keep for them and they trained,
3000 stores they treat Beauty Consultants really help you with your knee is it in the beauty Consultants work across both are our area as well as the rest of the beauty.

Jason:
[16:44] Hey Santa by understand this at Walgreens that experience is much more of a sales assistant experience so they have a
A salesperson with a specific training and subject matter expertise and you're much more likely to get help and advice than you would in a main line Walgreens store for exam.

Amanda:
[17:00] Yeah yeah so this is it yeah that they have specifically trained Beauty Consultants that only work in The Beauty Department so we trained them are brands are trying on other so very different than the day it introduced.
I think a couple years before a partnership with us and he's already been on that journey and we will have that experience by coming together.

Jason:
[17:18] Show me to put some pictures of this experience from my Chicago store on your weiner show notes but so
Shopper walks in the Walgreen they're going to see this this
premium space that has a different feel but still organically feels like part of the the same shopping experience and is it going to be strongly branded Birchbox is it co-branded.

Amanda:
[17:42] Is evolution only rented Birchbox so you know that you're it's a Birchbox environment but again feels very fluid between the two and then we have some I really tried to bring to life,
so there's kind of design of what I talked about that also the actual a sitting Twitter engaging within the space,
the replicator Birchbox experience so how do you bring for example the surprise and Delight of the subscription experience to a physical store,
so we have something called the build your own Birchbox BYOB.

Jason:
[18:08] Which is often disappointing when someone finds out that it.

Amanda:
[18:11] Customers you don't have might have a different interpretation it's Dino so but the idea there is that you're able to.

[18:19] You know we have a stamp lately we have samples and get a pack and make your own Birchbox you know where was five or six samples you can tape home experience that it's a way for us to start a conversation about what the subscription boxes are for,
we focus a lot on having Indie Brands be a part of the experience they are discovering and depressy is brand versus a really well-known Brands because,
begin that discovery that Delight the thing that I would never have found on my own as a key part of it so that's a key part and then in the full-size shopping experience,
really focus on how and we learned this actually in our in our own store that we have launched and brought it to this was.

[18:53] How does a consumer actually want to shop physically how do you make it as easy into it as it is in the Box on our website to discover products list take what's a good cleanser for example the most Beauty retailers the way they categorize things,
so if I want to cleanser or an eyeliner I'm going to go to like 20 different locations will get all of the different I don't the only thing I know about the differences that there's this x vs R and Y,
how do I know what's right for me so the way we set up our merchandising was by hadiyah categories
more I say intuitively to the consumer rights cleanser I go to the cleanser section and then we have to think of it like a jeans wall and try to visualize if you don't have pictures or you have been a column
going down with my B cleansers and then you have horizontal going across which will say like detox or moisturize right or acne prone you know what what are the ways that we can help a consumer make a more informed decision about what could work for them rather than putting on the onus
on them to have to do a lot of things about the beauty industry to make episode.

Jason:
[19:51] Perfect so you've sort of a sort of things by use case our problem rather than by brand which I know the early days of cosmetics,
like in the department store the only way to shop was by Brandon so it's almost like you had to get some kind of education before you could even know what you were looking for.

Amanda:
[20:08] And it prevented Discovery rightly we actually find a lot or casual be the consumer if she before she finds out she is like my mom use Clinique and therefore I use Clinique nothing wrong with that but it's a great brand but.
You don't even don't know how to store something else or do you know where to start yours like I'm just going to stick with Clinic because that's what I know.

Jason:
[20:24] So in this section I can make my own box and then,
am I paying for that one box and walking out with it and I sent you a bought some samples or if I actually subscribe to Birchbox and the one I take with me is just my first box.

Amanda:
[20:40] We hope it's the latter we have both options but it's definitely an intro selling tools I want to just feel like how it's a fun experience we found with uses in events in general.
People love it it's like candy people line up to do this so it's it's kind of an it's an enticing experience to get people even into the space and we definitely try if someone's interested to up-sell them and say hey if you like this will you can get this box for free if you sign up for 3-month subscription,
for us obviously the goal is definitely to try to convert into subscriptions but you can also for it up price we could we charge you more per box if you do just one,
but you can just walk away with the box of him.

Jason:
[21:15] Perfect so I can buy a box of samples I can subscribe which as far as I know is sort of a new thing from Walgreens Walgreens hasn't had a lot of,
like subscriptions and replenishment service outside of actual prescriptions,
so that's super interesting and then I assume I can also shopping by the full-size product in this is an interesting part of the partnership to me you're bringing a bunch of.
Aspirational independent Prestige brands that,
historically might not be willing like wouldn't be willing to sell on the Shelf in Walgreens so you're giving Walgreens access to some aspirational product that they might not otherwise have.

Amanda:
[21:57] Yeah definitely a big part of you know I think in any great strategic partnership you want to make sure that you're bringing equal value to the table,
I'm in your sock equally solving a big business challenge for the other So Raven Birchbox brings to the table for Walgreens is innovation Wright County innovation,
9 years of focus on this casual committee consumer which as a.
David. They've been going after them too but they're up there more than Beauty right there so many so many things are selling Wares were so laser focus on knowing that consumer and then for sure our relationship or our existing relationships and Trust we have with our trusty partners,
is it a part of it and for them obviously bring us scale they bring us amazing physical retail experience we don't have and that just like being in the place they have it has a consumer of the casualties were there.

[22:42] We have a lot of locations so having that so yeah for sure a big bend a big Focus for Walgreens and for us is like bringing in great Brands so that it feels like.
Fullbeauty destination in the point is not that it's going to shift all to be this type of the Cindy Prestige brand that's not the 80s that we believe that consumer and likely experience they're going to want is to shop for.
There are more Indie Prestige whatever reason if there's a need or brand or product they like as well as their drugstore Brands and have it be a seamless experience across that they can shop.
Draper Temple and we do have a check out in our space but it's not a Birchbox only check out.
I just there to facilitate the experience if you want that but you could buy other Beauty Brands are in the drug store 2nd and Walgreens section if you want you can buy your toilet paper there if not it's made to feel integrated to bring them together and stay there.
More options and Beauty to explore and having all of that available to Walgreens customer is definitely a big part of their strategy.

Jason:
[23:40] Awesome in so I can totally
fill my prescription make a custom box and get some diapers and go pay for all of it at the the front cash register at the Walgreens which is cool so is like obviously you're getting access to all the
the organic
but traffic to Walgreens normally gets because you're you're bringing something elevated to the Walgreens experience are they marketing you guys at all or you doing any joint marketing are you doing any any any campaigns outside the store to drive people to these stores.

Amanda:
[24:11] Yes definitely they're very excited know both of us are very sad about the partnership and think of something interesting and new so we're both talking there,
4 in the locations in the area so we are working our customers are they are there. We did Big launch event.
For the storage to make sure like in the cities you are aware of it happening we've also have done download with some digital app,
before it's too late friends are people in the store being advertised being so there's a lot of a lot of focus on how are we getting not just converting who's there but also how we getting new consumers end in two different ways is there a,
one thing we definitely look at his are we getting people who shopped at that Walgreens before but I've never even engaged in the beauty category which were done anything like move it on right,
example of that Walgreens right getting them into the store.

Jason:
[25:02] Got it and so beyond that digital marketing is like if I go to any of your own digital experiences or Walgreens own digital like is there like can I find out which stores have the Birchbox experience.

Amanda:
[25:14] So are we definitely have you know what location was retail locations you can find out where we are as well as we actually do have a small digital.
There is no give you look if you just a Google Walk Birchbox Walgreens the most likely to Walgreens I'll come up where they talk about where we are but we do have a small digital shopping experience to,
exactly omni-channel with Walgreens I'm so you can buy there's like a Birchbox there's a Birchbox section all in the Walgreens website.
Well that is similar to everything I just talked about physically you can see in the digital with a different look slightly different look and feel a little more elevated a little more information and you can just check out,
name is offline the online you can check out with a full basket with other things from.
From their mother be sections are the paper and have it shipped to you so it's it's not as big yet where the focus has been on the physical but we definitely have that too.

Jason:
[26:05] And the super Advanced question so don't feel bad if we're not at like 10:30 blacked out yet,
Services riding so you and we'll talk about this morning at the sac that why you can do things like trade a box and do things like that,
can you do those like on E channel experiences inside of the Birchbox location so I can I do a return for example if I got a full size item or.

Amanda:
[26:33] I know you could not yet he bought one from our website you couldn't return it to the Walgreen.

Jason:
[26:37] The probably be bothered at the Walgreens you.

Amanda:
[26:39] Yes definitely yes those kind of their separate experience in that but if you buy a subscription you really slow into the Birchbox inscription experience and we have talked a lot about how do we.
Think about what is valuable in the intersection of the subscription and Walgreens so.
Example of something that we could have your box deliver to the Walgreens instead of your house if you wanted right that could be an option so I'm or you could.
We have customization as we said we'll talk in a little bit is a big part of our experience for people who live close to one of these Walgreens you can say the way to customize your box at 1:50 to go in and do build your inbox in the wall,
so we definitely are having a lot of conversations on how how do we create value by the fact that,
play there's no place like the full-size shopping in the lake getting a new consumer in our world but in trying to marry the subscription experience with the the Walgreens and how,
thinking about you there there's there we just we don't wanna just launched something just to have that we want to make sure it's a trade-in value.

Jason:
[27:38] And then one other question about the Walgreens experience beyond the stores that have this
physical presence I read that you also did an integration with Walgreens where there's beauty advisors in all the stores can sell digital Birchbox inscription
American tablets.

Amanda:
[27:56] Yeah so in all of the beauty differentiation sources but they call it the ones that are more depressed or more upgraded in Beauty the 3000,
yes we're at 11 physically but yes been 3000 Source we just launched this month actually any beauty Consultants can sell a subscription,
I'm to a consumer and one thing that were really interested in learning and testing there is that.
Can different than how we do online and digital is at one of the best places to best ways to explain that I have a Birchbox human-to-human in Dracula
talk like this here physically I have for a talk about the Casual Beauty consumer and what we're about
I always have people come up after it's like oh my gosh I had no idea I'm the Castle View to Consumer I would love this I thought it was for my friend who's the beauty obsessed so there's something about us,
human to human conversation that can really quickly break through that kind of going after consumers not looking for you that we're hoping to leverage in this
model the beauty consultant selling it so that's very exciting that's when we're launching and then in general were so kind of
playing around with formats so as we grow and we don't want to go to more storage we don't just want to roll out the same thing we want to test it were exploring smaller format subscription or,
only affordable kits like we do a lot of kids some which is going to bundling a simpleton to a theme so.
Really trying to still test and learn before we roll out so we know what works where.

Jason:
[29:21] Got you into one of the things that's really interesting me about testing Warren and especially like to.
It's complicated because you're you're not making beauty products yet so your.

Amanda:
[29:32] Wish we have we have our own own brands.

Jason:
[29:35] Dutch okay so we have some oven Brands yeah and Anna,
a plurality of of wholesale Brands but then you you amalgamate them into this new product that's called Birchbox right I think of you is a direct-to-consumer brand even though you.
Are you could one could argue your a wholesaler.

Amanda:
[29:56] Yeah we're both our retailer and have our own product which is this.

Jason:
[29:59] Exactly but so normally when you know the reason companies do directions to Consumer is.
Number one better margins and number to direct relationship with a customer so you get all the states that you can use to rapidly evolve and do test and learn and and do all these things and if you,
if you were to just sell your boxes to Walgreens and let them sell them to Consumers however they choose,
you you'd be lacking that day that you wouldn't know those customers there be a bunch of detriment and so you don't you see direct to Consumer Brands like struggle when they try to,
partner or expand with a a big retailer to get better reach but the relationship you guys are doing scenes,
much more novel in integrated because you really aren't getting disintermediated from that customer even though they're meeting you through the Walgreens and I wonder if that's going to be.
A model we see you anymore.

Amanda:
[30:58] Yeah I don't mean it's definitely,
harder to get there today but it's the only one we were interested in in the sense that yes it was right before I sent a strategic partnership that's kind of what I mean,
hearing about your product and sell it and see how it does not. It's not just a pure reach I guess that's a part of it but it's how we,
how are we influencing to get how we're trying to build something together that is new and different and how are we both bringing different skill-sets to the table that also sharing learning ISO as your reference data data the ability to share both of us.
Combine what we learn and share data is a new critical part of the setup of the partnership so that we have that dataflow happening between our companies and it's not.
It's not a ice not just set it and forget it by any means it's is how is that comes from believing this is a massive massive opportunity,
this is not an opportunity that's like let's do it in a couple stores not see what yeah you know is that I think.

Jason:
[31:55] It's a lot of work if you're just doing it.

Amanda:
[31:57] Yeah I like rays that like that because of belief on both as if this is a massive opportunity to build this together that we did a lot of work,
because I found the conversation started,
a year before we even launch of of what this partnership was it was a lot of alignment at the top levels of leadership of those companies that we believe it's a huge opportunity there for this is the type of investment really make this is the type of information we need to do this is
how much testing and learning the news that happened that were bad alignment was critical to make sure that we were doing this in the right way.

Jason:
[32:31] Got it inside of her listeners Walgreens is based in Chicago so we know Amanda said she's working closely with Walgreens with a basically means that she was visiting my home town and never drop me a line one.
But I'm not hurt I mean I am but but I'll get over it so I want to pit a little bit though the Walgreens extreme sounds totally cool definitely encourage our listeners to go.

Amanda:
[32:52] Yes please go visit.

Jason:
[32:53] Check it out and let you know I do think there's something here in terms of.
Future models for collaboration between digital native Brands and traditional wholesaler so it will be eager to follow it and I'm going to charge you to be super transparent about all those analytics and sharing with us.

Amanda:
[33:08] No no problems there with some.

Jason:
[33:12] Yeah yeah I'm sure I hear that stuff so I just.

Amanda:
[33:15] Minor.

Jason:
[33:16] Their suggestions so what's going on at Birchbox.

Amanda:
[33:30] Yes on the corps experience were really focus on evolving Barber products and be Innovative Innerspace in designing spiritually Catalina consumer and
one day tactic we had this year which is an enabling tactic was to raise our price for the first time so we never raised Our Praise,
and I nearly raise our price for the first time and then the point being so we can invest back in our experience and really improve it and continue to innovate,
I'm to talk about a couple of things they're so there's going to taking the course. We have right now and making it better every thing from the merchandising that's in it to the algorithm and how we match of people with products to contents over Ark,
Advil consumer you can probably imagine education is critical cuz it in there just not that familiar with the industry so how are we giving them.

[34:13] Having them know what a Serum is why you would use it right is like a baseline of information having more content in the box and then how can we evolve the experience of the box to an able not just the discovery piece but also if I let you know,
we're not trying to just make you discover forever if you find something you love and we want to help you purchase that so I'm a couple elements there that were introducing or just about to introduce one is the ability to swap your box for a full size item.
I'm so you know this sucks and you can pick from but if I'm like I don't want to discover do samples this month I like the full-size you can do that,
we have also related to that is we have this ability to have add-ons so you can have items shipped for free with your box so if you want to have items you,
love and discovered you can have a ship and then we introduced swap your box for.
Which is really out next month everyone we did a test around it was before like so you we have loyalty points as many retailers to what you can use to buy full-size items on the site so you can swap instead of give me a box that once you get credit and we can spend later,
and we also have our customization options we've always had which is just you can pick a sample that's coming you can pick up. Mint so trying to make.
Give the customer choice right to say there's a lot of reasons why your you may be very different points in the Journey of Discovery versus having found something you love it,
how can we give customers options and how they engage in that subscription experience every month instead of being in a.

Jason:
[35:36] Donna and tell and just to make sure I understand these are all sort of proactive experience is so I get some kind of
messaging that hey here's the box that scheduled to come to you this month and I have some option to opt out of getting more samples and instead get points or a full-size product.

Amanda:
[35:52] Exactly you're the man experience if you don't do anything you'll just get the personalized box for everyone just gets that with some people have some for some people to subscription the benefit of subscription is.
Not activity basically right.

Jason:
[36:03] Set it and forget it.

Amanda:
[36:04] So we definitely have a huge portion of our consumers do that but then we also have people who want more control more decision-making and their experience especially if they may have said oh you know I've discovered a lot of things I like right now I'd like to take a break from Discovery but I really want to know.
It's almost like the layaway concept has been around forever right layaway some of this money so I can buy that shampoo or mascara that I really like.

Jason:
[36:26] Well one of the.
Sort of unpleasant parts of a subscription business is even subscriptions that customers really value there's this phenomenon of subscription fatigue.
And so you know you can imagine I get a bunch of value out of the samples but one particular month I haven't tried any of your samples and they're all sitting around my sink and I'm having a guilty moment and then I get an email that the next one's coming and I'm like,
and I would argue this like subscription fatigue has been super challenging in like the meal kit.
Example so it seems like some of these amenities are clever ways to kind of combat some of that subscription fatigue and I can get some other utility without.
Turning off my subscription and then then and then you don't come back to the the samples when it's more fresh and exciting again.
So that's why make sense I'll be interested to see how that goes,
the reason prices had to be an entrepreneur all of the siege The General,
cheaper and there's a couple examples in retail that didn't go that well raising place I'm thinking about the JCPenney for example that you did that with some consideration.
Did you feel like.
You knew you would lose some customers as a result of raising price but they they weren't the right customers and the extra money would give you more resources to do a better experience for your customers that kind of.

Amanda:
[37:54] Yeah I mean the decision-making was more.
Less around Lake and now is the date we have to raise our brightest and more around we fundamentally believe we need to continue to evolve and improve our experience,
and we cannot deliver the value we think is demanded by our customers at the price point that we've been at we can't because other things for us to write like.
Should we delay shipping is having a big part of the price right we don't charge extra shipping included that's one of every year right like so it was just more of a reality check I like we can't like,
living in the reality of the world ran in the prices that they are we don't.
Really we can stand behind our product if we can't innovate and explore anymore and in order to do that,
we need to raise our prices to create the belief that we can create more value by doing that versus the cost of the of the rising and the prices but it was definitely I was just right but it's both exciting and terrifying.
For sure right changing your face after 9,
especially as the marketing head is going to be in charge of the comms and figured that was like definitely really scary and I think it came from at the end of the day our biggest value in the thing that's going to make us successful is the community policing us.
And then.

[39:04] We believe we had that and because we had that if we were super super transparent in our, so if you were about why we were doing it was very upfront about it we give them multiple months ahead of time that we were doing it.
What we are trying to achieve and knowing it would be perfect and that,
they would be on the journey with us and that's what we found me actually found amazing response from our community list they're waiting another still like we're going to see
but they were like we believe in you verse possibly believe you can create more value and better for your so you did it one time before we believe that you you can put this money to good use and we really found that are,
we got they had much lower we had about a Superfecta. What we thought might happen from a term perspective so customers leaving subscription is a much lower.

[39:49] We don't need no impact would just really amazing and we also we did some smart things I say in the price change a couple of things one was having some Legacy pricing so we have for our Aces which our customers are most loyal,
Empire that was a communicate if you be more transparent as a business is like if you spend like to be in Asia to spend $400 with us in the,
if you can if you spend that with us we can afford to give you a $10 box,
even though we're going to Beth Moore in it right and then for our current customers we basically provided a slightly lower we got like as pretty as long as they say a subscriber there continue to have a lower price for the new customer coming in yes we've already,
you know you already given us money we appreciate that you were going to give this to you so trying to do some smart things like that and then the price will be introduced with tiered.

[40:38] I'm so again to communicate their relationship or trying to hang out with our consumers if you subscribe on just the month to month subscription your price is higher if you want if you commit to 12 months your price is lower per month I'm just a just trying to be.
Upfront and make it is obvious to customers as we can what we.
What makes a viable customer to us and in what the will allow us to invest more industry.

Jason:
[41:02] Yeah I know it's only make sense in some ways it's funny I think of your subscription,
as analogous to some of the the membership fees at a retailer charges so I almost think of it like,
the membership fee I paid a Costco and then that enables me to then buy products or the membership I paid a Amazon Prime and coincidentally like Costco famously,
successfully raised that membership price in the last 18 months and Amazon is now.

Amanda:
[41:32] Oh yeah it was on Prime say I mean how many times.

Jason:
[41:33] Yeah it raised raised it a couple times and so it does seem like if you think of it not as the product but as access to the product.
Like there is some some president of that being successful so it sounds like,
it's it's it was initially going that way for you and that's a perfect segue to the Future so maybe leverage some of your previous Consulting XP
nice to put your future has had on 5 years from now when we're sitting here at the,
the 2025 Utah least how do you feel like the the beauty shopping experience is going we'll have a ball.

Amanda:
[42:13] Yeah probably just end up in a lot of Industries but just like.
Technology loves you like really into interact with a product like online with it feels physical today we know Birchbox.
We wants to know how these technologies that are merging where the weight alike.
Hack the all my friends having some way to sample and testing those to send you some papers in the mail but for sure there's a lot of technology which is you know.
Look at my face and what is the colors look like on my face or like I just think it's definitely to go in that direction of how can sampling online of beauty products be fully digital
I think it's got a long way to go over when I see you in a bit actually being
truly useful I would say but I think in five years I bet they're going to be a whole Suite of new technologies and products that are out there that help you.
Really discover and use products that can work for your hair your skin excetra via these digital interactive AI.

Jason:
[43:08] Oh I got I think you're right I think like whatever the virtual trying experience is today and there's already some evidence that today is virtual trying experience I'm now seeing some day that we're customers prefer,
virtual lipstick try on inside of a beauty store as a.
Physical Tryon because you know.

Amanda:
[43:26] Just how accurate is the accuracy is where it's like.

Jason:
[43:29] Sure sure they even in today's date it there might be a preference incident your point five years from now like one can only imagine how.

Amanda:
[43:38] Especially other I think I would see colors kind of different colors.

Jason:
[43:42] I feel like they could finally nail my Foundation color you think I'm looking forward to that cuz it's right it's a real challenge at the moment nobody sells this blotchy color I don't know.
I appreciate that and that I'd say that's going to be a good place to end but that's slightly too
too long because we didn't really need to talk about my my beauty routine that we have used up all our allotted time so if listeners have any questions or comments we'd encourage you jump on our Facebook page or send us a tweet.
As always is a great time to jump in iTunes and finally give us that five star review that you've been meaning to do
Amanda is folks want to find you online or you on the interweb somewhere do you have a do you use LinkedIn or Twitter.

Amanda:
[44:25] I only said yes.

Jason:
[44:26] Okay cool cool so LinkedIn is the way to go and we sure appreciate your time thanks for being on the show.

Amanda:
[44:32] Yeah it was really fun.

Jason:
[44:33] Until next time happy commercing.

Aug 22, 2019

EP184 - Tapestry CDO Noam Paransky

Noam Paransky is the Chief Digital Officer at Tapestry, the parent company of Coach, Kate Spade, and Stuart Weitzman.  In this broad ranging interview we discuss Tapestry's vision for a Global Digital Experience, some of the challenges with global localization, organization structures for a house of brands, and the future of commerce.

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

Episode 184 of the Jason & Scot show was recorded on Tuesday, August 20th, 2019. live from the eTail East trade show in Boston, MA.

http://jasonandscot.com

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

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from the etail East trade show in Boston on Tuesday August 20th,
2019 I'm your host Jason retailgeek Goldberg and unfortunately Scott wasn't able to join us today so I'm solo
we're going to make up for it with a great guest joining us this morning is known bransky he's the chief digital officer at tapestry regular listeners will likely remember the tapestries the parent company for Coach Kate Spade and Stuart Weitzman
welcome to the show no.
We are thrilled to have you I mentioned in the in the intro that tapestry is sort of the House of Brands and I know you're relatively new to the real can you come and talk a little bit about how that
sort of evolution from coach to the tapestry evolved and what the thought process behind that.

Noam:
[1:18] Absolutely so,
tapestry is obviously the holding company for family of Brands the idea of building a luxury brand holding company has the vision of our CEO of Victor Luis,
who I report in to as.
Coach first bought Stuart Weitzman and then is the Kate Spade brand was integrated into the portfolio,
wanted to have a name the conveyed the the aspirations of our company.
And ultimately you know we we describe tapestry is a new york-based house of modern luxury lifestyle brands in our ethos is really focused,
on luxury being inclusive in its nature.

Jason:
[2:07] That's awesome and I'm always fascinated by the chief digital officer role I found there's a fair amount of diversity and sort of the scope and approach should I just be curious what what is a CDO do at tapestry.

Noam:
[2:22] Certainly there are many different ways to tackle the role of the digital leader in Enterprise.
Designed a few organizations as a relates to to digital and in how to approach it and,
fundamentally if you are a single brand entity versus a portfolio entity there are some different considerations in terms of thinking about the role of the organizational structure,
Etc,
specifically with tapestry we're trying to build a global scale digital capability because ultimately tapestry is a platform so our visual activities at the Enterprise level should be building a digital platform people processing technology,
ultimately the end of them responsible for all things digital in the Enterprise,
but there is a web of ran digital leaders and then centers of excellence that we're building the crate that scale platform so.
Fundamentally about being a team captain and making all of these things sing together creating scale and leverage brand Independence integrating those things to create the Desire X team approach and outcome.

Jason:
[3:30] Got you and I'm always curious in a house of Brands there's kind of the State versus Federal right side sometimes a CDO is like a center of expertise that the the brands can use,
sort of at their discretion and other times did you lose more federalized in this video is like putting guide rails in place that all the brands of my respected Apollo is there like.
Eyewear in the spectrum is tapestry.

Noam:
[3:56] Will potentially somewhere in between or altimate lie in the midst of our journey of really articulating at a detail level exactly how everything is going to work as a as in four months in and we're building this Outlet.
My view is at the Tactical level there's more sameness than different so how we think about our Tech stack,
wireframes General experiences within the guardrails of what the capability is gets built at the Enterprise level,
the brands are ultimately masters of their own destiny in terms of the stories they're going to tell the assets that they build to create those emotional connections and we try to make sure that basically at the Enterprise Al will do plumbing that we,
develop the tactics excetera.
Allow that amplification to occur and we're learning across the family of Brands so is something is working for someone else we can I take that and we can make it back to another bread hey you guys should try this of course it's going to be their voice their content,
their DNA but ultimately the journeys that we can build in the successes that we can have can be pretty Universal as we as we approach them.

Jason:
[5:01] That's why it makes sense and you mentioned you're new to tapestry but you're not new to this kind of role can you talk to us a little bit about your background and how you came to the role.

Noam:
[5:10] So my last role was very similar role with The Gap Bank portfolio Brands Gap a very mature and her prize platform,
I had had a universal shared shopping carts and something like 2004-2006 up the the platform the tech stock was already,
integrated as I enter that role so that role is more about you know organizational I meant and you know evolution,
I'm versus building scale Center of Excellence so here it's,
or a new is a portfolio only two years old and name as is tapestry so taking learnings from that rule adjusting and then applying them to the role here and then before I was it,
Gap and cannot rule out as a consultant for almost two decades doing digital transformation type work.

Jason:
[6:00] Got your listeners can't see the disdain on your face when you said consultant.

Noam:
[6:05] Cuz I cuz I was looking at you.

Jason:
[6:07] I know I didn't take that personally I told her appreciate that like well hopefully it gives me hope that my career will eventually take a better turn so.

Noam:
[6:14] You can always home.

Jason:
[6:15] Exactly it's important to have dreams of nothing else and I feel like that that Circa 2005 Gap Inc website is permanently ingrained in my brain because like in that year,
every client was you know having this debate Universal card,
separate sides and you guys were sort of the gold standard for having integrated that Universal part so I your your side.

Noam:
[6:39] I can't I can't take credit for that for that decision but it was it was very wise for that portfolio at that time.

Jason:
[6:45] Yeah but it is funny it's it's I feel like everybody is in a different situation you have at the moment 3 luxury brands in the portfolio but,
they they do have pretty different value props and I presume sort of core customer targets.

Noam:
[7:04] Did you occupy distinctly different space,
so in terms of thinking about the evolution of the platform and potential points of integration you certainly have to take that into account versus the very clear shared space that was occupied in my house roll.

Jason:
[7:21] So obviously you came here today mainly to be on the podcast but as a.

Noam:
[7:27] Without question.

Jason:
[7:28] Yeah but you are super nice guy so you did agree to also do a keynote at that you tell.

Noam:
[7:33] Absolutely I'm just I'm just here to give.

Jason:
[7:35] Yeah you are a giver and I I just got to catch that Keno but the title was reimagining the global digital experience which it sounds super simple.

Noam:
[7:45] Very simple yeah it's a small world.

Jason:
[7:47] One sentence clean out your drop the mic and walk out and for people that were unlucky enough not to make it like Kenny I like what was your high-level POV what were you guys talking about.

Noam:
[7:57] A lot of it was,
if I'm really what I wanted to convey the audience is just to share how they knew in this role how I think about a portfolio of Brands and how to,
tackle building capabilities and so for me it goes back to this how do you create,
a scalable Global platform people process technology I think,
in our industry but especially to the piers that we work within the other functional areas you say digital and they think two things right off the bat website and Technology.
And of course digital has become so much more than the website and it's getting more and more disaggregated across,
and touch points all over the globe but he then no social climber social activity and,
and how that's kind of the first point of ideation and inspiration yes ultimately all the way down to the website and also into the store but it's much more the website and it's much more than technology it's the people
in the process and then yes the technology all those things need to work together so there's a lot about just articulating to the audience,
how I was thinking through those elements and hopefully they could get a sense for how they could Advocate and their organizations to balance those things out to advocate for what digital can be and should be and how to integrate,
the rest of the organization at large into those activities.

Jason:
[9:22] Yeah and it is funny because I'm a hundred percent agree it's super common mistake that when people think about it they.
You go right to the lowest common denominator and the technical bits and bytes in the platforms and.
Sure those are important but so often the success and failure is much more predicated on the experiences you create with those platforms and I would argue
the hardest part of all of this is the organizational platform and getting the sort of the alignment and governance and getting like all the talented people in an organization running in the same direction instead of different directions.

Noam:
[9:59] I think that's the challenge of leadership across any discipline ultimately bringing digital experiences the life are very,
cross-functional cross-discipline is kind of where the rubber meets the road for all of these things it's it's the kind of first place that they converge and therefore was a very complex dance needs to occur to execute that,
successfully night and I think that's a lot of what's missing in today's retail environment is bringing all the disparate pieces and ideation and,
objectives of the organization distilling that down in the kind of clear experiential and functional swimlanes that then be executed against.

Jason:
[10:38] And doing all that for a single brand is difficult. You know I give you your blue belt save that if you can,
even just get that alignment in a single go for a single brand when you had multiple Brands and different stakeholders with you know they're starting from different povs.
I getting their skills like that brown belt and then we have to do a global issue and so many different markets have different sensibilities and.
Structure and experiences in us may be very different than what the right structure and experiences in China for example.
I'm so pretty good luxury one of the things I find fascinating I want to put words in your mouth but.
The majority of luxury brands in the US are not super excited about.
Trying to sell through a platform like Amazon for example in your silent me nodding.

Noam:
[11:30] No comment.

Jason:
[11:31] Like obviously every whether you want to or not every brand,
has Amazon there's lots of interesting conversations about that but the majority of luxury brand so far have made the decision that it's it's not brand additive to be on a you know everything type store.
And like obviously we've seen your brands.
I continue to invest in their own digital properties in in my sense is that why you sell through wholesale the majority of of tapestry sale.

Noam:
[12:00] House Majority is correct.

Jason:
[12:02] Direct-to-consumer through both your own retail stores and your digital properties so now you get on the plane fly to China.

Noam:
[12:10] Awesome awesome.

Jason:
[12:12] Sorry you have to I actually think it's super cool it like yeah but one of the things that super fascinating to me about China is.
Owned properties are important in you have to invest in them it's extraordinary difficult to conduct transactions in high-volume on your own properties in the the consumers are just been habitual.
Does the team all marketplaces in the JD's the world.

Noam:
[12:36] Yes that is the prevailing consumer Behavior.

Jason:
[12:39] Exactly so even a luxury brand generally has to have a T-Mobile store and you but you know what I I'm assuming you guys do as well.

Noam:
[12:48] We do is Stuart Weitzman our other two Brands currently are not Auntie mail but that is that is where the consumer is transacting digitally at scale in China without question.

Jason:
[13:00] And one of the like obviously that's Ali Baba's benefit one of the things that's really interesting to me you'll get a big Market Place in the US and all of that product,
is still indexed on Google so even if the the consumer starts of Journey on Google if that product exists on Amazon they're going to find it on Google and Amazon is likely to win the sco when it's going to snow.

Noam:
[13:21] There's a lot of forks in that road and I question.

Jason:
[13:23] The Amazon specifically doesn't allow their their pages to be indexed by bat out so it actually.
Almost makes it it's a huge disincentive to start a product search on the search engine in China like even more so than the US.
Consumers just go to Team all the start that search because that's the product catalog of done if you will.

Noam:
[13:46] Yeah I mean the journeys are familiar different in China on.
Many many layers the percent of Journey starting in search where they ultimately end up is certainly one of them there's also a big difference for between team on Amazon in terms of customer data sharing,
very very different approaches between T-Mobile and Amazon so built the whole digital landscape there is very different both in terms of where she transaction China what her journey looks like,
and ultimately the the Platforms in general are quite different whether it's the $0.10,
platforms whether it's team all-weather is Little Red Book there's a whole different ecosystem
in China so as we think about China we at we announced and teased are trying to next round of June our last earnings call and that's really going to be an effort.
To invest in local China ecosystems and teams to.
Adapt in leverage the ecosystem that's in China and then plug into our Global ecosystem where that's appropriate self there to be certain activities that need to be done on a on a local basis and things like,
content that we want to leverage globally and frankly bi-directionally so that we're creating content China and we're lovers and other markets and vice-versa but creating those points of integration but also the regional differentiation that China requires,
and not focus.

Jason:
[15:08] If that wasn't complicated enough one of the interesting Dynamics there so many cities at such ridiculous scale that people don't even understand here.

Noam:
[15:19] Is there a funk of forty or cities that are bigger than Boston that.
Most of the people are in the room today have never heard I would I would bet any amount of money that that's the case so that the size of the cities in China the rate of growth the speed at which the revolving as is quite breathtaking.

Jason:
[15:34] Yeah it is amazing and it is but it does create this interesting challenge does Tier 1 and tier 2 cities have pretty robust retail infrastructures and so you you can tackle luxury by opening,
gray brick and mortar and having this amazing high-touch experience that the the tier-1 City Chinese consumer like has mostly come to it,
for luxury go to that chair for City when your point is still bigger than Boston and there may not be that brick and mortar retail infrastructure and so my sense is a lot of brands are thinking.
It's simply not going to be possible to scale brick and mortar to all of those cities and so in some cases we're going to have to LeapFrog.
The in-store experience and served as customers with a new digital Ledger experience that like frankly I'm not sure anyone's perfectly invented yet.

Noam:
[16:25] Now I mean there are a number of challenges and opportunities so as we think about our business China represents,
first the coach brand China has tremendous awareness and brand equity and said it's an amazing business to be a part of them to work with.
And we're looking to provide that same kind of scale to other two brands in China but,
I think what you just described represents the opportunity that is China so while there are the issues of what is the retail footprint look like over time how does that start to mature at the same time,
you can kind of say there's a certain destiny,
to that because ultimately the infrastructure will propagate these are millions and millions and millions of people in these cities who aren't serve bye-bye luxury malls.

[17:05] Then there's the transactional piso is our objective in 3rd or 4th tier cities to,
transact was it to build the brand awareness and desire ultimately a lot of those people are coming into first and second-tier cities,
is Taurus and so they can purchase in those cities but just even though ensure that
are brand awareness and desires propagating into those markets bills that future Equity as the infrastructure of olives and then of course transacting digitally as possible.
Ultimately when people are spending that kind of amount of money,
in any country let alone China for that kind of product that there's that desire to
look see feel touch and experience that kind of immersive 360-degree experience inclusive of the stores and sell those things have to get into a sink,
overtime but will continue to extend our own properties into China will value 8
Partnerships with others but ultimately I think the number one objective is to to penetrate without awareness into those in a 3rd and 4th tier cities and make sure that were,
one of the top brands in consideration for that consumer as the infrastructure develops out and as they come into first and second-tier cities to visit in the shop.

Jason:
[18:18] You said it perfectly articulated one of the tensions that I think is really interesting and luxury customer experiences.
Utility inconvenience versus sort of experience and engagement,
it's over 4 years and you asked like the gold standard for customer experience in retail was our friends at Nordstrom you know that the staff is famously and able to do anything necessary to serve the customer in 4 years
they scored the highest in any way you would measure customer experience or satisfaction.
But in the modern era it's kind of funny or modern I should currently some was going to give us into this in five years and laughing at us going that's the mall.

Noam:
[19:05] For sure.

Jason:
[19:07] Today Amazon actually scores higher in a lot of the customer satisfaction in the X's then Nordstrom and they're obviously not doing it by,
doing that concierge high-touch bespoke experience better than Nordstrom but what has happened is they,
change the dimension and they've made a low-friction inconvenience and speed the things that.
Customers value right in luxury like I don't think the customer has shifted that they don't care about that sort of Engagement and bespoke experience but I think there are occasions in touch points when that low friction.
Convenience is super important even for luxury brand and their other occasions when that high engagement is super important and I wonder like how you think about.
Sort of balancing those two things in Franklin even understanding what the consumer wants at any given moment so you can sort of deliver on that.

Noam:
[20:07] That's the age-old retail challenges give the customer what they want and sell a lot of what we think about what we focus on is,
how do we how do we get to some ground truth about that,
in terms of the the MPS of say one retailer against another at least in in my travels would have seen is the demands are different,
so if your replenishing toothpaste,
what will get a high mtscores fundamentally different than you know that's $1,000 drafts or handbag the expectations are fundamentally different the dimensions are fundamentally different even if it's the same consumer,
and then across different customer cohorts you have,
just different frames of reference it's the same reason that I'm like I TripAdvisor a 3-star hotel might be the top-ranked but surely on a like-for-like basis if the room was $1 they wouldn't get the same score there's the context of the.
The price and value so is released to Amazon compared to someone else there's a lot of Dimensions to to consider but I think for us.

[21:08] Where we where the customer wants to be frictionless of course we want to be more fresh unless where the customer wants to be educated or have some more ceremony around the transaction we need to provide that as well,
and ultimately this is we aspire to have this kind of Lifetime engagement with the consumer of course everyone talks about lifetime value but.
When you're a luxury brand you're playing as a very long game around being,
consistent with high-quality and backing it up with service for perpetuity and that's in that's what really separates,
a luxury brand from a brand that's native from or transactional because ultimately that it's it's the power of time the crates that permanence in that true brand value and that's the stewardship that were responsible for,
for me within a set of capabilities that then prop up the brands and their day-to-day activities to allow that,
two occurring continue to evolve against the changing consumer landscape but that's that's the reality the difference between like the ultra Ultra frictionless environment you would see.
Does someone like a value retailer on Amazon is really trying to play in and then in the luxury space we are trying to provide but consumers perceptions of luxury will evolve,
it will need to evolve to a certain extent to meet the customer were there at while providing that longitudinal stewardship of Our Brands.

Jason:
[22:31] And I'm sure it's a small cohort but I have to imagine your favorite cohort are the people that buy thousand-dollar handbags with the amount of consideration that they bite toothpaste.

Noam:
[22:40] Without question yeah we're at work we're fine with that but it but at the end of day even if we get the transaction like-for-like.
Yeah we want to ensure that that transaction comes with that emotional attachment that.
That that aligns with that lifetime value cuz sure it's great to have the thousand-dollar hand-eye but we do want,
their next and I was he want to sell him some ready we're at we want to sell him some shoes and so ultimately we just want to make sure that they feel,
really good about the purchase and they have this Affinity to the brand that they connect to this great experience great product excetera so even if yeah we could get many one second one and done purchases ultimately,
our responsibility is to create that deeper level of Engagement.

Jason:
[23:29] Luxury was a little late to the digital game for a long time and that you know some of the luxury houses were sort of famous for
our brand is built in the dressing room not on the web page and while I understand that sentiment I feel like,
consumer behavior is necessitating that luxury does figure out digital and I think we are starting to see.
More segments of luxury Shoppers that use digital at least as a part of their shopping Journey or their primary shopping Journey.
Is there any examples out there that you think I should have best-in-class of recreating that brand engagement that that you would traditionally have in a great store on a digital property like what is the analogous experience.

Noam:
[24:17] I don't think I've truly seen that yet I mean I think for starters the statement that luxury is kind of late to the game II think that's technically and tactically,
accurate I think the interesting piece that is hard I think for us digital professionals to absorb.
Is that the traditional luxury houses have had a tremendous run over the past five or 10 years despite the fact that they didn't,
have these big investments in digital and that just highlights that first and foremost it's a Brandon product game,
and so if you have what people desire and I think if you look at say a Nike as an example if you have something that people desire enough they will go to the most friction Laden experience possible like lining up around the street corner overnight,
to get their hands on that products so first and foremost and I'm part of why I came to tapestries I wanted to come to a company that was really focused on product.
Because it starts with great product is a digital practitioner I can't I can't sell,
digital right is IT consulting I guess I can sell digital in-house is a leader I cancel digital digital has to be a supporting element,
and if you don't have product that people desire it doesn't matter how frictionless or how inspiring your digital experiences that the dots are connecting goes back to the,
team sport stuff that we were talking about before so luxurious Gwen quit late to the game but are the masters of maintaining and building brands for you know sometimes decades and creating that product designer and inspiration.

[25:46] So being in the space I want to take the connective tissue of that piece
and build a great visual platform the connect that into and I think that that was damaged us as we hopefully continue to build our portfolio over the years so that's that's what I think is super intriguing about this proposition in the in the luxury game but
I think it also highlights that,
digital isn't always as important as this digital practitioners would like to thank it's got to be connecting into a greater healthier.

Jason:
[26:16] No I I told a green item I didn't mean to imply that what genus are who have two Bunch on the table by not moving earlier.

Noam:
[26:24] Well maybe maybe it did but man I mean you know some of the players that done tremendously.

Jason:
[26:28] Yeah and for your point.
Having a product and having that mindshare with the customers ultimately and a much more valuable resource than being good at Digital Light in back. Even argue we're going to an interesting phase right now we're a bunch of,
people that I would characterize as good digital,
practitioners including some places you've words are struggling at the moment there are some some of the the best most successful retailers in the space,
are not necessarily particular good a digital so I absolutely don't think there is a pure,
correlation between being great at digital and being an economic success it's,
it's one element of that overall customer experience and while I can my day job I like to talk it out of the lot it absolutely is not the the most important element in that.

Noam:
[27:23] That and I think over the longer. These things will play out because ultimately customers have an expectation expectation that there are the places a shop or going to become more.
Customer-centric more personalized if you don't have those foundational capabilities it will become a greater challenge but so many elements at play two to bring together.

Jason:
[27:43] Yep yep and where is early days but we're starting to see.
Some third-party digital retail emerge that's focused on luxury and trying to cater to luxury and it's it's it's.
Timmy I think the jury is out on whether they have the exact right experiences or not but it's it's going to be interesting to see if they start to change customer expectations.
Bare luxury shopping we should be watching them closely whether we are in bed.

Noam:
[28:09] Yeah I think.
I think it's the experience of experience has evolved across all sectors right it is changing consumer expectations and perceptions and so in my position I got to be close to that and see,
where a customer wants to go and try to ideally be a step or two ahead so that we can build into that.

Jason:
[28:27] So what's pivot for a second we talked early on about like one of the difficult most important parts of these kinds of digital transformation being the organization how does tapestry structure itself I do you have all the.
The digital expertise like federalized and you support all the brands are there.
Digital folk sitting on each of the brands and does the digital Merchants next to the brick-and-mortar merchant is it the same person.

Noam:
[28:55] It's it's a I would call an ex and we're going from point A to point B with a creation of my role but ultimately.
We were independent brands that rolled up in the one into one portfolio so each brand had their own digital capabilities,
digital it was first federalized and now we're trying to create centers of excellence to then plug in and create scale,
for those Brands so it's going to be a next ultimately it's a team sport the.
The site merchandising the assortment architecture the day today commercial plan in those decisions were going to reside in the brand and then,
the the foundational capabilities the plumbing the enablement,
will be in centers of excellence so we're looking to bolster or digital teams I'll put in a Shameless plug like I did this morning but we're hiring for tapestry across all,
digital disciplines roster Jensen pull string within WinCo brand functions but ultimately for it to work properly,
everyone needs to act seamlessly it becomes a more specialized model than when you have distinct brand teams without the federalization but it's a again,
Amex so that ultimately folks going to be more specialized more focused and then were,
we're learning across the portfolio you talked about him goes like the the blue belt brown belt black belt.

[30:20] It can be difficult to operate in a portfolio because you're trying to trying to build a lineman and consensus to a degree right and you've got disparate opinions you ultimately need to build and Define a demand management process today,
you're clearly hearing articulating and partnering with business stakeholders to say,
you want this capability what's the value there's the dollars and cents piece the input and output related to cost and then benefit was also a strategic element you have to incorporate and then each item is not just its own business case but,
things connect together to become greater than the sum of the parts.
So you got to you got to manage through that which is a challenge but also an opportunity cuz you get a broader View and then similarly in terms of implementing things,
There's an opportunity to get one partner one brand to try something another brand to try something else and ultimately you can move at greater velocity cuz if something works for 1,
my past experience is about 99.9% of the things that can quit win 4-1 win for everyone,
I think one occurrence where it was did no harm and then the rest one so you can you can kind of with a portfolio more quickly propagate you do get to some scenarios where
Regional differences really do manifest especially on the experience and then the the third party partner enable mint front,
they can be somewhat the stink but a lot of these things will propagate successfully across a lot of the globe.

Jason:
[31:48] I think that maybe another one of the advantages of Euro versus mine is.
Well you have a portfolio there's some commonality to that portfolio is a consultant I have a probably a much broader portfolio and it's definitely true in my world that there's things that can win for one client and actually do arm for another client.
And like you know those warnings are real tough it makes it it makes these.

Noam:
[32:12] So that's why your test that's that's the beauty of of structured test.

Jason:
[32:15] Exactly I was just going to say like it is to me it really underscores this danger of best practices right in his notion that there is.

Noam:
[32:22] And benchmarking and yeah there's that you have to apply contacts that is a former consultant to a current one right there's always there's always that contact store marketing efficiency will if you invest,
what's the Benchmark on market efficiency if we invest $1 will get an Infinity return,
if we invest a billion dollars will get a much lower return because ultimately a lot of the media's biddable and there's an audience sizes and all of the supply-demand,
economics come in the play as is overall aggregate brand Health sobran that's healthier and sometimes scale channels much further than a brand that's in a different stage you need to think about the funnel composition differently.
Yeah these things all have to be taken in context and you got to be able to read the the distinct numbers.

Jason:
[33:05] I think you just crystallized the failure of Facebook marketing in one sentence right there no data driven decisions like show me the data if we're going to go to the pinions let's just use mine.
Almost no one takes that advice but I'm I'm trying.

Noam:
[33:21] It's very clear though since I since the concise mask.

Jason:
[33:24] When confronted with the risk of taking my opinion people are suddenly much more open to collecting data.
Yeah and I want to give it today. But just one car to find question you mention you're hiring for digital talent in New York you just moved in the cool office space in Hudson yard.
So you get if you working digital at tapestry you can literally have Mama Food fried chicken for lunch everyday.

Noam:
[33:51] You can you can watch people crawl along the vessel like an ant farm every day lots of lots of fun things to to CVI we got great new offices at Hudson yards this beautiful place and I,
we were one of the first tenants maybe the first tenant in Hudson yards and so the team is having a live through construction for a couple years when I join that construction was kind of finishing up so I get the benefit of this whole new kind of,
City from scratch finally fully functional at the coast which is awesome.

Jason:
[34:20] I'm personally hoping that that's also style customer experiences don't catch on too much as I out of shape retail consultant it's a disaster for me every.

Noam:
[34:29] It does prove if you build it they might come.

Jason:
[34:31] It does indeed feel like Mama focus should have been at the top of the vessel maybe would have made sense but I tease data,
one of the things that we talked about earlier in the show is this whole notion that like your digital properties have to wear two hats.
Have to be transactional when a customer wants to buy something but they're also the brand ambassador and they are they.
Best digital dressing room and I feel like that's a,
a potential challenge for attribution right so if I'm equipped and I'm selling a $20 toothbrush I want every visitor that comes to my site to buy a toothbrush in that visit right and so my answer jimano's pretty simple like what,
percentage of the people that came to my side.

Noam:
[35:16] Conversion rate is black and white good or bad.

Jason:
[35:18] Exactly but in your world there there's a ton of traffic across all your your digital properties that may not consummate the transaction but may have been wildly successful for you is a bran.
So do you have a super robust attribution model to sort of account for that is that like something a.

Noam:
[35:39] We're working on that I mean I think there's I think there's a few layers to the cake there so attribution My head goes first the marketing and how do I think about marketing efficiency so we're going to tackling the typical econometrics models to,
understand Diablo left more rigorously were talking about some Alpha Pilots with some Partners to help us kind of balance,
econometric models and multi-touch attribution models there's,
there's a whole journey that that were going to be undertaking I think some of your question all he's also gets into,
the context of Journeys in Journey productivity and objectives at the session level and then objectives at the,
visitor level and we're really looking to unpack that as we tackle rebuilding our experiences as we unify,
are platforms over the next year or so and it's a really meaty exercise to get into I think the important thing.

[36:31] Is to not get trapped in the in the historical norms and quit best practices but letting the data unlock what's really happening.
How do we think about if a customer might come back 6 times,
before they didn't go in the store by handbag how do we track that progress how do we understand that and how do we evolve and adapt the experience at each stage is really where are,
thinking is that but the idea of conversion being black or white or a car abandoned being bad carb and may very well be highly predictive of the future store visit and we can do that as being a very productive activity cell,
we're really trying to get into the depths of the data and understand it and not get into the typical funnel analysis cuz we're not playing a session game,
and really trying to think about,
what does she want to accomplish and how do we evolve a morph that experience to make sure that each touch point is a creative and to me that's super meat is a very complex,
but it's really something that we can sink our teeth into in our space and if we get that right that creates an advantage in the marketplace.

Jason:
[37:39] Yeah that makes total sense it's funny.
A lot of digital amateur companies will come to me as a consultant and they're like hey we built our funnel and we want to hire you to double our conversion in the funnel and my smart aleck response is always,
that's super simple we're going to stop letting all this unqualified traffic coming.

Noam:
[37:57] We're only going to let repeat visitors back to the site where done.

Jason:
[38:00] Exactly and yet no one's taking me up on that approach I proposed it many times we got to figure that one out.
So I want to give it to the future but before I do I had,
one more specific questions about about customer experience that came up in your session you mentioned in China that the brick-and-mortar experience that luxury customers expect a super high touch experience in so you talked about some of these,
wildly successful sales associates that are.

Noam:
[38:32] Tens of thousands of social followers.

Jason:
[38:34] And to me that's actually the most interesting thing like I feel like that's a common model in China is the sort of influencer as sales associate.

Noam:
[38:45] The importance of influencers more liberal even more important than I didn't hear you.

Jason:
[38:50] I'm actually very bullish on influenster other than the difficulty in scaling and sometimes and to me that influencers I care most about are those those micro influencers it's not the.
The paid million follower sorting out to me that's that's broadcast advertising that does Micro influencers are super powerful scaling on ends up being the challenge,
in China One of the cover ways they scale of me is they have all these employees who did they turn into influencers you own it.

Noam:
[39:20] A volunteer but yes.

Jason:
[39:21] Well sure you own a bunch of stores with Associates that likely decided to work in your store instead of another store,
out of some strong brand Affinity in brand loyalty like is that an opportunity for luxury in the US to do a better job of enabling the employee base as home phone service.

Noam:
[39:44] I think it is I think the China right now allows for the greatest scale.
To really scale amplify that one to one engagement and really dig in and in refined that.

[39:57] Then take those learnings and then adapt them for the us but I think generally especially in our space,
the the sales associate is a central figure in engagement is a huge opportunity I think.
Today the the lens is a little too limiting where we we can I get boxed in dequeen Co clienteling systems and so okay you so she can send an email or a text look very,
rigid views of the engagement based on,
the platforms that people buy versus thinking more broadly about the clienteling experience and then how do we identify where that associate has,
a potential Central role in that engagement and continuing the nurture that cuz again we're playing is long game in our space and.
You know what what would appear play like what an Amazon with a low-friction can't replicate to this point is that human connection that that sales associate,
is creating and so I think we've got a plate of that strength and figure out how to permeate that more broadly in our experiences and engagements that's it that's a lot of what we're thinking about him thinking about you blocked out of how we parse out the globe,
and where we have this permission to engage at this huge scale at a very personal level.
Build and refine our view and tactics and then take that and then look to employ that in the rest of the globe I think u.s. space companies tend to take a u.s. Centric approach.

[41:20] Take the Playbook here in just kind of push it out and there's a lot of,
Beyonce old stories about that so I think it's more about learning globally and having this by directional sharing and testing and evolution.

Jason:
[41:31] It's an interesting funny I do talk about one of the the best ways to compete with Amazon his obviously to sell stuff than Amazon
doesn't sell and you talked about the personalized experience in the opportunities there I like in the lawn when I actually think that's going to extend.
Do personalized products as well and I think that's an area where I know at least coach is already experimenting with some made to order product.
There's so many trans we're seeing right now about customers wanting distinctiveness the.
These different potential ownership models into me the.
The opportunity for personalization is an exciting foil against the Amazon Amazons whole model is we've got a hundred seventy warehouses that are super close to the customer give us a million pieces of your property and we'll split them up amongst all those warehouses.
Does warehouses are huge for a teacher can manage that suddenly go away when the customer wants something.

Noam:
[42:32] For them unique.

Jason:
[42:33] Unique to them and I think some of these like we're still Sterling the nail personalized experiences so it may be a little while before personalized products are its scale but to me that is one of the interesting risk factors that Amazon has in the.
In a long-term beyond that is your thinking about the future if you were to sort of put your futures hat on and think about I don't know five years out.
Is it like in your mind has the luxury shopping experience for medically changed is there. A wager any guesses as to how the consumer or the experience might be different than 5 years.

Noam:
[43:07] I think there's still a high level of store centricity I don't think we'll see.
More than 50% of the transactions occur in online I think will be some number materially lower than that I think that ultimately if if some of us are successful the brand engagement will be more immersive than continuous.
Versus just these big moments of coming into a store or a campaign launch but I think they'll be more of this always-on connectivity with,
the resources that we have the bear weathers the sales associate at whether it's a ai-driven kind of product finding experiences whether it's more game of Acacia around product engagement and or product customization and just,
customers playing with those permutations and ultimately slowly over time,
you know finally getting the product the way that they want it and then transacting it and maybe a mix of some Automation in the customization to.

[44:00] Help them in that process because ultimately people want to create they want you need product getting started can be kind of the key impediment so part of it is trying to think about.
You know how do we create,
that inspiration around what could be in letting that go I think also the the kissing cousin the product customization allow these drops right so people you know if it's a limited edition of 300 500,
people can see it they like it and I know that everyone's not going to have the same thing that they can express themselves in a more unique and individual level,
and I think that's been a lot of the the attraction to the drops that and just the exclusivity of it so I think I think the drop thing will continue but I'm hoping that.
There's a little bit more from the drops to more engagement of product customization cuz I think we can play really well in that space and I think it's super exciting to allow the customer to.
Fully Express themselves from product perspective with within the context of the brand value proposition super interesting to me.

Jason:
[44:57] I totally agree I think it's fascinating and I feel like that vision is a great place to leave it because it's happen again we've used up all our a lot of time if folks have questions or comments are welcome,
continue the conversation on our Facebook page or hit us up on Twitter as always this episodes of great time to jump over to iTunes and finally give us that five star review You've been meaning to do,
appreciate being on the show if folks want to find you online what's the best way to.

Noam:
[45:26] LinkedIn Stephanie the best way to hit me up and I'm highly responsive so particularly if you're interested in discussing careers or Partnerships with tapestry please hit me up on LinkedIn look for the conversation.

Jason:
[45:39] Awesome and we will put your LinkedIn profile in the show notes thanks again for taking the time today until next time happy commercing.

Aug 12, 2019

EP183 - Jason Del Rey Land of The Giants Podcast 

We catch up with Jason Del Rey (@DelRey) Senior Correspondent, Commerce at Recode. Jason was last on episode 67.  We discuss some recent industry events and get update on this two big projects:

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

Episode 183 of the Jason & Scot show was recorded on Thursday, August 8th, 2019

Transcript

Jason G:
[0:24] Welcome to the Jason and Scott show this is episode 183 being recorded on Thursday August 8th 2019 I'm your host Jason retailgeek Goldberg and as usual you with your co-host Scot Wingo.

Scot:
[0:39] Hey Jason and welcome back Jason Scott show listeners we are really excited this week to have back on the show Jason Delray Jason is senior correspondent
Commerce at recode he's also produces the industry event code Commerce and now joins Jason
retail geek and I in the pantheon of famous podcasters
he was last on the Jason Scott show on episode way back on episode 67 which was January 17th back then he was senior editor so I guess congrats on the big promotion to senior correspondent.

Jason D:
[1:14] I don't know if that's a joke or not but I am I am happy to be back I was going to make a sport Sports Talk radio joke which is second time long time you know.
Okay well we'll keep going thanks Rodriguez.

Jason G:
[1:34] It's good to have you back we don't get to make fun of the next enough so.

Jason D:
[1:38] Oh man it's going to be a long night.

Scot:
[1:41] So

Jason G:
[1:42] So is it true that your appearance on the Jason and Scott show sort of ignited your whole passion for podcasts.

Jason D:
[1:50] I mean I honestly did not know what podcasting was and then I came in you guys taught me the ropes and how many years later is this I don't know took me a couple years to like.
Build up the courage and skill set but here I am so thank you.

Scot:
[2:09] Cool fucking to the club it's exciting to have you up in the in the in the podcaster realm.

Jason D:
[2:17] Only for a few more weeks but hopefully they'll be a long tail of listeners that all at all extend the Land of the Giants fan club into the rest of this year.

Jason G:
[2:31] Absolutely and we are going to need that into that but before we get in a Land of giants I want to talk about one of your other projects it's near and dear to Scott and eyes heart.
I think it might have been three years ago now but you started a series of events code Commerce.

Jason D:
[2:52] Yeah that's right so we started we started with these one night one night,
what we would consider a live journalism events and we started inside of shop talk I think year one of shop talk
we did a sort of separate one-eyed event within shoptalk that required a separate ticket and it basically 3 hours you know an hour
some ways food and drinks and networking and then usually three or four
what would you like to drink or no BS interviews with.
You know people like in past years you know we've had people like Jack Dorsey talking about Square
Katrina wake pre-ipo talking about Stitch fix Mark Lori several years ago and overtime we built that. Into a standalone
today event that's why we're going on Year 3000 New York City Standalone event,
that happens every September and so we're only about a month out.

Jason G:
[4:03] Yeah and so and you have announced some of the the guess you're going to have for the Cher show.

Jason D:
[4:09] We have so we've announced maybe maybe about three-quarters of the lineup which I'm super excited about we have.
Entrepreneur founder CEOs like Jennifer Hyman Rent the Runway Julie Wainwright we just took the real real Public Market Lori from Walmart
Jeff Rader that Co CEO and co-founder Ari's which has agreed to sell for,
make 1.3 billion dollars.
I cookies in the CEO of Birkenstocks in the US and the founders of away
digital native luggage or they would call themselves as they call themselves travel company,
so that that's that sort of off the top of my head that those are some of the great guess we'll have and we are and there's a few more as well.

Jason G:
[5:09] Yeah that's going to be exciting away is kind of controversy on the show because Scott is a big fan and Advocate and I'm not so much.

Jason D:
[5:18] Should we got into that now or should we save that.

Scot:
[5:21] Shirtless Jason took me like 6 years again to buy a four-wheel bag and didn't even get in a way I don't I don't know what he was thinking.

Jason D:
[5:31] I will say that,
we are a I I have a I have a new wish four-wheel bag that was purchased by my wife at
TJ Maxx and so if that doesn't give it away I'll just say it it's not in a way back and it was probably about a third of the price,
but I am very fond of the look of the waybacks and I'm very very interested in whether they are able to do what they say they want to do which is,
build themselves into really a.
Multi products brand that sort of incompetence has all the different types of products you could need or want.
Intrexon sort of in your travel life.

Jason G:
[6:25] It's honestly like I have a critique of the product and but more seriously of the company like the
the Super Bee product line coming me miss your bag is perfectly fine I travel a lot more than either of you I've already been on planes on her 50000 miles of this year
it's alright it's like it tends to be worth it to invest in the most durable bag possible and for me that like I really like a bag that can.
Expand into a soft-sided expandable bag works better for me.

Jason D:
[6:56] Yep so what it was so what is your brand of choice.

Jason G:
[7:00] So I might I have a Briggs & Riley.

[7:04] More expensive more durable like I've already been with Scott when he was repairing his away bag and you know I would argue I've many more miles on that I've never had a proper.
But that's I mean both bags get you get what you pay for with just fine.
And I don't have a huge could take my bigger thing and you know maybe I'll get a chance to bring up on in your conversation with Jen.
I visited their pop-up shop in Tribeca and I thought it was a fabulous piece of retail and and you already alluded to it they get mad when you called him a luggage company they like to call themselves the travel company,
and you you go to this pop-up shop and they very much,
Lycra merchandising and glorifying the travel lifestyle so I know there was a lot of like.

[7:58] Memorabilia and stuff that made you you know sort of aspire to go to destinations and you know it felt like the the luggage was helpful enabler of this lifestyle that away was positioning right and whenever you.
You know either founder talk about the company that's exactly how they talk about it so then they started opening permanent doors.
And the permanent stores are super sterile shelves with luggage on on that like I could replace the away with Samsonite or to me and it would.

[8:34] Exactly the same.

Jason D:
[8:37] Yeah so we will definitely 100%.
Talk about this I think my guess or edit my educated guess is that,
they are going to sedate David they talked about that they're going to open I forgot what the number is but I believe dozens of stores is the ID across the country or maybe not just across the country,
select International markets over the next few years and I think frankly they are still I think they will read thank.
Their approach but I will let them speak for themselves on,
try to remember if they're speaking on September 9th or September 10th at Commerce whichever day I know be sure that this will be a topic we dive into.

Jason G:
[9:26] Yeah I'm looking forward to it I will be there and it'll it'll be fun to hear they're there POV I'll probably check my Briggs & Riley bag so they don't have to see it.

Jason D:
[9:37] Hahaha well I'll bring it up on stage.

Jason G:
[9:41] Awesome alone at the exactly.

Jason D:
[9:43] Okay.

Scot:
[9:46] Cool awesome to see what news comes out will be doing a show we always do a recap show from there and let's talk about your podcasts to land of giants you've got the time recording the Masters three episodes out,
it's kind of a different kind of flavor than kind of what we're doing here with news obviously suits to tell us about Anna what got you started on this and how you're laying it up.

Jason D:
[10:09] Sure and then just so just so I don't know how touchy the search the search functions are on podcast apps I'll just slightly correct that it's a land of giants so
people want to search it's Landon,
Giants and I'll try to make the backstory quick centrally recode inbox me decide a lot of success with podcast over the last few years my colleagues petercopter Kara Swisher they have phenomenal,
interview style shows but there has been a couple of things going on at the same time but what do this first dish heater Costco
friending how he came to me and said you know
you should the companies looking for more podcast you should do something on Amazon and I was like
okay that sounds interesting and then simultaneously their conversations and other part of the company about an idea.

[11:06] Doing a narrative getting into more of narrative storytelling and podcast there's not a lot of great narrative storytelling in the business world as a relates to audio and so there was this idea to do a franchise around the fangs
companies and do a season on each company so short of the idea to do something on Amazon
with that interest in the Fang franchise,
call West End for me the timing was for me at all about a couple of other things one is
obviously there's a ton of discussion around power effect of these right now.

[11:44] NBC in Saucon Valley in the media should I felt like good timing the other pieces
I know you guys know this to from being in the industry,
it's very easy day today till like worried about the next in my case right about the next product announcement the next business Amazon's getting into NYU know I'll have some contacts in my article is but sometimes
you need to force yourself to like step out to the big picture and say like you know,
you know what is the status quo in e-commerce right now like is that healthy what are the what are all the impacts on society
everything this company is trying to do and so I've had all those questions in my head for a long time and there's this seems like a way to I have the time to serve both dive deep and like take a broader look
at the same time so that's.
So why I can I can I can give a little more detail on what we're actually try and what we're actually set out to do with the content if you'd like or I can let you guys ask me whatever you want.

Jason G:
[12:51] So what's up I want to get to a little more of the contact but just to make sure that our audience is tracking so that the notion is there's a season about each of the Fang companies so there's a.
Amazon season I think most people Nothing But Apple Facebook Netflix and Google so it's actually faang,
that's the idea you'll have a season about each of those companies and then you're you're currently three episodes into the Amazon season is there a.
Dick by Jordi know how many episodes that are going to be of the Amazon season.

Jason D:
[13:28] Yes oh yes so there will be 7 episodes and there's a chance that episode 7 will.
Will be taped alive at so Commerce and so if,
is that ends up being the case episode 7 was sort of break from the format we have in each episode so far which is sort of a Storyteller telling a story basically throughout a given,
atopic area involving Amazon and episode 7 would sort of be like a conversation recap of unlike of of what listeners that the Earth were the first six episodes,
and so you can imagine the challenge of trying to break up Amazon's impact,
and interest into six or seven episodes is not easy and so on in episode 1 we should we try to
the iiibeca by I'm curious what you guys think you know the foundation of Amazon's retail
rise and dominance to me is Ben Prime and so episode 1 we both have Amazon Executives and employees telling the origin story of how Prime came to be and then we also
get into the consumer psychology of how Prime has been able to walk us walk you know.

[14:56] Over a hundred million people into Amazon's ecosystem and makes it very hard,
to break out,
episode 2 of I had this big question of like what does Amazon want that you from being inside our homes with Alexa with all the connected devices with ring with Eero with you know.
Basically best smart home and so we exported that question with with an Amazon executive and also.

[15:27] You know some smart people as food asking some skeptical questions about you know what this future of a fully automated home,
I will will,
will feel like in and how that might impact our lives in the future and then third episode which aired so far was that a look at Amazon's impact on local communities among the big tech companies yeah I would argue that Amazon.
Has the bigger the biggest physical impact on small communities around the around the country because of their warehouse Network,
North 710 now large fulfillment centers just in the US and so we went to a small town in Kansas that which was home to one of Amazon
first fulfillment centers and it was number three or four and where they left a few years ago and then told the story what happens when they came and left
and I'm and then I went to my hometown of Staten Island New York which is home to one of Amazon's very new,
Jerry automated fulfillment centers to get the taste of.
What the promise is in a in a small community when when Amazon comes to town today I'll take a breath.

Jason G:
[16:41] Yeah it's it's
yes I'll be curious it's interesting like I told you to greet you that Amazon has the biggest physical footprint and you know they're for like sort of physically has the most impact on those small towns some of the other ones are you know much more responsible for,
deciding who are government leaders are and how we really think so it's hard to know which one has more impact on your day-to-day life but yeah.

Jason D:
[17:05] Totally and then and I should I should say you know yes that's 100% true you know,
part part of Odysseus or the the emission of of the whole franchise Land of the Giants has been,
you know it is easy in our day-to-day getting caught up in our day-to-day lives work Family Family Life,
you know pleasure.
What sort of what the broad impact on what the broad reach of these companies now,
now he's in our lives and and that's not to say it's all bad I mean it's a lot a lot of good and I hope that you know will come across in the in the series as well but it feels like a moment in time where,
you know healthy scrutiny something that the world could use a little more us.

Scot:
[18:02] Close Amazon been kind of supportive of this or they they didn't really engage on.

Jason D:
[18:08] You know that's.
You know I have not gotten a lot of feedback from the company since since episode 1,
are the few weeks ago so they participated in episode 1.
I interviewed one of the people I interviewed was Jeff Wilke who spent it on his own two decades and is now to CEO.
Best way to get the global retail business and Global consumer and he reports to Jeff Bezos
in episode 2 I did it interview the vice president of the smart home at Amazon.
And you know for a episode 4 which will come out the week of August 12th so.
I want to watch than a week from now you know I got a tour of one of them is on a more automated warehouses for an episode about through Amazon as an employer and Automation and so Dave,
but they also just you know turn down and on-the-record interview for.
In episode that'll be about competition on the Amazon platform and Sherman Antitrust scrutiny so I would say.
They probably participate a little more than I expected but I think they're I think they're kind of still in a way to wait and see mode.

Scot:
[19:37] Did you did the Fulfillment center the toward was it like Eva based or was it one of the ones like the pallet lifting robot or something that we haven't seen you.

Jason D:
[19:46] It was,
yeah so I don't know what I didn't see in the warehouse so it's possible and had more than I saw but it what I saw it were I don't know that they call them TV anymore but yes the orange,
I think they call them mobile drive units are carrying carrying the 8-foot tall shelves to their stores and their Pickers.

Scot:
[20:12] Got to go so you don't you like us spend a lot of time to think about Amazon what's what's something that you done the podcast that kind of was a new discovery for you.

Jason D:
[20:22] That's a great question I think I think so far.
It reinforced a lot one of the things I thought I knew about the company over the last six years you know I will say one thing that stuck out to me that's in one of the episodes that is already aired so,
episode 2 is about sort of the smart home and Alexa and.
Yeah I won't give too much away for people living with him but essentially I'm talking to someone who's in the author and futurist about you know.
All the types of things that Amazon might do in the future with the data they can collect and you know I ask the VP of the Smart Home.
Daniel Rausch I said so you know do you guys have a team's inside of Alexa and I know you have thousands of employees working on Alexa that sort of kind of listened to like this the questions coming from the Skeptics of this you know,
as I said that the echo the echo behind me Alexa.

[21:30] I'm going to ignore that I'm sorry guys so they're always always listening.

Scot:
[21:38] At least you're still has work so they're not too angry with you when your when your Prime shipments stop in your Alexa stops then you know that you fingered the Amazon.

Jason D:
[21:50] I was a little surprised I asked you I asked his VP of a smart home,
you're do you sort of listen to it a lot of the smart smarter Skeptics are saying and what they worry about in the future and Anna try to like maybe we'll work back from you know some of those potential.
You know use cases that people are worried about or you know data collection people worried about and his answer was essentially we were young very Amazon we work back from your problems and you know.
And I we start from a place of optimism always phrase like started,
the amazing company it is today but also miss climbing in 2019 like saying like.
Tapping the site Facebook and social networks and you know it just felt,
I guess I was just surprised they've built a certain lack of knowledge mean the word seems me self-awareness.
About sort of the downsides of you know the advancement that sure the fast pases,
Innovation sort of Eden of even specifically like inside our hugs and that's one thing that sort of stuck out to me,
that was a little surprising I'd say.

Jason G:
[23:15] Yeah that
totally make sense I mean to me that's part of the fun of your podcast is for your point you know most listeners are they show or sort of living and stuff day today and it's like you're there some new piece of news about something Amazon's doing.
Every week if not every day and it's kind of fun on the show that you you kind of,
take that 50000 put View and kind of put it in a broader context then leaves.

Jason D:
[23:47] Yeah I'm like the chat near the challenges we're trying to do a couple things like my goal is to have Jason and Scott and the listeners of this podcast and the you know,
sure the sources I have you had developed over six years day today reporting like find enough compelling story wines and and hopefully new information as well that even though they stay the day they are coming away saying,
that was a pleasant storytelling experience or I learn something new or I never I didn't think of it that way while also being welcoming to
people who don't live this day today but but have Amazon in their lives you know in a big way and wonder about Amazon or 1/4 about Jeff Bezos or you know
shortest sit on the periphery
of these industries and so I think from the feedback I've gotten the reviews I've seen I think we've done a pretty good job at that so far,
but you know we'll have you know episode 6 which will be antitrust and competition on the Amazon Marketplace I can that one like we'll dive into the weeds that in a way that I think even people in the industry.
It'll really really resonate West and I think will be both surprising and hopefully
somewhat news-making so I'll leave that to you.

Jason G:
[25:07] Nice. That's a good teas are a couple of short fun facts on stuff we've already covered I can't let it go without teasing Scott Scott had an opportunity to be an early investor in Cuba and thought it was a stupid idea.

Jason D:
[25:19] Scot.

Scot:
[25:21] Yeah what was NC State Professor he was talking about how he was going to take the algorithm ants use an appliance warehouses and it just didn't didn't make sense to me that Aunt part lost me.
You was right I was wrong.

Jason D:
[25:35] Yeah I know I'm just I'm shaking my head in this empty house right now so.

Jason G:
[25:44] You mention so in episode 3 you visited a,
a warehouse that's now a fulfillment center is now closed you you teased us that you went to a modern performance center and episode for a fun fact for listeners,
Amazon actually gives a remarkably good tour of a bunch of those,
modern fulfillment center so even if you're not a fancy journalist I Jason,
you you can go to a web URL and Reserve at or I take clients on these tours all the time and it's if you're in the industry or you're just interested it's super worth going,
so as you're listening to episode 4 and hearing Jason's description know that you can you can follow it up with aching person experience and I'll put the donation the show notes.

Jason D:
[26:33] Have you been to the Staten Island New York Film Center.

Jason G:
[26:36] I haven't and so an interesting question which I'll see if our intern can figure out while I'm talking to you only certain of the facilities are available.
For the tours.
And I don't think that's an island is so like in your neck of the woods Robbinsville New Jersey and West Deptford are available.
I don't see Staten Island on the list I'm in Chicago and they they have a.
You have to go to Jefferson Indiana and now there's a which is a suburb of Chicago.
It's pretty interesting and I presume you had a slightly different experience at the very least they let you bring a mic and they do like Frisk you for all your digital device.

Jason D:
[27:39] Yes yeah they were there were big they were big no no phone or no camera signs and then
yeah I was going to say another
I'm hesitant to say what I think my memory is surfacing right now and another know something signed but I'm wondering if maybe it was when I visited a different
Amazon facility 5 years ago or 6 years ago and cnx I have a vague memory of a no guns sign but.
Anyway I am a millionaire I don't remember for sure so I probably should have said it but.

Jason G:
[28:26] That's not going to want to listen it'll be safe I'll put Jason's phone number in the show notes.

Jason D:
[28:34] Speaking of Jeff speaking of Jeff Bezos I got a secret I got a little package in the mail today from from.
Kara swisher and the box says Bezos primes and the hundred and hundred billion dollar man and I opened it up and it is a Jeff Bezos figurine maybe like.
A foot high and it comes with a robot that he was spotted with that one of his events a few years ago,
so I can maybe that can be your show mascot.

Jason G:
[29:09] That would be awesome is it I'm assuming because the robot is buff Jeff Bezos and not a bookstore Jeff Bezos.

Jason D:
[29:17] Yeah if you if you Google as I just did Jeff Bezos yellow robot the first image that comes up is Jeff Bezos walking with a.
Yellow shirt of is this a robot dog Boston Dynamics robot dog and he is wearing and just in the figurine is wearing what Jeff is wearing in the soda which is.
Yes.

Jason G:
[29:40] Patagonia obligatory BCBS.

Scot:
[29:43] Does it have a drawstring into the Jeff left when you.

Jason D:
[29:46] I couldn't I couldn't see that past the bulging bicep switch on.
A little envious I honestly.

Jason G:
[30:00] That was really your way of just working in that Carrie Fisher knows your address which is impressive but.

Jason D:
[30:05] She actually she actually I've only worked with her for 6 years and she had to text me for my address the other day not that cool.

Jason G:
[30:15] Yeah I kind of assumed that was the case I have to compete cuz I have a current mask mascot staring at me that I was going to bring the code Commerce this year I have one of the pets.com sock puppets.

Jason D:
[30:30] Yes yes and I'm assuming you're saying that the guess we're going to have Julie Wainwright too and I'm back in the day at one point rent ups.com.

Jason G:
[30:41] If I were younger listeners pets.com was one of the the fast runners in the first free internet crash
that was a precursor to Chuy and had television campaigns and it has mascot was this sock puppet dog
the that that's essentially did in fact morph into Triumph the the comedian.
I don't know if you know the backstory here but there are lawsuits in the whole thing that,
that sort of after pest.com left that the comedian that that treated the Triumph character like bought the rights to the Past. Calm dogs,
and there are some real property fights and stuff so it's fun and then the founder of pets. Com is the the also the founder of real real who's going to be at your shop.

Jason D:
[31:35] One correction yes she was not,
not the founder of cats but feels like almost every time.
Yeah journalists are very go see this on almost every time Julie is you know appears that something like.
Pets.com comes up twenty years later and I'm just curious about like,
maybe it's something it's a it's a role she held but I'm curious of what she'll have to do like what she has to do to like not have that be part of the,
part of the story in an only reason I ask is will a,
I had someone reach out to me recently after we announced her and was like really you guys still mention pens.com and it made me think about that and then being like
who is the CEO and maybe it's just a bad person and I should,
I should I should know whether a person is alive or what they're doing today I think it I think it might have been a George something.

Jason G:
[32:46] George Shaheen good job.

Jason D:
[32:48] Okay cool you know maybe it's just a juul he's had some level of success and I don't know that's that's enough that I don't know if that was actually a question but it's something I I was just thinking about recently and so was interested.

Jason G:
[33:02] If I remember correctly after webvan George became the CEO of what was then Anderson Consulting now Accenture.

Jason D:
[33:10] Wow I was going to say something really mean which is probably not right I was going to say failing up but but maybe I actually was not covering.

Jason G:
[33:19] Thank you I think I could be a correct characteristic.

Jason D:
[33:22] Okay sorry George.

Jason G:
[33:26] That way so I have a very minor version of that I started my career and was like one of the original directors of marketing a blockbuster entertainment and in my world,
like every time I go visit a client the the consultant from my saying company right before I get there pops up a slide talking about how you don't want to get Blockbuster.

Jason D:
[33:46] Oh well.
So you view a failed really up.

Jason G:
[33:51] I have but I would actually point out I'm feeling,
down because we sold Blockbuster for 9 billion dollars people always talk about the end when a failure the company was you no railroads are not a very good,
investment today but Anderson Cooper's family did pretty good on the railroad.

Jason D:
[34:15] I am now staring at your LinkedIn which I did not know about this.

Jason G:
[34:21] That I never listen.

Jason D:
[34:23] 1616 month. Of your work career.

Jason G:
[34:26] It's a slide that I have to face every single day as though.

Jason D:
[34:34] Listen listen as someone who grew up so when you were there I'm not going to do the age thing but okay I'll do it when you were that when you were there I was,
I was in Middle School and
Blockbuster was probably one of my favorite places on Earth and I have very fond memories especially now that my parents both my parents are deceased very fond memories of going into Blockbuster on Friday nights and you know,
hoping you what am I remembering correctly that like the case might be out but like if you opened it.
You had it like you found out whether a movie or game was in or not with whether it was actually that the case was empty or not or am I am I totally making that.

Jason G:
[35:21] I know you're probably thinking of an independent video store so I guess what we would have is the box art would always be there with the movie was in stock or not behind and next to that box are would be.

Jason D:
[35:32] Oh yes.

Jason G:
[35:33] 30 or 40 Blockbuster desert called Amaray cases that plastic taste it held the the video.

Jason D:
[35:41] Got it well well thank you for giving me this even this cloudy memory of my Friday nights as a 12 year old.

Jason G:
[35:50] I appreciate you making it a blockbuster night we are so getting back to more tree Topix,
I want we want to transition of the podcast but one question that you you may have inadvertently.
I revealed an answer already but so season 1 Amazon you are the host.
There's you know it least four more seasons are you going to be the host for these other companies or are we going to meet some new character.

Jason D:
[36:26] Most likely not I think,
this is I think there were likely be people with more expertise.
Then I have on those other companies since I have spelled spent the last six years really diving deep into Amazon in e-commerce show.
I don't I don't know what the 100% answer is but that is the 99%.
Correct answer likely answer so no I did I did there is an appointed frankly you know that I had to make you know
by choice I had to make some trade-offs as I've spent the last six months and still end on this podcast series and also working on the conference which was I've not been
able to report and write as frequently as I was I would like so you know where in the beginning of August and the last story I published was a big deep dive into
internal tension at Walmart and that was a month ago so I'm anxious to get back to Amor,
consistent writing a Cadence starting in the fall.

Scot:
[37:42] Cool I like how you started filling in the middle so you're kind of like doing episode 4 Star Wars style and then you'll have to kind of go do some some will have to come in and have filling before you.

Jason G:
[37:56] Netflix is going to be the prequel.

Jason D:
[37:59] I've always wondered is Amazon the first a in the Fang that has two A's or II a.

Scot:
[38:06] You know Kramer coins this I'm 99% sure so we can ask him.

Jason D:
[38:14] Know what you tweet we we we all know no one famous actually coins that thing right there like borrow it from someone was less famous.

Scot:
[38:21] Not the creamer did he had it on his knuckles one night I remember I remember watching the episode.

Jason D:
[38:27] Okay.

Scot:
[38:28] What it is like really fired up here like almost like a knuckle tattoo so is like f a i n g on the.

Jason G:
[38:34] But am I if I'm remembering right just to jump in when Kramer did start using it Apple wasn't even one of the things so I am assuming it was literally faang and I think so therefore it has to be m.

Jason D:
[38:49] Someone has tried to make for the newer companies A+ happen if you heard that one.

Scot:
[38:58] The effort several chondromatosis they're just not as catchy of Spain.

Jason D:
[39:03] No and now and I can't even I can't even tell you what the A and A+ is is it I'll maybe it's Airbnb anyway.

Jason G:
[39:11] The G is now and they also to make things more complex.

Scot:
[39:15] That sounds like an Andreessen Horowitz thing cuz it sounds like they're portfolio does their PRT.

Jason D:
[39:23] What's an A+ that I'm forgetting which food at after is who thinks he's an investor he actually is an investor.
Yes he is in a duster sorry Aspen yeah a plus.

Jason G:
[39:37] What in your world A+ is Ashton Kutcher in my world it's the supplemental high-value content on the Amazon product detail.

Jason D:
[39:46] Man we are we are just nerding.

Scot:
[39:52] Cool sweet recommends that listeners check out Land of the Giants make sure you get the D in there except to get the search right it's great podcast we strongly endorse it here at the Jason Scott shoe
so weak since we have you Jason we thought we just kind of
Heather written about the news without we pick your brain about some topics the one I'm most interested in is we've had a lot of IPOs and recently so we've had
Uber Lyft are out now we got chewy real real they all
Uber Lyft haven't done so great but I think the Commerce ones have done pretty well specially real rely things done quite well what he thinks next I know you follow the shoe guys close to are they tearing up or is it your way just raise a lot of capital.
Country has few you have any insights into what's next in the pipeline.

Jason D:
[40:43] Yeah sure so I'll you know what some of the ones I've been curious about.
And so so wish wishes accompany that.
Assertive gone through phases of being like like very much in the business news and then you know skirt,
out of the news in the business world and you know frankly I haven't checked in on their performance in a while and you know last I saw that,
there are some reporting that there is there gmv or I don't know what they use for their gross number is I want to say was somewhere maybe approaching or around 10 billion and.

[41:29] And I'm assuming most westerners no wish but should I tell them what it is if they down or.

[41:37] Yeah so wish wish I like to think of it is essentially AliExpress but for.

[41:46] The popular in different markets or sort of taobao,
what the Western Schism on it essentially not it's,
it's a mobile shopping app with a fee that specializes in the low price non-branded products that are very very cheap that often,
will take weeks to get to you although they've they've opened up some of their own warehouses to stop for the best selling stuff,
and I'm just very curious about them in it for a long time mainly for you know a lot of stuff they sell,
does not last very long
yeah I've wondered a lot about what you know what the expectation is with different consumers in different countries when they pay a dollar or $2 for something like is it
okay that it,
brakes after 4 tries or no is that going to be a significant turn issue to wish is one you know I don't I don't know what their IPO plans are I could see them going public in the next year but that's one of the companies I'm anxious to dig into when I get back to writing a little more
Casper there's been a lot of talk about I still looking at you know I still work at that company and.

[43:14] Msmm frankly just skeptical of a long-term independent future you know my big question with all these sort of single product for the most part I know they have some other products but single product,
digital native Brands is are they really expanding the markets,
they're in or they just growing much faster than previous iterations in their industry and so they're going to hit a ceiling
much faster and maybe that's obvious the people but it's something I think about a lot and.
I just you know I had to report a couple years ago about talks they had with Target about a potential sale for around a billion dollars
should I trust one like I don't know what the outcome is but I am very curious because like I said I'm I'm skeptical the public company that Casper has a password and public company,
and then some other ones instacart,
I think I wish around the current valuation they seem too big to be acquired,
I'd love to see you in an s-1 filing with those unit economics look like.
And then one that sort of Commerce City but sort of marketplace I don't know what you got if you guys have heard much or,
what that much recently is house Houzz.

[44:38] You know there was a lot of talk around then maybe a year or two ago and the businesses are smart like at a certain point you just want to get want to get your economics write a certain scale and like.
You don't need to be held talking to the business press as much and so that's another one that sort of all my radar to check back into.
I did a good job of talking for a few minutes and not actually answering your question.
Makes me feel like a PR person.

Scot:
[45:06] Those are good let's see how about that you guys were they big enough for you think they need some time to consolidate.

Jason D:
[45:18] Yeah I I mean iced I still think those are so there's there's good and there's stockx.
Which just,
data breach which took them a long time to reveal actually I think I just got an e-mail today but I feel like I saw it reported last week maybe.
My opinion is I think I think those are acquisition place.
I just I have trouble I have trouble seeing those guys as public companies then again like you know maybe they you know the real real just went public and I know it's not Sneakers but it is.
It is sort of high price high price point items Consignment second hand and sell.
You know maybe maybe that is a future but my bet would be on both companies acquisitions.

Jason G:
[46:25] We've I recorded your your bets and we'll do a recap show later I'll throw like one slight editorial and let you know
can I think it's an interesting thing about some of these companies that has changed as a result of digital disruption if you were to launch a
a really popular single item company 15 years ago,
the marketing vehicles that would be available to you and it would be affordable to you would like,
put significant parameters on how quickly you could grow so even there was a demand for 5 million people that wanted to buy your product,
it might hate for five years for all five million of those people to find out about your product.
And today that that same five million people will find out about your product one day after you want,
and so what are the things that I feel like digital has done is.
Artificially compressed the sale the initial sales.
For your product info you know the mistake I think some people have made is you know you look at these rapid growth of all these companies and you go oh man we just project that out another five years,
this is a huge business and what you don't realize is.

Jason D:
[47:49] You hate you hate you hate your car.

Jason G:
[47:51] Plateauing much fat.

Jason D:
[47:53] Yeah. Yeah you said that and much more articulate way than I was then I hit that I did earlier but yeah that was
play I was attempting to make was already are these companies and weeks I think we've seen it with some are these companies going to hit a ceiling much sooner than
they expected maybe investors inspect extract and.
And so yeah I mean that's why I don't hear it as much but I you know I grew double overtime you know few years ago I would have laughed after a. Of time when.
A Founder that was like 4 months in or 6 months in would talk to me about like it was confident about.
LTV lifetime value and like modeling out there tax you know because.
Because of that very point you just made like you're going to stir your hitting your target audience much quicker than in the past.

Scot:
[48:57] Coop's one area I wanted to see if you have any thoughts on this you've done a lot of good coverage around the food delivery companies you mentioned instacart
so there's there's like a zillion of them and
we saw a little bit of consolidation with someone acquired the one that square has always so that was caviar and they got acquired by.

Jason D:
[49:18] Doordash.

Scot:
[49:18] Yes yes and there was also controversy around tipping so to give us an update on what you're seeing there.

Jason D:
[49:26] I mean it's like the wild west right it's pretty crazy yeah we had also reported that Postmates had.
In a filed they had a press release very early this year saying they had confidentially filed,
paperwork with sec to go public and we are now in August,
they have still not filed their official S1 paperwork a publicly that is very unusual for a company that will,
that for companies that will eventually actually make it public until we we we have reported that every code that they had talks with some potential acquirers there just has to be Asian I mean no one you know
of the private companies no one's making money doordash is viewed as sort of dick because they have all this money SoftBank bank backed company they have tons and tons of money that they are burning through,
just to gain market share I mean there you know the rumors about them doing some deals with some of the The Big Dig
sort of quick casual and or fast-casual and food chains were there essentially you know,
they're take raid or they're cut is like.

[50:47] Pasta zero or maybe it's zero in some cases and so this is me it's just not sustainable what I've been told and Uber went public,
and had a good public outing
and was a valued you know they were they were thinking they were going to be value to round 120 billion I haven't looked recently but I'm going to try to pull it up right now what are they 70 70 billion
that they were going to wipe they would be wife we to do a deal,
for one of the companies and so that you know that the problem in a couple problems you know,
so I sold my back was they were going to eat there were neither acquired doordash or even GrubHub another public company,
and but at 72 billion instead of 120 billion those deals at those companies market caps evaluations,
become really really big percentage percentage of meaningful percentage of Uber's market cap.

[51:52] And yeah I could I could keep going to ugly one other point just on like the the debate for Hoover on who do who do you acquire you know you choir doordash you kind of a quite you acquire the crazy
show the crazy player in the market that's forcing anyone to just everyone in the mark this sort of lose their heads and burn cash for market share but but that
that's her set you back on the economic side like that does not help your profitability of your business right maybe there's some synergies but like on the face of it no
if you if you acquire instead GrubHub which is profitable business,
you know you've you've gained some NASA volume GrubHub shuja New York with seamless Fusion some Big Moe died in Chicago GrubHub popular Hometown but then you still have the crazy,
cash burner doordash out there and so.
I'm really interested to see what all happened I think there will be consolidation I'm hoping we haven't announced any of food delivery CEOs for code Commerce yet but I'm very confident we'll have one of the heads of want to be Services there,
and what I didn't talk about what is the Tipping scandal,
which is essentially I drove one of you guys for a wants to summarize it but it but I'm happy to get my dots on it.

Scot:
[53:16] Yeah I think the the summary is the so they they all charge there's just got two buckets there's a there's a delivery fee and there's a tip and,
what's happening is if you if you put a tip-in then none of the delivery fee they're essentially kind of well couple things to do is,
it's legal to skim the tip so you can charge the worker you can you can take out
yo sitting on there's all kinds of rules around us but something like two to 4% essentially covering your credit card fee and whatnot so that's one aspect to this
I think all that stuff kind of unethical but whatever so it's legal and then and then the bigger thing was that effectively you know the
as you tipped then the company was keeping more and more of the delivery fee so they were kind of saying it was like an order so the driver got you know kind of an order from the delivery fee in the tip not an ant.

Jason D:
[54:15] Right and I think this was surprising to an indoor dashes case and I don't think they were the only one surprising to both,
the delivery people when they were in that you know I was tipped,
$8 but I didn't get all that tip and then I think it was surprising to,
customers and doordash initially
sad like we believe in this model we believe our it's more steady income for our delivery people with this model and when they don't when they get you know this is better for them when they don't get a good tip and,
and then the story kind of exploded again a few months later when I think of New York Times writer,
a reporter asked her did delivery I get her first person then of what it was like and this came up again and then
doordash recently gave in or has said they will change their model the problem with the whole space I mean I'm going to paint with a broad brush and I know there's some nuances with each service but
generally like there is just I think most consumers just don't know.
How much they're paying and where it's going and you know maybe for a lot of people they don't care that they're,
you know the price is basically marked up twenty 30% from what they would pay in the store but the convenience is worth it but.

[55:45] I really think there's room for an ethical player to Stand Out by just doing business really the right way the problem is I think the economics of the business at least with the current auditor site and how many services there are.
Don't allow for that.

Scot:
[56:02] Yep yeah that's at some point prices will go up in the convenience store and consumer will know that they're they're paying extra for the stuff so what we have to just come to get to that normalization.

Jason G:
[56:13] Yeah the the tricky part is sometimes when at normal ization happens then the service isn't as appealing a consumer's rights.
At a similar version is played out with instacart where they were Articuno originally they they had a low delivery fee but they were artificially raising the price of all the goods you paid so it was.

Jason D:
[56:32] Right right.

Jason G:
[56:33] And when customers found out about that that's out really oily and dishonest so you know they started passing through the items at the same price and tried to charge more for the delivery fee
and found the customers weren't willing to pay that delivery piece of eight like 10 only do good in Market Square,
they kept the delivery for you which meant the unit economics for the business don't working in a b c is paying for your delivery.

Jason D:
[56:59] What are you doing I'm just curious and it like do you think any of these bit whether it since the card or you know the the meal delivery companies.
Do you think do you think any of them like go away like they did do you think we're in for a rude awakening where like.
Some of the most sensual like one or two of them like literally collapse even.

Jason G:
[57:22] Why did consolidate in one of them does well for a while but in the long run I'll predict the day all the way in or we change and the reason I say that is.
That they're essentially offering a service to grocery stores in the kids of instacart or restaurants in a case of the others,
providing a customer experience at that Grocery Store retail you know restaurant wasn't interested in providing or didn't feel they could have adequately provide and,
early on when it's not a big business it made total sense to do that as,
that service becomes the dominant method of getting those those companies products.
It becomes increasingly stupid for these companies to Outsource this right and I mean not the analogy to me.

Jason D:
[58:16] Oh I am now remind I've heard I've heard your tape before but I want.

Jason G:
[58:20] In the early days.
Nobody built their own e-commerce I try like we're retailers and so what will pay this technology company in Silicon Valley to operate an e-commerce site for us.

Jason D:
[58:31] Or in Seattle.

Jason G:
[58:32] Yeah so that was either Amazon or company back in the day g s i n g s I became a very successful very fast runner made the owner of billionaire now owns the 76ers the.
In the long run.
All of the the surviving retailers had to find a way to unwind their deals with Amazon and GSI because it just became too important a part of the customer experience and when I.

Jason D:
[59:00] And those DSi deals man I've heard some stories.

Jason G:
[59:03] He was a great salesperson that the contracts were absurd.

Jason D:
[59:08] Team 10 15 year deals yet.

Jason G:
[59:10] Yeah it was amazing but in the case of restaurants there's a huge shift in consumer Behavior.
20% of all restaurant sales are now consumed off pram,
the the deals they have with these marketplaces are unprofitable for the restaurants and so it's it literally at the,
inhibit scales under the current economic model outputs all these restaurants out of business and side note all of these delivery companies are secretly opening,
kitchens and commissaries to start delivering the universe similar to Amazon private label Marketplace so there's more pressure coming in the big successful restaurants that actually have products that consumers want.
They're going to have to own their own delivery experience right in it and you talk to these got these huge companies are announcing oh we're going to partner with Uber Eats,
and I I go like that that's crazy that's your the front door of your your restaurant.
That you're now Outsourcing to someone that's going to disintermediate you from the customer it for a variety of reasons I don't think it's a sustainable model what's the.

Jason D:
[1:00:20] Yeah one one other thing I forgot to mention Little Couple interesting things one is you know
the former CEO ousted CEO of uber Travis kalanick he's in the space I think
here's a company one of his one or a division of one of his new company is called Cloud kitchens which is essentially these like dark,
call dark kitchens or Bay City restaurants that only do delivery.
The other thing is you know how Mazon hasn't come up in this conversation yet but in the end they you know I think they announced shutting down Amazon restaurants there,
attempted delivery I don't think they're out of this I think like I would like,
I think the two wires to me in this space at least in the US are,
Uber and.
Uber and Amazon and so I didn't you know will Amazon do any big Acquisitions right now with the current regulatory climate maybe not but.
Maybe that's obvious to people that they're not out of it but I think some people when they saw them Amazon shutting down out of the restaurants. They were exiting but I think.
I I would not be surprised whatsoever if they if they make a point in the space.

Jason G:
[1:01:46] No I I I think that's very possible with some decent that's going to be a great place to leave it because we've done it again we've completely wasted an hour of our listeners time.

Jason D:
[1:01:57] You got you guys did I didn't want a day like that.

Jason G:
[1:02:00] You know you are a total a willing participant,
the but if listeners disagree and they want to continue the conversation as always you could jump on her Facebook page and leave some comments or hit us up on Twitter,
as always in bed this was the show that that you know finally added value in your life
what you should do is jump on iTunes give us that five star review and at the same time you can subscribe to Land of the Giants in here even more Jason Del Rey.

Jason D:
[1:02:31] Check can I just plug like you should really give it a shot we've been top 50 and top 30 for most of the last week on all of apple and I am open to all feedback,
good and bad I'm on Twitter at Delray Delray Jason at recode.net we have an email address for Land of the Giants,
and I just hijacked your ending there you go.

Scot:
[1:03:01] Jason thanks for joining us and congrats on the success of the podcast we look forward to hearing the rest of it.

Jason D:
[1:03:09] Thanks guys I'll see you at Code Commerce.

Jason G:
[1:03:11] Absolutely in until next time happy commercing.

Aug 5, 2019

EP182 - Amazon Q2 Earnings and News 

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

Episode 182 of the Jason & Scot show was recorded on Wednesday, July 31st, 2019

Automated Transcription of the show

Transcript

Jason:
[0:24] Welcome to the Jason and Scott show this is episode 182 being recorded on Wednesday July 31st 2019 I'm your host Jason retailgeek Goldberg and as usual I'm here with your code Scot Wingo.

Scot:
[0:39] Jason and welcome back Jason Scott show listeners,
Jason has been a while since we were able to get together with given the holiday season 2 vacations going on
and then we had some guests in there that that's important topics you on the cover so we thought it would be a good time to go and catch up on some news
there's been a fair amount going on in the world Lee Commerce as
you haven't been at this for feels like forever kind of Summer's kind of quiet and then here in this kind of Q3. Is where it gets really newsie as we head into the house so we thought we'd go over some of that before we do Jason you have been
a busy traveler I'll tell us about some of the tricks you been on.

Jason:
[1:26] Yeah yeah I have been on a couple trips full disclosure a number of them have been vacation and so I'm I'm a little proud I feel like you probably beat me on quality of summer vacation but I feel like I at least meet you on quantity of summer vacation.

Scot:
[1:41] Yeah yeah you were able to get a couple weeks in there and I'm
I can go further because I don't have to carry a 8 lb 80 lb espresso machine with me I think that that kind of limits our options but so fly over to Europe and stuff so we're going to free you from the shackles of the espresso machine.

Jason:
[2:00] Exactly I don't know if you think you're joking or not but I did I took two vacations I visited my family in in San Diego for the 4th of July and I
went to Upper Lake Michigan with my wife's family and the Upper Lake Michigan lake house is remote enough that I did have to bring my own espresso machine.

Scot:
[2:20] Oh I know I know I'm familiar.

Jason:
[2:22] But I'm calling it a big win I actually consumer protip.
Years passed I bought the new Nespresso which is called the virtuoso which is this fancy or system and I was never actually that happy with the shots.
Into this year I retired it and bought the older Nespresso original system.
And much happier with the shots there's a much greater diversity of coffee available for its was actually able to buy.
My Starbucks pods to go in that coffee shop by my lattes were both much better and this little town we we stay in North Point Court last year head Giro expresso machines in the town and they sure they had to poop so I feel like.
Like it was all green light.

Scot:
[3:07] Nice nice you're you're making America better.

Jason:
[3:11] But so in between all of that Leisure activity I took the opportunity during the Heatwave to go to Las Vegas.
For a new show that interact has launched this year called in RF next and they cleverly spell it like the Hipster kids NXT.

Scot:
[3:31] It's very cool to drop any kind of owls so kudos.

Jason:
[3:35] Exactly it sweet speak.
And they the.
Important to me because it's somewhat of the spiritual successor to the shop. Org annual Summits when shop.org used to be a separate entity from NRF.
Into this was the first year of this new format it's in Las Vegas in the summer it's at the Four Seasons hotel which is like a kind of cool luxury hotel inside of Mandalay Bay.
And it's less of a trade show there's no exhibit hall and more of a a conference with.
Certain interesting approach to content curation what they do is they they have.
Key notes that everyone attends on a topic and then they have breakout sessions which are deeper Dives on the topics from the keynote and you sort of picked the.
The specific tactic that you're most interested in for the deeper dive so you might have liked.
Akina ain't no bunch of good retailers that did Keynotes Zulily DSW Shoes untie.

[4:42] Dick's Sporting Goods Peapod.
Lilly Pulitzer to Value H&M JustFab I think with all the main presenters and you know you might see that the CMO giving a presentation on the keno to set up high-level case study about what they're doing and then you might have the.
The director of email marketing doing a breakout session specifically on on Dick strategy around a b testing emails for example if that was what was interesting to you until you both you got a mix of kind of high-level.
Strategic content and like you do more Hands-On tactical button-pushing contents as well which I like.

Scot:
[5:22] Brickell what were what were your your your most and least favorite topics.

Jason:
[5:30] Yep so there you know.
Everyone is tackling different aspects of what I call the next best dollar problem that like.

[5:43] A lot of the traditional tactics that repairs of used to drive traffic and drive conversion like.
Either aren't working as well as they used to or are becoming more expensive and more competitive and so you know our readers are challenge with like what is the right mix of tactics and
you know how do we evaluate what tactics to do and then you know how do we optimize and get the best bang-for-the-buck for all of those.
Like primarily traffic generation tactic so a lot of.
Surf interesting examples of how to tackle influencer marketing an email marketing and.
Bike shopping cart abandonment campaigns and in topics that we talked about for a while but like kind of what the the latest state-of-the-art is in optimizing those tactics out.
You know there's a bunch of General stuff there and then the 1st came out of the day was sort of a.
A much more overview of the market Keno which is from an acquaintance and former colleague of yours Pascal finette who's.
At Singularity University but I think you hired him a channel advisor at one point.

Scot:
[7:00] Yeah that's goes way back Pascal is a super smart person in here and Germany for us for a while he's a great guy and we stayed in touch so hopefully he gave give a good presentation there.

Jason:
[7:14] So I thought he did a really good job and his his whole presentation,
is there an interesting angle on something we've talked a lot about about bifurcation in retail and he had an interesting Paradigm for it like he he talked about traditional retail being a pyramid and at the bottom of the pyramid you had,
very high-volume low-margin transactions.
And at the top of the pyramid you had much of lower volume higher margin transactions and so you know for the most part it's like.

[7:51] Discounters and super high efficiency stuff at the bottom of that pyramid so that's that's Walmart T.J.Maxx dollar stores things like that and at the very top of the pyramid.
It's typically luxury brands,
and you know then there are a bunch of retards that are historically a compromise of those two things right and so that's,
that's all I like the mall based apparel companies that's that's gap that's Bed Bath & Beyond its Staples it's all these these different retailers and his premise was that for most of the history of retail.
The best place to be was that compromise in between the two extremes and that as a result of our our current disruption in the marketplace like what's fundamentally happened is.
The customers have all bifurcated to either
the the super high efficiency retailers at the bottom and the super high-value read you know High luxury retailers at the top and the
the segment of retail that's getting decimated are all those retailers that are trying to live in the middle and so he takes his pyramid and he he takes the bottom and the top and puts him around and it's it's sort of.
Like an hourglass so that the pyramid has become an hourglass don't kick in in the the the.
The dramatic conclusion being don't get stuck in the middle.

Scot:
[9:18] The sands of time are running out.

Jason:
[9:20] Yeah it was a little awkward that I'm sitting next to a little Gap team is he pops up beside that says and the Gap is in the middle.

Scot:
[9:26] They without the computers to start working on the resumes.

Jason:
[9:30] I don't think it was news to any of them that that was a challenge they had to overcome.
Yeah but so that was a good conference and of course like,
cuz it was a little smaller to maybe about four hundred attendees the networking you know is one of the highlights you know I got to see a lot of old friends of yours and mine and meet meet some new friends
share a couple adult beverages and and make fun of people.

Scot:
[9:55] How about where are digitally native vertical Brands their represent.

Jason:
[10:01] There were so like JustFab was one of the presenters they were number of,
the DMV be sort of in attendance so they they definitely had some some representation that it it's it was a pretty interesting mix of.
Frankly you know all all portions of that of that parent of Pascal's pyramid.

Scot:
[10:28] Cooper another one of the takeaways can you share with us.

Jason:
[10:33] You're grilling me I mean like those are the the big ones that we have time to talk about right now because I heard a rumor I know you have this whole separate gig in the automotive industry that you're cheating on me with
and I heard you were at an auto event while I was here so did you did you get a new cars.

Scot:
[10:57] I did not but it was fun because this was an event that was actually in my backyard the one of the Publishers and autospace I didn't even know this until
Teresa Lee is based out of Cary North Carolina which is in the Research Triangle Park area and they put on an annual kind of it's not funny how
things once you've done this in several Industries It's relatively similar to kind of
are e-commerce road so they have kind of like the big show their one goes to this kind of like you know the current stage and then they have the more forward-looking show that they kind of do the smaller and we're in a hot soak.
Kind of like interests next for Autos this was in Raleigh so it's actually nice to get to drive to the conference house by 2 so I was invited to speak about.

[11:43] Changing car ownership landscape which is not the topic of our podcast but it is kind of fun you know there's an in the
my world my e-commerce World in my Auto World are all colliding so we we talked a lot about these new models the most popular ones are there's two companies ones true and ones get around the CEO of truism eBay dude and then the get around
my folks are both marketplaces into
takes time for at least learn to talk about all the time and see it seeping into the Auto World another interesting company in that space is called ACV auctions where there's all these physical car auctions
require acres and acres of land in kind of silly because you ship all the cars there and then if people fly there and then walked around and and
bid on items and then they blow to back up and shut them somewhere else there's two shipping's in there there's this ACV auction company has gone and it just on a digital marketplace around that so very kind of eBay 1.0 asks to be in a different industry but then see the
the similarities the other fun thing is a lot of the presentations were you how do we make it like
easy for people to buy cars the carvana has really disrupted that World by effectively taking e-commerce.

[13:03] Stuff that we know well and applying it to used cars so now all the dealers are trying to figure out your pay if Jason walks in on a on a
Sunday afternoon in Chicago how can I sell him a car in less than 8 hours so that it's kind of funny they're trying to figure out you know.

[13:21] The basic blocking and tackling of that that we had knee Converse for a long time but but it's funny to watch them,
figure that out and there's a different set of vendors different set of players so it's a lot of fun.

Jason:
[13:32] Yeah I know it is it's funny when I get teased a lot from
my tenure at Blockbuster entertainment which is now kind of a joke but we sold the company for a bunch of money and a lot of the management team and that the founder of Blockbuster took that cash and started AutoNation in the hole
the whole premise even back then was,
like the inventory in any given used car dealership is the local inventory in that one dealership so you know a very small assortment free Chopper
but what you really need to do is aggregate the assortment across the whole the whole country right and that's that sounds like that's essentially what's happening with these options as well.

Scot:
[14:14] Yeah yeah and then yeah so they'll traditional models are all changing to the CarMax has the realtor now adding digital and it just kind of funny to watching.
The same waves we were kind of in the end of the sixth inning or whatever you want to say I guess Amazon would say they won but you know if we've been that day one for 20 years
daughter Ministry of feels like it's way earlier in that and it's going to go faster because we don't,
we don't have all the new waiting for people to trust payments and smartphones broadband and all that it's all all here today so it's just feels even more chaotic to the folks that are in the middle of it.

Jason:
[14:49] Sure I will say and I've been falling carvanha a little bit as a
start a digital shopping experience and there's a bunch to admire their butt from the commercials like you get the impression that if you bought a car on your mobile phone from carvana it would get delivered in this cool carvana delivery vehicle.
Or you go to a vending machine and the car would come out of the vending machine and I was kind of disappointed to find out that like.
Yeah in most cases some dude just going to drive the car you bought to your house.

Scot:
[15:17] Sure we'd moessmer delivered on the little flatbeds they don't have the commercial tissue this really big one but they bring them on these little flatbeds.
You by Ada price on so many cars in Chicago that there haven't.

Jason:
[15:32] Got you okay good I'm glad I'm glad to hear that cuz that felt a little bait-and-switch e and I'm hoping they've all been detailed by gets 50 before they get to.

Scot:
[15:40] That's what we're going on there's a lot of lot of cars to clean up their thanks for bringing that up.

Jason:
[15:45] Hey I'm here for you man.

Scot:
[15:47] What's one of the big news items we wanted to talk about is last week Amazon revealed their second quarter earnings since they came out the stocks been a down about 10% feel a little bit of pressure and what would happen there is it's kind of mixed quarter so it's Amazon you look over the long Arc since it went public
I was at a whiteboard I would draw these kind of stairsteps there and and see what happens is the,
they'll invest will bits the stair goes sideways and her words, like what's happening this is going to work out
and then do that that's what cycle Revenue growth will accelerate in the woods happy on Wall Street and then the Amazon will say well we need to go through another investment cycle so they've been pretty used to this
the telegraph this if you want if you remember that's when they took the auctioneer to announce
next day Prime so that's the real theme of the quarter is the mixed aspect of it so positive
camaco season of the quarter was one day Prime really increased demand that was that was good and exceeded while she text
Haitians pretty handily on the top line but at the same time I'm delivering on one day Prime really
shoot away at probability so you know I can have this mental image of they press the button on the website and then the.

[17:08] Total chaos happen to the Fulfillment centers in there just kind of getting their arms around that also you throw Prime day in there that wasn't a cute too but it's kind of body language was that it was a lot of little bit harder and more expensive to implement one day Prime
I'm too we're going to dig in the next level down is and we thought we kind of cover on positives and negatives we drew straws and I got the positive side Jason sits on the positive side
Revenue accelerated so Revenue at Amazon grew 21% year-over-year excluding in any kind of
benefit or hadwin from a foreign currency that exceeded expectations by about 3%
pretty material at Amazon's you know billions and billions of dollars to exceed by 3% hundreds of millions of dollars kind of come out of that one area that
everyone looks that pretty closely is within the Commerce business or what they called the online unit the there's a unit growth so that's effectively
no to the number of things sold so paid units that it's kind of slow down over the years to about 10% that.

[18:16] That metric which is kind of a forward-looking metrics that popped up to 18% so that's probably the best signal that the one-day Prime is working really well and then I think imma call Amazon did call out that you know
that that was driven that salvation was driving by the introduction of 1-day Prime one-day Prime's benefit was largely centered around North America because in most of it to go to 2
UK for example it's such a small little island are that pretty much prime has been one day for awhile since you out a lot of Europe they're already kind of at one day Prime.

[18:52] So it has a business impact on their National side so a lot of this growth came from the North America side
so North America Revenue accelerated to 23% year-over-year compared to 19% q1 that's a 4% bump due to one day Prime and then
the other thing that made Wall Street excited was you know whenever Amazon releases a quarter they talk about the next quarter so.

[19:17] Ouachita been projecting Q3 to be no X and then Amazon guided that pretty significantly ahead kind of keeping it this mid-20s growth rate at the mid,
another kind of interesting kind of in this we get kind of inside baseball here on the call Amazon talked about
Amazon is very methodical in these autometrix Sue on the call they revealed that they have about 10 million items right now that are in this kind of one day Prime
so think about these concentric Rings where you have at the center at the same day you have Prime now and then some cities have
car that same day delivery that's Prime now is like was like 5,000 skews and then I think maybe you get up to 10,000 20,000 skews for same-day so then the next thing out which is next day is now 10 million
and then the next train out which is I think there's about 30 to 40 million Prime
eligible products total supposed to be like the next thing out which is 2 days going to probably have caught 30 to 40 million so
they're really kind of focused on this this kind of ring that is that one day Prime so you know theoretically I think they could get you know.

[20:37] 4 * 40 million
items that are effectively available to put into that one a prime will it get it all there I don't know I have to kind of wait and see how they go but ten millions not a not a bad start
so it's it's going to be interesting and now they've revealed that number will get a slide about it we'll try to track it on the show here for you guys so you got to see if I was if I was them I would kind of try to get that up to
20 million die holiday I think that would be no cuz pretty material holiday bumps and then what you begin.

[21:07] Last couple things within third-party that segment of Revenue grew 23% year-over-year which was a nice little
acceleration retail subscriptions which is kind of our Prime lives that grew 37% and then one thing we watch on the show really closely is the Amazon ads now they put in this other category in blush and Rose have a way of kind of
looking in there and pulling out the ads business so so the ads business was up 37% year-over-year really nice growth and then the estimates are that this is that about a 13 billion dollar run rate,
I'm going 42% year-over-year so the projections have kind of been edging up we talked about this for a couple years that they were there
you're pretty high now I think they're raising them so I'm seeing a north of 30 billion from Amazon ads by 2024 that would
you're the ad
guy that would definitely put them up into the the Facebook kind of snow level certainly that would exceed I think Twitter and Snapchat
it might stay singers and they're not growing as fast as is Amazon's business so don't put them up in that kind of elite air with Facebook and Google if I'm remembering by my ad.

Jason:
[22:21] Yeah they're they're clear third they're like you. They still have a significant amount of ground to make up on on Amazon and Facebook and Google but they also have like a pretty good Gap ahead of everyone else.

Scot:
[22:34] Yes those are the positive sit in the question is why was the stock kind of down and I'll turn it over to our curmudgeonly Jason to give you the negatives.

Jason:
[22:44] Yeah I think it's because I'm such a positive guy that it it just feels better getting the bad news from me,
11 seidman on the advertising I saw a new and interesting datapoint today that I thought was kind of fascinating there's this company out there jumpshot we've talked about them before
they have tricked a bunch of consumers in the stall installing there plug-in in their browser.
Variety of utilities but then whether means is they get to collect data about how all those consumers are our shopping and their web browser and they,
they sell that industry data so they get they claim they can watch millions of Shoppers in North America on Amazon and they said that in January of last year.
6.6% of all product detail page is the people looked at on Amazon where clicks from a sponsored at.

[23:42] So by December it was 10.5% of all quicksand so there's this like they have monthly data and you just see this daddy step up that like,
Amazon has essentially double the amount of page views as a result of these.
These paid placements in that this very much follows a trend you see on the other big advertising platforms that you know originally.
You know Facebook had a lot of organic Google had a lot of organic content in overtime as they.
They've you know optimizing monetization on their platforms or less and less of the the content with C on their platforms is is organic and Marvis paid so where.
We're seeing a very similar progression happening For Better or Worse on Amazon.

[24:30] That Flippin to the the negatives from the earning report the first one was that their AWS growth rate was slightly below expectations so.

[24:43] To put this in perspective.
The growth rate was still 37% so it's a very fast growing business it's a wildly profitable business in Amazon has by far.
The the largest share of that business and I would say you like one other positive about that business is that there's still a ton of growth left in that business so you know by most people estimate something like 5 to 10% of all the.
Computing jobs in the world are done in the cloud and the rest are all still done in local data centers and things like that so there's still a huge amount of growth as.
Compute my grades from
from the local to the cloud and Amazon you know has this this clear commanding lead but the rate of their growth is starting to slow down and particular Microsoft and Google.
Wow much more than Amazon are now growing faster than Amazon so that's like not unexpected but it's interesting to see that play out and obviously there's,
a lot of mistaken Impressions out there that the.
That the revenue from AWS like pays for the unprofitable retail business for Amazon and hopefully our listeners.
I have learned to debunk that but be that as it may the AWS revenue is is very beneficial to Amazon.

Scot:
[26:09] Giannis this is not a cloud computing podcast but Microsoft actually their Cloud Revenue just passed their non-cloud revenue and that was really well-received by Wall Street
they are now in that that
Elite Trend dollar market cap where Amazon has kind of Fallen well below that due to the headwinds from this investment cycle.

Jason:
[26:31] Yep yep so it's it's super interesting to see this this Microsoft Resurgence they also announced that they're going to
invest more than a billion dollars in this openai platform that they're going to accelerate via.
Azure which is their Cloud platform so I say interesting stuff happening in the cloud space I like to think we're all the beneficiaries because the the tools and services that these guys are all offering.
Like they're they're so competitive with each other that they keep wildly improving and expanding every quarter so.
So it's a fun space going back to the retail side of Amazon's business a little bit more overall gross profit decelerated Amazon so is,
22% versus the last quarter was 27%.

[27:22] As you mention like they took a little hit because they had a good quarter last year and then their guidance was that they were going to.
Make more Capital investments in the subsequent quarter and expected things to go down and that's that's kind of how it it played out but they.
You know still still it's no fun to tell people that you you made less profit than you you did in the previous quarter.
Their operating income was also down a little bit and you know you meant I think you already mentioned their there.
There's a third quarter guidance was also a little lower as a result of this slightly lower profitability and I look at all three of those things and that to me those are all symptoms of.
They made the shift to one day Prime and it was a little more expensive and difficult and messy.
Then maybe they they anticipated and sew-in you know I think as we talked about in the past.

[28:28] Any inefficiency you have when you accelerate everything they they get Amplified in exacerbated and so you know the the.
Putting the accelerator on a lot of these processes if you don't have the exact right inventory in every fulfillment center instead of having expedite a shipment from one for filming Center to a customer now you're having to expedite shipments from to fulfillment centers to a customer things like that so.
Like this doesn't seem like a horrible shock to me and I I feel like I have a pretty high degree of confidence that.
That Amazon is going to operationally get this stuff all squared away and
you and me talk about this in in other news later in the Shell but like however much pain it's causing Amazon to do one day Prime delivery a bunch of other retailers have already announced that they're going to match the one day service and others probably will and I can virtually guarantee you.
It will cause more pain to all those other retailers to try to hit that service level than it's causing Amazon.

Scot:
[29:30] Yeah absolutely yeah some of the Wall Street folks are kind of saying it's a knockout punch in there there's a lot of interesting kind of language around that that the the demand they're seeing from it.
Is there a tributing just to really kind of is going to,
if it stays in Amazon and get the cost down it is going to be late to away at the the sheriff not only online but the offline folks will moved on Lancaster.

Jason:
[29:56] Yeah I know you have talent follows Amazon pretty closely and they they.
They have a pretty sophisticated model for how much opportunity think there is for hims on how quickly they'll grow and then they do this big consumer survey every quarter until right after Amazon announced this last quarter
they surveyed all the customers about how their shopping behaviors might be different if they could get stuff in one day and they had enough Confidence from that survey
that they had to dramatically increase the
addressable Market in their in their model and therefore like the the amount of Headroom for growth Amazon had because I felt like,
offering one day delivery was going to change a lot of shopping habits and and help Amazon capture a lot more wallet chair.

Scot:
[30:43] Yeah one final announcement they made that's near and dear to your heart as they talked about adding two more go stores which will bring the total to 13.

Jason:
[30:52] Yeah and it depends on how you read the announcement but there's two to four that are currently scheduled to open so maybe two of those they had already announced,
and they added two more but two of them are in Chicago,
and we have a number of ghosts tours I want to say we have three or four here now but one of the new ones that's opening here in Chicago is actually opening in one of the buildings I have an office and so it's at the merchandise mart.

[31:21] So that that'll be fun this was not Amazon news but there was a sort of interesting article.
That that came out that someone had done an analysis of the,
the shopping carts one of the credit card companies of the like spend in the Amazon go stores and they reported that the average ring in the Amazon go store is.
Much lower than the average ring in a traditional convenience store so so they were saying that like.
A typical consumer visits a ghost or like two to five times a quarter and a typical consumer visits a 7-Eleven like.
427 x 1/4 so they get 7-Eleven get slightly more visits then I go store but then the average ring in the convenience store was like $25 and then the go store it was like $14 and so the.
The takeaway from this is that you know people are tending to buy one item or just a couple items in the go store in a slightly bigger card in it.
Typical convenience store in it adds to the the the high-level speculations that the C's go stores at the moment are wildly unprofitable so it's,
it's very interesting and typical Amazon that like in spite of the fact that the the unit economics don't don't seem to work at the moment.
You know that's not curtailing Amazon's ambition to keep keep scaling and growing and learning.

Scot:
[32:51] Have you tried the the coffee that I have seen some of the newer ones have the coffee thing have you tried the.

Jason:
[32:57] Yeah they do have a coffee bar I confess I have not because I have very goofy specific tasting coffee but I will I will have to try the coffee when they open one in the merchandise mart.

Scot:
[33:08] Well we need you to take one for the the podcast team and even if it's sub below your standards we want to kind of hear you're all the Gory details.

Jason:
[33:16] Yep. I'm embarrassed I'm embarrassed to say that that I haven't I mean I think two things you think of when you think of the retailgeek are Amazon go stores on coffee so somewhat embarrassing to me.

Scot:
[33:27] You can just walk out without paying this can be even more fun.

Jason:
[33:30] Yeah yeah as I was like to say they they invented just walk out but they broke just walk in.

Scot:
[33:35] What if you go in and get your coffee drink it and then fill the cup again will they charge you for lunch test that Force.

Jason:
[33:43] Yeah well yeah that it is funny that there is a little bit of a history of background like you think you're joking
but this this ties into this so I kind of broader theme that there was some news about these last couple weeks which is about Amazon's overall grocery Ambitions and that the reason I say this that ties into coffee ago stores is because
there's an interesting recode article about the history of the ghost or in the evolution of it and,
it started out as a full-service grocery concept and in fact the idea was that you chop all of the.
The perishables.
In a live store that use Go technology to just let you grab whatever you want and leave and that you'd buy all your consumables,
I just ordered them on your mobile phone and they'll all be packed enough for Film It Center that was attached to the store and they be waiting for you as you walked out of the store.
And somewhere along the line it was deemed too complicated and one of the biggest reasons it was too complicated was.

[34:54] All of these items in a grocery store that have variable quantities that you have to weigh or count,
or you don't have different sizes of the same thing we're tricky for the camera to recognize and so,
the camera knowing whether you have 12 or 16 oz of coffee in your.
In your cup and your point whether you drink half of it and refilled it is a tricky Edge case that apparently Amazon aspire to do originally and then kind of avoided when they rolled out.
The ghost or so.
But it's interesting how Amazon handles that in these go stores but they they there is now construction going on in the original.
10000 square foot lease that Amazon took in Seattle when they thought they were going to open a grocery store and so there's lots of speculation that in the not-too-distant future we're going to see a new grocery concept.
That that may include some of the Amazon go visual search capability computer vision capability but but the Amazon may be stepping back to that more ambitious original.
Original Vision so we're all eager to see what happens when they they peel the paper off the windows of the storm Seattle.

[36:19] So that is kind of interesting in the grocery space another interesting tidbit of news I saw recently from Yuna from the the Seattle corner of our country.
That kind of feels very Amazon asked to me is Starbucks made an interesting announcement.
They did a partnership with a POS company to sell a product ties version of their mobile order and pay two other restaurants.

Scot:
[36:52] So are they now it's any who's going to be taking the outer or how's it going.

Jason:
[36:57] Yeah so I did not see in the in this original article.
Who like it may have already been pre-sold to.
But essentially this was like the chief digital officer Starbucks that help build mobile order and pay left Starbucks to start this new company called Brighton,
and now fast forward a year later Starbucks has done a deal with him at bright room,
to sell the the technology stack in the software stack to other retailers and to me that feels very.
Amazon AWS cuz it like you you build something to solve an internal problem and then you say like.
You know rather than keep it as a proprietary manage for us we're going to scale it and monetize it by by selling it to the rest of the industry.

Scot:
[37:53] You'll be interesting to see who takes out or not.

Jason:
[37:57] So I'm up interested to see if other people up take it there a lot of categories that maybe aren't directly competitive with Starbucks but want this capability and so,
you know I it is easy to imagine it being successful motor mobile order and pay the huge deal in the in the restaurant space right now and and something with a credibility of the Starbucks offering would be interesting when I'm super interested to see is.
Included in this deal would they ever consider using Starbucks as a payment method.
So can I buy my Five Guys burger on my Starbucks card for example.

Scot:
[38:36] Yeah yeah so be interesting to see how if it's a universal payment system ER or just kind of you know a complete private label into another brand.

Jason:
[38:44] Yeah I kind of suspect the first version will not include payments but it's interesting to think about and you know it could also open the door we seen a little bit of this like Kroger's it has invented some in-store technology that they're trying to sell the other retailers I get just going to be interesting to see if this is
a play that becomes a more you know Common part of the The Playbook going forward where I would argue historically
whenever a retailer meant anything proprietary they they want to keep it as far away from the rest of the market as possible and keep it as a sort of,
unique competitive advantage.
But there was also a lot of logistics news in the last couple weeks have you been following all this cotton.

Scot:
[39:26] I have a few yeah. I kind of use it that Amazon is caused so much destruction or one's kind of working to keep up have what what do you think about it.

Jason:
[39:36] Yeah no for sure and some of it very directly so this is slightly old news at this point but like in the beginning of July.
FedEx add their earnings and either during their earnings call or within a day of that earnings called they announced that they were not renewing their contract to provide Express services to Amazon.
And when you first hear that you go oh my God that's a huge deal.
Be reminded FedEx have the smallest chunk of Amazon's delivery and FedEx has a couple.
Products that they sell the Amazon only one of which is this this are delivery and so this is really FedEx walking away from one piece of Amazon business,
and you know if your regular listener the show hopefully it wasn't a total shock to you because I've said for a long time.

[40:27] The carriers are having trouble rapidly scaling their capacity and in so if you have a finite capacity.
Do you want to sell that capacity to the highest volume user that you don't have the most negotiating power and pays the least or do you want to sell that capacity to eat or smaller retailers with more with less Leverage,
they will have to pay more for that and then you know apparently FedEx answer was.
Yeah we we can make we can better product profitize are our capacity by selling it to other retailers and walking away from from Amazon who presumably.
You know as a Biltmore more of their own capability or you know where we're turning the screws for a better and better deal from FedEx.
So that was big news at the same time in that earnings call they did acknowledge than Amazon is a potential competitor in the space which like that also should not be.
Shocking but like you know up to this this point like FedEx had consistently said that that Amazon is a great partner and not a competitor so it's kind of funny that they finally acknowledge that.

Scot:
[41:37] I think they've all slipped it into their or their 10 case there's this guy competitor kind of category in everyone's going to start it but Amazon in there.

Jason:
[41:46] Yeah and I think I got triggered first by Amazon listing them which is never never good news,
the FedEx and UPS are doing some interesting moves the going back to the capacity problem they are both going to seven-day-a-week delivery so they've added Sunday as a delivery day,
that is going to be interesting to watch out you know Amazon was just a lot of their own deliveries here in Chicago already like has been delivering on Sunday for some time and Amazon has a u.s. postal deal with.
For Sunday delivery so like and I feel like the consumer expectation is it is is expanding the seven days and now we're seeing the other carriers.
Trying to figure out an offering in that space and they're also doing some interesting things about reverse Logistics and so.
UPS and FedEx have both like greatly expanded the their locker program and their pickup locations and I think.
Last week UPS announced that they had done a deal with CVS Michaels and Advance Auto Parts to use those 12,000 stores as.
Pick up locations for UPS packages in my mind that the CVS one is particularly interesting because.
CVS I believe is also a pickup and return location for Amazon so you know.

[43:12] It seems like as the healthcare industry is getting more challenging and and the prescription drug business getting more challenging like CVS is doing some interesting things to repurpose some of the the square footage in their stores.

Scot:
[43:24] Have you is there any anecdotal evidence how these return programs are doing it for everybody like is Kohl's benefiting from the Amazon thing or are people just kind of like.

Jason:
[43:33] So the 3rd party traffic monitors feel like holes traffic was up and Kohl's claim that their traffic was up,
demonstrably in the pilot stores when they first
when I first started taking returns and so Kohl's is totally Double Down they've expanded the returns to all their stores and Colts is really improve the logistics around the return so you cannot walk in a Kohl's with just a unpackaged item that you bought from Amazon and your
order on your smartphone and Kohl's will take it back box it and do the whole thing for you a CVS will take that package back but they don't do all of that boxing Logistics portal you have to bring the package,
can a ready to go in a CVS store and I know people always say like Josh kaul
poses in bed with their competitor I actually think this is the smartest partnership I've ever seen a retard do with Amazon because,
this this partnership is not giving Amazon access to Kohl's customers in any way this this partnership is really exclusively giving Kohl's access to Amazon's customers.

Scot:
[44:43] Yeah yeah I guess I'll never announce it let you know there's some percentage shopping in the store which.

Jason:
[44:52] Yeah exactly if you have to walk through that store you're going to serendipitously discover something and closes protected well suited for that because they're a little bit of a
treasure hunt store anyway and that you know they tend to have a thin inventory you know of that turns regularly with lots of deals and so
if you are Kohl's shopper
and that triggers a couple extra visits when you're returning something you know you're very likely to discover something and if you're not a Kohl's Shopper it's even a bigger win for Kohl's if they get you to come in that store for the first time.

Scot:
[45:23] And then I'll give you the privilege and then you every time I go to Kohl's I get in line behind someone that's optimizing their their triangulation between like some kind of cash back thing
Kohl's cash and something else and it's crazy like.

Jason:
[45:41] Yeah we call it doing a leveraged buyout on a t-shirt.

Scot:
[45:45] And then invariably they'll like walk away from a cart full of stuff to run and get like this was
it's not BOGO but you know if I bought this and this I got double Kohl's cash and I can apply them in this and then they want to split the transaction with their significant other and it's like
no they did a line for people that don't like just want to buy stuff and get out of store.

Jason:
[46:08] So for sure that's a common complaint in a number of retailers and Kohl's in particular like the more sophisticated those those reward programs are in the greater percentage of customers that are in those reward programs and take full advantage
the more acute that problem is
in the case of the Amazon returns it doesn't hurt you though because the Amazon returns as a separate counter within Kohl's so you're not waiting in line behind
any of those people to return your Amazon package at Kohl's and a bunch of other retailers like Macy's a big part of their answer for you,
is
if you're not that super high Rewards customer that's doing that really complicated transaction there they're trying to get you to do mobile,
Scan & go and check out without standing in line because they know that check out is a big a big pain point for them.

[47:05] Yeah I'm not sure that the average Kohl's Shopper Macy Shopper has,
then as early in the Doppler that technology as you probably are but like I I do think they're going to continue get more more traction we're seeing more and more stores.
Go that way and that's that such a perfect segue to.
Something we'll talk about in in just a minute but I had one more news topic I wanted to touch on before we get there.

[47:31] So there's this awesome quote I use all the time that I think Andy done originally used maybe four or five years ago e-commerce is awesome.
As long as you don't care about anybody off and
the sort of ominous you know message there is customers are loving it it's a it's a better customer experience in many ways for a lot of use cases boat but when things you shouldn't lose sight of is
the the unit economics of e-commerce are almost always unfavorable versus traditional retail unit economics and,
two big reasons for that are shipping and returns and it's it's just been interesting I've seen some some.
Not optimal news for eCommerce sites on both of those those costs this this month
so you know one thing there's a report every year that comscore does called the state of the online retail industry and they share a bunch of data and Trends the Desi from there you know millions of customers that shop in their panel
and one of the staff they always share every year is what percentage of sales every quarter were sold with free shipping.
And so for holiday this year 85% of all e-commerce orders had free shipping.

[48:56] And like three years ago it was 65% of all Commerce orders had that had free shipping so increasingly this is probably isn't surprising customers expect free shipping and they only by when they get free shipping,
and that that's currently you know ramps up the the profitability challenge for retailers and then you know when you,
you talk about like you know Amazon stepping on the gas and Walmart and Target quickly following them with one day shipping you know when you not have to give away free 1-day shipping,
that's a real challenge to to e-commerce profitability and then.
For many retailers the double whammy is returns tend to be much higher online and I saw a horrific stat this month,
there's a logistics company called optoro that did a study
and I'm not sure if I told you this I haven't been able to look in their methodology but they are claiming that the average rate of returns
for e-commerce orders over the last five years has essentially doubled so the percent the percentage of returns at every e-commerce retailer twice as high today as they were in 2014.

[50:12] And I don't know if that exact number is accurate this came from a Vogue article I'll put a.
Lincoln the show notes but but even if it's just directionally accurate your returns are going up.
That that's a huge stress to profitability in the example I was like to use
when revolve had to disclose their Finance his revolve is a Edition Ada vertical Brandon the apparel space in 2018 they had almost a half billion dollars in online sale they sold 499 million online and
on their books they they wrote down 531 million dollars in costs associated with returns.

Scot:
[50:59] Wow that's not skilled.

Jason:
[51:02] No nosso the unit economics on that suck.

Scot:
[51:06] It's a minus 20% or something.

Jason:
[51:09] Exactly and so obviously there's a ton of people working on,
the problem of returns and there's a lot of you know interesting things that the people are doing above make it less expensive to do returns and diminish people's,
interest in return but like early on an e-commerce industry you know everyone encouraged you to buy multiple sizes and send back what you didn't need I think I've sort of Zappos has.
You'll be one of the first big retailers to really do that and now they're desperately trying to untrain all those customers to stop doing that.
So not so you know that's going to be interesting stuff to watch as more and more of a sales volume shift to e-commerce were going to have to figure out these.

Scot:
[51:53] I'm not sure how you entertain people out of free shipping and returns so sweet.

Jason:
[51:59] Yeah I haven't seen it done in general it's very hard to unring a bell.
So wrapping up as we're coming up on time here I have a couple upcoming trips that I'm excited about and we'll get to talk more about some of them but I'm actually headed to.
Indianapolis and Dallas next week and the one of the reasons I'm excited about dialysis there's a couple stores,
that haven't been to yet in the Dallas Market so one of the sources Neighborhood Market that this is one of the physical Marketplace stores.

[52:34] Like merchandise a bunch of degenerative Brands and others in a physical space in the,
the the store essentially collects rent from all the other brands in the Brand's keep all the the prophet of there or their sales so it's sort of a digital Marketplace.

[52:48] In a physical manifestation they're going to be opening a store New York soon but I'm going to get to visit their original Plano store next week.

[52:55] And then also in Dallas Sam's Club has a store called Sam's Club now which pair are skin and go conversation Sam's Club now,
doesn't have a traditional check out so the only way to get out of the store is to scan and go and ask him super interesting virtual reality feature or augmented reality feature is to
let you get better product information and wayfinding and stuff in the store so it's up a store that's totally designed around using your mobile phone while you're in the store so I'm I am,
excited to see that and then,
a little later in the month on August 20th I'm going to be at Eataly East which is a long-running e-commerce show
in Boston and I know you can't join me but,
I will be sure to take good notes and do a trip report there and we may be able to put down a couple of interesting interviews from some of the
set from some interesting retailers that are attending that show so hopefully more on that and then if any of our our listeners are in Brazil or
are familiar with Brazil I'm going to be doing my first trip to Brazil ever at the end of this month and I'm excited that Mercado Libre has invited me to come speak at their customer conference so,
looking forward to checking out some of the the Brazilian retail and I'm eating a bunch of the sellers on that platform.

Scot:
[54:23] Hope you can screw them on marketplaces.

Jason:
[54:26] I have a feeling they already know a fair amount about marketplaces but I'll certainly try to add my spin but it won't be in Portuguese.

Scot:
[54:34] Yeah talk slow to the translators and keep up the I learned that the hard way.

Jason:
[54:40] Well that's that'll be easier because I'm such a slow talker just naturally oh wait nevermind I'm allowed talker that's what I am.
Yeah so that is all the news we have for this week I apologize probably little longer than we hoped but that's part of the ramification of us not laying down a new chauffeur for a little longer than usual.

Scot:
[55:02] And thanks for joining somebody.

Jason:
[55:05] Yep and as usual of you enjoy the show we sure would appreciate that five star review on iTunes if you do have any questions or comments about any of the news from the show feel free to hit us up on our Facebook page or on Twitter and until next time,
happy commercing.

Jul 29, 2019

EP181 -'Think Like Amazon' Author John Rossman 

John Rossman is a former Amazon executive who helped launched and scale the Amazon Marketplace, and he’s the author of “Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader“.

In this wide ranging interview we cover some of the 50 ideas from the book about how Amazon operates, as well as how the ideas can apply to other businesses, and what businesses that are competing with Amazon should know.

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